tv Worldwide Exchange CNBC February 17, 2016 5:00am-6:01am EST
good morning. crude fight. major opec members try to convince iran to join an oil production freeze deal. breaking overnight, tehran calls the request illogical. >> follow the money. new details on what the world's most powerful investors are buying and selling right now. >> and best in show. we'll bring you pictures of the german short haired pointer everyone will be talking about today. it's wednesday, february 17th, 2016. "worldwide exchange" begins right now. good morning and welcome to "worldwide exchange" here on cnbc. i'm sara eisen.
>> and i'm dominic chu filling in for wilfred frost today. our top story is of course oil. venezuela's oil minister is in tehran today, meeting with officials from iran and iraq. the latest report suggests iran will not join in a deal between saudi arabia, russia, and other producers to freeze output at january levels. iran's opec envoy calling the freeze illogical, arguing the current drop in prices was caused by other producers lifting output while iran was under sanctions. crude prices have been swinging on every report and comment coming out of these particular talks. >> i think there's actually a genius move on russia and saudi arabia's part. a tactical move. all you have to do is just chatter about it. have a meeting, talk, and they get lift to the oil price. also, this puts the blame on iran. it makes it look like russia and saudi arabia are trying to be very productive and helpful on the market.
i think it's a really genius move on their part. >> a lot of talking going on. the other potentially market moving event to watch today, weekly inventory data from the american petroleum institute. >> this is what investors were worried about. this is why crude lost its gains that it got from its original agreement in doha last night because there would be holdouts. iran and iraq would be tricky to get on board. and this deal was contingent on opec members all agreeing to it. >> for months, many assorted oil ministers, oil officials around the world have been talking about this oil of possible production ut cans. yet, every time they do so, the effects are wearing off. it's like the boy who cried wolf. at some point, you either have to show you can cut production or show that you're not going to cut production. >> although, the bulls would say this is a major achievement, what was agreed upon in doha. for the first time ever, you got coordinated action between
russia and between saudi arabia, two of the biggest oil produc s producers. it was the first time they got an acknowledgment. while iran is not coming in so easily -- >> it's a big wild card. >> there's an effort under way. and crude oil prices are rising this morning. let's show you what's happening with stock futures, which are paying very close attention to the oil market. in the u.s., we're looking at a rally here, giving back earlier losses on futures. dow futures up 38. s&p futures up almost six points. so fractional gains here. still, positive. the nasdaq futures up nine after the best two-day rally for u.s. stocks since back in august. let's show you the early action in europe. earlier we had seen losses. with crude's turnaround, you see gains right now.
the german dax is higher by more than 1 percent. green across the screen over in asia, a different picture. saw some losses. saw some weakness in the chinese currency, which has really become a flash point in the asian market trading. >> arguably one of the biggest flash points in the area. >> absolutely. global markets as well. potentially it's a good sign we're seeing u.s. futures an european stocks rally, given china actually devalued its currency overnight after increasing its currency the day before. these are sharp moves. they're sort of all over the place, but it is sending a message to the markets that we're in control. >> it's a roller coaster for sure. but it's a step to show there's at least some kientd of an effort being made to contain things, to get things stable for the time being. a big commentary in the markets overall. as for the broader markets in general, if you look at some of these macro indicators, you can see the ten-year down marginally in terms of yield. 1.77% the last trade there in terms of yield on the u.s.
