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tv   Closing Bell  CNBC  January 20, 2015 3:00pm-5:01pm EST

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right. much more on oil i'm sure on "the closing bell." the dow, the s&p, the nasdaq are all higher right now. >> "the closing bell" is coming up next and we'll see if we can close higher at 4:00 p.m. eastern. and welcome to "the closing bell," everybody. i'm kelly evans, and yes, it may not look quite as familiar but i am here bill at the new york stock exchange. >> i'm here at headquarters which looks like cnbc headquarters as well. tell us we've been waiting for this opening. >> everybody has referred to this space as the garage. as the new york stock exchange has unveiled this addition today they've been renovating for the past year. it's called the buttonwood room and people know that goes back to the founding of the exchange. more than 200 years ago outside of buttonwood tree. a couple blocks east of where we're standing today.
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68 wall street. today it's a luxury residential building but that's beside the point. we're seeing the results of the ice, the owner of the new york stock exchange moving and consolidating some operations not just the equities but also some futures business some of the options, and just some general support here as they continue to run vat the space. >> that's right. i miss the garage i will say, but time marches and the options traders have a beautiful new trading floor. so things look a little different at the new york stock exchange, but it's the same for the stock market overall. we still have volatility in this market kelly, and a lot of it. we're waiting not only -- we know about the state of the union tonight, but the ecb meeting, european central bank meets on thursday. that could have a profound effect on this market right? >> that's going to be a big one. a lot of anticipation arguments over whether you should buy europe or not. even johnson & johnson this morning on that disappointing earnings result talking about
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some of the weakness in europe and the weakness in russia, the weakness in venezuela and brazil. oil prices also under pressure. that's contributed to the dow's mixed. er formance today. right now we're up 10 points. the s&p is in green territory and the nasdaq add being 26 points at the moment. >> so much to talk about. let's get to it on our closing bell exchange. there's amy wu anthony chan from chase is back with us so is girard fitzpatrick. david kudlow from mainstay capital management and our own rick santelli. anthony, you're our big economic bull. imf reducing growth targets. it wasn't too long ago we had 5% handle on the economy and gdp now we're wringing our hands over china and europe and things. are we slowing down globally or not right now? wroo wroo >> well, we are going to be a little slower. it's clear china is rebalancing
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their economy. they came out with a forecast of less than 7% but they said the u.s. economy will grow faster in 2015. i think it's positive. and to the extent we get some stimulus out of the european central bank which at this point very few people are debating. the only debate is how much we're going to get, we will see that the global economy will start to heal when all that takes place. >> you know against this backdrop we also have to point out to people some of the big moves again and u.s. treasuries today, are rates going to keep going lower? what stops it at this point? >> u.s. treasuries the big issue there has been more concerns on a global bisaysasis but particularly disinflation. real yields are still not super low but the nomal yields have nose dived. where are we going from here? i think we're on a trajectory the u.s. economy still looking pretty positive for this year. the jobs story should be somewhat more positive but there are concerns ahead.
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the curve is starting to flatten. there's some wider international concerns out there. and i see the risk of potential slowdown just rising not necessarily this year but ahead. i see u.s. treasuries going 2.5% to 3% on the 10-year but for the first half of the year as global slowdown is likely to be to people's fore as the inflation story is likely to dominate, i can see nominal yields staying low. >> amy, you're good at gauging market sentiment. what is the feeling about that meeting with the european central bank on thursday? are they betting up or down or what is the expectation there? >> you know what surprises me bill, as you said earlier everyone is watching thee cb meeting, and, frankly, that's all they're doing, they're watching it. we're only pricing a plus or minus 2% move on the s&p. that's relatively average. you would think given the volatility that we have experienced and will experience through the catalysts ahead in the options market there would be more placement but we're not seeing that. we're not seeing hedges enacted
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to any degree. i think people are sitting and watching seeing what happens. i think if expectations are out of whack from what happens, we'll experience even more volatility than we've seen. >> speaking of watching david, tonight the president is likely to announce he wants to increase the capital gains taxation rate to 28% for the highest earners from currently about 23.8%. if that happened, would that impact this market? >> i think it could impact the market to some degree. we're always looking at how politics affect the market. with a republican congress where would that go. if we look -- coming back to the economy though the u.s. economy, what it has going for it right now, the gdp growth of 5% latest reading, highest in 11 years. and the international monetary fund raised 2015 outlook a half a percent while downgrading most of the rest of the world. we have consumer confidence, the highest in 11 years. jobs growth the highest since the 1990s.
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ism numbers well above 50 and we look at china slowing, we look at japan and the technical recession and europe on a path down that same road with i think the ecb probably disappointing on thursday. >> i want to get to rick in a second, but anthony, is it possible for the u.s. economy to grow relatively robustly when all -- everybody else around us is slowing down? does that make sense? >> bill i don't think that's true on a sustainable basis, but you got to remember you got to ask the question where are those global economies going, not so much over the next quarter or the quarter after that but over the next 6, 9, 12 months. and if the european central bank does a huge amount of quantitative easing, something north of $500 billion, we know the european economy is going to pick up and here in the united states that lower energy price, i know everybody is beating that drum, but studies show including some i have done myself when energy prices decline, consumer
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spending tends to go up. 54% correlation between what happens to energy prices and consumer confidence and 54% correlation between consumer confidence and energy prices. >> that's not that high anthony. >> and there are some studies out there, kelly, that show with a one-year lag, the correlation is 80%. if you're not impressed with 54%, you got to be impressed with 80%. >> i'll take 80. going back to the j & j quarter, shares under pressure partly because of the guidance and factor that is supported what otherwise was a real hit from the stronger u.s. dollar and some concern about their ability to meet sales target if the dollar remains just at these levels forget going higher. what are the guys down there saying happens to the dollar from here? >> if you have a problem with the strong dollar your real problem is with all the other economies that give the strong dollar value on the spread. you can't trade the dollar in an isolated fashion. it's only against the euro the pound, the swiss, and to that end the economies on the other sides of these trades are really
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the proactive force. it's just so easy to say strong dollar. as i look up on the board today, there's some huge moves, huge moves. we're gaining big velocity against the yen in particular. now, you really think that's a strong dollar story? you really think it's a weak japan story, and it's important. it isn't just semantics. this is huge. and i continue to see all the dynamics in place for 2014 continuing into 2015. our one guest said i'm sure if they do 500 trillion euros worth of qe, that the european economy is going to get better. why? why? why do we know that? we don't know that? and it's not the right question to ask anyway. the right question to ask is is there a benefit, a cost benefit, to putting the european economy into even more questionable unintended consequence-ville, if you will to do this and nobody is asking these questions. everything is just, you know, this is the way it's been this is the way it is. just like a strong dollar -- >> and rick -- >> what about gold? >> rick, the german 10-year bund
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is already below a half a percent. how much more canq qe help? >> right. >> quantitative easing is not just about lowering interest rates. it also impacts the currency, and if you believe that a lower currency doesn't help the economy, all you have to do is look at history and find that's the case. >> it will definitely help exports to some extent but once again, is this a dollar problem? is this a multinational problem? no, it's a beggar thy neighbor problem. we need to identify problems like tonight, state of the union speech. just because the warren buffetts of the world are getting richer because of ben bernanke and yellen, i don't understand why that makes a guy who wants to get a good education and open up a new business, why does that put him at a disadvantage? i don't get it. none of it makes sense. >> amy wu somebody mentioned gold a second ago. gold has just finished its best seven-day up period since 2007. we're getting close to $1,300. i don't know if you're doing any reading on options activity on gold these days but what kind
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of sentiment do you see there? >> we've actually seen upside buying on the call side in not only gold but some of the other derivative commodities related. one point i wanted to make going back to the oil beneficiaries is, you know, look i think a lot of people are afraid to play energy either single stock or macro directly right now because a lot of it is geopolitical, but we know that lower gas prices will help certain things in the chemical spacen the retail space, in the derivative place and those implied volatilities haven't moved as much as you have seen on the energy space in general, so i like that indirect approach. >> all right. >> that explains some of the activity we are seeing. guys, thank you. amy, thank you. thanks, everybody, for now. this afternoon we have about 50 minutes to go. the dow and s&p still both in positive territory although just. the vix is a little bit lower today, but anything could happen from here. coming up wall street veteran john calamos is speaking with us to find out how he's navigating
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these wild swings and what he's buying with his 20 billion in client money. >> always looking forward to talking to john. also, when we come back former fdic chair sheila bair will weigh in on the nation's banks. the talk about breaking up the banks is only getting louder. stay tuned for our interview with her coming up on "the closing bell." stay tuned. you can find a new frontier. there's nothing stopping you and a lot helping you. technology that's with you always. this is our promise. it's never been better to wander because wherever you go, you'll find us doing everything we can, so you can. if you're running a business legalzoom has your back. over the last 10 years we've helped over one million business owners
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welcome back. it's been an up and down and up day on wall street. the dow, all the major amples opened higher. at the low we were down less than 100 points. now we're back in positive territory with 45 minutes left in the trading session. inside the dow, it looks like roughly half are positive and half are negative right now. and -- >> that's what they call a trading market. >> it's not a stock market kelly evans. >> it is a market of stocks. >> thank you. >> wise man once told me that. >> president's state of the union address this evening is expected not just to ask for higher taxes on high earners but also new fees on banks. >> and the financials remain in the crosshairs at least politically. elizabeth warren continues to
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call for the banks to break up. just today there were protesters outside the new york stock exchange calling for the return of glass see gal. more reaction on all of this and an exclusive interview, former fdic chair sheila bair. it's great to see you again. let's begin with this move that the president may announce tonight. 7 basis pounds with -- 7 basis points on $50 billion. is it the right move? >> well first of all, i don't think it's going to happen. i think it's politics. you know we had a very sizable assessment for institutions above $50 billion as part of the dodd/frank bill the original bill that passed the house. the administration actually opposed that in the senate. their treasury department they also lobbied against the transaction tax in europe.
