Blockbuster Banks: Street Smart (07/16)

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July 16 (Bloomberg) -- On today's "Street Smart," Trish Regan and Adam Johnson find your last trade of today and first trade for tomorrow. (Source: Bloomberg)

Mcdonald's, chipotle, and others , and it is trending better than the s&p 500. who was the best performer in that index?

Rooftop hospitality's is the one you want to watch, absolutely sizzling for the first top of the year -- rooftop hospitality is the one you want to watch.

The stock is up around 85%. meat lovers are powering some of those restaurant stocks higher and higher.

That may say something positive about restaurant sales going forward also.

Thank you so much.

Appreciate it.

That doesn't it for on the markets right now.

"street smart" starts right now.

-- that does it or on the markets right now.

The big banks are back.

Citigroup, j.p. morgan, goldman sachs crush stock estimates.

Find out how good, old-fashioned trading turned wall street around.

And measuring marissa mayer.

She said she can save yahoo, but can she save the company from its largest sales drop-off in years?

Plus, sex, drug makers, and rock 'n roll.

For pharmaceutical companies face probes from chinese authority on some unsavory bribes -- four pharmaceutical companies.

Ok, and eight-day winning streak in stocks has come to a halt.

Welcome to the most important hour of the session.

60 minutes to go until the closing bell.

Adam, a profit drop over at coke adding to all this negative action we are seeing on the dow jones, down 37. s&p, off eight.

Certainly could have been worse.

My guess is a holding pattern ahead of ben bernanke's testimony.

Three charts you need to see right now to paint the picture of the day.

We came down, went up a little, went down, up.

We are in a holding pattern.

Why would anyone take any major moves?

You hear one thing on the 18th, another thing the other day.

Who knows what is coming?

So the holding pattern playing out across all asset classes.

The 10-year -- take a look right there.

Right now, down a mere single basis point.

The 10-year trading at 2.52%. finally, gold, again, in a holding pattern ahead of the fed.

You can see we have been in a holding pattern, sideways and effect, for the past six hours.

We have a lot to talk about today.

Let's start with the big three, the three stocks you need to be watching heading into the close of trading.

Julie hyman keeping an eye on things.

I'm watching one big stock that you mentioned, and that is coca-cola.

The company out with earnings this morning, and because of slowing global growth, it is seeing slowing sales and volume, particularly in europe and china.

All of that sending profit down 4% and sending shares down as well.

Even though earnings overall have been beating estimates and about three quarters of companies, when you get high profile companies like this reporting, it does tend to affect stocks overall.

Take a look at goldman sachs, beating estimates, but it seems investors are focusing on the fixed income trading business, which appears to be lagging some of its competitors.

We will get more information as we go on.

Finally, tesla, a big comeback for shares of the automaker today.

Goldman sachs downgrading the whole automotive industry, saying they tend to do poorly when rates are going up, and we are in this rising rate environment, particularly setting it price target of tesla of $80 a share -- setting a price target for tesla of $80 a share.

Thank you.

Our top story takes us inside the books of the nation's biggest banks were something pretty interesting is taking place -- a good, old-fashioned trading seems to be making a comeback and with a vengeance.

Citigroup beats some bonds and equity trading.

J.p. morgan soars on trading and investment banking.

Goldman sachs crush isn't on commodity and currency trading trading.

The uptick is being reflected in trading as well.

-- goldman sachs crush is it -- goldman sachs crushes it on commodity and currency trading.

Good news.

The banks are setting record profits with good, old-fashioned bread-and-butter trading.

The question is -- is the quarter just a fluke, or are there really better times ahead?

We are asking an expert, vice president of research at equity capital, and bloomberg's finance editor-at-large.

Good to have all of you here.

Do you feel like the banks had turned a corner?

I do not think there was a corner to turn.

The banks had shown earnings up year-over-year, and basically in the first quarter of 2013, the banking industry showed the highest profits in the history of the industry -- so you think it is going to last?

Yes, i do, although i do not think trading is the reason for it.

If you look quarter over quarter, most of these banks showed declines in trading activity.

The issue, i think, is that looking over the next few quarters, i think that loan volume will increase, which it did not do in the second quarter, and i think margins will go higher, which again, they did not do in the second quarter.

I actually do not think the second quarter was particularly good for the banking industry or for the banks that you mentioned, but i do think the third and fourth quarters will be better.

You bring up an interesting point about loan volume.

Paul miller worked in an environment which could lead to higher rates as you hear all this talk of tapering.

What does that mean for the banks?

Is that a good sign because they will be able to make more money on the spread?

If we measured real economic activity, i would say that it is a good sign, but we will get higher rates because bernanke is talking up the yield curve, it will not be good for banks because they will not be able to get that loan growth.

We need real economic growth for these banks to grow and take advantage of these higher rates, so we have to wait and see.

If the housing market continues to recover, we will be in more of a growth state and continue to handle these higher rates, but if we do not get more growth by the second half of the year, i cannot see a rate sustainer.

Do you think we will get that?

We have not really seen it.

What i'm afraid of is that the higher rate will choke off some of the good things happening in the housing market, like the refis that put extra money in people's pockets.

But we are hearing it is pushing some people off to the sidelines.

If that is the case, economic growth just will not get there.

I hope we get there.

It is hard to say we will get there.

I know a lot of people are betting we will get there, but it is hard to tell.

If we do not get there, if we do not see the kind of growth that we need and that the fed would like to see, but we are in a higher rate environment, what does it do to banks?

Jpmorgan and wells fargo warned in their conference calls about the rate environment for the rest of the year, that it could have a significant hit on those businesses.

On trading, which you started out talking about, the second quarter has been very good, but only in comparison to last year, which was very bad.

