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tv   Squawk Box  CNBC  February 9, 2016 6:00am-9:01am EST

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"squawk box." >> good morning, everybody. welcome to "squawk box" on cnbc. i'm becky quick along with andrew ross sorkin and scott wapner. joe is off today. breaking overnight, the nikkei closing down by 5.4%, dropping for five of the last six sessions. the dollar-yen fell to its lowest level since november of 2014. in fact, japan's finance minister calling the yen's moves rough and saying that he'll be watching it closely. also, take a look at the ten-year japanese government bond. this is unbelievable. the yield falling below zero for the first time. stocks also selling off down under. the main index in australia closing down by nearly 3%. the biggest drags here, the energy, materials, and financial sectors. take a look at how things are shaping up here in the united states. you can see the dow futures seem
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to have stabilized. the dow indicated up. >> among our top stories this morning, the international energy agency out with its latest forecast, casting new doubts about the recovery in oil prices. the iea expects global oil demand to pull back from a peak of 1.6 million barrels a day last year to 1.2 million barrels this year. the report cited slow downs in europe, china, and the united states as drags on demand. crude prices a the this hour, wti is higher north of $30 a barrel. that's a gain this morning of 2.5%. brent following suit, up nearly 2%. u.s. stocks coming off the lowest close in nearly two years. among the hardest hit sectors, the financials. morgan stanley posting its biggest one-day decline since 2012. the s&p 500 financial index the worst performing sector this
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year now down more than 20% from its july high. on today's earnings calendar, coca-cola and viacom report before the opening bell, disney after the close. coke coo james quincey will be on "squawk on the street" today at 10:30 a.m. eastern time. >> we have a zika update, and it's not good. the cdc activating its highest emergency operation level in response to the zi can, a virus. the level one activation meaning the cdc will accelerate preparedness for the transmission of the virus by mosquitos in the u.s. president barack obama also approved a $2 billion assistance plan to fight the disease. >> what does this mean at this point? the only thing you can do to fight the disease is to eradicate mosquitos. >> you have to spray. it becomes a whole project. or if you could find some kind of vaccine. >> but i guess this means that they think the cases here are picking up, the transmission is more likely to happen as we get closer to the summer.
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>> this is the problem. >> it's a big deal. >> i would tell you to wear off but that doesn't help. the first votes have been cast in the new hampshire primary. the down of dicksville notch among a few voting at midnight. the town's nine voters handed the early lead to bernie sanders and john kasich. the race might be get ak little more interesting. that's because michael bloomberg might be joining it. we don't know. the former new york city mayor said he's now considering a run for the white house. we had heard this before. now the financial times quoting him personally. bloomberg was critical of the quality of the debate so far. he said he was looking at all options. not sure that's technically different than before. the prevailing view is he would only go into the race if he thought he could win. the problem with that is it's
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sort of hard to know if you could win. >> until you know who the nominees are. >> then you're too late. it's a timing issue. you have to jump in with both feet. >> didn't he originally say or at least people were thinking that he would make up his mind by march, which is even later in the game as you start to get further down the primary road. >> i think they think the first or second week of march is the last time you can figure it out. >> and still get on the ballot. >> the problem is even then it's -- look, it's always going to be a gamble. >> he doesn't have to worry about fundraising. he can afford a late start. >> that's the good part. also some other news this morning, rioters clashing with police overnight into early hours. this taking place in hong kong. video showing a policeman firing warning shots into the air from his handgun in an attempt to quell the riots. rioters threw bricks at police. the unrest started when local authorities tried to prevent
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street food sellers from operating last night. activists who are dissatisfied with hong kong's administration took part in those clashes. >> the food vendors. that's how the arab spring started too. it was a situation just like that where a food vendor was being hassled. >> a number of these guys out here get hassled sometimes. we've seen it. >> don't mess with the street meat. >> kabobs, that's your thing? >> you messed with the cops last time you were here. parked your car on an unparkable spot. >> for those who don't remember the last time scott was here, he had to run out and rescue his car from the police. >> of course, it was parked illegally. i just want to underscore that. >> you didn't get a ticket, right? >> people thought i got special treatment. >> no, no. they were changing because there was a parade or something coming through. >> changing after i parked.
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no laws were broken in the process. >> let's check on the markets again this morning. yesterday was a bit of a rough ride. we saw the dow down by as much as 400 points before rallying back by 178 points. still, that's the second negative day in a row for the dow. at this point, the dow has reversed all the gains that it made during the fourth quarter of last year. s&p was down by as much as 52 points before it cut its losses in half. it was the that's nasdaq that s underperformed. the nasdaq is down 5%. facebook, amazon, and microsoft were the biggest losers in terms of pulling down the nasdaq 100. this morning things have stabilized. in europe, the dax is up fractionally. the cac is down fractionally. these are, again, markets that had been extremely rough yesterday. they now look like they're settling out a bit. overnight in asia, things did
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play out there. the markets that had been open, like the nikkei, down sharply. 5.4% decline, which is huge. the nikkei coming back under severe pressure and is just sitting above 16,000 right now. oil prices yesterday were down by 3.8%. this morning, wti is rebounding a bit. it's up about 2.5%. back above $30 a barrel at 3 30.43. >> worries about the global growth once again clobbering stocks on wall street. the broader markets were able to recover some of those losses,
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but what happens for those stocks -- that's going to have to happen for those stocks to rise again? here to help us answer that is the principal investment strategist. >> how are you? >> not so good. it's sort of rough out there. some people love it that way. i don't. >> i don't either. >> the question we set this up with, which is what does have to happen? >> i think there's a few things. we need to recognize what's happening. a lot of the same fears dominating markets towards the back half of 2015, which just spilled over into the first part of 2016. global growth. it's oil dipping lower. it's uncertainty around central banks. it's geopolitics. you need to get some clarity around any of these things. i would say some stability around oil prices. i got to believe the worst of it is behind us would certainly help risk sentiment. some stability out of china. i know i'm asking for a lot there. >> would you buy on these dips?
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i just read a jpmorgan report saying please do not buy the dips. >> we have raised a bit of cash in our equity portfolios. one side is we want to be mindful of volatility our clients are experiencing. so reducing the volatility within our equity sleeves, i think, is critical in this type of environment. but the second part of it, of course, is to extent you have these long-term opportunities, securities that your portfolio managers really do like. if they come on sale and you're a long-term investor, i think you want to take advantage. >> joe, we've been trying to figure out for a long time if this economic downturn was going to spill into other areas. now the concern seems to be that the financials are going to be at risk of big exposure if oil prices continue like this. that's what we saw yesterday. goldman sachs and a lot of banks really being in a difficult situation and leading the downturn. is that fair at this point? do you think that's premature? >> i think there's a couple things going on. oil prices continuing to bleed lower is spilling into all types of financial assets and
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financial companies in particular. also, expectations for the fed to raise rates, which has now been pushed out into god knows when, that's also putting financial pressure -- >> so financials are not going to get relief from the feds raising rates? >> i think to the extent that expectations for interest rates remain low, inflation expectations also remain low. that's going to put pressure on financials, but i've got to believe that at some point you are going to see the fed raise rates. i suspect that perhaps march is off the table, considering everything that we've seen and all the stress in the system. but i do not believe the underlying fundamentals justify the market movements we've seen. >> is there anyone you'd go in and just buy stuff? europe? anything? anywhere? >> i don't think so. i think this is a time to be very cautious. it's a time to be careful. there are some pockets of opportunity. we talk about oil prices dipping lower. you have to realize there are some benefits to that, of course. you look at the u.s. consumer. i think the u.s. consumer is clearly a winner there. you're seeing the housing market continue to improve. you're seeing household net worth of course continue to rise on the back of the housing market.
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it's making up for what's lost in financial assets. you're seeing the labor market continue to improve. the unemployment rate finally seeing signs of wage pressure actually creep into the system. i don't think all is lost. i think there are going to be some opportunities. at the same time, until you get some stability here in the markets -- >> you're not going to get anything on sale when this so-called stability arrives, right? >> i agree. >> this is your shot on goal. >> this is your shot. i think you need to be very cautious here. again, we have raised some cash in an effort to do two things. one, try to reduce some of the volatility that our clients are experiencing. at the same time, we are going to leave it up to our portfolio managers to pick up securities they see on sale that they want to have exposure too. >> janet yellen on the hill tomorrow. there's a suggestion, and i think the market is -- and global markets are sending a message that they increasingly doubt the effectiveness of central bank policy, central bankers to quote/unquote save the day. the nikkei, as becky was going through the market boards this
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morning, is a perfect representation of that, despite these huge efforts over there. you have a 5% selloff, rates are negative. what can janet yellen say on wednesday, tomorrow, that could possibly stem this selling? >> i think she needs to try to instill some confidence in the capital markets, try to instill some confidence and point to the u.s. economic data, which again isn't necessarily all that bad. it is possible that at some point all of this fear around a recession becomes a self-fulfilling prophesy. you can see volatility at some point have an impact on sentiment and ultimately have an impact on consumption and spending. we're not there yet. i think it's up to janet yellen to come in and point to some of the positives while at the same time recognize the risks. i do agree there's very little central bankers can do at this point. i think they can provide stability. they can provide some support to risk assets and to the global economy, but the law of diminishing returns here clearly kicked in. you think about to what happened after qe-1, qe-2, so on and so
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forth. there's very little fire power they have left. >> you talked about wage growth and pressure. is that sustainable? >> i think to the extent the unemployment remains where it is, i think so. think about what's happening here when you take a look -- >> you're looking at lower profits, layoffs. this is not an easy story. >> it's not an easy story, and there two sides. there's what happens to corporate profitability and there's what happens to the consumer. i keep coming back to the consumer. you're driving over two-thirds of economic growth here in the u.s. despite the fact it is going to have an impact on profitability to the extent wages continue to creep higher. i think that's going to be supportive to economic growth. it's finally going to bring in some of that revenue growth we've been waiting for. >> when you look at a day like yesterday, dow is down 400 points, gets half that back into the close, finishes down 175 or whatever the exact number was. what's the message in that? do you take anything from that turnaround as you look to the setup for a day like today?
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>> no. it's important you don't try to overrationalize marks. sometimes markets can be irrational. what we've seen over the past few weeks is a great deal of just irrationality. the underlying fundamentals are not that bad. there are a lot of risks. i think we need to be mindful of them. we need to be careful how we're positioned, but it's also important we don't read too far into them. >> you said you've raised more cash. what percent are you invested at this point? >> it depends on the underlying portfolio and clients. we have raised a little bit of cash at the margin. we're not sitting on cash. we are still fully invested. it's in the spirit of two things. one, to have dry powder to the extent we see opportunities, which our portfolio managers have been taking advantage of. at the same time, it's to reduce a little bit of that beta, reduce that volatility our clients have to experience. >> joe, thanks forme coming in. >> thank you. coming up, voting has begun in some towns in new hampshire
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already. john harwood spoke to voters in the first in the nation primary. he joins us next. vo: know you have a dedicated advisor and team who understand where you come from. we didn't really have anything, you know. but, we made do. vo: know you can craft an investment plan as strong as your values.