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so i think the only reason we're seeing it now is because they know the republicans are in control and they'll stop it so they can play a little politics with it. i'm sorry, given the past history of where this administration's treasury department has on any kind of bank tax, i think they're playing games. i don't think it's real. i don't think they really are serious about pursuing it. >> let me ask you about dodd/frank. is it too late to change the regulatory structure in that bill? the reason i ask, you know jamie dimon famously last week said banks are under siege right now, they're under attack. even barney frank has told us on this program that one regret he has about dodd/frank is that they left the regulatory structure too complex. they should have simplified it more. can we go back and simplify things do you think? >> actually i think that would be a very constructive discussion to have on financial issues as opposed to all this nickel and diming of dodd/frank and weakening that. i think we should give a serious look at regulatory structure. i don't support a single regulator. i think that's too much concentration of power in one
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entity but we could have a lot fewer, and he's right. there is a piling on effect and everybody is afraid of looking like a weak regulator if somebody else is going after a particular institution. it's not good government. so i do think that would be a very constructive debate to have in congress as opposed to all of this trying to seriously weaken dodd/frank, which i don't think is a good idea. >> related to all this is the ability to resolve failing banks, as you know. some say this bank tax obama's proposing is actually a form of fdic insurance. >> right. >> would you agree with that? >> no i don't think that's the way to look at it. i mean what we were trying to do in the dodd/frank bill was provide a fund for working capital. it would be adjusted on the basis of risk, which would be much more nuanced than what the administration is proposing, so if you have a lot of short-term funding, a lot of, you know, level three assets hard to value assets higher levels of leverage, there are a whole
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series of factors which would have resulted in a higher assessment. that makes sense and should be done but i just don't think it's going to happen. but the larger question i think, you know, just by raising capital requirements forcing them to issue more long-term debt, which is more expensive than short-term debt you can try to make them internalize some of the external risks they pose to the broader economy, and that in itself can create pressure for them to break up. the more expensive it is to be big, the more market pressure there is going to be to get smaller. >> i know you're a fan of elizabeth warren but with her call to break up the big banks, that's one thing that jamie dimon says is one reason that he feels like he's under attack by the federal government at this point. >> yeah, right. >> it makes for a great populist argument to do that but is it constructive to do -- to make that kind of a statement, to break up the big banks when in fact dodd/frank was created to deal with the big banks in this economy right now. >> well i actually believe that the market would get us there.
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i think the only reason they can operate -- there are a lot of management inefficiency was having these very large complex institutions and it's more about complexity than it is size. but derivatives dealing, commercial banking, those are all different skill sets. if you're trying to imagine them all centrally, you get a lot of management inefficiencies. the only way i think they can do this with all the leverage is because they're implied government support. you send that you end the market's perception of too big to fail you increase the funding costs, i actually think the market itself will force them to down size because it is really hard and inefficient to try to manage these very large conglomerates. >> it's interesting the way that at the same time we have this huge market force i guess coming on the banks in the form of just plummeting yields. >> this is also true yes. >> and to what extent is this a double whammy? should it be frankly, encouraged that this is accelerating the transformation of this country's banking industry sheila, or do you have a concern about what these low
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yields ultimately are going to mean? >> well i have a concern about low yields from a different perspective. yes, it's compressing margins, especially if you make your living making loans, traditional banking, which i think is important public service and something banks should be involved in. if you are doing that you are being punished by very low yields and it forces investors and others to go farther and farther out on the yield curve. you saw it last week all these retail fx investors playing this swiss franc against the euro and taking a bath with 50 to 1 levels of leverage and higher. that's the kind of activity you get when people can't get yields on their safe investments, and similarly with banks. if they can't get yields on the safe investments, it gives them incentives to take ricssks, too. >> do you think the fed is doing the right thing then by raising interest rates -- >> i do. >> -- even if it seems like the market is telling them the result of that will be somehow lower rates in many years' time? >> you can't control the global
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economy, and there's still -- if reports of the global economy are having trouble, you will see a high demand for dollar. that's going to result in lower treasury yields regardless of what the fed does but i do think they should start on this path. we need to get those rates what i would call more normalized which is at least so your safe assets for regular savers are at least a bit above inflation so they're making some real return on their money. i think that is something we should do. they need to do it gradually. we've been in this for a long time but i think janet yellen and the rest of the board are absolutely right in sig naling they will do this. i think that's absolutely the right thing. >> good to see you. thanks for joining us. >> happy to be here. >> sheila bair joining us from washington. as we said an up and down and up day. we're up right now as we head towards the close. a gain of 19 points on the dow, kelly. >> up next we got to talk about oil tumbling again today. we've got a guest coming up who says the oil price, this is what
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we should be looking at. he'll explain what he means by that. >> later we talk with wall street pro john calamos speaking with us exclusively about the markets, how he's putting his clients more than $20 million to work. we'll get his outlook on the markets and the economy for 2015 coming up. stay tuned.
