Transcripts For CNBC Closing Bell 20140722 : vimarsana.com

CNBC Closing Bell July 22, 2014

Weve got an allstar team lined up to get you the numbers, and more importantly, what they mean for stocks in the broader market. Stay tuned in about an hour when the action heats up. An impact on tomorrow, without a doubt. You know the saying buy the rumor, sell the news . When it comes to bill ackman and his reported takedown of herbalife today, it was more like sell the rumor and buy the news. I mean, big time. His presentation didnt tank the stock, as expected, it did just the opposite. Herbalife is surging right now by 18 . Why does the market think that hes so wrong about this company . Were going to take a closer look at that. Its an intriguing story. It is. Now, lets look at where we stand in the markets. The s p 500 at 1,982 is currently three points away from trading at an alltime closing high. Now, the Dow Jones Industrial average not far behind. Its at 17,110. Its High Water Mark is 17,138 for the close, 17,151 for the intraday high. And finally, the nasdaq doing reasonably well today, in fact, outperforming the other two, up about 0. 6 or 26 points. Reacting to big news after hours yesterday on the earnings front there as well. Exactly. Lets talk about all of it in our Closing Bell Exchange with monica meta, rob morgan, jeff reeves, sam stovall and rick santelli, of course, from cnbc in chicago. Sam stovall, you get the word from my favorite line of the day regarding the market. You say the s p needs to rest, but not necessarily rest in peace. How are the earnings doing right now, sam . Actually, the earnings are doing quite well. S p capital iq consensus numbers now showing a 7 increase for the Second Quarter versus the 6. 6 gain expected at the beginning of the quarter. And if history repeats itself, we could end up seeing that number possibly even approach the 10 level, because the reality usually beats expectations by anywhere from 2 to 3 . Rick, i want to go to you on this. Yesterday we were talking a little bit about the tenyear, but its extraordinary to watch that yield go below 2. 5 . You have to think maybe thats a tailwind for housing, which, by the way, this morning had a pretty strong report. The market didnt Pay Attention to that, didnt really Pay Attention to the recent fed surveys. Maybe the cpis spooked, maybe its geopolitical. What do you think . Where do rates go from here . I think all the topics and sectors that you mentioned are kind of painted in to a boundary. So, yes, housing might not necessarily be reacting to the notion that were just a couple of basis points away in 10s from 13monthlow yields. 30year bonds are already there. But we were at 5 million existing back at the end of last year. It definitely is more than Interest Rates. And remember, onethird of all transactions are cash, so take the theory of low Interest Rates helping people who cant get credit, since that really isnt a main underpinning now. Thats where the headwind is coming in the economy, and all the other issues seem to make sense by looking at the yield curve. Rick, hang on one second here. Weve got some breaking news. Herbalife is now responding to bill ackmans latest accusation that the companys a pyramid scheme. Scott wapner has that now. After bill ackmans twoplushour presentation in midtown manhattan, one followed by herbalifes stock now having one of its best days ever certainly in six years. Herbalife says in part, once again, bill ackman has overpromised and underdelivered on his 1 billion bet against our company. After spending 50 million two years and tens of thousands of man hours, bill ackman further demonstrated today that the facts are on our side. They go on to say, among other things, we recognize that he is running out of time to make good on his bad bet against herbalife. Today is evidence that bill ackman will not succeed. So, these the first comments now from herbalife itself following bill ackmans presentation in midtown manhattan. The most notable news today arguably whats taking place on wall street with herbalifes stock. As you see, shares up more than 19 . It will go down as one of herbalife stocks best days ever, certainly in the last six years. So, these the latest comments now, guys, straight from herbalife following ackmans presentation. Scott, remind us of the guest you had on earlier today who said he was liquidating other positions so he could get further long herbalife, that he thinks now this company is one of the best poised hes seen in his investing career. It was another investor who has long traded in and out of this stock, a gentleman by the name of robert chapman. He has been buying aggressively herbalife. He said yesterday and today as well, he thinks the stock could go to 300 bucks over the next five years, assuming that it remains a Public Company. Of course, theres questions, and there have been speculation for many months, if not more than a year now, as to whether herbalife would eventually remain a Public Company for that duration. But its an interesting story today after bill ackman himself came on cnbc with me yesterday and said this would be the most important presentation he would give in his entire career and maybe he didnt nineteen quite like this. He was probably right. He certainly raised the bar on the expectations. And at least wall street seems to be voting today the other way. They do say as well, remember, todays presentation was mostly focused on herbalifes nutrition clubs, in which, in part of the statement they make today, they say the claims made by ackman today are completely false and fabricated. So, were going to continue to follow this story. Herbalife makes its comment. The stock has added tremendous volume in herbalife shares, as you can see on the bottom of your screen, guys, and this may very well go down as herbalifes best day ever as a publicly traded company. Well, you have to believe that a few shorts have been taken out today and you wonder how much pain bill ackmans feeling as a result of all that, too. Thanks, scott. Anybody in our panel want to touch this hot potato . I wouldnt blame you if you dont. No way. Rick, before we stop with you, a little bird on the Trading Floor pointed out that the euro is at a low today. Who should mario draghi send the thankyou note to. I dont know that he should. I think the euro is finally catching up with the bad fundamentals of europe. They might celebrate because germany likes it with the economy, but in the end, should the euro get under 1. 