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tv   Squawk on the Street  CNBC  January 22, 2015 9:00am-11:01am EST

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u.s. outlook growing 3% to 4 hrs. >> would you raise? >> i would raise. >> great lineup today. guess what? we have another great lineup for you tomorrow. a lot of fun here. make sure you join us tomorrow. right now, it's time for "squawk on the street." ♪ >> good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer david faber at the new york stock exchange. 60 billion euros a month, how mu the ecb will purchase in assets beginning in march, nearly 2 1/2 years after mario draghi said he'd do whatever it takes to stop deflation. more than the markets expected and futures are higher. oil stable. ten-year yields above 1.9. euro has come down a bit. road map begin is with beginning of qe. markets moving on draghi's news conference.
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earnings from verizon, ebay and american express, job cuts a deal with carl icahn and more to digest this quart. >> airline results are in. continental getting hit. southwest ceo with us in a few moment. the decision marks waiting for. ecb abouncing bond-buying program to revive the eurozone economy. news conference in frankfurt, mario draghi said asset purchases amount to 60 billion euros a month starting in march, continue until september 2016 lower oil, jim, not inhibiter here. >> no. i thought germans would argue, can't do this now. but that failed. you have some -- our rates are all over the map, i want to be careful -- our rates had gone up big, even in the last few minutes come back down. spanish ten-year 1.4 now. our ten-year 1.8. i remember when we would sit here in 2011 and talk about how
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maybe the spain would go bust and rates were going higher and higher, now right -- i don't know who would buy that piece of paper. but i think i know who may have to, which is draghi. >> yep. he may be a buyer there. >> of course a lot of this also will have an affect on the euro which i believe is trading down. not that this wasn't telegraphed or expected perhaps the number 60 billion a bit more than people anticipated on a monthly basis. but weakening the euro certainly, an important part of this. we sat here many days talking about the rise in the dollar, what that's going to mean for example, to so many corporate earnings and we're starting to see that in earnings reports and guidance we're getting from multinationals. >> you don't need a weatherman to know which way the wind blows here, said bob dylan. quarters are starting to be domestic and it's all good, unitedhealth, american express, wow, we didn't see. or it's muches or or you can't get -- i'm now seeing like quarters where they're saying
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listen, fx neutral, fx neutral, it's not working. it's really a big issue. these conference calls have turned into a -- let's just say if you are international company, you're missing the numbers so big that you just literally think that the company has no idea what it's doing. back to johnson&johnson, horrendous conference call because of the miss. >> you were disappointed. >> i was very disappointed. my charitable trust owns it. >> right. >> it was just -- you want to x out currency maybe make a case it's good. the currency ain't working. >> yeah. >> and the number of companies for a huge issue is going to grow. ge tomorrow mcdonald's, i think, just a few days from now, where your revenues are half of your business. >> take a look at union pacific, by the way, which is by far the best rail put it out there, they are a domestic company. when their numbers come out and you look at numbers, you tonight have to say, wait a second what
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is coal if fx neutral? what does fracking stand? how about chemical? no. two kinds of companies, the companies that you can't analyze because of the currency you can't build a model anymore, and the domestic companies since, again, using unitedhealth has an example, after the conference call and say, i know what i want to buy. southwest air. i want to buy. 27 million passengers where are they flying to? let me tell you, they ain't flying to countries where i've got to do a far x neutral. >> you may not want to buy domestic oil and gas plays. >> southwest air is domestic oil and gas play. buy it. >> good point. >> kinder verizon, domestic-based companies, yes? >> yeah verizon, you know we'll get -- i'll do more on it later in the program, carl. but the disappointment there was on the margin side on the ebitda margin side and you may see analysts perhaps bring in
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their numbers from what had been at least consewn sus around a number of 3.68 for this year to maybe a bit lower. the stock may be down a bit. when you have 1.8, 1.9 ten-year dividend above 4% that can sustain the stock. the spectrum auction, of course the big overhang big question -- i'm going to talk about that later in the faber report -- >> cap x up a bit. that was -- that was a positive for overall -- it sort of the industry and those who provide to verizon. >> that's a big deal. when i had john claim bers chambers, really cut back, maybe this is a "back to the future" cap x. >> yeah. expectations had been 17 and they're now going 17.5 to 18 billion, of course they do generate so much free cash flow these companies. >> look at dividend dividend's
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not sustainable. >> how much is he spending in the auction? so much connected into that. more on that later. >> am nextex good beat cutting 4,000 jobs bernstein cutting, ebay cutting 2400 jobs. anecdotal evidence of companies that are looking at year ahead in which they're going to need fewer heads. >> charitable trust owns american express, i didn't like the call. >> why not? >> they said december was weak. customer spending was weak. they put in one-time gain of concurrent which is travel -- travel leisure app, one of these software service apps and that spooked everybody, had the stock go up to 88.5 picked off everybody -- i don't care if somebody loses in the aftermarket -- but that was not a good quarter, sorry. not in the order of j&j. ebay a great quarter and terrible quarter.
