China Ripple Effect: Street Smart (07/15)

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July 15 (Bloomberg) -- On today's "Street Smart," Trish Regan and Adam Johnson find your last trade of today and first trade for tomorrow. (Source: Bloomberg)

That is it for on the market at this hour.

We will have the latest stories and data every 30 minutes.

Up next, we have "street smart." the china ripple effect , will the country slow down and drink down, a can of coke, but do not put it in your portfolio yet.

We have news ahead of second- quarter earnings.

Plus, sharknado.

Actress tara reid and another talk about the social media firestorm.

From bloomberg world headquarters in new york, this is "street smart with trish regan and adam johnson." the s&p 500 looking for its eighth consecutive win.

Welcome.

Until the closing bell, scarring -- scouring every market.

I know you have some charts for us.

We are up in spite of the fact that we had a weak data.

Take a look at what is happening right now.

Three charts you need to see the results of the day.

There you go.

This is up about 39 points for the dow jones industrial average, despite the fact that retail sales were weaker.

But it could mean that feds are going to keep putting money in this system.

Attended 10-year yield, look at that.

You buy bonds, this pushes the yield lower.

One thing that is clearly moving higher, which is so painful, higher oil prices.

Look at this.

Near these two-year highs.

Ok, let's get over to the big stocks.

Julie hyman at the markets desk keeping an eye on things.

What are you watching?

The big bank coming out with earnings that beat estimates, profits up 42%, and we saw a lot get out of stocks.

That stock trading revenue helped out others.

A home or unwanted assets.

It posted its smallest loss ever.

This is part of efforts to cut down on risks, and also, the shares up better than 2%. these are rebounding.

U.k. investigators said the fire we heard about at heathrow airport of that 787 on the ground at the airport, unrelated to recent battery problems that grounded some of the boeing planes, so on relief, we are seeing shares on the rise.

Also, honeywell says it will be in adding to that investigation.

$15 per share.

Those shares are rising considerably and also above the offer price.

Christina was talking about that, an asset sale related to this deal, but we have seen a lot, but there is potentially a lot more to come.

Ok, we will check in with christina a little bit later.

Thank you, julie.

Growth is slowing big time, 7.5% in china, and that is down from 7.7% in the first quarter and down from 7.9% in the last quarter of 2012. they have been averaging about 10% growth in the last decades, and we have grown to respect and rely on that kind of growth, so here is the question.

Should china's great wall of worried crumble the economy?

We have a ceo at the china beige book international, a ceo at an asset management company, and a senior analyst.

Some might say 7.5%, that is pretty good, especially when you look at others are doing around the world right now.

The numbers are pretty much expected.

They are not want to say what the china policy makers are looking to do.

Looking at the economy going forward, they are looking at things like employment and inflation, and this let's you know if they are going to be getting involved in the inflation game.

So you are saying that this does not matter that much?

The market likes it.

But it has not mattered for a long time.

It is not transparent.

This is a game played by traders.

Michael, would you agree?

I would still think i would 10%, 11% growth.

This gives you no idea about what is going on under the surface.

To that extent, i agree.

China is more than one economy now.

There is a big split down the middle.

They are still looking at a massive issuance of credit.

The export-driven part of the economy, exports, they have averaged about 12% year over year, so there is a portion of the chinese economy which is still going gangbusters, which is still fuelled by credit.

That is part of the pboc -- i do not think china is really our problem.

I think china is china's problem.

What you're talking about there is the attempted to move millions of people, literally, from the farms into the cities.

The panic in 2008. they unleashed a credit bahama.

They stopped it in 2010 and to about 11, and they panicked again in the euro crisis, and then there is a massive what you have is not all that different to what they had previously.

I do not think lehman, particularly.

But it is like a late 1920's moment for them, or for japan, late 1980's. what does this mean for us back at home?

I am not sure i accept the premise.

Of what i am looking at is the policy decisions going on behind the slowdown.

The chinese government has decided intentionally, and to focus instead on reforms.

I think the medium-term outlook is positive.

This is a much better situation.

It will benefit them over the medium term, as well.

Are you saying, they are more in control of their economy than chinese governments of years past?

I think they are trying to regain control.

They are looking at some of the decisions about, hey, how to assess the dynamics of the role of the state and the role of private business in growth, and i think they are trying to find something sustainable.

This is not going to be easy.

They face some difficult policy choices ahead.

If you want to see them get to a more positive place, then you have to get to the right prescriptions in the tool kit right now.

I actually think that is right on.

They once lower, healthier growth.

The problem is you have to actually check them to make sure they are doing what they say they are doing.

So our q2 numbers, you have been seeing that, but the slowdown, which is much more dramatic than what we have seen it in actuality, it is not viewed by sector rebalancing.

So you do not think this is an engineering move?

Not everything is part of a beautiful sector rebalancing or other rebalancing.

It is still 7.5% growth.

Why are we so upset about this growth?

The growth does not talk about productivity.

You can build it up again.

When i was a kid, it was called "make work," but it is still work.

China has been inefficient.

For a long time.

They cannot keep doing that.

It sounds like, you think they are getting better.

They are doing this in an an improved way?

This is a different set of decision makers.

They clearly have a mandate to do something different.

This is happening on the economic side.

We are seeing foreign policy.

This is a comprehensive change in approach, and it is because we have individuals behind the decisions, and they have determined it want to pursue a different path.

As they go through all of this, and they have got a lot of hurdles to overcome, what does this mean for investing around the world?

I think it is a mess.

This is very typical of the confidence which is always put in the financial systems at the end of the cycle.

