i also like capex spending. two signals that business confidence is growing and people think, the people that run the businesses that there's going to be a big bump in demand. some dismiss the idea, say it's a byproduct of cheap money from the fed, and mostly a gimmick. i do not agree. judging from the excitement in the time warner news wall street is pumped, you should be pumped as well. talking media, construction, matt, i felt it in a lot of areas today. >> this is a trade that started earlier this year. 750 for the first six months on pay stubs, 1.5 trillion. buy the the best of 2007. the market topped out. i look at it yes, there are synergies, if the market creates synergies, it is fantastic. they are sitting on a lot of cash. if they have nothing to do with it, they don't go to capex. they buy another company. charles: but they buy another company. you don't see the cash, do you? >> i don't think we're there yet. you have low barring cost and a lot of cash on hand. it's going to create a lot of m&a. >> we

demand improving, there will not be an improvement in capex.re to put their money. you asked about real estate and equities, but i look around and some oth things do not look good to me. >> adam parker with morgan stanley. you like the red sox. but i do. worldre the current series champions. >> we will be right back. ♪ >> good morning, worldwide. good morning to the view of a gorgeous city. it is spectacular this morning. tomorrow, bill gross and alan princeton are scheduled to join us on the labor economy. we do that tomorrow, on a thursday, and not on the fourth of july. >> i'm scarlet fu here with tom keene and adam johnson. start withs, we fidelity. it is telling investors it cannot find future will -- it cannot fund mutual funds after the last day of the month. it is linking the change to evolving global regulatory environment. just ad clients are shareholders.tire google is trying to pull users away from apple with a new song company. and investigators are trying to find out why a factory in indiana exploded yesterday. it is about 65 mile

so, it's one of those where, yeah, the investments are going on, there is capex that's being spent, andes at a higher rate than last year, but we're going to continue to see these bumps along the way. and i just don't think we can react to every negative piece of economic news or really positive piece of economic news in an unreasonable way. >> right. >> this is one where i think the economy's going to continue to be okay, not great, not bad, but okay. >> final question, because i know we have to go, david. on the front page of the "the new york times," we just spoke with the author of the piece today. he calls it a bubble economy, says everything's in a bubble out there. do you agree? >> i think it's tough to know. and if we take a look at the last five years since we went through the great recession, these are unprecedented times. so, it's kind of tough to know at this point. and i'm one of the guys who says thank god the fed has done what they have in order to make sure that we didn't end up with another great depression and only ended up dealing with a very bad recession. i do belie

hates this name, revenue is florida eps growth is coming because they're doing more buy backs than in capex you are looking for is a short-term pop. look out below in case i get this one because they're making sure bullish option. >> they will gain to figure out who the activist could be, the retailer under some distress. >> forget about bed bath the truth is this is the quickest way for you to lose money for these short dated calls theing supply of option gets so jacked. here's the thing, whole foods and lulu after they blew up, okay the same sort of thing, the stocks started to rally, it was corporate. who knows what it was, restructuring copy recently, too, all were backed down towards the lows here him i will make one other point, family dollar has almost filled in that entire gap, it's all the way back down here. >> you know what else, the vine was not here. 36 million shares, but in the stock, fidelity trading and wellington and big players, no volume today. they've plunged a week or so it was 19 million. there was no endorsement here. >> the point you have to make is people can't hel

involved.he capex warehouses,on these they are shipping out those new phones today.es and he has drones. >> let me walk down the income statement. they bring in one dollar. they bring in less than one penny for the operating income l aw. by the time they get down to net income, i believe they get 2/10 of a penny. >> is shocking. hsn, mindy grossman, told me -- the margin, troy help me understand. the more they sell, the less they make. >> some of these highflying stocks have never had a stolid operating business model. if you look at health care, the companies have real earnings, real revenue. >> do you feel that way about amazon? he thinks it is a value play. >> it is hard to say what bill miller is thinking on any given day. if you own something like that, you better hope they figure it out. >> troy is with us from sky bridge partners. let me run through the capex from the last few years. $1 billion, $1.8 billion. $3.8 billion -- now we are up to $4.3 billion. that is what this is. they're taking all that money that is minus the shareholder and putting in futures.