treasury note. if you look at what's happening overall with the dollar against the euro, euro looks a little lower. >> stronger yen. that's a problem. >> yes, and the pound as well strengthening against the u.s. dollar. 1.4329 the last trade there for pound sterling on that side of things. one check on gold prices here. gold fining at least a little bit of action here above that $1200 level. that's down about $5.30 per ounce, about half a percent. >> gold has been lower over the past few sessions. less demand for those safe haven hideouts as stocks have found a footing. >> still, over the past six weeks, it's been a steady uptrend. >> we have a trio of economic reports on today's agenda, starting with january ppi. 8:30 a.m. eastern time. they're forecast to have slipped last month, reflecting lower oil
prices and the stronger dollar. it's a good read of prices at the wholesale level. we'll get the consumer price index on friday. also at 8:30, look for january housing starts and building permits. always an important number, especially after home builder sentiment dipped yesterday. then at 9:15 a.m., we'll get january industrial production. then the biggie in the afternoon. minutes from last month's all-important fed meeting at 2:00 p.m. eastern time. also more fed speak. st. louis fed president speaking about the economy this evening. and we'll get earnings from dr. pepper, snapple, t-mobile, and marriott. i'll be watching the minutes from the last fed meeting to see if there's any indication the fed is going to hold off in march. janet yellen would not say so explicitly in her testimony before the house and senate last week. though, they have to be worried about what's happening in the
global markets. >> certain macro events are going to shape a lot of it. >> she did say they're discussing it again. >> it's not off the table. well, moving from the macro side of things, a federal judge is ordering apple to help the fbi break into the cell phone used by one of the san bernardino shooters. court papers show the tech giant declined to provide the assistance voluntarily. investigators need apple's help because too many failed attempts at unlocking the iphone without the proper security code will trigger an apple fail safe feature that will erase all of the phone's contents. apple plans to fight the order. we're just now hearing from apple ceo tim cook in the last couple of hours in a letter to customers, he calls the court order, quote/unquote, dangerous, saying the government wants to create a back door around iphone encryption. cook argues the demand is
unprecedented and warns the implications are, in his words, chilling. of course, this is a huge debate about whether or not you value or how you balance out civil liberties, privacy, versus the needs of national security and potential security threats. >> and tim cook has been very vocal on it. >> they've drawn a huge line in the sand, saying they do not want to do this. >> even after meeting with members of the administration to try to figure out some sort of solution. i would love to hear this more on the campaign trail and hear what candidates say about it. rand paul led a big effort for privacy against this type of thing. no longer in the race. we'll see if we hear anything. it's generally assumed that hillary clinton is on the side of the administration here. >> this is definitely going to become a larger part of the dialogue nationally as this election moves on. >> a key case to watch. we have some stocks to watch today. concho resources joining the s&p 500. they'll be replacing plum creek
timber. fossil reporting better than expected fourth quarter earnings despite a drop in profit and revenue due to currency headwinds. the designer did cite a sales increase for its brands. campbell's soup is raising its full-year earnings forecast as it expects second quarter results to be better than expected. look at that stock. the company did cite lower costs for ingredients relative to sales and other cost-cutting efforts. they now expect core earnings to rise 10% to 13% this year versus the previous forecast of 4% to 7%. the ceo has really engineered quite a turnaround. that one has been a star among the consumer staples, which are popular right now. >> campbell's and hormel. another day, another record high. it's either about chicken noodle soup or spam. some more stocks to watch today. devon energy is slashing its dividend and spending by 75% as
low oil prices continue to weigh on producers. the independent oil company will cut about 20% of its work force in the first quarter. revenue dropped 52%. shares falling by about 5.5% in premarket trading here. boeing gets an order for a dozen 737s from china's ok airways at the singapore air show. the order is worth about $1.3 billion at current list prices. it's china's first privately owned airline. you can see those shares not trading just yet. rack space reports better than expected fourth quarter results, but the company is issuing 2016 guidance. that's below wall street analyst estimates. they expect full-year revenue of up to $2.16 billion. shares tumbling more than 6% in the extended hours trade. >> we've got some more stocks you might want to watch today because it's time for whale
watching. investment managers releasing fourth quarter f-filings showing how they're navigating the choppy waters. landon dowdy joins us with more. >> let's focus on the big three starting with carl icahn taking new stakes in xerox, pep boys, and aig in the fourth quarter of 2016 while trimming his stake in apple. last but certainly not least, berkshire hathaway decreasing take in at&t.