I do not think this is going to be a straightforward rebalancing.

My colleague over here in terms of what they are trying to do, i expect it to be a mess, but i expect it to be a mess with the chinese domestic economy, and those portions of the global economy which feed directly into with, and you are really going to have to go -- corp.

By a corporation.

Really relying on the chinese divisions for gangbuster growth.

Hang on.

Just so the viewers can understand what is going on, you are talking about the company that supplies peabody coal, versus a company like yum!

Brand, which is opening at taco bells -- opening taco bells.

You would rather being long ford than gm.

In that example, right.

I think the bigger issue here, we can talk about what the benefit of the chinese leadership is all day, but at the end of the day, they have to fix the credit mechanism, or they have to deal with the problems that come from not fixing it.

Right now, you have enormous situations.

What they need to do is be able to spread credit efficiently across the economy.

If they do not do that, all of the talk in the world is not going to help them.

Thank you so much for being here.

Coming up, the cash is coming in, and it is coming back to you.

But then what is worse than a tornado barely towards you at 100 miles per hour?

"snarknado" star tara reid and the director will talk about how this is creating such a social media storm.

Sharks are coming down.

There are too many of them.

We will need a bigger chopper.

Sharing the wealth.

We are talking about companies bringing well in, and then sharing the wealth to back out.

A really simple concept, right?

With the growth, they have to figure out what to do with the cash, and they have three choices.

Buybacks.

They can buy back their stocks.

They can increase their dividends, or investments, investing in the business themselves.

They have a choice.

There is a company doing all three, and the results speak for themselves.

Take a look at mastercard, a company we know well.

Cash flow up 35%. as a result, they are able to reinvest in the business, capital expenditures up, and they have doubled their dividends.

That is what is impressive.

That is what they are doing with all of that cash, and look at their returns.

If mastercard is one example, guess what?

There must be others, and as a matter of fact, there are, and in the s&p, nine companies that fit this bill, where they are seeing rising cash flow, and they are increasing their dividends, buying back stock, and increasing their expenditures.

This includes home depot, starbucks, and others, and notes, by the way, seven of the ninth of all consumer related.

That bodes well for the economy, doesn't it?

And this is why we care as investors.

This is up year-to-date versus the s&p 500. cash is king.

Our closer, everyone, is worried about holding onto too much cash.

He is a managing director of a firm and the co author of a book, "reckless endangerment." how greed and corruption led to economic armageddon.

He says this is real, but the market may have gotten a little bit ahead of itself.

Welcome back to "street smart." you heard him just go through about nine cash flow kings.

Let's take a look at some of these names, home depot, for example.

Half of $1 billion.

Should they be holding on to that much?

It is not my sector, but this is a real problem.

We have an economic expansion which is tepid at best.

We have corporate balance sheets which are really strong.

We have consumers on the other side which continue to virtually deleveraged.

Where is the demand point to come from, especially as the rates start rising?

In other words, you look at the results, and you say there are only nine s&p 500 companies where this is happening.

That is right.

Theoretically, the demand would, because if the economy improves and up, consumers are spending.

That goes exactly to the point that i think markets are assuming and the market's rise, the economy is healthy.

And you are saying that they feel like they have to do it?

Exactly.

Where the market is going to start pushing ahead, and the fed will have to take action at some point.

But the market itself, the borrowers are going to start demanding higher interest rates.

They get downgraded, and then what happens?

I do not think we are that close to that.

I think the view that we are seeing a real expansion is ahead of itself.

We are seeing an expansion.

We are not seeing it in terms of lending or investment.

Even 2% growth?

2.5% growth?

Yes, i think that is the type of growth we will see.

So did bernanke get ahead of himself?

No question.

And is that why he backpedaled?

Absolutely.

A belief that the expansion is more current than it is and that it is going to be more robust, and i think the psychology is -- look at the banks.

They are trading driven.

Volatility is actually a great in the markets right now, and it is a wonderful trading environment.

I think it is time to recognize, even as you start looking at the curve, the one-year, 10-year spreads, they are telling us that it should start to widen, and that should be good for the banks.

However, that is -- that is the potential supply side.

The widening net interest margin is good.

And citigroup, a lot of that came from stock trading, and last week, we had wells fargo.

Also, the loan demand on the mortgage side.

You are not really seeing it on another side, commercial and industrial.

You are not really seeing any demand.

The growth of demand on that side has actually slowed since 2011. all right.

And you are with us the whole show.

I am.

Coming up, the fight with edward snowden and ecuador could take a toll on global trade.

We will explain, coming up.

? time for today's global llp and russian president vladimir putin says edward snowden welcomes to an unwelcome presence from the united states, called a gift that keeps on giving korea on nicholas joins us from the white house.

We were debating, what is going to happen to this guy?

It is a giant mystery.

Nobody seems to know.

When you look at the position ecuador is in, because of the situation they have had with the u.s. over him, raising the borrowing costs, you can see the financial component, as well.

We do not know where he is going to go.

Vladimir putin does not go, but we do know that there are repercussions or wherever he lands.

In 2014, they defaulted on $3.20 billion in debt, and this, potentially, according to analysts, this could raise their borrowing costs as high as 9% with an option for a 10-year note, and you compare that to something like the dominican republic, which has about 6%, with a similar portfolio, and then there are the drug alternatives, and agriculture program, this brings it back to president putin, and him talking about snowden being an unwelcome item, something they think the u.s. has foisted on him.

The u.s. has affected his ability to travel anywhere.

Nobody wants to take him.

