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tv   Squawk on the Street  CNBC  January 20, 2015 9:00am-11:01am EST

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more attractive market cap than twitter ebitda lower than hbo. >> we'll watch netflix earnings after the bell. appreciate your time. we've had a good time. "squawk box" more from davos this week. the crew has arrived but for now, "squawk on the street" down at new york stock exchange starts right now. ♪ >> good morning. welcome to "squawk on the street." i'm david faber with jim cramer. we are live from the new york stock exchange. carl has the day off today. let's give you a look at futures now, as we head into the opening of trading for the week though it is of course tuesday. as you see, we are headed for what looks to be at least a fairly higher open crude oil, that can often dictate the way we trade over the last months now it seems, as though. certainly last few weeks. you can see wti down 3.6% right now, under $47 a barrel. how about that ten-year note
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yield? what are you guessing? around 2%. let's take a look and see if you're right. yep, we manage -- no we're at 1.8. pardon me for that for forgetting how low we had gotten over the last week or so in terms of what it does cost the u.s. government to borrow for ten years. still well better if you compare to france bore rogue .635% or italy at 1.6%. road map this morning starts with morgan stanley suffering the same fate as breaththren. we'll break down results for you. johnson & johnson posts mixed quarter. hurt by what else strong dollar. and around the rest of the world, imf cutting its outlook. china posting its slowest growth since 1990. and qe that is certainly on the docket, isn't it for europe this week. let's start with morgan
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stanley. it's the latest financial firm to miss on quarterly results, at least according to what the analyst whose follow the company had expected. in this case hurt by what appears to have been weaker trading revenue out of its fixed income unit excludeing items profit at 39 cents a share. revenue excludeing accounting adjustments fell more than 8%. bank of america is added to goldman sachs' conviction buy list firm sees upside after the stock's recent underperformance. becky quick, by the way, will have an interview with brian moynihan, live with becky from davos, switzerland later on the program. let's talk morgan stanley, jim. welcome back from the long weekend, by the way. >> yeah. >> we focus on this firm in part, it is different than its breath rent because of the continued focus on wealth management and on all of those financial advisers it has out there. but they trade bonds then may
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have a smaller capital base to do it certainly mr. gorman taking it down. 599 million revenue number not what people anticipated. so perhaps below estimates. >> you can argue every single one of the brokerage banks should preannounce, should preannounce. misses are gigantic. or you can say, listen we told you misses will be gigantic, look at rest of the businesses? goldman, people did not choose to look good, goldman 1 the95 goes down to 177. citi didn't know about legal, okay. jpmorgan didn't know about legal, including a couple of comments by jamie dimon about five, six regulators. >> which may have obscured what he would argue are record earnings. >> bank of america was not good. >> we didn't see a lot of records. >> goldman, stock went down a lot. >> yes. >> suntrust and wells if you circle back suntrust and wells don't have fixed -- they don't do it. >> right. >> so therefore, people are saying, i want a bank that is a
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bank, all right. morgan stanley i mean it's absurd here but if this stock will be up big if they close fixed income currency but that's silly. gorman will tell a story, this is my main point, gorman will tell a story, the cfo will tell a story, you're going to like it. you're going to like it because the model's being transferred. >> supplements to earnings report include this looking forward deck that -- you can see it here -- look at the pie chart, what the key is there, management in '06 was this much now it's this much. where does it come from as a p/e of overall? fexs fexs fixed income dramatically shrunk. >> they have a big tailwind from lower funding costs because they don't have to worry about that. these things are influx. people are trading instantly when things coming out. these are complex analysts, this is not ppg -- which is a
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terrific quarter -- these are not retailers, they are not based on gasoline. you'll see delta up because delta was down 10%, gasoline was big. i caution people who want to bang morgan stanley down that the stock was at 39 okay bought stock on this hit, betting that the stock went down to 34 and with the worst that would happen go to 33 the book value's real. gorman's real. nobody cares before he speaks. after he speaks big fallout. this is not a football game. it's not like seattle wins but then we have this press conference with aaron rodgers and it looks like that they look you know, it was green bay lost. no, didn't work like that. gorman might tell you a good story, and you might have to re-evaluate. wait to hear what he says. >> your point is transformation taking place over a longer period of time certainly than a quarter. >> right. >> i would add, though still trading bonds. like everybody else they don't
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seem to have done a good job of it. >> yeah, i think maybe what perhaps -- >> wasn't enough liquidity volume, everything else to get it done in terms of numbers. >> go back over the goldman quarter that was integral. >> it was, fixed income currency commodities the weak spot it would seem particular to that. >> why didn't an analyst say, i think that fic will be bad, fixed income and everybody who has that discount it. but it wasn't said. so we came into the quarter thinking about net interest margin. we've seen a number of quarters we've realized trading was bad. lloyd blankfein can call it did you see underwriting numbers? did you see -- >> by the way, investment banking and equity and sales and trading an important component of morgan stanley's earnings as well it's no just wealth management. >> a lot of the companies gave applause i lot of revenue. a huge amount of revenue gaven up since 2012 by goldman. you don't feel good about
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goldman. but that is kind of -- short term fixes income is better next quarter what do we do? we want to get away from the swing, why i bring up suntrust and wells. >> right. >> why suntrust and wells three weeks from now will be up. when you read the quarter, suntrust has one charge, anoubsed theanoubs ed announced in in january. go through bank of america, everybody is thrilled it has slightly more than 3 million in charges goldman had a big charge. >> the upgrade today on bank of america? >> the stock fell from 17 to 15. you know if they can do the 1.60, argue maybe the bank deserves to be at 16.5. i would -- i would prefer buying stocks that go up meaningfully okay, go up meaningfully. j&j, my charitable trust owns it looks like a disaster. read 2015, just horrendous
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numbers are terrible. i'd like to hear what gore ski says. >> sales of new drugs helped johnson & johnson, posted better numbers 1.27 a share. revenues shy. of course, we've talked a lot about the impact that the stronger dollar will have on these multinationals. >> we may hear him tell a good story. schlumberger last week the quintessential one. everybody hated schlumberger. on the conference call schlumberger said seven great things that i counted. stock ended up up huge. i mean this is a quarter it's not lending itself to look -- j&j you say, you know what alex gorski is going backwards. hear what he has to say. it's dangerous to act, because there's too many moving parts. i'm not punting but i remember that alcoa was good it was at 17 and then went to 15 a lot of moving parts. this quarter not lent itself to snap judgments, stocks hit the hardest like schlumberger, it
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was a good quarter. i wonder what will happen with halliburton where the quarter looked great. let's hear what they have to say on the book. well, we do know that baker hughes has a large investor in it now in the form of valueact right? jim, you saw that didn't you? >> yeah. i also tell you -- >> saying, again, here i'm searching for all of my paper here but taking very large stake, believing in the power of that combination. >> it does seem right. >> between halliburton and baker hughs. >> after reading this it's very right. what's so interesting, north america is not that bad. for halliburton, middle east is terrific. latin america was terrific. here's an odd thing, oil is -- will -- when you read these reports from halliburton, maker hughes, schlumberger, it's almost inconceivable to see oil bounce because these guys are going full out. no one seems to be cutting back other than -- north america's not cutting back they're going after the sweeter spots in the -- >> they seem to be -- rig counts
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coming down. >> production's not coming down. rig count, certainly. >> we lag but we are going to see production decline down the road. >> absolutely. you'll see self-correcting mechanism what happen was most interesting is is that production is probably going to be up very big in the first quarter because there's just so much drilling that has to go on because of these hbpps clauses which make people drill and then the amount of production is coming from the already open wells. and then the gulf of mexico's going to have a gigantic first quarter. so there's really only 1 million balance in excess now. iraq is pumping a lot. and that was because of isis we didn't think. but iraq had -- is doing 4 million a day. people think iraq would have wanted 2 million. there's a lot of production and it's not stopping. it's surprising the first quarter will be so much spent so make the first quarter big. and remember the -- these are -- oil comes after maximized cash flow.
