Transcripts For CNBC Squawk On The Street 20240622

Stanley. Gold falls to a fiveyear low while the dollar hits a threemonth high, well look at the Drivers Behind the moves and the impact. And ebay and papal begin trading as independent companies today. Well talk with the e bay ceo later on. First up Morgan Stanley better Second Quarter results. A Strong Performance in the brokerage business. Long lines in greece over night as the banks reopen after about three weeks. Some capital controls. You can access your safety deposit box. You cannot cash a check. You can deposit and there are limits on the number of euros you can take out. Morgan stanley, trading is the story this time after Wealth Management has been the story there. Lets compare this. For fixed income morguen stanley had a gain of 30 . Jpmorgan minus 10. For equities plus 28. Goldman plus 24. Citi minus 1. Some people are saying the liquid ratios arent enough. That was the wrap on the story about why it was up 41. 5 and then people turned it down. This has been a phenomenon of this quarter. Initially the stocks jump and guys peppered the bid down and real buyers come in. It was a great quarter by gorm gorman. The numbers will go up. Others who are smarter will buy it. We focus a lot on the different path that Morgan Stanley chose to take after the financial crisis. Morgan stanley with the huge acquisition moving securely into Wealth Management which people are happy to award a nice multiple to. A steady stream but this quarter back to trading and their success where goldman didnt seem to have quite as much. Goldman didnt. Its almost like theyre a quarter behind everyone plus they had the legal risk. Morgan stanley got out of the legal game. Everybody who faced down the Justice Department lost. It was Justice Department about five and banks zero. It was a bad it was just maybe even negative. The banks had the same record as the phillies. On the fiveyear anniversary of dodd frank today. A lot of retrospectives saying anyone who doesnt agree with the regulation probably thinks the world is flat. Roi 9. 1. Thats going to be the story. I have to tell you that i think that if youre not patient with Morgan Stanley, youre kind of crazy because this model is working. A lot of the models are interesting. The Morgan Stanley model being a norisk model, i love. I love because theyre the baby boomers looking for help. Morgan stanley is that place. They have a great retail network. A lot of people have fore saken this kind of customer. Morgan stanley embraces them. You have to keep all the brokers happy to a certain extent. You do. They hold back 15 of comp now. They do even more from the bankers but theres always that risk that teams will start to leave if theyre not happy. They deal with that at every one of these big firms but it is not a risk that should go unnoticed. No but the stock has run up in operation because all the other banks have run up. I wouldnt be surprised if it runs up and then is back. First quarter after ruth porat after we spoke of her in every other segment. It was ruth porat day on friday. And she learned her lifetime compensation at google in one day. They paid for her in one day. And it wasnt enough. I listened to that call and said what company is this . Where were the driverless space engines . I never once heard did you hear about them going to driving through the core of the earth to reach china . No. It was the first time theyre not trying to put a man through to china, and it was excellent. Or the mission to pluto that took place. It was done. Porat, the Conference Call its sad. Im not kidding. I dont want to go there but it sounded like other Conference Calls in publicly traded companies. At no point did it deviate to something something. It was about the numbers. In the meantime gold this morning falling to a fiveyear low after a wave of selling in asia on news that china reserves are up 60 from 09 as the precious metal falls, the dollar hit a threemonth high. New support mining we hit 10. 87. Theyre calling it a mini flash crash in gold. I think wealthy people have to wake up and recognize that it should be part of your portfolio and youre getting a choonsance to do that. Im not calling the bottom on gold. The gold stocks those companies have finding costs. Theyre fining costs are so miserable. Every time they find a nugget, its like we wont lose money on this but the gld is an interesting thing. If you decided theres going to be hyper inflation because we hear a lot of people talk. I was listening to people talk about hyper inflation. If you believe that gold holds the value, and mansions hold their value. Those hold their value. You probably want to look at gold if youre extremely wealthy. Asking this morning, isnt gold telling a story . I think gold is telling the dollar is strong and that china is not that sprang. Indian wedding season coming up. Maybe want to get ahead of that. I think gold is going lower. I think people who are trying to diversify are getting a chance to buy something that was an insurance. All of us own insurance. All of us hope it doesnt pay off. If you have no money, be in an index fund. If you have some money, maybe you build a gold position because you think that eventually hyper inflation could occur because all the economies around the world printed too much money. Its a hedge. Its not auto insurance. Its more like collision insurance. Like when you sign the contract. You do that . You dont do that when you rent a car, do you . I have to admit, im super stishs. I take that. You get it with your am ex. And the company car too. Like 7 concern. I guess you can drive like a bad out of hell then. I sign it because i say this would be the time. I go out the same doors i go in. Im superstitious. This morning an old place where theres nothing but auto stock. Google stock that planned out the selfdriving car with no one in it i never thought that would add value. Youre going to pull up uber and a car is going to pull up without a driver. What about the drones . I dont know that they had actual manual driven drones. I think the whole idea of a drone is that its not supposed to have a drone in it. How about porat . Im so amazed by it. She talked about things like she hit it on return of capital. She did. Gorman taught her. I dont know. The process of making money. She was there a long time. How could she have changed the culture so quickly . She changed the Conference Call. Sometimes thats enough. Well get into the Tax Implications of the dividend. Thats a big debate. Ebay and pay ball begin trading as independent companies today. Papal will now have a market tap of about 44 billion. E bay about 35 billion. Earnings per share, the numbers were interesting. Everyone is looking at 2016 numbers. The guy i trust, i always hype robert peck because hes been so right about everything. Hes using 1. 47. Im thinking 1. 50. I think you can give it north of a 30 multiple. Its valued versus visa with a fun company, mastercard. Im ahead of everybody else. Some want to sell. Thats wrong. I dont care about the regular ebay business. I think papal is going to be the must own for the growth funds. Stock goes higher than even has today, im shocked the thing wasnt up more last week. People dont know when to trade. Well get a sense of where things trade today when they begin. Always worth taking loo a look at history. 2002 it was a good deal, thats not bad in 13 years. That comes back to a decent compounded annual growth rate. A good deal for ebay. Unlike the skype deal which did not work out for ebay but this one did. You may remember the back and forth, carl i kahnecahn comes in and says split the company. They dont. And the former ceo of ebay, his decision to just step down and say, i dont want to be ceo of either one of these companies. Dont see that very often. I can remember the interview i did is there a plaque or a monument to him . Theres nothing. And they reversed themselves. It did not look great. He came out and defended it and said the board went through its decision and made the decision when i came along, we revisited it as we did every year and they made a different decision. Heres the result of that. One question that comes up a lot is either or both take over . Alibaba comes up a lot. Jack ma made it clear thats not where theyre going. I think papal is the millennial credit card. Theyll talk a big game. The stock will go up a buck. 1. 