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breaking news on standard & poor's. dom chu has details. >> what we're watching right now is a reuters report saying that s&p is in talks to pay as much as $1.5 billion to settle with the u.s. justice department as well as state authorities over its mortgage ratings. that according to a source familiar with the matter. s&p also possibly in a settlement of its civil fraud litigation that could be reached as soon as this month. that according to sources familiar. so reuters saying that s&p could pay about a $1.5 billion settlement with the u.s. justice department and state regulators over its mortgage ratings. of course, with he show mcgraw-hill financial is the parent company of standard & poor's. an interesting development here kelly, bill, on what's happening with the credit ratings agency. back over to you guys. >> that's real money. >> and a in the works for some
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time as well. thank you very much. keeping an eye on markets here the dow again in positive territory despite being a big underperform -- seeing a big underperformance from j & j. consumer discretionary getting hit which is interesting in light of the better attitudes and sentiment data we've seen. a positive session for tech. >> two of the darlingingss from last year not doing so well this year financials and discretionary. oil kicking off the week on a down note. jackie deangelis is following that for us. >> good afternoon. the selling pressure back "today." we were down $2.35. closing price $46.39. the first is thei mf cutting its global growth forecast for 2015. and weak data coming out of china. then iraq production 4 million barrels a day, record production keeps going up while prices keep going down. also, some earnings out from baker hughes and halliburton. the numbers were good but
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cautious commentary from management on oil prices in 2015. price for a gallon of regular price according to aaa, $2.05. everybody is watching to see when that national average goes below $2. >> it's already happening in many states. by the way, one of our next guests say forget the current price of oil, it's the oil futures. those stand at $53 for december of this year, under $59 for december of '16. >> joining us why is john kingston director of news. thanks for joining us today. campbell, what do you see here? on the one hand you've got a guy like the prince who is one of the savviest investors who says we will never see $100 oil again. and then john hofmeister says we'll see 100 bucks by the end
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of the year. what are we to make of that and where do you see it going? >> what i think is way too much attention is put on the spot price. just a few minutes ago we heard $46. there's much more information in the market about the price of oil, and the logical place to look is the futures curve. and oil frukluctuates wildly at the short term of that curve. we're seeing a period where the oil price is low but the futures tells us the price will revert to a higher price. and i think for many of the more important things in the economy, whether it's airline stocks, whether it's a papelineipeline decision, whether it's an energy company, all the valuations of those securities is based upon the long term. they're not based upon some spot price of oil, yet all the attention is on the spot price. >> fair point, but, john how reliable is the futures price of oil? did it predict a 50% drop that was coming or does the current hope really actually reflect a
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bailout for some of the company that is would otherwise when they're hedging or trying to receive income locking it in for the next 6 to 12 months have to realize the spot price? right now the fact that the futures price is higher means they don't have to do that. >> i never thought the curve was a very good predictor. that doesn't mean it's not important. i think to me when i look at the curve that was just discussed, it looks like the kind of curve you would get in a contango market with a very over supply in the short term and very steep curve going out. i have always viewed it as more of a statement of value, of what it's worth now to own that now, and that's kind of a complex brew of interest rates and inventories but it does have value. first of all that somebody is buy crude now, sell it 12 months forward, store it for the interim and with low financing charges they can money. so i think that's important. i also think it's possible that a company can hedge some of its future production but, you know, a lot of these companies are junk credits or close to them or they're getting that way and that's a liability on your
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books as soon as do you that. so i don't know if they've got that. so i have never been big on the idea that it's a good predictor of where prices are going to go. >> i want to get your comment on that campbell but first the word contango. it's a fun word. it simply means the futures are pointing to a higher price down the road. campbell, what about that and the thought that maybe the futures aren't that much of a predictor down the road? >> so there's many important things here. number one, it is true that the futures price isn't exactly the forecast of the future spot price because as was mentioned there's cost of storage, and that's very significant for oil. i think the point is how do you want to do this forecast? do you believe that there is some mean reversion in the price of oil, or do you believe that you need to extrapolate exactly the spot price from today? i'm a firm believer that prices mean revert in the long term. it just so happens that the futures curve is consist went that mean reversion. so i think that it's important
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to take all of the information into account whether it's mean reversion, whether it's the futures market whether it's inventories, all of this into account and not just look at the short-term price. >> john there's a theory going on around -- we've got to go here but i want to bring this up because there was talk on the floor today and art cashin was pointing this out, that the new swing producer in energy are the u.s. producers now. they are the swing producers in terms of putting supply in the market or withdrawing it when it's not economically feasible and whatever the price is that is feasible for them to continue production art cashin and others contend that's the new cap for oil prices right now, and we're almost there. what do you think about that idea? >> i think that's actually a return to a normal market, the kind of thing they would teach new economics 101. the fact is in the market previously the swing producer was opec and the saudis. they would take oil off the market or inject it back in as the market needed it. they took that role on themselves rather than let the
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free market work. well, now they're saying we're not going to do that not now and maybe for a little while, so then you basically get back to the order book who has got the orders for it, what's the supply/demand balance. i would agree, the pressure is on the people in north dakota producing in the eagle ford and to a lesser degree up in canada. the lead time is a little longer there. i would absolutely agree with that theory. >> very interesting. gentlemen, good to see you both. thank you for your thoughts. >> thanks. taking a look at the market with half an hour to go pressure on crude putting some broader pressure on stocks here and now the dow has turned negative again giving up seven points. puts it just over the level of 17,500 while the other two indexes trying to hang onto positive gains. >> we have mega earnings a half hour away ibm, netflix due after the close. we'll bring you the numbers the second they hit the tape and break them down. before we do that, john cal
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mixed day today. less volatility. i'll bet we'll be seeing that until thursday kelly, as everybody waits for that european central bank meeting and the announcement possibly of
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some sort of quantitative easing program. the dow is down just two points. the s&p up two points. nasdaq doing well up 21 right now. by the way, i would be remiss if i didn't mention why i'm sitting in haushseadquarters. i'm on nightly business report. check us out on your local listings. >> we look forward to it even though i miss you down here. speaking of dominic chu, he's keeping an eye on some of the big movers for us on this monday. hi dom. >> so let's start with here with johnson & johnson. the worst performer in the index today after the company issued disappointing guidance for 2015. as a result the shares down by 3%. also red box parent outer wall is moving lower as well. this after announcing its ceo was stepping down and resigning from the board. no explanation was given on that particular move so you can see down by 18% those shares. tiffany's trading higher after wells tar ss fargo upgraded them to
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outperform based on valuation. those shares up 2%. we'll end is orbitz worldwide spiking on a bloomberg report it's seeking a possible sale and has drawn possible interest from private equity funds. orbitz worldwide you can see up by 8% on today's trade. back over to you guy approximates. >> thanks, dom. we'll see you later. a lot of earnings coming out after the bell. markets have certainly had a volatile start for the year. today has been no different. so how does a firm that manages over 20 billion of clients' money navigate these kinds of moves you ask? >> well let's ask calamos investments john calamos joining us now. john, it's great to see you again. welcome. let's just begin with the volatility we've had so far in january. how it affects the trading decisions that you're making and what you think it means for the rest of the year. >> it seems like, you know, we're just on a risk on/risk off type of environment that's been
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a really tough environment, but i think you got to look through some of this near-term volatility, look a little bit further out and position yourself that way, and we're actually positive for 2015 overall, but this volatility has really been quite dramatic and it's not going to go away soon. >> john most money managers will tell us on this show it's about earnings that why they invest, that's where they invest, but inevitably our conversations get around to fed policy central bank policy. we're all obsessing on the european central bank right now. you know how does that affect how you're going to invest this year, especially if mario draghi finally is going to get around to some sort of quantitative easy money policy this year? >> well i think it's uncertain whether or not that's going to work well. they're obviously trying to emulate what the u.s. has done here, and we've done it and our
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economy has grown, so they're looking at qe to say, okay we should be doing that now, too. the problem they really have is we're they don't have a very uniform view across all the countries, and that's going to be the test there, but they're trying to become more competitive in the global economy by lowering their rates in here and hopefully that will stimulate growth in the european -- >> do you like europe? would you invest? >> well i think there is some areas of europe. i think some of the companies in europe that export outside of europe seem attractive so you have to be very selective. we're a little bit nervous about the political situation in europe right now, but if you look at overall valuations europe is cheap.
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it's whether or not they're coming out of the slump that they're in and that's the critical part that we're looking at very carefully. >> john, if you don't mind, pull the kircurtain back a little bit on your own business and tell us where people are attracted. are they looking at etfs, mutual funds or is it an appetite increasing for u.s. equities here? what kind of trends are you witnessing. >> i think what we're seeing is again we'd rather be in the equity markets than the bond markets with these low rates. also i think we're -- you know we're in more volatile markets, so obviously some of the lower volatility strategies i think will be appealing to investors, convertible strategies like that because we're in a very volatile period, and like i said earlier, you have to think, you know, really beyond the near-term volatility and from that point
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of view we're positive on the markets. so, you know, i think this low interest rate environment is tough. >> just could you clarify what you mean by some of the lower volatility convertible strategies because it sounds like an area that might be of interest for a lot of people watching volatility lately. what do those do? what do they offer? >> you know what those strategies have offered over market cycle is really cushioning your downside, you know, risk there, and you do give up some of the upside but in very volatile times, that has worked well and for investors really preservation of capital, protection on the downside is very important. so those type of strategies, you know, work well, and they don't have the interest rate risk that if rates all of a sudden go up they don't get hammered as well.