It is actually down from the first quarter.

The bernanke comments toward the end of the second quarter seemed to have jiggered -- jittered the markets somewhat.

What about investment banking?

That kind of activity has seen a lot of yield.

Goldman sachs was concerned that rising interest rates will depress a bond issuance by their corporate clients, which have entered a record for the last three quarters, so that business could also be in jeopardy by rising rates.

I think we are placing some uncertain times -- we are facing some uncertain times.

In that environment, i suppose you could understand cheap trading rates.

I'm curious -- what makes you so optimistic on growth for the second half of the year?

Almost every aspect of the economy is showing improvement.

Purchased housing, autos, energy, healthcare are all up.

We've seen a shift in the trade balance, which is slightly positive.

Capital spending is up.

The cost of the money is extraordinarily low.

That has to drive interest rates up 300%, 400% from where they are now to get to the point where they will slow down the economy.

The banks are sitting at their loan to deposit ratios at the lowest level in the past few years.

Investment banking has got a huge pent-up backlog.

We will see significant and strong improvement in the second quarter, which will drive up loan volume, which drive up -- paul shaking his head no.

This is still a housing economy.

We are still only building about 200,000 houses.

Back when we were at the peak tom a we were building 2 million homes.

We have a long way to get through bringing all these employees back into the u.s. economy to get this economy back and rolling.

150,000 to 170,000 jobs is not enough.

They're so much slack and liquidity in the banking system.

You really need strong, economic growth in the system and we are just not there yet.

-- there's so much slack and liquidity in the banking system.

We introduced you incorrectly.

I want to apologize for that.

It is robert freeman, everybody.

I do think there are problems in the u.s. economy driving some of the improvement in bank performance.

I think the growth prospects remain shaky.

I think with unemployment still high, over 7.5%, i cannot be too optimistic about -- loan growth has been trading about two percent over the past two weeks.

It's better on commercial and industrial, but it sounds like you are saying you might get some strength on business, but you are just not getting it on the consumer side.

Is that right?

Yes, there are still a lot of caution.

We are seeing a lot of mixed signals.

There are some improvements in the housing market, but it seems to have been dampened quite a bit right -- this could be dampened quite a bit by rising interest rates.

It is too early to tell.

I think the regionals have had a lice that -- have had a nice run.

If you have to play the market right now, i would definitely play the bigger banks.

I think they are trading at a discount to these regionals, but right now, we have to get economic growth, loan growth to start to justify some of these assets out there.

We are going to leave it there.

Thank you so much for joining us.

Coming up, investors are bailing out bonds, but where did all the money go?

Adam is going to tell you in today's "insight and action." ? bailing on bonds.

Where did the money go?

Time for a little "insight and action." bonds coming out of bond funds for the past five weeks, 66 billion, the highest we've ever seen over five weeks.

A mere 300 million dollars going into equities.

So much for the great rotation.

The question is -- where did the money go?

They think they have found it, or at least some of the money.

A total of $83 billion coming out of bond funds, and look at this -- over the same five weeks, that money is being deposited into banks.

Curious what is happening, right?

Large funds or large individuals are taking money out of bonds and stashing it into banks.

Fine, i understand that much.

Here's the issue -- the banks get the money, and they have to do something with it, right?

Because loan growth is only two percent -- only 2%, they have to look outside their usual activities so they can provide a return for all the people who have given the money to do something with.

Guess what?

They say back to bonds.

See the circle?

Money comes out of bonds and goes to banks, and the banks say they are going to put it back into the bond market.

The point is -- you get that kind of money flow, you start to get bonds to push back up from 93, and that means the yield dropped from the current 2.5%, down to perhaps 2.2%. 2.1% could be the trade for the moment back into bonds.

All right, thank you, adam.

Our closer is not saying hello to banks, but that is because he and the financials are not always friends.

He's the chief investment strategist at montgomery scott, and he says back away from the bonds and do not look back.

Welcome to "street smart." you have been in the financial sector since 2011. you liked it a lot then.

Is that still your favorite place to put money to work?

It is one of them.

It has been rewording to have crawled into that space as we did in 2011 -- it has been rewording -- and has been rewar ding, but there's other areas that look equally appealing and perhaps have better valuations.

Most of the sectors that have not done as well so far this year like technology, like energy, and even from a more pro-cyclical stance, perhaps industrial companies could take advantage of what we think will be a capital spending environment.

Within the industrial sector, a couple of classes -- classic names like 3m. these are multinational businesses and a fitting from not only an uptick we think in economics happening later this year, but as well, business is beginning to open their wallets to spend on plants and equipment that have been largely underinvested in for a long time -- multinational businesses benefiting from an uptick in economics.

Not only are u.s. companies repatriating manufacturing plants but as well international companies are opening up businesses -- automobile manufacturing, for instance -- in the south, taking advantage of what is happening in the u.s. back to the idea that they are willing to invest in construction, they must be seeing some demand.

The ceo of honeywell said unless he really sees a reason to put money to work, he is not going to be investing in infrastructure and new hires, and part of his concern has been uncertainty coming out of washington.

Certainly in the second half of 2012, we had tremendous uncertainty coming out of washington related to one thing -- the fiscal cliff.

We think as these fiscal issues continue to recede and largely turn into nonevents from an economic standpoint, that perhaps ceo confidence will lift.

We are starting to see that in ceo surveys of confidence among those in the -- how does that help?

They will take an underutilized asset like cash, and that investment refigured its way back into business activity and further fuels economic growth.

A vicious cycle, if you will.


It's tricky to try to figure out which comes first -- the spending or the demand.

I know you are very positive on housing.