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to pump like -- just to pump your eyes out. >> yeah. >> it has to happen. >> yeah. >> that's why you don't get a first quarter bounce in oil. i don't know how oil goes but it's not going to bounce. >> but 45 47? i mean come on. can they really continue to make money at that level, jim? >> and actual sunk cost well not a new well. paid for. >> right. >> people forget than you have sun cost well paid for when drilling like mad, up until october, and those are coming -- those come on. >> whatever you get out of there, money good so to speak. >> yes. once it's drills. wells depleted 15%. quick to deplete, not gulf of mexico but shale wells. next year higher oil not lower. next year not next quarter and not the quarter after that. too much being pumped. >> as we begin a shortened trading week futures as you saw are on the rise on hope central banks take aggressive actions to boost economic improvement.
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the imf, by the way, lowered 2015 global forecast for economic growth from 3.8% to 3.5%. as you also may have heard, china's fourth yarder gdp, steady at 7.3% and in europe there's expectations ecb will ramp up stimulus at its policy meeting. the big macro pictures, china 7.3% number they're -- i didn't see shrenk toink to grow but felt that way. it's a better rate of growth in a sense at this level. >> i think, first of all, hoping for 7. 1. you may think it's horrible. i thought 6 this year. they're changing this economy on the fly. they are making this an internal consumption economy. >> trying to but it's only 36%. >> right. >> you turned it on its head in terms of us where we are. >> the iron work companies
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pumping like mad because they think they can drive out of business the state-run chinese iron companies. i think that the -- i think that the chinese communist party is trying to cut back on excesses everywhere, whether it be excesses in building excesses in lending, excesses in marginal lending. >> excesses in consumption by party members and gift giving let's not for get crackdown on corruption has taken toll at the higher end. >> yes. you see that in the diageo numbers, johnie walker. i think there's a transformation in china, this regime will not tolerate willy-nilly growth which produces a lot of pollution and corruption. a i think a year from now we'll be talking about china as kind of back. but they have to get rid of excesses. you know housing prices -- >> the stock market down enormously because of a change in margin requirements. >> margins were ridiculous. unlike us where you know where greenspan, who could have
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controlled the rate of growth in margin they chose to raise fed funds rate. here, they're controlling margin.rational. i think the chinese are doing a lot that's right. that's why i don't think you peck to see many of our companies kratsercrater on a chinese slowdown. the domestic companies that we sell into that are domestic might do better. >> right. overall, as we begin this week given last week and the turmoil in currency markets as a result of what the swiss dit withd with the franc and continued focus on oil and ecb coming very importantly in terms of whether it will or won't really meet expectations in terms of quantitative easing how do you approach things. >> one of the things we have to get away from the idea that futures are up. because breakdown of the future of what's in the s&p, oil is 8% finance is 8. 17%. you've got 25 s&p going the
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wrong way. futures seem to indicate the wrong thing because futures are some hedge fund guy saying wow this i good ecb. they're not about the individual stocks. many of the companies are not doing well. i look at ecb and say, it's disappointing. it hasn't happened yet, i say it's disappointing. we have a big perception overhang from hedge funds. ecb not going to be good sell the futures. all i can tell you, unless there's structural reform in europe it doesn't matter. just keep they keep crushing the euro to make so bmw does better. >> structural reform. it's literally mercedes-benz, volkswagen audi in charge. >> nice cars. >> the president going to suggest hiking taxes on the wealthy and on banks, as well certainly levy new fees on them in tonight's state of the union
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address. to davos, becky quick's live interview with the ceo of bank of america, brian moynihan. a look at futures. more "squawk on the street" after this. the lightest or nothing. the smartest or nothing. the quietest or nothing. the sleekest... ...sexiest ...baddest ...safest, ...tightest, ...quickest, ...harshest... or nothing. at mercedes-benz, we do things one way or we don't do them at all. introducing the all-new c-class. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.
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president obama delivers his state of the union address to joint session of congress. slated to push a plan to increase taxes on the wealthy by
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hiking cal hiking capital gains rate, exposing a fee on large financial firms to pay for tax cuts and benefits for the middle clasp republicans who control both the house and senate say the president's plan is a nonstarter. some argue this will go towards at least trying to address the ever increasing gap in our larger society between the haves have have-nots, so to speak, what we know is the wealth -- the 1% everybody else. >> he doesn't like the capital gains thing, it was a matter of time. >> cap gains are up i think under -- >> it's 28 still under ordinary income. >> dividends as well. >> right, always a sense turn ordinary income into capital gains, something rich people can do. i think it's dead on arrival. i don't think he has the votes. i think step up in basis for when you inherit property that's been in the tax code
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forever. i just can't imagine that even going away. it has been the bedrock of individual income that you get that step up and there a lot of people middle class used to benefit from parents pay dids 16,000 for a house and house is $250,000. it's noted agood idea for the middle class. >> right. >> you can tax the step-up in basis of for the wealthy but great break of the middle class, parents bought homes after world war ii and value's gone up even went down the last 2006 -- it's almost not thought through. i was listening to larry kudlow today help wants to believe the legacy the middle class didn't do well and he did his best. these are the things when you have a republican congress, we can talk about it or we can say, it's not going to happen and we're just not going to dignify it by to say it's going to happen. yeah yeah.
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>> it's -- i'd rather talk about the price of earnings ratio bristol-myers. >> we'll see what areas they can conceivably -- >> where do you think they can? >> who knows? maybe cyber security. >> kibcybersecurity. >> wishful thinking. >> the republicans have always told me they want corporate tax reform without individual tax reforms and the democrats have always told me corporate tax reform is dead on arrival. the previous treasury and there is treasury. a great article what president obama proposed versus what happened. he tried tax on the banks. where's the tax on the oil companies? where is the condition the average person got an increase off of oil? good luck. >> we need to -- vent-ant up next cramer's "mad dash." one more look at futures. set for a higher open on this first day of trading of the
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week. more "squawk on the street" from the nyca this.
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a look at times square. six minute before the opening bell. why stand when you can sit? >> a "mad dash" over to the tell straight, didn't work now a "mad dash" back. this is the super "mad dash" because we barely made it. >> what do you want to start with. >> two pieces of good news that could reflect what future's saying. delta announced december quarter. we've had a couple of companies say, listen maybe revenues wasn't that good. delta reported a very good
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quarter and talked about a number of saving for oil -- $2 billion. the stocks and down 10% going into the quarter. people going to like it. >> that simple? >> yeah. because it got killed turned out to be good traffic. >> right. >> these stocks have been down they're popular favorites. >> as we know it's almost an ol la gop ollie. >> way these guys don't compete. delta has overseas stuff. we'll see. a pure domestic play could be better. >> right. >> tiffany here's a piece, like these kind of pieces this is a rating change. they didn't like tiffany at wells. now they feel it's been overdone and it's time to buy. if you remember tiffany was the beginning of this earnings season. this and sandisic a negative note today. but it's interesting that people are already starting to circle back to the real losers of the quarter, whether tiffany or bank of america saying, wait a second these have been thrown out. maybe they were thrown out too aggressively. i'm trying to rationalize why
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futures are going up and what's going up with them because i think the market could be down 10, 15. >> why do you think that? >> the financials are a big part of the economy. and i think also the drug stocks are going to take cue from j&j until alex gorski says we're doing things. >> i'm curious to see where i've got that stock. i've gone it down two, three bucks. >> yeah. look, if you read the release, it basically says we screwed up and we're horrible and the commentary, don't worry, we're good. halliburton, baker hughes. >> we've got so many stocks to talk about when we get that opening bell including halliburton and baker hughes. i want to talk at&t. downgrade from morgan stanley of the media names. all of it coming up after this. welcome back to showdown! i'm jerry rice here discussing the upcoming
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mmm, a perfect 177-degrees. and that's why this road warrior rents from national. i can bypass the counter and go straight to my car. and i don't have to talk to any humans, unless i want to. and i don't. and national lets me choose any car in the aisle. control. it's so, what's the word?... sexy. go national. go like a pro. you're watching cnbc "squawk on the street." we are live from the financial capital of the world. opening bell. it's been that kind of morning. a lot of things to keep track of this morning, jim. >> yes.
