>> where are you going? >> 5:30 a.m., he gets up, jumps in a pool for six hours and you just -- five olympics, isn't that -- that's like a long time to still be training. you got to hand it to him. >> the great ones love it. >> think about jumping in a pool every morning at 5:30. >> i do. >> not going to -- >> i do jump in the pool every morning at 5:30. >> in the meantime we have to jump in the "squawk on the street" pool because they're up next. see you tomorrow. good morning and welcome to "squawk on the street." i'm david faber along with jim cramer live from the new york stock exchange. carl quintanilla has the week off. a look the at futures, after two strong days, making back a good amount of the losses that we saw on friday and monday, certainly

in the equity markets on this side of the ocean, you can see the european markets as well have steadied to say the least but that's about it. after again a nice two-day rally there, although that ftse, a lot of people saying that's not the one to look at. yeah, it's back to where it was before brexit but that's because most of it is international exposure, not necessarily exposure to domestic uk. let's get to our road map this morning. it does start with a big day on wall street. it's the end of the first half of the year. we've got a look at the winners and losers and who's poised for perhaps a pop in the second half of the year. lions gate buys starz, $4.4 billion in cash and stock. i will give you the detailtss on how the deal came down and what it means for the companies and industry overall. the results are in, we will have a look at the bank stress tests and what it tells us about the strength of the sector. we are heading into the final trading day of the second

quarter and the first half of the year. the dow is up 1.5% year to date. the s&p with it, 1.3%p gain there on that. much more important average. the nasdaq declining more than 4.5%. biotechnology certainly not helping there. for the second quarter the s&p and dow aiming to finish the quarter in the green. the nasdaq, though, would be down let's call it almost 2%, jim. biotech certainly has been one of the stories. growth stocks, technology hasn't performed particularly well, hence the nasdaq. we know some of the big names in terms of the contribution of their significant market cap watching them down dramatically for the year. >> it's in a j and j kind of year, pfizer, walmart. these extremely large cap companies that were very much involved with a -- dollar being strong and hurt them, dollar now second half, right now, kind of a neutral for them. when you look at the companies

doing the best, what they are is the best balance sheet, decent growth, safe. decent yield in many cases. when you look at what didn't do well the ones that didn't have that good of yield and maybe the balance sheet, the non-gap numbers began to not be light. look, united health, let's look at the ones that have done well. united health, they've benefited from all the disarray and pulling out of all the bad exchanges. verizon, lots of people don't realize that verizon quite simply is a cash machine. >> all right. >> and has a good yield. you just go down over these. the stable companies did well. there are not a lot of stable companies like those in the nasdaq. >> right. and what about biotech, though, as we end the first half. because some of the names that you've talked about for years that were great performers, i'm thinking of a celgene, for example, and we can go through a lot of them, is there any hope for them in the second half or is this a year to write off in terms of the performance of these companies?

>> here's an odd thing. the multiples, price to earnings multiple to pay for future earnings went beneath the traditional pharma this quarter. i think biotech is very much involved in politics. i think they made too much money. >> the drug pricing has become an issue. we're talking endo, what a disaster that's been in this very area. there's some of the other names we're talking about in terms of the s&p. regeneron on that list not to mention perrigo not a biotech but drug pricing very important. how much have they raised prices. we focused on valiant but perrigo did it. >> that's important because the biotechs were serial price increasers. we haven't mentioned valiant. people are angry at valiant for saying that some of these franchises are challenged but you and i are looking at the debt side. companies that had a history of raising prices for the same drug

or a tweak has come under pressure. hillary clinton is perceived to be their enemy and is a frontrunner. everything is emotionally charged these days. frontrunner i'm looking at certain polls. that group has become politically challenged and medhivation being an example we used to have a lot of those. the cancer front line, you saw the stock double. people forget it's why you love biotech the wonder of it. we went for the non-wonders. pfizer, a lot of people feel it's mostly in a marketing machine. j&j because of their actual drug business has accelerated. you can learn so much from this quarter about how the markets change. >> yeah. >> people want bond market equivalents. >> at&t, verizon, exxon, walmart, all of which have been strong performers in the first half of this year. >> this looks like other -- >> at&t up 23%. >> i know. utilities the best performing index. what we have are companies that are perceived to be good balance

sheets, can raise other dividends. general mills did not have great growth, plus 2%. the cereal business was quite good. they raised their dividend nicely. all the companies you see with the exception of exon that list they can raise the dividend because their balance sheets are so strong. we came back to liking companies that have fabulous balance sheets with good growth. this is traditional investment yet the market is very much disliked by traditional investors. >> speaking of raising dividends in a sector not well liked the banks. 31 of the 33 u.s. banks did pass the final round of the fed stress tests, allowing them to boost dividends and buybacks. morgan stanley passed with conditions, the fed requiring the bank to submit a revised capital plan by the end of the year. deutsche bank and san tan deer failed. >> second time. failed last year. >> fed citing poor risk management and financial planning. these are small units to be fare

to deutsche bank which got pilloried by the imf for being a disaster generally. >> become the whipping boy. >> the stock hit a 30-year low. jim. >> with a country so strong. >> i've been making the point. when you look at deutsche bank and its minuscule market value in terms of its capitalization as an equity versus its balance sheet it has to be the biggest divergence out there. see where that stock is right now. there's san tan dar. >> the feds still had broad and substantial weaknesses across their capital planning processes. deutsche bank is really a pariah. san tan dar has been a pariah a long time. deutsche bank, now david, i have to tell you -- >> please tell me. >> what matters with the stress test is the disparity between the tangible book value and what the companies can do. look at citigroup holding in my travel trust they have a tangible book value of 62.07. every single share they buy is

additive. your numbers go higher. so citigroup which has an eight multiple versus the average of 10.5 of the large cap, should be able to go up. my friend at real money pro is saying listen, the banks -- >> by the way there's a look at where we stand nice little full screen for you. >> their numbers will be -- >> where the dividend is, the buyback, many of them have been increased. certainly morgan stanley went up as well. doesn't mean they're buying back that stock at one time. >> that's why it's hard -- >> over time. >> that's the downside. david, this group is -- is regarded as being a value travel. a lot of people feel by the way they're going to be the new tobacco. >> it's viewed as a value trap because it has been a value trap. >> as you said from the day this thing happened it's going to be about the return on equity. not going to be able to make as much money because the government won't let them. are they greyhound bus, literally utility, i don't know. utility is up 20%. you wish. they're worse than that. because they are being controlled by the government so

if you were and i to take a position in citi and we have to do something right now like an activist. >> not going to be an activist or deals either you will not see consolidatio consolidation. in fact the alternative is likely although not likely which is breaking them up. >> you know, if vice president warren -- she were to be chosen -- ever talk to her about the banks. >> no. >> she's a hoot. >> never spoken to her at all. >> i did see a picture of her with joe kernen however, did you see that. family photo. >> yeah. emanuel velcoughski when worlds collide. >> they were all smiling too. >> joe threw a first pitch. >> didn't look bad. >> every bit as my pitch. >> you've done the phillies he's done the reds. mets, i'm still waiting. >> you and jack lew still waiting. >> i can throw a better pitch than jack lew. >> your son could throw a better pitch. >> yes, he could.