Maybe you could lay out for the viewers your thesis on why housing is improving, where it is going, and ultimately what it means for investors.

In time, we turned bullish on the financial sector and we did so with the housing sector as well.

We are starting to see demand start to pick up.

Some of it is institutional, but some of it is individual as well.

Housing affordability is as high as it has been in a generation, with the fact that there have been very few new housing starts as well as existing homes that stopped being puked into the marketplace -- i like the way you put that.

But that is what happened.

It is.

This is what i want to ask you -- a lot of buying has been from private equity firms that are going out and buying blocks of houses, 4000 or 5000 houses at a time.

Does that concern you?

It concerns me if that was the only buyer of homes.

The fact is there are individuals in the housing market as well.

Household formation is running north of one million.

Apartment vacancies are at 5% or less at this juncture.

Once again, housing affordability will be a magnet to potential buyers as we see employment growth and sturdier consumer confidence lead, i think, households back into the housing market as opposed to the rental market.

Lex we have got a lot to talk about.

Day after day, we talk about housing.

Housing and jobs.

That is the whole shebang.

They matter.

Yes, they do.

Coming up, sex, drug makers, rock 'n roll -- got your attention?

Plus, we have three picks on yahoo.

We will see how marissa mayer's turnaround plan measures up against the company's stock performance.

? time for today's global outlook, and this is an interesting one.

Faking tax receipts, price- fixing the -- those are just some of the allegations acing glaxosmithkline.

This is some pretty wild stuff.

Yes, some pretty wild allegations.

Essentially, glaxosmithkline has been raking in money.

Sales were up about 20% last year, and one of the reasons authorities think they have been able to do it is that they are accusing them of basically running a bribery scheme to the tune of $500 million.

According to these allegations, they used travel agencies as conduits to receive rides.

They say other drugmakers transferred money to the agency's -- agencies.

They say bribes went to government officials, hospitals, all to curry favor.

Chinese authorities have attained for -- detained four gsk executives.

In these businesses, i think the operation costs involved in the medicine price account higher after the self- examination because everything needs a cost, such as holding a meeting or conference, and cost should be included into medicine price.

Considering the operation costs, it accounts a little higher.

In response to these allegations, glaxosmithkline says it is deeply concerned to the point where they are reviewing all third-party relationships, and they are, of course, going to cooperate with chinese authorities.

Is there actually a paper trail?

$500 million is a lot of money . they would shake them and hold meetings where there were five people and say there were 50 people.

This is part of a growing trend of chinese regulators targeting or in pharmacies.

I guess that addresses one of my questions as well.

Pimco talks about their executives in jail.

The only question is -- do you really have a fair shot of a fair trial there?

Let's take a look at the one safe haven today in this market.

The only sector in the s&p that happens to be up, trading up almost .5% there, and it is telecom.

People looking for that safety.

Just ahead, is marissa mayer's shopping spree paying off?

? there's a discrepancy over at yahoo -- while shares have soared over the past year on optimism over marissa mayer's and around plan, analysts are bracing for the biggest revenue decline since 2011 when the company reports earnings after the bell.

It begs the question -- has yahoo really changed under marissa mayer's watch?

Or that, we are bringing in our whole panel.

First over to you, paul.

Is she really doing enough here?

If so, why are revenues not better?

It is going to be a long pull to turn the revenue story around at yahoo.

I think she is focusing on product, investing in product, and that makes a lot of sense.

She came from google, which is a very product-centric and product-driven organization.

I think the bet she is making is that improved and enhanced product will drive the user base, driving casement in the user base, which will ultimately lead to sales and revenue.

It is a product-first strategy, not necessarily sales first.

Why has it not yet translated into better revenues?

Well, she is just starting.

She made about 16, 17 acquisitions, and most of them are acqui-hires with no real revenue paid on the bottom line.

I agree with what was said earlier -- it is all about engagement right now.

I think 2014 will be the year where we should start seeing some topline growth, but right now, it is all about, again, engagement, and maybe cleaning up operating expenses, so we actually expect some outperformance on the bottom line this afternoon, but the top line will be very muted.

How much time does she had?

It has been a year.

Everybody said, "be patient.


Things will turn around.

Acquisitions will start to pay off." think that is a good question.

A lot of investors are asking when the honeymoon will be over between marissa and the street.

It's probably sooner rather than later.

She probably has another couple or three quarters to show some momentum building on the revenue side, but probably not much more than that.

The investments she has made -- we need to start seeing a payoff over the next couple of quarters.

A few more quarters, you say, and then time is up?

Yes, but remember, there is something we did not talk about, which is the ipo for alibaba.

That is what has given yahoo this "honeymoon period." investors are getting paid to wait.

Until ali baba goes public, there will be a pretty big support or the stock, plus management is also very aggressively buying back stock, so this has been an easy stock to go along with.

The irony is maybe the stock may top just around the ali baba ipo, but clearly around that, management will have to start showing topline growth from the organic side of the business.

I want to get over to matt and talk about what he is seeing in the options market.

What are you actually doing?

I agree, and we do see support for yahoo stock, so we are going to try to create a trade that sees off that support or the stock, and i think this stock is an easy one to go along.

I'm going to sell the put spread , collect a little premium, and used some of that premium to buy a call in september, maybe give a little more time for that stock to rally, and also the citigroup, goldman shares clarity on the ipo . what is wrong with the yahoo model?

You go to the yahoo page, and it's a great place to hang out, right tackle all kinds of things to look at, and yet, people consistently go to google.

Why not go to yahoo regularly?

First, on the search side, the microsoft-yahoo partnership has certainly been a disappointment for yahoo.

Their search business -- a really have some issues there they have to address.

