This is regulated for the larger banks.
We have the basel three rules from earlier this month.
For a smaller bank, it came in better than expected or on a more positive note.
There were a couple of things was a couple of risk reits were not as complex as expected.
You have to hold of the amount capital against certain assets.
It will not be as onerous.
ok, got to leave it there.
A lot of insight on these banks.
That does it for "on the markets." "street smart" starts right now.
The great great debate.
Our roundtable takes on the testimony.
Our intel on intel.
We look at the gadgets within technology.
Plus, dancing for dollars.
Nigel lithgow, on the reality tv money machine "so you think you can dance." time to focus on ben bernanke's testimony, welcome to the most important hour of the session.
The market's really not budging a whole lot here.
A lot of stuff going on, ibm, intel, ebay, we will have all that information for you.
How nice to actually get back to company discussions as opposed to will he or monti?
-- won't he ? three charts you have to see right now, they paint the picture of the day.
The dow jones industrial average down nearly 6 points, you can see we have been up and down, back-and-forth, trying to parse all of those comments.
Bond traders have a different interpretation.
Clearly they said that the chairman is speaking more devilishly than expected and is not likely to taper because the yield is coming down.
Perhaps point to keep the pedal to the metal.
Oil is above 105. it is very expensive to fill up the car.
These are the stock picks you have to -- the stocks you have to watch before the close.
Bankamerica is out before cost reductions.
-- bank of america is out with cost reductions to cover bad loans and other losses.
Yahoo, we were talking a lot about this yesterday.
Marissa meyer's one year anniversary of the company, it looks like everyone is focusing on alibaba and their investment in that chinese internet company.
Income tripling and their benefit income shares up by 10%. falling the most in the s&p 500 today, missing estimates, the sales guy is down by 12%. fed chairman ben bernanke on capitol hill today, for the first of his semiannual testimony.
Take a listen.
I emphasize that because asset purchases depend of economic demand developments, there are no means for a preset course.
He is promising that tapering will not happen until the economy is really relict -- really ready for it.
When will that be?
For more on what is next and how it will affect the markets, we bring in our panel.
Adrian miller, director of fixed-income strategy is with us.
On the economy, paul donovan, senior u.s. economist.
You call this rally.
I know you think there is still a shot at 17 k next year.
Will the market keep going higher if that fed pulls back?
I think that the tapering in september is already baked in.
I was very encouraged by the 10- year.
I am sorry, you said baked in in september?
I think it is well within the range that stocks could continue higher as long as earnings come in at the rate they are doing in -- before the second quarter.
Backup for a second, did you say that the tapering is baked in for september?
The start of the tapering, yes.
My feeling is the beginning of the tapering is baked into bond prices and stock prices for september.
So, unless that accelerates, i do not think that that will stop the bull market.
What leads you to think it is september?
That was -- that was the date that ben bernanke had indicated that the tapering might begin.
As long as economic expectations moved according to what the fomc does.
It is true, the second quarter is going to be very weak with a zero handle on gdp growth, quite poor.
But most of what i seaport's third quarter is that 2.5% to 3% as long as jobs continue in the 150,000 to 180,000 range on the labor market, i think we are on course for a tapering that begins in september.
Remember, the federal reserve still says that even a tapered amount is still an easing.
They will just be adding reserves at a slower rate.
They are adding a lot to the banking system.
Adrian, do you agree with that timetable?
I think that the fourth quarter in september will be the big star.
The debate is not when it starts, but when ends and the pace at which we go down that road.
The third quarter is looking pretty good, we have two consecutive months of job gains in if the economy continues to move along and picks up in the back half of the year, like we expect, it is just the beginning.
It could be modest, but the bigger question is how long it will take to get to zero.
This is a challenge, then.
Ben bernanke is dealing with trying to block a very tight rope.
Mohamed el-erian was on earlier today.
Let's listen to what he said.
He basically said that ben bernanke has his work cut out for him.
He is trying a very delicate high wire act.
On the one hand, he does not want to modest, scare the markets and disrupt the current economic recovery, for agile as it is.
On the other hand, he does not want the market to get away with risk-taking, so he has these different signals striking this delicate balance, but it is really tough.
Carl, you are an economist, where do you come out on this?
The market expectation was certainly september before today's meeting.
I still think it could be september, but it is hanging on by a thread.
The odds definitely slipped, his testimony was very dovish.
He was talking about two separate tools with quantitative easing of being an extension of the low rate policy with one tool for the near term and one tool for the long term.
I am not convinced that chairman bernanke is ready to pull the trigger.
Do you think he knows what he wants to do?
Or is he just waiting on how the data looks?
I think that he is a very collegial leader of the fed and he is willing to allow people the leeway to have their own forecasts, however right or wrong they may be.
He is allowing the hawks to get excited about ending quantitative easing and talk about an accelerating economy, picking up inflation and whatnot, but i think he will wait until the time comes.
Certainly gdp is on the soft side.
I agree with prof.
Siegel, that it could be a one or zero handle.
But bernanke is a dove and he will not pull the trigger when the last report was potentially below 1 cents.
Professor, we have been hearing a lot of different voices from the fed.
On the one hand saying that we need to pull the plug on all the bond buying, others saying we need to keep doing it.
Are we doing ourselves a disservice but all of these different voices that we keep getting bombarded with?
We have always had a lot of different opinion on the fomc.
By the way, i agree, i think that ben bernanke is on the dove'ish side.