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yes. >> it seems to be getting best of me perhaps, in terms of paper i keep searching for and can't find. >> okay holiday, come in, you surprise, we're in the thick of earnings season holiday yesterday, and so many companies reported this morning, and they're hard. we know halliburton/baker hughes merger could be fabulous. i didn't think it would be this fabulous. i've got to hear what the company says because someone made a really smart move buying a lot of stock of baker hughes. >> value act files 13d, 5.1% position, average price paid 55 68. call it 22 million shares. >> all right. >> not insignificant sum of money they're spending here. their belief of course -- by the way hadn't been in oil and gas valueact sense i think '70. >> really. >> yeah they don't typically invest in the industry. >> if halliburton can ain'tmaintain the numbers, and that may be hard, because the rig count's
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going down very fast the company's making a lot of money all over the place because people aren't stopping drilling like other the u.s. >> speaking of drilling when we get to the opening bell we'll mention it again, there it is that opening bell. here at the big board, transocean partners transocean partners own and operate, of course ultradeep water drilling rigs. it's not rig, it's rig-p. as the nasdaq. >> very tough companies. >> yeah. >> we open up nicely because the futures, and then back and say, what a great opportunity to sell x. terrific opportunity to sell y. earnings frankly, earnings earnings include financials have been horrendous. x out financials, hard to do they've just been okay. you know look i'm a bull on earnings and -- >> what does it mean? we're not having a particularly
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good earnings season, what does it say about expectations the multiple, start to see contraction? can we expect any expansion? it wouldn't seem so. >> if you think the u.s. would benefit from lower gas, gasoline, than the rest of the world, you have to take advantage and think it's a trough. it's entirely possible it's a trough court. take a look at suntrust the bank that i've been following closely, they saw a lot of activity. a lot of loan activity. a lot of business. a lot of nonresidential construct. i think a lot because people are feeling optimistic confidence is back. it's this quarter -- i'm saying if you listen to the conference calls, listen to ppg, which is a great american industrial basically, this is pretty good. a lot of nonresidential construction, mexico great, u.s. great. it's case by case but there's a sense that maybe china's bottomed. there's a sense that maybe draghi is going to do something. let's get long stuff that's not
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just domestic. every day i see netflix go up. let's hope about the quarter. there's hope about quarters. and it's been kind of disappointing once they report but right now if you haven't reported yet you going up. if you have reported and got cracked, you're going up. if you -- you know there's a lot of joy about how we're going to get through this period and be in the promise land of gasoline at 1.89 which does make you feel great. >> it should. it should. more broadly speaking. broadly speaking right now, the s&p up let's call it a third of 1%. wanted to get to a couple of names i follow closely, your reaction. the auctions aws 3 auctions we've talked about, they've been incredibly successful by the way, 44 plus billion coming in to treasury. >> right. >> that's going to help. >> sure. >> i tell you, all of those little things between that and the feds, interest that the fed takes in on all of that bond.
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>> ring the register on long days. >> fannie and freddie, nice little things coming in. >> great point. no, no. >> i did not mention for that reason. >> read the paper, you feel like the world's coming to an end. all of that is terrific. 538 release -- >> helps with deficit reduction. i wanted to get to at&t. >> on "mad money" it's 5:38. >> on friday. >> a release that says huge loss. i look through it it's pension. it's like -- >> it was not -- >> people are living longer you have to adjust assumptions. >> the question on at&t specific to these auctions which are going to conclude any day now. >> okay. >> any day now, they're going to en is how much spectrum did they buy? how much did verizon? maybe at&t upping its revolver. once these close, you've got to put up some money quickly, not all of it but a nice down
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payment. there are throws who believe we may see at&t having bought more than verizon perhaps the most -- the highest priced spectrum i think j band what will that imply for what verizon bought and the possibility that verizon then actually going to pursue a different strategy perhaps dish and some commercial agreement. >> are you serious? >> this is all spectrum. >> do you think the number will be announced before -- >> i bet verizon would like to speak publicly about this. you recall a couple weeks ago at ces, it was -- at the same time the same place, but media -- the telecom conference we are anxious to tell you about our strategy but we can't. >> wow. >> so i do think they want to talk at verizon. >> what do you make -- >> keep an eye on both stocks. >> what about the goldman-t-mobile upgrade, buy the conviction buy ahead of verizon earnings. they like operating leverage and
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more importantly, op-x. that seems out 0 sync with what everyone is doing. >> t-mo is up. when i come back to that you think of consolidation and whether they're going to run out of room despite what everybody seems to agree the incredible leadership of the ceo in terms of taking fight to so many people. >> he's worked -- >> maybe they can tweet with his feet. >> do you know that near the end matisse painting with his feet going for a lot of money. >> you're kidding. >> best matisses by his feet. >> i did not not. that's why i come to work ever day. i did not know. downgrade of media stocks. >> explain that to me. geez viacom you read that people stopped watching viacom. >> we talk about it a lot here it's a lot of bigger themes
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that, if you're not a sports fan, you're going to start coming off that tier and are there going to be fewer subscribers? what is dish going to do in its deals with viacom and other, can it live without, and many guys live without the programming out there, can you expect ongoing double digit affiliate feed growth? what's the advertising landscape look like at this point? kind of all of these things coming together in addition to what are, in some cases, fairly high multiples. >> yes. and multiple years. >> and the analyst the morgan stanley say i'm out of here. we're going to downgrade a lot of names. cautious, as margins and multiples correct. >> i read that piece, like another piece about cable, how can cable keep doing so good? how can entertaining companies be doing so good? everybody feels like this is the big down story for 2015. and then it doesn't happen. then it doesn't happen.
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true. you have a lot of obviously companies generate enormous amount of cash buy back a great deal of stock, which always helps. but it's an interesting piece. it's having an impact viacom down again, over 3% at 65.88. >> still buying -- >> is viacom still buying back huge amount? >> they are, they are. people looking at sales stock. exercises options, had three years to go. i understand portfolio rearrangement for him necessary, at least his financial advises are tell him that's the case. but that stock hit the worst of all of them although the complex is down other than disney, your favorite. disney bob iger that model is -- the idea that they put that college bowl series on espn made you rethink the idea that you could possibly cut espn because that was one of greatest performing set of numbers, and it basically was not -- he
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didn't put it on abc. would have been natural to put it on abc but he didn't. did you see the number this within? not as strong for the seattle game. the most exciting game i can recall. >> certainly last four minutes of the fourth quarter. not to mention overtime. >> maybe because you don't have prebasis market. tv is not doing as well as it did. everything tells me when amazon does this programming, netflix reports tonight, you know what's the lead story over the weekend? the better call saul series how great it sounds bringing back mike. the fact that i know who mike is is a testament that the golden age, as michael wolff calls, golden age of tv a lot less to go around. when netflix and amazon developing product, you are to say, you can't watch two shows at once. >> right. we've got to get to bob pisani.