On the core display business, i think some of the issues have been engagement.

They do have 700 million uniques , but they have an issue of engagement, and keeping people on yahoo long enough that they are attracted to advertisers.

How do you change that?

How is google doing that differently?

Probably comes comes back to product.

Yahoo finance is a great brand in the marketplace, but there are certain aspects to the overall yahoo experience, most notably, mobile.

Mobile is something that yahoo needs to get right.

There is certainly a perception that their mobile strategy has lacked -- lagg ed certainly facebook's and google's, and they have to address that.

Are they doing enough on the whole?

No, they absolutely are not doing enough on mobile.

They are very far behind facebook, google, a whole number of companies.

If they are not successful on mobile, they do not have anything.

Mobile is where all the action in all the focus should be.

Marissa has her work cut out for her.

Tanks so much.

Be sure to keep it here.

We will have more earnings coverage in the next hour.

Coming up, thursday's all important shareholder vote at no -- dell.

We will discuss that.

Coming up next on "street smart ." ? ok, everyone, let's get to a company we talked about quite a bit on the show.

Dell's board may delay a vote on the $24.4 billion proposal from silverlake.

Right now, it is scheduled for thursday, and almost 20% of l shareholders oppose this buyout -- almost 20% of dell shareholders.

For more, we are joined right now by the bloomberg reporter who has been following the story.

I want to start with you.

We have a few folks against the deal.

It's amazing.

T. rowe price is an influential shareholder because they do not throw around their reputation very easily, and they tend to go with recommendations.

Southeastern is about 4%. this is starting to add up.

Yes, essentially, t rowe said they are not in favor of the deal that michael dell put on the table, which leaves them room to endorse and vote for a deal which is a five -- which is a higher offer.

Essentially, a tender offer was put forth, $14 a share , plus the stub of $1.65, so theoretically, the board could do something like that.

Could they?

Hi, guys.

Happy tuesday.

I think it is possible.

As we have kind of discussed before, i think there is value here, right?

The longer-term players that we are talking about -- t. rowe price, among some others, including southeastern, which is not an activist by nature, but more value-oriented -- they are thinking about the longer-term value.

Even though michael dell and southeastern -- excuse me, silverlake -- have been reluctant to bump the price, that bump, whatever it may be, even if it comes, will probably not be enough, not only for carl icahn, but any of these institutions.

Is that why they may vote it down or go to exercise their appraisal right?

It is possible they would do that, but i think they see the longer-term value here.

Can you put a number on that for the viewer?

Where you think the long-term value is?

We know karl icon things high teens, maybe as much as 20's -- we know carl icahn thinks high teens.

Even if you value the stub, the core operations for dell at a significant lower valuation relative to hp, then it still yields that $14 dutch tender, plus the steak and a company, plus the warrants, which allows you to have a value in the $16 range.

As you go up the multiple scale and very close to hp, which is trading at, you know, something close to seven times -- i got that.

I guess the question now is if everybody believes it is actually worth more, where does that leave thursday?

The premise here at the end of the day is shareholders are going to vote this thing down if they decide not to adjourn.

We will find out probably as late as thursday morning if they decide to do that.

If they decide to do that, they may -- they cannot decide before because the way this voting works is that you could vote no up until you decide to vote yes on thursday morning.

The special committee probably does not have any real idea or real handle on how this vote is going -- if they do not have a real idea until thursday morning, if they say it looks like people just are not onboard enough with this, then will the company come out and say they are going to postpone it by a couple of days, a week, two weeks,, and that is a chance or them to sweeten the offer?

Hypothetically, that could happen, although we have read that michael dell and silverlake have no intention of increasing the offer.

The question is -- what is this all about?

Then the board would have to do something.

The board is stuck with a ale real theoretically.

The stock could plummet on the news.

That would actually work in their favor.

They could prove that the $13 and $.65 is a good deal for shareholders because stock would be dropping for a week -- they can prove that the $ 13.65 is a good deal for shareholders.

Maybe it would not.

How would this layout -- play out?

Is a morning, the board says that they do not have enough votes and they are going to postpone it -- thursday morning . i'm not necessarily to sure that the shareholders are voting no or potentially not giving a vote only to potentially vote later to play this game.

To answer your question, if it is adjourned, that is a negative side, and that is what we are seeing today.

The reason why the stock declined yesterday and today and some part of friday is because people understand the downside.

To your point that the downside can be very meaningful in the near term, and that is when carl icahn, among others, will be buying additional shares, and then there is a restructuring of the company.

The board is out.

Potentially even michael dell is out.

The stock drops.

There is no deal is that is what happens with the shareholder vote, if they allow it to go or it is rejected.

The recap is the dutch tender.

You have to vote for these directors, and then there is a breakup of the company.

That is essentially what carl icahn is going to do.

He has not said it in so many words, but that is how you get to $16, 17 dollars, $18, and for that matter, something about $20. a breakup of the company, that is what he is going to do.

Thank you for walking us through it all.

It's going to do -- going to be a very interesting week.

Tell you what, coming up, our closer will explain why he has got some rose-colored glasses for 2014. ? time for "chart attack," where we bring you the charts that will make you a little smarter and hopefully make you some money as well.

You say there are a couple of components.

Let's start first with government employment.

Job growth is the key.

We talked about it earlier, self-sustaining job growth.

Companies being let go is -- employees being let go is largely over as shown in the chart.

We are focusing on u.s. state and local governments, the hiring or firing, as the case may be.

That is at the flat line.

In other words, that is your point, right?

That the pain has stopped.


Contributing to the unemployment trends that we are trying to work so feverishly to reduce -- it seems to be over at this point in time.

