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tv   Squawk on the Street  CNBC  February 5, 2016 9:00am-11:01am EST

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bit of wage increase, and this flows through to sales growth, and then people get more comfortable with the outlook, we'll be in much better shape for risk assets. >> be sure you join us on monday. right now it's time for "squawk on the street." ♪ good friday morning. welcome to "squawk on the street," i'm carl quintanilla with david faber at the new york stock exchange. jim cramer is at one market in san francisco wrapping up his busy week. january jobs at 151,000, below estimates. wages do surprise to the upside. does this validate the fed's move to normalize rates? we'll get to that along with earnings from linkedin, estee lauder and more. oil is steady at the moment. our road map begins with the big jobs report what it tells us
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about the markets and the economy. live reaction from the white house's jason furman. and the obama administration is proposal a $10 a barrel per t barrel oil tax. and linkedin, what is in store for that company. the unemployment rate is at 4.9, the lowest since february of 2008. average hourly earnings up more than expected, up 0.5. that is starting to become the story along with participation which is up for the second consecutive month. this is a number that we saw the market reverse, a lot of it is because of the old phillips curve. people believe the fed is focused on the fact when more people are hired, there will be a labor shortage. i think a lot of the wage increases have do with minimum wage. the federal reserve doesn't
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control minimum wage. the fact we talk about minimum wage shows how little people make. i'm not as nervous about it as the fed is. but this is the wrong number when it comes to the setup for stocks. the market was anticipating that the fed would be on hold again, this puts them back in the cross hairs. >> you think march is in play once again? on a week in which goldman said we'll wait until june? >> well, look, i just think when you see these kinds of numbers, you hear 5, goes to 4.9, you always think about what bernanke said, when we get to 5 we have to tighten. we are in a bear market. whatever number comes down is regarded as bad with the exception of oil going higher which is why the president's plan seems out of sync with where the weakest part of the market is. >> one is interesting. something you said just caught my attention. we're in a bear market. what does that mean to you? why did you say it?
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>> we'll talk about tabloid data today, and linkedin, we're out of areas where there's genuine growth. people are saying give me something so low and so cheap i can't get hurt. anything that i buy that has more than a 25 price to earnings multiple, we'll crush. this is multiple compression. people may not get it, but we're paying far less for earnings than we were willing to pay a couple months ago. this is the sign that the market attacks one area after another after another. pharmaceutical, then the internet, then back to the industrials, then the banks this is a rolling bear market. if you owned alcoa, you would say what is cramer talking about? we had a great day? it's a rolling bear market, we'll hear what happened with tabloid data and linkedin, we'll say there goes that sector. >> there is no forgiveness right
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now. >> morgan stanley has a list of stocks you want to own and avoid in a recession. to own, things like mcdonald's, hrb, kraft, walmart to avoid, american, apple, bloomin', coach. you say bear market, are you saying recession, too? >> i completely agree with the ones they picked. i don't think there's a recession. i think the market is 87, a little out of sync with what's going on. it's interesting how wrong i think that call is. coach is a company in the first quarter of a real transformation. apple yesterday went up. why? apple is being regarded as a cyclical stock with a low multiple. i'm interested in the call from the point of view of what they're say being the market switch. they got the stocks wrong. that's okay. they had a sell on under armour. >> you are seeing -- i think david and i understand what you mean by putting march back in play, but is there something negative about an environment where wages are starting to grow for whatever reason, minimum
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wage, whatever, and that's drawing people back in to look for a job once again for the first time in a long time? >> thank you, carl. that's the real economy, when you deal with companies like wells fargo, real economy, putting people to work, loan growth, the stock market is not working. the mechanism of the stock market is not working. there's not enough money go into one sector without leaving another sector. equities are acting as broken as i've seen them in certain periods. there was a two-week period in october of '87 where the market went from 2700 to 1400. not talking about that. individual stocks are shot -- if you were in the linkedin call, the tableau data, those calls were not good. but not so bad you would sell them off. the real economy of job growth, the real economy of, i would say, just construction going on, business activity, is so out of
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sync with what you're seeing in the stock market which is sell, sell, sell in any area that hillary tweets on or oil goes down, we don't look at anything positive. the fact that we are look at airlines so bad is stupid. >> even companies that have done exceedingly well, and there have not been many, facebook, it's up. it's up 5.5% this year, it's down recently. you're beloved f.a.n.g. has been getting crush. google, a great quarter by many measures. some people would quibble with certain things, down 6.7%. amazon down 20%, netflix down over 21% this year. oh. >> this is the turn. people turn on these stocks. i think netflix, i have always felt, was the stock -- we owned it for the longer perm core ter growth. alphabet is wrong, i think. but you have to take some pain. alphabet is down 100 points from
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where it was where it spiked. i think that stock is wrong. facebook is growing faster than almost any franchise, but we're not willing to pay for that. we're willing to pay for alcoa, freeport, we'll pay for 3m. look at union pacific, stock up nice. cummings, not a good number, stock up huge we'll pay for stocks that are low multiples and sell the ones that are higher multiples, unless you do a good buyback like 3m or honeywell. if your price to earnings multiple is high, they want to avoid you. if the price to earnings multiple is low, you are viewed as risk. >> on jobs, did you nail the number? this week, we asked you to tweet us your predictions for january nonfarm payrolls, the prize is the pair of cnbc earmuffs
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autographed by the gang. the president may propose a $10 per barrel tax on oil companies when he presents his budget to congress next week. that tax would be phased in over the next five years, be used to fund clean energy technologies, transportation initiatives. republicans and others are blasting that proposal. we will discuss that with jason furman. that's being called absurd, jim, is it. >> yeah, it's not going to happen. sometimes things occur, it's not going to happen. it's interesting that he didn't choose to put a tax on gasoline, that's where it would make the most sense. >> right. >> why wasn't there an increase in the gas tax? i don't get it. >> you can slap a 25 cent -- i know the poor people would be hurt worse, a 25 cent tax and we wouldn't know given the fact how low gasoline is going. if you're an oil company and you
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hear this, you'll shutter. most of them cannot make any money until oil gets to 35 and 40. you saw what happened with conoco yesterday, with marathon, with this equity offering for hess. these companies all need more capital. if you hate fossil fuels, you don't care how you wipe them out. this is a quick way to wipe out a lot of oil companies. maybe that's what you ultimately want. in you want to build infrastructure t would have been easier to put a gas tax on, repatriate taxes, go with senator schumer's plan, but this will wipe out our companies and that will not impact climate change the way the president wants. >> $100 a barrel oil, you may understand thinking about it. but at this level, where all these companies are deciding between dividends or what they want -- or what their borrowing capacity would be to pay the dividend, or whether they have to get rid of the dividend in order to meet interest payments,
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it's curious, jim that said we all know it's not -- >> those are the two. i don't know if royal dutch could. that's big company. conoco clearly couldn't. when i say wipe out a company, what i mean is that their cost of production, other than eagle ford is roughly, for many areas, 25, 30. let's tack on the ten, what happens? they can't make their interest payments. these companies, a lot of them will borrow heavily. again, does the president understand this is how it works? maybe he doesn't care. >> maybe not. for a country with crumbling infrastructure and the need for increased investments in so many different areas, we have not increased the gas tax in over 20-something years at least. >> such a natural to do. there's going to be a glut for a long time. >> very strange. >> what a fabulous opportunity to get republicans and democrats to agree to an 8 to 12 cent increase this would build tremendous -- you could do the
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interstate highway system over if you wanted to. that's what i was looking for. i thought that made sense. i bet republicans would go for it. >> yeah, speaker ryan yesterday tweeting that it's essentially dead on arrival. that's the response you could expect. jim what a week you've had in san francisco. was grandson grandsonkowski the not. >> i thought he was. he was kind of saying i have a nash nation, you'll never have a nation. he saves all his money, not spending his salary. he's the best guy. the best thing i learned from the fantasy players out there, he really doesn't like the following, which is the patriots win big, but brady didn't throw him for any touchdowns, he walks around boston and people curse him. he didn't get the touchdowns because his name wasn't called. he is sensitive to fantasy like i cannot believe. he wants to apologize to those who drafted him. >> let's listen to what gronkowski told jim this week.