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watching tvs get sharper, you've had it tough. bigger, smugger. and you? rubbery buttons. enter the x1 voice remote. now when someone says... show me funny movies. watch discovery. record this. voila. remotes, come out from the cushions, you are back. the x1 voice remote is here. welcome back to "squawk box." in washington news today, president barack obama will release the 2017 fiscal year
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budget proposal. this will be his final one as he prepares to leave office next winter. many believe this budget has little chance to be adopted as the president faces stiff opposition from the republican-led house. among the proposals expected to spark opposition from the gop, an 11% increase in funding for the securities and exchange commission and a 32% increase for the commodity futures trading commission. the first primary of the 2016 presidential election kicks off in new hampshire today. our john harwood sat down with some local voters to get their take on the candidates. >> hey there. i'm john. let's talk a little politics. you're conservative. >> right. >> why donald trump? >> when he started, people thought he was a joke, but you look at his history in the business and the company he founded and what he has done, if
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he can bring half of that to the government, it's going to go a long way. >> sometimes he acts like a buffoon, but you have to get through donald's personality. there's something about the man that instills a security in you. >> what's the problem that ticks you off the most? >> it seems like every day there's less people working, collecting disability. >> you didn't mention the immigration issue. is that big for you? >> i think as americans, we have a right to decide who comes into the country to become citizens and who doesn't. >> tell me what's different about this campaign from past new hampshire campaigns. >> just a lot of surprises. i think maybe way more surprises than i would ever have anticipated. >> you talking about donald trump? >> well, first out f all, i do e donald trump's slogan, let's make america great again. what doesn't appeal to me is his whole presence, his attitude. >> i see more memes about donald
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trump that make me laugh. it's just a joke to me. >> john harwood joining us from new hampshire. you've been covering politics a lot time. what's different about this time, or is this more the same? >> reporter: what's different about it is what we just heard from those voters in the package. donald trump. it's a completely difficult kind of candidacy from the outside. different in style, different in tone. he continued that yesterday. campaigning, offering some colorful vulgarities from the stage, but he's captured an audience here. what the polling shows us is that he is likely to win here as he did not do in iowa. there's a mad scramble for second place. john kasich, jeb bush hoping to move up past marco rubio, deal a blow to rubio's hoping of consolidating the establishment support but also help give them new life, an extended life in the contest. then of course on the democratic side, we've got the bernie
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sanders phenomenon, which in some ways it touches a similar strain of discontent with the political system. he appears on track to defeat hillary clinton, although the polls vary widely over what kind of margin he enjoys. >> john, you've been traveling all over the country. is what you just showed us from voters in new hampshire the same thing you're hearing around the country? >> reporter: yes. now, that was mostly a republican group of voters we talked to. with democrats, you'll hear a different set of concerns about income inequality and some of the social issues, abortion rights and gay rights, that you hear in the democratic debate. but the common thread you heard both in iowa and new hampshire was discontent with the way the economic system is working, the fact that average people don't feel like they're getting their
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due from that system, don't feel like they're moving ahead, don't feel like their kids are moving ahead. that's why we get this populism on both the right and the left. as sanders has done well in the closing phase of the campaign, you've heard some republicans, donald trump, ted cruz even, say, hey, i i agree with bernie sanders on some things. the economy is rigged. they have different responses to that, different solutions, but that sentiment is likely to reverberate all the way through election day, and it's something that the financial system is going to confront, whether bernie sanders or donald trump win or not. it's going to be quite a year of disruption and populism. >> i guess that's what i'm trying to get at, this frustration you find on the campaign trail, the sense of anger at washington and what's happened. you know that's been building for a long time. can you think of a time that it
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reminds you of right now, or is this the most extreme you've seen in your career? >> reporter: well, on the -- with respect to the issue of income inequality and stagnation, middle class not getting ahead, i think it's more extreme now. the reason is because it's been going on so long, just as you made reference to, becky. we have a 40-year pattern of middle class immediamedian wage moving up in the way americans became accustomed to the in the 1960s and 1970s. it's slowed down. so we've got an economy now that does well for corporate profits, that does well even for job growth the last couple of years, that does well in the stock market, although we've had some turbulence the beginning of this year. generally speaking, it has rewarded some in the economy, but a large group of people feel like they've been cut out, and they're demanding to be heard in this election year. >> you guess that the republican
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field narrows out after this primary, or does it take a little longer? >> reporter: i think it's going to take a little longer. that's the effect of what happened to marco rubio in that debate. it appeared to slow the momentum he had to try to consolidate support as the alternative to ted cruz and donald trump, who most people, republicans in office and the lobbying community, the donor community, the elected officials, they don't want those two guys. they were going to consolidate around rubio. now there's doubts about it. they're holding off. the fact that jeb bush and john kasich may come up and pass him, we'll see what happens. they're bunched up pretty close together. that will extends their ability to remain in the race and diminish pressure on them to clear out and say, hey, let's make way for marco. >> and on that note, john, i've heard people say that rubio needs to finish second here. what happens if he doesn't? >> reporter: well, the scenario
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i outlined. i think there are a bunch of different tracking polls. some have marco rubio in second place. if he gets second place, bullet dodged. that will be a nice showing for him. it will enable him to redouble his efforts to consolidate people as we head down to south carolina. but if he doesn't, that's going to let john kasich, let jeb bush say to their supporters, hey, give me a little more time. this guy maybe can't take the pressure, i'm going to go at him. we'll see how chris christie does. he was starting from a low base. not as likely he's going to be able to vault into that conversation, extend his campaign. of course, ted cruz is right in the mix with that group of people bunched distantly behind donald trump. he is one who's got money in the bank. he's got a southern conservative -- religious
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conservative electorate he's heading to in south carolina and those primaries in southern states. he's got a definite path to stay in the race for quite a long time. >> john, i know you have a long night ahead of you, but thank you for getting up early with us. >> reporter: you bet. >> interesting data out this morning showing executive gloom actually could be upon us. confidence among u.s. ceos has declined for the fourth consecutive quarter according to the latest ypo global poll survey. the drop in optimism stemming from uncertainty over the chinese economy, sliding oil prices, and an environment of weakening global growth. ypo, the young presidents organization, is an exclusive cnbc partner with 23,000 executives worldwide whose companies generate $6 trillion in annual revenue. coming up when we return, a special thank you from remember lobster to beyonce. queen bey helping boost sales for the seafood chain in a very good way. we'll tell you about it when we come back. as we take a break, a look back
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at yesterday's s&p 500 winners and losers.
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welcome back to "squawk box." now time for the executive edge stories. sorry, i should be looking at
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you over here. stories that may give you a leg up. we have our legs in the shot. can i talk over here? i'd like to. it's a little nicer. >> you got a problem with that camera? >> just easier to look straight at this one. we can do it over here if you want. >> i'm teasing. >> we should tell you verizon is exploring a possible bid for yahoo!'s assets, and verizon has given the coo of its aol unit, tim armstrong, somebody we know well here, a leading role in that research. it's according to a bloomberg report that says verizon has not hired bankers to conduct an offer yet, and there have been no toformal talks. tim armstrong, when running aol independently, had taken to marissa mayer several times. >> wasn't it that sun valley thing where they closed down the bar. >> i do remember reading that. two or three years ago. all sorts of back and forths. every time we asked him if he was interested, he would try to say he wasn't really interested but you knew he was a little
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interested. >> we had heard verizon surface as a potential buyer. >> aol -- people compare aol and yahoo! but he really transformed the company into this digital ad tech company, or at least that's how he was able to frame it. >> people keep saying, yeah, there is life after. you can be resurrected. they always point to tim armstrong and what he did with aol. >> i wonder if the assets yahoo! has are as valuable. >> could be getting it on the cheap. >> isn't it something like a billion users that go there. >> that's why when people say it's worthless, it just can't be. >> remember lobster, by the way -- >> do you eat rob lobster ever? >> not in the a long time. >> it was always huge for my family. >> there's one right near "the new york times" actually. 41st street and 7th avenue. the biscuits will kill you, but they're amazing.
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>> the cheddar biscuits. >> bang out a column, take a break for lobster bisque. >> only take my best sources to remember lobster. >> well, beyonce's new song "formation" doing a bit more than racking up views on youtube. it's also increasing traffic and sales at red lobster a of a not-so-pg mention about enjoying the food at the restaurant. the ceo telling cnbc that weekend sales saw a boost in weekend sales, spiking 33%. beyonce also helping out the company's social media game. ched bar bey biscuits. >> they've changed the name apparently if her honor. >> in response to her shoutout. that tweet earning more than 13,000 retweets, 14,000 likes, and started trending for the first time in the brand's history. >> i went back because i had to look up the lyrics. i didn't know what she said. >> i didn't either.
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>> i can't repeat it. when they said it's not pg, they mean it. it's about enjoying red lobster. >> the power of the celeb mention. in the super bowl, is that what we're talking about? >> in the song, yeah. >> adult lyrics. most people didn't catch -- the kids didn't catch it? >> i didn't catch it at all. i had to go back and take a look at it. >> a verbal janet jackson moment. >> i don't know if she said it in the super bowl but this is just the song she dropped afterwards. i had to look that one up too. anybody who's ever taken a cruise or thought about taking a cruise, i once read a book called "a supposedly fun thing i'll never do again." this is on the front page of "usa today." they had a reporter on the cruise over over the weekend. it hit huge winds, huge storms. waves of up to 30 feet when they were out there. they spent the night kind of
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horrified by this. you can see the pictures of what happened afterwards. >> i saw video. i think it was on twitter somewhere. somebody had shot on their phone and tweeted out. just the angry sea, not a place you would want to be at that moment. >> any time i've ever thought about taking a cruise, something like this happens. this is like the worst publicity they can hope for. again, put it on the front page of "usa today." i read through this, and the guy kind of sitting with his wife, holding their son's hands through the night, very worried about things. any thought i ever had about taking one just got wiped out. >> cruise was never on my list of things to do. the yacht, yes. the cruise, no. we should also tell you about mardi gras. today is the last day of mardi gras. >> it's fat tuesday. >> get on the plane if you can. hordes of revelers getting ready for the party. fat tuesday, as becky just said. events expected to be the
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largest since hurricane katrina. dumping an estimated $840 million in the local economy down there in new orleans. boy, do they need it. when we come back, it's one of the fastest starts to the year for buy backs, but will it be enough to stop the bleeding in the stock market? mike santoli is here to talk about that next. and as we head to break, a quick check of what's happening in european markets right now. you can see that there are some modest declines can after yesterday's big losses. the dax right now down by about 0.4%. the cac in france is off by 0.7. and "squawk box" will be right back. so you're a small business expert from at&t? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep it all digital. we're looking to double our deliveries. our fleet apps will find the fastest route.