78 when they report and at the end of the day, flat. When can it be bought . American express should buy it. They wont but they should. They should also send me a check. Theres probably a guy for the costco fiasco . Yes. They will say we dont need to buy papal. Thats always been the refrain. Our company is doing so well. As the stock goes down. Dont Pay Attention to the stock. Its the company that matters. Im from the other school. Which school . I like to win. A w is an w, and an l is an l. But im traditional. Is there a Different School . Were not aware of another. The American Express school. Is that no longer . People dont have to leave home without papal because its in their cell phone, but you can leave home without American Express. The late carl molden would be rolling in his grave if he knew you could leave home without our American Express. Google adding to the market cap on friday. Well get to that. Also had an exclusive with the ceo of e bay has the Company Completes the spin off of papal and begins trading as an independent company. S p only needs four points to set a record today. Td ameritrade, they work hard. Wow, that was random. Random . No its all about understanding patterns like the mail guy at 3 12 every day or jerry, getting dumped every third tuesday. This happens every third tuesday. We have Pattern Recognition Technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. For all the confidence you need. Td ameritrade. You got this. What a day for google. What a week for internet stocks. Google closed up 16 , an all time high and netflix is up. And youtube publishing some met tricks tricks last night saying the number of advertisers on the platform is up 40 in the last year. Spending up 60 from the last year. They say for ten years they were in what they called hurry up and wait mode waiting for the advertisers to get the picture, and then it was a sudden boom in one year their words. Really why im, and im being a little facetious, but if you go over the line by line quarter and look at analysis porat is saying this has been going on. The Company Never talked about it. It didnt just start this quarter. It was like Amazon Services where they broke it out. We dont know what base theyre off of. My sense is theyre talking about growing off of what is still a small base after ten years. Some of the comparisons i was hearing not that long ago, one syndicated tv show has as much advertising in an hour as youtube would in a 24hour period. Im not quite sure theyre doing as well as they had hoped they would be doing or as the targets had them doing. Theyre not quite up where they had hoped to be i think, but they are starting to highlight the fact that things are moving in the right direction. I wouldnt get carried away. No but they should have bid for that one game for the nfl. The nfl is waiting and fox and all Parent Companies all waiting for google to bid for the International Games that are happening. I think google is going to bid for the international slate. This is the fear. Google with write a check to the nfl and have every game thats done internationally. The rights are still free. I think anyone who has ever used google for an advertising campaign, let me show you how not to pour a margarita, your sales go up and you dont even pay anything. Everybody else you have to pay. Google is free for many small businesses. I think youre going to start monetizing that and i think thats another reason why the stock can go higher. One made the point last week the brewer due only between facebook and youtube, you dont tend to watch long term video for facebook. Youll watch a documentary on youtube. Google is i think google, youtube youtube, all of us use it and are surprised at how it doesnt cost us anything versus verizon data when you go to mexico. Theres a disconnect. One of the things that happened with google they always told you offline, we have so many opportunities we cant even get to them. I think porat said were getting to them. Were going to make money with our opportunities and it was a wakeup call to google who said one day well get to it. I do not want to be a Major Network and google comes in and writes the check for the nfl. And as you said i think a lot of the move that 65 agrecian in value was due to her value about what we are now watching our expenses. When ive spoken to people who own the stack, thats the key move. Pricing was still down 5 . Its hard to find good growth stories. This is one of them. Particularly in liquidity. Thats always important and that helps a lot. But the talk on costs really seemed to have motivated a lot of buyers. Yes. The multiple gone well down below the s ps average stock, mobile versus a Cereal Company and the other thing to keep in mind, when she did the numbers and looked at it its clear they have so much money overseas, they can find any way to get it back. They can do something. The cash balance is more domestic than some others. They have a lot of flexibility to do things. And david is right about the opportunities of what she could do. I mean wow. Shes a smart lady. Well get cramers mad dash and count down to the opening bell as we get set for the busiest single week of earnings season. Back in a moment. If you qualify for a sittinghams card today i can offer you no interest for 24 months. Thanks to the tools and help at experian. Com, i know i have an 812 fico score, so i definitely qualify. So what else can you give me . Same day delivery. The ottoman . Thank you. Fico scores are used in 90 of credit decisions. So get your credit swagger on. Go to experian. Com become a member of experian credit tracker and take charge of your score. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . That was her. She is monetizable. You are the most powerful man certainly in the mad dash. Is that true . Im one of two of the most powerful men in mad dash. Im beginning to recover from delivering alpha. It was a major undertaking and you ran it. You delivered so much more alpha than everyone else delivered alpha. I wonder if our panelists are going to deliver alpha. You are the alpha male. Lets talk about amazon. Heres whats interesting. I know youre mr. Amazon because of that documentary. Web bush says the future is fabulous. Raises the price target. One says this is going to be the beginning of when they start selling a lot of apparel. David, theyre using tam, total adjustable market. They say cloud bids understated. We saw this with netflix. We saw three powerful upgrades ahead and yet, netflix still went up big. I wonder whether this is going to be a breakout. David, remember when people used to short amazon and netflix . What happened to those people . Theyre probably hiding for cover or they learned their lesson. Very difficult to do that. To be fair there were periods where amazon missed and suffered after a quarter where there it is again, big losses, can they ever get the traction . Does the business work . All the questions people ask. People say more cloud breakout is going to be terrific. 40 million prime members, though . I mean prime, although we had the articles today about this new outfit the top of the market. Give me a break. The journal. Its an interesting story on them. There was a considerable short base that went into the market when china was falling apart. Now that china has had a couple of days of not falling apart, a lot of short stocks are scramble. These stocks amazon fang is what i used to call them. Thats facebook amazon netflix, google. Fang is back. Super sales. White fang . Huh . Im not sure what happened there. Im going to find out during the break. Back after this. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Ah aflac . Aflac i thought you said this guy was the best . Oh, hes a horrible stylist. Gah . But hes the best at paying claims fast really. Mmhmm. Paid mine in just one day. One day . Yea. Aaaflaaaac in just one day, we approve and pay. One day pay, only from aflac. Youre watching squawk on the street live from the Financial Capital of the world. Well get the opening bell on this monday in about 60 seconds. Busy week for earnings. 118 S P Companies are going to report this week alone. 