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>> it's not about your team this year. >> no. >> it's just not. what do you make of t panthers and denver? do you root for anybody? rubbing it in my face right now. you want to go. >> i wasn't -- you know, i -- i can be like edelman and outrun you. >> impressive. we always sort of judge football players when they come on by their business acumens, they are businessmen, and hopefully are planning for the long term. did you get that sense from him? >> i think he's very wise about not saying, listen, i really like certain advertisers, certain companies, he's open for endorsements. he is a gentle giant. does a lot of work with dunkin' donuts, with visa. and he's a clean player. there's not anyone in the league who doesn't think he's terrific. he's savvy about gronk nation and how gronk nation resonates with advertisers. also the guy doesn't spend -- a lot of the nfl guys, the first
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thing they do, they take their salary and give it away to friend and family. papa g. was here watching the show. you know what stock they like in that family? they like bristol-myers. >> then you guys are kindered spirits. they watch the show. brett favre was here, he photo bombed me. he likes the show. when they say they like the show, they like them both, but they think "mad money" is like espn for business. i don't mind that characterization. >> we'll take that. >> when we come back, a lot of movers to get to, including linkedin whose stock is getting hammered. if it opens the way it's looking, could be the worst intraday decline in its history. another look at futures. not a lot of movement. more "squawk on the street" on a snowy morning in new york city. who do you work for? your boss?
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yourself? your family? our financial advisors are free to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird. weinto a new american century. born with a hunger to fly and a passion to build something better. and what an amazing time it's been, decade after decade of innovation, inspiration and wonder. so, we say thank you america for a century of trust, for the privilege of flying higher and higher, together. ♪
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linkedin shares tumbling in the premarket despite quarterly results that beat the street. the professional networking site issued weaker than expected guidance for the current quarter and full year thanks to slower ad growth. that's a 34% decline in the
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pre-market. rbc's title report today ". >> the company saying everything is great, but there's economic sensitivity in europe. and when you hear that economic sensitivity in asia, you think, wait a minute, i thought this company did not have economic sensitivity. i owned linkedin because they had growth. they are acting like everything is great. they act like everything is great. you the don't realize how bad things are until you get the rumblings from analysts and the questions. this is the kind of thing people have to understand this stock would be done more than it is otherwise. people have turned on these stocks that are hope stocks. linkedin did not give you hope other than they are decelerating.
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it's a big kabooki dance, a call people despised. >> you spent the week out there, i'm sure, knowing you, talking to lots of people and having interesting meals i'm sure, as well. when we watch linkedin down this much or the struggles at twitter, or a yelp -- all different market capsizes, i understand that. at what point do we see consolidation of some of these names by some of the bigger players if these significant declines in the stocks persist and they really are worth a lot less than investors had thought some time ago? >> ego, david. the people involved in the companies that have been most looked have giant egos. they are not about to give up their companies or suggest mergers. a lot of these companies are tremendously overvalued on earnings per share. the cheapest company out here is apple. they have consistent growth, including a defense group. these companies are so expensive, i don't know who can
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do deals. linkedin will be an $18 billion company. tableau data, a smaller company, but nobody wants to make a deal because they don't want to give up their companies. >> linkedin at 18 billion -- >> they own the companies. >> yelp much smaller, twitter. you're not picking things up if there's a round of consolidation from the bigger guys finally picking these things up? >> i think this is an era. >> reporter: drone stoppalman at yelp is saying we'll get it right. what you hear about out here is amaz amazon, you hear about alphabet, facebook, you hear about apple. you say i don't want to be up against those companies. the best one that is up against the majors that i talked to this week was paypal. they have millennials going them against visa. but most of these companies are
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just unrealistic about their own strength. holy cow, you will see much more in financials and healthcare and consumer products goods. you will see many more mergers than this. everyone lives in fear that amazon will wake up tomorrow and say we want to be in that business or alphabet is already in it. facebook is so revered. facebook woke up and said, you know what? today we will dominate listings, then linkedin goes down another 50%. those are the companies that everyone is in awe of. those are the ones who get the greatest computer scientists and engineers. we may laugh at f.a.n.g., but f.a.n.g. is just a -- it's a religious thing with those companies. people believe in them in a way that you would not see any sort of secular presence. they are so loved, so feared. no one wants to be against them. >> nice summation of your week out there. we'll get your mad dash and count down to the opening bell
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after the break. one more look at the premarket as we wrap up the week. dow down 49 points for the week, if it can make that up, that's three weeks in a row. back in a minute.
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>> friday. we have about six and a half minutes before the last trading session of the week. let's get to the mad dash now last time we'll be doing it from san francisco. take it away. >> all right, david. there are two companies that have done well in the oil patch this year. ones that have not worried about, chevron and exxon. why? they have tremendous retail distribution, great gas stations. you take the gas stations away, they become like marathon and
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conoco. maybe the one that was the most egregious is hess. i know you tweeted -- i will turn it over to you about what happens after you sell the gas stations and you're out of short-term money. >> yeah. jim, i focused on this for a while. you and i talked about it a lot. it was back in 2013 when they fought that battle with elliott management, which owns a little over 6% of the company. they gave up three board seats eventually, also embarked on a large buyback and some asset sales. i went back and looked at a press release this morning or the end of the year to see how much stock they bought back in 2014. they bought back 62.7 million shares, spent over $5 billion to do it. average costs around 83 bucks a share. this morning, as you know, hess sold 25 million shares at 39. thanks so much, activists. >> yeah. of course also the 2.87 billion sale to marathon of the gas station. to become a pure e & p play,
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when you're pure exploration production play, you must sell low the stock that you bought high. pioneer, they did their big share offering at 117. you are up six. but this is what is going on in the patch. everybody needs money. i don't think, david, if you put a $10 barrel tax on top of hess that it would farewell. >> no. i don't think that would be particularly helpful. we made the point many times, though, you sell equity when you can. it's just unfortunate that they bought it at twice the twice they're selling it at. >> yeah. we've seen activists, by the way, do things, cause some splitups. i think about timkin and the split up there. being able to make money with oil going down, you make money at the stores. look at the exxon quarter, phillips, conoco and now hess. >> we'll be looking at it yet again when we get the opening bell. already saw it will be down a
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lot. we'll be right back to you. that opening bell in about four and a half minutes, followed by jason furman.