>> the stress tests, the results this group the worst group since brexit. >> i don't think we mentioned brexit in the last few stocks. >> the stocks looking up given in terms of everybody passing and doing very well. our banking system is healthy when you look at capital. do they get a little life or is the fact that we have a 1.5 year yield on the 10-year going to say guys -- >> latter. latter. going to report soon. probably not going to like the earnings unless you boost it a lot, bought back so much stock citi could add 70 cents to its earnings but no. we're going to see the numbers. david, here's what people want right now. they want anheuser-busch, they want -- anheuser-busch being enbev. we have the change in the order. we listen to all of what's going on in brexit but the fact is, the hottest stock it's diageo. why? scotch. our friend johnny walker black least in the evening, 90% of the sales there are export. think about what a leg up they

just got over some of our sco h scotches of which our scotches are not as good. i know the two, they send me the 18-year-old, i appreciate that. the rush to have the traditional european british brands. bp upgraded. that's another one. that dividend i believe is safe. >> believe it's safe. >> the reason we'll have a tough day, oil down 1.25 and this market is starring going back to the pattern of caring about oil and forgetting about boris johnson. >> what's interesting about our conversation thus far, 11 minutes into our show we haven't discussed brexit and that has been nice. >> you know, boris johnson is relegated to boris and natasha the way we thought about them. >> i loved that show. >> intellectual show masked as a children's show. >> speaking of brexit, we don't want to forget about it. one week after the uk referendum, supporter and former mayor boris johnson jim mentioned announces he's not going to run to become prime minister of the uk. wilfred frost is live in london and he has more on that story.

wilfred? >> david, thanks very much. just six days ago, of course, the former london mayor boris johnson oversaw an extraordinary election victory for the leave campaign, the brexit referendum and many thought that would sweep him to 10 downing street to be the next uk prime minister. however, this morning, he surprised everyone when speaking on the topic of who would be the next prime minister, he had this to say. is. >> my friends, you who have waited faithfully for the punch line of this speech, that having consulted colleagues and in view of the circumstances in parliament, i have concluded that person cannot be me. >> in the last 24 hours we have seen a house of cards-style stab in the back in british politics. just last night, boris johnson thought he would be announcing his candidacy with alongside him

fellow leave campaigner michael gove as his head of campaign. instead, michael gove this morning torpedoed boris' chances announcing his own candidacy and with it boris johnson felt he no longer had enough support. some of the candidates as they stand. mr. crabb and fox are expected to be outsiders, andrea leadsom has a chance, michael gove 66 to 1 in the betting market but the clear favorite the current home secretary theresa may, on the remain camp during the brexit referendum. listen to an important phrase she said earlier today. >> brexit means brexit. the campaign was fought, the vote was held, turnout was high, and the public gave their verdict. there must be no attempts to remain inside the eu, no attempts to rejoin it through the back door and no second referendum. there should be no general election until 2020.

>> here here. >> reporter: so brexit means brexit. the phrase from the favorite to be the next prime minister while the second and third favorites were both on the leave side. make of that what you will, but certainly seems like we're heading towards carrying out the will of the british people. >> all right. thank you very much. wilfred frost reporting from london. >> that's important. an interesting exchange this morning between sara and wilfred, sara saying, our own sara. >> of course who's back. sara eisen. >> maybe this is all talk about how it can be repealed and walked back. no. very, very clear that there's going to be a brexit. so stop thinking about that. what happened again the beleaguered british banks went down again. the common stock. not fixed income. >> when we come back, the home of the hunger games, striking a $4.4 billion yedeal. lions gate agrees to buy starz. we will talk with billionaire jim simons, founder of

renaissance technology, one of the most successful hedge funds, the guys when we talk algorithms we're talking about. take a look at futures as we set up for the open here at the new york stock exchange. baerng with more "squawk on the street" right after this. this woman owns this house, with new cabinets from this shop, with handles designed here, made here, shipped from here, on this plane flown by this pilot, who owns stock in this company,

that builds big things and provides benefits to this woman, with new cabinets. they all have insurance crafted personally for them. not just coverage, craftsmanship. not just insured. chubb insured.

we've got a long-awaited deal in the content business. lionsgate buying starz, the pay tv channel, that inks deals with a lot of the studios or has in the past and has a big slate now of original programming, they're buying it, $33 a share call it in cash and stock, 57% of the consideration is cash. that amounts to $18 a share, 0.6784 share of lionsgate if you're a regular common shareholder. john malone and discovery and lionsgate own or will own a separate voting stock and so their ratios are different. about $7 a share in cash. the rest in stock. so they will remain significant holders and significant voters in control to a certain extent. the deal itself an interesting one, one we've been waiting for some time.

there had been thought that perhaps amc made a better partner for starz. amc may have sort of been around the hoop a little bit but came too late to the party to be able to be involved. there were two other bidders for starz. one of which was cbs. but did not meet the price that lionsgate was able to come up with. i'm not clear on who the other bidder was. anybody -- >> over and done. anybody out there this process went on for some time. they had special committees. because interestingly, jim, if you remember john malone bought a stake in lionsgate as did discovery. malone on the board of lionsgate. but remember, the chairman of starz, which came out of liberty, is greg ma fay who is the ceo of liberty. >> holy cow. >> you had this odd situation where john malone was opposite the man who workses for him as the ceo of his company of one of his companies. >> how is that -- wow. >> yeah. >> they actually had to negotiate against each other a

little bit but did insulate themselves with special committees and everything else. two other bidders here. specific to the deal itself, though, jim, the call is just begun. we will see what they have to say about operational synergies. important to note lionsgate stock is up and up dramatically this morning. canadian taxpayer, beneficial to starz. leveraging the balance sheet to 5.5 times ebitda. >> let me figure this out. last october talking about how lionsgate was sitting pretty in the stock market and talking with starz that's when hunger games mockingjay part 2 hadn't come out. lionsgate was at 41. what happened? >> they got crushed. didn't do well. they had failure. >> look at this. >> i know. now starz, by the way, jim, is not growing at all and we are talking about a 9 to 9.5 times multiple to ebitda on where

their current ebitda numbers seems to be. that's a high multiple for a company not growing. they lost disney, will roll off at the end of the year. no longer a concern for them. trying to renegotiate or were with at&t to be distributed on at&t which is direct tv. that becomes important and perhaps helps them now that they're a part of lionsgate. a larger company, may generate as much as $750 million in ebitda a year. that is not insignificant. and again, the canadian taxpayer so basically not going to be paying a lot of taxes at all. >> this is a good deal. >> that is helpful. we'll see if they have anything to say about synergies which they did not say in the press release. >> broken several stories here. break it down. the cbs, now, why is cbs having to do this? >> cbs was always interested in the asset. >> so it was -- >> they own showtime. >> make cbs less -- develop -- i know -- >> synergies you can imagine. i will say, and i did pick this up, doing a deal even with cbs,

given what's going on at viacom, if you're on the other side, you got to wonder. right. >> whether the deal is yours to do. but less -- >> leslie is not going to want to hear that, i know, but it's true. >> but the fact is -- >> it's an outgrowth of what's going on at viacom even though cbs has been untouched by any of the goings on at this point and mr. moonves, chairman and ceo of the company but controlled by national amusements. >> it's interesting they're ready too. this is another level of consolidation we're seeing. i think that when you see the lionsgate stock is up it's going to make people want to contact bankers and say hey, maybe this is our way out of this jam that we're all in. >> you know, maybe we'll see more consolidation but it's tough to do consolidation and content. there should be more when you talk to the bankers, whether it's discovery or scripps or all these guys, they should be more. there hasn't been. >> speaking of bankers, let me end on this.

pjd partners advices lionsgate is the lead partner but jpmorgan, bank of america, merrill lynch and credit suisse. six different banks there. >> charity of deutsche bank. >> you're so good. >> they were being charitable. we'll put you on the press lease and won't pay you money. >> those are a top ten, in the top ten in -- as advisers, deutsche bank. >> they are. why in the world they needed one, two, three, four, five different advisors. >> can you have done with this with a couple bankers. you and i getting together. >> malone to begin with. ma faye, you didn't need bankers. >> it's good for everybody. >> we'll see. >> the quarters will be so bad. >> they need the fees. >> up next, we have jim's mad dash as we count down to the opening bell. give you one more look at futures after two very strong up days, we're looking, you know, mixed. >> oil. >> yeah oil. exactly, more "squawk on the street" right after this. before a bunch of dreamers looked up to the sky

and said, "why not?" and collaboration tools from intel made rocket science simple for actual rocket scientists. and the launch crew met for a moment of reflection. before any of this, cdw orchestrated a collaboration solution using pcs with intel 6th gen core vpro processors. collaboration by intel. orchestration by cdw.

