Transcripts For CNBC Squawk On The Street 20140714

Work today after last nights win. The road map goes like this, earnings beat for citi top and bottom line. Stocks up sharply as the Bank Announces its settlement with the government, 7 billion for, quote, egregious mismanagement. Far from the only deal news, well have more on mylan, for example, in a moment. Markets in the green on this monday. Goldman raising forecast for the s p, as we gear up for that busy week of Economic Data. Apple, barclays back on board ahead of iphone launch. Sees a weaker samsung and a stronger tim cook. First up, citi group, reporting Second Quarter operating profit, 1. 24. Revenues above consensus. Citi taking the charge of 3. 8 billion in q2 in connection with the companys 7 billion settlement with the doj regarding Mortgage Securities sold ahead of the 2008 financial crisis. Trading revenue down 15. Not as bad, jim, david, as some expected. No. This was in contrast to wells fargo, expectations were so high going into the quarter, there really was a lot of Great Expectations here. I like citi holdings, which had been kind of like leftover positions, went to a profit this quarter, i thought that was extraordinary. The Justice Department settlement, included cdos, how important is that . Certainly no overhang. All the big liabilities now behind them. The tangible book 56. 89, scrubbed through. Interest marjtgin better than expected. I liked the quarter. People readjusted based on expectation fixed income weak. Right. Revenue number, when you strip out dva, accounting, is down yearoveryear. Right. One of the things, look at all of banks and say, what were people looking for . Citis supposed to be eh. And its just turned out genuine excitement to the quarter. You know what . How about the cap, 3 been in capital with the settlement, they raises 10 billion, increase in cap, all i can tell you, citi shouldnt have been where it was going into the quarter and ma maybe wells shouldnt have been going into the quarter. Trading down 15. Fixed income down 12. Equity down 26. So is that what you want to hear going into a week like this. Interest margin up yearoveryear, people want to hear that. Something wells didnt deliver. Citis a consumer, worldwide Consumer Bank, 50 of consumer business overseas. Only thing i didnt i wanted to hear mexicos behind them and i dbts gidnt get that. Thats the only thing i didnt hear that i would have liked to. Current investigations of fraud in terms of some transactions that occurred there and the company that turned out to not be what they assumed it was. Right. I mean, overall, they still get a discount to tangible book, right . Substantial. The stock trading 47. Now it will be up today, as you see, perhaps 48. 70. The government doesnt let you take your cap, doesnt let you buy up to tangible book yield. Old days, its the government still got its head in these things, yeah, its great to see the Justice Department get out of the picture. A lot of fascinating articles in the New York Times and wall street journal how this deal done. Tick tocks fascinating. Congratulations to both brad carp and ted wells from paul weiss, involved in a bunch of other settlements. This one i thought particularly well handled. The complexity of citis business, i argue, still something that investors are going to keep thinking about. Investment bank not great but you pointed out, worldwide consumer franchise, that seems to be the advantage they need to push if they can. Right. What i wish they would do, really, i still like stop criticizing me it did a lot of the subsidiary floatings. Yes, yes. I would love to have a piece of citis Consumer Bank over seas separate from the rest of citi because that would be a kind of American Express that is an emerging market play. Theyre not going to listen to me. I know Michael Corbat watches the show. But when you come back and watch the dvr show which i know you, hes a dvr guy do flotation to get the stock to 56. Jpmorgan tuesday, bank of america wednesday, Morgan Stanley thursday, step in front of any of those . I like the fact that my indication, all indications of jpmorgan, that jamie dimon will be on the call. I didnt know that. Stepping in front of these banks is so unpredictable. Here you are, you step in front of wells fargo, you would have backed up ahead of citi. I dont mind in punting here, literally what im going to do, im going to overtime, maybe 118 minutes, and then i will predict what will happen. Not before then. Might just be it might be a shootout. Too hard to call. Super jim, right . Instead of super mario. So many deals to go through. Well try 0 ur best our best, s its willing to recommend abbvies latest takeover bid to shareholders. Now thats an improved bid. Its their fifth and its worth 53 billion. 2440 in cash, thats pounds and. 8960 shares of new abbvie for shire. Thats a tax inversion. You still got due diligence. Shares of abbvie, down a bit. You have due diligence, youve got people squaring their positions, youve got there it is. The overall value is not going up that much because of the decline in abbvie shares. But again, it has been recommended, this is going to avoid potentially what would have been a hostile fight under uk takeover law and theyre getting closer. So many other deals to cover this morning as well. Right. I dont know where we want to start. I want to get toy mylan, another tax inversion, in this case, abbott, mylan issuing 5. 3 billion in stock to abbott to buy the nonu. S. Developed market specialty in brand of generics business. What is that . Thats 1. 9 billion of revenue, 75 of its in europe against developed markets, the rest in japan and the like. Talking about 60 million in ebida. End up in the netherlands but choose tax jurisdiction, look for that to be the uk or ireland. All right. Weve got the whiting deal where its a takeunder right now. Takeunder but it becomes the king of the bakken, people like that. Paulsons the big holder in kodiak at 10 . It doesnt appear that hes voting in favor. There is some question here, jim, to whether theyre able to get the shareholder vote at kodiak. Some analysts weighing in and saying they are buying at least you know, this was a 5 premium to their 60day volume weighted price average. A discount to where the stock just changed hands. Will whiting have to increase the acquisition offer, at least a question mark in terms of looking where previous deals have been done. It does look favorable for them. This week last year, kodiak was between 8 and 9. Why was it between 8 and 9 . It put itself up for sale. There were no buyers. David, this one reminds me a little bit of hill shire pinnacle. Why . I was looking for whiting to be acquired. Now, whiting management, i like very much. Its a terrific company. Terrific. Should we rule that out or is that a possibility . Paulson the biggest holder in both. Really . I think so. Interesting. I think so. I thought that stat oil, which was like that play, it came on mad money they liked the deal, which is also bakken, stat oil, the gigantic Norwegian Company had seen a tremendous decline in the north sea production. I thought that it was a natural fit to buy whiting. I think whiting understands what a lot of people particularly howard hamm understood from continental before. Bakken could pass texas. Remember, they passed california. Three years ago i remember going out to north dakota and they were saying, listen, we can be bigger than california, alaska. Guys are like, are you kidding . Theyre bigger than california, bigger than alaska. To be king of the bakken, to have more oil, more Barrels Per Day than continental, i like the deal. If people are being greedy if they say no. One more to keep an eye on this morning. This was announced yesterday at aecom when it was announced during the game. During the game. Nice. What kind what are they trying to hide . I dont know. Urs, by the way, i mean, this is multibillion dollar, 33 in cash,. 734. Aecom shares talking about it worth 56 bucks, 56. 31 for urs. Urs, started back in february, reached an agreement, added four new directors in march, modified change in control for some management members in june. And they moved into auction mode not long ago it would appear. Here we end up with a deal for urs this morning. The analysts did not like urs going into the deal. We had a guy put out a note recently saying, listen, its unlikely that a deals going to happen. That guys wrong. Im being a nice guy not talking about the persons name, because i happen to be like jefferson and gaun dhani when im on the outright sale, unlikely scenario in our view. This is geez, sorry. Its it just happens to be a note from bank of america, merrill lynch, underperform. Unfortunate. Right. What i like about the deal, the antitrust people may not like about it, companies that do federal government government work. Yeah. Urs a tremendous underperformer over the years. Jana understood than congratulations to more than 25 cash good deal for aecom. Did 50 million of cost synergies nearly all of which going to be achieved by fiscal year 2016. Allergan, questioning valeant again, another day, another question for allergan, valeants model on m a. Tobac tobacco, most likely tomorrow, not today. You know, Russell Stover. Forgot about that. Private deal. Third Biggest Candy maker behind hershey and mars. I was shocked, i thought Russell Stover an old brand, make it more exciting. David pyatt, ceo of allergan, thinking that allergan could come down a lot if valeant were to walk away. I no longer feel that way. Theres a lot of things that allergan can do. I also think, though, acquisition is one you dont want to rule out. You cant. He made it he wanted to put it front and center in investors minds that we could do this. Yeah. Vie no idea what it is, i havent heard talks of anybody, but something to keep in mind. Something he brought up, he said, yes, we want to do a major acquisition, shareholders want us to do it. As long as its a foreign company, right . Wouldnt be bad if they could figure out a way to invert allergan. Theyre not buying kodiak. No, shires out. No talks. When we come back, apple getting an upgrade from barclays, months after he moved off of the outperform for the first time in ten years. C. Eo, vivek ranadive. Talking about the note at goldman, upping the target for the s p. Premarket, good action. More squawk on the street from post nine at the nyc in a minute. [ male announcer ] if you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end july 31st. Share your summer moments in your mercedesbenz with us. Offers end july 31st. M a news helping to lift future following worst week for stocks in months. David costin lifting his target from 2050 to 1900 and 12month to 2075. The u. S. Equity market appear attractively valued in relation to bond yields, thats the key. Talks about going into a tightening cycle, multiples contract, returns get more modest, yearend this year, would be 25050. 