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tv   Squawk on the Street  CNBC  January 21, 2015 9:00am-11:01am EST

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jimenez, michael dell and susan desmond-hellmann, 6:00 a.m. eastern time. >> love that. we do russell -- randall and then we leave out the but. everybody's going to tell me but, he went on to a long explanation after the but. anyway make sure you join. >> be here at 6:00 a.m., hear the whole thing for yourself. >> join us tomorrow. we'll be here again. >> across the atlantic. ♪ ♪ >> good wednesday morning. welcome to quack"squawk on the street." carl quintanilla with jim cramer david faber. stock market juggling a lot from ibm, netflix to turmoil in yemen and ukraine. that looming ecb decision. premarket, implied down 50 points. oil in the green. gold above 1300 for the first time since the summer. ten year yields a shade below
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1.8. housing starts not too bad. road map begins with netflix shares vaulting in premarket after the company trounced wall street's and its own expectations for the quarter. >> ibm moving in the other direction. after revenue and guidance came in below what analysts had been looking for. >> president obama outlining his plan to help the middle class removing tax advantages benefiting the wealthiest americans. first up shares of netflix up sharply in the premarket. the company exceeding its own forecast adding more than 4. 3 million streaming subscribers in the fourth quarter, posting profits that blew past street estimates. during the interview, reid hastings asked for his latest thoughts on the company's ability to reach 60 million to 90 million subs in the subs. >> looking very good. 39 million in the u.s. adding 5 plus million a year. so the trajectory's great. and you know if you step back and you say is internet video going to be in every home in
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america in ten years, that's a pretty clear yes. so tons of potential there. we're very excited about just continuing to improve our service. >> so this morning, jim, everybody and their brother's upgrading or taking their price targets higher . >> let's talk about jon blackman and scott. they came out last week stock at 323 and both said this going to happen, this is the breakout quarter. cowan had done a survey of 1,000 people saying there's a dramatic increase in time spent on netflix. stifelle said they could do 100 million and a lot because the compelling risk/reward and the international growth both cited the fact that marco polo did well. >> renewed for season two. >> $90 million price tag, not a cheap show. >> talked about how these are expensive price tags on stuff they do themselves, it's much cheaper. i was reading netflix --
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hastings' letter and i was with a bunch of people at dinner table and said i want everyone to read this. this is what you do when yoi you triumph over pessimism and do an amazing job. now you're cocky, do they not deserve to be cocky? this was a tom brady conference call. >> with a fully inflated ball. >> yes. it was a combination of roger saying, relax and belichick saying we're just going to cincinnati and richard sherman saying don't compare me. it was one of those nfl calls, super bowl super bowl they won it congratulations, reed hastings. >> when you think about the longer term, whether they can be a dynasty perhaps or win back-to-back to continue this analogy, i mean they are -- all right, at this point, they're very similar to hbo, they're an independent programmer with
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hundreds of hours now of their own programming, with movies thrown in that's trying to get into as many homes as they possibly can. here in the united states and around the world at a certain price point. okay, i like it i suppose. >> 100 million. >> as -- yeah as you know -- >> internet tv. it's 100 million people they could have by 2018. >> not everybody has hbo. >> hbo doesn't -- great question. it was addressed throughout the conference call. basically, they're saying the more the merrier, hbo's terrific. >> or amazon. >> they have developed a core group of people who love their programming and they have this momentum at a very low price point that they could raise. they're very visible in the countries. they're talking about 200 countries that want this. and i find it -- it's unassailable reasoning if they think that 2017 could be this monumental -- they're talking about numbers of material global
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profitability in 2017. this is the opposite of amazon. this is not willy-nilly growth for the sake of willy-nilly growth. this is willy-nilly growth for the saek ofke of big profits. i found it impressive. hbo's got -- i could make a case, they've got a lot of upside. >> hbo a powerhouse no doubt. >> absolutely. the downgrades are factuous. >> people look back to the last earnings call stock down 19% after the last earnings obviously different picture this time. >> it's a reset. look i didn't watch "marco polo." looks like people played marco polo. numbers 14 million. how -- 14% of the people watched this better than "house cards" these are the things where people love u.s. programming
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then talked about that they like western programming, they like u.s. programming, they like british programming. netflix has a real good call of what people want. >> yeah. and a decent interface. i'd encourage all of them to improve them. hbo go never using the cable service i'm paying for but using the broadband, i will tell you all could improve interfaces. >> internet neutrality. the president came out against buffering again last night. the guy, he must hate buffering. >> hates buffering. haven't you seen the video of him with his ipad talking about you know he wants to go here and there he keeps ending up in google fiber territories to talk about high speed in 100 megabits. >> well, it was -- it was a speech that as if he won both the house and the senate and his confidence level yeah appreciate that guy's confidence level. he had the confidence level of the colts, of the colts going into new england. they were like all fired up. >> right.
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>> they came to play. >> we'll talk more about netflix later on. got to get to ibm as well. better than expected fourth quarter operating earnings of 581, consensus -- it misses by the way as big blue fails to generate year-over-year sales for an 11th consecutive quarter. full year guidance below street forecast. earlier, the ibm cfo expressed optimism about the growth prospects. >> as we shift to value and our strategy's very much around the shift of value, as we shift to value in the clouds and analytic we see very good margin opportunities and growth prospects. >> obviously very tough services revenue down seven. >> cash flow flat according to what we heard. >> no outlook for increased revenue in 2015. >> they are the most optimistically pessimist people. isn't it terrific to rebuilding here. >> it's a reset. >> reset. >> yes. i don't know what you do other
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than what they're trying to do. the question is when they're going to be able to successfully execute over time. your points are well taken, why would i want to own the stock during transition? if i'm on the board of directors and i've got a ceo outlining a strategy saying i'm going after cloud, going after mobile going after security this is what i'm doing, we've made these changes in the past during the long history of the company, you've got to kind of go for it. the question is it going to work? why you take the pain? >> what happened here frankly, a great example if you had come in and not owned $20 estimate number. just come in and say, listen guys, earnings power here 12 bucks, going to do it all over. brightest spot i found, page 16 using the analysis there's -- their relationship with twitter. >> huh. >> they cited that as something real good. the twitter relationship. >> twitter relationship. >> maybe go buy twitter. >> ibm. >> are you kidding?
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it would kill them. it would hurt their earnings. do you think anybody cares about their earnings? >> a fee when twitter is sold. >> there isn't anyone i'm not trying to sell it to. really isn't. i've been trying to sell it to davos, there's a half dozen people in davos, interviewed this morning. they love the apple relationship. >> if in fact that ticket gets signed, i want a piece for you. you deserve it. >> i think so. nbc nigh my philosophy. >> always be closing. >> anybody about costello. >> can't wait to have him here for earnings in a couple of weeks in he's a nice man there on ibm, you mentioned i think they will fully admit, behind closed doors perhaps, they made a mistake enwhen taktake when endorsing that road map. >> it was -- one of the things that -- >> they got rid of it but if they had gotten rid of it
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earlier, it certainly might have benefited them. >> right. the example is brian cornell at target, had he waited one more quarter and not closing canada i would have felt that he was, okay, i own canada, it's mine i've taken it in i'm going to fix. he said canada wasn't mine. she now is kind of stuck, you know stuck with that big buyback. >> well they're redoing mainframes c-13 could be something down the road. >> sold a lot. $7 billion of revenues as you know, of businesses. you can't do year-over-year comparisons in terms of sales. >> no. >> how much lower do you think the stock can go. >> cash flow say earnings go to 14. it's still a cheap stock on the dow. people don't like other than for oil companies down earnings year-over-year. when you come in in january and say we're going to be down, people want to say, wait there's nothing you can do with the giant company?