Vladimir putin says he knows that snowden does not want to stay in russia permanently, but when asked by reporters about where he wants to go, vladimir putin said, "how would i know?

It is his life." it seems like a hot potato, but a hot potato with real consequences.

A hot potato.

You wonder why in the world ecuador would even consider taking him.

Because they can make us angry.

Venezuela.

Bolivia.

There is a bit of agitation, right?

And they are already harboring at their embassy in london julian assange from wikileaks.

There are various attempts to make the u.s. angry, and they are making a human-rights case.

Someone under universal, international law, they should have some right to petition for asylum.

Point taken, right?

They may be trying to aggravate america.

It reminds me of a famous quote from richard nixon, the problem with the middle of the road is that you can get hit from both sides.

That seems like something margaret thatcher would say also.

Thanks.

Time for us to go to the markets of day and show everybody exactly what is happening right now.

You can see, look at this.

We are in the eighth day of a row where the vix is falling.

Stocks have been rallying, and for the eighth day in a row, stocks are up.

Yes, that is right.

Yes.

One of the hottest movies out is swimming your way right now.

All right, the social media tornado, an original scifi horror flick, "sharknado," where the sharks leave the water and good to land and start becoming killing machines.

Watch this.

Move.

The movie was viewed by 1.4 million people, about average for a sci-fi film, but the social media impact was tremendous.

The term "sharknado" is trending worldwide on twitter.

We have got the director, anthony ferrante, and the star, tara reid, and think you for being on the show today.

Were you surprised by all of the attention or film god and is getting?

Yes, it is amazing.

It is like a phenomenon.

It is crazy.

We had no idea it was going to go this big, and then it was trending on twitter for three days.

It was, "what is going on?" i was in new york, and on the plane, one of the stewardesses said, "oh, my god, i saw "sharknado."" it is everywhere.

People are talking about it.

"american pie," or something like this, and all of a sudden, people are, it "you are in "sharknado."" any idea, anthony, how this became such a hit with social media?

I am a genre fan.

I made the movie for the genre crowd.

We were trying to play towards a certain group.

This was just some social media stuff.

I reached out to the fans, and i think because all of this summer's big blockbusters did not live up to it, they were not being told to sit there and watch this.

They just said, "i am going to and raise this and go for it.

Dvring and viewing it later, and on twitter, we had a nationwide situation where we were talking to the fans, and they were having fun.

This was a lot of fun.

Seth myers, mia farrow.

She was writing, "omg, omg, omg, "sharknado."" is there something you can do to replicate this summit to do it again?

How do you get this kind of excitement?

This is kind of a one in a billion chance that this happens, and once in awhile in your life, you get lucky, and this happens.

We just knew that we were going in to make a fun and funny movie and a good movie and have fun with it.

People got the humor that we wanted people to get, and they really enjoyed it.

It was about us making a film that people were going to enjoy, have fun with it, and sharks the flying in the sky.

Come on.

People enjoy it.

You cannot replicate this at all.

It is something you can buy in the future, and you can organize, but it would change how movies and television shows will be handled.

But you cannot do what we did.

Anthony, it is all of the rage to do sequels.

It is all happening.

There are sequels every other month, so why not?

Absolutely.

We are in talks right now, talking about doing a sequel, and this is a movie where we can have sharks going anywhere.

If we have them in the sky, who knows?

We can have them in an avalanche it is limitless with what can happen.

They can start taking over everything.

You know, the thing i think they should do because of the interest with this, they should do "sharknado" theatrical, and that would allow us to do an even bigger, more ambitious movie, because the fans have liked it.

Maybe they like it because of their charms, but look what we did with no money and 18 days.

A big movie.

Yes, we can do it.

We do not have to spend 100 dollars million on it.

We accomplished an impossible feat.

No one can pull something like this off, because everybody wanted us to try to reach for the sky, and you reach for this guy, and look what happens.

Yes, look at broadway.

"little shop of horrors," "spi derman," what do you think?

That is certainly a step in the right direction.

It is scheduled to air again this thursday.

Do you think you may get more because of all of the attention it has received?

You never know.

Because it has gotten so much social media and trending, i am also doing "the today show to be in two days, and we are also doing "the view," and we will be in new york.

There are so much more people intrigues, so hopefully we will get more people, more fans.

I would say there is definitely more of an awareness for it, but we are already a success, and we are a worldwide success, and we did not do much.

We made a crazy movie.

Imbd says it is estimated to be about $1 million, and i think it is somewhere between $1 million and $2 million, so i do not know the actual budget, but it was enough to do a budget, but it is not a lot compared to a studio movie at all.

Tara, what you said, the studio did not have a ton of input.

You actually did not even see the final cut before it went to air.

No, i did not.

My boyfriend is in a band, called infected mushroom, and i saw all of this press the next day, and i was, "you have got to be kidding." trending tarta.

-- tara.

We downloaded it and watched it with the ban on the way to the next show, and we were dying laughing.

We could not believe it.

In the car, my twitter was going nuts.

What is happening?

It was the last thing.

"whoa." how do you as a director, knowing that, with everything tara is saying, how do you use twitter to your advantage for your next film?

I have been wanting to utilize what i know about social media, and with "boo," we shot a lot of extra, and we did not have a chance to put it on the web, and there is a way to utilize this.

People know when you are trying to trick them.

There is value-added content.

I learned from a director of mine, david van eissen.

It is not just a web series.

It is an interactive experience, where you can put stuff on the web.

"lost" did that.

One of the things with twitter that i find fascinating, people talk to each other.