2100, 2200. A flattening out. What like about david, his timing. Last week was a socalled bad week. Its not like hes riding the wave of bullishness and cheerleading the dip that we had if we continue to dip, you want to get in. David represents the levelheaded guy who moves his price targets and i applaud his work. Its really clearheaded and not cheerleading. Talks about valuations. In his words, only time the s p has traded at a higher multiple than now during the tech bubble of 97 to 2000, when multiples were 25 lower than they are now. We need to see earnings expansion, right on the cusp of. I was thinking, the dows not the important index to watch. But imagine if alcoa and citi hadnt been kicked out, you wouldnt be seeing the dow with two juggernauts flying higher and wed be saying, alcoas made its turn and citi, maybe its time. Proved to be a decent strategy, right . Buying the ones honeywell got the boot. What a great one that was. Aig, delivered consistent results. With yellen hitting the hill, shes tuesday and wednesday. Tuesday and wednesday. Also profile in the new yorker with nick lemon. Nick . All right. Got to get that. Expect more talk of inflation, more acknowledgement perhaps of that, and a little more hawkish tone and are people going to get scared . Have insight, better than anyone else, anyone in the world, wake up with al, al roker, what matters the breadbasket of america. Anyone ever to the valley in california knows that really is where food comes from. And this drought is just killing this country. Its causing noisy inflation that janet yellen talk bpd gasolines coming down. First drop in ten weeks. Yes. Wheat, greens coming down. But the problem is, the breadbasket of the country is burning up, were short water. We dont know how to move water around in the country. Water credits being traded youve got to watch the weather in california because that if we get rain, it is going to be noisy inflation. But, boy, do we need. Its something, look, the Global Warming people are tom stire, who obviously the head of Global Warming coalition in our country. Right, in other words, favor of acknowledging Climate Change and doing something about it. Right. Those involved with that would say, listen, this is not idle. Were having this burn up because of coal and natural, you know could use a polar vortex in other parts of the country. They need the storm we had last night at 11 15 that woke me up from my slumber. Sorry. My vicodin slumber. Asking 3 00 a. M. , is it time to go to work . I did. 11 15 key rem time. When we come back, cramers mad dash countdown of the opening bell. One last look at premarket. More squawk on the street in two minutes. Kid hey dad, who was that man . Dad hes our broker. He helps looks after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . 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Theres a note this morning out saying that the advertisers are loving facebook and u. S. Minutes are increasing 42 . When i speak with ceos who are trying to reach younger people, they throw money at facebook and say the same thing, return on investment is fabulous. They love it, profitable company. Now at the same time we had wonderlick saying look out, engagement Monthly Average user for twitter disappointment. Twitter trades Monthly Average users. When i speak with ceos about advertising on twitter, took a lot of heat this weekend, they say, you dont have to pay twitter, you get a lot of free exposure. The return on investment is good. That is interesting because it means theyre not investing twitter theyre getting eyeballs some the two are very, very different. The people who use twitter love the fact its their news source. A lot of heat, twitter showed you world cup numbers, very good at promoting themselves. But are they very good at generating earnings per share . I want to know what anthony noto things, Monthly Average users feels very much like eyeballs in 2000 where you and i were saying, wait a second, we cant measure by eyeballs, measure by earnings per share. We were wrong for a while, and then very right. People believe perhaps, you said this, power of the platform will win out over time, theyll figure it out. They have to figure it out. For now we keep coming back to this metric of, is user growth growing in a significant way and that seemed to hurt the stock last week. Yes, it did. What youre talking about. Look, people, the ceos i speak to are mad money people and people who place ads, particularly restaurants, i do a lot of that, retailers. They say, how great twitter is, we dont have to give them money and we get a good return. Thats not what you want to hear if youre twitter. Its what you want to hear if youre an advertiser. Facebook, they pay and just think, terrific, and they love the custom ads this is the dichotomy of facebook making money and twitter making eyeballs. Im not an ophthalmologist, im an earnings per share aficionado. Opening bell a few minutes away. Stay with us. Squawk on the street coming right back. [ male announcer ] if you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end july 31st. Share your summer moments in your mercedesbenz with us. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Youre watching cnbcs squawk on the street, live from the Financial Capital of the world. Opening bell in just about a minute and i half. Busy week. First full week of earnings, among the companies posting over the next several days, Goldman Sachs, intel, jpmorgan, ibm, google, General Electric friday. Brian, running intel, they announced the upside. In the old days when andy grove running intel i think brian is the logical heir apparent but their philosophy always been dont do these preannouncements unless youre going to even be better when you finally announce the quarter. Intel has not come in one, really, 25 cents has not come in since preannounced. I look for intel to go higher. Old tech doing so well. We had nice, nice target bumps for Western Digital and seagate. This group is where the action is. And ive got to tell you, people are still underinvested in what i regard as being old tech, Deutsche Bank price target seagate 64. 74. Western digital 100 to 118. If its in pc, its going higher. Amid a lot of downgrades for momentum names, tripp, yelp, ebay. Tripps doing well. Ebay, talk about that. That has to do with algorithm thats been changed and some worries about the hacking. Typically dont hear hacking hurting things other than target. Now, ebay is being hurt by hacking. Lets get the opening bell here. Start things off, get a look at s p at the top of the screen. At the big board, best buys geek squad, celebrating 20 years of people with technology. Wow. Doesnt seem that long. Tibco celebrating 15 years and well talk with the companys ceo in the next hour. Speaking of upgrades and downgrades, barclays call, upset to overweight, had an overweight for almost a decade, if not longer. Came off of that in the springtime. Today they say tim cook has investors confidence back, price target 110. I didnt like this call, and the reason i didnt like the call is because he downgraded it on february 20th, as a matter of fact, 75, 80, there was no acknowledgement other than this back on board moving to overweight. Thank you for nothing. Now theres this kind of sense that we keep hearing that samsung has lost its way. Yes. And a lot of people like the samsung product. I dont know if samsungs lost its way. What i do recognize is that a lot of people want to be aboard apple these days. They kind of like it, to fight apple inexpensive growth stock, fighting a big buyback. Fighting a lot of new interdrukzs and tim cook that wants the stock higher new york longer regards the stocks irrelevant. He went from beinging anot stick about a stock to being a zealot. The board revamp, which we talk about, whether or not that happens. The post saying their ad account could go into review or bring it inhouse, after 30 years with the firm that brought the famous 1984 commercial. I just its funny. The companys on a roll. Now we saw there are some companies saying be very careful because this product may be late, that product may be late. Guessing game about what theyre going to earn, people have been wrong quarter after quarter after quarter. Thats the reason i didnt like this upgrade. It seems like, oh, boy, i downgraded it, maybe nobody remembers i downgraded, 75, 80, darn it, cramer mentioned it, squawk box looked it up. I think apples a cheap stock. I think it falls even carl icahn thinks its a cheap stock. Hes done quite well. That has contributed nicely to what otherwise not a strong year for him this year as last year. Right. Private business, the railcars