12 dow companies. Thursday is the busiest day of the entire earnings season. We have the greek banks reopening and the process of paying back the ecb and imf underway. I was going through the quarter to talk about a game plan for mad money for the week, and this is the week where people have to understand that analysts come home. They dont just read the concerns Conference Calls. They listen. Four weeks a year you cannot sleep. Its mostly a fivehour energy thing. Im able to last 92 straight days. This is that week. You produce it internally. I have that enzyme. Yes, you do. Thats the opening bell. A look at the s p at the bottom of the screen. Its lincoln financial celebrating its 110th anniversary. In honor of the super bowl. Thats an insight. Over at the nasdaq papal. Well be talking about it all week. A lot of people trying to make the argument after google and netflix next week were in an atmosphere of thinning leadership. Is that fair . This is a real issue with finding accelerated Revenue Growth. Its not around. No so the companies that have it, the money is being funneled to them. We have a lot of companies that are going to be hurt by the strong dollar. A lot of companies that are being hurt by the fed going to raise interest rates. This Boutique Group of stocks get a lot more attention. We just dont have a lot of growth stuff. Its not the sign of an aging bull market . Its a sign that when they raise rates, a lot of people have to unwind, different strategyies strategies. Where theyre short to ten year and they have to unwind that if the fed decides to raise rates. They have to cut numbers. Watch i bibbm. Theyll give you the number. Itll show how hard youre hurt. Then also china. A lot of these companies didnt include the july crash. People are going to start extrapolateing that. You sit back and say who has great growth who has no china and a lot of things going for them. You come up with google. Ibm reports after the close today. We may be talking about it tomorrow morning. Well see how things look for that company. They have to continue to show an acceleration in their faster growth cloud analytics. This is the old they dont call it artificial intention. She has her own road nap. She abandoned the old road map in terms of the growth of the businesses and what they will represent as a total overall revenues. When you spoke with her last time, i think she pretty much laid out and said its my company so, therefore, the ownership of the quarter is not the previous regime. The stakes are high. Hasbro is an all time high. Preschool up 14. Boys up 1. 4. Eve within girls down 22 we talked last week about the divergence when hasbro and mattel. These things happen slowly but they happen. Remember when you killed the boeg us story about the hasbro lbl . Yes, years ago. They should have done it. They could have brought it public. I think you killed the deal. It wasnt true. It had the added benefit of being something that wasnt accurate to the extend it was taken at the time. It would have made sense. Listening to them this morning, are doing everything right. More than 1 billion larger than mattel and mattel was far larger than hasbro not that long ago. Do you play hasbro games with your kids . I think so. Playdo. My little pony. Hes more into the toy things. My kids are teaching me chess. I know it but im saying the video game revolution is very alive. Thats why Electronics Arts is we play a lot of clue. They dont have a name thankfully. From has which is the best gainer, the second best gainer is hal, halliburton. 15cent beat even with north american revenue down. It was a thing of beauty, i thought it was going to be the only one, and this halliburton quarter was magnificent. It is so funny that the oil goes down every day and people love these stocks. They also talk about the divestitures. You have the oil going up and the Oil Companies are dripping down. Its usually been they traded in sync. This is a great diversion. One thing not going up is the pipeline companies. You and i have talked about it. Et is now going to be talking to williams. Theres no standstill. But the problem fe for ete is the stock keeps going down. Thats hard to combat in terms of trying to have a potential candidate and your offer is all stock. Kinder has also not been doing well. None of them have been. I think theres a perception that were just not pumping enough. There were a lot of pipelines on the drawing board that wont be needed. The Natural Gas Pipelines will be needed. Thats part of the problem with coal in our country and theres also a pipe needed to mexico. Theyre in an import situation. They used to be a great exporter. Gasoline being exported. Natural gas being exported but oil, when you cant move oil, youre not allowed to move it outside the country. Whats happened is theres been we need a consolidation. Theres too many pipelines. Right we saw a deal last week where the stock went way down. Theres a question of whether the ceo took a deal that was beneficial for tax purposes. Natural gas is quite a market even though its low. The demand for natural gas has been soaring because of the fall apart of coal. Its a great untold story. This weekend there was a piece, finally about how coal, 80,000 people, probably many going to be out of work. Right. We thought of you on friday. Ksu getting some follow through again today. I mean you talk about halliburton and some of the rails, the bar was set so low. You could have crawled over it. I think when you look at the rails, i didnt think a lot of them has put the high single digit decline in coal. Ksu has a remarkable line to mexico. Thats how you get the cars up here. Thats the cheap place to make cars. On friday ge weighed in with a solid quarter. The industrial business is showing some momentum. They have organic great in honey well. And ge capital continues at a pace faster than anticipated than when first announced. Stock down almost 1 today. I dont know what to say. You know whats 2 from an all time high . Under armour who has receive curry, jordan spieth. Nobody is picking athletes better than kevin plank. And nike gets an all time high. Theyre also on fire. Under armor the great junior growth stock of the time. Theres room for everybody. These companies are what are you laughing about . People are insulting me on my twitter feed because they didnt understand the soupy reference. If we had a trend, that would be it. What can i tell you. One guy said i went to yale and im an idiot. How can you face your public and not know soupy sales . I didnt give you that big kiss that he always give after white fang and black tooth. Thanks to the beauty of youtube, im on top of it now. Our executive producer noticed that soupy sales. No one is quicker than the internet with internet searches than him. We have a new record in the nasdaq. Bob is on the floor. Reporter good morning. Happy monday. Mixed open. Polyis at 50. Emergency is down. Financial and tech is leading. I want to focus on tech. Weird stuff is going on in tech. A lot of chatter with traders over the weekend. You mentioned nasdaq at a new high. Nasdaq 100 at a new high. A great month. Nasdaq 100 is up 6 . I want to concentrate on how weird. On friday new highs on the nasdaq, but three to two declining in advancing stocks. The leadership is getting narrow and its down to about four stocks. Technology is the biggest sector in the s p. The weightings here matter a lot. I want to show you the big four and why things are getting distorted. Google, amazon, facebook and apple. Look at the numbers. Three weeks, google is up 29 . Apple up 2 . The reason this matters is theyre 20 of weighting in the technology stocks. Look at the market capitalization of these stocks. Apple is 70 billion. Google is 400 billion. Add it up. 1. 7 trillion. The nasdaq 100 has a cap. Those four stocks are 30 of the nasdaq 100 right now. And it wasnt that bad just a couple of months ago. Thats why the nasdaq 100 is blowing everybody out of the water. Its up 6 on the month and its attracting everybodys attention. This is very dangerous to have four stocks that are really moving all of these indices around. We asked your partners how weird is this . Its unusual. Right now its only happened nine times since 1980 that the nasdaq 100 is three standard deviations from the 50day moving average. This almost never happens. 99 of the time you stay below a three standard deviations. Eight of nine times weve been lower in the next week. Very rarely do you see this move up rapidly in the nasdaq 100. Normally its lower. I believe three of the four are up. Google is down a little bit. As you see down 2. 