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welcome back, everybody. the buy back announcements have already totalled $63 billion. that's on pace for one of the fastest starts on record. mike santoli joins us now with more. good morning. >> good morning. this has been one of the reasons people were looking forward to february back in january because they pointed out that buy backs really do start every year very slowly in terms of actual amount of stock bought back. not the announcements, but the amount bought back. only 3% to 4% happen in january. people thought, okay, great, companies report earnings, they're going to buy back more stock. i think right now the question is not just are companies going to buy stack stock, they're going to. the question is, they're going to do anything more than soak up the supply of stock that's out there. i think it's important to remember, the market is not really rewarding companies that buy back tons of stock the way it did, let's say, going back a
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year, 18 months, two years ago. there's actually an etf which tracks companies that buy back a lot of stock. it's been underperforming the s&p 500 for the last six months, 12 months. guys, i think honestly, it's something that's going to help any time you get a price sensitive stock. the issue is the market wants financial stability. they don't want companies to take on a lot of debt, whether it's to buy back stock or something else. the question is, does it really act as a savior for the market or just one net positive that might develop in certain sectors. >> the market may demand something, but the companies themselves just in the current environment, maybe they want to pinch pennies. maybe they're uncertain about the direction of the economy, so they wouldn't be as apt to put as much money into the market. >> it's totally correlated to ceo confidence. we just saw numbers on ceo optimism is down, as stock prices are down. i do think that really what it is, it's just a coincident indicator of the market. it's not something that really
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leads stock its prprices that m. it just shows profits are high and they're willing to put that back into their own stock. >> although, we're not going to know for sure until we look back in hindsight to see where stock prices go from here. you'd rather see a ceo buying shares when they're coming down, rather than at highs. maybe it's a good time when ceos aren't that confident. >> without a doubt. i think that's why the boards are authorizing more buy backs. we're okay with our debt load or have the cash load to do it, so let's put it on the books. i think it's going to be company by company. it's not going to be this huge binge. by the way, the big opinion companies were big buyers of stock in recent years. now they're not going to be that because they're defending their dividends. >> which is what usually happens. it's usually countercyclical. >> are there specific companies you think that have actually been discriminating? most companies, once they put in place the buy back, with few exceptions, just sort of buy indiscriminately. >> the companies that have done
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best with it are the ones buying back stock but also increasing earnings and being disciplined about capital. if you look at home depot, home depot has baug back something like a quarter of its shares its 2010. it's done it very mechanically. huge amounts of money every quarter. and it's also increased total net income. >> but it's not buying on the dips. >> it's pretty much buying mechanically. that's the ones that have worked, at least that you could really observe. in terms of companies saying, hey, look, our stock is cheap, let's bid for a ton of it right now, i think you only know that after the fact with once you see the next quarterly report. >> exactly. mike, thanks so much for coming in. >> you bet. >> stocks to watch today, yelp reports a smaller than expected fourth quarter loss. the results hitting about three hours early on monday due to an error by pr news wire. shares slumping about 11% in regular trading as yelp gave weak outlook for 2016, and analysts noted a slight slowdown in growth of its mobile app users.
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yelp cfo will step down later this year. >> 21st century fox is cutting its full-year earnings guidance, citeding a disappointing film slate and a hit from foreign currency. the company also reporting a drop in second quarter revenue as lower box office sales offset higher tv ad revenue. it's the first time in five quarters fox has had to cut its outlook. and gap says same-store sales fell 7%, including a 14% decline in banana republic and 7% in old navy, which had been a bright spot. coming up when we return, biotech stocks among the worst performers in year. and later, another sector getting hammered. we're going to talk about the battered technology sector when "squawk box" returns in just a moment.
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welcome back to "squawk box" this morning. let's look at two stocks releasing preliminary financial numbers. retailer sears projects fourth quarter and full-year 2015 revenue that comes in below street estimates. also sees a 7.1% drop if fourth quarter comparable same-store sales, saying the holiday season proved challenges. it is accelerating the closing of unprofitable stores.
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a more upbeat number from wendy's. it's projecting fourth quarter results are above street forecasts. both sears and wendy's will release official results in a few weeks. >> biotech taking a huge beating so far this year. the ibb, the etf that tracks that sector, is now down close to 30% this year alone. since hitting a high last summer, the index has fallen nearly 40%. is now a good buying opportunity, or is there still more pain to come? let's ask the portfolio manager at e-squared asset management and cnbc's own meg terrell joins us as well. meg, you follow these stocks every day. at what point do they get low enough that people think portfolio managers and analysts think it's time to jump in? >> nobody seems to feel comfortable right now saying we're at a bottom. everybody is feeling the pain. essentially what i'm hearing is you can't just buy into the etfs
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anymore and expect it's going to go up. you have to choose individually. there may be good opportunities out there, especially if you look at how far down the valuations have come. but it's definitely not a broad-based, you're not able to buy in broadly and expect it's going to go up. for the general it's tough per >> that's the point we heard yesterday that exactly what meg says that you can't buy a whole group of these stocks any more. you have to be incredibly stock specific. is that how you view it? >> for starters, just the biotech is being moved by china and oil which for biotech analysts they are a world apart to begin with and then you should have always been picking stocks but so easy over the last five years to make a lot of money in biotech. there are places to go if you want to do in terms of global hmos, medical devices are a lot safer place to be. big pharma you get access to
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biotech. >> when you are buying? >> we're looking carefully on a stock basis. we're dipping our toes slowly but i would say our focus on the long side because we are long short and short a number of biotech's in the index, is med tech and hmos. safer. better. also i don't know that it's going to happen but if interest rates rise biotech's tend to be negative. we don't know that will happen. analysts skill set. but something to worry about. >> one thing people have said is that we've had these boom years for m and a. i'm curious to know your thoughts at what point do these biotech's become so cheap. all of the big guys in their earning calls say it looks like a good time to buy these smaller guys. when do they adjust the new formal. >> that assumes pharma companies
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act like hedge fund managers. its more complicated for big pharma. that's why they over pay. it has to fit and they want them to have good data. as you start to see good data, assuming there's good data because last year there was a lot of bad data you should see more m and a. >> do you talk shorts publicly? >> we try not to. >> you try? now i'll twist your arm. >> i would say in terms of shorts we're more index short than stock specific short because at this point most of the stocks are down 20, 30. >> short the ibb. >> yes that's a safe hedge against even long stock positions because if the index goes down, you know, presumably it will go down. so that's how we entered. >> how much of this -- markets yesterday were attributing the
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start of decline to hillary clinton he's tweets. how much does this guy and all the attention he brought to drug prices have on valuations. >> it's a consideration, politics in general. i think it's more of a problem in speck pharma than in biotech, companies and valeant comes up a lot who raised price with no volume increase. those are the ones that will get hurt the most. it's an issue. it's going to be -- politics in general, as we move into the second half will press on a lot of health care. >> isn't that an issue for biotech companies who see as potential plays, potential buys for other companies. you may not be as likely to buy one of these companies if you're worried you can't raise prices down the road because of the political outlook. >> that's true. we're seeing that in the orphan space. in orphans -- people that, you
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know, were immune to pricing, they could price whatever they want now it seems now they are even seeing pressure on orphan disease. >> barron says there's 30% upside. do you agree with that? >> we like gilead more than celgene. they both need to do deals. that's where they are predicated on upside. i wouldn't necessarily play a stock just make they may do a deal one day. gilead should just buy back their stocks. >> do you view these stocks as event driven either going to do a deal or have some sort of trial, positive data that was sort are of one of the views we heard yesterday was that if you want to buy a name say biogen or amgen you want to be ahead of some of the surprise good data that could be in the pipeline in the not too distant future.
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>> that's the way it works. you need value created events otherwise they look like every other company. that's the way to do biotech. it's not always clear the data works. a lot of times as we saw last year there were some disasters where, you know, 70%, 80% declines in stocks. it's not as simple hey there's news coming and let's buy it. >> i'm curious to know one last question. on gilead everybody says they have to do a transformative deal. is there anything out there that could do what pharma said they would do for gilead. >> i want to thank gilead for buying them. probably not. on only immunocology could buy them. >> thank you.
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when we come back this morning volatility in commodities. the selloff in stocks and weakness in the technology sector. we'll be talking strategy with dennis gartman and krishn krishna memani. michael bloomberg if he throws his hat in the ring will he steal votes from republicans or democrats? we'll asked ed rendell and michael steele.
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stocks slide 5%. dollar hitting a 15 month low against the yen. european markets have been sloppy. and despite about another warning of oil over supply crude
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is driving higher. battle in the granite state. new hampshire voters hitting the polls. who will be left standing as the battle for the white house heats up? ed rendell and michael steele give us their perspective from both sides of the aisle. >> sharing a coke with investors. the soft drink giant set to report. we'll bring the numbers and get the the street's reaction in just a few minutes. the second hour of "squawk box" begins right now. >> announcer: live from the most powerful city in the world, new york. this is "squawk box". >> welcome back to "squawk box" right here on cnbc first in business worldwide. i'm andrew ross sorkin along with becky quick, scott wapner is here. stability concerns wage on the nikkei which slid over 5%. many asian markets remain closed for the new year including china and taiwan.