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you're watching cnbc, "squawk on the street" live from the financial capital of the world. the opening bell in a minute. the jobs number came in at 151,000, unemployment rate at 4.9, the lowest since february of 2008. the biggest story is wages, up 0.5, looking for 0.3. a lot of charts out today looking at the trend on wages, that continues the upward trend, as more people get in the labor force. >> i still find the discourse to be incredible. talking about the minimum wage in the '70s and '80s it was not a factor. this was about trying to get the working person to be paid more. what it means is that things are getting hot, that's a misread.
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if this market we'll misread the fed. that's what we do. >> a look at the s&p at the bottom of the screen. at the big board, the maker of integrated circuits, celebrating their sixth listing anniversary, n neophotonics. at the s&p, wing stop. buffalo wild wings has had a busy week, super bowl sunday. we're all anticipating a big broncos win, obviously. >> not everyone. it is interesting to see tyson foods. just making a fortune here. this is a company that gets chickens and beef, they have feed. feed is down big. buffalo wild wings is interesting. people were betting that the company will report a bad number. they report a bad number and the stock goes higher. any time there's been a company
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whose stock has anticipated a bad number as opposed to linkedin, then you don't get crushed. maybe you even go up. you can really make a lot of money. the index, the dow index is about as false an index for a read-through of the stock market that i've seen. the fact that it could be up again, carl, there's so many stocks being decimated. it's out of sync with what's going on. >> a bunch of earnings coming in. estee lauder, the quarter itself was pretty good. but there's a drag for the year. >> i think people are beginning to realize in this business, if you look at europe, the dollar has stopped going up against the euro. estee lauder getting a break. ralph lauren no break.
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had clorox on last night. clorox would tell you we've gotten out of a lot of bad markets with 4x. venezuela is the bane of existence. venezuela can defeat any strength in any country on earth. that place is the worst place do business in the world. >> i did want to mentions h haso and mattel. it was reported that hasboro approach mattel some months back about a deal. mattel was weaker, they moved up. they made a brief foray, my understanding is that there's no talks going on now. and there does not seem to be the prospect of any talks coming back in any way. mattel made it very clear at time that it had significant
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questions about antitrust risk for such a deal. interestingly. i can remember covering this, it's got to be 20 years ago almost when mattel came after hasbro, mattel then much larger than hasbro. hasbro saying at that time it fear the antitrust risk and killed any potential deal. the approach made a couple months ago, not met with any significant interest from mattel in part or largely, it would seem they don't think they could get past regulators. and they may have a point. did want to mention that. both stocks were up sharply yesterday. after speaking to people close to the situation, nothing going on at all right now. >> that makes sense. mattel had a fabulous quarter. why would they sell? what a quarter they had.
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>> and the stock has soared since then. it's a different market cap situation. hasbro was larger than mattel last year, but now mattel is back. >> barbie is back. >> watching linkedin. prior to today, the largest decline was down 21.3. we will far exceed that at about 34% down. at what point do these names, jim, that are not in the f.a.n.g. group but aspiring to be, get cheap enough? >> linkedin is incredibly expensive. we start think being eaeining a earnings, and we say no thank you. look at splunk, salesforce, these companies are trading off of what happened at tableau. when you get these areas like the internet sign-ups, that was linked n when you get big data and analysis of big data and
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when you get kind of what i regard as bag salesforce.com notion of being able to improve a company by being able to look at the dashboard, everyone is selling all those. tableau data blamed the industry. i think tableau data is losing share to sales force, but who wants to get in front of that. again, all these companies are valued incredibly expensively. i think sales force is doing well. will the marketplace pay for even a good number when what they want is cummings? which reports a not good number, but wait a second, look at that stock. it's down so much, i'll buy it. on your screen today you are seeing all the companies that are involved -- that are high multiple getting crushed. linkedin and tableau are emblematic of high multiple companies that you own for momentum and you look at the price per pe and you can't justify buying them. >> all right. >> january jobs number,
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unemployment down to the lowest level in eight years, hiring slowing down, 151,000 jobs added last month. for reaction from the white house, we are joined by jason furman, chairman of the president council of economic advisers. great to have you back. good morning. >> great to be here. >> the story line here revolves around earnings and the participation rate. are you ready to predict a bottom in both of those trends? >> the earnings pick up is exciting. 0.5% for the past month, for the last six months, the fastest we've seen this recovery and i'd like to see that wage growth continue. on the participation rate it ticks up and down from month to month. i think of it being roughly stable over the last year. that's because demography will
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bring that participation rate down, but the strength of the economy will bring people back. >> i'm wondering if we can start to spin a narrative where people are coming in because of rising wages and that shows the demographic grow. >> over the past year on a pure aging effect you would expect to see the participation rate fall by another 0.3%. we would like to see some of that offset with a cyclical rebound. the real test of the economy is the unemployment rate. that 4.9 thing is a great number to see. i never thought i would see a number like this. >> that kind of number speaks to what you would think is strength in the economy, mr. furman. that said, i find myself surprised how often i hear the words recession from the people i speak to on a daily basis. are you surprised at the
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psychology that seems to be out there that can have a self-fulfilling prophecy occur of so many people talking about a slowing economy, and even use the "r" word? >> different data tells different stories. the fourth quarter is a good case in point. employment was up 2.4%. gdp was only up 0.7%. what to make of it? those could differ because of productivity, because of measurement error. like most economists, i think the jobs numbers are the more stable, more reliable indicator. with the unemployment rate low and ticking down, that tells me something very good about the overall economy. but certainly we're monitoring the situation the rest of the world, we're monitoring the markets, all of that will affect our economy. but we'll need our domestic strength to push through it. >> one area of the economy not doing particularly well, oil and
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gas. i'm curious as to why the administration chose now and what exactly or how exactly it would work, this proposal to put a $10 per barrel fee, i believe, on oil companies. >> this is a long-term policy. we should think about it in the long-term sense of this country needs to upgrade its infrastructure. i think almost everyone agrees on that. we need to pay for upgrading our infrastructure. this is a proposal that will help strengthen our economy by dealing with the most important thing that we need to do -- >> but why not do a gas tax? that has not been raised since 1993. prices are not been this low in a very long time. it would seem to be a much easier path that might have a chance of getting some sort of support on the other aisle. >> we're talking about autos, we're talking about aviation, we're talking about rail, we're talking about the system as a
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whole. so, placing that on the oil that is consumed by the system as a whole and using to invest in something broader than just highways, it's about transit, it's about rail, it's about air. the way we're paying for it matches what we're doing. the most important thing is what those investments will do for our economy. >> you'll acknowledge the pressure, right, the friinancia pressures oil producers are under. doesn't it seem to you to be a curious time to proposing something like this? >> this wouldn't apply to exports. it wouldn't apply to products made with petroleum. we designed it to make sure our oil producers can continue to produce on a level playing field. >> would it just be passed along to consumers? >> some of it would be certainly passed along to consumers. the consumers that would benefit from the infrastructure
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investments that we're talking about making here. >> there's no real chance that this is going to see the light of day, is there? >> in general the president's approach is laying out the vision of where the country should go what he thinks needs to be done to strengthen our economy. we'll be discussing it with congress, pushing the idea forward. certainly i wouldn't take any single proposal and ask is it going to pass this year? i would ask is it a good idea? can we put the idea forward. >> jason, jim cramer. i'm confused. i knows there very little oil being exported. i don't know what that has to do with it. >> there's a lot of petroleum products that are exported. >> but no -- no, actually. i think what matters is is that the industry itself has to bear a cost it can't bear right now, you won't get as much money as you think, versus the gasoline tax. i'm a little surprised, because i know that the president is not -- is in favor of jobs.