5 but not surprising given the amazing move up. Keep an eye on these very dangerous divergences that have been going on with the indices. They are normally not healthy. Those are the four you want to watch. In the meantime gold down. Fiveyear lows. The gld had a lot of action last week. Spider gold trusts and thats reflecting the fiveyear low. More importantly, a huge volume in the gdx. Thats the gold stocks index, and also is sitting near a fiveyear low right now. Finally, i want to mention the greek index. The greek stocks do trade here at the new york stock exchange. Modest moves reflecting the modest day were having over in europe. Guys . Back to you. Thank you very much. Lets get to the bond pits and check in with Rick Santelli in chicago. Reporter good morning, carl. Its an interesting session about an hour before treasuries open. We did see yields move up a bit rather quickly. If you look at a 24 hour chart of our tens, maybe as important is the length at the hip movement that we get with bunds, both the moves occurred right around the same time. You see bund yields. Its a scaling issue. The spread between the two remains at 150s and until it changes look for the markets to highly correlate on the yield moves. If we look at the spreads, a lot of talk. Is it a signal . Sit giving us a clue about the sfed . Possibly. Signals are hard to read because theres a lot of outside forces affecting our markets and all global markets. Fives to 30s. No we started out in july its all about flattening which may be fed closer. But if you really started year to date, you can see for most of the year it was about steepening. With f we look at the dax and i threw this in there last minute look at that chart month to date and realize were a couple and a half weeks through july. Really, its hard to look at that chart and say there was a lot of things going on over all the greek issues. Its been a moon shot. Euro versus the dollar we talked about it for weeks and weeks. Under 1. 10. This should have some follow through and it did as you see the 1. 08 handle on the chart. We zoom through 97. Its a little mesier in the euro but you can see also nice break out there. Carl, back to you. All right. Well talk to you in a minute. Rick santelli in chicago. When we come back Biotech Company Horizon Pharma. The stock is up. The ceo is going to join us next and later in squawk alley, an exclusive with the ceo of ebay as the company officially begins trading as a Company Without papal. Record highs on the nasdaq. Were back in a moment. Are you moving forward fast enough . Everywhere you look, it strategy is now business strategy. And a partnership with hp can help you accelerate down a path created by people, technology and ideas. To move your company from what it is now. To what it needs to become. Sharings of Horizon Pharma are up. Joining us is the ceo. You might know timothy because hes been a frequent guest on mad money. How many of these new drugs, the ones that you just acquired are responsible for this up side . Well, jim, its a combination of our base business continuing to accelerate and the high peern transaction integrated fully within a few weeks and adding new patients. I think people dont understand when you get a drug a lot of people have given up on or didnt know how to sell it out, you have a unique method that involves doctors not being to reject and Health Care Companies not being able to reject reject. Can you explain how youre trying to revolutionize things. What we do is its all about creating access for paints for getting to the lowest out of pocket cost for them and minimizing the rejections in managed care so we provide a patient free drugs who get denied access. One thing im curious about is i read about acquisitions and after a company is acquired the acquirer raises the price on the drug 40 . Is that a sustainable practice . How does that make sense if youre not changing the drug . We look at pricing in a way of pricing in a way of what the market will bear. Its how we use the dollars. We bought a product, the list price went up. That gives us money to create access for patients. So that gives you money to create access for patients but does it also make access harder because theres more push back in reimbursement . Sometimes but ultimately we find the benefit of creating access for patients min miedsing the issues and hassles in an office where patients are rejected. As a result, the physicians write more prescriptions of our products. Tell us also about the axis you are trying to make. They instituted this poiseon pill. Its a valid point. Your stock is up. That would seem to help your pursuit here. What are you willing to do . They put the pill in. Its made it more difficult to call a meeting. Are you willing to hold that meet. What have you heard on your side and theirs in terms of what they want to see happen . First, we believe this is a shareholder friendly proselposal. We heard from shareholders on both sides that this is both strategic and financially compelling. Thats why we went public with it. Weve had a number of meetings over the past weeks with their shareholders and ours and they believe it makes sense in all ways and were here to stick it out and make it happen. Their management doesnt seem to agree. And those who advise the company seem to be willing to fight. What are you going to do . Were willing to exercise all tools to make the transaction happen but in the end, the shareholders who see likeco our earnings today, significant results driving newly acquired products and the base business theyll see the deal makes sense and call their board and enforce them to engage because the deal makes sense for both sets of shareholders. This actimune is much bigger than we thought. We love the acquisition. With the two base indications, we see it as a 200 million drug. We started a trial far neurologic disease. We expect to get data late next year. All right. This is big. Congratulations in the mix of a major deal. Thats timothy walbert. Weve liked Horizon Pharma since mid teens. Great to be on. Markets relatively flat. Dont go too far. It took Tim Morehouse years to master the perfect lunge. But only one attempt to master depositing checks at chase atms. Technology designed for you. So you can easily master the way you bank. Its time for cramer and stop trading. You heard it first on the incredible Conference Call that was run on honey well. Nonresidential construction comeback. This is a huge hiring machine. Laa lii, this is another nonresidential construction company. This is the place to watch for this quarter. Its the strongest part of the economy, and its been weak for a long time, and i think that people have to recognize that con nonresidential conduction is a driver of the company. New homes on friday. We just had our best month in six years and it was the first time that we got a third of the market for firsttime home buyers. This is why i dont fear a rate hike. I dont fear it. Nonresidential, auto residential yrg theyre all strong. Theyre big hiring machines and they work versus the strong dollar which is going to get stronger when we raise rates . And when you talk to some of the people theyll say were underbuilt for quite some time. Its finally starting to happen but they seem to be very happy, the likes of john gray who we talked to last week at delivering alpha. Still very much e maamnamors of certain commercial markets. Its the great story to watch. Weve needed that. Thats been whats holding back a lot of the big industrials. It may not work out for europe. Theres so much to be left on the table in terms of talking, a lot. We only give 60 minutes. It goes quick. And then apple. The number bumps. Whats on mad tonight . I got a breakup of an american people. Ill reveal it and why the stock is undervalued. I know what it is. Now do you know . I know because i know. Ill throw a pie in your face. Im not going to tell anybody. Hes got a pie coming at him tomorrow. People are talking about things other than stocks sometimes. I had a big thing on lenox but i should have just talked about different characters. Tomorrow im going to come with sherry lewis, another lamented departure, sherry. Remember her . What were you watching growing up . Hr puff and stuffs. Watching pbs. Holy cow. I was watching huntly and brinkley. Well see you tonight, jim. More on Morgan Stanley after the break. Dont go away. When youre not confident you have complete visibility into your business, it can quickly become the only thing you think about. Thats where at t can help. At ts Innovative Solutions connect machines and people. To keep your internet of things insync, in realtime. Leaving you free to focus on what matters most. In the us, three in ten College Students drop out. But how can you spot whos at risk . The one who lives far from campus . The one who works the night shift . The one with new responsibilities . One thing cant tell you, but the right combination can. Universities are using ibm analytics to understand pressures in and out of the classroom some expect to cut dropout rates by twentyfive percent. Ibm analytics is working to make education smarter every day. Good monday morning. Welcome