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paypal numbers i loved. the rest of it look donohoe, i love donenaohoedonohoe, glad the year's over. >> best of times, worst of times? >> yeah. winter -- but one thing i talk about with paypal they basically said google's in charge of the world. because we didn't get the right search engine of google our business got really hurt that's the merchandise business. talked about $200 million in costs of breaking up. >> yes. >> but i'm sure we're going to hear from judge wapner he's got carl icahn. this is -- you see why they wanted the company to stay together, because when one business is bad the other within can save them. >> right. it helps with the other within. they argued there were synergies for some time. we've been -- talked about this talked to john donahoe, ceo about it. interestingly, icon didn't get more focused on the governance of the spins, if you will and the case of ebay splitting up.
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something i brought you originally this morning, has been confirmed by mr. ikahn, focused on the governance yet to come by the way for companies split off. he doesn't want them to have poison pills, they wants to call a special meeting with a low threshold in terms of votes. he wants to make sure that these companies, either one, whether ebay split in the marketplace and paypal or when gannett split into call it print, the newspaper business and tv and digital, that if there's somebody out that wants to buy them, they're not going to preclude that. that is a key part of why he's going after two directors at gannett this morning, again, he owned that for some time but that was somewhat unexpected in the part of gannett. originally what i was hear you might have gone for more directors, but looking for two. and many proposals he's making again on this governance issue which, by the way, he came at
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ebay on and got a lot of what he want in also when paypal gets 5 billion of net cash that was pretty good. we've seen spin-offs where lands' end had to pay its price to sears. >> how much is time inc is taking with. recall news corp. and fox, another one. extremely important. do they load debt on the spun company, put cash on it because that will auger its ability in the future. by the waying a theory that says you can roll up newspaper companies eventually. you're going to. >> gannett will be the acquirer. >> his thought, i don't want you precluded from participating in than think about the pure play print companies out there that aren't controlled. news corp. is controlled "new york times" controlled. gannett, tribune, time inc all out there. >> i want too own paypal when they spin it off. >> you do. >> yeah.
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it's got real momentum. >> it will be bought by somebody else or it's a good business. >> they can acquirer they have great stock. if visa wants to buy them, they could. it's a benign destruction. kind of like optimistic pessimism of ibm. >> as we've been talking, draghi continues to make news. steve liesman is monitoring that. >> monitoring markets, carl. the question we've been asking all morning, the extent to which the ecb surprised markets. you want to take a look at euro now, was beginning to plunge as we speak right now, as well as the whole complex of assets across the board. you take a look at u.s. ten-year yields have fallen as well down 1.87. we've lost six or seven basis points in last couple of minute mz eurour s. bit of delayed reaction took 30 minutes for the market to digest this. so the question is 60 billion euros announced, market looking
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for 50 there was a story released yesterday, but there's a however here. however, it includes all of the programs that the ecb had previously announced plus the new one, purchasing euro government bonds. a question as to whether or not there is an upside surprise. where there does appear to be upside surprise, indeed, the timing of this. he says here i'm going to read this verbatim purchase intended to be carried out until september 2016. and will in any case be continued until we see a sustained adjustment in the path of inflation. so kind of making this open ended. they could end earlier if they get to inflation target but go beyond that september 2016 date. so what we see here is taking a page from the u.s. federal reserve play book here they did a couple of qe programs that were limited, didn't work so well, then they went to open ended and the thinking in the monitor policy circles it that it was the open ended nature
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that worked better. seeing a big reaction in markets here right now, as they seem to digest what looks to be a surprise from the european central bank. >> now below 1.15. >> germans had no bite where their bark let it happen. germans said do what you want. >> she did say independent decision. >> when we come back southwest ceo gary kelly shares the discount airline rising on better than expected earnings. premarket, we have three-day win streak in our pockets. we haven't gotten to sandisk, big m&a moves. "squawk on the street" continues.
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southwest airlines beating estimates on the top and bottom lines with latest earnings. joining us first on cnbc southwest air lines chairman president and ceo, gary kelly. good to have you back. good morning. >> great to be with y'all. >> you're the best performing s&p stock of 20147 now saying fuel will save you half a billion a year. why is it that it seems your fuel hedging strategy is working better than it is for your rivals? >> actually it's half a billion in the first quarter. you know i think that we're -- that we're all scrambling a bit when fuel prices collapsed that fast, that far. it's tough on the hedging program, but hedging program is designed to protect against rising prices.