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they are doing everything as like bill mcdermott when he talked about -- s.a.p. on earlier on squawk" cloud is a challenge. the guys who pulled it off, adobe, oracle my hat's off to them. when i read cloud, cloud, cloud, and i say they've got a great deal with apple twitter, i say, look you've got a core business and it's getting hurt china did come back. i can come up with positives. >> right. >> amazing how audacious that $20 for '15 looks, a promise they broke six months ago. >> not even. did the interview last quarter. >> when are you going to do the special, ibm broken promises? >> you know i -- >> wasn't that with dell. >> i think -- i'm curious to see why we haven't heard or will hear from mr. buffett as well. silence on this. >> yeah. and if you're to find out he
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sold his stock, a demarcation. i don't think that's the case. i don't know. >> look -- >> he's not spoken up one would expect you would have loved the largest shareholder to have endorsed dispatching with the road map finally as the company did last quarter. >> again positives. a couple of areas that did better, they are trying very hard to reconfigure the company. >> they are. which they have done successfully in the past. that's the history of the company. transitions are never easy. and they take time. >> but if there were a sports teaming baseball take is along time to transition. mets had to start years ago, they're getting there. >> hopeful for this year. >> phillies talking 2018 the year. ibm is talking similarly. it's not nfl where you fire the coach, bring in -- 2 and 14 you're 14 and 2. this is a monumental turn not unlike a baseball team. >> like the mets or knicks? >> the knicks and the sixers together have won like 12 games. >> sixers there's a plan.
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>> yeah. sixers -- ibm is not tanking to get the first draft choice there is no first draft choice. >> shrink to grow. >> a draft. >> wouldn't that be great? >> shrink our way. >> you look at like the companies that are social media they get the top pick. >> how about this? ibm, it's not as bad as it was. it's trying to get better. there. >> great. thanks for that. >> what am i supposed to say? terrific? >> of course not. >> can't say that. >> when we come back house speaker john boehner holding a news conference reacting to the president's state of the union address last night. we'll bring you that live. interview with jpmorgan chairman and ceo jamie dimon live from davos. his take on the state of banking and future for his company. premarket, haven't had a three-day win in 2015. shooting for one today maybe. more "squawk on the street" from post 9 in a moment. your old 401k is rolled over into a td ameritrade ira. yes! so no
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quote quote
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the president heading to boise, idaho. his big focus on taking steps to help the middle class in the economy, including closing tax loopholes, benefiting the wealthiest americans to pay for certain programs. take a listen. >> let's simplify the system and let a small business owner file based on her actual bank statement instead of the number of accountants she can afford. [ applause ]
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and let's close the loopholes that lead to inequality by allowing the top 1% to avoid paying taxes on their accumulated wealth. we can use that money to help more families pay for child care and send their kids to college. >> and whether it's taxes education, infrastructure, net neutrality, the argument today is that he doubled down on liberal legacy. >> clearly. interesting, the reference he said the small business person if she could spend more -- less on accounting. but you have to hire accountants to deal with aca, affordable care act. you can't figure it out without them. little out of sync with what's really happening. obviously, you want to go -- they're going back -- i'm surprised he didn't say we want to go back to reagan days and make it you may more with capital gains. step up in basis would cost a huge amount of money for wealthy people. i pay 52% of my income in taxes. i was calculating last night, this would take me to 56%.
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i would get a solid -- >> capital gains. >> if you took me to this. if you got everything approved, 56% of what i make each year would indeed go to taxes. and i regard that as somewhat high. that means i -- when do i start making money. >> you regard that as somewhat high. when do i get paid? labor day? when does karen cramer get paid. i'm in new york city. >> no, we're really in trouble if you're in one of these areas where disposable income requires you -- i'm not saying i'm in trouble. >> all right. all of that being said republicans say none of it's going to happen. >> no. >> the question is are we going to see any progress at all on any areas of shared interest? larry kudlow yesterday talking positively about the hope of corporate tax reform. >> no that's dead in the water. >> paul ryan thinks maybe there's a shot. >> no chance. >> didn't hear much about it last year. >> unless you have individual breaks you're not going to get
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corporate breaks. i look at the speech and i think that most possibility is the fact that maybe going after isis not pharmaceutical kind the bad kind and that i thought it was interesting, taking troops out. but they're adding troops. a lot to basically say, we're going back to the days when there isn't a 1%. well -- >> did you heard anything that is a liability on a certain sector or certain stocks? does it make you think differently about keystone or in this case about content distribution? stevenson on "squawk," it would throw wrenches that their plans for capital expenditures in the year as head. >> look it's kind of -- he said the republicans basically, all you want do do is a pipeline i thought that meant, you're not getting your pipeline. that's one thing he can veto. i don't know. look, it was -- it was very old throwback, you put it when you go back the old liberal agenda
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to make the pie bigger. that was the lyndon johnson quintessential liberal spender. guns and butter. here you don't have the guns so much. i don't know. i'm sure maybe it gives people hope who don't have a lot of money, and a lot of people don't have a lot of money in the country. he's not oblivious. >> no wage growth at this point. the cleavage between income disparity grows. >> labor doesn't get as much capital in the country. >> right. >> i think he's probably thinking it's his legacy that got worse. >> so far, it has. >> davos has more money than the 317 million people. >> yes. >> right? more money in davos -- >> probably more money in davos than 2 billion people. >> 1,000 private jets in davos right now. >> looking -- look around at davos and say, all right, all americans here are equal to all of the rest of america. i think that probably would bother jefferson.
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i think yefjefferson wouldn't go for. the $2 guy wouldn't go for it. >> cramer's "mad dash." count down to the opening bell. a look at premarket on wednesday. for january, got similar moves year to date for all of the major indices. down 1.7 for the dow. looking for bearish action in a few moments. can it make a dentist appointment when my teeth are ready? can it track my crew's performance and protect their heads? can it tell the flight attendant to please not wake me this time? at cognizant, we see opportunities for every company. to meet the new digital demands of their customers.
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♪ ♪
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six minutes -- >> i was singing to that in the shower. >> good for you. i know you are an aficionado. >> where do we start? >> a very critical and i think, intelligent upgrade of whole foods. initiatives are workings more focused, better pricing, wine club seems to be working. responsibly grown ad campaign working and raising numbers above the street. this looks like right here, whole foods got religion, some other guys falling by the way side, fareway falling by the way side. sprouts up graded. fresh markets having management problems. hiee he i think a good call. i like. stock can go to 60. >> almost back to flat for the year. >> one of the worst performing stocks. >> it was. it was. they're on a new track to success. >> yes. they've gotten -- they've gotten -- look they're a serious operator, a great place to shop but figured out how to make certain changes including
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remodeling 77% of the stores. that's important. my whole foods looks great but it's a new whole foods. >> retail, you want to get to another call this morning. >> morgan stanley goes hold to buy lowe's that's discretionary spending, link that with gasoline. i thought interesting, buy whole walmart, lack of margin growth because of investments. it's investing year. butting looking this stock, what a run. okay, maybe it stalls here. but this is the ultimate gasoline play other than -- he's doing those smaller foreign factor stores. you've been close to walmart. don't you sense there's a re-energizing and maybe this is the wrong call to leave it. >> it could be. it could be. a lot of fits and starts with the company for a long period of time where it seemed they had momentum only to fail yet again. >> yeah. >> in terms of sustaining it. >> i think you're right. >> it's not that the business is
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in a bad place. you're never going to get to the great growth they had. >> lowe's i was there this weekend, perfection. you could have eaten off the floor. >> really? >> it's beautiful. people were very helpful. i had been crit al of other times. my lowe's dynamite. >> tax on capital, makes me think of the walton family dividends. >> step up in basis for the kids. not. >> grandkids would get some big checks every month. all right. is it every quarter? opening bell coming up after this. 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,
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♪ your ticket to a better night's sleep ♪ you're watching cnbc "squawk on the street," live from the financial capital of the world. the opening bell in about 45 seconds on a busy wednesday. earnings season powering ahead. we have amex and ebay tonight. state of the union, people absorbing what the president said last night. lay-offs continue in the oil patch. it's bhp billiton. >> look, everybody's cutting back dramatically. the question how quickly do things rebound. but we're still going to have i think, a very big first quarter
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number because they're repositioning. anybody who has rigs go into the sweet spot rigs. only way to maximize cash flow is to drill it. that's what has to happen. but drill in places that are cheap. yeah, there's going to be lay-offs. high-paying jobs you're going to see the wage level from the economy go down again. it's going to be interesting to see. go down again. >> a look at opening bell and s&p at top of the screen. big board, marine max, a recreational boat retailing celebrating the new york boat show. nasdaq advertising club of new york raising awareness for diversity in advertising. so take a look at some of the big losers today. qualcomm and ibm, jim, among them. >> yeah. a lot -- samsung going to drop qualcomm for nextel and use their own chips. that's out there. guys ringing the bell brunswick a great story. brunswick is a -- president did not put a tax on yachts. he put a tax on atvs.