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so i think there's a lot of interest in those strategies. >> i assume if you're concerned about europe and the political structure and what's going on over there that you're on the bandwagon that says king dollar is with us for a while, the dollar is going higher and if that's the case what about commodities and other hard assets? are all bets off, you just don't want to touch these right now or what are you doing? >> i think a commodity play is all about inflation, and we'd love to see a little inflation. we're actually in a deflationary environment, so, you know i don't think that's the answer. i don't think that commodities are the answer here. you know i think i would prefer equities to commodities in here. >> you were pretty cavalier with your comment there that we're in a deflationary environment. do you want to expand on that? do you see prices going much lower from here or what's going on? >> no, i think, you know, the monetary authority, whether it's in europe or here want some inflation, they want the 2%
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inflation. rates are coming lower, could really, you know, be the catalyst to, you know spur inflation, and i think that overall that would be good for the economies. very low interest rate environment, flat yield curve, you know overall is you have to for the economy. >> yeah, it certainly is. presents a host of challenges. thank you for helping us understand how you guys are playing them. john calamos, ceo of calamos investments. >> heading to the close we have 17 minutes left in the trading session. the dow has been hovering on either side of unchanged. up 15 points with the s&p up 4. nasdaq up a comfortable 25 points. coming up mohammed el-erian says the u.s. is the best place to invest right now. he'll tell us how this week's expected european central bank stimulus could affect your money. when we come back we'll
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tell you what to watch for as we get closer to earnings for ibm and netflix so don't go anywhere. >> we're back in two.
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welcome back. the earnings parade continues this week. ib m, a dow component, and
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netflix, expected to announce earnings minutes from now. >> dominick chu is back with the numbers that could make or break stocks. >> 15 to 20 minutes from now. big blue ibm, analysts are looking for about $24.8 billion in revenues. that's down almost 11% from the same time last year. adjusted earnings are expected to come at $5.41 a shay for there for the fourth quarter. big blue also expected to discuss a huge reorganization from their executive raknks as well focusing on cloud business. ibm currently flat on the session. netflix expected to earn 45 cents a share on sales of $1.45 billion in its fourth quarter. a key metric for this company will be whether its number of paid domestic subscriber additions will hit or surpass its guidance of 1.35 million subs. those shares up by 2.5% so far in trading. we'll end with one on the smaller end for chipmakers.
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advanced microdevices forecasts are for a penny a share gain. those shares are down 6.5% ahead of the earnings report. it is expected to be a volatile one for a company that's now only worth you can see there about $2.25 per share. back over to you. >> a you have to session again for amd. thank you. about 12 minutes to go before we hit the closing bell and start to get those earnings. the dow back in positive territory, but it's been fluctuating all hour. the s&p is up about 3, the nasdaq 25. it's by far, bill despite some pressure there that dom mentioned, the outperformer of the day. >> the state of the union is at 9:00 p.m. eastern time and his tax proposals seem to be targeting a lot of attention probably most cnbc viewers will be live streaming that whole thing, by the way. why is the president talking higher taxes for high income earners when everyone says it has no chance of passing the republican led congress? robert wolf, a former ubs
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executive and former member of the president's jobs council and economic recovery advisory board will be weighing in on that coming up on "the closing bell." stay tuned. isn't the only return i'm looking forward to. for some every dollar is earned with sweat, sacrifice, courage. which is why usaa is honored to help our members with everything from investing for retirement to saving for college. our commitment to current and former military members and their families is without equal. start investing with as little as fifty dollars.
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the dow still hovering around that unchanged level with
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about 8:30 left in the trading session. there is the dow down to 17,504. joining me from the floor of the big board, phil and bob pisani. after last week's swiss bank surprise, can you blame some traders for not wanting to make a big commitment before the european central bank meeting on thursday? do you think we'll sort of be quiet until that time? >> i think it will be. you know you have the president's speech tonight, which is obviously raising some consternation. you have what's going on in europe and the ebb and flow of data some good some not good. certainly i think people are holding back as of at least for the next few days. >> and some earnings bob, especially the big question mark, big blue here. >> you know look we know what the problems with big blue is. it's not the hardware problem. the problem is their service and software has got enormous amounts of competition, and we'll see what happens there. i have a much broader concern. i know there are macro issues
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going on. they're bringing down earnings estimates across the board, not just in energy and materials but even for q1 for the financials are not looking great. i want very impressed with financials today. they were talking about lower numbers in q1 as well. there was no bid at all this morning. there was no effort to buy the market. we went down right after the open. i'd like to see a little more interest but i think it's earnings. >> what do you think is going on with the economy and the markets right now, phil? it does seem like things are starting to slow down here to some degree. >> i would take it as a buying opportunity. i still believe we're in much better shape than we're being made out to be. the global consumer will benefit by 0.7% just by the correction in oil. the average consumer will save $1,800 a year. i see the earnings information. alcoa, good. some others mixed. sales are up 2.5%. if sales continue to strengthen we only had 50 out of 500 companies report, i think
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there's a lot better news to come. we're only on the beginning of the energy renaissance. i think it's an opportunity to buy stocks. >> point well taken on the benefit of lower oil for the consumer consumer. as the dollar goes higher, economically that's not owe soso good for the gigantic multinationals. >> no doubt. but 80% of your population benefits from lower energy. 80% will benefit from a higher dollar. maybe fanlinally diversification works again. in the end it's an outstanding benefit for everyone. lower cost of manufacturing, it adds up to a stronger market. >> i agree with that, but the stock market is priced off of earnings and a multiple of earnings. i see the impact of energy earnings being down is far greater than the positive and i agree it's a positive effect than there are in consumer
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stocks. we heard delta talking about the benefits of that today. i don't see that being borne out in the earnings and that's what empowers stocks right now. >> we're going could tom back with these two with our closing countdown for this tuesday. in a few minutes, ibm and netflix will be reporting earnings. we'll have the numbers, the instant analysis and the market reaction on how it may affect tomorrow's trading. that's all coming up. you're watching cnbc, first in business worldwide. do you have something for pain? i have bayer aspirin. i'm not having a heart attack, it's my back. i mean bayer back & body. it works
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coming up on the last two minutes. a quick look at the dow. as we said an up and down and up day as we get ready for the president's state of the union tonight. the european central bank meeting on thursday. so a kind of wait-and-see market right now. 10-year, a lot of long term yields went lower. the lowest i saw was 1.76 on the 10-year. the 30-year got to 2.39 and then finally the earnings coming out tonight that we've highlighted. get ready for ibm, netflix, and advanced micro devices. phillip, i don't want to put you on the spot, but would ibm be on that shopping list if you're looking for companies that would present value or have fallen on hard times to some degree? >> we've kept a close eye on ibm. it's interesting. i'm not sure we're there yet. i think you can get a little cheaper here. a few year companies i like better on the mlp space better. a big tech nim likeame like ibm i
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would hold off at least through february. the market has to soften up a little bit and maybe as earnings come out. >> bob, oil still calling the shots. another 5% decline on wti. >> yeah. the only good news here is we didn't see energy stocks drop quite as much and again the big question is whether or not this is a great time to buy them. the biggest question in the last 30 days is that xop which is the exploration and production etf. a lot of people have been trying to pick bottoms on that in the mid-40s. they failed once they're trying again the last few days. we'll see if that holds off. my sense is historically oil is when you have a 50% drop oil is historically higher six months later. it's only happened five times in 30 years when we've seen oil with a 50% drop and that is a rare occurrence but we haven't seen these kinds of supply side issues before. >> the thing about iraq cranked up production that's having an impact. think of it this way, are you going to drive your car more with gas down? are you going to heat your home more with oil down? yes. that will drive the price of oil
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back up. >> thank you guys. thanks, phil. see you later, bob. heading toward the close. mixed day. we'll sow how-- see how the president's speech effects the market tomorrow. second hour of "the closing bell" coming up with kelly evans. see you tomorrow kelly. >> thank you, bill. welcome to "the closing bell." i'm kelly evans at the new york stoke where it looks like the dow is managing to finish in positive territory, although just. it's up 4 points or so at the bell. the s&p adding 3 points. a little stronger session there to a level of 2222. the nasdaq up about 20 almost half a percent, but certainly a mixed day across the street. some pressure from some key dow components. by the way, some big components including ibm due to report in just a couple minutes' time. joining the panel for the hour we have cnbc contributor carol roth along with sharon epperson.