back to squawk on the street. Im Carl Quintanilla with david faber and sara eisen and simon hobbs. It looks like we may want to take a bit of a breather. Pretty muted data on the dow and the s p. The nasdaq hit a record high. Keep your eye on crowd which dipped below 50 for the First Time Since april last week. Lets get you the road map for the hour. Gold hitting fiveyear lows. Well talk about what triggered that and what comes next. And facebook inching closer to the 100 a share market. And an historic day in washington as the Cuban Embassy prepared to reopen for the first time in more than five decades. Well take you there live as the cuban flag is raised. Well this is the week for earnings. Morgan stanley on day one beating estimates for both Quarterly Earnings and revenue. Mary thompson joins us with the details. Reporter as you said the firms trading arm helping to deliver the revenue beat in the Second Quarter. Profits excludeing adjustments. A nickel better than expectations. Revenue ahead of analyst east forecasts. And the ceo holding the first Conference Call saying high activity in asia and a Strong Performance in the u. S. In trading equity revenue rose 28 . Fixed income commodities and currencies up, stronger than many peers. Below some analysts estimates. Only call someone calling the performance solid. And denying its looking to expand the business theyve looked to downsize over the years. The strategy is not changing. That doesnt mean were not going to be more efficient providers, and it doesnt mean that we wont pick up share and it doesnt mean these markets as they continue to throw out relatively low volumes, there might be more chance on the revenue side. Reporter Wealth Management or the broke raj arm delivered improved 23 . Loan growth was steady but retail clients remain hesitant about increasing their trading activity. The comp ratio remains slightly above the firms target of 55 . Broader markets now off to a sluggish start today as the s p and dow try to follow through. The nad daksdaq setting record highs. Where should investors focus their entaengs. Attention. Mary just ran through the financials at Morgan Stanley capping off a pretty solid quarters for big banks. Is the sector finally returning to health . I think the banks are one of the sleeper surprises over the next few years. Just the same Way Technology and probably the two groups that we think that could outperform the market. Its good news. Youve liked technology, and certainly technology has been a stand out. Google earnings but bob ran through interesting statistics but overall breadth in technology being negative. Is it just the googles and netflix going well or is this a broad group . You know, i think the performance shoud broaden but as you know a lot of tech is cyclical. Theres secular growth tech. I think the cycle oriented pieces are the areas that get signs of life as investment spending rises. It might take a while. Like what . Thinks like ibm, hp really are much more dependent on a broader base of spending by businesses and tech spend x medical has been flat flath for almost 15 years. We keep forecasting it will happen and it doesnt . Yes. We have been waiting and waiting. People say that and it i think part of it is the lack of inflation. I think were finally this is the year where you can finally say wages are picking up. Housing is picking up. The sense that we dont have to worry about inflation is ending. I think that gives people more confidence about spending. The its a very divergent market in the areas that are now not performing energy again down during the course of the month and then you have big tech icons, big names that they people are prepared to drive the multiple higher. Is the nature of the stock market and what the hedge funds will chase change it . I think simon, i was in the west coast last week. I think theres a real sense of confusion among large investors. The market hit new highs. People werent excited. The macro got people cautious. Theres a bit of a chase going onto momentum names. I think were in the middle of earnings so theres a tofocus on who beats. The bull market is still intact and i think the broadening will take place later. We just had this huge threat to the euro. We just had china halt half of its stocks and a couple days later sixvix is at 12. Youd rather see some sentiment change even a little. It shows you the crowd gets it wrong. Maybe people were overworried last week. As we highlighted in a piece a couple of weeks ago, two weeks because probably the best buying opportunity since october. But as i look at the balance of the year i think theres a lot of tail winds. I think Energy Becomes a tail wind because Energy Earnings comps improve. We get the tail wind from lower oil. Were seeing less of a head wind at least from the oil prices and the strong dollar during this quarter but the dollar is marching up and oil is going lower. Maybe that might not last. It depends on what happens with the rig count in terms of how it affects energy and in terms of the dollar i think youre right. On a year over year basis, the dollar is going to base some tough comps because its much stronger but its flattening. We should probably mention where we are on the fed. Is it september 17th that they have their september meeting . Yes. Presumably now that greece is not a Macro Economic problem for the future, that means the september rate rise is more likely . Yeah. I havent checked the markets expectations recently. Its still very low. I still think its more of a december. Yes, but given the the rhetoric we have fwlrks weather their september is more on the table than it was this time last week. Yes, eni would point out when you look at the history of fed cycles, the reason the fed tightens is often more important than the actual event. So if the fed is going to be tightening, lets say september is the meeting but its because underlying conditions have improved enough, its bullish for equities. I think thats the surprise for markets. Whenever it takes place, well do better. Isnt it also if you took a snapshot of where we are now, it might be how you ease Monetary Policy . You mean because because the data is relatively weak. I think you just have some biefr kags of data. I think weve seen improvement in house bug youre right. I think the fed is concerned about how any change in their stance will affect Mortgage Rates and housing which is really central to the consumer recovery. Thank you. Always good to check in with you on a monday morning. The dow down 15. When we come back on this monday, google breaking records while facebook gets closer and closer to the 10 0. How do you play these names, especially after last week. And an historic day in washington d. C. Where the cuban flag is about to be raised in about a half century. Well take you live from the embassy. More squawk on the street in just a minute. Welcome back to squawk on the street. Lets talk about fun and games with hasbro hitting a record high trading up over 5 at this point. Currently the Top Performing stock in the s p. The Second Quarter results Beat Estimates and hasbro benefits from boys preschool division. A nice day overall for hasbro. These have become intellectual property companies. Google shares down this morning after soaring on friday with a positive Earnings Report creating one of the biggest market cap increases in history. Amid the leap s p capital iq kept them to hold from a strong buy. We have a scott with us this morning. Good morning. You go to a move on friday was it overdone . You mean the increase of 15 to 20 on friday in we think so. We put out an update after we raised our target price on friday. 