Obviously, private payrolls, which have been growing decently, now will be a more important contributor to the total net effect of employment growth than not having to overcome the headwinds of the bleed coming out of the government jobs.

What else are you looking at?

Any litmus test of the economy has to be taken on the consumer.

The state of affairs, the psyche.

One of the things importantly related to job growth is along the way, because incomes are basically written barely ahead of inflation is the amount of consumer deleveraging that has been undertaken since 2007. we have now on the lower part of the chart added household debt as a percentage of disposable income.

Obviously, people have been deleveraging.

What do you make of the fact that it is where it is and it is starting to turn?

People are trying to restore personal prosperity back to something akin to where it was in 2008, and that will help to, i think, promote spending.

That is the fuel for economic activity and why we are constructive on the economy.

Good stuff.

We will get the top 10 stocks you need to know about today.

The close is next for you on "street smart." ? all right, if you missed everything that happened during today's session, do not worry.

It's time for your top 10. coming in at number 10, bally technology, shares up after they agreed to buy shuffle entertainment in a deal valued at about $1.3 billion, giving bally access to key markets overseas.

Yes, and baidu jumping 4% today.

The owner of china's largest search engine has agreed to buy app store 91 wireless to help the company gain a large share of mobile user markets.

At number eight, a uniform maker reporting earnings that missed analyst estimates.

At number seven, tesla, down about 14%, falling the most after goldman sachs' price target disappointed investors.

They said it more than 30% lower than the carmaker's closing price yesterday.

Ouch indeed.

All right, yahoo ceo marissa mayer will have a chance to review her accomplishments during the first year on the job with the release of company earnings after the bell today.

Let's stick with tact -- dell is down about 1%. the board may delay a shareholder vote until next week.

A final decision is expected from the committee on thursday morning.

If the votes are ready, it's expected to go against the michael dell proposal.

Just when you think we might be coming to the conclusion, it looks like it is being extended a little bit.

Maybe not.

Maybe it is a little far in the future.

It's very interesting.

We were just hearing that there has been concern about blackrock as well.

You add up all the different entities that have said they will not vote in favor of the michael dell buyout -- it's 27.5%, potentially, which is over a quarter of the company.

Do not forget, michael dell himself cannot vote his shares, i believe about 14%. right, you are at about 40% effectively not voting in favor.

Number four, coca- cola saw a one percent volume dip in its flagship north american market, including a 4% drop in sodas.

Four down after goldman sachs removed the automaker from its conviction buy list, replacing it with gm, as citigroup cuts the automotive industry to hold.

Johnson & johnson very little changed.

The sale earned the company $1.25 billion helping the company raises forecast as well.

All right, we are coming up on our number one stock of the day, and ladies and tillman, goldman sachs.

Goldman sachs down about 1.6% after it was downgraded from outperform to buy.

This is following goldman's better-than-expected earnings report, but it's rating was lowered to two valuation concerns.

All right, here we go -- down day here on the street.

15,452 seems to be the level we are closing out on the dow jones.

A little bit of rock the taking.

Also, for the first time in quite a in the red there.

So much for that rally.

We are ready to go.

Let's kick it off.

Lance do that, indeed.

We have first day in nine that is a down day for the s&p 500. a series of factors lending to decline.

First of all, earnings, high- profile earnings from companies like coca-cola missing estimates.

Investors looking at some of the negative within the report.

Also pulling down stocks.

Then there was economic data that was almost uniformly better than expected.

And usher production rising the most in four months.

Consumer prices rising the most in four months as well.

It means the economy is growing.

We have an index of homebuilder sentiment that came in better than estimated.

All of that equaling a positive tone on the economy.

The downside is that the fed could taper the stimulus.

Everybody has been talking about ben bernanke tomorrow.

A lot of the focus being pushed ahead.

People mostly focusing on what we will hear for him in terms of that stimulus.

Let's turned for what is going on in the commodities markets.

Buckle your seatbelts.

Oil prices are falling.

S lim futures are surging.

It has an impact on the price you pay the pump.

A lot of power outages.

This could hurt supply and postush gas futures to a four-month high.

This just adds to the outages from philadelphia.

Plastic below we saw a 15% increase.

Oil futures reversed directions after rising above 107. the stocks move lower.

Analysts are predicting the data will show the third weekly decline in the nation's oil surprise.

That is expected to be bullish.

Metals showed modest across the board.

Coco was big.

Copy saw its biggest jump in a month.

For more on the treasury -- coffee saw its biggest jump in a month.

For more on the treasury, -- the first of two days worth of testimony before congress.

On the 10 year treasury note, yields one point today.

It touched a one-week low.

People are buying those 10 year treasury note.

It yield down toward the 2.53 mark.

Just about nine days ago we saw yield up around 274-275. that is quite a bit of a move to the downside for the ten- year.

On the 30 year you can see a slight move in terms of of downsizing.

3.58%. again, all the focus will be on tomorrow.

Two key factors we will be looking for in terms of catalyst.

Number one, consumer prices.

Pbi comes out tomorrow.

We will also be paying attention to and bernanke during the house financial testimony.

Any hint about stimulus or his term ast the fed anything he can say about his outlook will tend to move markets.

He has a proven track record of doing so.

We will look closely for any comments.

Thanks so much to you.

For more what drove today's trade, we want to get to our fighters.

Our closer still with us.

We have broke the street here.

What does this say about the rest of the week?

I do not really care so much that we broke the streak.

On my radar right now is that we had an event at a location in terms of price.

We ran up to the may 22 highs and then we had increased inflation numbers come out.

We heard a little bit of his speech tomorrow.

We are selling off from that point.

I do not care so much about rocket making.

The market needs the all clear from bernanke.