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welcome. also with us for more on today's market action and the earnings set set to hear from ibm and netflix, guy adami. hi guy, and david nelson from bell point asset management. welcome to everybody. carol, i'm going to start with you on the market here. it's been kind of a rough session out of the gate in january but it's interesting because at the same time we have all of these record highs in consumer confidence and even the general polling data on the economy is turning up. >> it's funny there is within the market that is obviously not doing quite as well there is a bright spot and i call it the prepper portfolio, kelly. talking gold we're talking guns, we're even talking campbell's soup. if you think about it gold is on the rise. >> that kind of prepper. >> smith & wesson raising guide ens for the rest of the year and what does that say to me? that says the consumer isn't feeling all that confident. i think that speaks volumes about what's doing well in today's market. >> sharon are you a prepper? >> i'm not a prepper, but i am someone who is looking at the
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global growth story and looking at where money can be put to work other than the u.s., and i think a lot of investors are doing that as well -- >> why? why now? >> i think part of it is that they're concerned with the volatility we've seen, and they're looking at perhaps some european equities and wanting to be there instead. the other thing i think they're looking at is the earnings that we're seeing and the earnings forecast for the first quarter and they're concerned about what that says about the u.s. economy and the u.s. stocks. >> it is interesting to see a big component like johnson & johnson miss this morning. a little bit soggy guidance the stronger dollar was a key factor, but what are you supposed to do with that? they talked about how the weakness was coming from overseas. >> i don't think you will see much downside in the name. it's a pretty strong dividend yielder. it got hit hard by a goldman sax downgrade going to a sell. garl is carol is kind of scaring me with her trades. that's very 2008. i'm not liking the sound of
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that. this year is starting off very much like last year. i think there's some places to focus but i'm not quite in her camp yet. >> look at the numbers year to day. guy is doing to agree with me. i know it. right, guy? >> carol roth could read the phone book and i would agree with her. >> that makes it easy. >> netflix just said something pretty cool because that stock is up 10%. i'm sure the crack staff back in e kre. is ec to about to give you numbers. you have to give the market credit. it held 1990 a couple times, it held 2,000 today. the bounce was nice. i think the russ selell is trying to sell you something. the resilience of the s&p is noteworthy. >> you're sounding more upbeat. >> no no let's not get crazy. i'm not any kind of beat. i'm just trying to point out what's going on. >> i just mean on the market. >> you have to have respect the price action. for whatever reason the market had every opportunity to break down and overnight it looked like it might have wanted to do
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that. how many rabbits are in how many hats of the central bankers. >> bob pisani said it well earlier, there is no other al tern tifer for long-term investors. if you want long-term growth you have to be in the stock market. you can look elsewhere, there are alternative asset classes to be into in smaller doses but longer term if you want that growth, you got to stick with stocks and ride out that volatility. >> but sharon, we're all waiting for the ecb to thak mare big announcement, if we see some bigq e european edition, does that make europe the alternative? >> it likely could. that might be some of what we're seeing. some people anticipating that could be the case. >> we might be wildly disappointed from mario draghi. he's disappointed the street in the past and he has to deliver this time. >> hang on a second. let's get to netflix results. julia, a big pop here on the quarterly results. what do you see? >> better than expected results
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from netflix. revenue of $1.48 billion coming in in line with projections but earnings per share at 72 cents. wall street had projected 45 cents. next flittflix had projected 44 cents. a big beat to the upside in terms of earnings per share. a couple factors here. there was a one-time item that was excluded from that but some cost efficiencies. now, another key number here the key issue here kelly, is always with the number of new subscribers. the company adding 4.3 billion new subscribers adding a record 13 million new members over the course of 2014 ending with a total of 57.4 million numbers. now, the company adding 4 about the the.33 million members in q4 the majority coming from international. and better than the 4.07 million in the year ago period. a couple key headlines here kelly, in terms of
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international, the company says it's going to be fully global by the end of 2016. that means open to anywhere in the world by the end of 2016. they've always said they will expand as fast as they can by staying profitable and they are expanding faster than expected. the one exception here is china where they say it all depends on whether they can get a license there. another key nugget here from this letter to shareholders from ceo reed hastings is the company says it's actually more efficient to create a original content on a cost per hour basis than licensing content. that means they will continue to ramp up the amount of originals that they are creating. they say we should expect 320 hours of original programming this year. that's up from about a third of that amount last year. so a lot of really interesting details here especially as they are trying to sort of really expand and scale internationally. juke see everybody, the reaction. netflix trading up almost 12% on
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earnings. >> it's actually a very subdued reaction for this company. i know it sounds out of character, but, you know, since 2012 the move has been anywhere from minus 25 to plus 42%. i wouldn't get all that excited about the bottom line number. you can see that the revenue didn't grow. i think there's a larger secular story here that really needs to be addressed. sure, i get the fact that they're streaming and that's the future of the company. they're not going to own this space. i can watch this very program streaming on my ipad anytime i want. i can go to any show i want. nbc, cnbc all have streaming content. they're not going to own the space forever. >> lets pivot and get to ibm's results hitting the tape. hi, dom. >> so here is what's happening right now. ibm earnings are out here. earnings per share on an adjusted basis coming in at $5.81. that beats the average analyst estimate of $5.41 per share. revenues also coming in at
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$24.11 billion. that is a narrow miss to the thompson reuters estimate for about $24.8 billion in sales. now, the $24.11 billion also represents the 11th straight quarter of flat to declining sales for ibm, and also interesting of note here the company did say that currency and divestitures negatively impacted reported revenue by some $2.5 billion. so we're going to comb through the rest of the report but you can see the share reaction there up by about 3.25% for ibm shares. remember over the last eight quarters kelly, on the heels of earnings, 6 out of the last 8 quarters, the stock has reacted flat to negative. an interesting positive move in the early going. >> thank you. joining us for more reaction is daniel ives. quite a move. what do you think is going on? >> i think it's a step in the right direction from what we saw
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over the last year. i think these large cap tech players like ibm, sap, oracle they're having difficulty on growth as more i.t. budgets shift to cloud, big data and cyber security but i expect we're going to see more consolidation. i think the ceos have started to look in the mirror and realize what they need to do in terms of cost cuts and potential acquisitions down the road to put fuel in the engine. >> is this guy adami, the kind of growth you want to see? >> in ibm, no. they're the poster child for financial engineering. the other quarter is good enough to get a relief rally. look at the performance of the stock over the last two years. it has not -- clearly not performed with the broader market, but i think what you're seeing is exactly that a relief rally. a lot of people probably short into the number covering now. continuing to miss on the revenue side. they don't have near the cleararity in terms of the earnings going forward. i think you sell it again. i don't see why it won't
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continue. >> when you dig into the numbers, you have to ask how much are they reinvesting in the business versus the financial engineering that guy was talking about. are they returning money to shareholders or really reinvesting in the business because obviously that is a business that needs a lot of reinvestments. >> that's exactly the question daniel ives. how much of this is the buyback factor for an ibm? >> that's playing a lot into it and that's really where investor focuses on the top line can this company be successful in the cloud? that's really this bipolar spending environment. which of these, the ibms, microsoft, the sap, which could be successful in the cloud transition and the outlook going into 2015 is really what's front and center for investors. >> we're missing the elephant in the room. six months ago this estimate was 680 for ibm. it's down 20% since. i think the stock being up 3 bucks right now, that's just a vote that analysts have probably overcut here.
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>> compare that with netflix if you will. can you tell a tale of these two -- >> i emperor has no clothes on ibm. maybe he's wearing some underwear this time. it's a little bit of a beat maybe a step in the right direction. obviously this company is in the middle of a turnaround. if you talk to managers inside the company, they will tell you how frustrated they have been with management. each quarter management would come to them and say you have to cut your -- cut inside internally, lay off people cut your costs because it's the only way we'll make the numbers. they have to start focusing on growth and i think that means we're going to have to become a smaller company. >> i think what investors are interested in is what we're showing on the screen and that's the 50gain in netflix after hours. if you are in a t. rowe price mutual fund you may already own it. so be happy. look at your mutual funds and your 401(k) and be happy if netflix is in there.