. all right. we ran a little long there in that discussion about lionsgate. we're going to go rit to the bell. start with the mad dash, though, and get to it. what do you got? >> sometimes when you actually have a business, you detect there's big trends. i've been behind constellation brands, because he can't keep the ma dell lo stock. net sales in beer. they bought ball last point, depletions of 60% meaning how on fire are on. constellation in the high-end segment in beer market doing well in wine too. rob sands on "mad money" and i have to tell you, david, there

is no company in the consumer package that rob is a tough guy. >> guy should pray at the altar of the doj without them stopping that deal with anheuser-busch, $32 billion market value now. thank you very much. >> similar, yes. but it was a remarkable acquisition. rob says i'll give him this credit he has taken the brands to another level. >> no doubt. >> they were not a focused name brand. >> never looked back the minute the divestiture was announced. >> that was a gift but at the same time rob augmented it in a way people in the business know he has become go-to and when you want to have a bar or restaurant in america, this is beerts that people want. they want ma dell lo and corona. >> they don't want america, aka budweiser. >> no. and they want ball last point which is a good craft beer. i'm not saying -- i don't sell coors or bud.

i sell pacifico, which people like, like keystone and people like it. >> i only like allagash, with a nice orange in it. >> i don't drink beer. >> you don't drink beer? >> just kidding. >> come on. i'm not a big drinker. what else do we have to talk about, a minute before the opening bell. >> darden. >> i wasn't happy with the olive garden numbers, subpar. they did raise the dividend very nicely, that's going to be okay. but olive garden was a percent less than i thought. revenues weren't that great. conagra not what i wanted after general mill you have to conagra is splitting. tractor supply because of bad weather did not have a good quarter. >> as we end the first quarter what is the key to the market today? jpmorgan much of the week. >> well, i got to tell you -- >> is there anything. >> get this, mobile and intel combining with bmw for driverless car.

you will see intel be the key to this market. >> give me a little technology name. >> intel taking a share from qualcomm, downgraded by bernstein today. intel, brian cra zannic making his move out of the pcs to the car. >> there i it is the opening bell for the final trading day of the first half. [ inaudible ]. >> we got time to talk. big board, institute of internal auditors celebrating the 75th anners havepyp got to be a fun bunch. nasdaq, harbor one bancorp, celebrating its initial public offering. the real-time exchange at hq getting composed as i like to say. more green than red on the board right now. coming off of two strong days that saw claw back losses that had taken place on friday and monday. this after the vote by the uk to withdraw from the eu. of course it's not like that has

happened yet. right now they're having a political crisis over there in the uk. >> incredible order. >> makes us look like we have it moving smoothly. >> it's been since the [ inaudible ] parliament i've seen this activity. this note from intel is important. >> raising estimates and price market. better pc demand. apple wind, taking up to 25% of apple iphone, the 7, from qualcomm, and david, driverless cars, something you have pounded and pounded. >> i have. >> mobile i and intel together with bmw tomorrow in a partnership, mobile i will go up in that too. >> autonomous vehicles fascinating area. i talk about it often because it hits across so many different things. >> 2 million -- >> so many implications as it slowly, slowly begins to proliferate into our world. >> driverless cars is an

algorithm of whether you should be hurt versus a pedestrian. >> right. >> who gets -- >> i know. i've heard about that. do you hit the pedestrian or not. >> a pedestrian in a video when i was at ford motor, where we are trying do 2 million laser pulses to make sure they don't hit the pedestrian. all will resolve because in the end a drunk driver is not as good as a driverless car. >> that is true. >> or a texting driving. texting has brought fatalities back up first time in a long time. >> it's terrible. watching people in new york city as i often do, crossing the street doing this all the time, also is amazing more pedestrians don't get hit. >> think you cka -- >> no. >> the chinese are apparently ahead of us in certain areas. >> they are. it's -- >> and willing to go down -- >> arms race to driverless cars. >> willing to push it faster

than we have. >> all over that as he is all over anything auto related. >> if it move he's on it. >> i hadn't thought about it that. >> planes, trains and automobiles. >> they were my style. >> john candy made me laugh so much. look at him and start laughing. >> i always focus on gold and what gold stock do i like the snoost. >> rand gold. >> rand gold. dr. mark runs it called me a sissy for not willing to be a gold miner. i didn't take umbrage because he didn't do it on twitter. he did it to my face. you didn't behind any maim like so-and-so go for jack 38. dr. mar bristow. they are doing well because it's a growth gold but umana starting to pick up, silver wheaton. this move is not over in the golds. people dumping gold because they thought it was the peak. no. gold is not done going higher. >> it isn't.

>> because there's still chaos. not the chaos. >> muted chaos. >> chaos versus control. >> maxwell smart. >> oh, my go ahed. >> barbara feldman. >> are you allowed to say hot? at that point you were. >> she was. no doubt about it. the cone of silence, we use that occasion will i when we have to have a conversation off line. >> yes. morgan stanley rewriting the oils as we talk. taking some of the internationals down and yet, i happen to think again we got to focus on bp. why? brexit. >> article today in the "wall street journal" saying exxon mobil reigniting its desire to see a carbon tax. pushing for that. >> fossil fuels no long-term hope for those. they are really 30 years from now, you're going to see them right up there with altria and reynolds. >> we'll have self-driving cars that run on water. >> that was steve jobs' goal. remember before he died. he thought he could pull that

off. maybe one day. >> the banks are up but it's not up a huge rally and, of course, the bajs had been hit -- banks had been hit hard after the brexit of last thursday evening, friday morning. but they are up after the stress tests. our banking system is healthy. got to say that. it may not be earning a great return on equity, but from the perspective of the average person out there on the street, it's healthy. we got a lot of capital in these banks. capital markets activity may not be doing too much. the m&a activity maybe not great, not bad. fixed income may be a challenge for some of them. >> yes. >> not to mention the fact there's no net interest margin but they are healthy. >> oh, my. that is what i think of when i think about dominion and southern. you know, the old wisconsin electric had better margins. >> right. >> wc now. >> anything when you think about, all right, this year, we talked about it at the top of

the show, what has performed well in the first half, i mean, people don't necessarily split the gear in half and say okay, something that didn't do well in the first half will do well in the second but is there anything that you think we should be focused on as we move into election season in earnest, as we still deal with the uncertainty, of course, of this referendum that took place in the uk last week, and as so many other things may be coming our way including a longer -- lower for longer environment in terms of which rates stay negative in most places no i'm going to tell you, it's going to be in your wheelhouse, continued consolidation, david. we are getting less growth. our growth is going to be lowered. in your world. i keep thinking about the story you broke about cbs -- >> it's a part of the -- it's not a big story. >> does a boeing, does a my kron, nvidia, does a broadcom. they're going to keep coming back, david, because they don't have the margins. you look at what happened with the tyson foods when they decided to go after hillshire.

we knew they paid too much. look at that stock. deals, deals, deals. >> all right. >> we will see some deals in the high growth tech area. >> let me throw one at you then. when it comes to high tech. which is apple. will apple do anything of size when it comes to acquisitions? obviously they could choose to do anything they want given how much cash they have and borrowing capacity. if you believe the iphone is not the answer in terms of growth for the next five years do you need to do something else and if so, do you do something big if you're ap until. >> apple never wants to hear anyone say so-and-so must do something. but the service revenue stream is the only thing they can get a multiple there. i am hanging my trade apple on service revenues. company like pandora or you get a company like spotify, you need -- >> those are tiny. >> they're not going to do netflix. they're not going to do netflix.

>> bumpcuss. >> i'm giving you yiddish. >> they have to do it because you can't be a cell phone company and get a mult. that's been proven. pandora is not for sale. >> it's not for sale. if it was sirius would try to buy it in earnest. >> sirius would be a tremendous ac acquisition for apple. you would own the car. again, let me back up. none of the things i'm talking about i think are going to happen. >> you don't. >> if you asked me if i were running the m&a department for apple, i would put together anything that can be a continuum in the car whether sirius, pandora, i want to own the car. because the car moves. that's why i suggested that they buy harmon. harmon is challenged on a foreign exchange basis. own the brains of a car so your cell phone comes in and you turn your car on with this and then that is the future. i've seen it. they have to do it because amazon is doing it. when you go to the amazon echo

you can tell it to turn your car on and i did it last week. i had a ford turned on by it. and -- with the sync 3 that mark fields is pioneering and some people feel that ford is very late versus others. i think that they're in the mix. it's a scrum. but if apple wants to build the revenue stream from here they need to own the car. >> shouldn't just buy gm. >> no. they need to own the -- >> that was a joke. >> the brains of the car. when i was yesterday with martin who gave -- showed me the largest tractor in terms of size and compact. >> who is this gentleman? >> ceo of adco. they had giant tires. good video. the main thing number of semiconductors in that tractor. the brains of things that move need to be controlled by your iphone. that's the revenue stream. if it's just going to be the iphone you're not going to get more than a 9 multiple and we will to worry about the next iteration. you got to get off that

treadmill, tim cook. tim, like i said it to him, i'm -- >> it will be interesting to see. again, right. we're just talking. just talking. >> there's nothing wrong with just talking. i see a lot of it happen on tv. >> when i talk, there's a lot of bankers who also talk about it, but don't -- not that there's anything happening peop. i'm just saying. >> netflix was half its price i said to the people at apple this is an opportunity to have a good revenue stream. hindsight is 20/20. >> that's a nine multiple stock and what's netflix? >> low multiple stock that buys a high multiple stock is a higher multiple stock. the way of the world. >> talking 34 billion cap on one that's $520 billion. it's not still -- it's -- >> i just need to know the stream bigger than the service stream. i don't know if you back up your pictures on icloud. they get you on that. look at your apple bill but it

has to be like your verizon bill. which is so obscene.