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nikkei hitting europe already. the futures here in the united states came off what's happening here. we have some red arrows across the board in europe. things bouncing around when it comes to what's happening here. dow looks like it would open down 32. nasdaq down off 6.5 points and s&p off three points. oil is higher this morning shrugging off the selloff in japan and australia. wti is down to 30.26. >> also breaking overnight rioters clashing with police and into the early hours in hong kong. hong kong cable television showed a policeman firing warning shots in an attempt to quell these riots. police used pepper spray to disperse the crowds. rioters threw blocks at police and lit fires on the streets. this unrest started when local
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authorities tried to prevent food vendors from operating. we do have earnings just out from coca-cola. the company came in with 38 cents a share. that's one penny above expectations. revenue coming in above the street's forecast. worldwide volume in terms of case volume was up by 3%. they also say that the global price mix was up by 2% of the quarter in the full year. they say that reflected strong execution against strategic initiatives. there's been cost-cutting moves. >> north america strong. strongest annual performance in north america in some three years. case volume in the ship market in north america up 3%. we'll talk to the coke analyst later this morning. >> multibillion dollar deal in utility industry unveiled this morning. canadian utility will buy itc
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holdings. itc is the largest independent electric transmission company in the u.s. >> it's new hampshire primary day with republican donald trump and democrat bernie sanders the leaders in polling in that state. we'll have much more on the new hampshire voting in about 30 minutes. president obama is set to unveil his proposed fiscal 2017 budget today. it contains funding on a wide variety of issues such as fighting isis, education and job creation. it's unlike try to be passed as proposed by a republican controlled congress. lately stocks appear to be moving in tandem with crude oil prices. gold has been surging to start the new year. it's up 12% so far in 2016 and hovering right around $1,200 an ounce. dennis gartman joins us with his take on the big moves. he's a cnbc contributor. also krishna memani cio and head of fix income of oppenheimer
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funds. >> i believe the fed has to get engaged in some way, they have to give us some idea that they are off the picture for a little bit. until that happens, you know, the markets are discounting that. but i think until they say something and the dollar depreciates we don't see the bottom. >> what's a meaningful depreciation? >> it's not just the euro. on a trade rated basis dollar is off its peak but significantly higher than where it was in 2014. i think until we see a sign from the dollar, effectively overseas is in turmoil and the fed is engaged and that's just not a good thing for equities at the moment. >> what do you think the odds are janet yellen will tip her hat to something like this at wednesday or thursday when she
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speaks before congress. >> i think there's chance. she may try to help the markets a bit by being more dovish than what she would have been otherwise. the problem the fed has is the employment reports are coming in much stronger. you see wage inflation, lower unemployment. so, you know, they are in a tough spot. >> i think of it as potentially a mistake if janet yellen says too much and makes it took like they are reversing course after they raise rates and you get in a position where the unemployment rate falls again and again and has to reverse position again. >> absolutely. i think at some point it will slow down. you can't have this level of turmoil in the market that's this -- the growth rate wasn't too high to begin with and for it not to impact the overall growth rate. growth is slowing. so growth is slowing meaningfully and the fed has to help the economy by tipping their hand a bit. >> dennis, you agree with that? >> well, i'll agree with you, i
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hope the fed keeps its mouth shut, sits down, does nothing, remains very quiet. if the fed were to move in the opposite direction, start to move to ease monetary policy it would raise confusion. just do nothing. that's all they need to do for a while. back when i first started in the business in the early '70s we didn't even know when the fmoc was meeting. if we knew if they were meeting we didn't know if they were on the committee. i wish the fed would get quiet and disappear for a while that would be better. >> do you think that krishna memani is right if we don't hear anything the dollar doesn't bottom we'll continue to see this volatility and potential down slide for stocks as a result? >> i think it's going very difficult for the dollar to stop going higher. it has been moving higher except against the japanese yen and the volatility in the yen in the past 48 hours has been
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extraordinary. the trend for the dollar has basically been upward against almost every other currency except save for the yen and the euro for the past two days or so. >> getting back to this transparency issue. do you blame ben bernanke for all the volatility? is that what you think is going on here? >> i think that the fed has gone a little overboard with this amount of transparency. i one we live in a transparent world. i get that. but sometimes a bit of smoke screen, sometimes a bit of quiet, sometimes a bit of opaqueness might serve us a little bit better. i understand transparency but i think we've gone a tad overboard in the last 10 or 15 years. >> i think given circumstances it would have been worthwhile for the fed to be quiet. but we were told there will be four rate rises this year.
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they shouldn't have said anything. we're data dependent and remain data dependent. >> you're tying to it the dollar, if the market moves to the dollar. we tie it to oil prices. i want seems we're moving in lock step with oil prices. the dollar goes up the helps oil. >> at the end of the day the biggest market signal is a dollar. look at the charts. credit markets started under performing meaningfully at the same time the dollar started appreciating. basically it's an indicator that policy is tightening and when policies tighten and when growth rate is relatively modest to begin with that's just you walk into a danger zone. >> why should the fed be listening to the markets. why does the fed care at all what the markets are doing when it's supposed to be focused on what the economy is doing. the economy is better here than it is in most of these developed countries. which is use have the central bank feeling okay we have to be
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the first ones to move to raise rates. we don't have the economy like everybody else has. >> i think that would have been a good case if we had consistent growth. unfortunately we don't. just look at the fourth quarter numbers and way things are working out in the first quarter of this year. so you have an economy where one sector, employment consumption is doing okay but you have manufacturing and virtual recession and on a global basis things are slowing as opposed to accelerating. so when you have that circumstance on top of that, you have the world's central bank, the fed tightening policy and talking about four rate rises this year. to expect that the markets would do well and the economy won't slow down, i think it's unrealistic. >> dennis it has been frightening watching what's been happening to gold prices in the last several weeks. is the gold market stock marketer. is there something scary out there? >> the gold market is really quite smart.
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i think the spreed between yoad and swiss franc is smart. things are a little disconcerting. gold market is very bright. call the gold market smart. currency market smart and bond market very smart. collectively it tells us a lot. >> you think that the market is actually seeing real concerns and real economic slow downs not just seeing ghost of things. >> seeing very real concerns. i don't think the gold market sees inflation. it hopes to see inflation. it expects to see monetary authorities easing in various parts of the world but what gold is telling you there's concern, there's disconcertion. >> i think if the markets do well, credit markets have to do much better and if credit markets do better, the bank
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stocks probably will rally first. so until we see bottoming of credit spread and bottoming in banks, i think we'll be dealing with this turmoil. >> how low do banks have to go >> banks are getting interesting and attractive at this level. you take ubs, even a deutsche bank, bank of america in the u.s. very goal valuation levels. if you don't have a turmoil in the markets, i think these will be good -- i think if you look at the credit portfolios things are really not that bad. and the credit markets won't be that substantial. there's a good case made for that. >> thank you both for coming in. take another look at the futures board. things are coming down quite a bit. we're looking at the futures in positive territory earlier this morning but you can see the dow futures are down by 68 points below fair value. s&p down by seven and nasdaq
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down by 12. coming up when we return oil prices rising this morning over concerns about over supply. opec production and the dollar will keep oil under pressure. we'll hear more about it after the break. later new hampshire is ready to vote. former pennsylvania governor ed rendell will join us along with senior adviser to jeb bush michael steele joins us at 8:30 this morning. "squawk" returns in just a moment. oh remotes, you've had it tough.
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welcome back to "squawk box," everybody. we've been taking a look at the futures. check it out. looks like the dow futures are down by 64 points below fair value. this is a reversal. stocks were trending higher earlier this morning. it comes after two steep days of declines for the market. yesterday the dow was down by as much as 400 points. closed down by 177 point. s&p futures are down by eight and nasdaq down by almost 15, 14. among the hardest hit sectors of late the financials. morgan stanley posting its biggest decline since 2012. shares are down 29% since the start of the year. and in europe this morning deutsche bank saying it has sufficient cash to service its riskiest debt this year. default protection hitting levels higher than during the financial crisis. this is a huge issue people have
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been watching. shares of deutsche bank plunging 10% yesterday. the s&p financial index is the worst performing sector. it's down 20% from its high back in july. supply overhang continues to drive the price of oil. iae says the oil is your police will be bigger than previously estimated. crude prices were higher, a little bit earlier this morning. they are still hanging on, not quite as much gusto there. wti is just ahead of $30 a barrel. joining us now is kevin book managing director of energy partners. joining us now with his outlook on the week ahead. so we see crude is back up above 30 but do you really think a bottom has been put in at this point? >> fundamentals haven't changed. iae is telling you vince is gin
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is getting bigger. for february it was is going to be 110,000 now down to 70,000 reduction. so the rate of change is slower, yes to the down side but not as fast as projected. that means a longer work out, bigger overhang and no reason to get excited about a pop on a short day. russia plus opec or opec cooperation within opec is greatly overstated right now. opec has a tendency to want to time their cuts for when inventories are thinning out so they can market power. they would be pushing the string right now. no point for them to do it. politically within opec no cohesion. >> what changes the dynamic in oil? >> time. over time you'll still have declines here in the u.s. and other non-opec production areas. that will take its toll eventually on the imbalance. that will be pushed back until
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fourth quarter. the other thing that could change things is unexpected arrival of demand. for that you need global non-ocd and global growth to recover. it's not. we're looking at a long slow 2016. >> it's not going to, even if it recovers it won't recover next week or next month. we're talking a matter of months if not more than a year. >> well, let me give you a couple milestones for the next month. first, you have refineries switching over to their summer gasoline production soon. that's your next leg to the down side. they have thick inventories. they won need buy a lot of excess crude right now. second you don't know what iran is bringing to the market. we'll find out really when you start to see custom receipts in march and get a sense of whether it's a trickle or a gusher. from there summer demand response picking up and with the north american consumer still plenty of open road and plenty of excitement about driving in a real economy you might start to
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see some consumption upside. >> what do you think we go down to, 25 reasonable to you? the cover of barons was $20 oil. >> i don't know why you would stop at 25. the market doesn't want to believe in this. they haven't lost their taste for $100 oil. it's as if you have a cognitive d disonance that hasn't gone away. inventories don't lie. you got days of extra supply sitting in storage. as that continues you're not likely to see anything going up fast. >> we haven't even mentioned the saudis and their role in this whole thing and just how much pain they really want to inflict on u.s. producers and if they are content or anywhere near it at this point. >> limiting factor isn't necessarily the u.s. producer so much as the producers who can't cope wherever they may be. saudi's first and most prominent
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target is discipline within opec itself. they are not going to be the only ones transferring money from their treasury to regional rival in tehran. other than that they won't be sad to see a rationizatializatr. production leafs it vulnerable when you take a price back from wti to west canada select you're now in the teens. drop another $5 or $10 you'll see shut ins and that will influence the supply. >> dennis gartman said a week or so ago we won't see $44 oil again in his lifetime. do you buy that? >> i would be reluctant to do that. the mean price of oil over history is 35. so i suppose if you just go mean revert you're safe with that prediction. pretty volatile trend line around that mean. >> kevin, appreciate your time this morning. coming up will there be magical numbers from disney
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after they report after today's bell. a preview straight ahead. plus a special visitor stopping by in the company's california theme park. stick around to find out who we're talking about. take a look at the futures before we go to break. they got worse. we were in the green earlier. tow looks like it would open down 88 points nasdaq off by 18 points and s&p 500 off by about ten points. we're back in a moment.
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welcome back to "squawk box". this morning couple of stocks to watch. yelp reporting smaller breath. shares slumping about 11% much regular trading as yelp gave a week outlook for 2016 and analysts noticed a slow down of its mobile app users. yelp's ceo stepping down. 20th century fox cutting its guidance. company also reporting a drop in second quarter revenue as lower box office sales offset higher tv ad revenue. gap saw same store sales fall 7% in the fourth quarter.
