Transcripts For CNBC Squawk On The Street 20160714 : vimarsa

CNBC Squawk On The Street July 14, 2016

Keeping things unchanged. Strong showing for jpmorgan, Second Quarter revenue beating estimates. And awaiting the biggest po of the year. First lads for line. Stock set to open at record highs. The bank of england leaves rates unchanged but says stimulus is likely to come next month. Black rocks larry fink talked about the market rally this morning on squawk box sounding fairly skeptical. Take a listen. Here we are were seeing investors worldwide pausing, we have seen quite a large sum of money being pulled out of equities over the last year and yet we are at record highs. This rally in my mind is not i dont think we have enough evidence to justify these levels in the equity market at this moment. He does go on to say, jim, that if earnings come in above the minus 5 that everybody is expecting maybe some of these could be justified. Look, i spent all morning on this jpmorgan. Why . Because jpmorgan the largest bank, you have to stay focused on it. If jpmorgan is any precursor as was alcoa earlier this week as was csx in terms of not being worse than expected as was yum being better than expected, thats not a vast pab a plea but does cover cinch areas. Larry may be correct that it can be justified if earnings come through. This jp quarter on trading, its been a while since weve seen trading be as good as it was. What you forget, these banks have ways to make money, we often talk about how they cant make money like they used to, but jpmorgan fixed income, plus 35 . I mean, that says to me that maybe larry is right, remember, i want to you know, right that we could see upward revisions. Quite frankly it was a good quarter. It was a good quarter from jpm. Also expense reductions were pretty significant there. When you look at overall the net revenue up 3 , Net Interest Income 11. 7 billion but they took down noninterest expense by 6 , lower Legal Expenses of course a key part of that because we remember so many quarters they have had significant Legal Expenses. Right. But also just expense reduction, jim. So, i mean, you know, a Company Earns 6. 2 billion in a quarter thats thats a lot of money. A lot of money. People are pointing out that they took a higher reserve on oil and gas. Thats not true. Okay . In truth they because oil went up you didnt have to criticize more loans. They had one big downgrade. I have spent the whole morning on who this downgrade could be and do you know who the way that you have to do loans and judge them in your Balance Sheet, judge them in your reserves, was was someone downgrad downgraded. The only big downgrade this quarter was exxon going from aaa to aa plus. Youve got to increase the reserve to exxon . No. Well, you would theoretically. I mean, chesapeake was downgraded but it was the previous quarter. In other words, what im saying is that i those who are focused on this one credit, i have i really dont feel that this credit is at risk is what im saying. Now, exxon, maybe thats too extreme, chesapeake, but chesapeake was done in february. All im saying is that oil was good this quarter. You said it was terrible. You said earlier in the week were losing the bear case on the banks and chesapeake fcx was going to be your test. Look, exxon, i mean, im just saying that the big material down grades which is what you would have to do in a Rating Agency downgrade, you might have to take a look at a loan, im saying there is no bankruptcy risk to what that loan is and if thats the case we are in good shape. Double digit loan growth, deposits up 10, credit card sales up 8, right these are really good. Deposits up 10 . Were talking about to me that number where are they getting that . Is that people from overseas deciding they want to keep their money in xyz bank. I said this is one of your worst scenarios that could happen is this is an amazing quarter and nobody else can equal it. Net interest margin kind of okay, right . But the fact is the banks are pricing in jpmorgan was substantially higher at one point, went down to 53. I dont want to be too granular other than to say i thought it was interesting the bank of england says no, futures go down a little bit. Then jpmorgan says yes, i know that because i was stuck in the holland tunnel behind a truck and it broke down, im sitting there what do i do . Watch the futures, jpmorgan. Why not . Bingo, jpmorgan takes the futures up while the features were going down on bank of england. We did see a little fade in the futures on that surprise move. 8 to 1, not to cut rates for the First Time Since 09. They did say that august august. They will update their inflation and there is a good chance it could come then, but in the meantime the overall resilience of the uk Financial System has dampened not elevated the impact of that referendum result. Yeah, you know, i have to Say Something thats going to get me you know, maybe the uk isnt dont take this wrong because they are our allies, special relationship maybe they are not as important as we think. I mean, even jamie dimon is not talking about, listen, this is a wholesale change because this happened. But its still a fairly large economy in the world. It is large. Im just saying that and thats why i say i dont want to i dont all im saying is that there was im watching which wiilford this mo and the changing of the guard. And im saying, all right, they finished this. Barclays trading up how about ppi,. 5 core,. 4. You have to go back to last summer claims at 254. Were switching over here to where if the economy is good im going back to finks comments. If the companies are doing better, well, then, maybe we should be willing to pay a little bit for those earnings. Do you remember the old days when earnings would go higher and we would pay for that. But we had this conversation yesterday and a lot of people seem to be starting that theme were willing to pay more than 17, maybe we will get to 18, 19, jpmorgan not bad today we will see what follows thee, 1. 