Do not forget, charlie plosser really wants to end qe this year.
Basically i think he pulled back box from a very stringent schedule -- teh hawks from a bjthe -- the hawks from a very stringent schedule, when unemployment reaches around 10%. -- 7%. i think that he himself is on the dove'ish side and he is taking a consensus.
There are enough hawks in their that would not be satisfied if he did not set a cap -- set a timetable.
Jeremy, where do you come out?
I am with bernanke.
You are with bernanke?
I believe that we have over $1.50 trillion of excess reserves.
Do we need to add more?
That is the question that even some of the hawks are asking.
I think that most of the work has been done.
I think that the qe was a necessary policy tool that he used, but the truth of the matter is that a lot of the reserves that have been created are just sitting in the bank.
They are not being lent out.
I advocated to lower the interest rate from 25 to zero to try to encourage the banks to lend them out, but right now they are sitting there.
Do we need an extra half of $1 trillion sitting there?
It might satisfy basel iii, liquidity they could be used by the banking system.
Material for lending, i think it is already -- we are already in there.
Professor, this is just a revolving door between washington and wall street, wall street -- washington effectively letting the banks repair their balance sheets, just keep building reserves, because we're going to ask for more money, is that what is going on?
Well, when it was started, the banks were in terrible shape and it was viewed as somewhat of a subsidy, mortgage reserves being required to hold some with a little bit of help.
I do not think that it is needed now, honestly.
I think that it could be phased out.
At this particular point, you know, the fed uses a lot of the fed speaker when i bring up the reserve.
I do not know if i've agree with all of their reasons -- if i agree with all of their reasons.
Nonetheless, we are sitting on excess reserves.
The question is, do we need much more?
Request, professor, are you still a believer in the 50: 50 shot of down 7000 by 2014? yes.
This year, way at the beginning of last year, 2012, by the end of 2013 i said we would be between 16,017 thousand.
I believe that that is the range we will be at.
I think that next year we will move to 17 and perhaps beyond.
Thank you so much, professor.
Coming up, everyone, falling in love with stocks, pretty easy.
Adam is getting romantic in today's inside action.
And how much is the weight worth?
Dubai is setting a price tag.
Coming up for you.
? ? falling in love is easy, especially burning -- especially during earnings season.
Time for some action and this is what we are talking about, the good news priced in?
People are falling in love.
Look at this, earnings in the s&p, they are coming in 6.5% above the estimates, a pretty good.
Revenue sales, up 49%, yet look at the reaction.
Down 8/10 of 1%, in other words that good news is already priced in, people fell in love too early and had no place to go.
So, we decided to ask -- who else might be vulnerable?
Priced to protection, they might trade with the earnings coming out, selling for -- in search of perfection, stocks where analysts have raised the estimates over the past several weeks in where earnings are coming in the next two weeks?
Guess what, we found a number of them.
Let me show you an example in e- trade, up 40% year to date.
Talk about people absolutely falling in love with this stock, up 48%, six times earnings, priced to perfection?
That might be cause for concern.
A few other names that we found, nothing wrong, we're just giving you some caution, do not fall in love to quick, because getting hurt hz.
Biogen, google, keycorp, bellcore, science.
Do not worry, i will post results on twitter and give you a few more, we found a few more out there.
That is the way it works kali if you fall in love too quickly, sometimes you get burned.
Correlation [laughter] ship it buys from adam johnson.
-- [laughter] relationship advice from adam johnson.
Our next guest says that he expects the economy to meaningfully accelerate.
You say that profits from corporate income tax receipts -- let's take a look at the chart he brought with you.
Is that handy, guys?
Here we go.
Corporate tax receipts, in other words tax receipts are up and it is probably because profits are up?
Folks do not like to pay taxes on income that was not earned.
Tax receipts tend to be a real time indicator on household income tax, salary growth, or corporate income taxes, which are a useful tool of corporate profit trends.
Corporate profits tend to be reported with considerable lag.
With that you only have the second report of gdp, so at that point it is kind of war news.
This acts trend tells us that corporate profits are potentially plays to accelerate, rolling over at the end of the recession, possible in the gains as the economy pulls out of recession, rolling over, hanging around in the 5% to 8% range right now.
This trend tells us that despite the lackluster gdp numbers, private sector activity is picking up, tax receipts are picking up, and we should see follow-through with profits.
Like the other key that is apropos for the chairman, jobs.
Does this mean that if profits are going up, tax receipts going up, we will get some job growth?
Profits tend to be the mother's milk of private-sector activity.
If profits are strong or accelerating, that should be a positive moment for job creation.
Is this data making you more bullish?
I do not like the q2 gdp figures, but i think we will see meaningful improvement in the economy in the back half of the year with tax increases fading into the distance, fading away, the housing sector performing quite well, performance dated today not so great, but consumer spending seems to be getting in a little bit of momentum behind it as well.
You sound bullish to me, carl.
We are still looking to see how q2 shapes up, with growth . . ? this is "street smart," on bloomberg television, streaming on your tablet, phone, and bloomberg.com.
You will love this one.
The united arab emirates is taking its citizens to fat camp.
The reward is gold.
Dominic chu joined this now to explain.
Getting paid in gold?
You cannot make this stuff up.
This is local government in to buy looking to get people to lose weight and that they will pay you to do it.
They're looking to get about 1 gram of gold for every kilo of weight that you lose.
$45 for every 2.2 pounds.
The minimum weight drop is at least two kilos.