have to be just going gang busters, right . Largest owner of railcars. Railcars in short supply. I thought that trinity peaked, that was wrong. Greenbriar reported a number. People dont want pipelines good series in the New York Times people dont want pipelines. I had a pipeline under my property when i lived in pennsylvania, every year i got a calendar from the people from the pipeline. Nice of them. Very nice calendar. Ripped the month off, the next month appears, extraordinary. How that works. That cardboard thing with the stick out. If youre not the guy who gets the payment, youre the guy who buys the payment buys the property that has 50foot wide thing you have mow, you dont feel so good about it. No problems from the pipeline, though, other than just no, but i felt like the calendar, how about Something Special . Just a Little Something for the effort. Maybe a notebook and calendar. Puzzle. Crossword puzzle. Six of the top ten gainers are banks or financials in some sense. Schwab, genworth, Morgan Stanley, citis second biggest gainer. Before you decide to write these guys off, because they are supposed to put up more money from fha, be careful. Thats a proposed rule. I heard jim mcnerney speak, 4 30 a. M. Interview with bloomberg, i have never heard him more bullish. Everyone tries to trap these guys is the cycle over . No whats the biggest problem . We cant make the planes fast enough. Xm bank, cost the stock maybe eight points, terrible underperformer, what are you worried about . Its going to be approved. Too many Small Businesses will be hurt. Mcnerney, one of my favorite ceos, making a great case. Alcoa, we had germanys own klaus kleinfeld. Market americanny on later as well. Ray corn, commercial chief. The air show, look, every time boeing has gone up at the opening, a seller has materialized, i want to make that point. My Charitable Trust owns it. If you want to buy the stock, wait until 10 30. That guy will come in, he obviously hates the stock. Unveiling new variant of the 737, up to 200 seats trying to make a pitch to those low Cost Airlines around the world that could put ten more seats in, model changes completely. Thats whos got the money. European airlines dont have as much money. This is a world travel story. Kleinfeld always emphasized that hes got the wing, the fan, the fan is now made with aluminum. Used to be made nit nickel. Airbus, i remember speaking to jim mcnerney and i said, between you and airbus, on mad money, he goes not at all, we dont care for each other. Okay. They make coke and pepsi look like friends. Yeah. Those guys are buds compared to bowing and airbus. And one of the things hes making the point, airbus has a real edge if you dont let xm larry kudlow, friend and former partner saying the a corporate giveaway if youre a shareholder for boeing, its a necessity, some people say, 19 of the business financed. Shares of citi this morning. Weve discussed it. The call has wrapped up. Kayla tausche on that call. Cfo provided little detail on the settlement with doj. They confirmed 3 billion tax deductible, 3 of the 7. Geopolitical tensions eased in june that helped the markets. Hits International Equities due to ukraine and russia volatility. Decreased exposure to russia and ukraine, have 30,000 people in compliance by the end of the year no update on mexico. 30,000 compliance. Compliance increase paid for by cost cuts elsewhere. Highlights from the call with reporters that the youll see the paul weiss deal go down. Its funny, talking about apple bringing advertising inhouse. I once made a joik ke how jpmor out to make a bid for paul weiss. They are my attorneys. When you see the big settlements, you also are able to get smaller legal fees. When you see citi holdings, swing to a profit, thats also smaller legal fees. Legal fees, i cant tell you how much the hidden pain they have caused banks. A lot of the law firms, the lehman bankruptcy alone, what did it deliver . A billion in legal fees, Something Like that at least. There were law firms staying alive on just that there right. Thriving, not just staying alive. Did you see the number of people taking the lsat down 6 over last year . That is something. Down 6 . Jobs tend not to be there. Its a very good sign. Kill all of the lawyers. More people want to i dont want them to die. Not a shakespearean fan . Less litigation might be beneficial. Look, when you talk to people, young people now, what they want to work at google and facebook. You never hear, i am hoping for a Morgan Stanley offer, no offense to mr. Gorman, who has gone a great job, the countrys changed and the country recognizes you want to be the lawyer for google or work at google. I know a guy trying to get a job with the google driverless car. I mean, theyre like if you go to googles campus that Driverless Cars doing everything. The hookup between driverless and uber is the hope for solution to traffic. Did you watch Silicon Valley the show on hbo . One with the driverless car, hilarious. I encourage you to swing through. Emmy nomination . Fun show. We lad mike judge on the show. That may be true about google, people love that to be their first but theyre not unhappy to take a job at Investment Bank that will pay them a good salary. People that dont have engineering background. You need computer science, engineering to get at companies. If youre just engineering, its not even good enough. No. Lets hope our country develops more engineers. I understand companies wanting to have more immigrants because the pool of workers just isnt big enough to meet the demand of a google or facebook or you know, twitter or yahoo yahoo reports this week. Dow briefly up triple digits now up 92. Bobs on the floor. Good morning. Good morning. Dows up 90. We have had a global rally. The second half of the rally that began overnight. Shanghai, nice move up there. Shanghai market near onemonth high. Japans rally, germanys having a great morning, off the highs there france also to the upside. Part of it may be the proliferation of deals you were talking about here, lindt and Russell Stover, thats another deal, shire up inniping theed b mylan buying assets from abbott. The big deal everybodys talking about kodiak deal, whiting offering to buy kodiak for a substantial am of money here. The comments that i hear is this is not about the bakken exploding its about the bakken matu maturing, doing deals so that you can operate more efficiently and with lower costs. For example, now, whiting will be able to rent 30 rigs at a lower price than renting 20 rigs than they had before. More easy money made and now the game seems to be more efficiency directed and survival of the fittest. Its an indication of things maturing rather than things opening up at the very beginning. This is true if youre concerned about Lower Oil Prices and thats primarily what the bakken is. So remember, nat gas declining for a while, those prices. Bakken is an oil play. Weve seen what brent crude haze been doing. Here a threemonth low. West texas declining. Oil goes to 80, talking west texas, companies will be more hard pressed. They might be profitable but will anybody pay them huge valuations and will they get the money people are expecting to pull out of them . Heres one to watch here. Oasis petroleum, another play, bakken play thats there. Thats up. Continental resources, one as well. They may be an acquirer, we dont know, havent heard anything about them so far, but might be a buying of whiting or kodiak. Unlikely they are going to be acquirer of anything any time soon. Talk about citi. As you heard, earnings pretty good. Impressed with wells fargo numbers, auto loans up 9 on wells fargo friday. Citis up here. All of the big banks on the upside this morning if you look at big names. Well get jpmorgan tomorrow, Goldman Sachs tomorrow, but all of them trading on the upside. Speaking of Charles Schwab, buy over at jeffries, waiting for numbers from them. Mylan buying abbotts develop market branded generics, on the upside 3 . Back to you. Thanks, bob. Thats where i want to take it. Is to mylan, so many deals this morning, but i have been fixated on the socalled tax inversions. I like to think i was the first person to use the word inversion a long time ago. But we all know what that word means, which is u. S. Taxpayers, that is corporations that pay u. S. Taxes, actually leaving this jurisdiction. Doesnt mean they stop paying u. S. Taxes on money earned here. But over time when you change your tax jurisdiction, it does tend to happen that as well earnings, earnings tend to go down, interestingly enough, all sorts of ways to do that. They flow often to where you are paying more of the taxes or, in fact, a lot lesser rate. Mylan looking for an inversion for a long time. And it failed to find one until it inked a deal with abbott. I highlighted that relatively small deal buying did merging with units, asset dropped down, italian Pharma Company so it could reincorporate in ireland. Its the same kind of thing thats happening here except in this case, abbotts u. S. Company. Abbotts in devices. Abbvie is all of the drugs. But they did keep a portfolio of drugs they sell in europe and japan, developed markets. None of them on patent anymore. All off patent. But 1. 9 billion in revenues. Mylan talking about as much as 600 until ebitda once they take over the portfolio. Exchanging 5. 3 billion of stock, 100 stock, for that ebitda of the drugs, they believe the revenues declining but they believe they can plat continue out. You lower your leverage ratio because youre taking 600 million in ebitda, not adding debt, only exchanging stock. 