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i know what you would be doing is going to wipe out jobs. i'm confused about from the working person how it can be justified. this is an industry that does employ people, and it would be a tax on them. it would be a tax on them. these companies don't have a lot of profits now. they have losses. the people that you want to help are working people. i have to tell you, i'm surprised that you would want to hurt working people so badly. >> i thank you for saying that the president cares about jobs, because he certainly does. i'm not sure i agree with anything else you said in that comment. >> i think -- this is a long-running policy. it's not each day the policy changes based on what happens on the markets overnight. this is about the long-term future of our economy. our economy needs more infrastructure, it needs infrastructure for the 21st century, it needs infrastructure that will reduce carbon
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emissions, improve our energy independence, energy security. and that will create jobs. that will strengthen growth. that is what the proposal is designed to do. >> why not go for something that there could be agreement on, like the price of gasoline is on, you could add that tax that david mentioned. look, i'm not in favor of the windfall profits tax, i'm not in favor of helping the industry. i think in terms of what could get done -- what great opportunity. sometimes that's more important than doing something that is a statement that is a good statement, but won't happen. >> $10 a barrel is the type of fluctuation we see in a given month in oil price. the bigger things that effect oil are supply, demand, geopolitical situation, and, you
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know, this proposal is relatively small compared to those. but big enough to fund investments that we need to make. >> even though at these levels doct -- not that they'll last forever, but $10 is a big swing right now. this is a proposal that would be phased in over a five-year period starting later. so, again, you want to think of this as a structural long-run policy for the economy, not what it means today or tomorrow. this is something that is gradual, phased in. >> jason, we brought you on to talk jobs, you're a good sport for talking oil. we'll see you next month, we hope. >> okay. >> jason furman, council of economic advisers at the white house. dow is done about 50 points.
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bob pisani is on the floor. good morning. >> it was a mixed open. a lot of anticipation around the jobs report. below expectations on the number. wage growth was good. dollar dropped and then rallied. dollar is up today. look at the major sectors here. a mixed bag. the stuff that was rallying earlier, energy stocks, materials names, sort of lost a lot of the move on the upside. financials and consumer staples on the upside. the big names that were suddenly rallying, freeport and other basic material names, freeport down 2% today. that weak dollar trade has reversed a bit today what has not reversed is this breath taking drop in some of these tech momentum names, whatever you like to call them. a lot of people commenting about these drops like 30% or more, linkedin, tableau trades behind me here. small crowd as that started
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trading. splunk down big, qlik down big. other big momentum names, not linked ed ted to data analysise done, sales force has been week, tesla down 10%, even amazon down 10% on the week. a lot of concern right now that some of these tech companies may have lower growth rates than the consensus were. and that the multiples were starting to compress on some of them. that is the indication right now let's move on to the oil companies. you want to know how desperate oil companies are? hess did a secondary offering with the share price a third lower than a year ago. that's a desperate move for an oil company. 25 million shares, secondary offering, priced it at $39, but that was at 10% discount to where it was yesterday. that's why the stock is down 10% here. they also had a 10 million share depository share offering. they are increasing common
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shares by about 10% at a time when shares are down by a third compared to a year ago. it's simple, they can't raise debt right now. it's very difficult to do that equity raise is the only option that you got. you see the usual declines that you get in some of the big oil names when you have decline in oil here. i think some of this may have been due to the strength in the dollar. on a completely different topic, hane's brand down noticeably today. they had a revenue miss, but no one is buying long underwear. active wear core sales down 12%. underwear sales down 2%. the stronger, warmer than expected weather is even hurting the underwear companies. right now the dow jones down 85 points. carl. >> bob, thank you very much. let's get to the bond pits, check in with rick santelli at the cme. good morning, rick. >> good morning, carl. i'll tell you what, when numbers become important, when they become the fulcrum for policy in air quotes it's amazing how deep
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many traders will dig to find relevance. today on this floor everybody is looking at non-seasonably adjusted data. the ratio to the population with regard to outside of the labor force participation. why? they want to find clues. the wage component and the mean reversion are the headline number, and they are putting potential fed back on the table. and will it happen? i don't know. but that's what's going on down here. the majority are watching most closely which settle at 133 basis points last week. it's the biggest move. it has the biggest net change on the year. five-year note. look at the intraday. notice where it bounced from. 120. opening the chart up for one year. the reason that 115 to 120 is so important, the next chart, august of 2011, you have tops at those areas on the left, bottoms
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on the right. significant to watch this. look at a two-day of japanese government bonds, ten-year. one basis point low. one basis point away from zero. further negative rates. foreign exchange, not long ago the dollar index was close to 100. now it's scircumventing 97 handle. look at the move in the dollar yen, 121/117. that's a stretch. the last is euro versus the dollar. all of this was furor furthered with the fed funds rate telling us in march. when we come back, the game within the game. a closer look at the super bowl ticket market with just two days from the big event. dow early losses here, down 89 points on that jobs number. some of these earnings that we've been covering. back in a moment.
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a look at biggest movers, oil taking it on the chin again. we will get stop trading with jim in a moment. why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis and a $200 savings card stop taking cialis and get medical help right away. at ally bank, no branches equals great rates. it's a fact. kind of like bill splitting equals nitpicking. but i only had a salad. it was a buffalo chicken salad.