You have to make at least $90 and there is no limit to what they are handing out.
But katz the fine print, you have to clock in and weigh in on friday.
Carload today and tomorrow and then try to shed as much weight as you can.
For how long?
As long as you can.
They are really trying to get people to reduce their waistlines.
It is one of those places in the world where there are the most influences of diabetes and diabetes growth rates.
If the baseline is bigger they want to make sure that health care costs do not become an issue, so they're going to pay you to lose weight.
I love this, this is great.
I want to lose weight and get paid in gold.
It can help to incentivize.
I am all about getting paid.
What about 2 thwaites?
That you should -- self preservation is the limit.
Thank you, dominic chu.
Intel is pouring billions into the next technology, but is it too little, too late?
? intel puts a lot of effort and money into making sure that the secrets power their chips.
We had a chance to look at their crystal ball to see what new products are coming down the pipeline.
Inside the intercontinental hotel in san sysco, you can see inside the future.
At least inside the intel version of it.
Sensor is monitoring this -- monitoring distracted drivers.
Id badges to personalize personal information.
Sensors to warn you away from food you are allergic to.
Technology the dollar requires intel chips, of course.
We look at how people interact with technology, of course, and then understand of the components that would be needed to realize the experience.
Sean cole put the event together, he will show off all the places where the future is going to happen, like bicycle networks for the road, power networks for the park.
And -- where the magic happens.
It is showing a vision, showing that we can actually make products for the vision.
We are not only showing experiences, but fundamental technology development that proves that these things are possible.
This is not just about gadgets and futuristic junk, this is about billions of dollars of chips sold every year.
This is about casting a wide net to find out what the future might be.
We are at an interesting point in time where our technology has progressed to the point where we can build anything and the only thing stopping us is our imagination.
Intel has gadgets for the future but right now they are facing some serious challenges, among them global pc sales down compared to the same quarter last year with earnings slump and analysts indicating that this could be the semiconductor giant's biggest decline.
A new ceo took the reins just a few months ago.
Do you by the promise?
Or do you pause because of the premise?
We will get straight to the panel.
Cory, doug, and a deejay.
Pretty interesting stuff we just saw there.
Thanks, i am trying.
So is intel.
Intel, think about what they have to do, they spend billions of dollars, and really a whole decade or so building these applications and by spending the billions they have to think about where they are going to be 10 years from now and what kind of chips they need to optimize for.
The trick to intel every day and every quarter is all about growth margins, optimizing the yield and making the most useful semiconductors that can , which helps with gross margins.
They really have to plan for the future.
Like not getting cut out, like they did with mobil.
The mobile strategy, they did not really have one, right?
Now they are stuck in this environment with slowing global pc sales and it does not necessarily bode well.
Like their strategy has moved all over the place in the last 10 years.
They sold the business of blackberry off.
They recently bought the infinity.
Do you think that they can?
I think the perception has cranes -- changed greatly in the last few months.
Especially from their processed competitor being armed where they think they can get in there.
Wax cory, you cover these companies, the tax base, it is supposed to be -- cory johnson, you cover these companies and the tax base, it feels more industrial than it does technology.
This is a long-term concern for intel.
As we have more and more -- you are the carl icahn.
Semiconductors inside of those devices are less expensive.
While there might be a lot of growth in terms of unit computing, there may be less pricing for them to take.
Where does that leave us -- rather, let me get over to the trader at the cme.
Where does that leave us in terms of the head of earnings?
I do not really want to buy this stock here.
I would rather buy over in the october 23. collection on 83 cents while i wait to run and wait on the sidelines, profiting if it pays above the 23 area.
22.5 is an area where i would get in based on the technical, and further october is usually a good month for technology with a lot of sales headed into the holiday.
You think you have some support there at 18, 19? i think that it supports an lot higher.
I would be very surprised if we did not see doubles again.
The dividend, what excites you about the dividend right now?
For me the dividend looks like it is 15% of the payout.
Of what the new ceo does is going to be important in terms of their capital budget going forward.
Making people believe that the dividend is safe.
We will see how he does.
Thank you to the whole gang.
Coming up, the man behind the tv megahit, "american idol," coming to us to discuss the real money behind reality competition.
? ? nigel lithgow is a reality tv superstar, the brains behind "american idol" and "so, you think you can dance." here's a taste of what he might be doing to celebrate.
Let's do that with music.
5, 6, 7, 8. chop, chop, chop.
To the side.
He makes it look so easy.
That is a clip.
Great to have you here.
You know, thanks to shows like yours, dance is really becoming a bigger part of mainstream culture.
People are really into it.
What does "national dance de" do for that?
The idea is that everyone can dance.
[laughter] i truly believe that everyone can, but be grow out of it.
Put a piece of music on and every kid in the world will start dancing to the music.
But little bit of alcohol can help.
What about those of us without coordination?
You don't believe that?
I don't. our entire life is based on them.
From the heart beat in the boom.
We do fight it, though.
Why do we fight it?
That think we are embarrassed.
Especially in the western world.
If you go to russia, the red army has the most incredible dancers.
In south africa of the zulu, some of the most feared warriors in the world, fantastic dancers.
We shy away from it or we do the twist.
Twisting back to reality -- i like that.
What is it about dancing in reality television?
What is it about the whole concept of people seeing it -- seen people embarrass themselves in real time, why are we so plugged into it?
I do not think that anyone embarrasses themselves on a "snout you think you can dance -- so you think you can dance." the kids are amazing dancers these days.