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things he missed. you could have put a tax on $5 million yachts why not? terrific. >> i'm not sure the state of the union is completely comprehensive. >> $5 million yacht is a tax in and of itself as far as i'm concerned. people buy them looking for things to waste their money on. >> people who buy islands, they should tax islands. put a surtax on islands. >> all for the island surtax. >> coming up with new ways to bring in revenue that don't hurt as many people. >> amd, wow, another 4% to the downside. break even misses about a penneyny. tough times jim. >> remember, you can only $2.14 there. amd, talking about cash burn i don't know it's a lottery ticket. but right now i think pennsylvania lottery's like $280 $280le million. >> s&p down about .4%, i did
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want to come back to the media and entertainment stocks they've been getting whacked lately. yesterday a downgrade from morgan stanley questioning things we have talked about for some time, whether it be ability to keep getting huge affiliate increases from those who retransmit their programming and the like. viacom the worst amongst then. it is up. it's a 10% free cash flow yield, some saying multiples fall into a level where it's enough already. but time warner's down again, jim. disney down a little bit today. but it is interesting to see overall weakness in the group, more so than markets certainly, with viacom down 11. 5% this year along with fox, down 11.5% this year. those are ugly moves. >> now fox did have a big rally last year. but fox has done well. >> fox telling people dollar's going to hurt them strong dollar will hurt them.
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>> murdoch sales mixed in too, late last year. >> time warner. >> the big sales from viacom insiders. but the stronger dollar of fox telling people could be an issue. obviously an issue with ibm. >> ibm. >> starting to resonate an issue for a lot of companies. interesting story today, it's not just you're getting hurt on the currency translation, makes your products more expensive, it may have customers in that market choose to sample other competitors who are not based in the u.s. or have a stronger currency to deal with. it can have longer impact. >> oh yeah. look, all -- i mean ibm quarter, in the conference call talking about, you know hundreds of millions of dollars in currency. yes, i think the sampling of other guys is going to be talked been i was worried about this with boeing versus airbus. airbus giving you a discount. it's like you're going to walmart to buy a plane versus going to like -- >> are you going to make that
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kind of different choice for something like that which takes so long to deliver over a move in the currency which could be -- >> no you shouldn't. >> when you pay for it do you pay for it on delivery? >> you have these companies that are, you know big airline lessers look at it. >> sure. >> look it's a worry, okay because when you've got to figure out debasing the euro what is besides mercedes. jim stewart here he said he es no discernible win. >> not yet, not yet. >> mexico is -- it's dramatic how the peso's been. you can go there, it's amazing buying power of the dollar. amazing. how quickly it changes. >> one thing we haven't adresed ecb tomorrow. are you staying out of the way, whether draghi disappoints or not? >> i think that when you set up a scenario where the only thing you are hearing about is disappointed or not, that it's
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okay. i -- look a lot of talk about is the u.s. going to be switzerland? strong dollar. >> right. >> look, i did a piece on "mad money "s about the vix, something big going to happen it's factuous not to say which direction. draghi, maybe we get the big down day, i don't know. i think we're all conditioned he will not do much. if he done do much maybe we go down a little. >> the question is how we define not doing much where's the number? what's the number? >> 600? >> i don't know. >> it's not like gemini's said we have a balanced budget it's time to change. germany's got the votes. germany -- >> netflix at the top, it's the top gainer this morning, almost 20% gain after falling almost 20% after last quarter's earnings. 72 cents a clean beat.
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international expansion going well. marco polo renewed for a second season. this idea out of read hastings hbo go not a zero number game. tv channels turnings into apps. >> look this was, if you're a traditional company that makes content, i think you'd be shaky at this conference call. this conference call was, we have the model, not you. we can -- in new zealand, traila australia, wherever there's an internet, we go. they have a plelroblem, take orange is the new black, it's like game of thrones, orange is the new black, resonates all over the world. >> it does? >> yes. they said that orange is the new black, yeah. >> what do you expect? >> short sellers like it that's where they're going if they can't find stock. this was a great -- you know how we used to say america, hollywood knows how to make something, that's what we do?
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we make soft drinks. >> largest export. video product. >> hollywood knows how to -- hollywood makes the world takes, like the new trend. >> they've got lots and lots of new things coming. >> did you see the new things? >> comedy from tina fey. but that's actually on your cable. >> right. >> that's not on netflix. >> but that will be -- people watch -- >> with the proliferation of contend on hbo go amazon netflix, now hbo, it's an issue, remember, can you offer it as a broadband-only product because you're going to tick off all of the msos you're selling it to. is there enough there to make it fertile enough ground for somebody so say, what do i need cable for? i can just have a broadband connection. that gets to the other issue of subscriber declines at many other cable networks. >> fios competitive. i saw a downgrade of verizon today i thought was significant.
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>> barclays down to -- >> spending year. >> -- not the first to down grade lately either. >> verizon and at&t and potentially dish you're going to want to see the results of these auctions remember the spectrum auctions that are going to conclude at some point april bit of a delay yesterday, but they're conclude quite soon. right now, what i'm hearing expectation is at&t was, by far, the largest single spender and verizon perhaps spent less than people anticipate. but we'll see. that's speculation. i mean i've been trying to do reporting on it but getting the hard numbers certainly nobody wants to talk about it it's difficult. that will be an interesting question. and then does verizon still have spectrum needs or not? what would they do to fulfill them if in fact at&t did -- was the big buyer of the j block in the spectrum auction. that's important when we see results. >> it's interesting those that have broken away from utilities,
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yields are higher than a lot of utilities and i think a lot of people saying they've got to spend, spend, spend. i'm sure someone's saying that dividend's not safe. the carve flow that the companies -- >> it's pretty big. >> if they didn't cut them during 2008-'2009 to me it's more likely they boost than cut. >> i wouldn't be surprised to see at&t in the market trying to get something done to pay for the spectrum. why wouldn't you borrow now? just keep borrowing. >> yeah. >> i mean netflix talked about than borrow a billion. elon musk morgan stanley took the price target down from 290 to 280, talking about china problems. don't you think musk can raise a billion dollars? >> certainly did did -- spacex no problems raising a billion. >> only problem raising money in the energy market. >> yes. >> mcclendon's trying to raise money. >> right now? >> maybe. might not have the easiest time.