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>> every year we have delivered three new versus of sales force. >> can you say booya! >> booya. >> what a week for jim at one market. let's get to stop trading. >> david asked me what is the key to the market, goldman sachs. goldman is really at the fulcrum here. if you think the fed is going to raise rates, people will buy it ubs upgraded, also upgraded jpmorgan. that group, this market is so bipolar, likes financials, hates financials. welcome back, lloyd. just good to see you. >> yeah. jim, how will you close out this
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week tonight? >> we've had some boring guests. so we'll continue with that. we have ford, verizon, under armour, kevin plank make comes out swinging. loc lowell mcadam, will he bid for an nfl game? mark fields, and michael rapino. how are tickets doing in the super bowl. i would live out here if my family were not in east. they don't talk about the anger, how miserable everybody is. they talk about hope and hiring people, creating jobs. i would have moved here like my daughter did. there's a better feel. >> plus one on that front. i'd follow you. we'll see you tonight, 6:00 p.m. we'll see you back home on monday. when we come back, more on the jobs number and how to play it dow down 57, led by goldman on that ubs upgrade.
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good friday morning. welcome back to "squawk on the street," i'm carl quintanilla with sara eisen, simon hobbs and david faber at the new york stock exchange. markets down about 55 points.
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the jobs number is the big story. lighter than expectations, but surprisingly strong wages and participation has some believing maybe a fed rate hike in march is back on track. >> let's get to the road map for the hour. it starts with job growth in the u.s. slowing for january, but the unemployment rate fell to 4.9%. we'll get a deeper dive into the jobs report. >> and also ahead, a live report from new hampshire as hillary clinton and bernie sanders go head to head. and want a last-minute ticket to the super bowl? find out how much that will cost you. the ceo of pik ik will be joining us. >> cme reporting better than fourth quarter results. cme president and executive chairman terry duffy will join us for an exclusive later in the hour. we start with the economy and the markets. the dow is down 60. the u.s. economy added 151,000 jobs in january that was below estimates of 185,000. but on the plus side, the unemployment rate is at an
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eight-year low. steve liesman is back at hq with more on what was a mixed result. steve? >> there you go, sarah. sounded like an economist. on the one hand, on the other hand, this is a jobs report that i could say in the first instance reduces the fear of recession. it was, as sara said, lower than expected, but still healthy at 150,000. it has to put the fed at least for some back in play for the first half of the year. let me explain why. the non-farm payrolls at 151. that three month average is higher than most expect. average hourly averages up 0.5%. unemployment raid with a 4 handle on it. and the labor force participation, more people coming back into the work force. maybe that's because of higher wages, getting off the couch and coming back to work. the two-year said my goodness, i'm worry about the fed coming back into play, now half of that
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again has gone as some of the early reaction gets priced out. still it's a bit higher as people start to think about the fed again. i have to think for some fed officials, maybe some in the center, not just hawks, the unemployment rate with a 4 handle, a pop in wages tellis them they did the right thing in december when they hiked f they want to get out in front, which is their job, they say they have do things, they have to hike again, maybe not in march but perhaps in june. i have to think stan fisher thinks that, we know esther george, the hawk from kansas city, thinks that. here's where the jobs were. a bit suspect of these numbers because there's a lot of seasonal adjustment in it. retail at a time wh retail, january a time when we lose some workers, just didn't lose as much as expected. manufacturing up, and temp help another time when we lose jobs.
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here's some of the commentary out. the bbh is saying this is still not the kind of date that one associates with an economic contraction. and pantheon says the drop in unemployment and robust wage numbers complicate things for the fed. we still think that that march fomc is live, but the data between now and then will need to be decent. simon, wages next week for janet yellen as she goes before congress next week. >> after the weaker data we got on services, the whisper number on what we get is closer to 150 any way. this is where a lot of people were. >> i think that's right. we h probably expectations were lower. but the weird thing is the aberration is not the 150. it's the 200 pluses, and the
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question is when the market will get used to the idea that this economy should be, given growth rates and growth potential, should be producing between 150,000 jobs. >> 262 in december, 280 in november. steve, thank you very much. let's bring in the in lindsay a steve. lindsay, where does this leave you where you think the fed will move. >> it certainly was a disappointing report. but it sun likely that one moderate headline is enough to derail the fed from their intended pathway of continued rate increases throughout the year. for the hawks on the committee, there were plenty of bright spots, average hourly earnings up a nice half percentage point. back-to-back months of above trend annual wage growth. even though the three-month average fell from a five-year
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high down to a three-month low at 231, this is on par with the pace of job creation we saw going into that monumental policy change at that december fomc meeting. i think it's very clear -- >> i'm kind of confused as to why you started by saying it was disappointing then. >> i think it is very disappointing and it's clear the economy is not on sound footing. from the fed's perspective they seem to be ignoring the current slew of disappointing trends in the economy. focus instead on cherry picking the data and expectations of further growth longer term. they're focused on the expectations model rather than the lack of improvement. we continue to see a divide between what i think the fed should do, which is continue to coddle a still fragile economy and what we expect the fed will do, which is continue along with rate increases. >> we'll come back to that. sin jim, what do you think here? >> i thought it was a really
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good report. i think we come into this with growing fear of global recession, growing fear of u.s. recession, and i think this report just really calmed those fears down. those household employment numbers of 650,000 job gains after 450,000 the month before, we're now in the forehandle of unemployment rate. we have wages going up. i think it very much puts the fed back in play for march perhaps in terms of tightening. and it certainly calms fears of recession, which is going to be particularly good for international stocks. here it's a mixed bag because we're starting to weigh again in the stock market in the united states whether the fed will have to raise rates multiple times this year. as we're seeing tsh, it seems l folks are agreeing with you. dollar is increasing, all
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thinking that march is in play. this is a better number than feared. the problem is that's happening. the weak dollar this week was such a relief for so many investors who were worrying about how much the dollar that been eroding profits. can the stock market go higher if the dollar goes higher again? >> i think you're right. the real troubling case for stocks is if we continue to get wage numbers, drops in the unemployment rate, but it doesn't equate into much more growth. we stay sluggish at 2% growth, the unemployment rate keeps dropping, wages head towards 3 that will force the fed to raise rates. even though greats have not changed much, that's a stagflation type of tightening they have weak growth but they have to raise rates in the face of wage pressures. if we get a pick up growth from 17 times earnings no longer at 19 or 20, the stock market can
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find footing and will do better if not only u.s. growth but global growth reports also start to pick up. >> jim, there is sort of a contrarian bet out there where the dollar flatten os or declines even. you don't sound like you are buying that. actually i do i think the dollar has been peaking out against developed currencies for a year. i think it's already peaked out. the key is if we get better emerging market economic date tax i think we'll peak out against emerging currencies and commodities will bottom. that's my view. i don't think that's the market's view. if we do have wages going up, unemployment keep falling, and the dollar breaks to the down side again, it may be good for growth and earnings, but it will
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create a real problem for the fed and for inflation concerns, i think, in the bond market. >> lindsay, you are chief economist for sfeiffel fixed income. you said you don't think the fed should raise rates as aggressively as it might, and it will we had pimco come out saying the bond market is not correctly anticipating the rate rises. and jan hatzius is usually with us on these shows, he's in sydney but he thought that the ten-year could reach 3% this year and that people should be careful from here. what is your view? >> i certainly think the market is discounting the number of rate hikes we'll see. the fed is very much abandoning their stance and focusing on expectations, consistently