21 of the company will be owned by abbott on close, thats what you need to have it invert. They end up in netherlands and choose their tax jurisdiction, probably the uk or ireland. And then plan for years to come about what you want to do. By the way, lower leverage ratio, mylan talking about more acquisitions in the future. They get that key inversion that so many others in their industry have availed themselves of. Remember, if youre a mylan especially, youre not about developing new drugs. Youre about selling drugs that have been on the market for a long time, as again nairgenerict a companys that stock will move on new products what happen will make it move . More cash flow. What can 500 basis points in a reduced tax rate mean for more cash overtime . A lot. A lot. Thats one of the keys here. Initially that rates not going to impact much but over time in terms of tax planning, that the savings will come through in terms of accessing cash that is generated over seas, bringing it back to the u. S. Without having to pay u. S. Taxes on it is key and being able to do more deals. Again, get inversion here and they get it 1. 9 billion of revenue, 600 million in ebitda, they pay 5. 3 million. Mylan shares up as you saw on that deal. Another inversion. And i like, for miles white, the excellent ceo of abbott, who created all of that value by putting abbvie and abbott, i think its a good deal. Look, theyre getting rid of 23 of the sales, 24 of abbotts profits. But this was a business thats out of its not what miles white likes. That stock should be going higher. They point out quickly, at least in the deal notes, a good piece by jpmorgan, they do not want to be a longterm holder. All you need to qualify for inversion is they own 21 of it at close and then abbott is going to dispose of that stock. Its phonier this tax law. Im not saying miles whites abbotts Great American company, im saying that this kind of thing is a loophole. Ill ask jack lew about it at delivering alpha, you hear the republicans, you knee comprehensive. This is the biggest joke on washington going. How much royalty do i owe you . I and about to use the term inversion i didnt know you pat ended it. Im going to wait to invert. Yes, why would you want to pay taxes. On the royalties. Youll do netherlands and then dublin . Looking at my jurisdiction. The bond pits now. Rick santelli at cme group in chicago. Take it away. Good morning. You guys hit on it, you dont need Economic Data, which there is none today. The inversion tax issue is its own economic fundamental for any of those who have questions to why were operating at such a neutral type speed, and jack lew, lets face it hes not going to give you unvarnished view how to fix it or why it isnt fixed but needs to be. Train day of tens, up on basis point. Twoday, challenging on fridays train days highs but hasnt punched through. Maybe the most important chart open it up, these are basically the highest excuse me, what a fraudian slip, the lowest yield closes in six weeks. Look at the yield curve. We know that its been mostly about flattening. I continue to look at one of the wider spread trades, 5s to 30s. 5 to 30 now under, under, what, 1. 70, around 1. 6, close to the lowest and tightest its been since september 09. Look at may 1st charts, may 1st on the tenyear, yes it came within several basis points of 4 , its moving lower. I dont know if theres lehman momented in europe but certainly saddlebaged with a lot of the structural issues keeping economy at a very low, slow speed. Lets look at etfs. The hyg, undera bit of pressure, makes me happy. High yield or junk rates the ctf represents should be moving higher but the more Investment Grade reflected by the lqd seems to be looking for a bottom like the tenyear complex. And the last chart is june 1st chart of the euro versus the dollar, hovering solidly but tightly above 136, the notion looking for bad news to sell a continence currency, euros the best argument not to. Carl, back to you. When we come back, boeing ceo making news across the atlantic at the air show. A live report. Later on squawk alley, 11 00 a. M. Interview with reid hoffman, cal ripken jr. , good show. Dow up 137, new alltime intraday high. The same 14year high for nas 100. We do . I took the trash out. I know. And thank you so much for that. I think we should get a Medicare Supplement insurance plan. Right now . [ male announcer ] whether youre new to medicare or not, you may know it only covers about 80 of your part b medical expenses. Its up to you to pay the difference. So think about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, they help cover some of what medicare doesnt pay and could really save you in outofpocket medical costs. Call now. With a Medicare Supplement plan, youll be able to stay with your doctor. Oh, you know, i love that guy. Mmhmm. [ male announcer ] these types of plans let you visit any doctor or hospital that accepts medicare patients. And there are no networks. You do your pushups today . Prepare to be amazed. [ male announcer ] dont wait. Call today to request your free decision guide and find the aarp Medicare Supplement plan to go the distance with you. Go long. He cadillac summer collection is here. During the cadillac summers best event, lease this all new 2014 cts for around 459 a month or purchase with 0 apr and make this the summer of style. You know. Theres a more enjoyable way to get your fiber. Try phillips fiber good gummies. Theyre delicious and an excellent source of fiber to help support regularity. Mmmm. These are good the tasty side of fiber. From phillips boeing and airbus upping the rivalry in england. Phil lebeau joins us with latest. Phil . Reporter carl, if anybody thinking thicks are slowing down in the airplane tri, they would be mistaken on the news coming out of here today. Airbus, announcing this morning anew wide body plane, a330 neo, a plane 14 more fuel efficient according to airbus per seat than the current a330, competing with 787 dream liner. People have said the market has had big business over the last several years excuse the plane plying over people have said is there enough demand . Talked with boeing ceo jim mcnerney, sees no slowdown in the demand for not only wide bodies but all planes. We anticipated that the middle of the big airplane market was where the action was, not at super big airplane or the smaller wide bodies but right in the middle. Thats whats happened. Weve got 1100 orders for dreamliners spread across dash 8s, 9s, 10s. Weve got the market covered and the market is there we think its great. Reporter meanwhile, lockheed martins f35 getting a lot of attention, not because its flying but its not flying. It was scheduled to fly today. Of course it has been grounded since the engine fire in florida in late june, as a result lockheed martins f35 has not made its public debut here. The ceo told us today, she is optimistic that by the end of the air show, over the next week and a half, we will eventually see the f35. Were certainly looking forward to the opportunity to see that f35 here. Its a unique capability for u. S. Government and allies around the world. Were in a development program, were in the midst of dealing with a particular issue but like any Aircraft Development program, we work through the issue get to the root cause and looking to see it here this week. Reporter shares of lockheed martin. Back to you. Frankly, its hard to hear out here as military jets flying overhead. Occupational hazard, phil. Great stuff all day today and more to come, phil lebeau. Stop trading with jim. Not only a fresh record high for the dow, best day since may 21st. [ male announcer ] if you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end july 31st. Share your summer moments in your mercedesbenz with us. Offers end july 31st. Thats why i always choose the fastest intern. R slow. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. Time for cramer and stop trading. We havent talked about the trw deal, looks like its going to happen. And the moneys now going toward leer, lear corp, leer seating the big grab to own a piece of the car and lear has been a very good stock but so at trw, this could be next. I thought make magna. This is an inexpensive stock, ive been trying to figure out how to do it for a segment for mad money i didnt want to let the opportunity pass up. Lear is next. Whats on mad tonight . Were going through some of the whiting kodiak deal, that is very, very important. Also going to talk about a name that is breaking up, i think broken up because of hedge fund pressure. They succeeded with another one recently that we talked about and had the ceo on, and ive got to tell you, it was real. Keep an eye on record setting market. Dont go away. [ male announcer ] we know theyre out there. You cant always see them. But its our job to find them. The answers. The solutions. The innovations. All waiting to help us build Something Better. Something more amazing. A safer, cleaner, brighter future. At boeing, thats what building Something Better is all about. Take them on the way you always have. Live healthy and take one a day mens 50 . A complete multivitamin with 7 antioxidants to support cell health. Age . Who cares. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back to squawk on the street. Road map begins with citi, the bank beating on the top and bottom line, announcing 7 billion settlement. The markets in rally mode. Dow hitting new intraday high, this as david kostin raises target for s p 500. The ceo of air lease joins us live from the air show as the Company Signs a very big order. Lets start with the marketsen as i mentioned rally mode. The dow up 125 points in the early session here as s p 500 up half a percent and nasdaq up more than half a percent. Flurry of m a activity, perhaps igniting animal spirits since last we the worst week for stocks since april. The top dow component components, jpmorgan, Goldman Sachs, visa, ibm, boeing making a splash today. After citi numbers and m a, how many pots can david have boiling at one time . Did you work this weekend . I did a bit yesterday, yes. We havent gotten one of the bigger deals, tobacco, lorillard purchased by reynolds, on track from what i hear but not today. As you might imagine, given not just reynolds and lawyer ore ri lards and imperial tobacco, a lot of things to work through. Expectations its on track for announcement in near term. The return of the megadeals and tax inversions. Tax inversions. Start with citi. Financials in the lead. Eric holder set to begin his News Conference announcing 7 billion settlement with citigroup to resolve the governments mortgage probe. Kayla tausche here with more on all of that. The bank is trading higher right now. It is because of markets trading being better than expected. But it that is settlement marring a positive picture for citi group of the payout, 4 billion straight to the doj. Consumers by the department of housing a housing a housing and urban development, 2. 5. Citis not pay taxes on 3 billion of that. So thats going to be a point of contention, you have to imagine with critics of the banking industry. Now as i said, that marred a positive quarter for the bank. They did post the settlement 1. 24 on bottom line, wall street expecting 1. 05. Profits down 96 given the giant legal charge wall street not expecting this quarter. Citigroup offered 363 million. Doj volley of 12 billion. But when you think about marks, that actually is where the revenue picture did improve. Cfo in june said he was expecting markets revenues down 25 because of the volatility around russia and ukraine through the Second Quarter. Because that eased, he said on a media call moments ago, that improved. Revenues in trading down 15 . Europe hit the weakest. Thats whats lifting financials today. A lot of people expecting the Second Quarter to have been so bad for markets, it was going to hurt the banks across the board. But down 15 , that apparently better than expected. Good news. The International Exposures a big one when it comes to citi. Thanks for running us through the details. Lets get more insight on citi and the markets this morning. Key owneriearnings reports out, jpmorgan, Goldman Sachs. David katz with mate tricks assea advises are. Is this an inflection point. A surprisingly good quarter. Cautious on citi but todays earnings a nice step up, 7 billion settlement putting another overhang behind them. We prefer the jpmorgan more than the citi, we would expect citi to trend higher. Actually nicely higher over the next 12 to 18 months. What is it about jpmorgan that you like better than citi right now . We, as a firm, have a lot of financials and in order to have a lot of financials weave tried to focus on the lowest risk Financials Companies that have their act together strong, cap cal ratios. Sticking to the jpmorgan and wells fargo, stronger, better managed banks. You look since 2007, those were trying to focus on Companies Whose book values have grown significantly. Wells fargo book value up. Citi groups book value down more than 50 over the time frame. Citi seems to have its act together but not well run as some of the others. Thats enthusiasm going to extend to the regionals or not. We do like the regionals. We think of bbt, which is our favorite in terms of the regionals, going to have an okay quarter but poised to do better over the next 12 months. The Second Quarter earnings in aggregate okay to modestly better. Dont expect it to move the needle and dont expect it to move the stocks in aggregate but as people look toward the fed raising Interest Rates and the economy picking up steam and loan growth picking up the financials which have done nothing over the First Six Months of the year poised to be a leader in the next 6 to 12 months. What we saw of wells fargo friday optimistic when it comes to the broader economy, take out mortgage and housing activity, loans up for autos, for other parts of the economy. I would think that that would benefit the regionals versus bigger guys which are way down by legal cost and trading. Well, the bigger banks right now have such a negative expectations that when they put these legal costs in the trading starts to get better we think they have upside. But we like regionals, toop wells fargo, one of the largest holdings, we think poised to do nicely over the next year. As people increase riskiness in the banking trade, wells fargo could lag the group a bit, because its done so well over the last 12 months. I wonder, now that we have figure out, 7 billion for citi on top of 13 billion for jpmorgan, related to mortgage and the financial crisis what does that mean for bank of america, trying to hammer out its deal . All of the things help size the ultimate settlements. We think bank of america going to pay a lot of money but manageable. Again, youre putting woes of 2008, 2009 behind them and thats a net positive for the Banking Group longer term. Citi, i would think, has outstanding legal issues, still has that probe related to fraud in mexico and it also still has concerns about emerging markets. I mentioned russia and ukraine on the call today. Youre not ready to jump in here . Were not. But we expect it to be higher. The reason were not ready to jump in, focus on lower risk financials we can own a number of them rather than just put a bet into one or two. Got it. Jpmorgan, wells fargo. Thanks for the perspective here. Meantime, all of the biggest names in aerospace and defense at the air show this morning. Both airbus and boeing courting our next guest for a big order. The winner, airbus. Air lease the launch customer for the a330neo, 25 firm orders. Phil lebeau with another first on cnbc interview with one of the deans of the industry. Phil. Reporter a man who the airbus ceo himself, carl, said, if steve says its good enough for selling a thousand, im going to do it. Youre joining us, ceo of air lease corps. Give us perspective as the launch customer for the new a330neo. Why do you want to be in that space so bad . The largest component of the wide body market is 250 to 350 seaters that can go anywhere from 2,000 to 5,000 miles. Thats about 80 of the wide body market. You brought up a great point, people are losing sight of the fact the aircraft age around the world is still very high. Yes. Planes that youre ordering now, how old are planes that theyre going to replacing. Anywhere from 18 to 25 years old. With almost 100,000. Yes, 100,000 flight hours. When you look at that, in your opinion its a nobrainer in terms of fuel efficiency . Absolutely. Fuel efficiency, lower maintenance costs, rely ability, a host of Economic Issues come in to play. Weve talked with a number of market experts and investors, and i hear this all the time cov offing this industry, close to a top. Guys cant go stronger much longer. Youve got to scoff at that. The Global Airline traffic grows about twice the times of gdp growth. So this year there will be 3. 5 billion passengers flying Airlines Services throughout the world. And so, 5 or 6 modest growth, the sfri needs over 1,000 new planes just to replace and keep up with traffic demand. Hear people say youre close to a top, investors say that, what do you say . Aviation is a dynamic business. Its always grow, its a matter of how fast and how slow. Big day, carl. They are the launch customers for the new a330neo. Morbid in the wide body segment. Looking forward to more coverage and interviews. Janet yellen speaking to the new yorker magazine, saying easy money will be needed even after the u. S. Economic recov i. Cnbcs senior economic reporter Steve Liesman has more on this. Why did she talk to new yorker. Good we question. The market goes beyond, what did she say, but why talking at all, who is she talking to . First, yellen didnt make a lot of news in the article. Except to reiterate fed policy in her own words fed will stay lower for longer. Even when the headwinds have diminished to the point where the economys back on track, where its where we want to be, acquire unusually accommodative monetarypolicy. In touch with main street. Policies towards unemployment than inflation. Is it about appeasing the left while the fed moves to right . What i mean, with the article makes clear what everybody already knows, however, liberal or activist janet yellen may be shes the fed chair who has to normalize policy becoming the first fed chair to raise Interest Rates since 2006. Thats eight years. Its at least 61 regularly scheduled meetings, any fed chair hiked rates. When the fed does move, the biggest hue and cry comes from the left and maybe talking to new yorker could be a sign the biggest voler in ability on its left, it would like to move to right in coming years. More from janet yellen tomorrow, shes scheduled to testify before Senate Bank Committee 10 00 a. M. One question, not a great time to be talking about activist fed policy when the house meeting and talking about prescribing fed Monetary Policy making through rules. But, ultimately what i see this is talking to the left while effectively headed to the right, though in no particular hurry. Interesting triangulation. See how that works long term, steve. Steve liesman back at hq, thanks a lot. The owner of the Sacramento Kings and ceo of Tibco Software joins us live. My mother made the best toffee in the world. Its delicious. So now weve turned her toffee into a business. My goal was to take an idea and make it happen. Im janet long and i formed my Toffee Company through legalzoom. I never really thought i would make money doing what i love. We created legalzoom to help people start their business and launch their dreams. Go to legalzoom. Com today and make your business dream a reality. At legalzoom. Com we put the law on your side. The street. Stratus share, stock moving higher on news home depot will sell 3b printers in 12 stores