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>> hard to make a projection where oil's going to be which is hard to do cash flow. >> if you're exxon, you can. >> exxon upgraded today. exxon's a bank. the halliburton/baker hughes calls terrific. great technology plays. it's going to be amazing come been nation. the only one we've not talked about, the market's turned. unitedhealth reported a great quarter. goldman sachs upgraded that last week. picture perfect quarter. they can make more money next year. good play on employment growth. very clean quarter. >> up sharply. >> very clean quarter. terrific job by those guys. very good job for years now. >> yeah. so, quick 90 points down 90 points up. bob pisani's on the floor. bob. >> i've been standing here a few minutes. dow down more than 100 points and now it has turned positive. a strange morning. at the open weakness in defensive names.
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utility stocks consumer stocks telecom stocks weak. it's all turned around. from the very start we had a rally in energy stocks and the important thing is west texas intermediate stabilizes 45 47 it's roughly 47 today. put up energy stocks. more volatile names, den bury anadarko, sw energy you're getting 3% 4% moves right at the start. exexxon and chevron helping the dow. everybody's waiting for the ecb meeting. i can tell you, boy they are expecting -- germany turned around, that was negative a few minutes ago -- expecting big numbers out of the ecb. 750 billion to 1 trillion for the qe program, certainly 500 billion isn't going to do it. some people want open ended whatever it takes stuff. so there's a lot of expectations around this. and some of the guys who are out, the australian ecb member
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trying to calm people down saying don't get excited about one meeting. obviously they're anxious about this. exception to the dow markets china what am i supposed to make of a shanghai stock market this week? look at this. monday it's down 7.7%. yesterday up almost 2%. today it's up almost 5%. there was a lot of concerns on chinese regulators changing margin requirements on monday then come out yesterday, no we're not trying to affect the stock market or curve the market rally. stimulus hopes. you make sense out of this strange moves that we're seeing in china. certainly nothing that is fundamentally based right now, seems to be a lot of scrambling around the margin requirements. elsewhere, a lot of talk in the last few days this is over the weekend as well how unusual it is to see ten year treasuries well below s&p 500 yield. a rare occurrence. trying to find out how often it happened. i saw a few traders saying it's only the fourth time in 50 years this has happened. i'm trying to confirm that.
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certain a rare occurrence. regional bank earnings love regional banks they make money two ways interest on loans and charging fee for services. u.s. bancorp one of the stars, minneapolis based. great consumer in business lending operations. net interest margin was 3.14%, that's where everybody is. only down a couple basis points. loan growth, everybody's getting 3%, 4% loan growth year-over-year, what's reporting. people hoping for 5% 6%. that seems to be what's going on. fee income, they make a lot of money charging fees particularly strong on overall good report. fifth third based in cincinnati good example how lower rates for loans are hurting their banks. net interest margin down because they had to reprice loans. that hurs their overall interest rates. bhp billiton taking a write-down on oil holdings. back to you. >> thanks so much.
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one reason for the brief turnaround in the dow might be headline out of dow jones, citing sources that the ecb's executive board has a proposal for qe of roughly 50 bill euros a month for minimum of one year. that would take you to 700 billion. as you mentioned some of the figures the market was looking for. >> i saw it. i think it turned things around. depends what they're willing to buy. you could see a lot of different things. japanese will buy anything. >> got anything they'll buy it. >> twitter. >> there you go. another potential buyer for twitter. >> you're going to make that deal happen if it's the last thing you do. >> got to be -- united arab emirates could use a twitter, right? it's a natural, a natural fit. >> i think they're active. >> tomasic could buy it. >> i'll make it happen. just wait. >> i have no doubt. >> maybe i'll do a direct
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message and i'll get things done. >> make sure a direct message. >> they've got a -- it's not helping them to drill. drill. it's cheaper to buy twitter than it is to drill. >> rick santelli at the bond pits in chicago, maybe talk about the ecb headlines. rick? >> yeah the ecb headlines actually fit. the real question is how will the markets align after tomorrow? i'm still a believer that the markets expect more than any central banker can give no matter what country of origin. look at intraday of tens we did see activity around the 8:30 numbers. starts and permits, especially the starts were better than expected. single family still has a long way to go but it improved. two-day chart reveals going nowhere quick to the upside in yields. if you look at year-to-date chart, which fascinating here we're closing in on 40 basis points lower than we settled the end of last year. if you look at bunds, we're a half a dozen basis points higher
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than last year. we're recalibrating the premium to the the u.s. economy based on the recent spat of questionable data. that's what many of my traders think. and it is showing up in the next chart, year-to-date of a difference between your ten-year and bunds. it's narrowing, yields are more dramatically dropping is that a premium recalibration? we'll have to wait and see after tomorrow. a better view of the world. if we look at yield in the country, another record flat back to summer of 2012. so we are slowly pricing out aggressiveness of the federal reserve, at least in part. if we look at what's going on in foreign exchange land i'll tell you, very very important. seems like the euro is starting to round, as you see on the year-to-date chart around the 1515. it's stabilized here. and the dollar versus yen, dollar can't seem to get traction.
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up smartly yesterday. it's giving it all back today. if the euro's going to rally because the ecb can't do enough and the bank of japan, most of the issues on at gresive side are priced in might be time to reassess. the dollar index, we'll know more tomorrow. back to you. >> big day setting up. correct myself ubs -- unh. i apologize. >> no worries. >> it was key. goldman downgraded. got to correct when i get it wrong. >> davos for a live interview with jpmorgan chase chairman and ceo, jamie dimon. down claude trichet, markets await the big meeting tomorrow. does he think his successor draghi should go the kiwi route? all over the map and only 17 minutes in. more "squawk on the street" is back in a minute.