715 we thought was reasonable and next thing you knew the stock was in the 700s, implying 2 up side. At this point we thought a hold is more appropriate, and it does seem like a lot of people have forgotten about some of the notable risks we see related to google and thats something that people need to be mindful of as well especially after the gains this year. I wonder i mean i dont know what the Short Interest was like, but we talked about it doing so little for so long that it was almost like a coiled spring. I assume just her first quarter, she could have said a number of things that could have caused a pop. Its interesting to note that there was a lot of negativity across and around wall street related to google. And i dont know that things have completely flipped at this point. People are optimistic about youtube and optimistic about mobile and optimistic about costs and expenses. People are optimistic. Growth is going to be interesting as we look out a couple of years from now and think about a legal and regulatory perspective. We think the stock is fully valued. This sounds contrarian. Most of your fellow analysts came out and raised their estimates finally starting to see cost discipline finally starting to see some of the positives working out including the numbers out of youtube. Why are you going against the grain, specifically i guess, on some of those issues, and i think the biggest argument for this company is the valuation of facebook, which is so much higher and the fact that google is also growing in these kinds of numbers. I think thats a fair point, sara. I was looking back and i was on your air at the beginning of the year and everyone was asking why is it that youre positive on google when everyone else is turning negative. I said then and ill say now, we like the concept of buying nowlow and selling high. We have a buy opinion in the stock of facebook going into results next week. The way were thinking about it is really if you look on the top line facebook has two to three times the growth that google does at this point, and we see a lot more levers for gains as a posed to google where it seems to be a Cost Containment story at this point. We really like the fundamental story for facebook a lot more and people think its a lot more highly valued than it is, frank l ly, in our opinion. Today we have in the Financial Times the number of advertisers at google as risen more than 40 in the past year. Were aware of the structural changes coming through. Specifically on fax and what we can expect and i think people have spoken about stickiness. What can we expect when they report . When we think about facebook we think about a strong organic growth story and continuing investment in some of the kind of emerging opportunities whether youre thinking about video or youre looking at instagram. I think down the road you could see more monetization. If you look back the last couple of quarters facebook has traded down because theyve had negative impacts from currency and theyve been spending morevery aggressively. I think people are thinking about facebook differently and see it as reasonably valued if you look at next years earnings. Its where the Revenue Growth is expected to be, not the premium that a lot of people would have you believe, especially as the market capitalization that has increased. Finally, some of those more positive on google than you are like to compare the multiple to facebook and say google has got to be worth at least half of a facebook. Do you have a problem with that . Thats interesting but considering the market capitalization right now and facebook is still really much much lower than what google is and facebook has much more growth, and we think has a lot more avenues to kind of continue and maintain that growth. Google, we think, is going to be kind of a mid teens grower with a lot of regulatory overhang. Until we see more details on what ruth porat is going to be doing, we think the stock is fully valued especially after the 33 gain weve seen year to date. That regulatory overhang didnt get a lot of discussion on friday. Thats a fair point. Thanks for joining us. Coming up on the show its been an arresting 24 hours for gold. Falling to a fiveyear low after a wave of selling in asia. And were still awaiting history in the making. The raising of the cuban flag at the Cuban Embassy in d. C. Well bring you that controversial move, next. [dad]i wear a dozen different hats doing small gigs,side gigs. Gig gigs. Quickbooks selfemployed helps me get ready for tax time. To separate expenses,i just swipe. Its one hat i dont mind wearing. [passenger] i work for me. And so does quickbooks. It estimates my taxes,so i know how much stays in my pocket. And thats how i own it. 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Gold under pressure dropping almost 4 overnight. We have the Senior Vice President at ambersino brothers. Good morning. This was a big drop at the beginning of the asian suggesting. Some were suggesting it was fundamentally driven. We got the data from chinas central bank. What is your take on whats going on on a big move. On the big move i think its relative to look at chinas holdings. Right now thats all they are is expectations. The news out of china that theyre not holding as much gold, they probably wont be buying as much may have triggered some to exit the gold position. However, its odd to say that after all that happened last week when you look at the Federal Reserve and what happened with the iran deal and the greek bailout, all of that was gold negative but it trickled lower. We didnt see a big move and then on sunday morning in asia, a big move. It gets me thinking that someone was testing the waters and that while liquidity, its key here it probably would have been better for someone to wait until new york opened. We got a 40 drop. Half has been recouped. Right now its a wait and see. You have to wait and build a little bit of a base. Weve made big strides in gold prices over the last 12 hours and to say that this is it or this has another 100 points to the downside its too early to tell. If you see a major asset class which gold still is down at a fiveyear low, does history teach us thats a buying opportunity or do trades or investments like this break . I think when it comes to history, we have to throw it out the door and look at where we are today. Gold has been traded as a safety net, as a safings vehicle and also traded by fast money since the crisis and the whole currency devaluation of qe. I think in the big picture, we have to look at this. Gold is going to find other suitors. People will see a buying opportunity but there are better opportunities out there. If the shortend yields are going up in the u. S. Thats better, stocks in the u. S. Looking at maybe bonds in europe having a little bit better bid to them given the bailout. I think right now gold is going to find a lot those looking for risk avert trades are going to go away from gold. What caused the overnight selloff, we can hammer out different opinions all day long but it happened and now we have to move forward and those still long gold, theyre waiting. Do they want to add to their position or get out . I think you wait and see. This isnt a panic position. You want to watch and see how it trades. The move in gold was notable but weve seen a general trend of weakness in kwoidcommodities for a long time. Weve been talking about crude oil dipping below 50 a barrel. Is there something to worry about when it comes to the message from the commodities markets on Global Growth and deflationary concerns or is it about a stronger dollar . I think the strong dollar is only part of the argument here. I think when you take your largest buyer of world commodities and they decide theyre going to pull back or cease buying all together and that would be china, this is just the tip of the iceberg. The if theyre really in trouble over there and if theyre going to stop buying and if their Housing Market starts to crumble and they start looking at expand expanding their Energy Sources and if they stop buying gold and i think the Commodity Prices themselves, this is the beginning of what could be a greater selloff. Youre talking about 30 a barrel oil, sub thousand dollar gold. Those numbers are attainable with china is pulling back on the reigns. This is just the beginning. Have a good week. Nice to see you. Thank you. Freightstraight ahead, an historic day in washington. In moments, cuba will reopen its embassy in d. C. For the first time in years. Well bring you that moment live as it happens. Well be right back. Of the mercedesbenz youve always wanted. But you better get here fast. Yay, daddys here here you go, honey. Thank you. Because a good thing like this wont last forever. See your authorized dealer for an incredible offer on the exhilarating c300 sport sedan. But hurry, offers end soon. Share your summer moments in your mercedesbenz with us. You focus on making great burgers, or building the best houses in town. Or becoming the next highlyunlikely dotcom superstar. And us, well be right there with you helping with the questions you need answered to get your brand new business started. Were legalzoom and weve already partnered with over a million new Business Owners to do just that. Check us out today to see how you can become one of them. Legalzoom. Legal help is here. No fifth graders ever sat at the cool table. But your jansport backpack is permission to park it wherever you please. Hey. Thats that new gear feeling. Now get a swiss gear backpack for only 10. Office depot officemax. Gear up for school. Gear up for great. Here is your news update at this four. A midday explosion rocked a turkish city near the southeastern boarder injuring 100 in what appears to be a suicide bomber. A senior Government Official saying they expected the Islamic State group was behind the blast Foreign Ministers engorsing theen endorseing the iran nuclear deal. A and p filing for bankruptcy plans to sell off stores as it faces increasingly tough competition. This marks the second time in five years the company has filed for bankruptcy. And the Parent Company of ashley madison, a match making website for cheating spouses was hacked. Avid life media said it has taken down the hackers post and has hired a firm to investigate the breaks. Thats your update for this hour. Back to you. All right. Thank you. We have an historic moment about to happen in washington d. C. The cuban flag about to be raised above the Cuban Embassy. Reopening full diplomatic relations for years. Good morning, michelle. Reporter good morning. 