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a 14% decline from banana republic and 18% drop for old navy. shares rose 3% in after hours as gap expects adjusted profit for the year to beat the high end much its previous forecast range. coming up when we return battle for new hampshire that could be a make-or-break time for some gop hopefuls. could we see a few candidates dropping out after granite state showdown? we'll talk about when it we return. before we take a break take a look at u.s. equity futures. dow will open off 85 points. we're back in just a moment.
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but i am only 1%. only 1% of college students are american indian. donate now, and help our numbers grow. ♪ welcome back to "squawk box". we are on market alert this morning. the futures dropping pretty sharply just over the last 30 minutes. we started out the day in positive territory but the dow is approaching triple-digit declines. dow futures down 94 points below fair value. s&p futures off by close to 11, nasdaq down by 15. this comes after two days of steep declines. nasdaq has been down by 5%. oil prices at this point are trading back below $30 a barrel. still in positive territory but we saw in those declines in the stock market pick up as wti
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started to give back those gains. hit been up by 2.5%. wti at 29.88. ten year note which yesterday touched yields below 2.8% is still sitting there at 1.748%. gold prices which have been on a tear in recent weeks as people get worried about what's happening in the markets. it's giving back some of that ground this morning down by $5 but still trading at $1,193 an ounce. drugmaker regeneron missing estimates. also spirit airlines beat mates by five cents. revenue above forecast. that coming despite a double digit decline in revenue per
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passenger flight segment. and ingersoll-rand beating estimates by one cent. results were upbeat despite currency challenges. dow component coca-cola out with earnings earlier this hour. coca-cola earnings coming in at 38 cents a share and adjusted basis. that was a penny better than the street had been expecting. the company's global case volume was up by 3% and coke's results were helped by higher prices. we'll keep an eye on that dow component stock. you can see right now things are relatively flat. we should say viacom matched estimates with $1.18 a share. it was impacted by a 15% drop in viacom's film division. a letter out this morning from deutsche bank co-ceo to the firm's employees, it's a letter of encouragement to workers in the face of market volatility,
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slower economic growth and lower earnings for major banks especially those in europe. he's saying the bank strong and financial reserves for legal challenges are adequate. and that it's hiring more people and investing in technology that improves client experience with the bank. and as you know, deutsch seems to be the poster child of what the concerns are in europe about the situation of the bank. the stock has gotten hammered on an almost every day basis. yesterday it was down 9.5% as financials here have been the worst performing sector year-to-date. that one hasn't been spared at all. he's saying if clients ask you what the situation at the bank is in his words tell them deutsche bank remains rock solid given our strong capital and risk position. >> at what price does it begin a great deal? we're getting there. >> although the thing that's so
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concerning credit swaps is blowing out. that was the first indicator back in 2008 that thing had gone awry. >> it underscores the worry that as our banks are recapitalize and took the necessary stones in the position they are today the european banks were so far behind the curve in doing that. so the pressure just continues to mount whether it's deutsche bank, ubs, credit suisse. >> remember after the crisis they didn't take a bail out. so great. they never took back the steps they needed to take. >> even the losses here have been pretty stunning, goldman is down 5%, morgan stanley down 5%. it's been an almost daily bleed picking up in the last couple of weeks. >> questions as to the weakness in the stock market when it starts to catch up with these
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financials. >> rates low. net interest margin. it's not paying benefits as people thought because, you know, what was the ten year yesterday >> 2.7 in change. >> it's insane. 1.73 was the yield. it's incredible, right? 1.73 is not anywhere i don't think where people saw yields at the start of this year, very few number of people did. >> i'll give mark grant credit. he said we're going back to 1.75. >> there were voices that did but the consensus moves where near that. >> when we come back we'll talk politics as we head into the nation's first primary. plus peyton manning's magical day and we're not talking about his super bowl win. disney's earnings will be out after the bell. we'll talk about the force behind the company's profits and concerns about espn. "squawk box" will be right back.
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. welcome back to "squawk box," everyone. the futures again this morning have taken a turn for the worst at least if you're a bull. right now it looks like dow futures are down triple digits, a decline of 101 points assembly
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fair value. s&p down 11, nasdaq down by 16. we started in positive morning th -- territory this morning. we had steep declines. in the last two sessions the nasdaq is down 5%. peyton manning didn't waste any time celebrating his super bowl win with a trip to disneyland. he was the center of attention at a parade in california. this will be stuck in your head all day. mickey mouse and goofy helping manning wave to the roaring crowd. there was a familiar i'm going disneyland commercial after the game but manning kept that tradition alive with his appearance. >> drinking a lot of budweiser. >> how many can you slip in? >> they didn't pay him. >> it's a home town thing. >> coors.
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>> in the meantime disney set to report earnings after the bell. the latest installment in the "star wars" franchise expected to help boost profit. the film only third to past $2 billion mark. investors might look to the smaller screen. particularly espn reporting a loss of millions of subscribers fueling fears of rampant cord cutting. will espn drag down disney or will the force awaken. good to see you again. it seems as though the concerns about espn have just trumped everything that disney and "star wars" were fully in the stock at the time that the film dropped and then now it's all about espn. >> boob eiger precipitated the media loss with his comment we're losing subscriber. espn is propping up the cable industry. you cannot opt-out of espn if
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you're a cable subscriber. you have to change the whole package or drop cable all together. there have been about a million cable subscribers in the last seven years that have cut the chord. not as tadisastrous everybody o the street is thinking. >> is the growth rate of cord cutting picking up. >> not really. comcast showed an increase in cable subscribers. it's going to happen. no question. five years from now we'll have a different media landscape. >> you would revalue it based on what happens in five years. >> the street is pricing the media companies the way they price financials right now and disney is the most broad based stable diversified company in the whole media sector and as you pointed out it's the film side that's really propping up the earnings. they are going to be great earnings, great revenue growth
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when bob eiger comes out. >> unjustified then? >> i think media in general, but disney specifically is a great buy right now because it's really undervalued. >> it's been interesting watching as the old immediate where a companies lost massive amount of market shares that were given to new media companies. now new media companies are sharing in the pain. >> you got a political year right now which every four wears is a big boost in ad revenue. what's interesting, though, bob eiger has half billion investment. he's been shrewd in the accusations. he has hundreds of characters and captain america coming out in may is another blockbuster . it's a huge ten fold victory. >> how does eiger and disney get the narrative to change. i'm looking at a rundown of
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stories on the news wire about disney. disney needs espn in the game. disney/espn is a key issue. why espn has to get back in the game. espn this, espn that. >> it's still 40% of the business. >> it's better than that. by far the biggest profit center that disney has got. >> that may be the problem. >> it's messaging. eiger has to talk about transitioning. nfl is pushing for over the top streaming nfl. the networks don't want that to happen because that takes away their big money. but disney is going to take espn over the top and it's giving you right now $6 -- cable is paying disney $6 per subscriber. you would happily pay $6 so get espn and all of its franchise. >> you don't believe that if they go over the top tomorrow, that they will ultimately -- >> no it's never going to happen
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tomorrow. i'm saying five years from now because they make billions of dollars from the $6 that each cable subscriber pays. >> they think it's will happen much sooner. >> what eiger is doing is laying the ground work forgoing over the top. >> you're not charging $6 you're charging something on $20. maybe $25 a month. $30. much pricier. >> what nobody is appreciating is not going to happen tomorrow. it's a distant thing. eiger set off that media collapse in august he'll do the same thing if he doesn't sharpen his messaging and say we're going with the transition. we're on top of it. most of the other media companies don't have the option that he has. >> so, a year ago, 52 weeks ago the stock was at, 52 week high was 122. today it's a 92. you say it's a great buy. you believe the stock has gotten cheap enough. >> it may not be momentarily the
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great growth stock but it's a huge value stock and under valued right now. >> appreciate it. see what happens after the bell. see what mr. eiger has to say. it sounds like you think that's the most important thing at this point. >> absolutely. as you pointed out. that's what analysts are focusing on. they forget the fact that "star wars," forget the film side it's the merchandising and royalties and tleem parheme parks. he can create "star wars" theme parks. >> music to my kids ears. before we talk politics we should tell to you keep your eyes on the markets. the futures are down. down in a big way. take a look what's going on. dow off by 115 point. nasdaq looking to open down as well. 22 points off. s&p 500 looking to open down 13 points. we'll check out the price of oil as well as that. wti crude has dipped below $30
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again. had been trading above that. we're now looking at 29.77. thank you iae. that's taken some of the wind out of what wti had this morning. >> right. >> okay back there? okay. we have a little -- a little accident on the set. >> he's good. are you okay? you haven't injured yourself. >> the nation's first presidential primary in new hampshire already under way. polls opened at midnight. it's make-or-break contest for some recandidates. who will take the granite state and who could we see or whether we could see any surprises. joining us with his analysis former pennsylvania governor ed rendell. good morning to you. you know, i started talking about the republicans. given your history, i want to talk about the democrats for a
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second which is a new poll out saying that nationally at least hillary and bernie are completely and utterly neck and neck. do you think that stands? >> got to be careful about the polls. that's quinnipiac. the other six major polls have hillary anywhere from 16 to 22 up. so i think that poll is an out lie liar. polls don't mean much particularly on march 1st when 13 states go to the polls. >> you think hillary just takes it? >> i think she takes it. obviously bernie is making a much better challenge than anybody thought. you see the response with significant segment of our party's base. and it's going to be not an easy fight but i think she will take it. she's just so strong with african-americans and latino voters who are a very large part of our base. but as you get into states that are more diverse she's going to do much better.
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>> can you speak to the whole banking thing, the wall street situation which is to say bernie forced her into a corner both on the speeches, what she said during these speeches she made to places like goldman sachs where she was paid a lot of money and also the issue that perhaps she wouldn't be willing and she sort of said it on "meet the press" over the weekend she would never appoint somebody from wall street to be the treasury secretary. >> well, i think we've demonized wall street and to some extent they deserve to be demonized. you know the role they played in the financial collapse of the country. that was more than just wall street as hillary pointed out, it was more than just wall street, it was insurance companies, mortgage companies. but -- >> not a popular thing to say. you need stay on message with bernie. >> the fact is that this whole idea that a politician raises
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money from a certain segment and that means that they do exactly what that segment, the banks want them to do, that's ridiculous. hillary was for dodd-frank and a lot of things that wall street was against. i remember when i was running for governor, donald trump was a very significant contributor to me. i think $30,000 or $40,000. he want ad gaming license when i became governor when we expanded gaming in pennsylvania. he want ad gaming license. the location he chose was a bad location and we didn't give him a gaming license. now, that's not uncommon. politicians do that all the time. >> what did he say in response? was there fall out from that, governor? >> i can't say it on the air. [ laughter ] >> so, governor, given that you're supporting hillary i'm curious who are you rooting for on the republican side? >> well, either donald or ted cruz. i think they would be the
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easiest candidates in a general athletic. the republicans i think hillary will lose tonight, lose probably a lot closer than anybody expected if you look at the polls eight days ago. eight days ago she was 33 points behind, now she seems to be somewhere in the 10 or 12-point range. republicans are fascinating. donald looks like he'll win a solid victory. then you got five or six people claiming to be second. >> you don't think donald would completely damage hillary in a one on one debate. he's so good -- i see him spending an hour talking about monica lewinsky. >> one on one debate is much tighter than the debate style donald has been in. you're forced by the moderator to get back to the question. to have good details. i think donald, if he's the nominee he has a lot of work to do to be ready for those one on one debates.
