Transcripts For CNBC Closing Bell 20140625 : vimarsana.com

Huge change. Talk about it with National Economic Council Director jeff zients. Also, media broadcasters winning a Supreme Court ruling against streaming Video Service aereo. What that win means for the Media Industry and for consumers is coming up. Lets see whats happening in the markets right now. The dow, you know, yes, we had that horrible gdp report, a pretty bad durable goods report this morning as well, but the markets have taken it in stride. Weve bounced back from yesterdays decline. The dow is up 30 points. Theres the nasdaq up 23. Its up 0. 5 right now. Thats the best performer of the major averages so far today, and were even moving higher into the last hour and the s p is up seven points right now. Lets talk about it in our Closing Bell Exchange today with Jack Bouroudjian from index financial partners, david from mainstray capital management, susan fulton from fbb Capital Partners and our own Rick Santelli joining us as well. David, as we go into the summer here and the market continues to incrementally go higher here, youre advocating just, look, put your eggs in all the baskets right now. I mean, diversify as much as you can just in case, right . Yeah. You know, 2013, it was easy. We bought the high momentum stocks, we bought small cap growth, biotechnology. You could really throw caution to the wind and do very well. This year weve pulled back our horns and really have looked at this more as we want to hold our own here, be careful, be diversified, largecap value, smallcap growth, broaden across sectors, diversify internationally, but our favorite sector domestically is still the Energy Sector. Okay. Susan, and were actually going to talk about some of the Energy Policy changes that are, that arent happening in just a little bit, but in the meantime, you know, we get these reports about how the u. S. Economy did in the First Quarter. Weve gotten data since then that show perhaps things are looking a little better. I think a lot of people, though, look at the selloff yesterday, wonder if that was part of a deeper correction here . Whats your take . Well, were very concerned about deflation. Were not concerned about inflation. And one of the reasons is that we dont see the United States being able to raise Interest Rates, and thats because europe has now created a universe where there are zero Interest Rates. And so, if youre a european banker or a european that wants to invest money, you can get, you know, 200 basis points over what you can get in europe just by investing in treasuries. Thats going to not let this yield curve go up much. So, stocks are about the only place youre able to get income. And americans, as weve reached the baby boomer going into retirement today, theyre very, very driven by income. Jack bouroudjian, youre looking back at Janet Yellens comments last week, very dovish. Maybe she new something about the economy, the firstquarter number we were going to get this week, right . Yeah, bill, absolutely. In fact, everybody was questioning why she was so dovish last week. Well, this is the reason, because were seeing this number. And remember, lets keep it in mind, this last revision is what i call afterthefact analysis. You know, in fact, if anything, it encourages me that were going to see real good numbers over the next few months. But these last couple days have really been about the end of the quarter. This window dressing effect today, in fact, is the last day to be able to trade stocks and have them settle in june, but weve picked up on a bit of a pattern and Everybody Needs to know this. We seem to see strength going into the end of the quarter, and then about a 2 or a 5 correction right after that. Now, its happened for the last three or four quarters in a row and it seems to be a pattern thats developing and one that over the course of this bull market might be repeating itself over and over again, so lets keep an eye on that. But lets keep in mind that any pullback is absolutely a buying opportunity in what is still a secular bull market. And i wonder, john rutledge, what your view on the Energy Sector is. I saw im sorry, we dont have john. Let me, david, go back to you on this, if i can for a second. You like the Energy Sector. A name like valeros getting hit today. Its still down 8. 5 . Perhaps an overreaction to what is coming out of the Commerce Department on export policy, perhaps not. Where do you see opportunity across this sector . I think that it is an overreaction to the announcement that there is the condensate form of crude oil thats going to be able to be exported as early as august. It is a symbolic change in policy that has been in place for four decades and it could be opening the door to broader exports of oil, so, thats affecting wti prices and affecting domestic refiners. But overall, when we look at energy globally, the longterm prospects for Energy Stocks are very good. We look at these developing nations, china, india, countries in africa, where people are buying more and more petroleumhungry vehicles. And until a cheaper alternative is developed, fossil fuels are going to power those engines for years to come. David, just to be clear, though, does your bet on the Energy Sector imply higher prices that u. S. Consumers are going to be paying in the months to come . Well, its the the Immediate Impact of oil as an input to those refiners could be