1961 the embargo started under eisenhower and flushed out and really became in full force under jfk in 62. Were waiting to see the whole event unfold here. There are hundreds of vips who have been invited. Theyre going to raise the flag at 10 33, exactly, im told. You are seeing hundreds of people on the sidewalks between protesters and camera crews and a line of dignitaries lined up ready outside to go inside for a reception that will measure roughly 150 people. To arrive at this moment so many things have had to change. We have seen the cold war rise and fall in the last five decades, and it was only after that that we begin to see this kind of change occur between these two countries. It also took a president who believed more in engagement than in isolation for this to happen as weve seen it play out with cuba and iran. And inside we know there are a lot of American Business people who are very eager to do business in cuba. Provided the cuban government will let them. Its going to be a twoway street. Even though theres a lot of easing thats happened in terms of what america can do the embargo is still in full force. And the American Government has allowed investment. Its never totalled more than 6 billion over the last ten or 20 years according to those who have been able to get ahold of some of the figures, because the books of the cuben government are still to this day opaque. We dont know their gdp or outstanding debt. We dont understand what is their relationship financially with venezuela who provides, we know used oil to the cuban government. Behind me there are a small group of protesters to who are here to support the cuban government and i will say this. If this event had happened 20 or 30 years ago, we would have worried about violence in the street and fistfights and perhaps even bombings. Its a very dramatic shift relative to the relationship that weve seen in the last 20 or 30 years. It is 10 33, michelle and looking over the state Department Background briefing it does appear theyre doing to do this on the havana side very carefully. Would you agree . Absolutely. And i would say that the way the state department has handled today has been as unceremonious as possible. The cuban flag that hangs in the lobby of the state department was put up at 4 a. M. They didnt want to do it during business hours. Whats going to happen in havana, a small plaque is going to be put up and the secretary of state will go later this summer, bebelieve mid august and thats when well see a flag raising. But today right now the cuban flag being hoisted in front of the Cuban Embassy here in washington d. C. And the way i understand it is this is largely symbolic. Obviously it marks, as you said a historic shift in the u. S. Relations, but as far as what comes next for business doesnt congress have to get involved here with some of these trade embargoes . For sure. The embargo cannot be lifted without, literally, an act of congress and then theres a lot of rules written into the law, things that have to change, presumably the castro brothers must be gone from cuba for the embargo to be lifted. And there are 5,911 claims of American Businesses that filed claims back in the 60s when castro seized all kinds of properties whether it was bank ranches, the cocacola factory, et cetera, and the way the embargo law is written, those claims must be settled before it can be lifted. Theres competing legislation on either side of this question at this point in congress and its going to be the political story that plays out thats going to decide how this is going to go but theres money on both sides, very active trying to keep it strong or weaken it dramatically. Right now as you can imagine, the predisposition of the president is for it to weaken dramatically dramatically. And there it is. Theres cheers here from the street. Reporter thats the Cuban National anthem. Reporter there it is, guys. The cuban flag in front of the Cuban Embassy for the First Time Since 1961. Michelle its evident that there are protesters that are there. Many people will be quite angry around this country at the images they have just seen. Can you touch on the anger and explain why still there suspect a pathway for the administration to get what they want through congress as things stand at the moment . Reporter well, i think its because there are so many cuban exiles who lost a lot of property and lost their livelihood and country. A lot of them live in miami. They and their children the children are not quite as strident, but there were so many people besides the American Companies that we told you about that lost everything, and fled to this country to escape communism and they feel that there should be some kind of change in cuba there should be Democratic Change and more human rights in cuba before this kind of event would be allowed here in the United States and for the u. S. To restore diplomatic relations. Its a vein that runs very deep. It runs far less deep than it used to because many of the exiles have gotten quite old and are in their 90s and as that generation passes on their children are far less strident and feel that there should be some kind of change and many of them travel back and forth to cuba and bring back all kinds of foods, electronics. Its an incredible almost shipping system that happens. Theres so many new products in cuba that are a result of the cuban exiles who live here. But they are very divided. And far less likely to be supportive of the reestablishment of dep lomatic relations. With some of the political simymbolism out of the way, it will be interesting to watch the flow of money into cuba as it relates to tourism and power generation. Thats an important economic story to watch over the next several months. Michelle in washington cede as the flag is above the embassy for the first time in a half a century. When we come back the ceo of ebay is going to join us for an exclusive interview. Still a muted picture with the dow down about 5 points. Dont go away. Rprise and you can move the world. But to get from the old way to the new youll need the right it infrastructure. From a partner who knows how to make your enterprise more agile, borderless and secure. Hp helps business move on all the possibilities of today. And stay ready for everything that is still to come. One of the stocks set to report this week could see a huge move on earnings but which one. Well tell you on trading nation. More squawk on the street coming up. Gold is still down sharply right now after hitting fiveyear lows overnight. A dramatic move. Good morning. Thats right. Very heavy selling pressure. Almost a 50 drop overnight and the question out there is where was the selling pressure coming from. There are a few theories out there on this. A stronger dollar thats battering all commodities. That is one piece of the story. Another theory is that margin calls in the equity and commodity space were causing this sort of selling. We have recovered a little bit. Let me put this in perspective for you. Nearly 900,000 lots were traded. Thats you can see the sense of scale there. A lot of people asking if the chinese are giving up on gold at this point. The theory is that maybe were seeing a little bit of a rotation affect as weve gotten better data out of china and also as the market is recovering after the nose dive we saw recently. Gold has not been getting a bid of geo politics. That has been an issue for gold and if youre trading gold as an inflation hedge and youre going by the data janet yellen is looking at theres no inflation in the marketplace. Thats another reason people might not want to be holding gold right now. The technicals are important in this trade. 