All the kids on the show do baryshnikov and it is common.
I do think athleticism has come to the fore with dance.
With other ones with celebrities, it is just the joy of it.
What i love about that is that the celebrities go -- my god, i did not realize how tough this would be.
You have been a judge -- rather, you are a judge on "so you think you can dance" and ensco creator, how important are the judges to the overall success and ratings of the program?
Are they the key?
They did not used to be, let's put it that way.
When i brought american idol here, nobody knew who simon callow was, paula abdul was a sort of past her prime -- how dare you.
In terms of pop music.
And no one had heard of randy jackson.
Because they became huge stars in their own right, people now have to bring in big stars and they are being judged as not only a judge but as a star themselves.
It is a reality show with a reality show.
The judges, the people on the stage -- here's the thing, the ratings are down, so what does this say about the notion of reality?
When you said they are down, they are down against themselves.
"american idol" is down against itself.
35 million viewers, it is called the death star because whenever schedules against that is blown away, of course it goes down, but in truth is still the number-one show in its slot.
Then you have got "x factor" and "the voice." why can it not have 36 million, like it did in 2006? the history of television, nothing else has lasted this long.
This is a global phenomenon.
Look at "saturday night live." "friends" did 10 seasons.
That is it.
A reality show, you are always going to maintain it, if you have the right talent.
If you have the next kelly clarkson or carry underwood.
What happens to those answers?
There have been a lot of successes, the dancers -- you are living proof that you can go on to have a fantastic career and still be in the dance field, but most of them, you know, what happens?
They are all here on broadway, in proof.
They all leave los angeles and come here.
Certainly dances coming much more to the fore.
Those step up movies, $6 billion?
Those are all dancers and choreographers.
A dancer on the show is now one of the country's top choreographers.
They do not belong to earning millions of dollars like terry underwood, but that is a very short life.
29 years of age, girls are coming to the end of their career.
What is the next big john rowe for reality television?
If i knew -- john robb -- a genregenre for reality television?
If i knew i would not be telling you here.
What about next season?
Of what are you talking about?
Talent is always a good thing.
The next talent people are -- talented people are always coming up.
Not that i wanted to children and talent, but certainly a lot of latin-american countries are using children now.
I think we have not had a good quiz show for a while.
"to wants to be a millionaire close but was around for a while -- "who wants to be a millionaire" was around for a while, but everyone got sick of it.
You are no longer going to be executive producer of " american idol." how does that make you feel?
Like anything, you are giving your child away.
When my boys left home, i was an empty nester.
I feel as though my baby has been given to someone else.
At the same time, i said this in a press statement, as long as we maintain the platform for young children to come and sing, i do not care who does it.
They said they want to take it in a new direction?
Then it is not "american idol." i do not think that they should get too much away from what it was, which was burger flipper one day, start the next.
All that was was the american dream and giving people the opportunity.
It should not divert too much from that are otherwise they should call it something else.
I am encouraged, hopefully there is help for me and data on the dance floor.
Make sure you learn the routine.
There is always the opera.
? [singing] ? that is a first on bloomberg.
Ben bernanke leading the labor market.
The question is, how do we get to 5%? we will get you there with a chart attack, will be right back.
? ? time for chart attack, where we bring you a chart that will make you smarter and hopefully a little bit of money as well.
Today we are talking about labor participation, where we have a bit of a problem.
How do we fix it?
Participation rates have been falling in the labor market, they are at their lowest since 1979. painful, let's show everyone what that looks like.
The question is, what will cause the participation rate to turn around?
Economists will tell you that there is no good way to forecast that.
Month-to-month, i would say that is true, but over time i will say that a healthy economy will bring participants back in.
Than you would want to look at the change in non-foreign payrolls.
We could do the same thing with gdp growth or any other barometer of economic health.
It is not surprising that participation has been so soft given how weak the economy has been.
This is cause for optimism.
Payrolls moving up, i like where you're going with that.
All right, from barbie dolls to communication, we have the top 10 stocks you need to know coming up next on "street smart ." plus, wireless id's, they keep making headlines.
? ? ok, if you missed everything that happened today, do not worry, we have 47 seconds to be too caught up on the only stocks in need to know about today.
10, yahoo, jumping 10% after reporting that the value of their stake in alibaba went down to three for the first three months of the year.
Profits tripled, tripled in the first quarter.
Tripled, that works.
Intel, on the other hand, down 8% coming out right after the bell, accelerating at times to get its processors into smart phones, going head-to-head with qualcomm for the mobile device market.
Stay tuned for results from intel right after the bell.
American express, down 2%, dropping the most in a year after wall street analysts talked about the risks in the european union proposal that would cut profits and captured transaction fees after amex said the impact of the rules would be limited.
#7, rising 10% after analysts at dorothy doubled the price target for test of.
One day after goldman sachs made their declaration.
Ebay, reporting right after the close, you can see it shares are up 1% with a profit of 63 cents per share made on revenues.
We are going to be bringing you full coverage of all of these earnings right after the bell.
Mattel shares are down on earnings, dropping 7% in 16 months with declining demand for the aging barbie doll line, with the american girl chain in second quarter profits.
I am going to do some market research with trish reagan, mother of two girls.
What do you see?
Collects lots and lots of demand for barbie dolls.
I guess i am not with the rest of the market.
There is a big appreciation for barbie dolls, for better or worse, in my family.
Dell, down 1.5%, the internal ceo resigning after this shareholder vote of a $24.4 billion buyout offer.