used for capex over twofollowing 12 months or lower employment wages.here may be more incentives to kickstart money in the u.s. .> that sounds great that sound something that may raise the potential growth rate of the united states and something i would want to talk about. the problem is, as we learned last year, the taper tantrum. markets really struggle in these transition periods. we really feel like we are in a transition period at the moment. we are going from the market with incredibly chief -- incredibly cheap money to the tax code lowering unemployment. getting from a to b sounds really simple. you make it sound simple, but it is not. >> the chinese government suggest you can do it well for a few decades before causes problems. let's say there is a bound of confidence they can potentially work with over the next couple of years. it appears to me that the bias is for accelerating growth. there are reasons why -- around that. ,ost investors carry strategies risk management strategies. it is important to have a view on each of those. we have favori

then what about capex? this was supposed to be the year of the capex recovery. we still have not seen that. and then when you throw on top of all of this the global turmoil, what's going on with the fed, the disconnect between stocks at all-time highs and the ten-year below 2.50, i think investors don't know what to make of it. they've been taught by the fed to push higher. >> i was going to say, dennis to that point about what's signal and what's noise out there. we have gold doing well today. we've had the soft commodities get hit. and yet, some of the metals are holding up a little bit better. what is happening in the commodities space and what's that signal for the broader market? >> first of all, kelly, let's understand, the commodities are not an asset class and they don't move together. they move absolutely in contravention one to another. the grain markets have been under unbelievable duress because the weather's been spectacular and we are growing one enormous crop. we have the biggest corn crop and one of the biggest soybean crops we have seen, so whea

is there rotation for big firms like yours moving back from buybacks, towards doing more capex? guys are thinking through the allocation of capital? >> yeah, our strategy is that first and foremost, we invest in our business. we think that's the best way we can drive shareholder return and you see us doing that with our investment in leading-edge factories and in r&d. second is the dividend, and we have an industry-leading dividend program -- >> stacy, i apologize. we actually have to leave it there for now and let you go. stacy smith, thank you for joining us, cfo of intel. those shares are rallying after hours. we have breaking news now out of apple. cnbc's josh lipton in cupertino, california, at the company's headquarters with the details. josh? >> reporter: well, we are here at apple hq in cupertino, california. just a few minutes ago, i had the chance to sit down and talk with apple's tim cook and ibm's ginny rometti. apple and ibm announcing a new partnership today, a new class of business apps that brings ibm's data analytics to iphones and ipads. also, ibm will start to

and as you know, we're investing capex in the business, and with that, our cash flow has been very goodnd is going to continue to be good. >> well, don't you think it's interesting that a lot of companies -- i like dividends, you know that. the capital allocation wasn't the theme in this quarter in terms of how much dividend. because every business, the dollar end of the business is giving you great return. >> oh, we're getting great return. some of the chemical plant investments, when you look at the amount of money and these are 30%, 40% type irr projects, you say we'd be in insane not to put money into this. this is going to generate an unbelievable return for our shareholders. >> what is it like right now in the gulf area, the refining? >> booming. it's booming. when you look at everything else in the u.s. and you talk about unemployment or wage growth or anything else, it's not the problem in the gulf. and i'd say the gulf has got two things. one of the things they've done is, of course, they happen to be the locusts of activity for this. the other thing is, those states work very

when rates go up, we should expect some weakness in capex. we think the opposite.think it will encourage people to make investments. ?> does it make it sustainable >> we haven't invested in anything for almost five years. one of the reasons we are seeing rents go up so dramatically is because we haven't invested in rental stock or housing stock. likewise on the corporate side, we haven't been investigating -- investing in new plants, new equipment. once we start the cycle again, it will be a prolonged cycle. .> may was revised down by 1% that was telegraphed into the numbers. >> we will see what june gets revised to. >> drew matus. theng interest rates not in u.s. but in russia. have sanctions are finally taking a toll on that country's economy -- how sanctions are finally taking a toll on that country's economy. you won't believe how new york city is spending its share of that money. ♪ >> russia's central bank is reacting to the threat of wider sanctions by unexpectedly raising its borrowing costs for the third time this year. with us is drew matus. it seems like

that still leaves the question of capex.the most are outperforming the s&p 500, but there's still so much cash warning -- cash orting. at the end of the order, capital expenditures were around $3 million. thought onyour capital miniatures? >> it is -- capital expenditures? >> it provides a halo effect on sectors of sectors. even though portfolio managers say we don't choose stock because we think it is a takeover market. in fact, the market does that. and it is broadening out and that is healthy. people want to bid it up. it reaches the point where companies will take up another company they don't want their competitor to take. >> and that is not healthy. >> know, and at the end of the cycle it gets plain nutty. we have been watching overall and the overall acquired shareprice is writing on the announcement. >> and that is a good barometer. >> right. capital expenditures, we need to have it if you're just looking at the economy. >> we have not seen comedies put that money to work yet. >> no, just a little bit. we've seen it