you see 40 points or so below that level. the people debated last night on our special why did we have a rally in the last couple days. as the selloff started debating heavy positions unwinding. modest impact from end of the quarter issues like pension reball here.

in terms of winners and losers, a lot of differences. energy big winner, retail and tech a big loser, apple, microsoft, all double-digit declines for the second quarter. the second half is the big issue. brexit is going to be an issue for the second half. five straight quarters of negative earnings growth but expected to go positive in q3 an" 4. but to the extent that brexit can throw a monkey wrench into the thing is a concern. on dollars and lower rateses. kí/ will definitely hurt techs, materials and energy and the lower interest rates hurt financials. you can see this with goldman sachs. higher earnings in the second half of the year than the first half. if we have any slowdown in business activity and m&a or trading that's going to be an issue. of course any kind of lower rates also impacts them. we're expecting good numbers from them and that could change through the brexit as well. take a look at the banks you notice here, of course the capital distribution here better than expected. most of the banks trading to the

upside here. bank of america by the way going to 2.25 dividend yield from 1.5. one disappointment, american express the buyback wasn't as big as anticipated. i think perhaps some people were expecting that costco loan sale to be a huge share buyback. not quite as big as expected. financials trading to the downside. the dow up 47 points. back to you. >> thank you very much. bob pisani. chicago pmi is a few moments away. to rick santelli at the cme group in chicago and will deliver it in 50 seconds. rick? >> absolutely, david. we'll start looking at the charts and break away for that pmi number. let's look at a february 1st start. our 10-year i picked february first the 11 was the old yield close for the year, 1.66. see we've gone through it and haven't come -- we have come close to challenging the sub-1.40 july 2012 low. we seem to be stabilizing at

1.50. take a look at the french 5-year. trading close to minus 33 basis points. it's negative out to the 8 year which is minus 6 basis points. let's look at the jgb 15 year, that's right, closing in on double digit negatives, currently trading minus 9. if we look at the pound versus the dollar i like a one-week chart that gives you a more granular look putting a cushion to the lower 1.30. and break away for chicago purchasing quickly. it's a june read. whoa. 56.8. that's six points better than most were looking to. last look 49.3 to put it in context. and 56.8, wow. that is the best going all the way back to january of last year. january last year. and this really has been a very,

very weak index reflecting questions on manufacturing is it going to standard start a trend, i'm not sure. my last chart i want to get to, i've heard accurately so, ftse 100 multinational, all true. but if the ftse 100 has recovered as you see on the month to date chart if it didn't recover would many say wow, how terrible it is. you got to look at it both ways. maybe part of brexit's bravery was understanding the global dimensions of their stock market. however you slice it, i call it impressive. david, back to you. >> thank you very much. >> all right. thank you very much, mr. santelli. >> that oil -- >> maybe you get pmi. look oil is down a buck and that's hard to rally. you get oil down 50 cents see a nice rally off that. >> right. >> oil has to turn around. i mean look i'm not an algorithm man. >> we hit 50 but been sort of in retreat since. >> well, that's -- that will be -- that's multiple sometimes,

third time. eventually it's going to come knocking. what happens at $50, saying, that's when the oil producers sell futures. want to be able to raise cash to keep bank of america away so to speak, large bank with big positions in oil. only thing that could make the bank stocks rally would be other than interest rate hike would be a sense we're taking the loans off the table. david this is a j&j rally. >> it is not a bank rally. barely holding up in terms of gains after the stress tests came out. very slight trading after the bell, but they were up. >> biotech, again, just not any mojo whatsoever to use the texas term. we're looking at a tractor supply problem that is moving into the retail side. you could argue lowe's is up, home depot, lead read through there, the spring planning season weaker.

the best thing that happened with the banks was not to be one. general electric. >> general electric, that stock, of course, reacted positively. we talked to keith sherin. real quickly -- >> he was good. >> good day for ge. >> quicker than they happened originally when they announced the plan to divest most of the assets of ge capital last april. it was april of 2015. >> want to switch gears quickly to viacom. we haven't talked about it this morning. they're up in that probate court in massachusetts. the analyst rich greenfield tweets 43 lawyers in small canton mass courtroom up from 23 in the initial hearing. >> 23 lawyers alone in that. >> viacom. >> in that courtroom. >> greenfield -- yeah, greenfield was talking about viacom/cbs and halftime. >> yeah, that seems to never go away. >> it won't go away.

it won't go away. look at the lionsgate deal for starz and the multiple they're paying for no growth company really. >> right. >> doesn't make viacom look that bad. now that being the case, doesn't mean that viacom is ever going to get bought or be sold and it's not clear to me there's a buyer for that company in its entirety you will continue to hear cbs buying viacom, consolidating control of the national amusement run by leslie moon have overall and see if that comes. >> on the banks citi can sit there and -- >> as we approach the fourth of july holiday weekend we will discuss the business of theme parks with the ceo of cedar fair. that and so much more when "squawk on the street" returns.

let's get to eamon javers in washington, d.c., for some breaking news. eamon? >> [ inaudible ].

[ no audio ] >> is eamon good or do we want to move on from here? >> david, i'm here if you can hear me. >> now we can hear him. we can hear him. let's get back to you again. go ahead. >> try that again. >> we're monitoring a report now from andrews air force base of an active shooter at the base. tweets from the official twitter account from joint base andrews saying jba is on lockdown due to a report of an active shooter. personnel are directed to shelter in place. more information as it comes. you're seeing a live helicopter picture of andrews air force base. the second tweet saying the incident is ongoing at the malcolm grow medical facility. first responders are on scene. personnel continue to shelter in place. the reason we're trying to sort out what's going on here, there was also a drill coincidentally

or not scheduled for this morning at 9:00 a.m. and an active shooter drill. our nbc affiliate in washington, d.c. is reporting the drill was scheduled for 9:00 a.m. and saw the official tweet go out after 9:15, 9:20 eastern time. so people are trying to sort through whether or not there could be confusion here. these two official tweets have gone out. andrews air force base is an enormous facility, small citi just outside the beltway and southeast of southeast of washington, d.c., famous home of air force one, the president's planes fly in and out of andrews air force one and dignitaries and high-ranking officials from around the world when they visit in washington, d.c. it is an incredibly secure facility. when you drive on to the base as i've done, you have to go through several steps of security to get physically on to the base. but once you're on there, it is like i say a small citi.

residences and homes, playgrounds for children, thousands of people actually live at an drus air force base. it is a pretty wide ranging facility. we're told that this medical facility, referenced in the andrews air force twitter account is the malcolm grow medical facility wide ranging primary care facility on base. they've been doing a lot of construction there recently to expand it. but it provides all sorts of outpatient services to medical -- to military personnel on the base there. we're going to have to sort through this now and figure out what's going on there. as we monitor developments at andrews air force base. >> thank you, eamon. we'll be coming back to you as we get, as you said, more information on exactly what's going on there. back to our markets, of course. the banks i would note are just not really -- they can't hold the lead as we say. >> no. >> kind of like the mets lately. >> unfortunately. >> i have paychecks on tonight

which is one. >> the mets don't have a lead. i should say that. >> but what we make of that, i mean -- >> the banks, do we just -- i a number of times. >> bank of america wasn't happy with the $5 billion. wanted more than that and the dividend boost wasn't that much. one i'm not that fond of. just you should have had citi did 8.6, possibility of shrinking 200 million shares, capitalization basis, number of shares six times what it used to be. i do point out that i've got two winners tonight. i have paychecks up very big. a lot of people are short -- >> on mad tonight. >> yeah. >> right. >> short case has been wrong so long. the short case based on the floor has an increase, easy money, the long case is that the company happens to be doing well. >> yeah. >> companies have ways to augment their business being smart. rob sands from constellation

brands. the baltic is up again. china market not that strong but when you see pmi, see copper doing well, see if oil turns around we will have a good day. >> okay. >> a shame about the home depot but the spring planning season was weak as i know because i'm a planter. >> one more day to go, my friend. you have a show tonight. >> again, congratulations on your reporting. i wish people knew what it meant to be able to get those stories. they have no idea. >> appreciate that. coming up we got a lot to talk about with jim simon the founder of the hedge fund renaissance technology one of the biggest and best performers out there. keep it here.