You can say one thing, and people respond back.

I can say, "when are you going to say "sharknado"?" it is really interactive.

This is out twitter with its people involved.

Another thing that is fascinating is people are defending our movie.

There are people who say they hated.

I have never had that happen before, people defending us.

There is good and bad and everything, but it is nice to see that people are saying some nice things, as well.

They changed the script because of things that people are saying on twitter.

Can you imagine doing that?

Based on what people say?

There you go.

We want to make fun stuff for people, whether it is the next or something else.

Thanks so much, and good luck on the movie version.

We are looking forward to seeing "sharknado" on the big screen.

Anthony ferrante and tara reid, and you can watch it thursday night.

Just ahead, popping open a can of coke the giants' second- quarter earnings.

The triple threat, coming up next.

? coca-cola report second- quarter earnings first thing tomorrow morning, and while it is an iconic american brands, tomorrow's numbers are more about what the company is doing outside the united states, because, after all, cokes earns 50% of its earnings outside.

You have to ask, what does it mean?

We have our panel and carol massar server with the story.

And we have the trade.

At a time, most companies?

-- they do have a big exposure to the north american market.

You have to keep that in mind, and that is where we have seen the strongest growth in the past three years, about $22 billion in 2012. we are going to watch those numbers.

Coca-cola still has a lot of exposure.

We are going to watch those numbers.

People drinking it so that any more.

They have branched out into all kinds of different drinks.

Coke has done a lot of acquisitions to play on that, but it is a more challenging environment just from the beverage perspective and the economic environment.

Sugar has declined 33% in price over the last year, 1.5 years, and you would think they will take advantage of that opportunity, but, you are right, sugar is being consumed less.

We are looking for revenue growth in north america.

People are just not drinking as much?

There is a lot of competition with pepsi.

And the street, 62 cents, the earnings, we are right at consensus.

But there is no real compelling value as far as a strategy.

There coke share price is added 25% premium to the market, bonus times earnings, and you have a dividend equal to the 10-year yields.

Let's go over to you.

What are you doing ahead of earnings, and what are you looking at?

It has rallied five out of the past eight quarters out of the number is.

They are expecting modest growth with relatively flat revenue.

Expectations are low, and any good number will send the stock higher.

I want to look at the july options, buying the 51 -- excuse me, the 41.5, $42 call.

A pension profit of $35. all right, a good idea.

Thank you.

Well, our rising rates good or bad for banks?

We will be told all about growth, what it means to the banking world, next.

? time for cha rt attack, which will make you smarter and hopefully a little bit of money.

A good thing.

I tell you what.

There are a lot of moving parts.

You are a very well-regarded, a longtime banking analyst.

Walk us through this.

Raising rates, terrible for banks, the difference is, each balance sheet is different, and, frankly, the smaller banks have more exposure, but, really, you have to think in terms of the charge.

You have the spread between the long term and the short term.

Let's show you people what you are talking about.

We are showing you the yield on the 10-year note.

The point is, recently, right down here, you are starting to see that line move up.

In other words, letting up, where the bar, that should help the bank.

Absolutely, it should help the banks, but everything matters, including the speed with which they move.

For example, if you are a community bank, and you have a lot of adjustable rate loans, and it is very slow.

You may not hit triggers for repricing.

Just hold the mortgages.

Exactly.

Because why would they refinance at a higher rate?

Exactly.

But if you have to pay up to maintain deposits, that is going to hurt you.

When you look at the big data, none of that is captured, so besides the fact we have never seen rates this low this long, in an uncharted territory, based on the available public data from the fdic and the feds and others, there is not the dated to do that level of analysis.

Although, there is one chart that you brought, and it gets more complicated.

If we look at commercial loan growth, commercial plus industrial loan growth, it is growing.

I feel like this is the second charred, to me, that makes it look like it is best for the banks.

This is one of the best areas.

If he were to look at almost every other category, it would be flat or down.

This is also, unfortunately, one of the smaller pieces.

And, by the way, if you think about it, as we were talking about it before, most of our large industrial companies actually have very good balance sheet at this point, so how are we going to get them to invest, to borrow to spend, and that really becomes the question on the shape of the recovery, how robust the recovery, so this read in the rate is going to matter either way, but it depends on the economic recovery, how robust the economic recovery is, and we are just not seeing the end user loan demand that we need to see.

All right.

Charts can be misleading.

I guess so.

Profit down.

"a close" is next.

We will be focusing on the fed.

We will hear from pimco, coming up on "street smart, after this.

? however, are raising questions.

Budget is down 2% after acquiring payless call -- car rental for $50 million in cash.

$80 million in annual revenue.

U.b.s., falling half of 1% today after getting downgraded over jpmorgan, raymond james, and the hat trick.

The downgrade comes after they cut their full-year earnings guidance on friday, citing a slowing u.s. economy.

#5 is yelp, down after it was cut from neutral to buy -- from buy to neutral by ubs.

Yelp is a popular service the boasts 100 million monthly users.

Remember, it came public last month at $15 per share and is now trading in just under 39. not too shabby.

It is like the opposite of facebook.

They figured out a way to monetize, getting closer to modernization.

Still struggling.

Let's move on.

No.

4 happens to be dell.

Down more than 1% , saying that there board is attempting to scare shareholders.

Earlier the board deemed to their latest bid unrealistic and the proposed valuation did not make sense compared to what others would argue differently given the higher per-share valuation.

It is going to be an interesting week.

It is going to be a lot of moving parts.

Boeing, up nearly 4%, regaining the ground lost in friday's session.