Those inflation numbers matter.

We will have talked of the tapering.

There is no talk of a rate change.

I think you will really the size the difference between the two.

Traders have to figure out which ones really matter for equity prices.

The easy interest rate environment will still be around.

There has been this concern about capering.

You bring up a very interesting point.

It is something we heard from bill gross weeks ago.

It is this idea that we have got to be watching inflation because there is very little inflation in this economy.

Everybody would like to see some but where is it?

Too little.

That is one of the concerns expressed by the head of the st.

Louis fed with regard to the reluctance that he expressed to relieve the economy of its tapering program.

It is due to the fact that he was concerned about falling inflation.

A little bit of uptake would the considered healthy as long as it stays within the target rate of 2% or 2.5%. so back over to bob.

Do you think then that the market will be watching this very carefully in terms of the fed?

Do you think we might see more fluctuations or more volatility?

I do.

It is one thing in that the fed is not known for, shifting back and forth.

We are not going to see tapering in 2013. i think it will start in early 2014. the fed was to make sure these things are happening.

They are bad -- not very well known.

I think they will not started and then be at to start it up again.

Bernanke will be focused on letting the markets know that easy money will still be there.

Interest rates will be low.

Even if it starts to taper, that is just the extra part of the easy money situation we have had.

It is a new phenomenon.

I think he is going to want the market to know that.

We have some breaking news on yahoo.

They are out with earnings.

It is a bit of a mixed bag.

The number comes in better than the estimate, 30 five cents.

The estimate had been for $.30. revenues have been fractionally.

The traffic acquisition cost comes in at 1.0 7 billion.

They were estimated 1.08 billion.

We should also point out that the company is reiterating it will continue to buy back shares under its existing 1.9 billion share buyback.

You can see the reaction at the bottom of the stream -- screen.

Cory johnson, you know this company as well as anyone.

You have had a moment to quickly go through the press release.

What can you tell us?

I do not know anyone.

The share buyback was put into context.

They had a big share back buyback.

A new share buyback means it will continue to be support.

It is not indicate any change in the fundamental business.

What we're seeing from yahoo is let's start with the revenue numbers.

7% year-over-year revenue decline.

This is getting smaller.

Businesses need to get bigger in order to grow.

If you look at net income as well, let me start with some of these numbers.

Net income also rising.

That is a real good sign.

220 million dollars in net income last year and this quarter.

335 million dollars this quarter.

That is the improvement they need.

They do not need to have more revenues to have more rockets.

They need better revenues.

It looks like we're starting to see it here.

Among the things we're going to look look for is what revenue they have per click, how many clicks they have.

Those numbers are going to come out of the release that just came out as well in a conference call.

I think it is a groundbreaker.

We will see what goes on in the room as they choose which analysts to go to.

Embracing technology, right?

One of the reasons companies do not do this as they do not want us to see how it is made.

One of the things they will do is they will scribble on a piece of paper am a do not take a question for that guy.

Let's give him the first question.

That will happen.

Does she get an extension?

We were talking about earlier in the show the stock was up 70% but revenue was expected to be rather weak.

Does this by her summer time?

The stock has benefited from initial moves.

Too sure of things on the income statement.

It is her to find a better business for yahoo to be in.

We will see at these numbers are there to support that.

Is a very expensive application of tumblr if they can make those work and turn into a better business.

I expect they will say what are you getting?

You are spending billions of dollars in acquisitions.

What are we getting?

We will be watching you and the whole team on "bloomberg west" coming up.

We have not really talked a lot with you about tech.

You did mention earlier on the show that it is cheap.

What kind of confirmation do we need to get people to buy russian mark it is cheap.

On a trailing valuation, it it is a 15 or trailing -- 15 or 20 or trailing.

It is one of the cheapest that her spirit it attracts sponsorship because it is a source of iua shouldn't. i think what we're concerned about is making sure what exposure we have is business facing.

We began in that belief and the revival.

There are increases that have grown sequentially.

We know corporate america is an great shape.

Corporate profits are still at all-time record highs.

The wherewithal is there.

What we need is animal spirits to be rekindled to match the cash on the balance sheet.

We think they have underinvested in technology among other things as it relates to last week.

This is deserve it -- a deserved of investments.

We are facing those to see this of increasing productivity and matching their business needs.

Thank you so much for being here.

That is our close.

What is next?

A message for ben bernanke.

Find out what everybody's favorite economist and humor ms.

-- humor ms.

-- humorous has to say.

Lauren bush discusses capitalism.

She is fashion and political royalty.

She is here to tell us how her feed line is right on target.

Les, a doomsday timeshare.

A $3 million tablets.

That is in today's weird wall street.

? ben stein has quite a resume.

He is a humorist, actor, actor , lawyer.

He is also a former game show host.

We are challenged him -- challenging into a game of word association.


It is so good to see you.

We know you have great insights into all things economics.

We're trying to cover a lot of ground.

What is the first thing that comes to your mind when i say names like bernanke?

Drug dealer.

Come on.

Pushing drugs.

Pushing that easy money drug down our throat even after recovery has started.

Addicted to making americans addicted to using money.

Making the stock market addicted to easy money.

I love it.

I love it when i opened my account and see it is worth more than it was a day before.

He is a drug dealer.

Some day it is not going to feel so good.

That day is going to come.

That is what you are worried about.

When could it come?

I do not know.

We are not going to have fixed price interest rates at low rates forever.

That cannot happen.

There has never been a case of price fixing that lasts for a long time.

If you could tell him something, what would it be?

I would say get us off this drug fixing on the prices as soon as you can.

In age into impolite way.

-- i would do it in a polite way.

Continuing on with word association, paper.

I wish they would do it sooner.