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and start gathering the information you need to help you go long™. thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet, on the other hand,

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declines. our road map with the markets up for third day in a row barely here trying to make up losses since the brexit fallout and the end of the month the quarter and first half of the year. where should you be putting your money? we will tell you. >> a shocking turn of events in uk politics, boris johnson deciding not to run for the prime minister spot. who is in the running for the top job? we're going to break that down. who may be the next leader of the uk in a post--brexit world let's make a deal, lionsgate buying starz for $4.4 billion in cash and stocks. the details on the deal straight ahead. and coming up later in the hour, the ambassador of the european union to the united states, david owe sullivan is with us, his take on brexit and how europe plans to deal with what is coming next pap rare interview with james simons, the founder of hedge fund renaissance technology, find out what he says will really take to get america great again. we've got a big show ahead for you. we start with the market. it has been a volatile few

sessions here. what can we expect going forward? the ceo of smeeds capital management and robert is a chief market strategist with boston private. welcome i'm curious what you make of the past few days. what has changed post-brexit that seems to be giving the market stability here. >> what gave it stability is first of all the banks came through their stress tests with flying colors and that took one, you know, real big negative that's weighed on the market prior to brexit off the table. it doesn't mean that they're going to go up immediately. it just means that that's a big negative that's kind of taken off the table. the second thing from our standpoint, is we feel that globalization, that whole globalization trade has been dying for three to five years, and it's all going to be about the domestic united states economy the next five years and most from people getting married and having babies and buying

homes. >> yeah. >> so -- yeah. >> i know you've been looking at long-term sort of pictures and stories as a way to invest. just on the short term, robert, i wonder how much of the last three days has to do with the fact that it is the end of the quarter and the end of the there change in sentiment for what brexit means for the u.s. economy and u.s. stock? >> you know, sara, we've been talking about this over the past couple days in our vario various meetings at the firm and what we saw is really sort of cooler heads prevailing over tuesday and wednesday. the market got little ahead of itself to the downside. nothing has changed from last week. last wednesday we're back to the same levels we're trading at the same 17.7 times that we were last wednesday. when we got down on monday, we were at about 17 times. i think people were just acting first an then thinking second.

so now we have to go back to a normalized market. the dollar still up, treasury yields are still low, gold is still high, the euro is still weak. the things have got to start changing for the markets to gain momentumj=:" cf1 o i think they will but it's going to take time. >> bill, we talk about a normalized market. i don't think anybody necessarily feels as if you have all this debt around the world trading at negative yields, very stubbornly low and declining treasury yields here what's the right price to pay for a stock in that environment. does it mean that everything gets even more expensive or does that mean that you apply a discount to u.s. stock? >> that's a great question. you know, our case, what we're interested in companies in owning them five to seven years. mike, where we are now, is we're approaching the same kind of crisis that we had on a forward basis in -- at the beginning of 2012. so if you're not in staples and

not in utilities and not chasing the dead cap bounce in energy, no one has been interested in anything that you own which makes them very cheap. all the academic studies show cheap stocks outperform all the academics studies quality out perform and if you own quality and they're not staples and not utilities and they're not energy, they're cheap right now. >> just to be clear you're talking about a subset of the market that's trading as cheap as you say it was in 2012, correct? >> no one wants to own amgen ÷ company in the s&p. they pay 20 times earnings for a staple company and pay 13 or 14 mgen. no wants to be in old media. and as you folks are proving at this very minute right now, your advertising is stickier than throwing spaghetti at the internet and hoping anybody pays attention. there's all kinds of bargains out there. >> thanks for the endorsement of old media.

appreciate that. why amgen? i'm just curious. why should people want to own amg amgen? >> they've swallowed 40% of their shares in the last 13 years, started a dividend at above the 10-year treasure in 2011, grown it to $4, spent 21% on r&d and a numberdidpé of acas have come out recentlyg9ñz and hey, you know, the way things are accounted for these companies are better than you think they are. so how do you dealdo that? you do it at as massive cash flow. indebted utilities when rates go up no one will want them. staple stocks when the united states economy booms the next ten years no one will want them so they're trapping everybody like they always do in the wrong things at the wrong time. >> i mean, bill makes a point here, rob. we=6÷ are seeing -- bob, excuse, telecom up 20% the best performing sector this year. utilities up double digits. do you stick with those winners

or as bill said look for something cheaper and wait for rates to rise? >> i think you have to look for something cheaper if you are looking for better performance out of your portfolio. there's going to be that interest in the higher yielding stocks this year, and i think that play sort of continues throughout this year. but if you're looking for some you. first of all, a global industrial conglomerate breaking off into two pieces. they have wonderful management. they're growing at about 15 times. 15%. another name is baker hughes. that speaks to the other guest's idea in energy. baker hughs an increase in rate count. $3.5 billion from halliburton. they're using some of that money and being thought of as a takeover target and then another name that never gets any mention on air, is albemarle. they're a specialty chemical company.

the stock pulled back from the recent high, growing at really tremendous rate and what they focus in on is making lithium and lithium goes into batteries. jim and david were talking about driveless cars. really the first move in this advent of new car technology is going to be electric vehicles. so there's some big wire houses out there that are saying electric vehicle market is about 3% of the overall market right now going to grow to 25% in the next 14 years. 3%s to 25% and they're going to be running on batteries, ab ber moral is the stock for you. >> thank you for coming on and discussing your ideas in this market. bill and bob, good toj/iqç you. >> thank you. >> when we return, on the way back we have ambassador of the eu to the united states, david o sullivan will join us. what the brexit means for relations between the u.s. and uk. much more ahead. you're watching "squawk on the street."

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welcome back to "squawk on the street." former london mayor boris johnson shocking the world this morning announcing he will not be running for prime minister. our own wilfred frost i left to deal with the political chaos the brexit has left. wilfred, what's the latest? >> absolutely right, sara. the word shock and that's still of course after the leave camp won the brexit vote last week boris johnson the spearhead of

the campaign, many expected he would be swept into number 10 as the next prime minister. that's not going to happen. his fellow leave campaigner michael gove, throwing his name into the hat. this is hot off the press, the firstdjaf÷ edition of the londo evening standard gove knifes boris in the back. what a lot of people are talking about today. in the next 45 minutes, the focus will leave the political sphere of brexit and turn to the financial bank of england behind me mark carney due to speak in about 45 minutes time. of course markets have called down a little bit since this time last week. if we look the at the chart of friday of 1.32 and more important than the levels the liquidity. even on friday last week buyers ator ator every level and not -- at every level and not expecting carney to mention any levels. markets have called down. but we will be listening to his every word, assessment of what brexit means for the uk economy and, of course, what it means

for financial markets. due to speak in about 45 minutes time. sara? >> we'll see you then. wilfred frost, thank you very much. outside the bank of england. equity markets seem to be recovering just a week after the brexit vote but clearly the political and trade fallout and questions continue and joining us now to discuss o'sullivan, ambassador of the european union to the united states. mr. ambassador, good to see you. thank you for joining us. >> good to see you too. >> we've been getting a list of european official responses to the brexit vote. everyone is shocked, draghi said he's sad over it. what was your response? >> i think, indeed, all of us who have worked for the european integration and benefits we believe the european union has brought to our citizens, we're saddened to see the outcome of this british referendum but we live in democracies. democracy is the most important value of the european union and of course we are extremely

respectful of the decision of the british people and we have to figure out how we find a way to go forward in the context of that vote. >> and in that context, there &háhp &hc% brussels this week. we covered it. wilfred was there of european union leaders. was there any consensus, ambassad ambassador, how friendly or unfriendly to make these divorce talks? >> look, i think -- i mean perhaps the divorce analogy ):@ choose but i think it does convey the task which lies ahead. i think there was a lot of sadness and disappointment at that meeting because the uk has been a valued member of the european union and a member of the european family. we will be sorry to see them go but this is what has been decided. people are waiting to get clarity from the british government as to how they wish to proceed, when they wish to trigger the mechanism of article 50 the legal process by which we unravel the relationship between the uk and the european union and on this it was clear that