sara, codom, you want to keep i mind these are backwards, but still a look at what the big guys are doing. >> of course, always fun to watch what the big whales are doing. thank you so much for that report. coming up, today's trade of the day. plus, later, a gift for the girl who has it all. a 404 carat diamond. we'll bing you all the details in just a bit. diamonds, yes, a girl's best friend. >> and they're forever. rn 100 yo into a new american century. born with a hunger to fly and a passion to build something better. and what an amazing time it's been, decade after decade of innovation, inspiration and wonder. so, we say thank you america for a century of trust, for the privilege of flying higher and higher, together. ♪
welcome back to "worldwide exchange." if you're just waking up or on your way to work, let's get you up to speed with what's happening on the markets overall. we'll start in asia. pretty much green across the board except for a couple specks of red. bigger ones to point out. japan's nikkei down by 1.3% overall. the shanghai composite, however, up by about 1% there. turning our attention to what's happening right now with europe in early european trading, you can see here the german dax index up by about 1.5%. the cac in france up by about 1.75%. the ftse 100 in the u.k. up by about 1.4%. that of course brings us here to our time zone. the u.s. equities future showing green across the board. nasdaq futures up by about half a percent. s&p futures up by about nine
points there as well. and dow futures up by about 71. so sara, looks like at least for the early going, we'll see some positive moves in our markets here. back over to you. >> the rally keeps going. thanks, dom. minutes from the last fomc meeting will be released this afternoon. late yesterday we did hear from boston fed president. he suggests the central bank would not want to raise interest rates if u.s. inflation shows no sign of rising, but he adds it would take a much grimmer economic picture to prompt a rate cut in the other way. he's widely known as a dove on the committee, those that don't favor aggressive rate increases. he's also a voting member, so it's important. and fed heads are out in full force this week. you don't want to miss the brand new minneapolis fed president neel kashkari after he made a big splash at the brookings institute, talking about too big
to fail, saying the banks need to be broken up. after he was an overseer of t.a.r.p. should be a good one. >> brings back memories. >> very controversial. >> now to today's trade of the day. many are expecting today's fomc minutes to back up that fed dovish january statement. our data team did some digging around to find out what traders can buy if the market rallies again off possibly dovish fed comments. they found that the best performing sectors were technology, utilities, and energy. they all had pretty decent three-day moves after the last fed statement. just some sectors to perhaps keep an eye on if it follows the same pattern as the last time. for more, go to cnbc.com and check out cnbc pro. all right. when we come back, the gloves are coming off in south carolina. plus, what president obama had to say about donald trump's
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nasdaq futures up 13. nasdaq had a strong close yesterday, up more than 2%, though it's still down about 11% for the year. one of the reasons why, well, traders are watching oil prices, which have also turned around here in the overnight session. they were lower. they're now higher. wti crude in the u.s. up almost 2.5%. brent crude oil, the international benchmark, up 3.4%. deal talks potentially continuing between the major oil producers. natural gas even getting a boost as well. let's also quickly give you a sense of sentiment, show you what's happening in the currency land, where you're seeing the euro back off. it's a bit of a stronger dollar. the dollar-yen also just turned higher, potentially feeding into the positive sentiment we've been seeing in global stocks. >> all right. sara, thank you so much for that check. in political news now this morning, the final countdown to saturday's republican primary in south carolina is still going on. it's now a two-tiered contest. trump versus cruz at the top with the others fighting to stay
alive. nbc's tracie potts has the latest from washington in what's shaping up to be a very, very heated battling in a pivotal point for the overall story in the republican side of things. >> reporter: exactly. now president obama weighing in, saying yet again that he does not believe that donald trump can end up winning this election in november, despite the fact he's got double the strength in the polls as his next closest competitor nationally and in south carolina. >> i continue to believe mr. trump will not be president. >> reporter: president obama on the republican front runner. >> it's not hosting a talk show or a reality show. it's hard. >> reporter: trump's response -- >> this man has done such a bad job, he has set us back so far. for him to say that is a great compliment. >> reporter: trump's double-digit lead in our latest national poll mirrors what's happening in south carolina. >> we love south carolina. let's go. >> reporter: he's got twice as much support as ted cruz, who's