The operator of carson block declaring a strong sell with the american power engaged in a value destroying investment been is that a lot shares down.
#2, ibm, shares up one- quarter of 1%. an analyst at bloomberg estimated that it would be 378 on revenues.
We will have instant analysis of those results, coming up.
Our number one stock of th day,-- of the day, bank of america, rising 66% after the cost-cutting campaign.
Coming up on the close on the first day from testimony from ben bernanke.
[closing bell] the market reacting somewhat positively to his remarks.
Coming up we will have the latest on intel, american express, and ebay.
We will get those numbers to you when they come out in just a moment, but it is time for a roundup.
Market reporters ready to go, let's kick it off with julie on stocks.
Looks like the ben bernanke commentary today was indeed positive, people viewing his comments on dovish.
That tapering is not necessarily around the corner, even though ben bernanke substantively did not say anything that different.
It looks like investors read his comments to mean that indeed, we are going to keep going with stimulus.
Earlier today michael mckee called it a win as stocks rose after his comments.
Market materials, financials, energy, doing the best today.
Oil ended the day back above 106 on the third straight weekly decline in inventories with a pullback on precious metals falling back.
Falling to a 33 month low in june, they call that a corrective rally.
Bullishness increasing demand in china with activity that they cite as just a couple of reasons.
Let's talk about the heat wave.
How hot is it?
The important point is they say we have not seen that many days above 100 and cooler weather is forecast for the weekend, putting natural gas a wild ride.
Dominic chu, we go to you now for the latest on treasuries.
East coast temperatures are not the only thing rising, with all the talk about qe and a tapering stimulus, you did not get that out of ben bernanke today in his testimony, so that means no imminent and to stimulus.
People want to buy treasury bonds.
Not helping matters is the fact that housing starts are also coming in worse than estimates.
Maybe slowing things down put in a bid for treasury.
As the yields start to decline we are heading to be closed.
Short of those bonds the two- year and five-year show signs of buying power, prices go up, yields go down.
And of course we have the long bond showing that same price action.
Now, tomorrow we get more information on the economic front and the weekly jobless claim.
With manufacturing in that particular region, what else?
Those will all be challenged for the fete -- treasury trade tomorrow.
Thank you very much.
Second quarter results from intel are out.
Looks like they met estimates on earnings, a little bit light on the revenue side.
Obvious that we understand the progress of the company , revenues down a mere 5%, to 12.8 $1 billion in revenues.
That is down 29%, year over year.
Not only is there financial trouble overall, but they lowered the annual guidance for gross margins to 59%, plus or minus a few percentage points.
They are so busy spending so much money on the new fabrications in the last hour, a lot of those costs mean one thing -- capital, expense lost, there could be more in the conference call on the sources of gross margin data.
All right, thank you so much if.
For more on what drove today's trading, our closeout call with donna is still here in new york.
Starting out here, it seems the market somewhat malcolm the news from ben bernanke.
But it was not an enthusiastic reaction.
I thought that we would get more movement today and on friday as well.
But ben bernanke said was more in line with what he has said recently as opposed to a month ago.
It seems like everyone is in the by the debt load.
I think that we are getting too complacent.
I tried to buy gdx and i will revisit those tomorrow.
Around the 1680, 1685 level, that is cocky.
I am saying that on the rewards basis i can see it selling off before rallying 25. this was the high from may selling off a little bit.
Is that in tuition, and rubella or something that you can point to, in number?
We came back from 1570. all that good news was factored in.
The banks are really the only one mid year-over-year growth in their earnings revenue.
There was a lot more to come out.
That should be interesting to see how they come out today, but i am not going to sit here and analyze what ben bernanke says every single day.
It is exhausting.
It is exhausting.
Because of that, we have a quick pause for earnings, so do not go anywhere.
Earnings per share, up about 10%, 5 cents ahead of analysts' estimates.
Looks like we might have moved away from estimates at $2.8 billion, the average analyst estimate.
That spending overall rose 77% in its second quarter in the u.s. with income profits up by 3% and international card service income was up 17%, so internationally we were seen easing growth from amex.
Speaking of international, to give you some context in the top 10, they did fall on some commentary from analysts that they could be hurt by new regulations in the european union with transaction fees.
The shares it still did finish the day lower.
Second quarter returns on equity, by the way, at 20.6% with shares in the after hours of making a big move down and a bit of flipping around.
The company did see more spending on the part of its card members.
Back to you.
All right, dominic chu, ibm, also out with earnings and it looks like we have a pattern.
Sales are coming in worse, ibm, amex, intel, but i think we just lost dominic chu and i will look at the computer and tell you the numbers right now.
They closed earnings better than the estimate of 377, however revenues are light.
The expectation -- excuse me, the estimate -- dominic chu, do we have you back?
What we are looking at is second quarter net income on a per-share basis, adjusted in terms of operating profits.
Like you said, that beats the analysts estimate.
Estimates are $29.3 billion, right?
Gross profit margins coming in as well.
What we are looking for here is what we see in headlines for earnings.
We also see a narrow shortfall.
Very much a mixed picture.
We are also getting the for chat.
Adjusted earnings per share coming in at $16.90, slightly higher than the prior forecast of $16.70. they have essentially boosted their forecast per-share.
Also looking at the second quarter service backlog, that is up 3%, again, up 7% if you adjust for the effects of currency.