5 yield on the ten year. I get it. Yum we have to wait for the Conference Call but china was better. You can say, jim, thats a couple chicken wings that were eaten. Im not going there. China is better. China is better. Im not worried if the colonel had a decent quarter. By the way, into i buddy charlie bolello most upside progress the market has made post crisis with no qe in way. This is the most overbought weve been since 2009 but its actually been positive a month later. Look, i am struggling like everyone else, larry fink, i happen to like larry, i just love him because he just kind of knows what hes talking about. Is it justified . Sometimes it isnt justified until three months from now when we realize it should have been justified. Sometimes we look back and we say, do you know what, things got better. The gloom that people look, its never going to get better. How many of you have never going to get better . Hey, do you know what, in 1942 it was never going to look never going to get better. We were losing at every single theater. We won. We turned it around. We turned it around. Thats the way it should be. Why . Because we were great and we knew how to make things. Okay. Are we still great . Are we still great . Yes, we know how to make things. Look, line is coming public today. That has nothing to do with us making things. We make intellectual property. We do. Its a valuable thing. We dont know what to do with people who the third guy who puts that hamburger bun on the wendys burger because they now have a machine that does that, i totally get and im worried about the psychological aspects but thats none of our business. Im trying to figure out what i should pay for the earnings at Bristol Meyers and i saw Bristol Meyers getting an upgrade today and am saying maybe i would pay a little more. I saw the proctor up. Did you see it . Theyre talking about possible 3, 4 organic growth. Im talking hair care. We did see jpm cutting wynn. That was a mistake. That was a mistake. Look, i forgive you, i can forgive you for being wrong already. Its all right. We do have a couple other names. Delta tops estimates, revenue comes in lower than expected. Yum did top expectations, misses on revenue. China flat, which is actually seen as a pretty good number. Its a win. Geez, you know, come on, thats been massively bad. Csx, okay, only two businesses good, the light vehicles remain strong and minerals, construction and auto, lets go for that. Construction, auto, a big part of the economy. Yes, Everything Else coal, but coal hey, we are not suddenly finding new use for coal. No, coal is hated. In your stocking maybe and even thats request he believe. Say that again. Thats questionable, the coal stocking at your house. Coal volume there down 30 . There is a certain point where you just say, listen, that is not going to be our fuel of choice and theres too many if you look at the quarter that alcoa had on gas turbines you know that thats just gone away. I had a guy from an outfit that does wind power, wind power is coming on. There is a lot. I drove through an area of california recently i have never seen too many palm springs. No, up north, the northwest part of the state. Really . Unbelievable. By the way, those are enormous turbines, those do you think they are ugly and hurt birds . You didnt go there . I didnt think theyre ugly. In a way theres a certain beauty to them. Interesting. Yeah. Anyway, strong dollar did hurt usx for some of these lines, but all im saying is if you have a stabilization of bad, thats the next thing toward an Inflection Point and im saying that maybe were getting an Inflection Point. You know, europe, a little stronger, china a little stronger. You play that game . Im trying to think through it, jim, thats all. Youre not doing this . Dont you feel like theres some complacency, too, and that should be worry some . The bulls love that. No, i mean, you come on and al listen land greenspan came on recently he was not that bullish. He was not talking about the equity market no. Lectured by Rick Santelli. I dont want to be lectured. I just want to say that its possible as a guy who does bottoms up that the earnings could be better. Thats not im not a bond guy, im not a trump guy, im not a hillary guy, im an earnings guy and im looking at the earnings, hey, revenue look at general mills. Did you listen to ken powell yesterday . I did. I didnt understand some of what he said but i listened. He took the artificial colors out of trix and the numbers went higher. You could say, come on, general mills. Every Single Company that ive that chart says dont just say, come on, jim, general mills. Thank you. When you are a food company, a restaurant chain, the biggest minerals maker in aluminum, the Number One Bank and they are all saying good things and a railroad that says things are probably done going down and delta having an okay number and United Continental the worst of the worst so to speak having a better number. If i supposed to, therefore, say, do you know what, things are really bad because the fed doesnt know what its doing and we are all bad and this is bad. Youre getting yourself going, man. Im stuck with this positive nonsense. And there was a pokemon 300 meters from my house yesterday and i could not find it. Were going to talk about pokemon, cowan saying it could be the answer to the american mall among other things. This was at a church, right near the church. 