battling it out for second with marco rubio. >> this election has to be about making a difference. >> reporter: on the other hand, jeb bush a distant fourth in state polls. >> i will be a commander in chief, not an agitator in chief. >> reporter: he insists no matter where he finishes, south carolina is not the end of his campaign. >> a fourth place finish on saturday night, are we still going to nevada? >> i'll be there. >> reporter: ben carson and john kasich are also hoping for a strong finish in south carolina. >> this is an important state for us. >> reporter: this weekend's primary could further narrow what was once a crowded field of 17 republicans now down to six and counting. so those are the republicans. don't forget, the democrats are also face off in nevada this weekend. it's a caucus, and we really don't have a lot of polling data. so what's going to happen there between hillary clinton and bernie sanders is really sort of anyone's guess at this point. >> tracie, i'm curious as to what you're hearing about the president's remarks on donald trump. on one hand, maybe not so much a surprise, but on the other, it
was pretty sharp language to say this is not a talk show. i can't help but think that it plays right into donald trump's hand and is going to be quite good for him. >> reporter: and a lot of people are thinking that, you know, maybe he got a boost certainly from his strongest supporters out of the president criticizing him. clearly, he's got the numbers to move forward, both in south carolina and nationally. we've heard president obama say it before, that he doesn't think that trump can win. we've heard his criticisms of donald trump. a little sharper. they seem to be getting a little sharper asklyal tend to grow. >> absolutely. fascinating. tracie potts, thanks very much from washington this morning. switching gears, a new champion has been crowned, but all he really wants is a uh if bones and. yes, we're talking about a dog. c.j., a 3-year-old german shorthaired pointer, whatever that is. >> that's what it is, right there. it's a regal dog. >> so this is the winner. he won the top honor at the
westminster dog show. he's only the third of his breed to win best in show. there's no cash prize, but c.j. does get a polished pewter dish. and he'll get to appear on nearly all the network morning shows today and visit the observation deck at the empire state building. we were rooting for the toy group. we were. it was a named panda. there were two russian dogs -- i should say two dogs of russian descent that placed in the final group. >> i didn't know you knew so much. >> i'm a dog person. anyway, moving on. "the huffington post" is getting the royal treatment today. the duchess of cambridge, kate middleton, is joining the online news service as a guest editor for the day. she's inviting a team from "huffington post" to kensington palace and will use her role to help raise awareness for
children's mental health issues. she's not the first journalist in the family. her sister has written pieces for "vanity fair" and was a columnist for "the daily telegraph" as well. so yes, royal and perhaps a prose poet. >> royal journalist. so you mentioned the diamond. this would clearly be a girl's best friend. we're talking about a 404.2 carat diamond measuring three inches long. it's been found in angola. it's the largest ever discovered in the country. the rock, which was found by australia's diamond company, is a rare type 11a, which means it's virtually flawless. the diamond could be valued at more than $20 million. and would not, i would say, fit on anybody's ring finger. >> three inches long. it would be a little gaudy. >> it looks like an ice cube. >> put it in your drink. won't keep it cold. anyway, coming up this morning's top stories, including why tim
cook's big fight with the government could get more heated. plus, is it time to get rid of the $100 billion. a growing chorus is saying yes, and we'll tell you why. >> first, here's today's weather forecast from the weather channel's reynolds wolf. >> hey, sara and dom. let's look at the forecast around the country. we've got things that are going to be pretty stable, especially in parts of the southeast. partly cloudy skies can be expected for miami. plenty of sunshine for the central and southern plains. out to the west, that's where all your action is going to be in terms of the rain, the sleet, possibly snow in those high mountain passes. great news for the skiers. it's been a banner year for them, especially in comparison with what they had last year. a lot of that cold air that incapsulated much of the nation is going to be going, going, gone. a lot of warm air is going to make an appearance. southern plains, dallas to the front range, anywhere from the 70s to 60s. 29 in chicago. 56 the high today in atlanta. miami with 79. l.a., look at that. 73 degrees with plenty of
sunshine. all right, folks. so much more coming up. you're watching cnbc. hey, jesse. who are you? i'm vern, the orange money retirement rabbit from voya. vern from voya? yep, vern from voya. why are you orange? that's a little weird. really? that's the weird part in this scenario? look, orange money represents the money you put away for retirement. save a little here and there, and over time, your money could multiply. see? ah, ok. so, why are you orange? funny.