They say so far that they say -- seen no link between the fire on friday and the battery problems the grounded the airplane earlier this year.

#2 is hewlett-packard, they added three new members -- three new members to the board.

Bolstering sales of new technology and services.

Bringing us to our number one stock of the day, shares are up after they jumped from second quarter profits this morning, citi.

[closing bell] surging on the lost decline assets, the eighth day of gains for the s&p 500. this is the longest winning streak for the s&p since the month of january.

Helping to give the market a boost today, another thing that added to this was a better than expected manufacturing report that added up on the s&p. over on the dow jones, up 21 points, pretty much a flat line, we will see how that finishes the session.

Let's take it off with julie on stocks.

This run in stocks means that the s&p is again at a record here, even though it only gained about 10%, it was enough to put it at a record, but still not enough.

As you mentioned, we have some mixed economic data today.

And higher manufacturing data beat estimates on the flip drive, half of what economists had estimated.

It looks like particularly the bond market may be looking at the downside of this.

Yield has come down.

Why is that important for stocks?

Utilities were the best in a group today.

Dividend yields do not look quite as attractive on a relative basis when treasury yields go up.

The fact that their game -- going down made them the best performing group, up more than 1.5%. financials partially getting a boost because of what we saw in the treasury market and from citigroup.

Over all equalling a gain, even if not too much of one.

Let's get more details on the treasury market.

Sue keenan?

It is a bond rally that we can expect, extending the biggest weekly rally in treasuries in more than one year.

As julie mentioned, yields on the 10-year fell, but was half of what was forecast.

Some say that this underscores the weak gdp scenario and the fact that it could be a while before the economy gains real attraction.

About being in data dependent mode, thursday, get ready, we have a $15 billion auction in 10-year tips.

For a check on commodities, let's check in with alex.

It is a big story of that have and have not.

Coffee futures posted the most in 10 weeks, among concerns that exporters would expand shipments, not adding to the global surplus on the markets.

The downside was the crops that hit the corner and the wheat.

-- corn and wheat.

Were some concerns about production, but now the weather outlook is pretty good in the u.s. is still looking at a record corn crop.

Trichet?

Thank you for that.

We want to go straight to our street fighters for the rest of your market roundup.

Phil, josh, still with us from new york.

The eighth day of gains for the s&p, does this mean that these concerns about the fed and tapering are effectively behind us?

It looks like it.

Ben bernanke dampened those expectations, we saw the gold market moving up.

Speculator is added 4.1% but more positions on the gold, once it starts to break out more you will see more depressed commodities that were beat up because of the dampening expectations.

Those are going to start to trickle up.

15 day per move average.

Back to equities with gm, s&p as i pointed out, eighth day of gains.

There have been so many concerns that the market has gotten overvalued.

What do you think?

Those are serious concerns that we have that valuations might look stretched, but this is something that is particularly interesting.

In the last push higher, around 1685, it was one full point higher.

We would tell you that market participants are actually less concerned than they were before, hedging even less.

Is that a positive for a cause for concern, in your view?

We always say that complacency can be a bad thing and that with this type of pricing, if ben bernanke came out and said something really surprising in front of the house or senate, with that level of complacency week of release season downside.

What is even going to say that causes everyone to run for the exits?

Maybe you can shed some light on what you guys in chicago actually focused on.

Ultimately only one guy really has the final vote, ben bernanke.

How much of this stuff is just noise?

A lot of it.

We will see a lot conflicting news coming in in the morning, the market doing 180 degrees overnight, what drove that?

Was it weakness in asia, europe?

Chatter from these fed guys?

We had weakness in asia.

7.5% growth?

It is not good.

There is weakness in asia to be concerned about.

What do they think?

That they will continue an easier monetary policy with the u.s. on what they are doing.

It really is tough to tell what the next thing is that happens.

It does appear that the s&p is going to track higher right now, there is not much earnings expectations.

They are fairly low.

We believe it will be a longer time before they taper.

Strength seems to be positive.

The path of least resistance is up right now.

The expectation right now is that the fed recognizes a weakening europe with consumers deleveraging the retail sales numbers today.

Questions, they have got to be -- this -- they have got to be on hold for long hair, which we take as positive, but in the backdrop europe has done a good job of putting their problems under the carpet until after the german elections, but at some point they will resurface.

Where else are you going but to u.s. shores?

Why is it that the 10-year is only up two ticks today?

The bond market is getting this slowly.

I do not think we are seeing fraud awareness yet.

Jim, we are looking right now, the yield coming down four tics.

How are you trading bonds right now?

I am trying to avoid them right now.

Like we said, there are all of these conflicting views, i do not want to be exposed to a position that is against me.

One fed governor comes back against what the other one says.

Equities is where you want to be right now with strong chart overflow.

By the way, if you do not want to be in the 10-year, that would suggest to meeting you do not necessarily want to trade banks, it makes figuring out the interest margins very tricky.

What's in the banks have so many other problems ahead of them.

The largest banks in reality we saw three agreements endorsed by the fed.

We have the leverage ratio that was introduced as proposed rulemaking last week.

In front of that we have the implementation of don franc, which will force 30% of those rules.

For the big banks, this is a whole other level of complexity, what loans are making beyond the demand?

We have problems ahead for the banks.

I am not saying it is a problem, but on the bank side you do not have the ability to increase dividends the way that you have because they have to build their capital.

You mean the way that they have in the past?

Right.

I question whether or not they would not be as willing to lend as much out.

That is a big part of the problem.