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>> good morning, guys. industrials, techs, staples leading the market. energy, though lagging a bit. i want to point out something. i'm not in my normal spot. i'm next door to what used to be old garage. this was an annex to the floor and it's completely been remodeled and reopened here. just take a look at this and how big it is. you sue hoy wide the space is? over 7,000 square foot. it's a a great, beautiful new space that they just opened here. put up the full screen. it opened in 1922. it's an annex, you're next door. this is completely remodelled and renovated, housing additional part of the u.s. equities and housing options business, what we used to call american stock exchange ice futures also in here as well as operations part of the new york stock exchange, just on the other side of the wall. it's a brand-new space and literally just opened about a
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half hour ago. i'll give now more on it as the day progresses. in terms of the markets here a bit of a problem. energy earnings below expectations. last week big banks below expectations. today disappointments with more companies that are in the financial space. morgan stanley and regions financials regions a notable dis disappointment today, some of it was on the expenses side some on the legal side. regardless, their guidance for 2015 not particularly great. loan growth is 4% to % 6% despos desposde deposit growth, anemic. talking about net interest margins lower if rates continue to stay low somewhere that's an issue. any issue with margins, you saw last week, number of companies talking about margins, a real concern. airlines, positive comments on what lower oil's going to do. jim you mentioned this delta talked about $2 billion in fuel savings in 2015 that's a
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remarkable number because very very big hedger. and they specifically came out and said had we not hedged savings would have been 70% more than that without the hedges. here's a company that's clearly got tailwinds with the lower oil costs overall. bottom line is we can get a company that's making positive company commented around oil. the dow jones industrial average, as i stand in the brand-new room down 3 points. back to you. >> thanks very much, bob pisani. now from stocks to bonds. we go to rick santelli at the cme group in chicago. good morning, rick. >> good morning, david. of course being closed on monday, much of the world continued to trade. we're catching up a bit. yields slipping as we slip under on 8 on down just a handful of basis points. if you look to year to date down 38 basis points for the year, 217, basically where we ended up last year. if we look at bund yields year-to-date not the amount of
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distance traveled but obviously, the same direction as we still hoover in the lower to mid-40 basis point range going into the big meeting on thursday. if we want to resurrect what happened in the foreign exchange markets last week we know that europe euro versus swiss, huge move not in favor of euros. look at two-day chart of the euro versus swiss, it's getting its gps back hooving around 1.1. the dollar open up the chart, back end of '03, last time we were in the zone, not right to the tick but virtually at the lowest level. and over a decade, the last chart, i like this chart, year-to-date of the shanghai composite, chinese stock market it was down 7.7% when we were all sleeping in. one of its biggest drops in almost six years. but indeed it did right itself with the recent data righted itself a bit.
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back to you. >> all right. thanks very much rick santelli. now let's go to oil prices. jackie deangelis from the nymex. >> pressure on oil again. watching wti, february off the board. i have the march price at 46.88 down 2.25. brent crude 48.10, down $2 as well. imf cutting global growth forecast and also the weakest growth we've seen out of china since 1990s. that's pressuring crude today. iran making some comments that we could see potentially $25 oil and that the pressure it and venezuela putting on opec does not seem to be having any impact. earnings out this morning from baker hughes and halliburton. we did see a beat on the top and bottom line. but at same time companies are cautious about 2015. a lot to watch in the oil patch today. back to you. >> coming up bank of america ceo brian moynihan becky quick
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will be interviewing him live from davos. but first, interactive broker ceo thomas peterffy with his take on the swiss central bank's surprise currency move and the impact on forx brokers and his clients as well.
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while some currency brokers like fxcm were hit hard by last week's surprise swiss move boy, were they ever others weathered the storm better. talking first on cnbc inactive brokers chairman and ceo thomas peterffy. got to tell you, tom, this was jarring to people and i want to know whether you think in your judgment individuals should even be in these markets. >> well you know to the extent that individuals are running internationally diversified portfolio like our customers do you cannot have but have to be
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in the market because of the extent that you buy or sell assets denominated in currencies other than euro and home currency you're inevitably taking a foreign exchange risk. so most of our customers are well-to-do individuals and financially sophisticated professionals and organizational accounts that they manage internationally diversified portfolios so they do not have a choice. >> do you allow the level of 50-1 liveeverage as some others do. >> 40-1. >> well, you know there were some up to 5-150-1. if the majority of your clients levered up and got it wrong, would your company be able to survive? >> well you see, first of all, misunderstanding about interactive brokers. we are a much larger company
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than it's commonly known because less than 15% of our stock is publicly floating. so we appear to have a market of 1. 5 billion, our market volume really is 11 billion. so this kind of -- >> wow. >> seems we've lost mr. mr. peterffy. looks like that feed has gone down. >> talking about how large difference is it's very large. >> yeah you find fxcm which by the way i note is open and down 85%, also has a large amount had a large amount of its stock as well held by its founders and insiders i think as much as 40%. didn't realize the case of interactive brokers it was that large a company in terms of overall capitalization. >> i didn't know either. it does seem like there's a level of geez i hate to use
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the word sophistication i don't know the client base, seems like there was a, let's say there were people who maybe didn't understand how quick, quickly, fxcm currencies can go against them. and i think that mr. peterffy was basically saying we didn't have that base of players, so to speak. >> yeah. our apologies to mr. peterffy for losing that feed. by the way i mentioned fxcm because it is open for trade. you may want to take a look down 86.7% there it is, may come up earlier. did the deal on friday to save the firm $300 million offer, debt deal with lucadia that will give other rights if the company's sold which they're going to try to do. i think it's three-year period. also 10% coupon that creeps up by i think 150 basis points a quarter, if i'm right. >> really? home run. >> yeah. >> that's big give up.
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but they got to stay in business. >> didn't take long, as i said rally to go away. futures don't remember the common stocks. >> s&p up a third of a percent to down a third of a percent. up next of course stop trading with jim. former jpmorgan cfo, doug braunstein. jim woolery, i'll have that for you 10:15. >> that's yours. >> that's me baby. >> i want to hear that.