♪ no, you're not ♪ yogonna watch it! ♪tch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. good morning. happening now, oil prices on the rise, and so are stocks. we've got your trading agenda. that's straight ahead. >> is the american consumer ready to shop or drop? we're bringing up the state of the u.s. economy ahead of reports from the nation's biggest retailers. >> and go fund me. how one kanye fan is trying to help the rapper get out of $53
million of debt. it's wednesday, february 17th, 2016. you're watching "worldwide exchange". good morning. welcome to "worldwide exchange" on cnbc. i'm sara eisen along with dom chu sitting in for wilfred frost today. welcome back. >> it's good to be here. >> among the storyings front and center for us right now, venezuela's oil minister is in tehran today meeting with officials from iran and iraq. crude oil prices giving back gains on reports that iran will not join a deal between saudi arabia, russia, and other producers to freeze output at january levels, but they have since turned around and are now marching higher. iran's opec envoy is calling a freeze, quote, illogical. we'll see if they can come to any agreement on this. what you're looking at is a 2% plus gain in wti, 3% on the brent crude. that's the international measure
of oil prices. we'll see as these negotiations continue. potentially at least there are negotiations. and that marks a symbolic step towards some sort of agreement that oil prices are too low, too painful, down 70%. they've got to do something about it. >> oil has been very range bound, for sure, these days. >> and today stocks are following suit. yesterday is what art cashen called a trial separation. we'll see what happens today. in corporate news, apple ceo tim cook says the tech giant will resist an order to hack a phone involved in the san bernardino shootings. we want to know what you think about this contentious issue. should app the unlock the iphone of the san bernardino terrorist? vote in our poll. give us your feedback. we're going to share the responses. we've also put our poll out in our brand new facebook page. check it out. do you agree with tim cook, or
do you agree with the u.s. government? >> hot-button topic for sure. let's move to a check of the global markets. if you look at u.s. futures, they'll show you swatches of green here. you can see the s&p futures up by about nine points. dow jones futures up by about 67. nasdaq futures gaining by about 18 points. looks like it could be a nice modest open to the upside for this particular market here in the united states. as for what's happening with europe, we're maybe taking our cues from there. the german dax up by about 1.75%. the cac in france up by nearly 2%. the ftse 100 in the u.k. up by about 1.5% as well. you can see green and red in the asian markets, now closed. the shanghai composite up by
about 1% to 1.5% overall. >> shaking off the effect of a weaker currency in china. same with the u.s. and europe. potentially that's a good step. >> day three of open markets there. right after that lunar new year holiday. >> we've also got a lot to trade on in the u.s. a trio of economic reports. starting with january ppi. 8:30 a.m. eastern time. producer prices forecast to have slipped last month, reflecting lower oil prices and the stronger dollar. also at 8:30 a.m., look for zwran housing starts and building permits. 9:15 a.m., we'll get january industrial production. then this is the big one, minutes from the last fed meeting 2:00 p.m. eastern time. more fed speak. st. louis fed president james bullard speaking out this evening. and we'll bet earnings from dr. pepper snapple, t mobile, and
marriott. >> so from the big picture, stocks to watch individually today. dessert first. cheesecake factory reporting better than expected profits, but sales came in lower than some wall street estimates. contract driller nabors industry posting a smaller quarterly loss when compared to this time last year. shi shares up by about 5.5%. comerica revising its forecast after a probe found loans could be repaid. those shares up 5%. one of those regional banks in a very beaten down industry group. >> other stocks to watch, mechanics at united continental rejecting a new labor contract. the union calling the agreement substandard and objecting to a new wage scale. express scripts offering a soft earnings outlook for the current
quarter. the food and drug administration granteding astrazeneca bl's blar cancer breakthrough status, giving a boost. >> now to the world's largest retailer. walmart kicks off the retail earnings parade later this week. joining us with a preview of what to expect is the managing director at mkm partners. thank you for joining us on this early morning. let's talk about the earnings season for retailers. retail stocks are important for investors. retail and consumer spending makes up 70% of the u.s. economy. so what can we expect, patrick? >> yeah, walmart kicks it off tomorrow. then we've got a bunch next week. i think what we can expect for the fourth quarter is some fairly soft results. just broadly speaking. there will be some pockets of vent. we've heard from a few retailers
already. they've given us a look at the fourth quarter. what we've heard so far from, macy's, for example, some of the department stores, has been disappointing. weakness, particularly in apparel. the warm weather would explain some of that, but there's certainly more to it. i think the staples, walmart will probably be okay tomorrow. i'm looking for a slight increase in same-store sales, about 1% at walmart u.s. if you look elsewhere in the basics area, i think they did just fine over the holidays. certainly in the apparel area, i think we'll see weak numbers. >> so is the right way to play apparel in this kind of environment and retail in general to be defensive? >> i think so. that's how i've shifted my ratings over the past several months. i've become more defensive. i'm really not recommending much within my broad lines coverage. i'm not recommending any of the apparel names, the department