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incorrect, but the expectations of further growth down the line that will drive the short end of the curve up, but the disappointing fundamentals are likely to keep long end of the curve under control, resulting a much flatter, much more difficult rate environment going forward. right now we are talking about 130 basis points. we see that declining to about 08 basis points by the end of 2016 down to about 40 basis points in 2017. >> if they raise rates, it will be a mistake. people will be increasingly concerned about growths, and yields from down the curve will fall as a result. the bond market rally at those points, is that right? i think you're exactly right. remember, we're still seeing longstanding trendses of disappointing growth. less than 1% at the end of last year, consumers pulling back, negative retail, flat retail spending in the last four, five months. production moved back into contractionary territory, and
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business spending is negative. i don't see any signs of vast improvement coming down the line. >> guy, we'll leave it there. thank you very much for your time. we see a lot of double digit declines in some names, but this linkedin story is breath taking. dom chu has more on that. >> to put it in context. the plunge in linkedin shares right now is about 40%. they shave 40d 40% of market va off so far. this after weak first quarter guidance. that overshadowed a beat on revenues and profits as well. the shares are tracking for their worst daily performance ever, since going public in 2011, around 9 billion to $10 billion in lost market cap. a slew of analyst downgrades and price target reductions. even with them, the average analyst target price around $211
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per share that implies 83% upside from current levels. >> dom chu, thanks. when we come back, drama in new hampshire. speaking of drama, there's no shortage of it at viacom, as the tension of sumner redstone's succession escalates. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be. herthey work hard.ade,
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a heated debate in new hampshire last night between hillary clinton and bernie sanders. sanders slamming clinton for her wall street ties. a lot of squabbling over wall street, john. >> a wild debate last night, almost as crazy as this snow coming down in manchester, it revolves around bernie sanders that wall street and the american business has bought the political system and also bought hillary clinton. she didn't like that much. here's how she responded. >> you will not find that i ever changed a view or a vote because of any donations that i ever received. i have stood up and i have represented my constituents to the best of my ability. i'm very proud of that. i think it's time to end the very artful smear that you and your campaign have been carrying out -- >> oh.
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>> recent weeks. and let's talk -- let's talk about the issues. let's talk about the issues that divide us. >> let's talk about why in the 1990s wall street got de-regulated. did it have anything to do with the fact that wall street spent billions of dollars on lobbying and campaign contributions? well, some people might think yeah, that had some influence. >> bernie sanders has used this set of arguments to build a 20-point lead over hillary clinton here in new hampshire. she's trying to erode that there's been some signs in polling that she's coming back a little bit. on the republican side, of course, donald trump has had a substantial lead, but polling has shown his lead is coming down. marco rubio is coming up in second place. ted cruz in third place. we have a lot of movement left to go in the three, four days before the new hampshire primary, we have over the weekend a republican debate where that won't be fiery on the
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same issue bs but you can expec fire work there's, too. >> john, thank you very much for that. shifting gears from that political drama to one unfolding at viacom, where the struggle for power is playing out like something out of an hbo show. joining us today is "new york times" columnist jim stewart who is also covering media in this week's column, notably about our parent company, comcast and nbc universal. good to have you back what do you want to tackle first? viacom? >> let me just briefly say about nbc universal, which obviously owns this channel, i'm not an employee, so i think i can say this, the turnaround here has been almost miraculous this should be a business school case study. five years ago comcast completed the acquisition of nbcu. how bad was it? nbc had been in last place for so long, people said it's never coming back. universal studios was fifth out
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of the six studios. the universal theme park, nothing. suddenly, they're hitting it out of the park. this is still old media, there's life in it, it's a people business. steve burr who runs it, i talked to him this week, he talked about this person that person, cajoling them, stroking them, in some cases firing them. >> and ge sold it for a song. >> they bought at the bottom. but that people business, of course, is how i will segue to viacom. that's an old media business, too. it's all about people as well. especially a 92-year-old chairman who has finally just resigned in recent weeks, he would had this spectacle of where board members have taken him to a neurologist, a psychologist, i don't know who
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the doctor was to opine on whether this 92-year-old executive is mentally competent to run the company. can we just take notice when you need to publicly take the chairman to a neurologist to ask if he's mentally competent, that should be the answer right there. we shouldn't have to wait for the medical opinion. if you need to ask the question, you know the answer. this resignation is long overdue. >> is that a story of a culture protecting an executive who has outlived his efficiency, or is that about stock structure? ownership structure? how does that get fixed other than waiting for a long time? >> this is about shakespeare. this is king leer in the boardroom. it's not just like any company. we have a chief executive who owns 80% of the voting stock. once you get to a certain age do you have the best judgment about when you, yourself, should step
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down? this is a fundamental human psychological family and business dilemma. >> obviously, he was chairman, but it was a long time in coming in terms of -- from a governance perspective. a lot of different things going on here. as we were reporting yesterday, the battle has just begun in terms of sherry redstone, his daughter, who they like to describe it as back in the house with mr. redstone and seems to be asserting her control. it will be interesting to see what happens. the trust, which controls the 80% ownership of national amusements, of course, includes her and her son, but many others. redstone had a plan in place for many years. >> this doesn't seem to be a good plan. i mean, is the plan working? we have the beginning of more chaos at a moment when the board said they wanted continuity, a time of crisis with the digital
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media revolution. >> it's all about performance. activists will point out that the ceo dauman and the coo almost half a billion dollars in stock options in the last five years. they would say how did they perform at viacom? most would say not particularly well. if you're a shareholder, look at the past year. that's record you would expect to be rewarded with promotion. they say they want continuity, when the continuity of the stock price is going down, down, down s that the continuity you want? >> he's also the trustee and executor. >> that's one of the points that the daughter is making, there's an inherent conflict if you have someone who is a trustee also running the company. i think she has a good point on corporate governance there. >> it's also unclear if she just wants to gain power under that trust. >> that's true. is it a corporate governance issue or is it a power grab?
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>> but also is this i industry changing? activists sniffing around, there might be deals, as everybody change their dna to become more digital focused what will it look like in a year. >> we're seeing a convergence between hold and new media we've been talking about how old media is trying to come into the digital world, but the digital world is coming into the terrain of the old world. i was watching clips of jeff bezos at the golden globes which didn't look like a fit, but there he is, working the red carpet this is a whole new world. which is important, that te technological prowess from the digital side or content skills from old media? we'll see them in head to head competition. >> looks like a better fit when they actually win. >> there's a generational thing going on here. some of the old media, it's not just summer redstone, but we had
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some, shall we say, how to put it kindly, ageing leadership in some of these jobs. you have a lot of youthful energy coming up. >> we don't usually use that word on the show if we can help it. >> we're all aging, including me. but when we talk about people turning 90, you know, we're in a whole different category there. >> i'm not there yet, simon. don't look at me. >> great piece, jim. >> thank you. >> jim stewart of the "new york times." did want to get to shares of lions gate which are down sharply that name has been involved in a lot of speculation about a potential link up with starz, but the news this morning is that lions gate did not hit the estimates for ebita or revenues. some of that is due to the nature of releases of shows and releases of movies. the stock of lions gate getting hit hard. though up from what had been a down move as much as 22%. starz also in part getting hit because perhaps in puts aside or
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makes a deal between the two less valuable. they really had nothing to say on the conference call about discussions with starz. >> we'll keep an eye on that. coming up, an interview with cme group president and executive chairman terry duffy. we'll be right back with "squawk on the street." mmm, a perfect 177-degrees. and that's why this road warrior rents from national. i can bypass the counter and go straight to my car. and i don't have to talk to any humans, unless i want to. and i don't. and national lets me choose any car in the aisle. control. it's so, what's the word?... sexy. go national. go like a pro.