33, i dont think it will, i dont think that will send a solid message regarding the outlook. By the way, to ray dalia out there talking about the contagion risk across europe. Monica, digesting earnings, digesting some stock battles, digesting the macro environment, where do you see opportunity in these markets . Well, i think with earnings, everything looks good in terms of profits and sales, but i think it comes back to the broader economy. Will the economy actually rebound from corporations doing better . And im still not convinced that they will. Because if you look at the sectors that are performing well, energy, for example, the jobs that are being created in energy dont necessarily come down to the folks that are in the unemployment lines. Theyre very specialized skills and we see that skill gap. Wait a minute, i just read about a pizza driver in north dako dakota, lasting for a driver taking 56,000 a year plus benefits. And im sure theres millions of people who would love to fill that one position i mean, thats not a very specialized skill, is it . Well, i think that just the fundamentals it is in north dakota with all their shortages. The fundamentals do show that there are millions of people who are out of work, theres millions of people, i think more than 3. 5 million, who are working parttime that want to work fulltime. If youve found a great listing, maybe make 3. 5 million copies of that and send it out. But i think broadly on the whole, its a weak job market, and the performance of the s p corporations isnt necessarily translating into something that boosts up the economy in jobs and wages. Rob morgan, i know youre keeping an eye on apple. Weve got earnings coming out at the top of the hour. Do you like apple at these levels . Yeah, bill, i certainly would. I like the technology space, and really, more the largecap growth names like apple and microsoft would be names that id be looking at. I think staying away from the social media. Now, obviously, Janet Yellens group was telling us to do that as well. So, yeah, well see how apple comes out today, but i do like that stock. Jeff reeves, what are you keeping an eye on, which earnings here . And again, still just this morning, a lot of the Consumer Staples names arent perform thaeg well, mcdonalds, coke, kimberlyclark. Chipotles a different story. Yeah, true. Yeah, i think earnings across the board are pretty good, though. I mean, theres a couple stocks here and there where you could say valuations are stretched or a couple stocks are going to tank on earnings, but broadly, i think the market is doing really well. I think earnings season is going pretty good for us. I would disagree with the notion that the labor mark is weak out there, aside from the 6. 1 Unemployment Rate. I think its a question of demographics. I think people are leaving the labor force. Again, thats another reason im long equities. I think the s ps going to finish the year in the low 2,000s, maybe 2,100, because we have a lot of baby boomers without incentive a lot of 25yearolds are retiring. Thats exactly right. I hope [ everyone talking at once ] 25yearolds dont have any money, though. Yeah, go ahead. And that helps the economy . If youre just looking if 25yearolds have money . I mean, if the Older Americans do leave the workforce, the younger americans get jobs, sure, but from an investing perspective, talking about buying pressure from the market no, you were saying that the Unemployment Rate shows its a good labor market and that is completely and patently untrue. Thats all right. The Labor Participation rate has been falling because people have been leaving the workforce, in part because of obamacare. But its not only demographics. Even janet yellen is finally admitting the structural issues that we have of people, 58 million, to be exact, that have all the parts on their body to work, except for theyre not. Rick, can i ask you a question . Theres a disconnect in the labor force between the skills that we talked about earlier in the segment, the skills and the wage. Dont you think part of that is because corporations are trying to get people to work for 35,000 a year and people arent inventiveized to take that job . No, its about education. We spend more on every pupil than any other country and the risk on investment makes it look like chipotle. Just because american universities cost so much money and why do they have to take Student Loans out that they cant pay back . The game spirals out of control because theyre taking money because the government is giving it to them no, weve sold millennials on the notion that they have to go to college because if you really want to unravel this yarn, its because Community Colleges anymore dont give people vocational degrees. Not true. They want them out in two years so they can go to a fouryear institution and graduate with 100,000 in debt. I graduated with 100,000 because of that. In illinois, they got jobs because they got a good education. Both sides are clear at this point. We have to go. Good discussion. Thank the rest of you. Rick, i dont think theres any truth to the rumor, jeff reeves is not related to jack bouroudjian. Well move on from here. Thank you for joining us today. Lets check out the family tree. Yes, we will. On to another story. Obamacares been in the news today and it remains a mess. Yeah, were keeping an eye on hospital stocks. Bertha coombs, can you sort this out for us . Its one of those situations if you dont like an obamacare ruling, wait a minute. At issue, are obamacare subsidies legal for those who got them on healthcare. Gov . A threejudge panel in the d. C. Circuit court of appeals said no. The Affordable Care act specifically states irs subsidies go to residents in states that set up their own exchanges. The ones in blue here on our map, like california and new york. So, states like texas and almost three dozen others, including florida and pennsylvania that were all part of the federal exchange, if todays panel ruling is upheld, subsidies for 4. 