an issue for higher prices in the months to come, but we think in general, we looked at the integrated oil companies, we look especially at e p, exploration and production, the shale oil revolution, fracking and everything, horizontal drilling, everything thats going on now, what that means for the u. S. In terms of the energy infrastructure, the Overall Energy complex. Thats why we like the Energy Sector broadly. Okay. And we think that overall weve got strength in that sector Going Forward. And geopolitical events, iraq, only causes maybe a rush to a safe haven sector and a Broader Market selloff, if it is because of uncertainty because of the geopolitical events. Rick, i know the bond markets forwardlooking, but do you think that the mystery of the low yields along the curve there in part was because they sensed what the First Quarter did or didnt do in terms of growth there . Yeah, i think its that, but i think the answer is more simple. I think whether you call this old data or not, and i challenge anybody on this panel or any other panel to show me any data that they can release in june thats based on july, august or september ahead of the data we use in the markets alone, just a question of how old. We dont have what we should have, considering where Interest Rates are, where the stocks are, where half the economy is. So, i think the real answer is were underperforming, and i think thats what the bond sensed. And i think the market senses that the underperformance is going to go on, and i think the volatility you see in numbers and blame weather, blame whatever you want, but exogenous shocks are nothing new. The recession of the 70s was an exogenous shot over energy. It doesnt dismiss the notion, hey, how many times do we debate a bill where the stocks are not commensurate to the economy, but youre still cashing the check. If the weather is bad and you go in to fire employees, they dont get to cash a check. Rick, the flash data for june for both u. S. Manufacturing and servicing industries that pretty much covers everything has been, as you know, pretty strong. Yeah, but you know what, i love flash and i love all the feelgoods, the consumer confidence, and sometimes they correlate very well with the economy when you go back and do your beta testing for your models looking forward. But in the end, its really the hard and fast data like jobs and gdp that i find in my 35 years in this business are the ones youre supposed to pay the most attention to. And i think that we cant dismiss it. The jobs reports have been reasonably strong, too, though. Yes, they have, but the problem with the jobs numbers are that were not being honest about the true state of labor, whether its demographics, whether its how many people are out of work, whether the skill set of the people out of work more than 27 weeks is ever going to change come on, rick. Uhoh. Wait a second, you cant have it both ways. You have had an s p market thats gone up 200 points since february, all right . And whats happened to the bond market during that time . Its basically gone sideways. If anything, its misled investors, as ive said time and time again total return on the long end still better than stocks, though, but dont mention that. Come on, rick. Look, look whats happening here. Im coming. Where do you want to go . Id like to go to numbers. You have a generation of investors that are left out. The numbers right now, you have got Corporate America making more money than ever before. You have got yeah, yeah, now, too bad we cant say that to the people that live to the left of where we go home and to the right of where we go home. You and i know that theres a big disconnect between wall street and main street. And thats what ive been focusing on, jack, so welcome to my world. Well, thats not a reason to be out of stocks and lose purchasing power parity. I never said to get out of stocks, jack. Thats the problem. Never said to get out of stocks. Rick what im telling you is that from the standpoint of what Central Banks are doing, with the standpoint of how much debt is going on in this country, that the growth that we are trying to pay for in these absurd, catastrophic, strange policies doesnt seem to be worth the price of admission. Id agree with that. 2. 9 gdp. Last word from susan here before we go. Susan . I agree with rick. Well, thats a way to keep it brief and to the point. A concise final word from susan. Thank you all. Appreciate it very much. Thank you. Jack, as always, getting the blood flowing as we head into the final hour of trading. And i like susans point as well. A lot of people are investing in stocks as an income play these days. You bet they are. Look at the utilities and how theyre doing now. Exactly. 