to start at least beginning toepd first time home depot offered these printers in its stores. You can see shares off the session highs but up a percent and a half on todays trade. Back over to you guys. Thanks so much. Big milesteone for one tech company, tibco. Fresh ringing the opening bell, vivek ranadive, found somewhere ceo of tibco and owner of the Sacramento Kings. Welcome back. Good to see you again. Good to see you. 15 years, quite an accomplishment. Of course brings to mind some of the challenges you have short term, guidance recently has been relatively weak, investors getting agitated. Walk us through where you think you are, what challenges you have against you. Carl, weve had challenges before, 15 year agz we had finished 50 million year. Weve grown 20fold, over 1 billion company. We think our best day as ahead of us. World is transitioning from slow data to fast data, tibco is the platform. Its an internal issue, some people complain youre distracted by the team or do you need the market to change somehow . No, weve made adjustments in the past. Much of our business is directed the low end and we need to build a low touch model. We have absolutely the best products. And so we have to find ways to get them to our Customer Base. To carls point, we see you all over the place when it comes to the nba and the Sacramento Kings how many can you reassure investors your focus is on turning around the company, tibco, and not just on the nba . The nbas a big opportunity for me. So we just closed a 4 million deal with a basketball team. And my experience with basketball is really a software experience. Basketball team is a social network on the one hand, and its got perishable inventory on the other. Thats exactly how every Company Thinks of itself now. Whether selling basketball tickets, airline tickets, banking products, consumer electronics, every business thinks of itself as a social network perishable inventory and tibco has the fast Data Platform to connect those tibco is the last defense to prevent that from happening. Transition from subscription revenue, does the street have a good handle yet . Its starting to. Well do about 20 of our software product, revenue next year from subscription. And what i love to do is im a software salesman, thats my passion. Where that is number headed . Whats the target . In terms of the target on subscriptionbased revenue. This year, about 9 of our revenue will be subscription based. And about 20 of it will be subscription next year. More importantly, if you look at our time based revenue, which is a combination of maintenance and services 75 to 80 of total revenue will be time based. Owner of the kings, what did you make of fridays announcement . Were you surprised . How does it change the dynamic eastwest. Talk about everything that occurred to you. Dpirs of all, the clear statement life is bigger than basketball and lebron made that statement. It also tells you about the importance of sport and basketball in the world today. Basketball, the arena, which is the 21st century communal fireplace, has the ability to transform an entire city and were doing that in sacramento. Youll see that in cleveland. Im impressed with the way lebron handled. His essay was fantastic. On the contract, something wrong with a salary cap, caps 21 million for a superstar that adds so much to a team and a city and franchise . I dont think so. As you know, its twoyear contract. And the tv contracts are going to be renegotiated. So lebrons a smart man. Im sure that hell do even better in the future. Yeah. 31 favorite to win it all. Do you think thats likely or is he sort of a home room teacher of sorts with the young talent and coach . Its going to be a process but hes the greatest player of his generation. And so he can have that kind of impact on the team. But the western teams are not sitting still. Were work hard to get there as well. Please come back. Congratulations on 15 years. Thank you, sir. Vivek ranadive joining us from tibco. How about the New York Times cover on saturday . With lebron and the transakz. On the plain dealer front page. Tequila made famous by entoura entourage has a new owner. Talking about the deal and what is next for the brand. And the spirits industry. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. My mom works at ge. Hi, Credit Report site andour i have a problem. I need to speak with your fraud resolution department. Ugh, we dont have that. What should i tell him . Just make that super annoying modem noise. shuuuuuuuh. Zzzzzzzz. De ee. Dong. Shuuuhh. hello . Not all Credit Report sites are equal. Classic. Experian. Com members get personalized help plus fraud resolution support. Join now at experian. Com. With enrollment in experian credit tracker. Not a bad way to start the week for the bulls. A big week for us at cnbc. Along nit institutional investor, the delivering alpha takes place wednesday, biggest names in business and politics on hand. Kate kelly with a preview. The day starts with treasury secretary jack lew, followed by the worlds biggest investors including ken griffin, nelson pelts. John paulson, manager of the 2 billion firm paulson and company the grandfather of the famous subprime short. Paulson made news last year revealing he had done a 180 and snapping up u. S. Residential properties in large numbers. He also recommended a primary residence as single best investment in individual could make. Afew Housing Starts up 50 from the trowel and that created a lot of excitement. However, the peak was 1. 8 million, and we estimate you need about 1. 2 million new singlefamily homes a year to meet population growth and replacement demand in the u. S. While up 50 for the lows, were still only half of what we believe is the longterm trend. A few things have changed since then and at least one notable housing buyer, blackstone group, thinks the big opportunity to invest is passing right now theyve slowed their pace of investment. Mortgage rates are lower than last july when paulson spoke and Housing Starts are still a ways off from where paulson thinks they can meet demand. Well see if he still feels as strongly as he did a year ago. M a, paulson established himself 20 years ago this month as arbitra arbitrageur and the fund is one of the best performers so far. Well get his take on the landscape wednesday and perhaps advice on how to make money there. Well see what the market is in the near term. Kate kelly back at hq. Goldman sachs says s p lit will hit 2050 by the end of the year. Dows up 128. [ male announcer ] if you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end july 31st. Share your summer moments in your mercedesbenz with us. Were changing the way we do business, with startup ny. Weve created tax free zones throughout the state. And startup ny companies will be investing hundreds of millions of dollars in jobs and infrastructure. Thanks to startup ny, businesses can operate tax free for 10 years. No property tax. No business tax. And no sales tax. Which means more growth for your business, and more jobs. Its not just business as usual. See how new york can help your business grow, at startup. Ny. Gov thats why i always choose the fastest intern. R slow. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. Markets starting the week on a high note. Dow at fresh intraday high. Almost every component in the green. One of best day for the market since may. Goldmans chief equity strategist david kostin lift his yearend target to 2015. 12month target 20. 75. The market attractively valued. Sam stovall with s p capital iq and paul hickey. Good morning. Good morning. Sam, youve done your bit in terms of raising your target. How do you feel now that others are following suit . Its a sigh of relief on both count youpz hate to be the only one out but you like to see the market doing what youre expecting it to be doing. Now the question for how long. Part of kostins rational, its that bond yield, yearend target only 3 . Actual multiple of the market, paul, he says, is rich when you consider history. How do we square that circle . Look at multiples, weve season expansion last year into this year. Thats the only part of the bull market where weve seen the multiple expansion. You look back at prior bull markets, you know valuations are above average, valuations typically expand in bull markets and based on those prior experiences there is still believe it or not more room for multiple expansion before we would be overly concerned. How close to the beginning of the tightening cycle are you comfortable being invested . I think investors should be comfortable being long this market for the remainder of the year, at least. Were looking to like second, Third Quarter of next year for potential hikes in rates. But lets see how the economy and things play out between now and then. The feds forecasts have been notoriously optimistic for the past several years and reined back in expectations. Lets see what happens Going Forward. Whenever its time to doubt the bull market, theyve been proved wrong the last five years. We dont see any reason to doubt it Going Forward this year. Sam, higher Interest Rates is potentially a scary pros special, if you look at what has been one of the defining features of the last fiveplus years of the burl markpull mark. Should investors be worried about higher Interest Rates. Its a good question higher Interest Rates are likely to come. A year from now, well probably see the yield on the tenyear note averaging 3. 