There is continued improvement through the second half of the year, a good point of optimism for the second half when they think they will do better in the second half of the year, we will be looking at bros contract signings.
Those are a sign that perhaps future business, down the line business, these numbers again which have right now is a bead on earnings with a narrow sale, a be down profit margins in the boosting of their full-year profit forecast.
We will see how the trades settle in the after market.
Dominic chu, thank you so much.
Basically a theme here, all three of these companies came in a slight on the revenue side.
What is the take away?
That take away is that the economy grew at a slow pace, so when sales are missing expectations on a particular company or an array of companies, that is emblematic of the performance we saw, but it speaks to the mean operating environment for these companies that trim labor forces as much as they can and reduce costs over the past five years, of which is why you can see from the improvement and underlying details -- economic caught because cut your way so far.
-- you can only cost cut your way so far.
Right, but you just need a little bit more momentum in the economy, which is why ben bernanke was so cautious today.
Where might that come from, if at all?
Housing, housing, housing.
If you look at the core of that report, which is single-family permits, that looks fairly decent.
We saw homebuilders sentiment yesterday rising sharply, of which is consistent with a very sharp acceleration in home building through the end of the year.
It is a small sector of the economy, but we are looking at a substantial growth rate.
Based on the leading indicators in the market, only 2% to 3% will be making this contribution.
That is half the story.
The other half is home prices.
Do not go anywhere.
First trade for tomorrow, a look at what is next on "street smart." a congressional firefighter, and arizona representative with new legislation aimed at stopping the fires the devastated his state.
Ugly shoes, attractive profits, cool and hot, we will tell you why.
Plus, jim chinos and dodges a bat.
Heads to new york city.
And who could save the economy?
Part of today's weird wall street.
Stay tuned for your first trade tomorrow, coming up when "street smart" continues.
? ? all right, the fire in arizona, taking the lives of 19 members of the firefighting team.
We are joined right now by the congressman representing the district 2 is proposing a new bill to prevent massive wildfires, which we are seeing too often.
Welcome to the show, good to have you here.
We just had the governor from colorado on recently, his state suffered the worst wildfire on the book.
Tell us about the bill right now, give us some details on how that would work.
It moves across the west and all this does is streamline the process of the action for a local state communities.
In those first few terms , how do you put a price tag on that?
Trying desperately to save structures, how do you put a price tag on that?
Basically it's streamline the process, making sure that they intercept the problem.
You would be cutting down trees in the hopes that you do not see what we are looking at on the screen right now?
In my neck of the woods, everyone agrees to the density.
We now have 200 trees per acre that burn so hot that people do not have chances to get out of the way, it kills the ecosystem and takes out endangered species.
Representative, there are environmentalists who would take the other side of the argument and to make the case that there is a natural process to recycle profit brigitte recycle for us, they grow in the burn.
What would you say about us getting involved in that process and having our own hand in a as opposed to letting nature manages self?
Let's when major managed its course there were major -- when nature managed its course there were huge grasslands.
Ponderous of pines were very deterrent to those fires.
Now that there is a strangle on the watershed, there is no grass.
I just visited a place that pushed the acres to the proper management by four inches.
It is good prospective management looking back at the historical precedent, so be careful about the details that you want to fight.
Flying over colorado, you realize how vast and difficult the terrain is.
Arizona as well.
How do you possibly manage choosing where to cut?
We already have an agreement between environmentalists, the forest service, and the logging industry.
The problem is that be just got it started.
This is not rocket science.
I think that the biggest buyer in arizona history, we spent millions trying to put it out.
The environmental community lost 20% of the world's population of spotted owls.
We all lost and we cannot keep doing this over and over.
Environmentalists are not necessarily in favor of an idea like this.
They also point to the fact that the timber industry could benefit.
How do you answer those concerns?
We should be putting people back to work, that is what the western states were sold on, keeping the public land open for everyone to utilize.
We cannot have environmental groups that do not want to deal with fact, that all they want is for poetry and philosophy.
In a science guy, based on facts that is how you -- i am a science guy, based on the facts that is how you proceed.
Thank you for joining us.
Thank you for having me.
Flax coming off, about to make a comeback?
The brand's popularity is the -- coming back, about to make a comeback?
The brand popularity is rising among teenagers.
? ? time for our next big trade, where we bring you the boldest calls on wall street and the people behind them.
All hands on deck, outdoors, best known for ugg boots.
Even tom brady has not been able to put points on the board.
Aaron murphy is here to explain.
Thank you for joining us.
Why does, why now?
We think that deckers is a fundamental margin recovery story.
At the half of the year where there ugg brand becomes irrelevant part of the story, we think that margins can start to recover and gain ground, moving much more to the high overtime.
They realize they had to lower prices and are trying to find the right match.
But do you think of that?
-- what do you think of that?
The brand was very headstrong in terms of their consumers, significantly higher demand oversupply, they had the upper hand in terms of pricing for several years may stun elastic city at that time.
There was also a piece of the business moving higher during that time.
Sheepskin costs have gone up fairly significantly and it came to a head about one year ago, where they made some adjustments to pricing.
We do think that the price relationship is in a good place going forward and we should start to see some margin stabilization going forward.
Teenage girls are a big part of the story, are they not?
One of the big things we have done for the last 13 years, we have started a significant survey and gone into schools in the spring and fall to capture what it is that teenagers like to buy.
What is most striking about the most recent survey was that the ugg brand started to see some stabilization.
It is now the fourth preferred footwear brand within the u.s. with a 9% share,. i was looking at the chart, nike is no.