this would have to await the outcome of the political process in the uk involving the choosing of a new prime minister and correspondent in london was talking on how lively that discussion is.;ñh5o cf1 o once that is triggered those negotiations will begin with a period of up to two years to conclude them and then either in parallel we will need to figure out how to build a new relationship between an exited uk and the rest of the european union. and on this also people will be waiting to hear what are the uk initial thoughts as to what that might look like, though ultimately this will have to be decided by all of the 27 remaining members of the european union. i fear we will have rather more questions than answers in the coming months, but the most important thing it seems to me, this is reflected a little in the market reaction, is that in practical terms, today, nothing has changed since last week and nothing will change until there is a definitive outcome to the

process i've just described for the time being, the united kingdom remains a full participant in the work of the european union and that will be the case for several years to come most likely. >> yes. well, you know, there has been talk, mr. ambassador, perhaps this process could remain suspended, in other words, maybe the new prime minister might not look to trigger that process the beginning of that process. is that something that would be a large problem? i assume that would not be an acceptable outcome to you? >> well, it depends on what would be the reason for delaying matters. i think to the extent delaying matters the uk needs more time to clarify exactly what its position is and exactly how it wants to go forward, then i think people will be respectful of that. on the other hand, i think people need the uk to be respectful of the fact that the remaining 27 members of the european union have political imperatives. they have domestic constituencies. we have an economic stake in this. at some point we do need to have clarity about the direction in which we're moving.

i think that was the message that was given to mr. cameron this week in brussels. we understand if you need some time, but please, at some point we need clarity and we do need to move on. we cannot remain if a limbo indefinitely because uncertainty is the enemy of us all, including an economic and commercial terms. >> i wonder how much soul searching is going on inside the f1 o i have to say i was just in london for the last week and there's so much hatred towards brussels. i think it was a major driver behind the leave campaign. the taxi drivers know who jean-claude jucker is do not want him deciding their future immigration or budget, you have it. how does the eu look at what just happened and come out stronger? >>. >> i think, sara, even the description you have given of how the uk works of how the eu works forgive me, does not reflect reality. mr. yunger do not decide these

things. they are decided by the democratically elected representatives of the european people, through their governments, represented in>r)r council of minister and parliamentarians in the parliament. these are how decisions are taken. a great deal of misunderstanding amongst many people on how the european union functions and the important role which national governments play in taking the decisions which are ultimately turned into laws which apply to our citizens. so i think there really is a huge exercise needed to explain better that it is not faceless bureaucrats or even senior politicians appointed to the institutions who ultimately take decisions which affect people's lives. it is a profoundly democratic process in which the citizens are consulting both via their natur national parliaments and governments. i don't deny this narrative is maybe not fully understood or accepted by many citizens and

this is something which will require reflection not just amongst the institutions in brussels who should not be exempt from some self-criticism but on the part of national government who could perhaps do a better job explaining to their citizens the reality of european integration. >> thank you for now, mr. ambassador, for joining us. the eu ambassador david o'sullivan to the united states. back to this breaking news developing story on andrews. eamon javers what do you have? >> hi, sara. nbc's pete williams is actually reporting right now there is no active shooter at andrews air force base and the all clear has been given. citing law enforcement officials for that. looking at live pictures. this is where we had the;4!u re of an active shooter and a confusing situation through about the past hour this morning there. andrews air force base as you know is the home of air force one the presidential aircraft, also a host of dignitaries coming through there. an enormous city facility to the

southeast of washington, d.c. just outside the washington beltway. they had an active shooter drill scheduled for 9:00 a.m. this morning and shortly after that, we saw reports of a real world active shooter. the joint base andrews official twitter feed said the base was scheduled to conduct an active shooter exercise however reports of a real world active shooter situation were reported. so they have gone on lockdown there today. they've been telling people at the facility to shelter in place. there are thousands who live on base at andrews air force base. the locus of all this was the malcolm grow medicalcúé48 clini surgery center ter. pete williams of nbc is reporting the all clear given. just what prompted all this in the next hour or so i would imagine. >> thank you very much for the update. eamon jabers in washington. >> coming up we have a deal in the content instrids.

lionsgate announces it will acquire starz, cash and stock deal worth $4.5 billion. shares of lionsgate which had been up sharply in the early going are down. what is going on there. plus billionaire james simon, founder of hedge fund renaissance technology, will join us. hopefully he has a lot to say. we're back after this.

it's been an interesting morning for shares of lionsgate after announcing a long awaited deal to acquire starz in a cash and stock transaction that was worth $33 a share to starz holders at the beginning of trading and actually more or less still is given the performance of lionsgate stock. at one point the stock was up dramatically as investors seem to respond quite positively to the deal. it is $18 a share in cash, roughly [ inaudible ] of the consideration and stock as well that brings the value up to about $33 a share. as i said this has been a long rumored deal of what is expected to have been a way potentially of consolidation in the content

instrids but focused on starz, the pay tv channel like so many others moved into not just showing movies but programming its original programs and paying a lot for them. in an environment, of course, which we've seen a proliferation of new shows. in fact, according to pacific crest the number of scripted shows on tv has increased to over 400 in 2015 from less than 200 five years ago. for lionsgate, the hope is, of course, that it will increase its over all ability to deliver some of the shows over time to starz as it tries to build out its over-the-top platform had this newly emerging world in which over the top is taking share away from traditional cable. we'll see whether that happens. this morning pacific press in its notes say the ability for lionsgate starz to bolster the offering in the near term likely to be limited. lionsgate has sold the majority of its original tv rights to various programmers domestically and internationally. for the deal itself it will lever up lionsgate balance sheet

to about 5.5 times ebitda, on eye level of ledge. in other words of debt. but it will be paid down quickly given the cash flow generation of the company expected to generate as much as $750 million a year in ebitda. i should point out the price tag itself at about 9.5 times trailing for 12 months ebitda is quite high for a low growth asset such as starz and may have been giving some investors pause although we've seen the stock up dramatically, downví:br as much% now see it coming back a bit. perhaps some of the new headlines from lionsgate off the conference call saying there's significant benefits to combining both companies, starz as a content creator not a channel and they think the deal derifts the company. john malone will have about 13% of the economics in the company, 10% of the economics, 13% of the vote. mark ra chesky, a controlling shareholder at lionsgate will have what is -- what is it?

18% i think overall. excuse me, 13% of the economics and 19% of the vote, guys. very interesting deal. >> with those guys involved you know this is probably just one move in the chess game, right. down the road. >> we'll see whether we get more content consolidation. expecting it but it's hard to get the deals done. >> thanks, david. the uk isn't the only one making moves in politics. maybe you recall the u.s. presidential election is getting closer. invest now to prepare your portfolio for november. susan lee joins us with the answer. >> hi, mike. investors might be hoping for a less volatile reaction in november than what we saw after )=sjust five months to go until a presidential election and if you want to place -- a place to park your cash, thereemv9÷ have been since 1992 and over that period industrials have been better buys on the broader s&p. this timeline does include 2008 which we all know was an extraordinary year. so actually if we exclude it you can see industrials more than

doubles your return in the five months leading up to a general election. but let's break it down by individual names.d$ potential running mates to consider for your portfolio. first off, kansas city southern which is a rail company has given you sensational gains up 16% and trades higher 80% of the time. next two, defense and aerospace, general dynamics, raytheon and"% union pacific and fedex. on the flip side names that tend to under perform, deere trades up only a fifth, double-digit declines, similar losses for industrial systems maker parker hannifin but trades up twice the amount deere does. bring up the here so buyer beware for you in industrials. back to you. >> all right. susan, thank you very much. >> when we come back james simons billionaire hedge fund founder of renaissance technology a rare interview. his take on investing on the fast approaching presidential

election. and much more. stay with us. you're watching "squawk on the street" with the dow up 19 points 37