2 in the Second Quarter of 2015. Yet, if you look to history, what we find is that the yield on the tenyear note has to approach the 6 level usually what i call the line in the sand before the average Monthly Price change for the s p is negative heading up to that level, it is positive but on a decelerating rate of pace. Investors basically say, where else am i going to go . Also, if rates are raising its because the economy is improving. So will earnings. The problem there, paul, is i mean 6 could happen quicker than you think if in fact janet and company are behind the curve . Yeah, one of the things we looked at beginning this year is one of the worries that you have, worried about things even if youre optimistic. But would the fed find themselves behind the curve . At this point, after the data weve seen this year in the u. S. , we dont think theyre going to fine themselves behind the curve this year, at least, especially after the data weve seen out of europe last year, the Economic Data i mean last week was horrible. I think thats maybe one thing to worry about with the industrials reporting this earnings season, to see how is the slowdown in the european Economic Data going to impact their results and, more importantly, outlooks into the Third Quarter. Sam, since were on the brink of getting a boatload of corporate earningses, Something Like 10 , 12 in the next week, s p 500, wall street estimates, 5 , 6 growth, theyre sounding optimistic. Is that a worry. Were starting the quarter at a higher bar level than last quarter, yet s p capital i. Qui consensus estimates around 6. 5 and usually the actual number comes in anywhere from two to four Percentage Points better than estimates. We could end up with a number that approaches 10 . Wow. Right now the markets feeling euphoric. Good to see both of you. Interesting read from goldman today. Gold having not a good day. Down almost 30. Jackie deangelis. A big move for gold today, gold prices hovering around 1307 level, close to 1300 again. Traders saying that there are a couple of issues here. First, strong stocks getting people to sell gold and rotating back into the stock market. Also the fears about overseas subsiding a bit. Portugal seems to be okay, middle east ceasefire with israel and hamas also on the table here. This move in gold lowers causing miners to fall, you can see, barric, newmont, lower. If we cross through 1300, a big technical level for gold there it had been on a strong run. Sothebys and ebay formed a new partnership to stream sothebys sales worldwide. Robert frank with more on that. Is this a game changer for the industry . It really could be. Im calling it sothebys 2. 0. Its the second time that sothebys teamed up with ebay to have a big push. E bay and live stream the sales for lower value ims like wine, jewelry, photographs. Sothebys Getting Better Online Auction technology and a chance to broaden its base to ebays 36 million buyers. What ebay gets out of this the cachet of the sothebys name as it tries to sell more highend goods. These two companies did have a partnership in 2000 that collapsed after three year because of a lack of sales. But they say this time is different now. Online auctions are one of the Fastest Growing segments of the art world and sothebys online sales grew 36 last year and it sold a piece for 3. 5 million this spring. Christies the undisputed leader in the space, having sold 9. 6 million Edward Hopper painting in december. Dont expect multimillion dollar picassos to be showing up on ebay. Sothebys will not stream the big contemporary sales, where you break the records and half of sothebys lot sold last year went for less than 100,000 but the most profitable. This is in keeping with the strategy laid out by dan lobe who is on sothebys board. David faber reported last year he wants the company to push online to catch up with christies and of course to broaden its Customer Base to tap the emerging, younger collectors. I have a question. Robert, when you show up at sothebys or christies or phillips they charge you an off the top fee 20 , 25 just for being in the room on top of whatever you pay. Do we know any fees charged here . What sounds like ebay will take a percentage cut of any sales, but i think thats. Im not sure how the buyer and seller premiums will work. Those are negotiated by the auction houses on one to one base cnbc. As far as this deal, ebay will get a percentage and thats how theyll make money from this. Certainly interesting. Well see what else happens in the industry. Ratings for the world cup just in. Julia boorstin has more on the numbers. Yesterdays germany versus argentina fifa World Cup Final the third highest metered market rating on espn networks. 9. 7 overnight rating up 13 from the overnight numbers from the 2010 final and all 64 matches up 29 from the matches in 2010. National ratings and viewership numbers in more detail this afternoon. Judging by the fact i watched, you knew it would be good ratings. A big gulp of tequila, taking control of the brand for 100 million. The founder and chairman joins us live at post nine to discuss after the break. With all the opinions about stocks out there, how do you know which ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of fidelity investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Take them on the way you always have. Live healthy and take one a day mens 50 . A complete multivitamin with 7 antioxidants to support cell health. Age . Who cares. But ive managed. I got to be pretty good at managing my symptoms, except that managing my symptoms was all i was doing. When i finally told my doctor, he said my crohns was not under control. He said humira is for adults like me who have tried other medications but still experience the symptoms of moderate to severe crohns disease. And that in clinical studies, the majority of patients on humira saw significant symptom relief. And many achieved remission. [ female announcer ] humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal infections and cancers, including lymphoma, have happened; as have blood, liver, and nervous system problems, serious allergic reactions, and new or worsening heart failure. Before treatment, get tested for tb. Tell your doctor if youve been to areas where certain fungal infections are common, and if youve had tb, hepatitis b, are prone to infections, or have flulike symptoms or sores. Dont start humira if you have an infection. If youre still just managing your symptoms, ask your gastroenterologist about humira. With humira, remission is possible. Ask your gastroenterologist about humira. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Avion went public today. It did . If not for my selfish desire to prove i dont need you, if we didnt sell the stock i would have made almost 4 million. Whats worse, you would have made almost 15. Jesus. Unbelievable. Sorry, vin. Im so stupid. Youre not stupid. Youre smart for getting me into the tequila thing. Im smart for not [ bleep ] listening to you. What. I never sold. Made famous by hbos hit series entourage and backed by aols Tim Armstrong and coach chairman luke frankfurt, the spirits brand tequila avion has a new owner. Shelling out a reported 100 million for 84 stake in the company as part of its plans to expand its u. S. Presence. Joining us for a first on cnbc interview, tequila avion founder and chairman, ken austin. Good to see you. Great to be here. How did the deal come together. In 2011, we were doing really well and as you as a entrepreneur when you do well it gets hardrd, it doesnt get easier. We joined up with perndo and saw them as a Minority Stake in 2011 and created the relationship. The brand has taken off since then and we got together and decided it was time for have more skin in the game, and they deserve it. Now that you have the size and scale of i pernod. Were in the second inning, the tequila category is explode, avion as a brand showing incredible growth weep have to continue to increase our distribution and build the Brand Awareness more and more every day. And well go global. If youre in the second inning, why sell . Well, pernod had rights to acquire more. We did it sooner than we thought. But it was really the situation where it felt right, the deal was right for our stakeholders. Im still in the deal. And you know, it just the stars were lining up properly and we think the world of the company and they wanted to do this and we thought it made sense. Talk about how the whole thing began. Its a great story with buffett. An enormous hole, its amazing no one had done this, no strong number two anywhere in the world. Totally the drinks business to break through, its handtohand combat every single bar, youre dealing with that in many cases an individual entrepreneur, just like we are, Liquor Stores the same thing. Its really tough. Breaking through the odds are almost zero in the drinks business. Lots of entrepreneurs try and fail, like many businesses but spirits are tougher. For me i thought we could break through. We had a lot of good friends out there, you named some investors, based on us being the marquis jet guys as well we took care of a lot of people and felt our network of people if we made the right product, the right liquid in the bottle, they would come, and they have in droves. So its a tough one but we did crack the code. Whats driving the demand for premium tequila. You see premiumization, we look at whiskeys, bourbons, vodkas, consumers are gravitating towards higherend products. A crafted small batch thats the future and young people dont have to deal with the havevagrai did growing up drinking tequila. Was much different then. Are they drinking it straight . Drink a margarita, to have a avion margarita its a dollar more versus using a lowend poor quauk quality tequila. 