1100, a key point. Thats right where were sitting. It is possible after a dive like this that we could see a technical rebound. Need to watch the watch gold. Back to you. Lets get over to the kmcme group with Rick Santelli. Reporter lets stick with the gold commodity topic. Id like to welcome brian west bury. Good to be here. A couple of things. When i look up and see gold moving lower, i cant help thinking about other things like china and global demand, and ishl ati remember at the beginning of this move it was all about is this about accumulation of commodities, is it about global demand, your thoughts . All those things come into play but gold was massively overvalued. Look at oil to gold. Its about 16 barrels of gold to an ounce of gold over the last 30 years. 50 for a barrel of gold today. That gives you 800 for gold. We think gold is about 950 . Not that long ago we were at 100 in oil and much higher in gold. Commodities always want to blame something else. But in reality, at the end, in my opinion, it comes down to those fundamentals. Im an economist. Thats what i look at. And youre a teacher sometimes. Put on your teaching hat. Im going to make a comment. Tell me whats wrong or correct with it. Boy, china might only be at 7 but with greece the United States australia, they would die for those growth rates. Your thoughts . They would. China is growing rapidly. Heres the key about china. Its not some magic. What they did is for 2,000 years they didnt use technology and then all of a sudden about 30 years ago they decided to put in cell phones, all the things that we invented the internet all this stuff. And compensate us in a favorable way. All that stuff, theyre able to get this growth that away. In the end theyre not a democracy. They dont believe in the reel true rule of law. I think thats going to hurt them. I believe social issues are the key. Heres the bigger problem. To go to 6. 5 from 10. Thats about a 30 drop in growth. What who is going to make that up. . What were hoping. Bedontwe dont use the word hope. Thailand and asia. They are doing it . Not completely but they are. Theyre filling it up. Global market happens. This is my argument. Its a mugs game argument saying their growth has slowed 30 something percent over the last years but its only about how much everybody contributes to one Global Economic number. And remember were still four times bigger than they are. I get that. And the other thing is their economy is bigger. 6. 5 is a bigger number than it would have been before. And growth from us makes up a loss for them. We only have a few seconds left. Another reason i think gold could be getting hit, fed normalization. If they raise rates its a negative carry. Right. It costs more to hold the gold. It does. But its also not tight. The economy would be doing well and gold is not a safe haven. It hasnt been for six years. It isnt, but when i look at whats going on in the world, you thought gold could get down to 800. At 800, i dont think anybody can get crunched. Thats the time to buy but wait. Thank you very much. Back to you. Up next on the program, new york city is stepping up its battle against air b and b abusers. Well talk to the woman at the front of the fight. And the ceo of ebay will join us for an exclusive interview. Squawk on the street will be right back. No students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. New york is double down on the pushback from some big cities against home rental sites like airbnb. The new York City Council to actively investigate what it calls the conversion of residential units into Illegal Hotel rooms. Councilmember Helen Rosenthal is a driving force behind the move from nyc and joins us here. Good morning. Good morning. Nice to see you. You obviously feel very strongly about this. Well were losing in my district alone on the Upper West Side over 600 units of Affordable Housing every single year. Citywide its tens of thousands of units of Affordable Housing. So thats the fundamental problem. Now youve got airbnb whatever the other sites are, shortterm rental platforms that come in and use an opportunity where people could monetize their homes to in fact have these Illegal Hotel units. Its a problem for two reasons. One, youre living in your home, your own residential building, and all of a sudden your neighbor is renting out their unit every couple of nights so you have people coming in with bagagesgage coming in through your front door using your public space in the building and you dont know who they are. Theyre not your neighbors. Number one, you have a quality of life problem. But, secondly what we have are unscrupulous landlords who are systematically harassing and evicting out of their homes tens of units, and then renting them out on airbnb. So theres where we see the loss of Affordable Housing. Just to be quite clear, though, this is Illegal Hotel rooms. Sure. Just define that for the sake of this conversation what youre actually able and willing to fight for here. Sure. So in 2010 the state passed a law that youre not allowed to rent out your home for fewer than 30 days. If you are a Single Family or a dual family homeowner and you have a Free Standing home you are allowed to do this. But if youre in a residential, multiple dwelling unit youre not. Does a townhouse count as Free Standing dwelling . Townhouse, as long as it has no more than two families living there. I think theres an economy thats been created sort of in some of the upandcoming neighborhoods, harlem for example, where lots of people rely on the income they get from airbnb now. Look if they stay in their unit while the visitor is there, its perfectly legal. The problem is when they rebt out their entire home. Have you seen the de blasio tab on uber that now runs . Theres a de blasio tab unrelated legislation, a proposal that he wants to pass on uber against uber. Theres this perfection right now that new york city is fighting the innovation sharing economy. Sure. Its two separate issues. Really separate issues. I understand how theyre connected in terms of you know, a website platform. But in the airbnb scenario currently and in our hearing in february airbnb refuses to act against the illegal rentals of the units. So the attorney general, for example, found that twothirds of the rentals on airbnb are illegal. Flatout illegal. If airbnb were willing to step up and, for example, weed out all of those rentals and truly youre fighting illegal activity. Am i allowed to let my buddy from chicago crash at my place . Absolutely. Especially if youre there. How is it different from airbnb . Youre not leaving and getting if im gone. If i leave town and, say, for two weeks david, you and your family, feel free. Use the place as you like as you see fit. Pay me 50 a day. Okay. So if your board allows to you do that in your building perhaps you get a pass. Most boards will not allow that to happen and, in fact people are finding that theyre being evicted out of their homes because their board doesnt like it. My question would be how effective you can be here. On the one hand if you were really i. T. Savvy could you go on to airbnb and sort out instantly the city council there and shut them down. Bingo. The other side of it is youve got 17 new inspectors on the figures youve got here thats one new inspector every 550 illegal rentings. You dont stand a chance with that sort of ratio. Right. For them to continue doing what theyre doing presumably. Absolutely. So to date the office of special enforcement has been reactive body just in the way youre describing. Sending out inspectors when theres a violation, issuing a violation, not really getting us anywhere. The difference here is were doubling down on the funding, and the exact positions that are being funded are Data Management analysts and lawyers who are going to now proactively do data dumps, find out who the worst landlords are and go after them. Probably not you. Renting out to david is your own thing. Its nice to meet you. Well watch with huge interest. New York City Councilman Helen Rosenthal. Coming up ebay ceo will be joining the show live for an exclusive interview. The companys first day trading separately from paypal. Ent spontaneously turns romantic why pause to take a pill . And why stop what youre doing to find a bathroom . Cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. 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