stores. i'm not recommending anything in footwear. my buy recommendations are more concentrated in the dollar store area. a few others. five below, which is an early stage growth retailer. i've got some recommendations in the outdoor sporting goods area. >> as we talk about the overall theme, is there anything that you're going to be looking for as you kind of take these earnings reports in aggregate? is there any threat or any particular group of items you would be keying on as perhaps an indicator of the health of this industry group going forward? >> the big one has been store traffic, which has been just broadly under pressure over the past several quarters. that's a key area of focus, particularly with some of the market share shift to online. you have to pay very careful attention to store traffic. really, the best fundamentals and the best stocks frankly have
been retailers that are growing traffic, the off-price apparel retailers. one area of apparel that's working, the dollar stores. a few other select retailers are seeing some growth in traffic. that's a really pick and very important metric. >> you're sounding very gloomy this morning. what's it going to take to turn -- >> it's early. >> understandable. what's it going to take to turn around the sector at large? we got the low gas prices. what's the catalyst for retail to come back? >> unfortunately right now, there isn't a big spending catalyst. we don't have a tax cut, for example, on the horizon. minimum wage, there are states that have boosted their minimum wage. we could see an increase -- a bigger increase in the minimum wage at some point over the next year or so. that would disproportionately affect the low end, the dollar store. so unfortunately, sara, there just isn't a catalyst. the spring weather, if we get --
i mean, the warm weather does become a positive as you move further into february and into the early spring selling season. so that could have some positive impact on apparel. unfortunately, a lot of these retailers, particularly the department stores, they still have too much winter apparel. it makes it a little tougher for the customer to even shop the spring merchandise. >> at least it's cold out. >> absolutely. patrick, thank you so much for joining us with your retail outlook. >> now it's time for a look at today's trending stories. starting with this. did you see this picture? secretary of state john kerry meeting with top hollywood studio executives tuesday to discuss ways to counter the isis narrative. >> this is an interesting story. >> top reps from universal, warner brothers, dreamworks, and fox all meeting to brainstorm how moves and shows could have a positive effect in regions affected by terrorist organizations. john kerry tweeted it out, including the picture eliciting
a fire storm of response and mostly criticism. not just from republicans but everyone. what is he doing talking about isis with studio executives? >> it's interesting. it's a media propaganda type strategy, but you wonder how effective it can be. we'll watch that. >> doesn't he have more important people to meet with? not that they're not important. >> there's a lot of stuff in the world he has to talk about specifically. we're going to talk about scottish oil and gas workers being encouraged to reinvent themselves as school teachers. that's a government-funded program we're talking about. it's going to help workers at risk of losing their jobs in the current oil slump to teach s.t.e.m. subjects. so maybe taking a career change going from doing science, technology, engineering, and math to teaching it. >> because they're losing their jobs because the sector has been so brutally beaten up. >> it could be. but it could be a way to reinvent themselves. my career has taken a bit of a turn. >> former treasury secretary larry summers is making his case
to kill high denomination notes. the main reason is the link between these bills and crime. he says illegal activities are easily facilitated because these bills are just too light to carry. he really goes after the 500 euro on this and how he's been opposed to it since the beginning of it. but the idea is it's much easier to get away with crime when the actual money, the 500 euro bill is way less, and the $100 bill, if you put it all in 20s, it would be very heavy. >> haven't security measures already been put in place? there's a whole bunch of those security strips and everything else. >> i just love it when economists propose practical solutions. >> there you go. well, the ultimate to-go cup. a new bracelet with a caffeine patch promises to dole out similar doses of caffeine as a
cup of coffee. experts say it helps avoid teeth stains and bad breath. >> what do you think? i'm a huge coffee drinker. >> i'm just going to drink coffee. >> send us a few. i don't believe it works. kanye west trending as usual. he makes a daily cameo in our trending secondme ining segment. turns out one fan created a go fund me page to help kanye out, saying he's modeling his act of goodwill in support of the artist. so far the page has raised $35. poor kanye. >> interesting. >> he's an artist. that's what he says. he has so much more to contribute to the world. >> there you go. >> up next, today's must-read
