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What's Up on Wall Street - Brian Sullivan, CNBC

May 23, 2011|

CNBCs newest anchor, Brian Sullivan, tells us What's Up On Wall Street. Brian discusses the LinkedIn IPO and Europe's Financial Issues

Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

Good afternoon ladies and gentlemen welcome to lunch money it is Monday may 23 of Europe and a terrific day. We're following the stock market I gotta tell you the Dow is down a lot over a 160 points in the red so that's not good news. We're still licking our wounds from last week last week the Dow lost 83 points for the week the NASDAQ was down 25 points last week the S&P 500 lost. -- half points last week. And the Russell 2000 down six points last week the markets are still in positive territory and year to date basis anywhere from five to 8%. And this week is a week that is. Really devoid of much economic did not a lot of economic news that's breaking so. The reason the stock market is down a lot well there's problems going on in Europe where it talked to Brian Sullivan from CNBC. Brian how you -- today welcome. I'm doing great brutality. Nice to hear from you. Radio what's what's going on in Europe that's causing our stock market sell off I saw the Dow down I think about a 160 points. Ever dealt -- down right now pretty ugly out there to start that we can listen what's not. Not going wrong with Europe I think is -- -- question we can't talk about it you guys and after about a year happening. Europe has been my number one sort of flash point to the overall market overall economy. -- other more concerned about. Whether more bailouts will be needed where that money will come from then let let's put it this way and production to walkie about it if you're if you're. The Greek government -- anyone borrow money for two years. Peachtree street you're gonna pay is -- 25%. So they cannot borrow money effectively. Well they don't need to right now to the IMF has basically become their de facto bank of course the IMF has its own problems given that their former leaders now we you know basically -- Was -- -- New York City jail took a couple days ago. You've also got concerns over Spain that the conservative. The conservatives had their prime minister was his whole party was pretty much ousted so. They're anti austerity talent stated during the real economy -- what -- what does that your listeners of this greeted by itself was not that big of a deal Ireland by itself was not that big. But the entire eurozone economy. Is actually larger on GDP basis then United States. Why why are they so resistant. To the austerity measures itself and and I know I should not just say why is Europe so resistant why are. Why is everybody so resistant to tightening their belt nobody wants to give ended -- -- -- just two points and number one million dollars over the three days reporting last year talk to people on the ground one. It's approaching culture but then -- -- people there are under government funded pensions and they're. They're very generous they retire in early fifties get a couple thousand year old month in some cases. So obviously that's that's a huge part of their sort of income and their security the other thing. -- you gotta remember is that they view this really is not their problem. The folks that I talked to the ground and happen to like this is not our problem this big German bank problem they think this is created by Wall Street in German based primarily to. They don't view this -- there issue it all back there with to a sort of a riot slash -- It happens when I was there they were all these signs and thank god we had a translator and basically it was like. We didn't create the problem don't take our money we sort of -- just somebody's done. How does this shake out that what is the eventual outcome because. Clearly Germany is not gonna keep pumping money in degree say if they want austerity measures taken the German population feels like they're supporting degree population. I want and that won't. It was an there was actually you have to -- what was actually small sort of adds flash editorial picture in the German paper. Last year that I saw that at a picture and all Greek woman on a beach. And it said like 3000 year old -- your funding her pension managers so because there's some nationalistic stuff going on here how does that end. I don't know I'll give you my opinion and it's just my opinion there is -- gonna have to be a restructuring slash default you can call it what you want but I. And it started -- mr. quote soft re profiling. If you if I tell you a hundred dollars. Right in icu you know what I can't pay it back a hundred bucks at least this year payback eighty bucks in three years bet that's the default I've effectively says I cannot pay you back. It might again this is my personal opinion that they're gonna have to beat. Because you can't pay 25% interest on to your dead especially here already broke. Yeah it -- -- they never should have been allowed to borrow the money at those low rates to begin with the only reason they can borrow the money so cheaply was because they're part of the eurozone. They're trying to market knows it is going to be you know once they were right -- IMF backstop -- -- but let's not lose sight of the fact the United States. -- single biggest country funder of the IMF to -- Who we hear about bailout for Ireland and increased American taxpayer dollars are going towards those that about 70% of anything he's equal to Europe. Is common awful all our money remember that. Now -- it and you know you look at our response when one politicians as well we