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oil's hanging on to a gain this morning. over to jackie deangelis at the
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nymex. >> a bounce today no the upside, a dollar on both side of the atlantic. the name of the game volatility. that's what trades are saying. they're not surprised about this. we did see steep sell-off across the board. downside risks remain. we have comments from the kuwaiti oil minister saying it's basing its budget on $40, $45 oil, that implies potentially wti price with three handle. the ohman minister sacrificing price rather than market share. how can you base a business on plummeting prices? bhp reducing rig count by half dramatic cut there baker hughes cutting about 7,000 jobs. now, on the flip side of this we're watching gold prices carfully today. this risk boosting gold over 1300. i think we've pulled back a bit. based more on the ecb and the
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action in the euro right now. back to you. >> thank you so much. you think we found any stability over the past week jim? >> you know, no, no. i think the market's into queasy. we get a headline from ecb and the market swings dramatically. it comes right back. other than netflix, i don't really -- cree had a decent quarter. i don't have positive quarters. >> how about crude? 45 -- >> crude is tougher. people aren't ready for this explosion of crude that's going to happen in the first quarter. first quarter's going to be one where people say, holy cow, they can't shut it down. second quarter will be the shutdown. you can't shut it down so fast that's what people are missing, particularly because there's a lot of oil coming on iraq a lot of oil coming on gulf of mexico. the market's not ready for that. >> got to be patient on that. >> nat gas still coming down. >> "stop trading with jim" after
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the break. john boehner weighing nont president's state of the union last night. live to capitol hill with the news conference. the dow down 45 points. she inspires you. no question about that. but your erectile dysfunction - that could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach,
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it's time for cramer and "stop trading "s. >> a stock that doesn't quit. i think that we have to talk about it because it's positive which is actavis. deutsche bank says great synergies coming. this is one of great stories of our time. they've become a great giant drug stock over you know past -- >> it's a good rollup as opposed to valeant, the bad rollup. >> they're both rollups and one is more positive than the other. price target here it's not dis disingenuous, talking about this going up another 50 points. and deutsche bank, you know it's just a good call okay. it's a good call because allergan, if they hit their numbers, you know that the possibility of a 16 number for actavis is realistic. congratulations on amazing buy. >> they haven't closed the deal yet. >> i know but they're saying 280 goes to 320, and i can see
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that. 20 times earnings. >> what's on "mad" tonight? >> finishing up siris about the smaller biotechs i talked about in jpmorgan. we've got amicus therapeutics and tg therapeutics. people are saying these are the small companies but the small companies get bought by big companies because the big pharma wants to be activists. >> right. >> it's not actavis. looks like it could be. >> hedge fund loves to say actavis. >> it's like actavis. >> actavis. >> see you 6:00 p.m. eastern time. john boehner and his news conference after the state of the union last night in a moment. the lightest or nothing. the smartest or nothing. the quietest or nothing. the sleekest... ...sexiest ...baddest ...safest, ...tightest,
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good wednesday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, simon hobbs, david faber. a shot of capitol hill, speaker john boehner in a moment will a statement with his reaction to last night's state of the union address. followed by other republican
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leaders, as soon as the speaker begins to talk we'll bring that to you live. in the men time markets in the first half hour down 100, back up to flatline currently up 17 weighing headlines warding ecb and more. >> let's get to the road plan. netflix soaring today, but does the stock have more room to run? talk to rich greenfield who thinks the stock is heading to $600 a share. >> $75 until funding from investors like the new york stock exchange and former city ceo pandit the ceo of coin base will join us live. >> live interview with former ecb president jean claude trichet as the market hangs on to every headline ahead of the crucial ecb meeting. two months after crushing election laws that swept republicans' majority in the senate, the president used last night's speech to take credit for the economic turnaround and challenge congress to fight inequality and boost the middle
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class as expected. it's drawing praise from democrats, and of course criticism from republicans. speaker boehner set to speak any moment. we'll take you there live. first, chief washington correspondent, john harwood, for more on the reaction in washington, d.c. is it seen as the president using last night to campaign or actually talk about policy that could get through? >> reporter: mostly the former. the president trying to shape an argument republicans didn't care for the speech at all. said it was a partisan speech. democrats thrilled by it. paul ryan was muted in his react to it. he praised some aspects of the president's speech and gave a signal that he at least, wanted to have a conversation about some of the tax issues the president put on the table. this congress is not going to pass the capital gains tax increase the president talked about, but i think paul ryan is trying to show that he wants to
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govern he wants to try to see what sort of tax reform possibilities there are, corporate tax reform is something the two sides have agreed on. so there was a divergence in attitude between some members and some of the ones in the most responsible position. so it will be interesting to see what john boehner says today. >> to me the big message john, the middle class economics. the president says it's working cited a number of examples. what is the republican response to this? did they have a plan a middle class economic plan? >> reporter: we'll find out. looking when mitt romney went to san diego to tell the members of the republican national committee he was thinking about running for president again, what was his message? he said under obama the rich have gotten richer and the middle class deserves a raise, and i want to do something about poverty. that is a stark indication that the republican party is going to engage on these issues of what about flatlined middle class
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incomes. middle class incomes have not gone up for 40 years. and now that we're have turned the corner from the great recession and the financial crisis, this squarely what american politics in congress and the 2016 campaign are going to be about. >> there's a big divergence here. de in. s think they can do it from the rich to the poor. i don't think anybody close an income gap by doing than the republicans, gop have got to turn to economic growth. i'm not sure that they found a way how to articulate that in a way that might appeal to a middle class that feels -- >> reporter: you're right. in fairness to the democrats, they're not proposing to close the gap with wealth transfers. they're proposing to redistribute some of the money and make some incremental headway. the president also has big proposals on education, job training, infrastructure all of those are about long-term growth through improved human capital
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and infrastructure spending. republicans are going to have to articulate policy some of them are cutting the corporate tax rate. republicans believe in that. you also have some republicans who say, look with the top rate at 39.6%, we've got to come up with other ways to appeal to middle class earners. so there's some talk on the republican side about earned income tax credit child tax credit, other ways of republicans putting money directly in the pockets of those families. >> we'll see how boehner responds. for now, thanks very much john harwood in washington. >> as we wait for house speaker boehner, focus on the markets. down 26 points on the dow. stewart freeman, co-head of global strategy at wells fargo. >> good morning. >> let's back up a bit. note that we're now on the 13th day of trading. it's actually been quite stark moves that we've had within the market.
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we've really rotated quite strongly. i want to show some of the sectors that have done very well and om of the sectors that have done badly and ask you where we go from here. utilities and health care have clearly worked on 12 day of trading for the year. down at the bottom we have consumer discretionary. energy and financials have performed even worse than that. financials coming into the day's session down over 5%. what works now, stewart? what does that tell you about where people think we're headed? >> well i think we've had a defensive move in the market here going into the year. volatility's greater. we expected volatility to be more as qe here was over. the fed was laying a bed of liquidity in the u.s. market. volatility's not a surprise. but we've had various events that put investors more into as we open the year into interest rate sensitive groups as oil's
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come down inflation's come down, interest rates have come down, that's how we started the year. but i think as you look further into the year the things that cause consumer spending to do well are low inflation, declining inflation, low interest rates, declining interest rates, we just had a good housing starts number for december. the year last year for housing starts was one of the best since 2007. those are all positive leading indicators of the last 12 months positive for consumer spending. expenditures going forward. consumer income over the last year should be positive for consumer spending going forward. >> right. >> i think the base of data from last year really says you're going to have a consumer who is going to continue to move forward. >> the problem, stuart and i'm looking at your notes here you say people should as the market should up on liquidities and going into tech consumer
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discretionary and industrials. the problem is that that isn't working. all of those sectors are down quite heavily. my question is are we changing our view of what this year will bring? do we think that oil will come back? and interest rates will come back? do we look at high tide water marks on sovereign debt and go this is scary, we could be going in the other direction? >> i don't think we do. we still have that same comfort level with domestic. another thing's good for, again, for inflation and consumers in this environment is a stronger dollar. if you look at variables together, they look more like the mid 1990s, when we saw soft commodities, strong dollar strong u.s. versus international markets, strong u.s. economy versus international economies, and continuing growth and new high-highs in the market place. it doesn't look like the mid-2000s, doesn't look like late 2000s.
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really looks line the type of environment favorable for the u.s. we think that as we move ahead, some of the industrials that discretionary stocks -- >> stuart. >> -- those are doing very well. >> i want to break in here because in the last few months breaking news. surprise interest rate cut from the bank of cap canada, bringing down rates bay a quarter i've percentage point. canada is hurting from what we've seen reeling from the oil price, the shocker hurting canadian businesses canadian oil a huge export for them. this is a market stuart that seems to be glued to central bank activity. ahead of the ecb, all of the leaks moving the euro this morning, what's priced in what's not priced in. central banks are in overdrive to reashth toct new realities, low oil prices stronger u.s. dollar. that is what the market's going to be about for this year? >> well i think it is. we're seeing the eu put on 50
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you know, 50 billion a month going forward. i think a lot of what we're seeing, as far as qe goes replacing what stopped here. so it's going to be very difficult for the fed to raise rates aggressively. here, when you've got other countries bringing rates down when you've got japan in qe eu starting a big program in eu of equity work i think -- i think -- i think really these other countries are replacing some of the qe that we had in place for years. you know stuart i hope you're right because we're all invested in the stock market. i hope you're right. the problem that i have with the analysis that you're bringing to the table, your pattern matching. looking bag over history and saying, look when the price of oil fell in the '90s this is what happen to the economy it was great for the market. when you see this job growth
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it's great for the market. this time it's different. and it's different because the central banks have skewed the whole game. you know we are up from the lows 200% on the s&p 500 and the argument goes have they broken all of the correlations by bringing the asset gains, the price gains, early to the table? in other words did the fed steal the gains from this year on the stock market and backload them into what we've already had? that's the central question on the analysis that you're bringing to the table. >> well i think -- i think we can continue to see liquidity help in this cycle. don't forget you know, we have a broader workforce now. we've had -- we're having continuing job growth now. the unemployment rate is down now. the 15-month of unemployment numbers, that number is still coming down. overall, we're in a much better position than we were during the -- going into the last recessions. but we have less inflation.