the author, martin wolf, uses this chart to illustrate performance, showing how banks do during economic downturns. the problem, according to wolf, is that banks are exposed to everything and that poor market conditions undermine their returns from wealth management, asset management, that sort of thing. so are they canaries in the coal mine? are they the grease that makes the financial world turn economically? that's the reason why perhaps there's a real warning sign coming from these banks. >> so he's arguing that it's basically a read on economic weakness in the u.s. and globally. and they're just leverage bets on that. >> correct. and also there's an investor sentiment that we don't know exactly what these banks have. >> that's the scary one, when you see the relentless selling of the banks worse than so many other groups. people wonder what's lurking under the surface, especially in europe. >> both sides of the atlantic banks still a focus. and we're coming up on the top of the hour, which means that
the "squawk box" crew is getting ready for their show. brian sullivan filling in this morning. joins us from new york. of course, guys, brian, you've got a huge interview. neel kashkari coming up. what else are you watching? >> obviously you have the oil headlines. oil catching a bid this morning. good morning. we're up about 3%. still below $30 a barrel. we'll probably dig into why oil is not catching more of a bid. obviously talked about the banks. new minneapolis fed bank president neel kashkari is your guest exclusively. not just fed policy but his call for breaking up the banks. basically reinstating glass steagall. a former goldman sachs exec. a lot to talk about there. and we'll talk more about your money. with the futures up today, we could be on pace for three straight gains. in this kind of market, three
days of gains sounds good, given the kind of year it's been. >> we put out a twitter poll, and the results are very interesting. we're going to share them by the end of the show. >> can we get a hint? >> it's called a tease, brian. you're a tv professional. brui brian, we'll see you later. >> up next, we'll get you caught up on the markets an get you ready for the day ahead. john manley join us live. stay tuned. "worldwide exchange" will be back after the break. whole communities are living on mars and solar satellites provide earth with unlimited clean power. in less than a century, boeing took the world from seaplanes
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s&p by ten, nasdaq by 19. get this, if we do manage to close higher today, it would be the first three-day winning stretch of all of 2016. sounds like a modest achievement, but it's actually something we haven't seen all year. >> bulls will take it. >> joining us now is john manley, chief equity strategist at wells fargo funds management. yesterday we didn't care about oil. it went down, stocks went up. overnight looks like we're watching the price of oil going up and stocks are going higher as well. >> i think we're starting to break down the correlation a little bit. there is some linkage. it's obviously linked to the km i. there's some concern that oil prices being so low will negatively affect the banks. so there is a linkage, but it shouldn't be as tight as it's been. i think that's more remembrance of how bad things were. >> do you believe this rally? is this real or just a bounce? >> i narrow it down to either yes or no. i do think the market is way ahead of itself on the downside. there's no question the world is slowing down somewhat. i don't think we're out of
control. i don't think china's out of control. i think the oil markets may be brought back into control. i think if this were to the upside, i would be worried that we're way ahead of ourselves and maybe we have to pull back. i still think we can do an awful lot. the governments and stall bacen banks can do an awful lot to stem the problems people are worried about. >> the interesting part about this, as we talk about the interconnectedness of markets here, the real concern has in some ways shifted from energy to the banks, to the financials. there's been a huge concern about what those banks mean to the economies, both here and abroad. how do the banks stack up now, and is the selling that's been happening in banks overdone as well? >> i think it's explainable. i remember -- well, let me put it this way. i think there's a tendency on wall street to look back at the last real terrible thing that happened to us and then look ahead and say it's going to happen again. i'm not so sure it's predicting that eight months from now the banks will have problems as eight years ago they had
problems. it's very easy for us to take a small misstep and say, well i know how where that goes. i saw that before. you're not going to fool me this time. so i think it's still more -- i don't want to say panic, but excessive concern. i think the banks are in pretty good shape. more importantly, if push comes to shove, the central banks are really practiced at dealing with these things. will there be another lehman brothers? there only had to be one. now we know what happens. >> so you still have faith in central banks? last week the narrative was pretty negative around this idea that they're resorting to negative interest rates, they're desperate, and we've lost faith. >> i have more faith in central banks than equity strategists. we love to criticize. someone has to be dumber than us. >> but it's markets or central banks. >> first of all, i believe in markets, but i believe in central banks too. the whole idea behind a central bank is it's an add on to the market. i think a market economy is the best way to go 95% of the time.