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what's interesting to me tonight who survives. cruz and trump will survive. rubio will survive but rubio if he doesn't come in second will be wounded and the question is among kasich, bush and chris christie who survives and i think if they get over 10% and they are bunched between 15% and 10% kasich and bush will go on, chris christie doesn't break 10 doesn't look like he's going to break 10, i think he's history. >> okay. we'll see. governor rendell thank you for joining us this morning. great to see you. >> you too. >> appreciate it. >> when we come back some quarterly results from coke. the numbers out moments ago. we'll talk to an analyst facing the beverage giant next. and if you're in the car on your way to the office, we're on market alert. markets this morning, you can see are down by triple digits. of course you're in a car your can't see. dow futures down by 107 points below fair value.
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s&p futures down by 12. nasdaq off by 21. "squawk box" will be right back.
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o buckle this morning there's your market picture. pre-markets implied open dow would open lower by triple digits right now by 114 points. broader market not looking too good either. s&p with an implied open down 13.5 points. yesterday at one point the dow was down 400 before it managed to come back and close down by about 175 into the close but we're watching oil again today which has now turned negative. what's positive by 2.5% at 6:00 a.m. in the east two hours later you see a different story. oil is negative dragging the overall market down with it. >> coca-cola, the dow component out with earnings this morning. the results came in above expectation. joining us right now to break down the numbers is ubs environment steven powers.
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what do you think of the report so far. it was better than expected. >> the quarter itself was better than expected, 38 cents versus consensus at 37 cents. underlying organic growth came in at 5% which is a point better than expected. the quarter itself was strong. the guidance for next year is where the debate is. guidance was a bit lighter. i was looking for $2.05. consensus was above $2. so 1.90 to 1.94 which is a bit weak. part of that, though, they are accelerating the divestiture of their bottling division. >> incredibly long statement from the chairman and ceo talk about their plans. is this something that you liked and what you read? >> yeah. i like it qualitatively. no numbers. the question is how quickly and at what cost these assets are
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divested. the nature of coke at its core coke is an asset like brand building company. over the last decade or so they've taken on bottling asset, manufacturing distribution assets. generally speak being coke and investors would like them to rid themselves of those asset, improve overall returns. that's what they are doing. they are doing it at an accelerated pace. that's good. the cost is the question. >> what will you listen for in the conference call later? what's acceptable cost, what's unacceptable? >> i think, assuming that this is a one year dilutive step, step to the side and we resume as planned growth looking beyond fiscal '16 that's acceptable. they've implicitly implied there's a point or so drag by the acceleration of divestments. that's fine assuming it's a one
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year thing. coke is in the low 20s from an operating margin perspective. as you look through this process they will be up close to 30% quite quickly. the return of investment on coke will be significantly improved. and it should result in a higher trade multiple. >> do you think a currency head wind becomes a tail wind a little bit if the dollar -- >> not quite there yet. coke, over the last -- since 2011 coke has basically incurred a cumulative head wind of 20% on their $45 billion revenue base. that's a huge head wind. looking out to fiscal '16 another year of head wind based on where markets are now. we're looking at a neutral fiscal '17. so we need some dollar weakening. >> you would tell information buy now or wait for the conference call? >> i would wait -- i like coke no matter what. i think what they are doing now is directionally correct.
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we'll see how the stock reacts today. everything they are doing is right on where they should be strategically. steve, thank you. >> coming up, when we return, the bank stocks losing their bite. is this the tech bubble 2.0? that's next. and the other stock to watch is viacom. we'll talk about it. back in a moment.
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a global market roller coaster ride breaking overnight. japan stocks plunge nearly 5%. now stacks around the rest of the world are swinging wildly. a market defanged. taking a bite out of sentiment. plus decision day in new hampshire. could the first in the nation primary be a game changer in the race for the white house? we'll hit the campaign trail as the final hour of "squawk box" begins right now. >> announcer: live from the most powerful city in the world, new york. this is "squawk box". good morning again and welcome back to "squawk box" here on cnbc first in business
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worldwide. i'm becky quick along with andrew ross sorkin and scott wapner. take a look where the futures stand. you'll see right now dow futures are down by triple digits. when we first walked in this morning it looked like things had stabilized. dow was up by 18 points above fair value. this comes after two days of significant losses for all the major indices. none so much as the nasdaq which is down by 5% in the last two trading sessions. oil prices started all of this. terror trading well off the highs of the session. still up by five cents. wti is down to 29.74. the iae released its latest forecast. they are expecting a drop in global oim demand caused by slow downs in europe, china and united states. as soon as that news come out oil prices came off their highs. overnight many asian markets
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remain closed for the lunar new year. those were the lucky markets. the ones that were open saw stocks slammed. nake i can closing by 5.4%. check out the ten year japanese government bond. that's right the yield analog below zero for the first time. decline of 0.19%. we've seen stocks in europe drop throughout the morning as well with things relatively flat to modest declines. now the dax is down by 1.6%. and the ftse is down by 1%. >> today's top stories. the cdc activating its highest emergency operations level in response to the zika virus. the level one activation means the cdc will accelerate preparedness for the transmission of the virus by mosquitos in the united states. that including developing diagnostic tests.
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also we have a developing story, rioters clash with police overnight in hong kong now. we have some images. a place minnesota firing warning shots into the air from his handgun in an attempt to quell the riots. police used pepper spray to disperse the crowds. the unrest started when local authorities tried to prevents street food sellers from operating. activists were dissatisfied with hong kong's administration took part in the clashes and becky mentioned that food is always the issue. >> a food vendor that started the arab spring, if you remember. an outburst there that led to riots throughout the region. >> some other news this morning, the first votes have officially been cast in new hampshire for the primary there. nine voters in dixville knox making their picks giving an early lead to bernie sanders and. john kasich.
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larry kudlow spoke to john kasich and that interview comes up at the bottom of the hour. >> a few stocks on the move. viacom reported a profit of $1.18 a share. revenue fell. we'll talk to a viacom analyst at the bottom of the hour. retailer sears is projecting fourth quarter and full year 2015 revenue that comes in below street estimates. it sees a 7.1% drop in fourth quarter comparable store sales saying the holiday season proved challenging. as a result sears is accelerating the closing of unprofitable stores. dow component coca-cola reporting earnings of 38 cents per share. that's one cents above estimates. revenue coming in above street forecasts. worldwide case volume was up 3%. markets obviously off to a rough start to the year with a sell off in technology and dragging down the nasdaq by 15% already in 2016.
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tom chu joins dom chu joins us. >> reporter: any guess where the markets go if tech leadership doesn't in fact try stieblize at least for some time here now. if you take a look so far in 2016 the reason it's a big deal technology is the single biggest sector. when it goes down a lot of weight is put on the town side. look at the s&p technology sector year-to-date already down 12%. over the course of the past year we've seen this gradual decline from the highs we saw back in just about december, early december here. you see that decline here still off 6%. if you take a look at some places where the most impact has been done, the most damage in the market value side of things, no surprise. apple is by far one of the worst out there. it's lost about $63 billion. through ten of trading last
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friday. so approximately $63 billion loss in market cap so far year-to-date. alphabet google the parent company down $44 billion in market value and microsoft as well, $43. these three companies represent the biggest market losses. if you total it up this is big. if you look just year-to-date you're talking $383 billion in lost market value. so as we talk about what's happening with technology and financials, the two biggest sectors in the s&p, both of them are showing real signs of weakness adding more cause for concern for all those traders out there that believe we may be due for more down side. no crystal ball. technologies and financials two places you want to keep an eye on. >> thank you,d dom.
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we got a whole crew to help us try to figure this out. the question is, is this the bottom in tech land or are we going -- we're crashing to the floor >> i don't know we're at the bottom yet. we're 2k0u7b% from the highs in early december and it appears that the high flyers, that have largely been priced on to sales are having troubles now and we think money will flow to the companies that have some earnings and fresh cash flow. i'm here representing old tech and i think there will be a shift back to value. but i think the water is fine in the pool, the free cash flow. >> is this 2000? >> i think actually -- i think that there's going an accelerated shift towards the new technology. that's what always happen when we get into a period of uncertainty. there's a lot of confusion. we got tableau and linkedin
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setting the stage. tableau is not a platform company. linkedin more barriers to entry. google bar towers entry. facebook, amazon barriers to entry. in '08 and '09 when markets were crashing and huge uncertainty these companies fundamentals took off and we think that's continuing. >> what's the barrier to entry for linked in. >> they were there first and you're not going to put your resume on another website. recruiters, this is the most heavily used site by recruiters, they are bringing in more training. labor friction costs us just in this economy $640 billion a year. >> what's >> just made this acquisition. it's a retraining and educational site. becoming very popular including
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on college campuses. >> where are you, john? >> i'm right here. i think we're seeing the shake out in cloud and big data, a couple of, you know, buzz terms that have been float around for years that too many investors have not understood. cloud is a meaningless term in and of itself. you got to drill down and say is this infrastructure as a service software as a service, platform as a service and what's going -- >> there's so many barriers. you think i'm wrong on that? >> i do. there are significant barriers in the cloud but there are different kinds of barriers. take a look at facebook. we talk about it as a social media company but really they change ad lot of things including the way they do infrastructure. there are a lot of barriers around facebook just because they know how people are connected, they have enormous amount of data on people's online behavior. contrast that with yelp.
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we just saw their earnings yesterday. their growth has slowed down. they don't have great data. their site and services are not architected particularly well. they will have a slide. some companies will thrive, some survive and some die in this environment and based on how much value do they have in their technology and what they are selling. investors can't just say hey this is tech overall. you got to look where the value is and who can thrive or at least survive going forward. >> how about the message for anybody who wants to answer of what happened late last week. linkedin, a real company. down 40% in a day. you spoke on tableau. but what message is that sending to investors? >> i think there was just fear. tableau, competition coming along. they admitted it finally. and i'm happy to say we sold it last year at 127 fearing that the barriers to entry were not there. when you call yourself the excel of this decade microsoft will come after you.