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and usually at this point in the cycle, domestically, we have more inflation. so i think that for the u.s. at least for now, i think that's a goldilocks environment for domestic business. >> okay stuart thank you for your time. stuart freeman joining us co-head of global strategy at wells fargo institute. >> a look at oil. a lot of headlines sweeping across the tape not only about canada or the ecb but now the secretary-general of opec saying in davos the price of oil in in his words will go back to normal soon. that's his quote. price will rebound and we will go back too normal very soon. crude's up 1.14. >> bank of canada counting on higher prices of oil, expects brent to go up to $60 a barrel. obviously, it's hurting their economy, hence the surprise interest rate cut. >> it's not a rocket on brent. >> it's another $10 or more so
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which hurts them. >> netflix soaring today, beating its on forecast for the fourth quarter. next the analyst with the highest price target on the street rich greenfield thinks netflix can make it to $600 a share from around $400. is he right? more on that.
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waiting on john bayner to speak in reaction to the state of the union address from last night.
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was expected close to the top of the hour but as soon as he comes to the lectern, we'll take that live shot. a quick market flash here with dominic chu. >> let's keep the theme for the state of the union going here. watching shares of alumina down 2.5% moving lower after obama didn't mention anything about gene sequencing with regard to 1 million genomes in the state of the union address last night. the stock had risen the day yesterday before anticipation he would make some announcement with gene sequencing. illumina dominates that mark. shares down by 2. 5%. >> thanks a lot. a big earnings beat by netflix late yesterday. the aggressive global push sending shares higher this morning. for a while on track for the biggest price dollar price increase ever for netflix. what happens by year's end. rich greenfield joins us from btig. his call on netflix on the previous quarter eve buy rating
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and price target of 600. good to have you back. >> thanks for having me. >> this call looks to be in question, after last quarter's numbers. you must be feeling better today? >> look, i think there's just a real challenge that the media space has the traditional media companies have in evolving to meek consumers' needs. when you sit back and watch traditional television you're watching tv with an old school remote that hasn't changed in the past decade using a program guide that hasn't changed really much in the last decade. the end of the day, consumers want to stream they want any time access, they don't want to deal with commercials. they don't understand why you have to wait a week between episodes, why breaks for baseball and special events. the whole traditional way that you watch television is not being served by the traditional industry enter netflix, giving the consume just what they want they're not letting the business model get in the way. >> what about the competitive threats from hbo, the content
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costs, notion that they're not pricing aggressively enough? are those concerns gone? >> look from the standpoint of pricing, the more content they add, if you look at the netflix release schedule over the course of the next 12 months most companies would be jealous. content creators would be jealous to have the breadth of content that netflix has coming on, not to mention as you get into the end of of next year bring in disney movie content from a pricing standpoint they're going to have more pricing power over time and do it from a position of strength where there's so much content coming on and people are spending so much time with the service, reed hastings made the content median usage continues to tick up. that's a very important metric as you think about pricing power over time because you start using it so much every single day, you won't turn off for an extra dollar or two over time. pricing power will get dealt with observe time.
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in terms of competition, reality is people want to stream. there's room for a bunch of companies in the streaming space. >> does that mean you're not worried about the competitive threat posed by amazon which got the golden globe, announced it wants to produce and acquire films for actual theater releases got woody allen on board. is that a friend or foe to netflix at this point in the quest for streaming tv online? >> i think you saw a tremendous amount of press interest in the topic of is this netflix versus amazon in a battle for internet streaming supremacy? what they're missing is that both companies have this massive pool of time spent watching tv. and the real industry that really has the crosshairs focused on it is traditional television. there's a lot of time spent watching general entertainment television that is exposed as you see the rise of these always available deep catalog watch what you want to watch without commercial services in both
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netflix and amazon just like hok and showtime have done and flourished they fight against each other technically but taking share from broadcast television. remember, it's not tv it's hbo. think about what you have now is you don't just have hbo winning, so is showtime. i think you'll see the same with internet television you see both netflix and amazon hulu and going to see other brands develop as well this is not a two or three-player market. there's a lot of winners. the real question is how big a loser is traditional television cable networks from your own cnbc to the broader universe of you know general entertainment networks? >> what happens to pricing, rich? a lot of the conference call about the fact when the subs went down last time they didn't think it was due to price increase and tested that they believe, with low income subscribers or subscribers on low incomes. if one dollar over price increase generates half a billion of revenue, where do you
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think they'll take pricing in the country? what can they do to subdivide it? there they've talked about the fact they're charging $12, if you want the ultrahd service. as there is more and more ultra hd tv sold more and more content shot in ultrahd, that's a natural lever up on pricing. i think it comes down to you're going to get to a point where you are streaming so much content that you don't churn. look at what amazon did. amazon raises the price of prime dramatically. and they've continued to grow. obviously that's not just for video. they also include things like free shipping in that that's the focus of it. but the point is, when something becomes so valuable you're using it every day and all of the time the pricing power really is inherent. that's what netflix is shooting for, give you so much content, fresh content it becomes indispensable to your family and whether the service is $9 or $11 or $13, i think there's a lot of pricing power, as you look out over the course of the next four
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or five years, but it's all built on contend. if the content isn't good -- if everybody hates orange is the new black or house of cards that pricing power won't be there. it's all about the content. >> rich we will keep our eye on that $600 target. good to see you again. thanks. next historic talks between the u.s. and cuba begin today. it's the first time an assistant secretary of state has visited cuba in almost 40 years. a live report coming for you from havana with a look at what we hope to gain from those talks when we come back. you just got a big bump in miles. so this is a great opportunity for an upgrade. sound good? great. because you're not you you're a whole airline...
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waiting for house speaker
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john boehner to talk about last night's state of the union address from the president. as soon as he emerge on capitol hill, we'll take you there live. sara? >> a delegation from the united states will begin historic talks with cuban officials today. eamon javers live in havana with more on what they're hoping to accomplish. good morning, eamon. >> good morning. historic moments here in havana. a short while ago with the arrival of the american delegation, we just got video in of their arrival this morning. it is the highest-ranking delegation to arrive in cuba in 38 years. they're going to talk about the future of the bilateral relationship between the two countries, so at odds over the years. this, just a day after president obama called on congress during his state of the union address to reform the embargo against this nation. take a listen to the president speaking last night. >> what you're doing doesn't work for 50 years, it's time to try something new.
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and our shift in cuba policy has potential to end a legacy of mistrust in our hemisphere. >> reporter: we had a chance last night to go to historic hotel here it's a hotel that was once owned by american gangsters. it featured in the cuban revolution castro's picture all over the place. we talked to american tourists at that hotel about their reaction, as they watched the state of the union. they said they're going to tell all of their friends to come down here to cuba. take a listen. >> this is wonderfully ironic experience, to be sitting in cuba havana cuba in the basement of the hotel and watching obama's state of the union. i love it! >> reporter: now all of this got off alittle bit of ominous start with at rival of a russian intelligence ship here not far from where we're standing in havana. this week the russian ship
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arriving at the u.s. delegation set to arrive. she's a soviet era intelligence ship. russians say she's here for normal operations. guys, back to you. >> thank you. eamon javers live from havana. straight ahead on the program, coin base raised $75 million in vc funding the largest ever funding round for bitcoin company. sara is bristling at the opportunity. invest the nyse and vikram pandit. live for a first on cnbc interview as bitcoin hits 200.