I am ready to take the hit and my stockbroker a point -- accounts.

I am ready to pay higher mortgage rates on the many houses i own.

I am ready to do it.

I think it is time for the economy to get back to a market system of interest rate instead of a mix price.

It will never last.

They had to fix it with the so- called treasury of court.

They will have to do something like that this time, two.

The are a nation that needs to have the tapering start sooner than later.

Quite you are running with it.

Let's shift gears.

President obama.

I am not a fan.

I hate to say that.

I think he handles some things brilliantly.

I think he does a better job than mr.

Romney would have.

I would have much rather see mr.

Mccain as president.

I disapprove very much of even the remotest concept of the department of justice pursuing george zimmerman for allegedly violating trayvon martin's civil rights.

Explain why.

A florida state jury has already had a full, fair trial.

It was not like the murders in 1960 were the ku klux klan did a murders in a local white jury would not touch them.

This is a fairly drawn, ethnically mixed jury.

They put him through a link the try.

The state through everything they could at him.

-- link the trial.

The state through everything they could to him.

I think that eric holder is just picking a racist's cap.

I would love to americans get along as a regionally -- racially mixed country.

We have to get along with each other and not pick fights.

Let's move back the markets and talk a little bit about banks.



You just laughed.

I have a very wonderful bank.

It only has about 100 clients.

I write as many checks as the other 99 put together.

But it's probably because i have 12 houses.

That would do it.

I hate them.

They take my money.

They pay almost no interest.

They send me statements that are all screwed up and have to have to correct them.

I basically hate them.

I love my tiny bank but other banks i hate.

When they miss a payment on a credit card the charge the wild amount of interest.

I hate them.

I think they are thieves.


We look at this recovery process we are in.

I am interested to get your thoughts on what stage we might be in and whether the banks are doing enough in terms of lending.

Where do you come out?

They will not lend to the people who really need it.

They will lend it to big corporations and other big banks and of course to the u.s. government.

In terms of a real human being that needs to buy a home, they are very tough on them.

I just think that banks have gotten into a position where the government is spoon feeding them some cheap money.

They lend it back to us at a very high rate of money, especially on credit card debt, and they walk away with all of this of money that has been given to them by taxpayers.

They cost of the mess the first place.

The guys who caused the crash or the guys getting these huge profits off the taxpayers.

That is not right.

As we end our game, i have one final last word association.

It is buhler.

-- bueller.

I miss john hughes like crazy.

It was the best day of my life.

My wife always says what about the day we got married?

It was the second best day.

I am serious.

This tapering has got to start.

We are going to leave it there.

Thank you so much.

It is good to see you on the program.

Thank you so much.

Running up, where do our money and a chanel go to make their products seeing it?

Lauren bush right here on her latest business venture.

We will be right back.

? take a look at coke today, down almost 2%. the worst performer in the dow today.

Profit dropped due to economic challenges around the world.

Also changes right here at home.

Not as many people drinking soda.

Feed is jesse america to really feed america.

Lauren bush lauren next.

Casino game manufacturer bally technologies announced the merger of shuffle entertainment and others.

They are of 7%. shuffle entertainment up more than 20%. what is behind this merger?

Brian miller joins us.

You e-mailed me the second it crossed you're all excited.

Strategically this is a big deal for bally.

Although the average investor wants with other casino equipment manufacturers, they make a different product set.

They do not overall -- you have two companies that do not over lap at all.

Shuffle master gets more than half of its revenue from outside north america.

You have geographical diversification.

Which makes perfect sense.

What about the products shuffle entertainment has?

That is a great point.

Only about 31% of the business is actually from slot machines.

Most of the revenue is from things like traditional shufflers and then proprietary table gainsmes.

Can you get into "texas hold 'em" where they lay their own on top of a project.

Can you go to a table and play what ever kind of poker you want based on the application.


It is like taking something and putting it on top of it.

The regulation.

Every state has different regulations when it comes to gambling.

How is the company going to deal with that.

That is an issue when you look at operators that are in multiple states.

One of the things we looked at was rummy department of justice standpoint the gaming is is is already highly consolidated.

When you take a business out, when you look at 2007-2000 eight, the sirius xm radio got held up a year because they were defining what the market was.

The market is already so consolidated it could be at risk.

Pricing on this thing, 1.3 billion dollars.

How does that strike you?

Evaluation is pretty high compared to what is considered in the general peer group.

They say this company is different.

It has different business units.

It is justified.

Thank you.

You e-mailed me early this morning.

We are glad you are still here to talk about it.

We have been noticing a trend.

It is the rise of conscious capitalism.

The idea is to create a for- profit business, give it a charitable agenda and then watch your sales take off.

Lauren bush lauren has been doing this since before you put on your first pair of toms.

This is focused on clothing and accessory.

It looks good and it gives back.

Her new heart and a ship would target is combating world hunger to a new -- partnership is combating world hunger to a new level.

Her bag gets her gets the attention but her shirt also gets 16 meals.

Now a family gets a dinner.

Thank you so much for joining us.

Explain how it works.

We got a sense but walk us through it.

It was started over six years ago with a mission to create good products to help the world.

The model is that.

We build a tangible donation into every product we sell.

That signifies the amount of meals we are able to give up.

I brought a bag of course.

Each of badg gives eight meals.

This is to signify a goes to america.

Each of our projects has a number so you knew the -- so you know exactly how many nails you're helping.

It is very tangible.

How did you come up with the idea?

Quite simply.

I was a simply and have the opportunity to travel with the un program starting as a sophomore in college.

It was through that experience of going and learning about poverty and hunger it is hard to fathom but eight hundred 70 million people around the world are food insecure.