150, the Pappy Van Winkle of tequila, people coming out in droves looking for sipping tequila because its that good and aagave product delicious. Ive talked to guys who have the small craft business. The hoard all of the lumber, does the smalltime guy have a chance against the pernods of the world . Of course they done the entrepreneurial opportunities are always there and always will be there. You have to burst your hump. Theres wood out there. You have to work harder. Nen who uses that as an excuse is not a entrepreneur. I assume it helped elevate the brand. Out of the gate entourage was amazing. There was negative, too. People thought it was a fake tequila. I thought it was like bubba gump shrimp. People thought it was fake. They thought couldnt be good, it was made for tv when it wasnt. I was working on the profile for years. With that said i wouldnt change a thing. I became a great friend of his and he decided to put it in and got nothing for. Amazing story. Friends doing things for friends. Thats still alive. Friends take care of each other. Do you, ellen, armstrong, kenny, have a party . Can we go. The answer is you will be invited to the party well be having a party. Lots of shots . Lots of shots. Were looking forward to that and looking forward to continue to build the brand. Its monday morning. The deal announced friday. Im back to work. My wife said get out of the house. Well continue to grow this. Theres growth in margaritas with corona bottles. We see a lot of. As long as its avion, im good with us. Ken austin, the founder of avion tequila. When we come back, linkedin founder and chairman, reid hoffman will join us top of the hour for extended interview, a lot to talk to him about tech, social networking and latest investments. Dows up 133. Back in a second. [ male announcer ] if you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end july 31st. Share your summer moments in your mercedesbenz with us. Offers end july 31st. My motheits delicious. Toffee in the world. So now weve turned her toffee into a business. My goal was to take an idea and make it happen. Im janet long and i formed my Toffee Company through legalzoom. I never really thought i would make money doing what i love. We created legalzoom to help people start their business and launch their dreams. Go to legalzoom. Com today and make your business dream a reality. At legalzoom. Com we put the law on your side. Could help your business didavoid hours of delaynd test caused by slow internet from the phone company . Thats enough time to record a memo. Idea for sales giveaway. Return a call. Sign a contract. Pick a tie. Take a break with mr. Duck. Practice up for the business trip. Fly to florida. Win an award. Close a deal. Hire an intern. And still have time to spare. Check your speed. See how fast your internet can be. Switch now and add voice and tv for 34. 90. Comcast business. Built for business. Welcome back to squawk on the street. Check out shares of gt. This stock is moving lower after analysts reported its check of the companys sapphire supply chain to apple indicates poor yields, which is limiting supply and posing a risk to gts 2014 guidance. You see the stock off its lows but still down almost 4 on the days trade. Back over to you guys. Thanks, tom. Now lets get over to chicago, the cme group, rick santelli. Good morning, rick. Morning, sara. Thank you. Id like to welcome our guests this monday. Richard farr, thanks for taking the time, sir. Thanks for having me on, rick. Richard, a turning point in the market every month is nonfarm payrolls number. You have a chart that hopefully were showing right now that shows parttime versus fulltime. Why dont you elaborate recent years . Sure. Well, this is a blip for sure of the roughly 300,000 jobs that were created last month according to the household survey. When you look at the establishment survey, of those 300,000 jobs, 800,000 were parttime which means there was actually a loss of roughly 500,000 jobs, fulltime jobs. So far it looks like a blip. So, you know, i wouldnt raise too much of a red flag. When you look at other things that are happening out there in terms of youre not seeing really any material increases in average Hourly Earnings or hours worked. It starts to tell you that there may be a trend in the economy of a shift from fulltime employment to parttime, and theres obviously some reasons for that with the obamacare. Well, you arent the only one that seems to have gravitated toward scrutinizing this issue because this morning in the wall street journal, there was an oped by Mort Zuckerman titled the fulltime scandal of parttime america. And i want to pull a quote out of there that isnt necessarily about the fact that we had 800,000 parttimers and 523,000 loss on fulltime, but its along the same topic so lets put it up on the screen. Since mid2007, the u. S. Population has grown by 17. 2 million according to the census bureau, but we have 374,000 fewer jobs since november. 07 peak and are 10 million jobs shy of where we should be. Do you agree with his assessment there, richard . Well, yes because one of the things youve got to factor in, you know, a lot of people are saying hey, jobs are back to where they were, you know, postcrisis. But you have to remember the population has grown substantially over that amount of time. So you have the same amount of jobs while you have a Larger Population is not necessarily a good conclusion to whats going on. We need far more jobs. And one of the things that we track is population growth relative to job growth. And its only been the last few months that job growth has been starting to beat population growth. When we see data like we saw last month where its all coming from parttime work, thats obviously a very big concern. All right. Now, lets move to a more macro view. Many including myself many years ago thought it was jobs, jobs, jobs that would make the ultimate difference in reaching escape velocity for the economy. Is the market so smart that its discriminating and dissecting the issues of fulltime, parttime quality of jobs, or is there Something Else going on, keeping the economy in first gear when at this point we should be in much higher gears . Well, rick, we think there is Something Else going on. If you look at demographics in this country, 37 of the country doesnt work anymore. So thats a large percentage. Its a multigenerational low in participation rate. So when you think about the economy, you cant just think about jobs. You have to think about the conditions that people are no longer working, whether theyre aged or so forth. And one of the things that we have, you know, been stating all along is Monetary Policy could be a headwind, actually, for people in that category because as the fed tries to create inflation, well, if you dont have an income, thats not necessarily a good outcome for you. And a larger percentage of the country now falls into that category than ever before. Thank you so much, richard. And a very interesting spot to end, knowing that janet yellen is going to spend one day on each side of the aisle in d. C. Tuesday and wednesday. And well talk again when we see or hear more from janet yellen, head of the Federal Reserve. Thanks, richard. Sara, back to you. Timely debate, as always. Still ahead, the cofounder of patron spirits. Live here at post 9. You wont want to miss it. Were back after a quick break. [ male announcer ] we know theyre out there. You cant always see them. But its our job to find them. The answers. The solutions. The innovations. All waiting to help us build Something Better. Something more amazing. A safer, cleaner, brighter future. At boeing, thats what building Something Better is all about. At boeing, thats what building Something Better is all about. He thought it was the endn for his dof the conversation. D. She didnt tell him that her College Expenses were going up. Or that she maxed out her card during spring break. When the satellite provider checked his credit, he found out his daughter didnt pay her bills. But hes not worried. Now he checks his Credit Report and score at experian. Com, allowing him to keep track of his credit and take a break of his own. Experian. Live credit confident. Lets take a look at the major indices because we are seeing stocks take off here on this monday morning. Sharp rally across the board. The dow up 134 points as we speak. S p 500 up a little more than 0. 5 . And the nasdaq up 0. 7 . Plenty of positive catalysts that people here are talking about. Janet yellen, the Federal Reserve chairman, talking to the new yorker magazine about easing policy even after the end of quantitative easing. A flurry of merger and acquisition activity perhaps igniting some good vibes here on wall street. A sign of confidence that ceos are making deals. And we are coming off a down week. Last week was the worst week for u. S. Stocks since back in april. One area, carl, just want to point out getting hit are the golden miners, and that is a sharp decline in gold worth watching. Hard to ignore the impact of financials this morning, sara, after those citi numbers. After trading was down but not as much as some expected, and thats why citigroups with the top of the list along with a bunch of other financials, Morgan Stanley to name just one other. And well get to digest a few later on in the week. Jpmorgan, Goldman Sachs among them. Busy week. Good to see you. See you soon. Good morning. It is loom 8 00 a. M. In cupertino, 11 00 a. M. On the east coast. Squawk alley is live. And welcome to squawk alley. Big day for the markets. Dow setting alltime interday highs. Best day for the dow since may 21st. Look whos back from a little vacation out west. Jon fortt and john steinberg, the two johns. Good to see you both. A lot to get to. Lets get a quick check on those markets. Dow, new intraday alltime high. S p, 1978. David costen speaking of the s p, raising his target for year end to 2050 from 1990 and interesting targets in the years following that. Apple also a big story, getting an upgrade ahead of quarterly earnings. Were going to talk to the analyst, ben reitzes over at barclays later this hour. This is an interesting st