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i'm morgan brennan, here's your cnbc news update. one person killed and two seriously injured and taken to a hospital after a crane collapsed in new york city. the downed crane fell on and crushed several cars. no word on what caused the collapse. an investigation is underway. according to the latest nbc marist poll, donald trump is leading in new hampshire with 30% of the vote, followed by marco rubio with 17% and ted cruz with 15%. the poll was conducted after the iowa caucuses. a united nations human rights panel says julian assange has been detained unfairly and
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should be compen compensated. sweden rejects the findings. and the music world is mourning the loss of maurice white. the founding member of the band earth, wind and fire. he suffered from parkinson's disease and was kept out of the public eye. he was 74, and a great songwriter. that's our cnbc news update. simon, back to you. some cheer here at the new york stock exchange. big names from chicago buying into the trading floor. bob pisani is there with two key guests. bob? >> it's an interesting deal coming down here. citadel well known, one of the biggest marketmakers in the united states, buying the floor operation of knight capital, just behind me. here's the principal involved, jamil mazzella, and also joining us, tom farley, the man who runs the new york stock exchange. explain what this means for people.
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this is the second deal we had. last week gts bought the floor operation of barclays behind us. some changes on the floor what does it mean for the new york stock exchange and what does it mean for the average investor out there. >> sure. we're real excited. we want a bank, kcg and barclays, but as we know diversified financial firms are look carefully at businesses they're in we're welcoming today citadel securities. our listed companies, what they want from a dmm first and foremost is a marketmaker who will make good market force their stock and secondarily provide excellent customer service. i've known these guys, jamil and his team personally for a long time. they've been a customer of ours for a long time, they're a great group. i have no doubt our list of companies will be thrilled with the service of sit ta decitadel. >> for the average investor, does it mean anything at all at this point? >> it does i'm glad you asked
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that. our designated market makers are unique, and obligated to be on the bid and offer of our listed company securities at all times as well as to hope and close the stocks. the impact is tighter bid offer spreads, lower execution costs for our customers, but in particular the institutional retail investors. >> citadel, jamil, one of the biggest market makers in the world, if you put in a bid, often you go through citadel. why do you want to be on the floor of the new york stock exchange? >> this is a natural progression of our business. we're one of the world's largest market makers. and becoming a designated market maker on this new york stock exchange allows us to bring our technology combined with expertise and human judgment with floor traders to bring better markets to all. >> the interesting thing for citadel and the big market makers is the fact that we've
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had tremendous volatility. a lot of people have been coming on air amazed by the moves in industries, huge moves on intraday. tableau right behind us is down 40%. people come on and say i don't understand this. it doesn't make sense to me. the machines are taking over. you are the guy running the machines. you are mr. machine what do you say when people say machines are taking over. >> we heard that a lot. the markets were volatile long before the markets were automated. the markets are better, faster, and more efficient than ever before. the role of technology is to -- what we should be doing is not trying to slow things down but make sure it's better and safer. we think today's markets are the safest. >> do marketmakers, high frequency afraid traders like y you cause volatility? >> we do not. a lot of academics and
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regulators studied this. the overwhelming evidence is that automated market making dampens volatility. >> let's talk about the market structure. the sec has a market structure committee. they are looking at making potential changes, particularly after the 24th decline that we saw when the dow dropped 1,000 points and then recovered. you are on that committee. do you think anything will happen in terms of market structure? do you want anything to change in the way that we do trading here in the united states? >> we think the u.s. markets are the deepest, most liquid and efficient markets in the word. they work extraordinarily well. having said that, there's always improvements that can be made. one thing that we feel good about in the market committee is that the s&p 5is taking a thoughtful approach. >> do you still believe in the role of human beings down here
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on the floor? you're mr. computer, you're mr. intelligence. >> absolutely. we're bringing the entire business and combining and looking forward to working with them to give them the tools to do their job the best they can. >> appreciate, jamil, coming on. tom, always a pleasure. you can see what's going on here, a lot of big marketmakers, high frequency firms investing in human beings as well. >> big changes at the new york stock exchange. markets have taken another leg lower. the dow down 112, s&p 500 down a percent. the nasdaq down 1.6%. facebook and amazon really weighing on the nasdaq. s&p technology is the hardest hit. when we come back, cme president and executive chairman terry duffy will be joining us for an exclusive interview. "squawk on the street" will return in a moment.
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cme group reporting fourth quarter earnings. let's get to rick santelli in chicago. >> would like to welcome the president, executive chairman
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and a buddy from the old hog pit trading futures from a long time ago, terry duffy. thanks for taking the time today. earnings day. >> yep. yep, it is. thank you for having me. >> absolutely. listen, first let's start off with what i think is excellent news from the year over year perspective. i'll just gloss, you can fill in the facts. annual revenues up 7% year over year, record volume in the neighborhood of 14 million contracts. commodities, interest rates and the fed, it dovetails with your product. can you elaborate? >> it does. when you look at what the price of energy has done over the last 12 months, it's been extraordinary. the moves we've never seen historically. then you look at some of the commodity markets that have gotten huge attention because of the pressure on the prices of commodities. then we look at foreign exchange and interest rates. you have the dollar trading very, very high compared to the other currencies, then interest
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rate complex, which you report on accurately on a real time basis that interest rates are just going nowhere. but yet what is strange about that, we are seeing in our interest rate complex, between futures and options, almost 62 million contracts open in our interest rate complex. that is a record open interest, and interest rates, they're not doing anything. so what does that tell you? it tells you that there's a big slowdown in china there's a big slowdown other places, there's negative interest rates going on in japan. people are coming to the united states to manage risk. what i find even more fascinating, rick, is the open interest is really going into the strategy part of the products which is the options on the futures. that, to me, is most exciting. as we know, the futures are the risk management component, and the options on the futures are the strategy side of it so we're seeing a lot of that trade, which is something historically we have never seen in our world, great open interest in the
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options on interest rate products. >> just to point out, there's a lot of organisms still doing options, i consider that a plus for your exchange. listen, now, annual revenues, everything about the year over year report, terry, just to get into the accounting, looked great. there was just a little bit of a dip when i look at it quarter to quarter, profits were down 4.8%, volume was slightly down on a quarter over quarter comp. can you differentiate how the whole year was so excellent and what may have happened in the fourth quarter? >> absolutely. as you know, a year ago in -- last year, the end of 2015, the fourth quarter was off the charts. it's something we historically have never seen. we've seen a lot of volatility, a lot of movement, a lot of conversation around the fed, geopolitical events. our volumes were through the roof the fourth quarter of last year. that did not happen. we were down, you know, roughly trading around 13 million contracts in the fourth quarter in 2015 versus the prior year.