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time for cramer and "stop trading." last week there was just a flurry of activity about jpmorgan's biotech conference. >> health care conference, sure. >> they all went up. a big hangover effect. immunotherapies names down. a caution people a couple days of churning. never a history where the stocks have gotten crushes after the conference. wait a couple of days pick among the ones. i'm going to focus on "mad money" three, four days from now. buys created instantly by the hangover effect. >> we talked last week kiddingly, of course about the law passed that even with the
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down market would not allow the likes of celgene or gilead to go down both of which are down this morning. is that over with? >> i think you'll fine those will catch a bid after they dough go down. this was one of the most hyped events. you can't have a pair abolic move and think you're not going to give it up. celgene, visit 115, 114, not bad. very cheap. >> by the way lens lifer. >> talked about the notion of choice. >> regeneron. >> regeneron a great winner. he did -- >> he's all yours, baby. i don't like the idea you're being told by your pharmacy benefit manager what drug to take. i like being told by my doctor. i thought that was a great interview by meg. i don't like the cost to be cut by having a drug that maybe i think is inferior or the doctor think's inferior. but that's what's happening. >> "mad" tonight? >> we've got -- there's a deal
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coming -- i'm not going to reveal its name -- a big deal coming in ipo i think a chance to get in on it comes this week. i'm going to encourage people to get. i don't think it looks hot but it will make people a lot of money. >> i like that. all right. "mad money." thank you. >> see you tomorrow morning, same time, same place. breaking news on home builder sentiment and becky quick's interview with bank of america ceo brian moynihan live from davos. keep it right here. you just got a big bump in miles. so this is a great opportunity for an upgrade. sound good? great. because you're not you you're a whole airline... and it's not a ticket you're upgrading it's your entire operations, from domestic to international... which means you need help from a
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good morning welcome back to "squawk on the street." i'm david faber with sara eisen and simon hob. live at post 9. carl quintanilla has the day off a look at markets. turned around after an up open you can see now down by a like amount. what's oil doing? you see it down there, wti, well below $47 a barrel, down over 4.5% on the session. let's get to diana olick, breaking news on home builders
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sentiment. >> home builder confidence, down one point in december. it didn't move for the month. the monthly sentiment index stands at 57. anything above 50 positive and it has been in positive territory for seven straight months. last january, it was at 56. but then it dropped into the 40s for the first half of 2014. a mid higher interest rates and higher sales. david crow said steady economic growth rising consumer confidence and growing labor market will help housing market to continue to move forward in 2015. of the index's three components, current sales conditions unchanges at 62 expectations for future sales dropped four points to 6 on traffic of prospect evg buyers fell two points to 44. buyer traffic the only component unable to break into positive territory. builder confidence highest in the west lowest in the
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northeast. housing starts tomorrow morning at 8:30. >> thanks very much for breaking news on housing, diana. it has been a volatile start to the year and the morning. stocks opening higher. now dow down 9 points. stronger dollar oil slump, falling commodities an investors best friend? who better to ask the bull on the stock markets, as he's known, wall street tom lee. >> good to see you. >> is your confidence shaken from what we've seen over the last 2 1/2 weeks a bumpy start to 2015. >> it's been disappointing obviously, you think the u.s. economy's doing better stocks should track. but it's disappointing. we know there's headwind, right? how is oil going to affect strong dollar, what's going on in europe? i understand the confusion and hesitation. >> of all worries out there, yes, oil at top of the list perhaps that it would hurt more than just energy companies' earnings, do you buy that? is that a negative for stocks if you look at services companies,
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railroad stocks other type of companies which could get hit. >> yes. there are going to be the second order effects from lower oil, which is activity levels are going to drop. i think investors have done a pretty good job of saying cap x cuts energy earnings this is what it's going to do to s&p. and that's why it's weighing on sentiment. we put out eight report last week if you weigh in effect u.s. corporates are huge users of energy, both for commercial and industrial use, transportation running factories, the s&p's a net beneficiary of lower oil by almost $5 per share. >> headwind and tailwind, even more of a tailwind. earnings season it's still early, but it doesn't feel so good. >> you know it's -- it's not been great on the top line right? only 58% of companies beating on revenue. but 88% beating on the bottom line. it's early but it shows you that there's a better margin story than a top line story. you know, maybe you can say part
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is energy savings helping margins. but it's a good margin story. >> it's early. there may be some but it's early in terms of of savings and talking about last quarter. >> sure. but you have to remember even on the strong dollar there's positives to consider, right? when you have a strong dollar companies have a good currency you're going to see u.s. companies say, look i've got a great balance sheet what can i buy that's in distress overseas. >> the lags? you think oil will lead to higher consumer sentiment six months out. >> correct. >> about now, then? >> yes. i think we're going to start to see 15 20-year highs in consumer confidence by the summer will that translate into spending. >> correlated not only with consumer spending, it's correlated highly with s&p p/e ratio. >> there's a quep i wantstion. we saw weak retail sales in december that should have been strong. you say there's a lag effect to oil. is there a deeper concern about the u.s. consumer?
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unilever was out and developed markets were flat. >> you know we don't know. december retail sales disappointing and december wages as well. i wonder if it's an anomaly. is it going to be something when we see january data are we stacked november december? turns out those two months were good. >> questions over the -- how they compile the wage statistics in the first two weeks of the year, for december in particular whether it's an 11 or 12 working week period. it's kind of like a lot of people scratching they're heads about it. you sound unusually down beat. have we got you on a bad morning? >> maybe it's 178 on the ten year treasury. >> yes. >> that's decidedly pessimistic, no matter what other factors are at work. >> yeah. simon, i hope i'm not coming across bearish. we're bullish for the year. >> slightly deflated i think is the way. >> yes disappointed with the market action. again, i'd say it doesn't rule
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out even us being up for the month. i wouldn't -- >> the earnings numbers, you said -- maybe it's the guidance i'm not getting the same feel from investors certainly who are responsing to it when it comes to consideration what multiple to pay for earnings. >> i think there is not a lot of visibility at the moment right? we have to think, strong dollar how than going to affect incoming guidance, weak oil, the energy cap x, what happens going on in europe. but remember visibility doesn't always have a negative conclusion. so i think right now it's understandable for people to say, look, let's attacktake a step back. underlying story should be u.s. consumer's getting stronger. u.s. companies have great balance sheets. ton of pent-up demand. the story by the summer look at age of capital stock. other brokers are starting to write how there's aged equipment and that's a demand story. >> sticking to bullish guns, thanks for joining us at post 9. tom lee.
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>> the president will use tonight's state of at union address to push for tax increases on the wealthy and wall street fund higher benefits for the middle clasp this as a new poll shows 49% of americans approve of the president's handling of the economy. cnbc's chief washington correspondent john harwood has more details. talk about the poll john. admittedly from a low bar, this is a very optimistic poll for once. >> that's right, simon. what we've seen is that the american public has turned a corner from the pessimism that accompanied the great recession and financial crisis now they're looking ahead. take a look at these numbers reflecting that rising optimism. you see just since august when we were in the middle of the midterm election campaigns president obama at his low point in popularity. we've seen a ten-point gain in the proportion of americans who say they're satisfied with the economy. nine-point game in number of people who say that the nation's
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headed in right direction. six-point game in president obama's approval. here's how he wants to use that rising optimism. he wants to tax people at the top, $320 billion by raising capital gains rate to 28%. by taxing the appreciation in inherited assets which hasn't been tax sod far, he wants to use that to benefit the middle class, 235 billion over 1 years new tax benefits for children $60 billion to make community college free for all, as long as they keep up the work. now, is the president going to get these things from congress? no, he's not. but we've turned a corner in the economic debate as well as attitudes. middle class incomes and what to do about them democrats and republicans alike, that's what politic is about and president is trying to set the terms of the debate. >> there is a problem with wage growth there at the heart of. john, thank you very much. busy day for you, john harwood, in d.c.