whether it is a financial institution servicing it or anything related to it. ,> and you talk about capexou talking about companies spending on software, or are you talking about machines? >> buying real things. number one is energy, number two is agriculture, number three is manufacturing. mining.id not mention >> that goes with energy. flat, nots fairly remarkable by any stretch of the imagination. >> what are they doing? still believing in a slow, steady grind upward. slow steadye be a pull toward the end of the year? >> the consensus has a going up simply because the market has gone up. -- flat liners are still there are still a couple of strategists that expect a flat year. as a whole, it has gone up a little bit following the price. >> michael regan with us for the hour, along with robert albertson. i have worked with him before. today's single best chart shows the end of an era in consumer spending compared to how much we get paid. robert opportunist sandler o'neill will explain it to us after the break. ♪ >> good morning, everyone. bloomberg "surveillance." with me, scarlet fu in

. >> what portion are we looking at to make capex expenditures as far as retiring debt and stock buy-backs? >> right. so about 25% of the companies are actually deploying that cash or the xash is decreasing. of that we have seen an increase of 30% two years ago to about 43% now of that segment that have been spending money on cap-ex. then 20% in terms of stock buy-backs with mergers and acquisitions in there. so they are deploying the cash in a whole range of asset classes. >> that's interesting as i look at what the bankers are saying and they are saying yes, u.s. lending to firms is approaching record highs but department believe we are making the building blocks here to see a stronger u.s. demand situation and an organic growth is actually being pushed towards share buy-backs and other options. it's not about cap-ex here. >> i think those show there's some confidence in the economy going forward. as i said, this is a three-year trend in our analysis and we have seen an increase in cap-ex, but clearly the flood gates haven't opened in terms of the expenditures. but i think all those thin

how did they cut capex? >> i don't know. the call is going on right now.erhaps we'll get that question. but i don't have an answer for you on that. we talk so often about, is the reality as much of what -- is it worse than they ever anticipated? perhaps you could argue yes. is it going to be tougher? will it take longer? yes. are they out of luck if they don't get a deal with t-mo? maybe. and by the way, again, back to that, most likely september, from what i'm hearing. very little has changed except the calendar keeps passing by. even when we do get that expected announcement of a deal between the two you have a long arduous regulatory process that many believe won't end up in a favorable outcome for them. >> which is less bad. that's better than good. i was looking for a bad sprint number. we dent get a horrendous number -- >> we didn't. >> it's a little daunting to try to figure out -- u.s. steel, i was looking for a horrendous number. but they said the next quarter is going to be good. so the stock goes up 15%. >> at&t keeps lowering the pricing ceilin

it's about people having a need where they want to put the money to work -- expansion, capex, hiring, building an extra plant, things like that, or some amount of m&a. we're the largest middle market lender in the country. we have 140 offices that are out there region by region facing off with borrowers, and it's been growing and we're happy about it. our borrowers are a little bit more optimistic. >> so you are seeing that pickup now? are we saying that we're seeing a material pickup in that critical part of the lending in the financial services industry now? >> we're saying it's a pickup. i don't know whether it's material, but certainly to wells fargo it's a pickup. >> all right. >> we'll take it. >> john, thank you so much. >> welcome, john. looking forward to talking to you in the future as well. >> great. thank you very much for having me. >> john shrewsberry. >> yep. we have what, 40 minutes before the closing bell? >> yes, we do. >> about that. the dow and the s&p -- let's see, the dow's up 18 points on the trading session. s&p is positive as well. and we have earnings to look

. >> they're still not getting the capex spending. that's the one thing that you didn't say.t a number like japan today, that may be a good signal that we're not spending enough here as we might need to be. >> steve weiting? go ahead. >> go ahead, steve. >> just make a point about china, you had 7% export growth in the year through june. we had pmis showing outright expansion and an improvement. and chinese, hong kong and taiwanese stocks on balance rose last night. and then when you started to see all the excuses in today's european and u.s. action, it was again, you know, devastating for us. so you know, i think you found a lot of excuses for this really, really calm market to break. >> and steve, what stands out to me is that we've had a number of excuses since march 2009 when this rally bottomed. i mean, that has been the persistent theme, that there has been a wall of worry. and whether it's a problem in the u.s. economy not being equally distributed or elsewhere. and you see a market reaction like this, which is that the losses don't even hold. i was here this morning w