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so that's really where you saw the year over year difference what is encouraging is the first four weeks of this year. we have 18 million contracts being traded a year at the cma group. we don't get worried about month to month, we get more worried about year over year. >> i got you. listen, when it comes to navigating risk, i think of the commercial, it's a great commercial. i want to get into the navigating of risk. that's what this exchange is about. risk transfer. the s.e.c. and the fed are working hard to limit the definition of what a hedge is, to alter and lower leverage, potentially raise margins, and the final few seconds we have left, does the cme have a plan for how that will affect the business or any change, is that you may have to make? >> well, i don't think we need to make many changes at all. i think when you look at marg s
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margins, risk management procedures and protocols, they are comfortable for the most part to how the procedures work. i would be surprised if they came in and tried to amend a procedures and protocol that have worked for over 100 plus years throughout our history. again, we take margins very, very seriously. as i've said many times before, we will never sacrifice dollars for today for markets for tomorrow. that's critically important thing. so we manage these markets risk controls are critically important to us. >> excellent. terry duffy, thank you for taking the time on this earnings day for the cme group. sara, back to you. >> rick santelli, thank you very much. when we come back, if you want to go to the super bowl on sunday, we have good news and bad news, the ceo of kik ik joins us with the answer on that.
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>> so the good news, if you still want to attend the super bowl this weekend, ticket prices are dropping into the big game. the bad news, they're still
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expensive. joining us at post nine to discuss it is jesse lawrence, founder and ceo of kik iq. what is the average price? >> a little under 5,000, which is under $5,000. last year it was almost $10,000 at this time. but that was a real anomaly. there was a market blowup, a lot of short selling that happened. this year is a relatively stable market, but prices still at historical highs. >> so how did you ensure that year that some of the speculative short selling didn't happen? >> there was a lot of structural things that the industry between. requirements for people selling. a lot of the people selling last year got wiped out so they're not in the market anymore. so there is less risk in the market than there has been. >> so why do you think it is more historically expensive than r previous years? >> the first is san francisco. there is a ton of money in san
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francisco. a lot of wealth there. there is the denver broncos proximity, they're close. short flight compared to two years ago when they were in the super bowl, it was a relatively long flight. and then the third is super bowl 50. so it's a historically significant event and a lot of people are interested in going and they want to be part of it. >> how much fly is there, how many tickets ends up in the hands of fans? >> that's a whole other question. supply available right now, there is about 1,000 tickets available. the peak is about 4,000 that people could actually buy in the secondary market. so on a percentage basis, you're looking at roughly 5%. >> so is that more or less than usual? >> it's about normal. it's a little bit less this year because there was less speculative selling. there is rest supply on the market. >> so i was going to say, in general, the new york attorney general said recently what many believe that ticketing is a
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fixed game. a general comment about the event, not in event and not you in lawyparticular. he found 54 brs s% say for conc are pre-sold and then come back marked up. and he's suggesting that there should be caps on the amount of tickets that can be resold. what do you think of the allegation and the solution? >> so i think there is definitely a need for transparency. the types of events that the torn general was talking about, let keep in mind it's the 1% of the 1%. bruce springsteen, madison square garden. ultra high demand events. the majority do not sell out. it's something really important to keep in mind. so there are always tickets veil. a lot of tickets end up below face value. so he's talking about a really small percentage of events. we provide transparency in the marketplace. >> just as an observer, is it true to say that roughly half of the tickets never actually go on
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sale or are pre-sold if you like opaquely somewhere else before the public gets a look at them? >> i don't believe that is a true statement. i believe it's a true statement as it relates to the 1% of events that he's talking about. >> what's the highest price ever paid for a super bowl ticket? >>suite, hundreds of thousands. but this year, highest price is about $25,000 for an actual seat. if you want a last minute deal, one interesting thing to think about, last minute prices typically drop into the historically the $1,000 range. this year it's about $3,000. priceline has another $1,000. hotels are another call it $1,000. so last minute shopper who wants to get there for the game will pay about $5,000 all in. >> are you last minute shopping to be doing all this checking? >> i'm not. but it's my job to know this. >> will those seats get filled? >> no question. there are people paying -- average transaction on our site
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is about $10,000. so $5,000 is the get in and something that people absolutely want to pay. >> because everything is now available online, but the selling of the tickets gets later and later like customers waiting for the retailers to discount? >> that's a trend in the ticket market. 75% are sold within 72 hours of the event. so that's how consumers have been trained to purchase today. the difference this year with the super bowl is you're actually not the seeing that last minute decline. a lot of people historically expect that and this year it's not happening. >> thanks for sharing. let's see what is coming up on squawk alley. >> linkedin getting crushed, down about 40% this morning. and it's not alone. other software enterprise names down. what is going on? we will dig into it. and i don't know than bujonatha
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from athena. we'll cover it all coming up on squawk alley. need to hire fast? go to ziprecruiter.com and post your job to over one hundred of the web's leading job boards with a single click. then simply select the best candidates
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welcome back. cloud software players town big after tableau reported. you can see they're all moving down. splunk on track for it worst intra day loss in two years. price cut to $67 from a prior $82. those shares again down as well. so a lot of these newer tech players especially in cloud computing all reacting to the numbers. back to you. >> a strange year this year. what a strange year for price action. >> well, we want to say congratulations to our nail the number winner.
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michael kahn's guess 153,000. not bad. he's on the phone with us right now. welcome, michael. so how do you do it? why were you more pessimistic than the average economist out there? >> hi, guys. well, the experts are usually wrong. usually get it wrong. i just thought the macro pressure in the emerging markets and china, i just didn't think the u.s. could be so isolated. >> it's interesting. there was a whisper number doing the rounds which was 150. i suspect you're more keyed into the markets than you might have us believe. >> well, i watch cnbc every day. >> well, that's enough. >> you watch cnbc every day, you'll be keyed in. >> what do you do for a living? >> i'm an investment adviser. >> all right. there you go. well, michael, congratulations. your earmuffs are in the mail. >> wear them with pride. if not through spring and summer, because it says cnbc.
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>> with that, we'll send it over to you, carl. >> thanks so much. it is 8:00 a.m. linkedin headquarters. 11:00 a.m. on wall street and "squawk alley" is live. happy friday. welcome to "squawk alley." joe monsdale is joining us take. great to have you this morning. thanks for joining us. get to some tech news, but a quick market check. dow close to session lows down

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