but that's not 100%. 5% of the time you need something in there, a regulator, a modifier. i think that's what the central bank is. >> where would you be looking right now to give you -- i mean, there's no crystal ball. we understand that. but is there something you would see in the data, in the markets that would convince you that we are due for a leg higher in the global economy as opposed to a leg lower? >> it's got to be earnings expectations. i look at the fed, i look at earnings expectations, i look at valuations. i think the fed is okay. they're not going to do anything. they know what the risks are. i think the valuations are not good and not bad. they're sort of in the middle. i think if earnings start to improve, which they can, then i think the market can take heart. this could be the last hurrah of looking back at the great panic. we saw that with the great inflation. >> given that, you have many options. you must be licking your chops when it comes to sectors that have been beaten down very hard, whether it's the winners of last year, these f.a.n.g. stocks that
are down 20% or automakers or home builders. where are you buying? >> well, i want to own high-quality stocks when i retire. if you look at the big multinational, integrated oils, they just put part of that market on sale. i think financials represent very good value. i don't think they're going out of business. i think you need quality. and technology, corporations still need to improve productivity. they'll still buy business-to-business technology. >> how important is dividend yield to the investor in today's market? >> to an investor of my age, it's extremely important. i can't retire on bonds anymore. i can't even think about it. they will expire before i do. and they don't pay what they used to pay. high-quality stocks that have cash flow, a dividend, and a history, i think, are very attractive. >> where's the ten year? 1.78. john, thank you. >> thank you. >> john manley, always a pleasure. we've got the twitter results. >> we have those results on twitter and facebook on that poll that we asked you whether apple should unlock the iphone of the san bernardino terrorists. the majority of you, 57%, say
yes. >> there you go. keep voting. we'll share the results. that's it for us today. see you tomorrow. squawk wa"squawk box" is next. ...we've helped our investors stay confident for over 75 years. call us or your advisor. t. rowe price. invest with confidence. try align for a non-stop,ive sweet-treat-goodness hold-onto-your-tiara, kind-of-day. live 24/7 with 24/7 digestive support. try align, the undisputed #1 ge recommended probiotic. four score and seven years ago, our [train horn blares]th-- to the continent -- ... a new nation. announcer: presidents day may be over, but the savings go on at sleep train. through sunday at sleep train's presidents day sale save up to $300 on beautyrest and posturepedic, get three years interest-free financing on tempur-pedic, plus same-day delivery, and sleep train's love your mattress guarantee. hurry! sleep train's presidents day sale ends sunday.
good morning. time to rise and shine. the tentative deal by major crude exporters to freeze oil production levels is already in jeopardy. an energy official from iran calling it illogical. a federal judge ordering apple to help in an investigation into the san bernardino shooting. ceo tim cook responding ov overnight. we'll tell you why he's fighting that court order. and neel kashkari was one of the architects of the 2008 bailout, now he's the minneapolis fed president. he joins us in a first on cnbc
interview. it's wednesday, february 17th, and "squawk box" begins right now. live from new york, where business never sleeps, this is "squawk box." all right. good morning, everybody. hi. welcome to "squawk box." i'm brian sullivan along with becky and mike santoli in today. joe and andrew are both off. here are the big stories we're watching for you today. venezuela's oil minister is in tehran meeting with officials from both iran and iraq. the latest report suggests that iran will not join in a deal between saudi arabia, russia, and other producers to freeze oil output. iran's opec envoy calling a freeze illogical, arguing the current drop in prices was caused by other producers lifting output while iran remained under sanctions. oil is helping your stock