Jamie dimon said last week that we should expect further above the expectation contraction on the mortgage side.

Similar concerns over wells fargo, there were about it.

Obviously the 1,000 pound gorilla, they can squeeze it out even more easily.

With almost three times the market share.

If you are worried about banks, would that not cause you to be worried all again?

But about overly enthusiastic?

Where else would you go?

The most hectic rally ever, right?

Not enthusiastic.

It is all about money flow.

It is all about the fed driving markets.

Why don't you start off here?

This is the most hated rally, we are all doing this because the fed is supporting it?

That is absolutely correct, the way that you described it.

It is close your eyes, get on board, look at the s&p at these levels.

Small pullback, if there was a miss tomorrow, you still have to get long.

It is a no-brainer right now.

Jim?

We lost them, i think.

But we got him to agree.

343. we are going to take a quick break and be right back with more on these markets, more "street smart closed but right after this.

Thank you, you.

Stay with us.

? ? everyone is listening for ben bernanke to talk about his plan for interest rates in the end of qe3 as he heads to capitol hill this week.

Hope mike sat down for an exclusive interview with top fed policy makers.

Hopefully a little bit of insight as to when ben bernanke will be doing that this week.

What he and charles said, from the philadelphia fed, is we have heard a lot of back roads looking statements from the fed chairman.

Humphrey-hawkins is about what they have done, not necessarily what they're going to do.

The hard part for him is that the people behind him are not sure of what they wanted to do.

He is particularly concerned about inflation.

Here's what he had to say.

The minutes showed that there are differing opinions and more data to come in here.

We will have to see.

One thing i have been concerned about is inflation in the u.s.. headline inflation is running around 1%. measures from one year earlier, that is a very low level.

In the past that has caused us to take action in the other direction and become more aggressive.

I would at least like to see inflation picked up a little bit or get some kind of reassurance that we can see in the past.

Jim is important because he is a voting member of the fed this year in his comments suggested he is not yet ready to sign on.

He was also looking at the fact that not only do we have inflation to low, but maybe the labor market is not as healthy as we think.

Work hours not going up very much.

He is waiting to be convinced.

Also, talking with charlie, his concern is that we might be building bubbles out there in that qe is not doing much to help the economy.

Two very definitive points of view, both of which have merit right now.

It is a real challenge for the fed to walk this tightrope between not creating an asset bubble and making sure that there is enough support.

The key take away for them and other officials i have spoken to is not to invest on the idiot the decisions have been made.

They will try to take as much time as possible before september to examine the data.

Reports coming out tomorrow with revisions, a lot of data for them to look at to tell whether the economy is improving enough for them to cut back.

Everyone is looking in september and december because those of the press conference meetings, something that they agree on.

This whole idea of talking only at press conferences is a real problem for the fed because of they want to do something other times, the markets would be so shocked.

Would they be willing to come forward and hold a special press conference?

I asked jim about that, if you announce a special conference, everyone thinks -- my goodness.

A good point.

They are almost constricted by all of this transparency.

There is a meeting on july 21. did anyone mention that?

Might as well what happened.

Let's broaden the conversation.

Mike laid out a lot of that force.

Walk us through these tantrums and the testimony happening on wednesday, we have a few pros.

Kelly, executive vice president and portfolio manager at pimco.

Still with us, our closer, josh rosner at graham fisher.

We are getting a lot of mixed signals, of what is the mission of chairman bernanke when he speaks to this on wednesday?

Thank you for having me.

Bernanke will likely do what he did last week and put an explanation -- ! on the point he made at the fomc meeting.

It seems that those points fell on deaf ears because markets were adjusting to the idea that the fed might reduce its $85 billion per month in asset purchases.

The idea that he will want to put on various points, capering is not tightening.

The fed is not putting its four on the brakes, they are just letting up on the accelerator and the bet.

When the fed does put an end to its purchases, which projected right now by the fed is in june, it will be a considerable time until there is a rate hike, a key point of we would make about interest rates.

They depend greatly upon the policy rate, which will be at zero for a long time.

Making it for a third time since the june meeting, the day that is more important than the date in terms of determining the next policy action.

What the fed did in its minutes last week was made references to be eight months.

Since qe3, nine months since it was announced for september showing the progress.

That is one of the things he will want to say.

The progress made on unemployment, for example?

8.1%, a live and over 7% without being rounded.

That is the sort of thing that he will point to, saying cumulative evidence data before they make any decisions, it will take more before they go from 85 to 60 and something else, eventually reducing.

The first reduction is fully priced in.

The case has not been made at all for this second production, somewhere in the distant future.

Understood.

Tony, thank you, sir, as always, for being on the show.

Michael mckee, letting it all out for us.

Josh, you are staying right here, you are our closer.

Coming up, we will serve up buffalo wild wings, next, right here on "street smart." we will be right back.

? ? time with the next big trade, we bring you the boldest calls on wall street and the people behind them.

Investors are hungry for winning this.

Buffalo wildlings that is.

Shares are up over 40% this year.

Stephen anderson is with us.

You are preaching to the choir, but why wait until the stock was up 40%? an interesting question.

Going forward we see another wave of wing cost declines.

Corn feed prices are down, half of that has been since the first of june.

Making a further downside in the costs, accounting for about 20% of their total cost.

When you assume that they actually value on the spot market, they have had more media affects on the upside.

Up 20% next year, how much of that when you go that far out with declining feed?

Talk about the growth in the business.

They are opening new stores?

Exactly.

They are going to open as many as 105 new locations this year in the u.s. and canada.