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let's bring in larry kudlow cnbc senior contributor. >> good morning. how are you? >> the question is whether obama's kicking off a meaningful debate now about tax reform or whether he's just irked the gop to a point that it's back to the bipartisanship. >> i think this is an irk. >> right. >> all right. i'm going to score it as an irk. look, there is growing consensus on corporate tax reform which i think should be the first order of business and the studies show that lower corporate tax rate benefit the wage earning middle class the most. these are studies from left of center think tanks, right of center think tanks. that's the selling point. paul ryan is getting close, they're talking to the treasury they're talking, what as far as this other rigmarole is concerns, you know class warfare's not going to work. raising capital gains tax would push money offshore or deter investments. the estate tax, i was talking to
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my pal jim cramer you know raising the basis was a good thing for the middle class, helped them a lot. it's silly to fiddle with that kind of thing. you need full-fledged tax reform for the personal code. you need to lower the rates, broaden the base get rid of the deductions. i'm all for that. >> but would that be realistic? >> picking out winners and losers and trying to pit one class another, it won't fly, it's lousy economics and it's lousy politics. >> do you think this president has the clout to lay out in the state of at union seeds for corporate tax reform when he has a message and that is that he wants to help work families and higher income. >> everybody wants to help working families. everybody wants to help working families. how do you do that? one, grow the economy faster. we're seeing improvement in the economy. let's not be raising tax rates. >> the problem we have we all have for these people wages
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aren't growing. and that's what he's -- it hasn't worked has it so far? we are generating employment but see time and time again, that the wages particularly at the bottom of the workforce are not shifting. he's coming through with in essence entitlement reform of some description. that may be where your objection is. >> no. >> the heart of it surely we have a problem. >> no no. two quick points. wages is doing better than you think. can i make this point? people look at monthly job numbers and see average hourly earnings, 0.7 year on year whatever the number is. >> they were down. >> down 0.2. >> you can use that number. you have to multiply average hourly earnings times hours worked. when you do that year-to-year it's 1.7 plus 3.3, you're at 5% less inflation rate of 1. it's better than you think. now, i agree, over the course of
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mr. obama's presidency as the "wall street journal" reported today, middle income wages have slipped. i agree with that, okay. here's my solution. all right. lower tax rates for all those people. give them more aftertax income. can i just tell you something? if you're married filly jointly make $70,000 a year you don't pay the 15% rate. knock it down to 10. if you married filing joinly make $100,000 a year the husband and wife don't pay 25%. push that down to 10% a year or 12% a year. flatten the rates and get rid of all the deductions and loopholes. that's the way to do. don't penalize investors. investment leads to business formation, which leads to jobs which leads to consumer spending. we need the investment. we can't just joggle the investment. but my point is this obama's plan will go nowhere. his -- he will have a paragraph
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tonight on corporate tax reform okay. honestly, from what i gather talking to people like paul ryan okay talking to orrin hatch in the senate finance, they're not that far apart, believe it or not. there are issues, revenue raising issues there's territorial offshore issues but in terms of dropping the rate from 35 to 25 they're not that far apart. he's at 28 the republicans are at 25. the big battle's on the repatriation of profits and so-called territorial. but, i'm going to play this from the optimistic side because the gop wants to help all workers, they agree with obama on that and they are moving towards corporate tax reform. this could really help america get us -- i want 350,000 jobs a month. i want to get wage up to 5% 6%. i want the country to grow at 4, 4.5%, 5% for the next 5 to 10 years to get back to long-term
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trend line i'm want america to be competitive. don't be raising taxes. keep them down. flatten them. make it simple. don't be complex. make it simple. i want tax credits -- i don't want all of this other regular ga ma roll. put the irs out of business. give incentives. incentives grow the economy. take home more after tax, incentive. >> one and only larry kudlow. >> the larry kudlow state of the union address. >> you're great. thanks for having me. >> two wall street deal makers starting a new activist hedge fund with major ceo backing there they are. former jpmorgan cfo doug brownstein and doug woolerly will be here at post 9 with david. over the last 10 years we've helped over one million business owners get started. visit us today for legal help you can count on to start and run your business. legalzoom.
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♪ two of biggest deal makers of that their day ditch, arranging corporate marriages for an opportunity to invest in them. doug braunstein and jim woolery, forming a fun to create value through corporate financial solutions. nice to see you both.
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>> good to see you. >> david, very glad to be here at start of the new firm. >> i bet you are. just quoted from a press release, of course, and i would like to know doug what is that? it's funny, people have been describing you guys as forming activist fund, the word activist doesn't exit here. >> no it doesn't. >> what does it mean to create value through corporate finance solutions. >> great question. >> thank you. >> what we're about, we're going to find companies we think undervalued in the market and we believe we can bring some transaction or execution expertise to the company to enhance value. we're going to do that through constructive engagement. that is working with the boards and the management and the shareholder of those companies to create value for our firm and to create value for all of the investors in those securities. >> jim, something that you guys are not going to do at least, is mount proxy fights. again, differentiating you from what has been an extraordinarily
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popular strategy as we know act everybodyists, talk about them every day, but i wonder does that prevent you from using effective weapon to get attention of managements. >> no, it plays to our skill set. we can create value as we always have done by collaborating. this is a new/old idea merchant banks of old collaborating with shareholders and boards and management teams to get deals done and get things positively done for shaersreholder. we have secret sauce in terms of being able to collaborate and make things happen that are positive. and you know you don't always need a contest to do that. that just isn't our skill set. we have another core skill set, friendly collaboration. we see tremendous opportunity in the marketplace. >> what do you mean by secret sauce. >> i can talk about that, right? one of the great things this firm brings together is we've enlisted the help and partnership of 14 ceos and those folks bring with them a wealth of executive and
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management experience, strategic insight. they've got deep industry knowledge and they've been through almost every type of issue in their companies. jim and i have spent 50 years on the corporate side of the ball right? we understand how boards think. we understand how they make decisions. and, quite frankly, we've worked with them on hundreds of friendly negotiated transactions. so that insight, that network, that real capability and expertise we think is going to make a difference in companies in which we invest. >> some say you have done all of those things. you've been in boardrooms but never picked a stock. and that done mean you're going to be any good at it. what do you say to that? >> we've created a lot of value through our careers. our record stand for itself. i think we are going to be able to create a lot of value by making positive deals and corporate finance solutions happen. we're really really comfortable moving into the space. i think doug and i have been
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sort of moving in this direction for years and years, and this is sort of culmination of careers and experience. we're going to put all of that to work for investors. >> doug, what do you say to somebody who says, braunstein, has done deals, cfo, getting into the activism game it's got to be the top. >> this hat gots got to be it maybe this is tipping. >> let me give you perspective, david, which is there are 2,000 public companies in the united states which market values more than 500 million, a mere fraction of those have seen activists investors but the entire world of long only investors is becoming increasingly active. we've spent much of our career in that space. so we think being able to bring that strategic advice and the capital behind that advice and the industry knowledge of the group that we've assessabled, i think, is going to create enormous value for the companies, 500 million to 10
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billion and it's a space we think we can really do a lot to help improve the value. >> that's where you think you're going to focus up to 10 billion a month. >> absolutely. >> that's the places where we think, we've worked with those companies over our entire careers, there's a lot we can bring to the table. when you have a list of group of experts that we brought to bear we think we're going to be able to do a lot to help companies. >> a lot of companies in that space, david that are looking for the kind of financial and strategic support that hudson executive capital will bring to the table. >> that said 250 million, which you guys are putting in along with partners, cfo partners, you've got to work with more than that it would seem, from my perspective to take meaningful positions to get to the table. is that a starting point? >> it's extraordinary that you've got 14 public companies ceos putting this amount of capital into a venture like this. but our fund-raising process is
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private under the law, so i can't get into detail around that. all i can say is that this is a pretty extraordinary group of people to come together to pool their capital i don't think you can find something that substantial n. history. >> doug a procedural question, but a real one, do you find yourself restricted potentially from opportunities because you kind of got to wait some period of time before you can actually invest in them? >> the good news for us we think there are an enormous number of opportunities out there where we are free to act and more importantly, we believe we've got insight that will help those companies improve the value for all of their shareholders. we're obviously going to be very mindful, david of making sure that we do things in a first-class way and for jim and i, this is really about the long game for us right? we're starting a firm today that
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we think hopefully will have a real meaningful impact over time. >> what do you do when that ceo, you come and sit down and say we think you should do x, y and z and they say i'm not interested see you later? >> that's happened to us before. you know what we do? we sit down we have a conversation right? we -- it's a collaboration. it's a back and forth. we're i think doug braunstein and jim woolery and ceos we have together have a lot of experience in playing tennis with ceos around ideas. we love doing that. so just because they don't agree with us in the very first second doesn't mean that we immediately have to go in a different direction. we'll stay in there, work with them, get something done. >> can i just add? i think what's interesting here is there's always this presumption today that things just have to be unfriendly. the reality is there are lot office companies out there that are looking for capital to support their strategic direction and we have a real good sense of the opportunity
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set given our network where that first call in is going to be a welcome call. looking forward to those opportunities as well. >> doug, no longer an employee of jpmorgan. >> technically i am still. >> you are. i can't ask you -- this the first time you've appeared public any in an interview since you were cfo. >> yes. >> a lot of ups and downs, you've admitted that as well. but i'm curious, before i let you go are these big banks too big to manage? >> you know i -- i'm not going to speak generally, but what i will say, i've spent 19 years at jpmorgan. i feel privileged to have been there and been a senior manager to serve heading the investment banking businesses to be the company's cfo and recently vice chairman i think it's an extraordinary management team extraordinary set of businesses that jamie and the team have built, and i'm delighted to be a shareholder and intent on being a shareholder for a long period of time. >> all right.