We will leave it there.
A quick look at the earnings that were out after the bell, coming out in the missing on revenue, two of them trading down.
Back after this.
? ? julie hyman is standing by with the second quarter for ebay.
Another example of the trend that you guys have been talking about.
Earnings in terms of earnings with revenue in little bit light and estimates coming in at $3.8 billion, $3.9 billion.
Investors are clearly disappointed not only with that but by the third quarter forecast.
65 cents is what analysts had been anticipating with the country saying -- company saying that it would be the learning -- the lower end of its forecast.
They say they have seen less contribution from their international business.
The rose merchandise volume here in the u.s., excluding vehicle growth of 13%, lower than the 15% that analysts had been anticipating.
Higher than anticipated, up 24% is what they had been interested in.
It looks like this past quarter was mixed for ebay, but looking ahead it looks like they had seen interest in their international growth with sharper business shares down in the action of this report.
Julie hyman on ebay, thank you.
? the housing data, guess what?
It just was not pretty.
Analysts estimated a change in housing starts, but they came in down.
Building permits were estimated to increase but instead dropped 7%. maybe ben bernanke is to blame because the housing recovery might be unraveling by two words, rising rates.
I know you have been saying all along that you are not scared and that you think housing is on the tear, but given the data points we saw today, are you still in that camp?
Yes, we still believe that housing prices are headed higher.
Housing starts are still up 10%, year-over-year.
The supply situation is really unprecedented.
Basically, you have only 2.1 million homes with inventory and if you look at new and existing single-family homes, it is that 30 year lows.
Demand is picking up because basically the fed announced prices with rates that are very low and the fed is on your side.
They are on your side until they are not and there is concern as we have seen mortgage rates go up from their record lows that they have been at, but the reality is -- and you know this, if mortgage rates increase even buy a little bit it means that people can afford less home.
My question is -- what does this do to the housing market?
On the margin, higher rates reduced affordability.
But if we look at affordability, the median income family being able to afford a median priced house , affordability is still close to a four decade high.
Housing is the most extremely affordable.
The point that we are missing are not just focus rates, it is also income.
But we are not singing income growth.
200,000 jobs created?
But they are not going up much.
We still have a high unemployment rate but as we move in that direction, you will see income growth.
The other part of the story is that banks were not willing to extend credit over the past couple of years.
Home prices were falling and they did not know what was going to happen but now it is solidly in the positive territory and banks are now more willing to issue the mortgage.
Issue it but at lower percent down.
Collects a lot of the buying we have seen come from investors.
A lot of people would say that this is in part why we are seeing this appreciation.
What is your response to that?
Like some of that response is true, there has been a lot of demand from foreigners and investors, but the simple fact is that a state like california, there are 50% fewer homes for sale than one year ago.
It is as simple as demand significantly exceeding supply.
Supply will likely not, mind fast enough for the next several years.
You are basically starting 834,000 housing starts, 20% to 25% annual growth just to get to 1.3. if you think about it, single- family starts at the peak in 2006 and is three times where we are now.
We are nowhere near where we were at the peak.
Talking about the supply side with housing starts, i understand the notion, but you cannot argue with the fact that 10 out of the last 12 weeks we have seen mortgage applications fall as rates on mortgages shot up.
How do you deal with that?
There is no question that for the new buyer the higher rates have an impact.
For every 100 basis point rise in interest rates it affects affordability by 10%. the marginal buyer definitely gets affected.
In fact housing is more directed by supply and demand inventories and the buyer expectation for future house appreciation.
Buyers are coming off the sidelines after six or seven years of pent-up demand and if consumers expect higher housing prices, even financing of 4.5% -- do you really think that, though?
After everything that people lead been through, i would argue that a lot of americans realize now that this is not a guaranteed investment.
It is an investment like anything else.
I do have a problem with the mortgage chart on screen, which includes refinancing, and are very sensitive to those interest rate changes.
If we look at the purchase rate data, it holds up to a greater degree.
Holding up balance sheets, but not necessarily the markets.
Mark, how long does this take to bring back in line?
There will be a housing and land shortage for the next two years.
The bottom line is that you are literally in a situation right now where there is a housing and a land shortage and if you saw the report this morning one of the reasons those numbers were low is because the availability was completely lost.
The homebuilders with those lots and can hire the workers, there has been consolidation in you cannot bring supply fast enough with demand.
That is why the housing prices are rising.
California, housing prices are up 20% year-over-year.
Good thing you bought when you did, right?
I want to say it was right about one year ago?
He sold his home, rented for several years, and then bought.
Disclosing your whole housing situation, you did well with that.
Hopefully you are right and housing will, in fact, continue to hire.
Thank you so much, good to have you here.
Thank you for joining us today, good to have you at the close.
Come back soon.
Coming out, do smarter cars equal dangerous drivers?
That story's next.
And just when you thought it was safe, sharknado headed for the big apple.
? ? as we all become more dependent on smart phones, automakers are racing the stakes on cars, but does that mean we are becoming more disconnected drivers?
Sam has a look at the high-tech solutions to high tech distractions on the road.
Two things are happening in the automotive road -- automotive world right now.
Mutually assured destruction.
On the one hand, many drivers want as many apps and services that they get on their phone to be found behind the wheel.
On the other hand, you can look at these listings in one hand and use it in your dashboard.
The problem is, doing a lot of this means you are not doing a lot of this.
For this the auto industry has a solution as well.