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an hour into trading. 7:31 on the west coast. 10:31 wall street. unitedhealth big evidence gainer on the dow, up 2.5%. posting better than expected fourth quarter results helped by higher profit margins and premium revenue. north trust up 6% financial services firm beating street with quarterly results as new business and rising equity markets drive assets higher. campbell soup and dr. pepper snapple hitting new 52-week highs. conbase raised didn't$75 million of new funding. vikram
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vikram pandit among others. could this fit in wall wall street? brian armstrong joins us now. interesting list of investors there. what does it tell you that prominent, established financial names and institutions want in and want a piece of your firm? >> yeah it's really great news. it's not only largest fundraises for a bitcoin company but the first time that banks have bet big on bitcoin and financial services like new york stock exchange. it's a great opportunity for them to get a portal into the new, emerging technology see where it's going. >> what have you heard from them? do they believe in bitcoin as a technology, as an anti-currency, give us a little bit of color why they're coming to you. >> yeah they're really excited. its a technology. these people are bitcoin believers, they're interested in this potential that it has to make payments fast cheap, global for everyone around the world. i think they also just got excited about, you know all of the things that have happened in the last two years.
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go back a couple years ago new york large merchants in the united states accepting bitcoin payments no large payment processors. now we have people like paypal and brain tree accepting, you know bitcoin payments we have large merchants like expedia, overstock -- >> at the same time not to cut you off, you've got doubters saying what's not exciting in the past year has been the price drop. it dropped 1,000 bucks in 2014 you have people like simon making fun of me. >> it dropped 1,000 bucks to $200. >> yeah. >> but still up sharply from where it was two years ago. is there a disconnect between where the market thinks this digital currency is going and where the vc community and where your firm thinks it's going, and why is that? >> well it's a few things i think. looking at something similar to like the internet bubble that happened around 2001. so, like this any new technology people got very excited about it
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irrational exuberance, if you lp the market went up 56-x in 2013 on the price of bitcoin. we saw a correction it came down 4x in 2014, back to reality if you will. and i think, you know for people like us our firm is just there to move the ball forward one yard every day for the next five years and make it useful. we pay less attention to the price and more about fundamentals are the number of transactions on the network every week going up? in those cases the answer is clearly yes. >> you know, brian, i wish you well. you're a big digital wallet provide, providing picks and shovels, helping those companies that want to integrate bitcoin into their systems to do that. i wish you well. but just on the central premise this is actually about the wider acceptance of bitcoin, a investor, the private equity arm of that private equity fund of bbva, and their executive director said, look bbva is not about to accept bitcoin, this is not where we are. this is understanding the
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industry and what crypto will mean in the future. those sitting on the edge like everybody else are just wanting to observe what happens internally rather athan thinking this might be the big game. you hit the nail on the head. exactly right. they're dipping a toe in the water. they want visibility into the trend to have the best data about where it's going. you're a bank and it's 1994 and the internet's just coming around you wish you could go back and get early access to that information see what's happening. these banks are making a smart move by doing this. >> what do you see in terms of growth? how many people use your company as a bitcoin wallet? it's been growing and i know there are prominent names, like microsoft. do you expect that to continue? can you give us a hint as to what that will look like this year. >> the number of consumer wallets on our platform over 2 million, it's 2.2 million, we've got 38,000 merchants accepting bitcoin. so that's about, you know 5x
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growth year-over-year in terms of the number of wallets. i think you'll see that trend continue, more and more people finding out about bitcoin. we're not the only firm in bitcoin. bitcoin is a -- more like e-mail or the internet. there's not any one company who owns or controls it. that's the great power of bitcoin. so even though we're clearly leading the market in terms of the number of wallets or merchant sign-ups there's a huge industry of people doing bitcoin all over the country. >> imagine one of the shareholders like the japanese mobile operator buying you, or do you think you're part of a public service and you need to be kind of spread around and owned by many? >> well the bitcoin network you know will ensure that happens regardless. there will be many bitcoin companies like us like many internet service providers but might be more consolidation than that. but, no, i don't think there will be, you know acquisition by a telco or pank in the near future. we want to stay an independent company.
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>> are you profitable? i imagine the price drop has hurt you guys. >> we don't disclose those numbers obviously, but our revenue's not tied to the price of bitcoin at all. we charge 1% when people buy or sell bitcoin. and so if the price is going up or down it's more linked to trading volume than it is the price of bitcoin. >> very interesting. thank you for joining us brian, with the latest investment on bitcoin. brian armstrong, ceo of coinbase. >> we continue to keep our eye on washington, d.c. . house speaker john boehner expected to issue his reaction to last night's state of the union address in a few moments. when that happens, we'll take it live. oven to the cme group. rick santelli with a special edition of the santelli exchange. rick? >> absolutely. of course a special edition in lieu of tomorrow's big ecb meeting. my very, very special guest jean claude trichet, former head of ecb. thank you for taking the time today, mr. trichet.
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>> pleasure to be with you, indeed. >> all right. with the delay, we're going to just go out with three very basic questions. the first is what do you see as the main eurozone headwinds at this point in the cycle regarding their economy? >> well i think that we certainly have the legacy of the crisis. as you know we were ap center, apc center of the crisis of sovereign risk and that is still there and is a big, big issue. and we have absence of flexibility and central reforms in europe which is a permits structural headwind if i may. on the other hand, i think that we will benefit, as the rest of the world, of the decrease of the price of oil. and that is something which, of course, has always to be taken into account.
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all being said -- >> let me interrupt you, mr. trichet -- >> we have to work very very hard. >> how will quantitative easing should it happen like the release this morning, dictating that the ecb executive board is looking towards 50 billion euros a month of purchases for a minimum of one year how will that specifically in your opinion, address the headwinds you just outlined? >> look first of all, i would say that it is usually underestimated what the ecb does already today, if i may. you know today we have risk-free interest rates, 140 points below the u.s. today we have spain and italy, finance, i would say fourthr coming way than the u.s. itself. we have a situation where clearly the ecb has done a lot.
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but it's legendary for the ecb to decide something more because, of course, we have an inflation which is much too low and that of course has -- is hampering, if i may, the overall situation of europe. but again, to think the ecb has a magic wand and will change all the situation in europe by its magic wand in my opinion, is not the appropriate reasoning. we need the ecb. we need the ecb to do more. and we need the ecb to decide to move and on the other hand we need governments, parliament to be on board. i have to say, social partners to be on board because, again, they have a decisive role to play. >> all right. now you mentioned, and in my final minute and a half here drop in energy price is a good thing. i'm dplad
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glad you said than the kilowatt hour in germany versus u.s. it's much higher. but you also talk about disinflationary forces. when it comes to energy which is it why is it interpreted as another part of the negative issues pushing prices down if it's a positive for the manufacturing and economy as a whole? >> well we -- as we have inflation, we are already very low. even before the fall of the price of oil, we had dangerous associated with too low inflation for too long a period of time, much lower than our definition of price stability. on top of that you have the decrease of the price of oil, which is both expansionary for the real economy and disinflationary. i would say, all taken into account the decrease of the price of ils a i good thing, of course. in terms of the real economy it goes in the direction of expansion. but it makes an additional case
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for avoiding anybody to think that deflation is likely to happen in europe. it is not today. it should not be tomorrow. and the reason ecb is right to look at it very very very seriously. on the other hand the message for the governments, the message for the structural reforms, the message for all, i would say, the other partners public and private, has to be very clear, too. >> mr. trichet, thank you very much. i anxiously await to talk to you again after we learn what mario draghi has in store tomorrow. back to you. >> rick santelli thank you. a big day tomorrow. in the meantime live shot of capitol hill, we'll take speaker boehner when he comes to the microphone. dow's basically at the flatline. "squawk on the street" will be right back.