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i'm not going to let you get away with it you're leaving, you haven't been there very long, they can't be happy. >> they've collaborate the with us. they helped birth this company. this is a dynamic moving area of market. cat walter's right in the middle of it and we'll do business for a long time. >> thanks to you both. >> mr. faber, thank you very much. >> good luck in this new nonactivism but activism world. >> thank you, david. >> all right. >> doug braunstein jim wool ier are. >> live to the slopes of davos. bank of america ceo brian moynihan live from the world economic forum.
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welcome back to "squawk on the street." teva the stock is sprooi spiking after the supreme court ruled in its favor over patent protect for a top selling multiple sclerosis drug. by 7-2 vote the supreme court said the court of appeals had not used correct approach in analyzing when the patent in question was valid or not. the court sent it back for more lower court proceedings. shares off session highs, still up by 1.5% today. back over to you. >> thanks very much. a down market wit the dow down 50. live interview with bank of america ceo brian moynihan. get his response to that surprise shocking move out of the swiss national bank. plus, does he think the federal reserve can raise rates this year. and on the economy and more, we'll be right back.
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it's that time of year the world economic forum kicking off in davos, switzerland. becky quick in position at ski resort and joins us with a special guest of over to you. >> thank you, simon. right now we are joined by bank of america ceo brian moynihan. and brian, it's great to see you here. you just arrived. we really appreciate you making time to come over. >> a spectacular spot on a sunny day like today. >> it is. lucky to be here. when you look around the globe, there are chaotic things happening now, markets in flux things we haven't been anticipating i wonder what your
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perspective is from where you sit on so many things, currency markets in flux, interest rates, oil markets. which surprise you the most? >> well, it's been an interesting, late winter here in the sense that you had oil structure move rate structure move dramatically. it's moving around based on economics. as we look at world, we see the world growing next year not as fast as people like. the united states picking up growth in everything we see supports that. the markets reflect the view of the economics, people's view of worldwide growth slow down people pulling back and example of new things what happened here in the country a few days ago. that moved the markets around and now settling back into the new reality. >> talk about what happened here a few days ago. swiss national bank actually deciding it was going to depeg from the euro caught a lot of people flatfooted. a lot people didn't know about it. >> you didn't know about it.
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>> there's a lot of things we won't know about, how do you keep risk down? we made money last few days and helped our customers but it hasn't had a big impact on us but caught everybody by surprise. >> how did you find out about it. >> read it about it over the wire like you did. it reflects a decision by the country to move forward and i think that's good. the world's got to keep moving forward off of artificial elements to help push growth artificial elements get back to core growth rate. there's a good side it just dislocation as it goes through the system. >> people think they had to move ahead of what is expected to be some move by the ecb this week that they will go ahead, start their on quantitative easing. you think that's the case. >> experts say that's the case. it's been so talked about, if it weren't the case somebody would be saying something different. but we'll know i guess on thursday. and we'll all react to that. >> let pleat ask youme ask you, you've made money over the past few days
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referring to the currency markets. >> currency marks and trading. volatility helps activity. if you keep exposures low. any activity helps generate revenue at the time. so we are fine. and we look forward to getting to the other side and letting the economy adjust and markets adjust. but it's been dislocating for some firms, well written up and for us it was fine. >> obviously a lot of volatile markets, oil one of the ones people watching closely, too. what is bank of america's expose exposure loans made to the oil companies that could be in trouble at this point. >> we have $900 billion loan portfolio and our exposure in oil is around $40 billion that we disclose. a big part is very large companies that have a lot of different revenue sources which oil and related products is one. but as you look at it and we look in the u.s. especially you have a plus and minus. from a macro sense and company sense we stress oil to 30 hole
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for months and it's part of what the regime keep stress testing yourself all the time. we have been running them consistently. doesn't have a huge impact on us. but the question is why is it falling and what that broader effect and the economy. consumer side it's remarkable. just looking at data from last week, oil spending, you know, effectively down over a dollar a gallon. consumers spending that money, plus more, and that means consumers are benefitting and spending money which is good for the broad company. a company like ours that has more consumer expose sure oil exposure, it will be a benefit long term. >> your view of the consumer is a very good one. bank of america you have half of all households in one form other another through banking, loans. we looked at the retail sales and it was a shocker to see retail sales were down in december. i know that's because of lower gas prices but what's the consumer feel like to you? how healthy are they.
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>> we didn't see any break from the headline number in november december and into january so far about of about 3% fairly stated combined spending and debit credit cards. you didn't have the oil downdraft compared to a year ago and the oil cost down draft it would be 4, 4.5%. we see the consumer has spent more money. data, it gets done in a way sometimes which it gets restated and thought through again. what we see in our consumers last friday they're spending more money by 3%. >> does that make sense to you to look at ten-year and a yield of below 2% maybe 1.8% 1.7%. >> i think there's a lot of market activity based on the view when the fed and the rate structure will rise that has to do with unemployment. is it improving fast enough as wage pressures and people earn more money to spend in the u.s. context obviously. that debate will go on until the
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fed does do something. so each time if you watch we come into the year with a lot of optimism and it deflates and it picks back up. i think this year will be no different. you expect the economy -- our experts at 3.5 in the u.s. versus 2015 versus 2014 last year. last year was flat and raises increased. next year we look to increase again. everything we see is constructive and for growth. and that ultimately means the fed raises rates, the question depends on the factors they talk. >> it means fed will raise rates, probably the middle of the year. look what's happening around the globe, if they would raise rates right now? >> they tell us what they watch, they put it out in great detail. i think predominantly what they've been focused on is u.s. employment. they want to see, you know, the
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wages pressure. underemployment rate is down. a couple years ago we would be talking about underemployment rate. you see it our workforce, job openings turn over quickly. i think that's what they're going to look at. i think the key one is u.s. labor economy in the shape that they'd like to see so they'll have the sustained spending and sus sustains consumption. >> lloyd blankfein joined us and he brought up an interesting perspective, look at it as a risk manager. for the fed if they -- he's fine with them keeping rates lower for longer because it's about making sure that you don't get yourself in a bad position. would you agree with that logic or would you like to see them raise rates sooner. >> selfishly, we'd make more money if they raised rates but the good of the american economy, long term is better for the company. think about. they ought to raise rates, and they will, when the economy's strong enough to absorb to slow
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it down. if you go back to chairman bernanke and his discussion the unknown of going backwards and having deflation and other issues, which figuring a way out of that is tricky i think as lloyd would say, err to the risk of worry about the upside getting overheated versus the downside because it's a big economy. the world's become dependent on the u.s. that creates a fact to make a mistake. all of that factors in. i assume they look at it as a risk manager, that's what they all do. >> thank you so much more your time. appreciate you joining us. sara, back over to you in new york. >> thanks for bringing us the conversation, becky. we'll have more big interviews from you and the "squawk box" team all this week. coming up one and only art cashin joins us at post 9 to weigh on the market action and big move we've seen. the dow is down 119. looking at session lows. "squawk on the street" will be right back.