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>> netflix is all about possibilities and ibm is all about reality. netflix, is there a possibility that this is going to continue the momentum and this is really all about a psychology trade. ibm, is there a business reality that you're going to be able to bank on in the future. >> the most interesting part the original content. on the heels of what amazon has announced, what they're doing in terms of going into movies and what receive seen with golden globes and those that won being in a totally different sector than we ever thought about two years ago, five years ago. >> is there a business amazon is not in yet? >> this is true. >> i don't think the bunker business. >> the guns business? >> don't get any ideas. guy, if there's one point we can connect these two reports after hours is that they both missed on the top line and shares are rallying anyway. >> one has a huge short interest a lot of nonbelievers. and the net ads in terms of subs and their international growth is carrying the day because if you look at the guidance at least for the next quarter, eps wasn't great.
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ibm, what's the big deal? i think the fact they continue to miss on the revenue side off of what has been probably really compressed expectations lead me to believe that although the stock might rally to that 165 level, every rally in the stock for the last 24 months has been a sale and again i think that trend continues. you know what else continues tonight on "fast money"? we're going to have a tag team street fight. first time ever kelly. you better tune in man. this is going to be nuts. >> you're getting ahead of yourself. we have to go back to dan ives because before we let you go just cure flus toious to gai's point, every rally has been a point. what does it take in terms of numbers and guidance to turn it around? >> i think it's about giving investors comfort in the cloud transition, in that road map. you compare it with what that dell has done and microsoft, he's done all the right thing. i think it's about giving the playbook. it's not just talking the talk but walking the walk. >> dan, thank you for joining us. good to see you. guy, you're not fighting dan,
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are you? >> me and dan are going to take on pete najarian. have you ever seen the movie "heat" with robert de niro. he's a dead ringer and then the blue eyed tim see more. that's two cats against dan. >> dan nathan to be clear. we'll we'll see you on "fast money" at 5:00. they'll also be talking to dennis gartman. we'll have more ahead on the expectations. president obama set toim pose new taxes on wall street and wealthy americans tonight during his state of the union address. that includes a lot of cnbc viewers. how should investors react? we'll take a closer look at what the president wants to do and also are lower gas prices impacting consumer behavior? rick harrison of "pawn stars" here to tell us what he's seeing at his shop later on "the closing bell." you're watching cnbc, first in business worldwide. aflac! and a gentle wavelike motion...
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have you heard of the new dialing procedure for for the 415 and 628 area codes? no what is it? starting february 21, 2015 if you
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have a 415 or 628 number you'll need to dial... 1 plus the area code plus the phone number for all calls. okay, but what if i have a 415 number, and i'm calling a 415 number? you'll still need to dial... 1 plus the area code plus the phone number. so when in doubt, dial it out! welcome back. let's start here with our dominic chu and an earnings update. >> here is what we're watching. watching shares of cre e moving higher. posting better than expected second quarter earnings of 33
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cents a share on sales of $413 million. that's just a bit above wall street forecasts. its guide sense in line for sales and just a little bit better for the earnings side of the equation. as a result shows shares up you can see by about almost 5% now. they were also up about 4.5% in the regular session ahead of this report. back over to you. >> a strong day there. thank you. president obama delivering his state of the union address tonight, and john harwood seems to have a message, he wants more of the money of the wealthy doesn't he? >> he does. to give to the middle class, kelly. there have been a lot of proposals the president has laid out in the two weeks leading up to the state of the union but most of the attention especially from wall street is going to be on the tax and spending proposals he's going to lay out. first, let's look at the tax side. what he wants to do is raise the capital gains rate to 28%, the top rate. that applies to incomes over $500,000. he wants to eliminate the exemption for the appreciation in value of assets that are inherited from one generation
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from the previous one. and he also would impose a financial fee, seven basis points, on the 100 largest financial institutions that have more than $50 billion in assets. seven basis points on their liabilities. the theory is it would reduce risk. how would he spend that money? he would give money to the middle class. trying to deal with the problem of stagnant middle class incomes. $175 billion in the form of new tax benefits a credit for two-earner families two years of community college free. also the proposal the president has had to expand the earned income tax credit for workers who don't have children. now, people on wall street who are concerned about being taxed can relax a little bit. these are not going to pass in this congress but what the president is trying to do is engage republicans and begin a debate which is going to play out in the 2016 campaign and in the next presidency over what to do about those stagnant middle
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class incomes which essentially have been flat for 40 years now, kelly. >> all right, john harwood in washington. getting ready for that address tonight. john, thank you. more reaction now with former ubs america's chairman robert wolf. our panel joins us as we hedrick harrison from the hit show "pawn stars." robert, we got a big announcement from the president tonight understanding that it will be hard to pass it through the gop congress. in terms of the substance, do you think this would achieve what he's after, this transfer of wealth from the wealthy to the middle class? >> i thought the big announcement was rick's new app but away from that. i mean listen it's clear to me that john was spot on. the focus is going to be middle class economics. the chances of this getting done is slim to none. i think they'll force a conversation about personal income taxes, but really the two book ends that can get done is trade and business tax reform.
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so it's not going to be from the personal side. >> basically this is political theater and he's using the opportunity to have a state of the union address to pander for votes, which is really from my perspective a little bit disheartening. i would rather hear some real proposals on things that can realistically be done to help with the middle class -- >> i don't think that they'll realistically be done, not with the republican controlled congress. >> i want to hear some realism. >> but they are realistic to those middle-income americans who are saying i have not seen my wages go up in several years. i'm working two jobs my wife wants to work but can't. we're going to get a tax break for that. we're going to get a tax break for the child care we have. we're not going to have to figure out our flex spending anymore. we will just get -- >> the only way you get that -- the only way we do that is if we transfer wealth versus curbing the spending in government. >> that's just not accurate. >> it actually -- >> there are 30 million people watching. it's time for a debate on this wage stagnation happening in the middle class. doesn't mean it's going to be solved on tv.
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but it forces a debate. what can be solved tonight is things on education, free trade, infrastructure, things that we all agree on both sides, and then he's going to have some things that are certainly left leaning but trade has been right leaning. >> rick, where do you come down on all this? >> it's not do you suddenly want to give away money from the government. the government is never the answer. just plain and simple. >> thank you. >> you want to stimulate middle class income? let's repatriate some of the money overseas without 40% tax on it. all you have to do in a state of the union is say, hey, repatriate the money, there's only 5% or 10%, we'd have trillions of dollars coming into the country and it would stimulate the economy. and then you would pay income tax on the money you made off that money. >> tie it to a job training training. you have to put a training program in place to help people getting the skills. then it becomes a win/win.
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>> it's easy to say let's repatriate but you have to watch the deficit. he would do a repate yation for revenue neutral tomorrow. you cannot get a revenue neutral deal done. have congress stand up and vote up or down on every pork you wouldn't even get them in line. so let's just make rate 20%, 10%. with all the other things that go on you're not going to get that revenue neutral. we have had a tax holiday, okay under bush and it didn't move the needle on the economy. they're not going to do a tax holiday. the repay triation has to be revenue neutral. >> getting free community college for those who need it want that kind of education -- >> sharon it's not free. you know supply and demand. the price of college is going to go up. i agree that you need better education, but that certainly isn't the way to do it. >> i think that's one of the ways to look at dock it. >> look at college tuition rates
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right now. i have a daughter that wants to go to harvard, okay? so i know the tuition rates, and -- >> and i went there is i know too. >> everybody gets a loan it raises the price of everything. >> i went there. not everyone gets a loan. >> listen let's not have the glass so half empty here. today, okay "the wall street journal" poll said 85% of the country wants to prioritize the economy. at the same date the president had his highest rating on the economy on his approval. so at the end of the day we're in the right direction. it's not optimal but we're in the right direction here. and the key is the middle class, and that's what the focus is going to be tonight, okay? i don't think the people up here are the ones hurting. >> no i'm from the midwest and i'm involved with the small business owners of this country and i see how they're hurting every day. i think there's too much political theater. there's a lot of talk but all the policies they do end up hurting small businesses and end up hurting the people they need to most under the guise of helping them. >> which policy are you talking
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about? what policy are you talking about? >> things like minimum wage -- >> you don't think we should be raising minimum wage? >> i certainly don't think we should be raising the minimum wage. >> in a consumer driven -- >> 28 million small business owners in this country and it ends up hurting the very people who need it the most. >> the millions who are watching tonight are really middle income americans, those he wants to watch tonight to raise the numbers from what we saw at the last state of the union address. waents to talk to the people who are hurting saying why haven't i seen my income go up, what are you going to do for me? >> that's the part that kills me. that's the -- they come up with ideas with good intentions but the execution ends up doing the opposite. >> rick what would your state of the union address be? >> i'm pretty much -- as little government as possible. like reagan said and a lot of things he did i don't agree with, just get government out of the way, everything will be great. it really will. like obamacare, okay?