7 million americans would go away. But hold on. A virginia court, the full 4th Circuit Court of appeals ruled that the federal Exchange Subsidies are legal. That could help the Obama Administration in its appeal to the full bench in d. C. Now, professor ken thorpe says the issue could be resolved in congress, but both sides are wary to do that. Thats been a real challenge about opening any aspect of the Affordable Care act back up, because it would open up a whole range of opportunities for people to make a wide range of changes in the legislations. Ultimately, it could end up at the supreme court, but insurances rallied off strong earnings from sentine. A lot of folks say this is going to be a long process. Meantime, subsidies will remain in place until appeals are done. Guys . Bertha, thank you very much. What a story. Heading toward the close, weve got about 45 minutes left in the trading session. The dow hanging on to gains, off the highs of the day. The industrial average was up 81 points, now a 67point gain. Coming up, Td Ameritrade ceo fred tomczyk talking earnings and if Mainstream Investors are jumping back into the markets. Remember, were at or near alltime highs here. Thats ahead. Also around the bend, toys for rich people. Polaris explains why the motorcycle maker just raised earnings outlooks for the year as rival harleydavidson lowered estimates. Thats revving up polaris shares big time today. And up next, how much debt is good to have . A Financial Planner and Steve Liesman have very different ideas about this and theyll hash it out. Over 1. 2 billion eyeballs are on us during the two weeks at wimbledon. True tennis fans want to know whats happening. They dont want to just see whats happening, they want to know and understand why its happening. Anybody can just put data up, but we want to get a reaction, make it far more interactive. We rely on the cloud to provide that immersive digital capability. Give fans more then just the game with the ibm cloud. The ibm cloud is the cloud for business. In a we believe outshining the competition tomorrow quires 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. Ithe part of us that a littwants to play,on. Wants to be mischievous, wants to run free, all you have to do is let it out. Find your inner minion only at the despicable me minion mayhem ride at Universal Studios hollywood. Slightly higher market today. The dows up 68 points right now. The s p up about 10, about 0. 5 . The nasdaq up a little bit more than that. You can see where we are in relation to an alltime high. Were about a point and a half away from that for the s p, so were keeping an eye on that. A reminder, we have earnings coming out tonight from apple and microsoft, along with others, electronics well be keeping an eye on and could move the market for tomorrow. The socalled credit boom, meanwhile, is said to have helped the economy recover but some warn it could lead to another crisis down the road. So, when is getting credit, or more to the point, going into debt, a good thing for you and the economy . One of our next guests says almost never. Financial expert chris hogan. And taking the other side of that trade is our senior economist, Steve Liesman. Chris, you dont see the merits of credit in a consumerbased economy. Why . Other than for a mortgage, we should point out, right . Well, i look at it this way, that interest that you have to pay is a penalty, but interest that you earn is a reward. So, i dont want people to penalize themselves. I want them to reward themselves by having a game plan, avoiding debt at all costs. Is that the right way to look at it, steve . I dont think so, because you said penalty and reward. I look at both as a cost, right . The cost of taking on credit now to buy something, thats the price you pay for current consumption versus future consumption. To save money, the opportunity cost of not consuming something. Theyre both sort of a privilege. Im not here to argue anybody should take on debt they cant handle. Im here to say that a person has a right to ask his future self to pay for some of the consumption that they will enjoy based on todays purchase, and thats what debt does is sort of takes the payment and spreads it out over time. It says, if you buy a house, as the simplest example, well, future steve should pay for some of that consumption rather than current steve paying for all of it. You know, chris, youve said that you think a mortgage is pretty much the only debt a household can ever justify. So, in an economy when precisely the opposites happening, people are taking out loans for their education, for their cars, for all sorts of things, including vacations, but not for a house these days, you think we should completely reverse those activities here and that would make for a better longterm outcome . Well, i just think people do better when they have cash. And so, if im not having my money become see, debt makes your income out gone. And its going to all these other things. So, i think people could have a better quality of life if their income is staying with them and theyre able to do things for their family, instead of making the creditors rich. Kelly, the data show that consumers have really been on a serious deleveraging streak here. Now, some of that del

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