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that's what's happening. linked in does have real barriers to entry. they were throwing the baby out with the bath water. gave us a great opportunity to continue to increase our position in linked in. >> what steve said about price to revenue not playing as well as price to earnings is work day is now trading at, let's see, six times forward revenues. >> that got crushed on friday. all those things. >> the price is back down to the ipo. linked in is trading where it was a very new company. investors are not believing the overall growth story of these companies. i think that's an opportunity for some people who are willing to look for what the value, what the technology differentiation really is for these companies. >> especially for the natural monopoly, linked in is effectively a natural monopoly. amazon web services is the operate system of the cloud.
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natural monopoly. there's an accelerated shift to that. >> work day is not. but what they are trying to do, they got this human resources product which is essentially like peoplesoft for the cloud era. they are trying to expand that into financials. not clear whether they can do that. oracle is trying to keep them from getting a foot hold. >> what about april signal >> i think it's very cheap here. >> it's been cheap the whole time? >> it has been cheap the whole time. obviously having some comparison troubles here. not so much a share loss just tough comparisons. trading at ten times earning, eight times x cash. relative performance of the stock has body. after the march quarter we'll see the performance of the stock bottom. maybe not take off right away -- >> 12 months from now where should it be? >> our target price is 120. we'll see. i will argue it will out perform
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the market in the next 12 months. >> are we seeing a permanent leadership shift in tech from these high growth names, the very names we've been discussing getting destroyed to older tech, more value perceived plays within technology? >> i would love to argue that. it would add ten years to my career. kathy is right. platform companies is to be in. st. cloud a secular trend. aws is the data center for the world going forward. so that's the way to bet over time. i think there's trading opportunities in names like hp enterprise and cisco and apple and i think there's some money shifting to those cheaper names. longer term it's against them. >> the other thing that's going on you mentioned media and retail at the beginning. technology is disrupting every sector. amazon taking half of incremental online sales during the holiday season. that's crazy. all the other online players
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taking a quarter of all retail sales. that's amazing. >> offering deep discounts. >> that's it. price declines. writing down technology cost curves and driving prices very aggressively. >> beating inflation. >> right. >> the last full week of this month is one to watch. we'll get earnings. these are names that have really led growth, what they say particularly about the next quarter which is where a lot of these companies have been missing i think will be really interesting. >> john, thank you, steven, kathy, thank you. >> when we come back a rocky start to the year for stocks. where are investors hiding their money. we'll take a look at one of the top spots. as we head to a break, take a look where traders are. dow futures down 100 points.
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down 100 points at this point. s&p futures off by 11 and nasdaq down by 27. stay with us. you're watching "squawk box" on cnbc, first in business worldwide.
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welcome back, everybody. the treasury market re-emerging
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as a top destination for investors looking to stash capital amid a global downturn in stocks. the u.s. ten year falling to its lowest level in over a year. you can see when you look at the yield, 1.741%. is this simply a fear factor trade? >> it's a big piece of it. i think if you look what happened in january and in particular investor risk aversion really peaked with the route in chinese equities. no surprise and also in oil and a lot of floss coming out of high-risk bonds. high-risk corporates and moving into treasuries the. the last week to two weeks has bean subtle underlying shift that the move has been driven by economic concerns. they have priced out future fed rate hikes for 2016. >> part of it is fear factor.
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thinking through what we watched happened to other sovereign notes this is historic. we even watched today the japanese ten year bond falling into negative territory. >> i think the international relative value is lesser of an issue because you have to contend with currency crosswinds as well if you're a foreign investor coming in to the u.s.. if you hedged out all your currency risk, you would receive in the long run basically the same return you have right now on ten year jgb. >> is this a good idea. should you pile into treasurys at this point? >> we were somewhat optimistic at the beginning of the year. obviously could be further than we were anticipating. but at the same time, we're really close to the bottom of our economic fundamentals given
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trading range. so to the extent that the long end of the u.s. bell curve reflects economic expectations particularly with regard to inflation we're probably at the bottom of the yield range or close to it and we wouldn't advise aggressive buying at this point. >> we've been talking about a lot of issues with the credit markets today including deutsch bank and some issues we saw in the credit default swaps there. what do you think of this? is this signalling bad things that are align here? >> what it's signalling and using deutsch bank, what it is signalling, really is that there's a lot of market, we call microstructure issues that are having macro economic impact. with deutsch bank situation what it seems to be is a group of hedgers called counter party valuation adjustment desks that seem to be aggressively buying protection in deutsche bank cbs. that's growing bigger and bigger having market wide and macro
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wide impact. so market issues causing macro events. >> what do you think about european treasuries. >> for u.s. investor for domestic based investor we're not advising they put much of their funds overseas particularly in europe. for a couple of reasons. number one as you mentioned absolute yields are very low for the european sovereign markets. number two a lot of optimism in the long run over what qe can do to bond yields in europe and i suspect given anything, future european qe will underwell as opposed to overwhelm. >> how important is janet yellen's testimony this week? >> it's huge. one thing we're looking for when she publishes her comments tomorrow morning does she reference recent market turmoil.
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it tells us in recent fed officials comments of largely avoid talking about the market turmoil and what it tells us is how policymakers are considering this as a factor in their decision-making. if janet yellen's prepared remarks avoid market turmoil it's a clear signal all the fed cares about right now is jobs numbers and inflation numbers. at least in the jobs still running reasonably strong. >> the hike is not off the table for march and that's what's going to put people on edge tomorrow? >> exactly. that's the question for the march decision is does the market turmoil enough affect fed decision. >> greet to see you. >> thanks for your time, becky. >> come aupg closer look at the big moves in global stocks and price of oil ahead of the opening mile. and emoj ikea board.
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whose behind it. >> announcer: this friday "squawk box" tees off from the at&t pro-am at pebble beach. joe and becky hit fairway one to talk business, the economy and golf. guests include at&t ceo randall stevenson, former humana ceo, cbs caremark and hall of fame quarterback steve young. "squawk box" live from pebble beach this friday at 6:00 a.m. eastern, profit from it. we're the hottest young company around but if we want to keep the soda pop flowing we need fresh ideas! >>got it. we slow, we die. >>what about cashing out? no! i'm trying to build something here. >>how about using fedex ground for shipping? >>i don't need some kid telling me how to run a business! i've been doing this for 4 long months. >>fedex ground can help us save money and deliver fast to our customers. not bad, kid. you remind me of a younger me.
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>>aiden! the dog is eating your retainer again. let's take a short 5-minute recess. fedex ground is faster to more locations than ups ground.
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. welcome back to "squawk". futures right now not looking pretty. in fact, we're pretty much hanging out at the worst levels of the morning. s&p 500 down 12 points. dow would open lower by more than 100 points. all of this coming after yesterday's 400 point drop for the dow and recovery to drop of 175. market remain under pressure. crude oil has now turned negative as well perhaps on an iae report saying crude prices and supply and demand imbalance will remain that way for sometime keeping that pressure on crude. wti which was above 30 bucks a barrel has moved back below and
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the overall market appears to be following suit. check this out. monica lewinsky is launch as new emoji keyboard combat cyber bullying. it's in honor of safer internet day. it's to help people feel less alone when bullying incidents happen online. >> pretty cool. coming up viacom posting quarterly results. revenue falling slightly before forecasts. later decision day in new hampshire. going head-to-head in the nation's first primary. we'll head down or up to the granite state with cnbc larry kudlow who will join us in a little bit. we'll be right back with a lot more after this. hey guys, i want you to meet my fiancée, denise. hey. good to meet you dennis.
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. welcome back to "squawk box," everyone. it is 8:30 on the east coast and here's what's making headlines this morning. a multibillion dollar deal in the utility industry. canada is buying itc holdings.
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it's the largest independent transmission company in the united states. former new york city mayor michael bloomberg is considering a run for president. he told the "financial times" that he was looking at all his options. he says the current campaign is what he calls an outrage and an insult to voters. and the international energy agency says the world oil glut will worsen this year. cuts in u.s. out put will take time to hold and opec countries will unlikely to come to an agreement to reduce production. oil below $30. u.s. equity futures have been trading down as oil trended down. we're at our worst levels dow down 125 points. this comes after a decline of 175 points yesterday and a big down day on friday. s&p futures down by 13 and nasdaq off by 31. >> new data on consumer bore roger in the fourth quarter
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raising revved flags. phil lebeau joins us now. >> we're talking about delinquencies of more than 60 days. people haven't paid their auto loan for two months and subprime borrowing. take a look at growth of subprime loans. in the fourth quarter percentage of open loans going to those with a subprime score between 500 and 600 on the credit rating was up 9.3%. and when you look at the market overall keep in mind that subprime and deep subprime now make up basically one out of every five open auto loans that are out there, about the same as the super prime the highest end of the market with regard to delinquencies, 60 day delinquencies in the fourth quarter were up half a percent. now 0.77% of all auto loans. they are 60 days past due.
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those are the most severe past due loans that are out there. and keep in mind when you look at those the average balance about $3042 for those 60 days past due. two earnings i want to focus on. group one, importantly when you look at the dealership stocks those earnings are coming out on thursday. and then the other one that really everybody is talking about, it happens tomorrow after the bell. tesla will be reporting and oh, by the way if you've been watching tesla this year this stock is getting crushed. now under $150 a share down 38% year-to-date. that's not over the last year that's just since january 1st. again their earnings come after the bell tomorrow. >> thanks, phil. >> especially in the last ten days it's gotten hammered. just obliterated. >> lower oil prices. not helping either. >> suvs parked in new york city on the street which i was surprised by. like not in the parking lot kind
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of thing. >> you're thinking of buying one? >> no. my children were admiring the winged doors. >> the old delorean. >> something to behold. >> viacom posting quarterly results. revenue was short of forecast of 15% drop in film unit revenue was among the negative factors. joining us now to break it down, james dix here on set. what's your take way from these earnings? >> the number, if i'm forced to look at one number in the results i would like at their domestic advertising which was a little bit better than expected. down 4%. we were at around down five. so that's consistent with what fox talked about last night. near term advertising not so bad. >> headline has weakness in film and cable. that's how the narrative is
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being written this morning. >> wrong narrative. domestic advertising side, i mean that's what people have been focused on at viacom because of the ratings from the television networks flowing through to just the secular trend of advertising moving from tv to wherever else. >> when you try to figure out what the stock price should or should not be how much of it is the actual operations and how much are we talking about the family dynamics and everything that's going on around this stock. >> yeah. certainly i think -- >> premium. something about to happen. >> right. >> or not. >> i would say more on the or not side. just because, you know he's still there. he's 80% owner directly or indirectly. basically, you know -- >> is that the right move philippe dauman to be elevated
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to chairman. some would like to see him removed as ceo all together. >> yeah. i think that's the more relevant issue what should, who should the operating management be, what should they be doing as opposed to whether the ceo and chairman role should be combined. i would say viacom is in a situation where they are trying to deal with whether their brands have out lived their audience. and, you know, so their audience that they are targeting is younger. i don't think there's anything that they've done in their strategy recently which has been a big surprise to people. so activists who were concerned about what viacom is doing, i'm not exactly sure what their motive is. >> let's strip out the idea there's a take over premium. strip out things that change. how do you value this company if it continues as it? >> before the recession, if you look back 2008, 2007 they trade
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premium on earnings to their peers. that's been a long time. and now they are trading at 20%, 30% discount to their peers because they are targeting a more volatile audience and volatility lowers the multiples you put on that earning stream and it's an audience which is to some extent in the greater secular decline because it's younger than the audience of other companies like cbs. so, you know, they are not going to get parody on earnings versus their peers on any time soon. >> i'm confused. it sounds to me that you are looking past the criticism of whether they are activist investors or just large shareholders who look at the performance of a company whether it's stock or otherwise and say it's dramatically underperformed their peer, they are behind in some of their digital properties, they need to do asset sale or go out and buy
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something. you don't agree with any of that? >> if you're going sell you have to find a buyer. it's not entirely clear who that buyer would be. easy to come up with a sum of the parts analysis where you put a higher value on, you know, any asset you want to figure, whether it's a network portfolio again i can find fox or somebody else private equity. >> are you concern with the governance issues? as a fiduciary duty to the shareholders those could be in conflict >> nothing about this is new. anyone who came to this -- i mean sumner redstone had 80% control for decades.