Advanced safety systems that take over certain driving tasks.
At the blind spot assist keep you out of the way of a car coming up beside -- behind you.
Nudging you back into place in the lane.
We do have more distraction as we are driving, but we also have new technology to keep us in place.
We do not want to lose our new toys, but once cars can actually drive themselves, we can do whatever we want, because we will not be steering.
What do you make of that?
Not steering a car?
Let's ask the man himself.
You gave up your ferrari to come talk with us on the show.
It is just downstairs.
No, it is an interesting thing that is happening, like an arms race.
You have more safety systems and more things to distract you.
Kind of like you could take more lipitor in the more cheeseburgers.
Or you could just not the cheeseburgers.
We are not going that direction.
We have made that argument on the air before.
We are becoming the lead dependent on all of this technology stuff that is assisting us, right?
You back up and you can see a screen that tells you you are close to something.
Are we going to lose our ability to drive well?
We might, that is actually a perfectly good point.
The car takes over so much of what we do on the road.
They parallel park themselves, maintain set distances from the cars in front of us.
We may become worst drivers, but it may not be much of a big deal.
The cars will do it anyway.
It is complicated.
You have to be a manual to feel out how to use it all.
The auto industry has messed up in a big way, unlike the computer industry when you turn on a computer or smartphone it says -- let's get to set up.
It walks you through it.
When you turn on a car it does not say -- in your new car, do you want to go through it?
You have to delve into these menus.
It is not intuitive.
Being a programmer is the hot new ticket to getting hired?
General motors is looking to hire thousands of new software developers.
To come up with these new systems.
They are rarely open it will bring jobs back to detroit and the rust belt.
They have to compete with silicon valley, meaning you have a whole new class of people working at general motors.
Ride, you cannot get away with the same thing for the software developer to be working there.
Realistically, of what is the timeframe for getting a car that drives itself?
End of the decade.
That is what some people are saying?
If not absolutely completely autonomous, they will take over the majority of driving tasks by the end of this decade.
Sam, love reading your stuff.
And love having you on the show.
Speaking of, pimm fox, what is coming up?
I do not want an automatic car.
Does playing football give you a leg up on wall street?
We will find out what three nfl players learned playing for the pittsburgh steelers, jacksonville jaguars, and st.
That and much more coming up on "taking stock." ? ? it is time for weird wall street, where the bizarre is the usual.
Talking about sports today in "street smart," the american league build -- beat the national league last night.
And one hedge fund the guy, sort of newly active.
There he is.
There is, famed the short seller, and jim jaunius, was almost hit by a flying ball.
It looked at it, he is pretty collected.
A flying back.
He is pretty calm.
Black sea is a cool character.
Viewers noted who had been caught on television there.
Jim chenos, nearly hit by a baseball bat.
Lucky, that would hurt.
Ready for a little excitement?
You heard it first right here on bloomberg, we spoke with tara reid about a "sharknado " sequel.
I am sure that you will see some sequels.
Sci-fi has confirmed dead, they have green that "sharknado 2." it will all be right here in the big apple.
Filming in the big apple?
What do you think?
That is great.
I have to go back and watch "sharktopus." speechless.
All too often.
When the going gets tough, the tax man gets creative.
Cities are thinking of alternative ways to bring in revenue.
Philadelphia is trying to tax what?
The city is pressing the case to go after delinquent property taxes.
Philadelphia has the fifth highest rate among u.s. cities.
Illinois already taxes its strip clubs.
Are they going to tax the tips of waitresses?
They do, shear -- theoretically you are taxed on your tips.
Coming up tomorrow, stay tuned, but do not go anywhere, because julie hyman is back after this.
? ? it is the end of the hour, time to see where stocks ended the day.
We definitely had some gains, the s&p finished higher.
The dow jones eking out a gain of 19 points, 1/10 of 1%, or 11.5 points.
All of this as ben bernanke testified this morning before the house financial services subcommittee.
His comments were declared dovesih.
After the bell we have a number of different earnings reports i want to highlight, big companies reporting, like ibm, beating estimates to raise the forecast on the strength of cutting costs and buying back shares, shifting away from low-margin businesses.
The shares have been rising in the after hours.
Earnings per share, matching estimates.
They had seen a bit of an increase, shares taking a hit.
Ebay, short of estimates, those shares leaking a bit.
Finally, american express, shares down, beating revenue, that seems to be a trend we have seen quite a bit of.
Joining me now to talk a little bit more about what we have seen in the markets, lynn thomas, from bloomberg news, who looks at earnings.
One of the things we have definitely been noticing, earnings per share missing estimates.
This does not seem to indicate a lot of quality to the earnings season.
The main concern amongst investors has been that cost cutting has been such a huge part of how customers -- companies are boosting earnings per share.
That is what you see in these revenue numbers, cutting costs and cutting costs.
The real question is, how long is it sustainable?
The two biggest groups in the s&p 500, financials and technology, we heard a lot from financials and technology, we're probably halfway through with each of these big groups.
What is your read on them so far?
We have definitely seeing a lot of good numbers.
Bank of america, goldman sachs, they have all done really well in the past few weeks, a good sign, they are supposed to contribute a lot.
If you see them doing well, that is a good sign for the overall market.
I think that technology is overall a bit mixed.
You are seeing that reflected in the share price this year.
Up only 11% compared to 15%, you are seeing some weakness there.
Overall, when your team is talking to investors and are so focused on ben bernanke, they have talked about shifting the