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i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. good morning, everyone. i'm sue herera. your news update at this hour. twin suicide bombing attacks on a convoy of busses carrying police cadets in afghanistan has killed at least 30 people and wounded 58 others. that attack took place some 12 miles west of kabul. the taliban claiming responsibility for the attack. turkey says police have detained 13 people in connection with the deadly attack on istanbul's airport which killed 42 and injured more than 200. authorities blaming isis for the coordinated attack. at least four structures have burned in a wild fife that is spreading in idaho. several roads have been closed and nearby residents asked to evacuate. strong winds overnight fueling the fire making it very difficult for firefighters to

contain it. and video posted on social media take a look at this shows a vehicle chasing -- a vehicle chase involving a go-cart in california. a black suv that looks like a police vehicle in pursuit of a man driving the go-cart down the freeway. witnesses cheering the go-cart as its drove by them on the freehway. only in l.a. not clear if the driver was yap helpeded. that's the news update. over to jackie deangelis with the eia inventory data. >> good morning to you, sue. the department of energy out with its weekly net gas storage report for the week ended june 24th. a build to 42 bcs slightly less than expected but significantly less than both the stock last year and five-year average in the 70 billion cubic feet range. total stocks about 3 trillion cubic feet, higher than that at this point. about 25% higher overall than last year's inventory.

nat gas stocks in shape but strong demand, warm weather and headed into the thick of things in july so that demand is expected to continue. i will say this, expect some resistance around that $3 range. we're getting close to that point at this point. up 33% in the last month, up 45% in the last three upon. at $3 it's tough to crack. positive before the number came out and now switching into negative territory. back to you, mike. >> thanks very much. let's stay with the markets. we will bring in billionaire investor and founder of renaissance hedge fund james simon in a cnbc exclusive. we hear you're live tv debut. thanks for being here. >> glad to be here. >> your firm has put up rather stung returns over a long period of times using sophisticated mathematicals. but what is the investment environment seem to something that happened last week, the fracturing of the eu and wild currency moves does that filter

into your process and your approach to the markets right now? >> well, sure. you know, we -- just for the mill and the system does okay with it. i think. so i don't know how the rest of the world is doing with it but we're okay as far as i know. i'm not directly involved with the company. i'm its chair and so on but i understand. >> right. >> dave? >> i would like to talk about the growth of algorithmic trading something you began in many ways. seems many days that volume is largest in terms of the volume by the shops that do quantitative analysis and algorithmic trading is that here to stay and we should get used to? a bunch of math ph.d.s are running our markets? >> some of them are physics ph.d.s. and maybe a few chemists have

snuck in. >> chemists too? >> i have no idea. >> do you hire -- >> no. i'm a mathematician. >> the way things are going. >> it's the way they should be going. >> why? >> because by having a lot of fast trading, spreads have come way down, volumes have gone? u and, therefore, it's easier to get off a trade because there's more volume. and i think it's actually brought short-term volatility down, not up. so i think it's been good for the markets. >> has anything happened -- you hear people talk about the character of the markets, the p velty. people thought the computers are now involved in trading and maybe things have changed. has anything in your view in the long time you've been doing this changed the fundamental character of the market for the end investor? >> i don't know the answer to that, except for the fact that

as i said, the spreads are smaller, which are good, and there's more volume which is also good, so investors can get a more sizable trades. you don't have block trading desks anymore, at least i don't think so, because one can really put down a pretty sizable trade because of the volume. >> do you still like gold stocks in this environment? and have you been -- >> i have no opinion on any stocks. >> but your firm -- >> and i -- >> not running the firm anymore? >> even if i were i wouldn't have any opinions. the computer has the opinions and we follow them. >> worked very well for you. i want to interrupt our conversation to refer to headlines from dow jones. the fact that i also can add something to. having heard something similar yesterday. dow jones reporting that mun deless made a takeover bid for hershey, sent a letter this month and i'm going to have more on this, in fact, because it is similar to things i was hearing as well. as recently as yesterday.

should point out immediately in this case that hershey, of course, is controlled by the hershey trust and, in fact, the hershey trust has an 88 -- i think 80% of the vote if i recall or more, roughly 80% voting control. if the trust at hershey which owns 34% of the economics is the trustee for milton hershey's fortune were to choose not to go through or have any interest in this, it will die. that said, these talks, as i understand it have been going on for a couple months. there was the hope on the part of mun dough leez that the stars would align so hershey would consider what is the bid made and now i'm going to depart to make more phone calls so we can give people more information. >> very interesting, because a lot of people see mondelez as the ultimate target in a big m&a tie up to some of these other --

>> kraft heinz which i think some of these companies are trying to avoid the clutches. cadbury and one has to wonder how that would look. let me go. unfortunately i wanted to -- i will ask a couple more questions and then go. we don't get you on tv too often. >> you don't. >> i wonder, mr. mercer, political now, talk politics, you will not talk whether to buy gold stocks or not, do you get along? >> we get along very well. >> you do. >> you, obviously, are a democrat he's a supporter of mr. trump. >> yes, but he's excellent at politics. there it is. >> and it's easy enough to run the firm that way. he's running the firm. you no longer are. >> he's co-president along with peter brown and peter himself is way to the left of bob but they've worked together for years and years before they came to us and bob has his opinions,

peter has his and i have mine and it doesn't have anything to do with work. >> how do you see the presidential race spanning out right now? what do you think? both sides are they making a decent case? you have opinions about what the priorities should be. >> i do. i would love to mention that. >> sure. >> but what do i think of the candidates? well i'm a democrat, so i'm certainly in favor of hillary. i think she would make a fine president. when i think about the investment analogy, because there's something called the sharp ratio. did you ever hear the sharp ratio, expected return over standard deviation divided by volatility. >> risk adjusted return. >> risk adjusted return. >> now so -- and you strive for as high a sharp ratio as possible, hqú x return, lower volatility. even if those two candidates had the same expected return which i

doubt, but even if trump's was as good as hillary's, his volatility is sowa'"d enormous sharp ratio is terrible. as an investment trump is not a good investment no matter what return. just a wild man. >> talk about the issues that are of utmost importance to you when you are backing hillary clinton. >> well, the issue that i wrote this little piece about that you guys ran had to do with infrastructure. infrastructure in america. in fact, we have neglected our infrastructure for 20 years. it will cost trillions to get it back where it was. and it's a shame and now, there's no better time to address ourselves to rebuilding america and rebuilding its infrastructure. first place, it's gone down considerably. a new airport, for example,

hasn't been built for 20 years. the roads are bad. the bridges are bad. the electric grid needs a overhaul. so it's time to do it. over time to do it. lots of folks out of jobs who could be employed. millions could be employed doing this. and interest rates are at all-time lows. so it's a no-brainer. i mean you can borrow money at 1.5% for 20 years over ten years, why not make an investment. put people to work, and there will be a financial return as well, taxes will go up. >> i was going to ask, really be an economic return or just a way to put people to work. >> always is an economic return on at least well-done infrastructure. you know, better roads, save money, traveling back and forth and so on. bridges. the greatest example ever was the erie canal a huge undertaking and brought great

wealth to new york and to the united states. so well done infrastructure is very, very important. >> if it's a no-brainer why aren't we talking about it more in washington? >> maybe because we have no brains. >> but even if your candidate hillary clinton does manage to get elected, if the republicans still control the house what's the likelihood of that? >> well, even republicans can learn something, i think. so -- and i think it's entirely possible that if hillary does get elected and makes a good case, and it is a good case, and maybe -- and if the senate, as captured by the democrats which i think there's a reasonable chance, then maybe the republicans some of the republicans are sensible and maybe they would see that this is just a plain good idea. i mean, previous years, the

republicans mitch o'connell, highest priority is to, you know, have a one-term president, you know, in obama. that's a crazy highest priority. i mean your highest priority is supposed to be doing something good for the country not just to throw out the president. maybe they'll come around. >> what about other economic priorities?fu?]h whether it be tax policy, adjustments, anything like that, very important to you in the next administration? >> no. tax policy is not -- i don't see where it's in need of any kind of major change. i have a strong belief that we should put more money into our science enterprise. we've -- nih has gone down, ns national science foundation has gone down, those places should be built back up. that's a very important i think investment in our country. s.t.e.m. education, for example. so those are things. and again, those -- that's

infrastructure too. science is the foundation of ultimate technology and so on. and it also brings a lot of smart people into the united states to study. if our science is top notch. and i was just out in switzerland and while certain wou sern would not be the great center it is if we had not built the super conducting super collider of 20 years ago which we canceled and that was too bad because high energy physics is centered in europe more than the united states. we've lost the. but there's plenty we can hold on to. >> whilec.$tare talking about te political landscape a lot of people look at what happened in great britain, the rising tide of populism, the sentiment of anti-establishment and anti-political elite movement on the rise, do you see that trickling into the united states

as a brexit vote have direct implications here? >> i think the brexit vote was an expression of dissatisfaction among many dissatisfied people and i think it's that same crowd there's reasons for people to be dissatisfied but just because you're dissatisfied doesn't mean you should do something stupid. brexit was not a well thought through thing an i'm hoping, since it's only advisory, to the parliament, that they might reconsider and either have another referendum or say under the circumstances the vote was so close we think it would be unwise to do something so serious. >> i wonder if that's an investment thesis that one can make, and that is that the referendum doesn't go through. maybe low probability but high upside at this point. >> it does -- well, it has a reasonably high upside.