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you're coming to the nuisance as a lawyer might say. you're going oh, i'm shocked. shocked to find that, you know, the board basically does what, you know, sumner redstone wants it to do. you weren't complaining when viacom was trading at a premium to peers back in 2008 and guess who was the majority shareholder. >> sounds like you would tell people not to buy. >> we're neutral on the name because you have these secular challenges. they announce a deal with snap chat this morning. that highlights the secular challenges they have. >> who do you like? >> i mean i would prefer certainly in the naerm a tiear time warner. lowest advertising exposure of any names. under 20%. brand which you have a pretty good intuitive sense can go direct to consumer like hbo. you know in a world whether
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you're going over the top or not, you know. they can approach that with, you know, more indeference. i think longer term what's you sort out what the macro will be you go more with cbs over viacom. they have 50% advertising exposure not so good if every morning you're worrying about oh, auto delinquencies are up. what about auto advertising. that's not good for tv. you'll have that headline risk until we sort out the macro. long term cbs giant television studio not a lot of exposure to film. pretty good management. >> a year from now is philippe dauman still the ceo? >> yes. >> stories are being written that he has a year, to the end of the year to turn things around. >> i think mario may have laid down that line in the sand. he's a media investor. i have no reason to believe that the board has laid down that
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line and they are the ones that hire him. >> thank you. >> thanks very much. >> when we come back it's primary day in new hampshire. many calling it a do or die day for many republicans in the house. we'll hear from john kasich in his own words next. first though as we head to the break check out the futures right now. okay. now the dow futures are down by 154 points below fair value. nasdaq down by 45. these are the worst levels of the work. stay tuned you're watching "squawk box" on cnbc first in business worldwide. this just got interesting. so why pause to take a pill? and why stop to find a bathroom? with cialis for daily use, you don't have to plan around either.
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welcome back to "squawk box," everyone. the futures this morning have been under pressure. we started out in the green this morning with the dow up fractionally, up by 18 points. can you now see that things have taken a decided turn for the worse for the bulls. dow futures down by 143 points points below fair value. nasdaq down by 43, s&p 500 down 17. the price of crude also dropped. at one point we were up 2.5% now down 1%. wti is at 29.41. european equities more of the same. been getting worse all morning with the dax down 2%. cac off 2.6%. in italy that market down 3.2%. >> this is definitely causing more of a drag on futures here and once europe closes at 11:30 eastern maybe get some
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stabilization. the numbers you just read are ugly across the board. >> we'll get up to election central because we have political news and primary day in new hampshire. john kasich is hoping for his final push in the granite state and the hope i want pays off. larry kudlow stat down the gop hopeful last night to talk about the campaign, economic growth and his role in government. >> i think government closest to the people is the best. i don't like big business, big union or big government. it stifles and stomps on people. i don't like that. so, there are times when government has got to help. but we have to transform it from a help to up on your feet. >> on this government big business thing, donald trump said today, we talked to donald trump, he said there's too much cronyism in the republican party. too many big pharmas, oil companies, defense companies, they have too much influence with too much money and time to
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change the gop. do you agree with that. >> in some respects because i've never part of the establishment. i've always fought the establishment. reagan fought the establishment. newt fought the establishment. i think we should not like coddle anybody. if you're big and you're mont monopolistic we got to deal with it. >> so thought experiment, all right. stock market is plunging. profits are going down, there's unrest and turmoil around the world. can you not rule out a recession. >> i worry about that. >> all right. so president kasich in early 2017 unveils his anti-recession program, his new growth program to reignite the economy. what are the goals. what are the key goals? >> first jends withagenda withit 100 days you need a seat belt.
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regulation reform. it kills especially small business if they are mindless. we're going change that. freeze federal regs for a year except health and safety and my vice president will untangle all this regulation that chokes small business. two we got to cut corporate taxes. give them incentives to bring their business home. let them write off the investment, plant and equipment and lower that corporate tax rate. i'm at 25 you say it can go lower. i'm open to that. on the personal side 28, 25, 10 and a capital gains tax of 15 and an community to increase the earned income tax credit when you clean out the fraud and a fiscal plan that shift as lot of programs back to the states, and restrains the growth of spending. you get there with both -- look when there's certainty on the regulator you get growth.
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>> psychology. >> it's a formula. makes the car go. >> you know who the biggest beneficiaries of lower corporate tax rates are the wage earners. shouldn't the gop help sell that on that basis? >> well i'm selling all this stuff. that's why you entered the town hall and people are positive because these -- larry, these are formulas that work. >> larry kudlow joins us now live from new hampshire. good morning to you, larry. the big question i would ask you, what do you think his chances are? >> his clans are improving. in some sense kasich is one of the hottest people in this race. moving up has excellent chance of coming in second. i hate to make any predicts but i'm just saying he's had a nice rise. andrew, he has developed a positive optimistic, you know,
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we can solve message. it took him a while to get around to that. but he's got his sea legs on that message. i saw him at a town hall last evening. and he was terrific. he was absolutely terrific. and the crowd which i'm told was randomly selected, when he was over they gave him a standing o. i was like watching this. i'm going wow. that's a lot of enthusiasm. it was in the evening in new hampshire on a snowy night. i think he's a hot ticket right now and i think he's a key challenger for second place. >> what happens after this race, not this particular race but this primary which is to say do you think we'll see people dropout and if so who? >> i suspect you will. i think dr. carson will dropout. chris christie is going to have a lot of trouble. the chris christie story is sort of ironic. he basically took down rubio and
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right now in the last few days rubio has been like a fighter trying to get off the canvas. the whole thing has changed. whether it helped governor chris christie i don't think so and if he doesn't get a second or thir third in this thing, it's going to be hard for him to can't. the race will widow down even more andrew as they move into south carolina. this will be tough. cruz will be there, believe me. cruz will be there. he will hang tough with trump. trump, of course, will be there. jeb bush told me in an interview yesterday that he has the resources to hang in there. so we will see. rubio probably does too. i don't know. this has not ban good couple of days for marco rubio. >> larry, before you go, weigh in on michael bloomberg now, which he is considering jumping in does it make sense to you for him do that? >> well, look, michael bloomberg
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was a very good mayor of new york city. i think frankly he has to deal with the hillary thing. if nothing happens to her legally, i'm not sure what his opening is. he's got a lot of money obviously. he will draw heavily, andrew -- at least this is my take -- if he were to run as an independent, he will draw heavily from hillary clinton in the general election. it's sort of the reverse ross perot hurt papa bush many years ago. i think bloomberg really hurts hillary if she's the candidate. right now you have to say she's the odds on candidate. so, i think the flyover country in america -- god bless them all on main street -- they like to eat french fries. they like 16-ounce slurpees, i'm not sure mayor bloomberg will fit the bill for them. we'll see. i must say at the moment, i don't take it all that seriously. >> okay. appreciate it. talk to you soon. when we come back, we head
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to the new york stock exchange and check in with jim cramer. later today, don't miss coke's coo on "squawk on the street" that comes 10:30 a.m. eastern time.
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. okay.
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let's get down to the new york stock exchange. jim cramer joins us now. around 3:00 this morning i saw a tweet from you that said the setup necessarily right now, but let's see where we go as we get closer. we're not getting better as we get closer. >> no, we're not. let's see what janet yellen is saying. this credit news out of credit suisse is spooking people. obviously they never raised the capital we did. it is shadow boxing. when you look at different loan portfolios, you don't see was would cause the weakness. i'm not whistling past the graveyard here. that's been a big issue. when i tweeted at 3:00, oil was still looking up. oil above 30 is a different market -- different animal than animal below 30. we're so worried about chesapeake. chesapeake is a major focus. i'm worried about sprint.
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i'm worried about genworth. there's one nobody is focused on. in europe t is credit suisse and deutsche bank that people are concerned about. it's hard to put these issues in perspective. they are causing our bank stocks to go down every day. the bank stocks seem like pitiful helpless giants as if they all trade together. that's a very 2011 analysis, not a 2016 analysis. if you say that, you seem like a pollyanna. >> to your point, goldman down 6% yesterday. morgan stanley down 5%. deutch down 9.5%, now the co-ceo is sending a letter to employees saying we're rock solid. >> you never want to see that. you have to say to people, as jpmorgan said, when you have to say to people your credit is good, it's too late. >> we've seen that before. >> yeah. i will say that goldman sachs, yes, there's been no ipos. there's been no m&a, how can goldman make the numbers? at the same time there is a book value. the big disconnect here is
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there's no way to marry the book value to what stock is doing. you know, if book value is at a discount of 148, it will be 140. the actual balance sheets of goldman, i'm not questioning it i'm not going to question it. >> sure. >> lowe's of the morning for the futures. we'll see you in about four minutes. see you in a bit. coming up, the squawk planner stories you need to watch in the trading day ahead. know your financial plan won't keep you up at night. know you have insights from professional investment strategists to help set your mind at ease. know that planning for retirement can be the least of your worries.
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it has been a busy morning at cnbc. still to come, wholesale trade and the jolts report, and dow component disney after the bell. scott, thanks for being here today. >> all right. >> join us tomorrow. right now it's time for "squawk on the street." ♪ good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. another ugly morning in the premarket. more worries about banks, about oil. we do have earnings from coke, viacom, wendy's and more. the nikkei down 5.5% overnight. the worst session since mid 2013. europe since again unable to hold some early gains. german industrial production was


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