The next wave will be overseas and in places like mexico and the middle east.

That is why we raised next year to 125 units.

Certainly, we see a global demand for this product.

Picking up already in canada but have a dozen locations.

Why none in manhattan?

I think it is a franchising issue.

The franchisee that controls a lot of the greater new york area.

It is an opportunity.

Now it will be a notification.

92% of the bennett -- business is company-owned.

That is in terms of revenue.

In terms of the company owned as opposed to franchise, yes, closer to 5050. is one more profitable than the other?

Does one behoove the ball holding company more than the other?

They see opportunities for additional upside in profitability.

Understood.

Tell you what, stephen, you are welcome back any time to talk wings and beer.

Looks so good.

The real -- the real game changer is the lower costs coming up.

Understood.

Lower wing costs, commodities actually matter for stock investors.

Here is what else matters on the market, the s&p utilities index today, 1.6%. you can credit those falling yields as the fed put the pedal to the metal without paying for purchases.

All right, we have been on the list looking for contractors.

Yelp, looking for restaurants.

How about reganomics?

See you after this.

? ? ? after rushing to identify the names from the pilot -- pilots and the asiana crash, the fox affiliate in san francisco victoriously and embarrassingly misidentified the pilot names today.

Asiana plans to sue the television station for the mistake.

This makes it clear that people are hungry for the names of the pilots who were flying.

There is a database that tracks private records, that information is kept entirely private.

But if you could see the pilot history, education, and records as easily as you look up a flight itself?

The ceo of [indiscernible] performance is planning on doing exactly that, streamlining information for the public view.

Tony, welcome to "street smart." what sort of information which like to include?

Thank you for the opportunity to chat this morning.

Is about the company that they retain.

60% in commercial aviation are caused by human error, a lot of what we are looking to produce is to these folks are and where they come from, but sources are the ex-military?

Where were the foundational elements made?

What kind of training do they have?

What kind of support from the regulators did they have?

We hope to begin collecting that data and auditing airlines early.

I know you are a former command pilot yourself, so you have a sense of what makes a good pilot.

How do you get this kind of information?

I think that the important thing is i fully expect they will volunteer this information.

Competition is the high driver of capitalism.

I think that if customers and insurance companies knew, those that were leading the pack in terms of supporting ideas in recruiting and salary with professional growth opportunities, i believe strongly that those organizations -- to those companies not already know?

Are there not some standards imposed on airlines where they have to have that with a certain amount of flying hours in education, etc.? like you bring up an excellent point.

It is a complex equation when it comes to ranking that 15%. where does that come from?

It is not necessarily experience, it depends on the type of experience and support that they have.

Let's face it, the airline industry has taken basic kits since 9/11. all of these things factor into distraction and other factors related to how reliable it might be for a given company.

How would it work, exactly?

Would i be able to as soon as i've booked a flight the radically look at who was flying at, getting someone safety record, education, etc.? probably not like that.

Of course, that would be the most obvious and easy solution.

The problem of scheduling flexibility in the airlines is you may think you know who you are flying with and at the last minute it will be someone else.

It is more important to have you look at the corporate profile and the core ingredients of safety within the pilot tool.

Not just that, but means as well.

All of these things it broke up into the human error of equation.

Technology and software, we are there as well.

At the end of the day where the rubber meets the runway, is that group of professionals, but how professional are they?

How do you make money on this?

Do you go directly to consumers?

Do the insurance companies say -- where is the revenue?

Two things.

What is good for the industry, the ability to be able to pull together the fundamentals with expert observers are really not related to the industry.

Those who do not have a dog in the fight, per say, we should be able to bring order these airlines out there and it should have potential from the consumer, industry potential with others, paying 40 per metrics.

Tony, thank you so much for being here today.

I want to get a final word from josh ha before we take off today.

The economy is slow growth, it will not be significant acceleration.

There is no place to go but equity markets at this time.

The fed will make sure that.

We are all in their game at this point.

We are all gaming it?

Remember the day when we used to say that it must agree to bubble and we live in it?

-- it was the greek a bubble in we lived in it?

Well put.

What about the cap that said maybe we are creating something?

I just feel like we're getting ahead of ourselves.

The growth rate?

16 times earnings.

We are living in a bubble.

The whole game, the fed is driving it.

We are not driven by fundamentals.

And that scares you?

It should be a cause for fear.

This is a detached reality being driven by washington rather than main street.

Ultimately, how does it end?

At some point they have to unwind and i do not see it there at this point.

This is a more disinflationary rather than inflationary practice.

Thank you, josh.

Coming up, the sweetest comeback ever, we are talking about twenties, coming up on "street smart." plus we're taking you for a wild ride.

Look at this, that is me this weekend.

I will tell you where i was.

What did you do for your weekend?

? ? all right, america's favorite snack food is back from the dead.

A couple of private equity firms at the top of the list, they purchased twinkies at the top of the list along with other brands.

Now they are back in stores.

In honor of their return we want to take a look at some of the most interesting facts.

? [clapping] ? [ clapping rhythmically] ? cream filling.

? try one, mama.

Amazing how they were able to increase the shelf life, right?

From 28 days to 45 days.

From a sweet treat to a battle for men with, we are of course talking about at&t. this deal would give them 5 million new customers and more airwaves.

We want to bring christina in.

Why does this make sense for at&t? at the end of the day, it comes down to the more spectrum that they had.

Bigger data plans, faster data, everyone using it has devices that they are trying to trade movies on.

At&t has tried to do this by increasing.