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i have 60-some employees right now, and, you know, i ask a u.s. senator how am i going to know if i have in compliance. he says i have no idea. if anyone tells you you are, they're wrong. we come up with new regulations every day. >> on obamacare we're going to have 30 million more people insured at the end of the year and the cost of health care is slowing. we have the highest cost of health care -- >> the increasing costs are out of control, are not rising as fast -- >> one of my best friends -- >> hang on. >> one of my best friends is a retired cop, okay. his health care went from $900 a month to $1,900 a month. >> the cost -- by the way, you can always have a one off. the cost of health care -- >> it's not one off. i talk to people all the time about this. >> the slowest growth rate we've had in decades. >> but it's still increasing. >> and it's being shifted. >> the challenge of the health care -- >> the population is getting older, yes it's increasing. >> now, listen -- >> the whole problem is the fact we should be focusing on
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decreasing the cost of health care. >> before this turns into an all-out brawl, if there's just one question i have before you leave it is simply this. is all of this heading towards major corporate tax and income tax reform given the complexity of the system? i'm trying to file my own taxes. it is a nightmare. >> so i think there is slim chance there will be personal tax reform before 2016. there is probably a 35% chance we can get -- we're calling it business tax reform because of partnerships and llcs. you have to to call it corporate tax return. we have to call it business tax reform. >> that's also not small business because most of those are taxed at the personal income rates. >> the thing we can really get done is free trade. that's the side where with the republican congress, they're for it, the president is for it and it will likely be asia free trade. >> let's leave it somewhere where we agree. >> patriots winning the super
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bowl. we agree on the patriots winning the super bowl. >> our robert wolf thank you so much for being here. really appreciate it. panel sticks around. drivers have enjoyed going to the gas station lately because of plunging pump prices. what are they doing with that money? they're saving. up next we have rick harrison to tell us what he's seeing at his renowned las vegas pawnshop. and coming up mohammed louisiana air el-erian and what's worrying him about where we're headed. stay tuned. ed louisiana el-erian and what's worrying him about where we're headed. stay tuned. el-erian and what's worrying him about where we're headed. stay tuned. and what's worrying him about
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welcome bark. lots lots of earnings coming in. >> what we have is amd stock moving lower after posting earns a penny less. this on sales of $1.24 billion and shares down about a percent in the afterhours trade. interactive brokers losing ground. it posted weaker than expected earnings. revenue was at $208 million below wall street forecasts. interactive broker shares down by 4% in the afterhours trade, kelly. >> ouch. thank you very much. gas prices falling across the country. the price per gallon for many people is below $2. that's leaving a decent amount of extra cash in people's wallets. rick harrison here can't wait
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to find out how is this affecting, if at all, consumer spending. >> actually my sales were right around flat around contribution. i think christmas. >> your sales were flat? >> they were flat. year on year. >> does that surprise you? >> not really. i guess i'm doing better than everyone else. >> do you have more people coming in to pawn or about the same? >> i don't have your normal pawnshop pawnshop. i have 4,000 people a day in my pawnshop, most of them are tourists. >> what do people seem to feel about the economy? do you think they're more optimistic? >> i really -- most people think we'll see what happens in a couple years. and my businesses are doing well but then again i have -- i'm a select and people want to come see and see me for some reason. >> when you look at surveys where all the people are getting their gas, and people are more
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opt stickimistic optimistic. only 16% of the people are actually spending the money they're saving. >> are they paying down debt? >> we have so much consumer debt in this country. we have an amazing amount of consumer debt. >> we have a lot less than we used to. >> but we have the student loan problem. >> we do. but i'm trying to understand if overall the amount of consumer debt is down significantly from call it five or eight years ago. should people still be paying it down so aggressively? >> well i'm a history buff. and you look at one of the problems was later on in the depression people -- the economy was getting better but people were still saving. we still have that mindset of what happened a few years ago. you know and it's not -- everyone is like we were free spending up until '08. from now on let's bank a little money. >> and i do think, i think especially with the millennials and just what everybody has been through over the last five or six years, that you're getting that sentiment that i'm not going to do anything bold right
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now. i am going to wait and see. >> or i'm not going to make the mistakes my parents did. >> besides tourists kind of the demographics of them granted there are a lot of people who want to see you, of course, but who is coming in and what are they spending their money on? >> my place is generally jewelry. a lot of gold and silver bullion. a lot of that. >> gold. what about guns? >> as far as guns go i just sell the antique ones not the modern ones. my business is really well. i'm opening another shop. >> you mentioned you were flat year on year around the holidays. gas prices have still kept falling and especially in vegas i have to think that's goss to affect because people are driving so much -- >> it's a few extra bucks. >> are you noticing are sales up? >> so far for january i'm actually up a little bit. but i don't think it's going to last long. eventually opec is going to have to break. i mean they're going to have to -- you know there's
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political reasons why they're not cutting back and by the end of the year they will cut back production and drive the price up. they don't have a choice. >> you should buy some furniture. we have some breaking news to get back to on earnings. dominic chu, what's happening? >> not so much on the earnings front here but breaking news on the corporate actions front. first of all bristol-myers squibb has announced they have appointed a new chief executive officer. he's a dr. jioctor who had been the chief operating officer of the company. so a sea sweep change there. and a new director of the exec fif tiff board. also confirmation on the spacex front. they have raised a billion dollars in financing with google
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and fidelity. spacex is saying for the record they join existing investors, founders fund valor equity partners, and capricorn. they will collectively own just under 10% of the company. so $1 billion for 10% of the company imply that is $10 billion valuation for spacex. that has now been confirmed by the company itself. back over to you. >> all right. a lot of big moves this hour. dominick, thank you. it's been another rough day for the bulls on wall street. we did finish positive but barely. mohamed el-erian saying the u.s. is still the best place to invest right now. he will make the case next. and gold has been well golden at least lately. if you haven't noticed, we're on a run and we want to know if rick harrison is starting to see more people coming into his shop to sell their gold. that's later on "the closing bell."