We come back from this trip.

I was inspired to do more.

I was inspired to create a way for others to engage in this issue which is seemingly so big and overwhelming.

It is for them to tangibly engage in the issue.

How about allocating money between the u.s. and abroad.

From the beginning, most of our funding went abroad because our experience was with unicef . i knew this was something to address.

I was so thrilled with our new partnership with targets.

The goal of the target partnership which is in store now, nationwide is hopefully to be able to give 10 million euros to americans.

It is a conversation starter.

This is abroad as well as here in america.

This is giving back.

You are running a company.

You have to pay pay your staff while working together to work on this.

It is a double bottom line.

My intention was to create a sustainable small business as well as donate the most amount of meals we are able to get.

We may not be able to scale the same rates.

We are giving away such a large chunk of our profits.

The purpose is here.

What comes of the profits?

We get around 10% of the retail cost.

It is down to the very tangible metric.

A very sizable amount of money to pay salaries, to stay in business.

At the end of the day, are you trying to run it by a nonprofit?

I will pay people and giving money away?

It is not like that.

If i sold this bad i just showed you, a certain amount is going to be donated.

It is not after costs.

It is part of the cost.

There is a profits.

The company makes money.

That is part of the idea.

If you can harness that idea , there seems to be a push toward this conscious capitalism.

We think it is a viable model.

More companies should be looking to get back.

I think so.

I think consumers demand it.

There is a study that edelman did that shows 89% of millennial's who are the rising generation of consumers are more likely to buy or support a company that does good and authentically does it if price and quality are the same.

I think tom's and feet has proven that.

It does give you a leg up.

You have a deeper mission.

If you are sure to that, you can really grow in the business.

People think their money is going somewhere.

It is not just consumerism.

Thank you so much for joining us.

Lauren bush lauren.

Coca cola, one of the most iconic brands in our nation's history.

Once in a while they take a gamble.

We're going to show you the strangest coke products you can possibly imagine.

Shark natonado, what would insurance cover you?

We have the answer.

? coca cola announced second quarter revenue this morning and missed estimates.

Today we're looking at some of the world's biggest soft drink makers other misses.

? ? that is some strange coke.

Click weigh in on this.

Have you had any?

I had new coke.

The one i found the strangest with the pine nut flavor from south africa.

I am not sure what kind of soda taste like.

The only time i have had pine nuts is in pesto.

That is in italian meal.

Please do not put it in my coke.

I do not know.

Lipstick on this food and beverage theme and take a look at how the restaurant industry is airing.

-- let's stick on this food and beverage theme and take a look at how the restaurant industry is faring.

This is something that neil talked about.

He is an economist and is looking at something in terms of the divergence between restaurant sales and restaurant employment.

This is a great chart.

It shows you be divergence.

You can see the number of hires per restaurant for her kinder's -- for bartenders and servers tracks closely with the yellow line which is restaurant sales.

All of a sudden on the right- hand side you are seeing this convergence.

Sales are lower but employment keeps on rising.

What gives?

He inc.

That eventually you will see those restaurant sales start to catch up a little more with employment.

He thinks they're understated right now.

He says consumer confidence is still hovering near some pretty high levels for the u.s. economy.

Things are getting better for the retail spender.


It is counterintuitive.

I am glad they are hiring.

It could catch up eventually at some point.

There are also some other places where we are seeing this play out.

If you look at the stocks, they are doing great.

If you look at the performance between the restaurant stock, the s&p 1500 compared to the s&p 500 it is doing to a slightly better.

Best part about this is these are stocks like starbucks, mcdonald's, darden restaurants, olive garden, red lobster.

The best-performing stock question mark?

Think ruth's hospitality group this has been a sizzling steak , up 87%. over the last six or seven months, are we seeing an increase in sales there?

If so, that is certainly a good economic barometer.

People do not go there unless they are going to use or spend on premium items like a nice usda prime porterhouse or a ribeye.

It is dinner time.

It is a great steak but it is a great stop for investors.

I wonder if this is example of the barbell economy.

Luxury, high-end.

Mcdonald's on one end and many have ruth's chris on the other.

The middle ones are underserved.

Thank you very much.

We're going to take a quick break here and we are back with some very weird stories.

? it is time for weird wall street where bizarre is usual.

A weird story.

We are not doomsday watchers.

You know that.

Just in case it happens, we want you to be preparatory and we want you to be able to get comfortable underground in the ultimate doomsday shelter.

How about that?

An rv park.

This is a company selling a military bunker.

It cost $1000 plus a $1600 per person for years worth of food.

Forget about keeping her canned food in the basement.

It comes with a kitchen, bathroom, bedroom and do not worry.

You do not have to miss out on life's perks.

There is a wine, and meditation area.

This is where you go when the end of the world comes.

I do not care if it is the end of the world.

I will live there right now.

It is pretty cheap.

That is a pretty nice set up.

Underground with a salon and day spa.

I do not know what i think of that.

This is good to be in the sweep.

Russia's natural gas exporter announced it has ordered a $3.7 million tablet for the company 's ceo.

It is weird.

Apparently it will be guaranteed to start within five seconds, i mean.

Come on.

What is curious is that vladimir putin vowed to fight wasteful spending,. i do not know if they got the message.

When it comes to sharknado, tara reid said it best.

It is amazing.

It is like a phenomenon.

Likes the tv movie has taken the world by storm.

If you get a falling shark in your house it will be covered by insurance.

I am so relieved we would be covered.

We will see you tomorrow at three.

It is time to get on the market.

This is an eight-day winning streak for the s&p 500. coming off the record close.

It cannot make up for a ninth

This text has been automatically generated. It may not be 100% accurate.


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