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♪ ♪ it's quite a broad based retreat today. dow down over triple digits. energy one of the sectors in negative territory. dom chu has more at hq. >> energy weighing on stocks as oil prices continue their fall. west texas intermediate down 4% in today's trade. usual suspect leading the way. danbury resources, range resources, neighbors industries and chesapeake. energy is down trying to make its way off of session lows. >> wti 47.05. with that move we're seeing stocks taking a leg lower during the session. art cashin director of floor operations for ubs financial services. looked like we're going to start on a high note, now dow down
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113. >> it is primarily energy. looking for signs of stability or range and they're not quite getting that comfortable feeling. i also think that there is further concern about the operation of the swiss national bank. i don't think the victims will be limited to just a few currency traders. i think it may spread past that. >> this idea that central bank credibility is a question central bank mistakes can be made, and we are in an unprecedented era. how do you take big ideas like that work it into the trading environment? >> if you look at it the swiss national bank is -- was in a position whereby making this decision, they may be putting their own nation into a recession, and possibly into a deflationary spiral. i don't want to overdramatize it, but the last time you saw things like this happening we're in the '30s. >> again, you have the imf coming out overnight, downgrading global growth
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forecasts for almost everywhere except the united states. the question remains into 2015 can the u.s. remain not only island of economic stability but attractive place for the markets or would you rather be in europe on the expectation of qe. >> short-term traders go long in front of thursday. the assumption is that the swiss national bank to make that dramatic effort that they did, might, in fact have had a minutehint this is a large qe if so it would move the euro substantial substantially. if they had kept the peg on, they would have gotten run over. so they painted themselves into a corner of their own making? >> absolutely. before 2011 there was no peg. they decided it seeped like a good idea and it never went with them. >> what about this market? can we continue to make gains through the year. >> i think you can, but you'll need cooperation. you need oil to begin to look like it's stabilizing.
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there are some people beginning to think that the ceiling for oil will be the nominal cost of fracking. in essence, if they can drive the price lower, they can limit some of the fraccers from going. >> what price? >> 50-ish. 50-ish. you hear iran and others talking about $25 and $30 oil. if they can take it below 50 and it shows a sign that they're limiting production then they'll be happy. however, if china or somebody else begins to firm if it gets back above 50 fraccers go back to work. instead of open peck being the swing player it's the fracking group. >> you think the china worries are making they're way into the trading session? yes, gdp came out better but still the slowest growth rate for the year since the '90s, and that massive drop on monday for the chinese stock market. >> well that was margin related from what we could see. you did get a bit of a bounceback today. but i think obviously that bears
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watching. we'll begin to know a little bit better when we see what the chinese do with the cheap oil. do they -- >> should help them. >> i know it will help them but my point is you have got to see how aggressive they are in building strategic petroleum reserve. do they go and rent the big tankers and bring cheap oil in figuring things are going to get better or if they're difficult dent about it that's going to tell you they're concerned about their own economy, too. >> for now a lot of pressure on the commodities at large, except for gold which is getting a nice tick. >> gold's getting a nice tick. it broke above a long standing downtrend line. moving better. you've got surprises in the currency markets. so, it was kind of a flight to safety with an excuse for breaking a trend line. >> i degree. we'll see impacts of the swiss move for a while. art cashin director of floor operations at ubs.
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walt mossberg why you do not need to give in to pressure to upgrade devices. we're back after a quick break.
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welcome back to squawk on the street. the parent of red box, the stock is falling after announcing its ceo is stepping down and resigning from the board. no explanation was given. board member nora denzle will serve as the interim ceo. the shares down 13%. the stock up nearly 25% over the past three months. they also provided some revenue guidance they expect 2015 revenues to be up about low single digits and operating profits to be in line with 2014 results. back over to you. >> thanks very much, dominic chu. let's get to the cme group where rick santelli will join us with the santelli exchange. >> thanks, david. my guess this morning is trey i think the best way to introduce you, is you've probably forget more about japan than many people will know. it's his passion, japan. all right. i hate what i call burping comments, when the dollar is
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stronger, what does everybody say. burp it all together. >> weak commodities. >> what's gold doing. >> going up. >> why doesn't anybody talk about that one. >> it's up about $15 today. >> the conclusion is the crude oil break is not because of dollar strength. crude oil is breaking on its own right. the proof of that is in gold. gold acts very good this month and it will continue to do that. >> let's bring all this back to japan. what's a great trade that would include japan? hint hint might have gold in it? >> it certainly might. not a great trade, rick this is my single best idea and my single largest holding. long gold in yen. the bank of japan -- >> we have the chart up is my guess, coming close to historic highs. >> long gold short yen in my mind has the perfect macro economic landscape. the bank of japan is buying twice the amount they're issuing twice the amount of yen as the government japan is borrowing in a year. how could the yen do anything but go down.
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remember when you short a currency short it versus what? i like being short it against hard assets. real estate is a little harder trade to execute. >> black swan factory in japan is like the zoon factory. might have made a lot but nobody has one. do you think there is a catalyst that will make this kind of fray in japan? >> this sounds counterintuitive but as the bank of japan buys bonds they are creating an enormous amount of pressure on bonds, and bonds will eventually break. why? because a bond is an iou. i'll give you yen, you give me an iou. the bond holders as they see the yen -- >> which is mostly old japanese and the bank of jaen. >> lifecos and things like that. the largest pension fund, the government pngs fund announced they're changing their asset aloe kay away from the government bonds.
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>> shocked on the peg of the euro vers sus the swiss franc, the bank did it before the 22nd meeting. i'm not shocked on the timing. you think another peg may be unpegged at some point and it's funny because it's my kind of wild card for 2015. why don't you break it. >> look to china. number one, as the yen weakens, who do you think is ruffling their feathers right now? who do you think is a little upset about euro weakness and yen weakness. i don't know a big export market like china. so a strong dollar hurts the chinese. they're going to change that. the chinese are going to unpeg to the juan to the dollar and devalue it and it's going to happen in 2015 2016 at the latest. right now, 6.2 to the dollar. i think 12 13 14. >> wow. that's a big call for 2015 and trey is moving to texas. he can't handle taxes in illinois. happy feat. good luck in texas and thanks for taking the time to be our guest this tuesday. simon hobbs, back to you. >> he will be missed. thank you very much.
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let's see what's coming up on the "squawk alley" which takes to the air in just over three minutes time. jon fortt has our look ahead to that. >> good morning. yeah, well google might have its eyes in the stars, possible investment in spacex. elon musk's other venture. we will look into that. netflix reports after the bell were they sandbagging last quarter with the reduced guidance or is international growth kind of uncertain. is that going to hit them? we'll look at that. finally walt mossberg on why you shouldn't necessarily feel the need to upgrade every time a shiny new gadget comes out. all that and more on "squawk alley" up next.
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