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take a look at material sector. one of today's best performing
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in a market that's flat overall. dom chu has more. >> simon, second-best performing sector in the s&p 500, materials one of the leaders and leading the way higher in the specific sector. lion dale bassle mosaic and alcoa shares. mosaic raising earnings guidance for the fourth quarter. that explains that part of the story. good day for a lot of the material stocks. one of the smaller sectors in waiting for the s&p 500 overall. back over to you. >> thanks very much dom cloo. waiting for house speaker john boehner to take the podium. he's being introduced right now. of course, we'll take it to you as soon as we hear and see mr. boehner. in the meantime markets here dow down one point. was down more than 100 points at the open it's really come back pretty strong. nasdaq and s&p 500 are in positive territory. >> all right. a lot of things we've missed in the course of the morning. house starts not too bad, up 4.4 in december. single family showing strength
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some of the strongest numbers since 2008. hasn't done too much for the housing sector. there's one of the hopes dashes over the past six months. if housing were to take off, what would it do for the economy, jobs and wages? >> as we await house speaker, we bring in john harwood from washington. what is mr. boehner expected to say? >> reporter: going to react to the president's speech. we heard from a couple of members of congress. kevin mccarthy, the house republican majority leader. and they've said that the president has the right goals but the wrong approach. that's an interesting way of not getting into a frontal war with the president at this moment but to try to engage on the goals that he's articulated about helping middle class families. smart of republicans to do that. see what tone the speaker strikes when he gets to the podium. >> and legislation pending here i think just in the commercial break, the gop at least in the house introducing legislation?
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>> reporter: legislation to provide people a choice between taking overtime pay and time off versus cash. this is something that democrats oppose on grounds that this would become a way of employers to avoid paying people to push people towards taking comper to time-off. something prush republicans pushed in the past. >> hearing from majority whip scalise, as we await john boehner. one of the criticisms of the president's state of the union last night, it was very domestically focused at a time that we are launching air strikes against isis. we've been in syria doing that for three months. dana mill bank the op-ed writer in "the washington post" called it oddly qui bet terror. something republicans expected to pick up on? >> i wouldn't think some americans are focuses on their own circumstances, their own
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economic condition and living standards. so you know foreign affairs are important, national security is vitally important. that is something that the administration is engaged in on an ongoing basis. but when trying to connect with average americans and convince them that you're on their side domestic economic local issues kitchen table issues are what count the most. >> you mentioned paul ryan's comments taken as a sign that maybe there is some give between the president and at least the house. at the same time people are commenting he stopped short of telling congress put a tax overhaul bill on my desk. is there anything to that? >> reporter: i mean, look the corporate tax reform discussion the additional tax reform discussion, the president put on the table about raising capital gains taxes, those things exist
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in the backdrop. they are not likely to be acted on. you know the president laid out a principle for corporate tax reform in 2012 after tim geithner as treasury secretary initiated a initiated a process. everybody is for, in theory reducing the top corporate rate closing loopholes, but it's difficult to get specifics and get a consensus around those, not just politically, but within the business community, so i think it is -- it will be a challenge for republicans to pass any corporate tax overhaul and if they do and engage a discussion with the administration, then it's possible something will happen but i'm skeptical that that issue is ripe in this congress. >> we're going to talk to jamie dimon in the next hour who is in davos this hour. some argued he stopped short of shaming the big banks in ways he has in state of the unions past. what did you make of that?
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>> he has proposed this fee on the largest financial institutions of 7 basis points on their liability, so the president was thematic in his speech. he didn't talk about a lot of the specifics. i suppose if you're jamie dimon you think they got whacked not rhetorically but in the substantive proposal the president put on the table. >> a lot of questions coming off the heels of jpmorgan's quarter and jamie dimon's conference call and regulation and whether the bank is too big, should be broken up not to mention the intricacies of the quarter itself. >> we're watching lynn jenkins a republican congresswoman from kansas's second district still awaiting house speaker john boehner. john harwood, interesting to follow twitter last night. last year 2.1 million tweets were sent. this is becoming one of the most tweeted and talked about over social media kind of event, the state of the union. i was looking at some folks making fun of john boehner's
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reaction during the speech and just how unpleasant he seemed to feel during the whole time. how is the president's relationship with the house speaker now that he is in control of both houses of congress? >> i think their personal relationship is fine. it's -- this is really ideological and structural the disagreements they have and i thought boehner did fine. look, the state of the union puts him at a disadvantage because the president's up there speaking to the country, delivering applause lines, at least to members of his own party, and the speaker, who is his political adversary has to sit here and take it. he's about to start talking. >> really offered last night was more taxes, more government more of the same approach that has failed the middle class for decades. these just aren't the wrong policies they're the wrong priorities and growing washington's burecracy here instead of helping to grow our economy and grow opportunities for middle-class families. there's a better way.
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we need to fix our broken tax code. balance our budget replace the broken health care law with solutions that lower costs, and protect jobs. veto threats and fantasy land proposals from the white house will not distract the people's house from the people's priorities. another priority is protecting the united states and our allies overseas. that's why i've invited the prime minister of israel benjamin netanyahu to address a joint session of congress on the grave threats of radical islam and the threat that iran poses to not only the middle east but frankly to the world. american -- america and israel have always stood together with a shared cause, with a common ideals, and now we must rise to that moment once again. >> [ inaudible ].
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>> i would expect the president's going to send an authorization to the congress. i expect that we will have hearings on that and that we will, in fact, have a debate and a vote on it at timing yet to be determined. surely. >> [ inaudible ]. >> i did not consult with the white house. the congress can make this decision on its own. i don't believe i'm poking anyone in the eye. there is a serious threat that exists in the world and the president last night kind of papered over it. the fact is is that there needs to be a more serious
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conversation in america about how serious the threat is from radical islamic jihadist and the threat posed by iran. >> [ inaudible ] top priorities -- last night -- top priorities, where do you put [ inaudible ] congress accomplishing tax reform instead of [ inaudible ]. >> we would love to do tax reform. but you heard the president last night call for raising taxes again. now if he wants to raise taxes it's going to be difficult to come to some agreement on how we're going to reform our broken tax code. >> last question. >> [ inaudible ]. >> i do expect that we're going to have hearings on iran sanctions legislation, timing yet to be determined. thanks. >> what's on your tie? >> house speaker john boehner there away from the mike talking about the potential for tax reform which we just xhentsds
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on with john harwood. what do you make of this foreign policy around the white house. if you look at places the administration is vulnerable at the moment foreign policy is probably the biggest vulnerability they have when americans are feeling a renewed sense about the islamic state. we've seen the horrific images coming from syria over the last several months including some yesterday, yemen now in a state of implosion. this is -- you know, the economy is doing pretty well right now and the job market is doing well and the stock market is doing well. if you want to look at a soft spot of the administration, it's the middle east and whether or not the president's commitment to draw down our forces in iraq and afghanistan blinded him to the threat from islamic extremists and that's on the table. certainly the paris attacks made that point as well. >> yeah.
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and boehner clearly anxious to focus on iran with the netanyahu invitation. john harwood joining us from washington. "squawk alley" takes to the air in a moment to remind you we have a big interview today, the ceo of jpmorgan, jamie dimon. push your enterprise and you can move the world. ♪ ♪ but to get from the old way to the new you'll need the right it infrastructure.
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good morning. 8:00 a.m. at netflix headquarters 11:00 a.m. on wall street. "squawk alley" is live. ♪ ♪ and welcome to "squawk alley" for a wednesday, joining us this morning, be jon fortt, kayla tausche here at post nine. interesting market day setting up. a lot of headline risk. bank of canada cutting rates. rumors about the ecb move tomorrow. the secretary general of opec saying oil prices will


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