have to reduce Medicare benefits are we have to reduce Social Security benefits are now talking. Domestically here in the United States. We we respond very much like the -- right -- the we don't want our benefits cut at all there's tremendous resistance. The everybody wants somebody else to pay for the problems that have been developed over the last forty years. Once you begin to get some things. It is politically. So much more difficult to try to remove that then never offering it in the first place sitting politicians have known this for since the dawn of time. Right and that's why they promised things figuring you know what it'll give me select dividend thirty years from now some other politician ought to figure out how to deal. Hey I saw Sony announced this morning you point two billion dollar annual loss. Was this unexpected. Because it's backed government deficit to saudis -- shell of what they used to be thanks so direct. -- back in February they basically said it would make a profit this year now they've pulled way back in fact as you noted that three billion dollar lost. To pick your number one -- takeaways the impact of the earthquake and subsequent tsunami that's been a huge. Development for everybody in Japan it's human toll also you know you don't what -- you don't wanna you don't want to minimize that. Promote a mile per -- supply disruptions. I would focus more on some of the missteps that they've made I mean this polls don't keep PS speed network. Acting issue has been huge for them on and basically anybody that's been on sort of their their PlayStation network all the teenagers that are you know parents -- -- analysts and right now you know. They've had their data compromised. And so they shut that down. And -- that's been -- -- them we have really twofold you've got the you've got the earthquake and of course you got that the Sony stuff. Our via the network up at the same point and let's not forget Sony's been accompanied. That has been trying to find. It's way. For years. United they seem to be in trouble today texting to watch hey how about Linkedin is -- gonna lead to more a social networking IPOs will FaceBook follow suit to whose next. Well FaceBook -- interviewed wanted to co founders of FaceBook last year he was saying probably not before 2012 is going to be an IPO I think that we did IPO so the couple. Things have been so great demand yes it's for. You know social networking type IPOs whether or not this will lead to more. We don't know because literally only a couple of companies that might actually be able. Profit from the of course you mentioned the sticky widget which is FaceBook but what I have also heard that venture capitalist. They're not being IPO is necessarily the best way out right now mean maybe the best way out is to -- the company. Once that it's going to larger company never never monetize that through an IPO would be pretty much everybody we've talked to have -- and. Like the -- -- everybody to be Ali it's not. These are you referring to the state model is that the way Skype lets. Exactly right if you look at Microsoft by. It got Skype for about eight billion dollars levied -- eat these Skype was the last time it was sold to two billion and I mean I'm not sure what Microsoft saw out of 400% increase over the last sale but. Hopefully they don't look at -- they don't more than read the. I've found anybody that said they got a good deal on everybody I've talked to me whether it's an individual investor institutional investor technology guys Avery everybody says the overpaid for -- -- Google has the same service now -- did do. Isn't always right and I use that Apple's iChat through you know their big time program to a ball or or an iPad as Wi-Fi in camera able -- I have great respect for Steve Ballmer and the people of Microsoft but at the same point this stock. That has been the same price and effectively over a decade. They've got issues they need to figure out what their strategy is just buying a company for eight that it got in grand plan that they did not say when they bought it but everybody I've talked to was skeptical that a lot of money. Well I wonder if they're not better off breaking up a company like that number and ITT broke up years ago Brady into three different. Groups in Sheraton hotels ITT industries and something else -- camera was that in the autumn and it -- -- far apart -- That was that created a lot more value Microsoft you're right nobody's made money on that stock for a long time. Adobe -- the core businesses still windows and the office suite of products have been that is still almost the entire majority of Microsoft's revenues. Xbox has done pretty well they've been a total bust in the mobile industry of course that's why they're the former head of mobile with the now this deal Nokia. And in -- -- there's been -- -- -- billion dollars to sort of -- -- exclusive provider and Nokia phones but. You don't Nokia I mean look around talked people into your studio and your listeners can ask their family members who would America's use and -- Nokia phone. -- done. -- Europe but that doesn't help Microsoft here in the. That's that's for sure well congratulations on your new gig Brian hopefully he'll be irregular -- lunch money. I'm ask I'm available I love you guys were happy to do it. All right that's Brian Sullivan from CNBC joining us today on lunch money. Our next guest will be mr. -- fox from Bloomberg television in New York talk about the weak dollar you know there's. Pros and cons associated with having a weak dollar and boy do we have US dollar. So camp -- from Bloomberg TV is up next right here on -- 680 WRK.