things have recovered some so it's not as big an upside as it might have been. but it's certainly possible. i give it 25%. that it will be reversed one way or another. >> yesterday president obama along with the leaders of canada and mexico had to mount a bit of a defense for the idea of globalization and free trade. is that something let's say, you know, secretary clinton is in office, is she going to have play defense on the issues and just to keep the status quo what it is? >> well, historically, free trade or freer trade, has been good. collectively it's been good. now maybe someone would say it's been good for the chinese but hasn't been so good for america. i don't agree with that. i think it's been -- i think generally speaking it's good for everyone. we are -- well, i mean, immigration, people are that's what the brits were complaining about immigration, taking their jobs and some of donald's folks are

complaining about immigration. wants to keep out the mexicans and build a wall. net immigration from mexico, it's negative. so his wall would have the effect of keeping mexicans in as opposed to keeping them out. in any event, immigration has always been good for this country. we're all children or grandchildren or great grandchildren of immigrants. and they come here and work hard. so i think it's good. >> i know you're not betting that trump wins the election and you say it's a low probability, but if it does how would that change the economics and financial outlook for this country? >> i don't know for the country. i'm looking at canadian real estate. i'm only kidding. only kidding. >> one of those. >> i think that it wouldn't be good for the country. and i can't tell what the man will do because he's sofa 0í er. and, you know, as a businessda?b he was apparently pretty sleazy

and, you know, i just -- i just can't predict. maybe it will turn out okay. who knows. >> with that downside risk you mentioned before i guess. >> yeah. >> well, james simon, appreciate you joining us. should mention that you do have that op-ed on cnbc.com about infrastructure investment. >> okay. >> appreciate it. >> glad to be here. >> keeping an eye on scherhe he shares halted over the last few minutes. i think they're reopened for trading. spiking up more than 18% after faber can confirm that dow jones report that there was a letter of intent sent by mondelez international to buy hershey. a major deal of two biggest candy makers, global candy makers. hershey last had a market cap of $20 billion, mike, so if we see this it could be a huge deal and, of course, as david reported it would be contingent on the approval of hershey trust. we will stay on top of the

story. mondelez is up 2.25% on the news. david will back to share his reporting and keep an eye on the shares for you. much more "squawk on the street" in two minutes. at td ameritrad, they work hard. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade.

moan lez >> is it about to get much better for the music business and a well-known stock. an analyst says yes. more "squawk on the street" coming up. ♪

♪ it's here, but it's going by fast. the opportunity of the year is back: the mercedes-benz summer event. get to your dealer today for incredible once-a-season offers, and start firing up those grilles. lease the e350 for $499 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing. >> lelgts get right out to chicago where rick santelli is at the cme. held jobs rick. >> hello mike. i want to welcome my guest. jim thanks for taking the time. >> thank you. >> all right. you were on "squawk" recently. you said something i like. if the fed goes sooner they have to go slower. if they go later it will take longer and faster. now the reason i find that so

interesting, brexit to me, trump, bernie, this is an all an anti-globalization trade. globalization in the good days pushed prices down. globalization in the bad days are really pushing prices down. in a world of reverse globalization wouldn't it be fair to say there's a higher price inflation risk all things being equal. >> to think about globalization it comes in cycles. when economies do well a lot of globalization, labor mobility and things like that did be very beneficial. >> no. i don't want to talk about labor. i want to talk about price. during the hey day of global zais i remember watching china export more and more at cheaper and cheaper every day low prices. you remember that, don't you? >> absolutely. >> now, they are dumping because globalization is going the other way. is that correct? >> i mean yeah to an extent. we do hav a slow down in china

that's creating deflationary -- >> i want to keep it macro. all things being equal. if prices go down when globalization is good or bad, wouldn't mortar arrie tariffs a brexits and trumps most likely raise prices? >> i think it eventually does raise prices. for right now the way we think about the global economy we don't have a major inflation problem. >> i understand. if you're janet yellen and all you ever do is ease, if you're bernanke all you do is ease and aspirin money is there a higher risk? is there a higher risk >> yeah there is a higher risk and there will come a day when this becomes a much bigger problem. look at where yields are. 30 year at 10, 12 basis points. treasuries at 1.5%.

this is not a healthy sign. the low yields are actually representing the fact that there's actually global issues right now and i do think that we need to get some change in that to the extent that low yields could beneficial. in the meantime this does create a risk in the few of that, yes, inflation can rise. and that could be -- in the longer term is this healthy for the markets? i would argue it is not. it could be disruptive. i'm worried about that. if we have a long term investment horizon how are we supposed to think about our investments? i don't think we'll be at a very low rate for an extremely long time without there being some disruptive move towards higher rates and that increases the risk premium in the markets as well. as much as we think about low inflation, we need to get

inflation higher, we do but over time that can create problem. the more qe and more banks keep interest rates low that could be more disruptive in the future. >> see, this is the conversation i want to have. it seems like it's never symmetrical with regard to fed. i see higher risks. if they go sooner and slower i think after post-brexit world the symmetry of the responses should change. we just had a billionaire guest say do over. my kids playing soccer they don't keep score any more. in the end i don't think there are do office. there's a big movement people are ignoring. final moment. we're out of time. >> what we need to build into poirls is some inflation protection. that's a risk. not this year, maybe not next year but down the road. it could be even more disruptive in future markets. >> thank you so much. all i know is a little snowball

down a big hole, on a big hill gets big fast. timelines can change. thank you. back to you. rick santelli, thank you very much. we'll talk consumer now. the summer amusement park season is under way as people get ready to hit the road for fourth of july. our next guest says customers are prioritizing experiences over possessions. here to discuss them parks, president and ceo of cedar par.s what does demand look like? >> i just read this morning aaa is forecasting 43 million travellers this weekend alone. and that's a trend we've seen all year. what i say and you talked about it to start, is experiences over possessions i think as the world is getting increasingly complicated, fun is more precious and that's something we can help with.

>> are your raising prices like your competitors are in this environment? >> we are raising prices but being very responsible in that regard. you still have a very much bifurcated economy. you have those consumers that are budget conscious that we need to be responsive to, particularly young families and those with extra money where you provide a premium experience and willing to step up and pay that. >> talk about the innovations. we heard about 3-d roller coaster rides. your working on that? what else do you have coming this sum center >> we call it broadly techtainment. augmented reality is available to us at cedar point. we have the largest 4 d, l.e.d. back lit screen in our park in santa clara, california. so you'll see it being applied to make it more fun. >> what do you see with respect to spending patterns.

incomes have not risen that much and the economy has recovered but still somewhat soft. more people are spending on fun but how much are they spending and what exactly are they spending on. >> the cruise industry modelled over the last couple of decades. more and more people are paying for their tickets ahead of time online. more and more people are buying food and beverage ahead of time. that advance purchase commitment gives them a good experience. we've added executive chefs to every one of our amusement parks. food and benefit ral offerings are different than what they used to be. as long as you provide a quality experience. we're seeing in park spending continuing to grow. >> matt thank you very much for joining us to talk about the summer season ahead. let's look at what's coming up next on "squawk alley".

>> good morning. we're going to continue to talk these markets. we're also going to be talk about the lion's gate stars deal and former executive from facebook take a look at what the culture of silicon valley really is and also facebook. >> one of the big events we're watching is a press conference happening just at this hour. mark carney is set to speak any moment now on brexit from london. of course he did say on friday that the boe would pledge about $150 bill thrown support the brexit vote. you're look at a live shot of the bank of earn gland where the governor is set to speak. financials, mike have been the worst perform being sector for the year, for the month so far and for the quarter they haven't done so badly. brexit didn't help. jobs report in may didn't help.