50 minutes to the close and we are seeing a rebound after yesterdays selloff. The dow is up about 30 points, a couple to the dow and nasdaq, too, as we watch volumes and volatility, a couple vols in focus of late. This mornings downward recession of the gdp for the First Quarter driven in part by a surprise contraction in Health Care Spending. How did the government misread this so badly . Well look at that coming up. Jeff zients, National Economic Council Director and assistant to president obama on Economic Policy will speak with us exclusively and well ask him about that. The other big story of the day, as you heard, the Supreme Court ruling against upstart aereo for violating broadcasters copyrights. Well look at whats next for the startup and what this means for broadcasters. Is there still a Business Opportunity using the Business Model that aereo has been using, maybe even for broadcasters . Well look at that coming up when kelly and i continue after this. [ female announcer ] we love our smartphones. And now telcos using hp Big Data Solutions are feeling the love, too. By offering things like onthespot data upgrades an idea that reduced overcharge complaints by 98 . No matter how fast your Business Needs to adapt, if hp Big Data Solutions can keep wireless customers smiling, imagine what they can do for yours. Make it matter. Yeah, citi mobile. Pay the dog sitter . Imagine what they can do for yours. And deposit that check . Citi mobile. Pack your bathing suit . Wearing it. Niiice bank from almost anywhere with the citi mobile app. A bit of a bounceback for the markets today after yesterdays selloff. The dow up 33 points right now. The nasdaq, technology has done well today, relatively speaking. Its the best performer of the major averages, while the s p is up 7 1 2 points right now, kelly. Now, shares of owners of tv stations gaining ground today on the heels of the Supreme Courts ruling against aereo for violating broadcaster copyrights. We should note, of course, cnbcs parent company, nbc universal, is among the companies opposing aereo in this case. Hampton pearson has more on this landmark decision out of washington today. Ham . Reporter Supreme Court majority, if you will, slamming the door on Internet Company aereo and really giving broadcasters and Cable Companies a kind of slam dunktype win. Now, aereo, we know, is available in 11 major metropolitan areas, including new york, boston and atlanta. It uses dimesized antennas to capture Television Signals and transmit them to subscribers for a fee over the internet. Today in a 63 ruling, the Supreme Court said aereo is violating broadcasters copyrights by taking the signals for free, not paying retransmission fees. Speaking for the court majority, Justice Stephen breyer wrote aereos system is, for all practical purposes, identical to a capable system. Both use their own equipment, both receive broadcast television programs, many of which are copyrighted. Justice breyer also went on to say, the decision has nothing to do with Cloud Computing, remote storage, dvrs or other technology. That could be a case for another day and another set of issues around all of this. Now, also, Justice Antonin Scalia speaking for the courts three dissenters basically said its up to congress to fix what he characterized as a loophole in the copyright law, reminding his colleagues that about 30 years or so, an earlier Supreme Court came within one vote of banning the vcr. Back to you guys. Hampton, thank you. And yeah, a lot of the Tech Community, by the way, seizing on scalias dissent, concerned, despite the Supreme Courts language, this could set a precedent against further innovation across this space, bill. And wed like to remind you, by the way, aereo is number seven on this years cnbc disrupter into list. For more on how much disruption aereo could still bring to television moving forward and what this ruling means for broadcasters future, lets bring in two key players in the story. Vincent sedusti is lynn medias ceo. They have a merge pending with media general that would create a company that would own 74 broadcast stations around the country. And gordon smith, of course, is the ceo of the National Association of broadcasting. Good to see you both. Thank you for joining us. Vincent, let me obviously, both of you will be telling us how pleased you are with the ruling by the Supreme Court. We get that, but im wondering, is there still a Business Opportunity to pursue here . Aereo was a growing concern here. The Technology Still exists. Thats not going to go anywhere. Vincent, would you pursue a Business Model like aereos, to go after those mobile customers out there . Yeah, its a really interesting conversation. The broadcast business has always provided a terrific amount of spectral efficiency in providing one to Many Technology with these big, tall towers in these markets, reaching a lot of people, versus cellular technology, which is a onetoone. So, i think as we look forward and think about the future of our industry, were very excited. Having been the original mobile providers, were very excited about the opportunity we could play. But we do differentiate that significantly from the aereo Business Model, of course, which we see simply as a company trying to profit without having to pay for this very expensivetoproduce and valuable content. Gordon, speaking of the future, that brings up Something Interesting about the past that i personally would like to understand. You know, this goes down to the fact that broadcast is a free signal and the right of who, i guess, should profit on that free signal, but is it a requirement . Is it a hard and fast rule that these broadcast signals be free . Or could Companies Move if they sensed a threat somehow, towards making people pay in other ways for this content, too . When you think about it, when we had cable and they were subject to copyright law, and then if satellite, when it came along, wanted to evade copyright law, they could have taken the same position as aereo, but what the Supreme Court has just decisively said is that if youre going to take copyrigh