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welcome back. so far a year full of volatile triple digit swings for the dow. now the market is waiting to see what the european central bank will do later this week. many anticipating its own version of a bontd buying version like the fed's. earlier we spoke with john calamos and he described the deflation he sees right now. >> i think a commodity play is all about inflation, and we'd
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love to see a little inflation. we're actually in a deflationary environment, so, you know i don't think that's the answer. i don't think that commodities are the answer here. you know i think i would prefer equities to commodities in here. >> joining us now with his reaction to those remarks, mohamed el-erian. great to have you with us. welcome. >> thank you kelly. >> let's begin with how much better you think equities can do if we're in a deflationary environment. >> i don't think we're in a deflationary environment. i think inflation is coming down. it's good disinflation because lower oil prices put dollars in the pocket of the consumer. am i worried about a deflationary world in which negative inflation makes people postpone their purchases and, therefore, we get into a downward spiral? no. we're not going to get there absent a global economic
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catastrophe. >> aren't we already getting that in housing? nobody is buying a house because they think rates aren't going any. >> you may get it in particular sectors, but the reason why economists worry about deflation because it's a generalized issue where everybody's inflation expectations turns negative and people postpone spending. so you may get certain sectors adjusting. that's what a modern capitalistic market economy does, but i don't think you get general deflation unless we get a catastrophe in europe. >> you know i think people would feel better about the outlook if oil prices were collapsing and bond yields were rising because it would indicate people expect faster growth and a little more inflation and that sort of positive circle that would ultimately lift wages. the very opposite is happening right now. how much does that worry you? >> so you're right, people would feel better. first of all growth is picking up. just look at the imf projections for the u.s. undoubtedly growth is picking up. undoubtedly this economy is
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healing. why aren't yields moving accordingly even though the fed is easing its foot off the stimulus accelerator? for a simple reason. we live in a global interconnected world, and we are no longer a pricemaker kelly. we have become a price taker in treasuries. we depend on what's happening to the german bund and that's what's driving our yields right now. >> i know and i'm trying not to interrupt you. here is what i can't help but think is there's always an explanation. last time around it was asia's fault. this time around it's europe's fault. at the end of the day maybe that's too simple and narrow a way to look at what we've been seeing for the last 15 for 20-- or 20 years. >> i think there's been secular changes and i think we entered a world of new normal where it takes a long time to adjust but fundamentally the question is the following. do we see wage increases in this country? >> right. >> when i look at 11 months of 200-plus thousand job creations
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i think we will. if that materializes the mood will change and there will be a lot less concerns about deflation. >> very true. i have to wonder what happens in that environment for investors. if we're moving into a period where the economy does better does that mean you want to get out of the stock market and into other assets or is this precisely the time in which you should be getting out of the bond market and maybe into equities? >> so that's the irony, right? that we've come through a period where the economy hasn't done very well but the markets have done extremely well. why? because of central banks. central banks were able to decouple fundamentals from market valuations. now we're entering a period in which fundamentals are improving, that the fed would look to normalize and i think the fed will be hiking rates this year, and the markets are not going to get the support. so fundamentals need to improve really quickly to validate prices and push them higher. and that's a big task kelly. >> it is. do you think the fed is going to be one and done when it comes to rate hikes? >> i think it won't be one and done. i think they're going to embark
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on a very slow and gradual 3r0 ses process and they will start well below the 4% historical avalancheer average for the fed funds rate. i think they get started, they move slowly and strengthen forward policy guidance to calm things and always remind us that they can stop at any stage. >> and real quick when it comes to europe isi just told us they think europe is going to try to get rates equivalent to pi news 3% or minus 4% by doing a couple trillion dollars over time in purchases. what's your expectation? >> so i do think they're going to try to do a lot. the problem is they're going to try to do it through the national banks which is another way of saying that the loss sharing will not be at the regional level, it will be pushed further down. and that's going to mean that their qe is going to be less effective than our qe. >> and that worries you? >> i don't think qe in europe is the answer. so it doesn't worry me especially. it does worry me that markets have built in massive
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expectation on what mario draghi can deliver and actually he cannot deliver that much. even if he's willing to do so he's not going to be able to do so. >> thank you so much for being here,-month-old el ar here,-month-old mohamed el-erian. two tech and brand giants, ibm and netflix, holding analyst conference calls. we'll look at the aftermarket trading and see what trends might be buried in the results. also gold has been on the move. when you have the owner of a famous gold and silver pawnshop in the heart of las vegas as we do with rick harrison you are going to talk about it.
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ibm and netflix highlighting a big day for after hours earnings. dominic chu recapping the results. >> for big blue first, we're going to watch shares of ibm, they're moving lower in the after hours down by 2% after guiding 2015 operating earnings per share below the wall street forecast of around $16.51. the stock had moved higher after it reported this fourth quarter earnings of $5.81 a share. that actually beat expectations. revenues slightly below. so some of the things that we'll be watching for because the conference call is going on right now, they're going to be talking about growth areas, geographically being down 16%. sales in those parts. also global services sales down 8%. although those results are better when you adjust for currency and one time
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divestitures of businesses. on the conference call the ceo will be defending their growth markets in terms of products things like cloud analytics, mobile and cyber security which they claim represent 27% of total revenue. that conference call ongoing. we'll bring you more details when we get more from that call. kelly, back over to you. >> dom, thank you. let's pivot to netflix making big moves after hours. julia boorstin is breaking down the results. >> hi, kelly. netflix shares flying higher now, up about 12.5% on better than expected subscriber additions of 4.3 million and earnings that blew past projections on lower than expected international losses. international growth is a big focus for netflix. reed hastings announcing the company will complete their global expansion over the next two years. that's earlier than expected. netflix announced plans to grow the percentage of its content spending on originals saying it will have 320 hours of original
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content that year. that's triple the amount last year. kelly, back over to you. >> thank you very much. they are golden they are delicious, but are they potatoes? that's the question behind mcdonald's french fries? a story that's cooking at cnbc.com on the hot list. the details next of the french fry mystery. stay tuned.
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the trade of the century, that's the story. all of our web viewers can't get enough of today. for that and the whole hot list the site's managing editor joins us now. >> yeah, kelly, up from mark faber, dr. doom author of the "doom, gloom and boom report" did a little segment with our futures now folks talking about how he's convinced central banks are going to bungle whatever turnaround they are trying to construct here and he says the trade of the century would be to try to short them. he says, unfortunately, there's no direct short. easiest thing to do is bet on gold. another thing that's drawing a lot of attention today, op-ed from eric cantor the former house majority leader. >> oh, yeah. >> and he thinks tonight's state of the union address will only enflame the gop and finally mcdonald's has come out with a video taking a look at what
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their french fries are made of. here's a fun fact for you. 19 ingredients go into those bad boys. get some fascinating data. >> is that a bad thing or just different kind of salt and spice? >> 22% said after seeing that video they are not so sure they would eat the fries, another 42% said it would make no difference. you view it. you be the judge. i found it kind of appetizing. kind of hungry now. >> cnbc.com for all of your french fry viewing. gold meanwhile hitting a five-month high, as mentioned, perhaps the trade of the century, and more on one of its best runs in a long time. more on that when we come back. 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 whole team of advisors. from workforce strategies to tech solutions and a thousand other things.
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welcome back. it's all about gold lately hitting a four and a half month high. up 7% in the last winning streak. almost $1,300 an ounce as you can see. curious, rick are you buying gold? are people walking in to sell it now that we've seen a bit of a bounce here? >> having a real hard time getting supply because i do retail bouillon and i'm having a hard time for my suppliers finding it. >> no one wants to sell their gold still.
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giant suppliers, coin shops around the country. they are out. >> yeah, rick. i want to know what kind of gold trivia do you know? you have a new app that's out now. anything in the rick's trivia app on trivia on gold. >> there are some questions. i can't give away the answers, otherwise it's no fun playing the game. it's rick harrison's trivia challenge, in the app store, it's fun. as far as gold goes living in greece right now, would you want euros when they will be turned into drag maas the next day and you don't know about it? gold is a currency, and if you actually have the physical one, it's not suddenly devalue ated. >> that's what they really want right? they want the physical gold don't want the gld or the gold etf, they want the physical bouillon. >> think how high gold has gone up recently with the decline of the euro. it's a safe haven and still one of the old-school guys who believe you should put 5% 10% of your money into gold hard assets, because governments
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don't control them. >> in your bunker kelly. >> exactly. >> in your personal portfolio, do you have that much gold bouillon, 5% even more in. >> a little more than that. >> speaking of which, let's go back to earnings we've gotten this hour ibm an netflix. are these names you look at personally. if i made you pick one or other, which would you pick? >> definitely netflix. it's the new network model five years from now. i think that is going to be the network model. you'll turn on your television and -- and it will just -- it's going to ask for your wi-fi password and take you straight to netflix and a few other companies like that. >> what do you think in a? >> that's a rough choice, kelly, netflix or ibm. is there a choice "c" here? i'm not a momentum investor but i think if ibm is my other choice then i if for netflix for the quick trade but i'm going back to the tangibles and the consumer. >> do you watch much cable? >> well i watch cable and make my kids watch it with me and put the laptop away which they would
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rather watch while they are watching the cable so that's a approximate but i would say own vanguard and state street and some of these mutual fund companies. then you can have both ibm an netflix. >> that was the lesson from tween. thanks so much for being here. a lot of ground to cover it. that does it for us on "closing bell" and "fast money" begins right now. "fast money" starts right now with an earnings alert. netflix shares rallying more than 13%, company beating earnings expectations the conference call beginning right now. we'll bring you the details throughout the hour and ibm guidance sending the shares south, stock down more than 17% over the past year. we'll bring you latest from the ibm ceo. i'm emmelissa lee. we're expecting volatility and here we are, pete to the upside. >> to the upside. caught a lot of people off guard. when i was going through the reports, people asking what were the expectations? absolutely crushed the

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