Last year they canceled a deal to buy tea-mobile because regulators basically -- t- mobile because regulators hit them with antitrust.

They had to pay out because spectrum has only gotten more expensive in the face of all the other consolidation we have seen.

There is a lot to go around before the government auctions set off.

What might be see in terms of the overall in this space?

In terms of this deal?

It is funny, analysts have been talking about this all day long.

Of course, you have seen the stock price go above the offer price.

That factor is in some asset sales that the investors are going to see proceeds from.

When you factor that in, that is how you get the price that people are talking about today.

Even still, analysts are saying that maybe t-mobile could come back.

Remember, t-mobile bought metro pcs three years ago, which is what lee pad, a subscriber base.

-- leap had, a subscriber base.

This does put pressure on smaller players, numbers 3 and 4, to do a deal.

What else, potentially, are you hearing about that could be in the pipeline?

One thing that everyone is anticipating is sprint, because they have so much cash as a result of their infusion.

It could be the next big thing that we see in this space.

Other than that, we see smaller targets, like u.s. cellular.

That stock is actually rising today on the anticipation that either t-mobile or sprint picks that up for additional spectrum.

Again, until the government lets it go, the prices spectrum is going to skyrocket.

This will get messy.

Today sprint announced unlimited data that inc.

Voice, text thing, and data, showing that they are going after that part of the market, the limited customer, the customer that once that feature.

Sprint has big money backing.

Are they a leader in the same way where you go to at&t or verizon they lose money where they are effectively subsidizing the cost?

It is interesting that you say that, for sprint it may be the short-term, because right now they want to be a real player, they want to be a real competitor to at&t and verizon.

They may have blocked on this going into it.

Long term it may work out for them.

Thank you so much.

Pimm fox, you are coming up with your show, "taking stock." coming up i will be talking about the business of major league baseball.

I will be talking to the president of the yankees.

If you are a yankees fan, a businessman, we had the details on the operations of one of the most valuable sports franchises in the world.

More "street smart" is next.

? ? time for weird wall street.

We're going to start with adams great adventure.

We are going to for warn people.

Occasionally you bear a striking resemblance to the tom hanks character in "big." of the little boy that just loves trains and the amusement park?

How can you not?

I have to show you this video.

This is mind boggling.

I went on an unbelievable ride.

You accelerate from zero to 120 miles per hour in 0.8 seconds and then you go up for stories.

You can see philadelphia in the business.

There it is.

Watch the corkscrew.

My god, we did this a total of five times.

We did it three times in a row.

My hair looked scary afterwards.

It was like, you know, permanently back.

The safari, by the way, they have a safari.

Look, the whole reason we went -- they have snakes, you name it.

But this is an unbelievable story.

This is a company that was bankrupt five years ago and the ceo bop -- brought this out of bankruptcy.

The bondholders gave up claims on the old bonds, the exchange has been a huge winner and it is all about cash flow.

What are you feeding that giraffe?

Ice-cream cones.

An awesome time.

Clearly.

[laughter] superstars do not always make the best out of a sticky situation, but sometimes they do make the best out of what is around.

This week and a fan was on her way to a concert plassey stopped with -- for a hitchhiker, who had a strong resemblance to her favorite singer.

Turns out it was.

It was dave matthews, he had no cellphone and his bicycle broke down.

She gave him a lift.

He was so grateful that he invited him -- her and her boyfriend to dinner.

It was a fun show.

I saw him a few weeks ago.

You are a fan?

I took the kids.

Speaking of music, i have another one for you.

Carli re jetsam, probably wishing that the taboret -- tampa ray bays did not call her, maybe.

She held onto the ball, possible worst pitch ever.

Oh, no.

I really feel for her.

Watch how long she holds it.

She is capable of doing it, she just had an off day.

We all have bad days.

We have all been there.

Thank you, everyone, for watching.

Mixed economic data but investors are looking to the fed to extend the stimulus going on.

This is the longest streak that we at have been since january for that index.

We heard about a new i.p.o. coming to us from dan loeb.

He will reassure the public on the founding shareholder.

Right now, there's a place holder for this initial public offering.

He started the venture in 2011 to give him access to additional investment funds.

We will be tracking that i.p.o., of course.

And it's a big week ahead for financial earnings, and we heard from citigroup, jpmorgan and wells fargo, tomorrow, goldmansachs and bank of america.

Here to tell us about what to expect from the finance team is bloomberg reporter michael moore.

What are some of the things we're looking to?

Certainly, companies that rely on trading avenue-revenue, fixed-income trading is down.

One of the things we are looking for is to see if there is any idiosyncratic risk this quarter in terms of banks doing better than their competitors or worse.

We expected fixed income to be down from the first quarter.

It is a little bit better than we had expected and that the street had expected.

There were some questions on the june quarter, what was quite drop in there.

But citigroup and jpmorgan both said they managed fairly well.

We will see if that holds true for goldman tomorrow.

And as you said, citigroup posted a strong increase in equity markets where they had been a laggard for a number of years.

Maybe catching up to rivals a little bit there.

Are there any scenes that will be emerging besides the numbers we've gotten?

One of the things is how banks are handling the rise in interest rates.

It has got some offsetting effects on the one hand the the.

-- on the one hand.

There's a higher yield for security portfolios as they try to unload extra deposits they have pared and on the other hand, we will see how the other firms held up.

Wells fargo may have held up pretty well, but jpmorgan offered some caution for the end of the year saying that refinancing could drop 30% to 40%. in the past, we have seen rates start to go up and some of the home buyers have rushed in to try to lock in relatively low

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

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