300 meters and i couldnt find it. What was i doing . I dont know what youre doing. Im on the blue team, you know. What team are you on . Im not on any team. Youre not . No. You will never see me play that game. You better get with the program, my friend. The blue team is smashing it. When we come back this morning wlau need to know about the biggest tech ipo of the year, a closer look at jap neon messaging company line, sometimes called japans facebook. We will take another look at futures, theyre way up. Get to other names, Consumer Reports say tesla should pull autopilot and a lot more after a break. And can you explain to my you recommend synthetic over cedar . Super food . Is that a real thing . Its a great school, but is it the right the one for her . Is this really any better than the one you got last year . If we consolidate suppliers whats the savings there . So should we go with the 467 horsepower . Or is a 423 enough . Good question. You ask a lot of good questions. I think we should move you into our new fund. Ok. Sure. But are you asking enough about how your wealth is managed . Wealth management, at charles schwab. [announcer] is it a force of nature . Or a sales event . The summer of audi sales event is here. Get up to a 5,000 bonus on select audi models. Reports say tesla should pull biggest tech ipo of the year line is set to debut on the big board and tokyo. The messenger app raised over a billion dollars with 22 million shares in new york, 13 million in tokyo, values the company at almost 7 billion. Only by naver and shares in tokyo will begin trading tonight. Jeffreys calls it japans facebook because even though they face competition from the anyone tend dose of the world its advertising that is now the focus of their strength. Its the only justification for it. When i look at head to head comparison with snap chat you would never buy this thing. You just wouldnt. Im looking at all sorts of thank you, aiden one of my assessment cyst ans, monthly pay users, monthly active users are not good numbers at all. Compared to. Facebook. Even the growth youre talking about. If this thing is x you would pay 2 x for fb. My understanding is they priced it at 11 times 2017 ebitda which is not its not crazy. Bad. I mean, thats like twillio. Remember, it is the actual way to monetize whats app. Whats app does well, as uber does well, as airbnb does well twillio does well. Also because they did a good job pricing it and making it a value. Yes, those guys are winners. Theyre biggers, twillio, but i dont want to get too sidetracked. This thing better do well on advertising or otherwise it will be another overheated asian equity. Like facebook theyre facebook. Seeing big growth in mobile, the mobile app market. Yes, definitely. Look, are these companies excited theres a scarcity of companies in this world that do these things and i could show you total operating revenues are terrific, fiscal year 406 million, 2013, 817, then 997, some people could say, listen, thats slowing, but it is attracting interest. I just caution that if that this snap chat, i wish that thing would come public, that thing is just a horse. Interesting path, they tried to do this in 2014, then they backed out. They had a range pre brexit and then waited and then actually raised it to a higher level than it was pre brexit. Interesting. Yeah. Yeah. Along time coming. Lets stay focused on the fact that theres theres this is going to im trying theres excitement with this and what that may mean s again, remember if youre looking at blacks ton when is the ipo market going to open . Twillio priced that, its getting a little interesting considering this is july and, you know, most people are supposed to be on vacation. They are. They are. But you never know. Allibaba came in late august. I caution that if you like line you should love facebook. Love it. We should talk more about that maybe a little bit later. I think facebook is youre going on those 2018 earnings like i am and seeing how inexpensive it is. 5 bucks a share in 17 people are saying. 2018 number that i could use that makes it seem like its three times cheaper than clorox. 1. 6 billion users. This is an advertisement for facebook. Line is an advertisement for facebook. We will get cramers mad dash and count down to the opening bell. Back in just a minute. All right. Things getting crowded here of course on the floor as we await that opening for line. What are where he headed on the mad dash . One of my favorite stocks is lulu memen. They had supply chain issues, merchandising strategy, they are all being resolved. Chip wilson has been critical of them over and over again. But wells fargo is raising price target. I think this is justified. Lulu has the momentum, this is where people are in terms of yoga apparel and i have to tell you that as much as nike, some people are tepid on, bf corp. , under armour which i kind of like, this is the star. They have what people want. Ive been positive on these guys, not on a takeover basis but earnings basis. This could fly. Really . It could still fly from here. They have what people want because they havent been able to develop what really creates earnings which is how to get the merchandise in the store. They have the right merchandise, you figure out how to make the merchandise correctly, the real guy, the new the ceo who has actually not been under criticism by chip wilson who was the founder, he has been critical of the director from the early days. Right. That he has been very critical of. I do have to tell you that this makes sense. I know it seems overextended but it makes sense to me. Its going to go higher. Thats one of the many names we will be watching. We are waiting for that first trade and that ipo for line or the open of that japanese company. Although really its roots are in south korea. South korea, yeah. David, there you go. Every time we see something that resembles like a doll or whatever. Yes. Its always been an inspiration to say, wait a second. I know. Do you remember when the when i was a little kid that would have freaked me out. In your closet, man. Big head. Moving around. I would run away and cry. We have the opening bell coming up right after this. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Youre watching cnbc squawk on the street live from the Financial Capital of the world. The opening bell in just under two minutes as we await the ipo of line, the biggest tech ipo of the year along with Jpmorgan Earnings, pretty good, bank of England Holding steady, the list of Rnc Convention speakers is out. Vp tomorrow at 11 00 a

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