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and we're seeing a significant reduction in our fuel bill. that means hedging program is working well. and i'm just very proud of our people. i think they've done a great job. >> this is a monumental quarter, gary, you're doing an incredible job. your industry though certainly changed. delta just basically i saying we're -- we're not going to cut rates anymore, plow money back to shareholders. you guys have always done than has the rest of the industry finally adopted your model of trying to return profits to shareholders? >> you know, i think they have. i think shareholders are more active and demanded that. and in the end, of course i think that's good for us have sensible competitors. yeah we have very strong competition. i would say, jim, it's the strongest that we've seen in a generation. they've got stronger balance sheets. they've got healthy profit margins. they're running good airlines. they're very tough competitors. and that should make us bitetter.
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i think our people are up for the challenge and i look forward to it. >> one thing, i know you don't use hyperbole, customer demand your term, remains strong. this is important. you have texas roots. even with oil going down your business, the actual customer demand, is just excellent. >> it is jim. you know i admit, it's unnerving to see energy prices drop so fast so quickly. but our energy markets in texas are holding up very very well in something that we're watching very closely. our short haul markets which could be impacted by the dramatic change in energy costs are also holding up very well. so, so far, so good. and our goal is to continue to grow our earnings at least at the pace that our capacity's grown. >> mr. kelly, you say unnerving, obviously many people would share that perspective in terms
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of that fall in prices. what are your expectations if you can give me a sense? i mean we have seen this kind of scenario before for texas, it's many years ago. do you expect if oil stays around this level that there will start to be a fall-off in some of those roots that you just mentioned? >> if oil stays where it is, there has to be -- things have to change. so we're already seeing drilling rigs cut back. we're seeing job you know jobs being cut. so far, that's not being manifested in our travel demand. i think on a net basis, though you've got consumers that have a lot of cash in their pockets and they will likely be traveling more than they would have. so how all of that nets out is anybody's guess. my best guess that that nets out system wide for us in a big positive. of course, it's much much lower, you know input cost for
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us. >> right. >> other thing i point out to y'all, because we're a low-cost producer and we -- all of our competitors and we essentially pay the same amount for jet fuel it is a significant competitive advantage for us to have lower energy prices because it enhances rest of our cost structure. >> really quickly, gary from a consumer standpoint people are curious do they see any fare relief as some hedges come off in the industry absorbs the lower cost? >> well the problem is i just -- you all understand i can't talk about our pricing in the future i wouldn't want to do that for competitive reasons or legal reasons. what i will tell you is that we are america's low fare leader and we're going to work very hard to keep our costs low so that we can keep our fares low. at the same time, i've already shared with y'all, we want to continue to grow our revenues and produce strong returns for our shareholders and our
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employees. so we'll work hard to keep all of our constituents happy. >> a tough one in that business. gary, thank you so much. gary kelly, southwest airlines. good story. really good story. people have to recognize, historically the justice department does not allow companies to get into a room and do pricing. when he says he can't talk pricing he can't signal leadership. he's not dodging. he doesn't want to get prosecuted. he's really unbelievably good is he not? they never lost money. >> $30 billion market value, that company. >> worth every penny. by the way, southwest, very well hedged. american, like no hedges. united continental lost money in fuel. didn't matter stocks up anyway. this is domestic strength. and i thought his texas comments were on point, which is that certainly no weakness yet. should they have been seeing weakness already? >> i don't know. i think a little.
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>> a great operator. boy, some people are impressive. >> cramer's "mad dash," opening bell in a moment. a look at premarket on this day when the ecb makes their move. more on that in a minute as "squawk on the street" continues. being a keen observer of the world has gotten you far but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running. 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
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♪ ♪ welcome back. time for "mad dash." 6:30 before the opening bell. kinder morgan. >> a man, rick kinder smarter than you and smarter than me. his style of mlp into a regular company, now a lot of debt
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capabilities, low cost financing, he is the first guy to take advantage of the other problems in the patch, bought harld ha harold hahmm's company. >> private company. >> infrastructure company. right. and this was a brilliant acquisition. so you say to yourself okay why is it going down? because rich is stepping down from ceo. he's going to be chairman not executive chairman help says he won't leave, he won't lose his stock. my favorite line from the conference call i urge everyone to do explains economics of oil, i plan to die with my boots on. in other words, not going anywhere anywhere. stop fretting, start buying. he's got the sensitivity. look they did their budgeting at 70. but at $50, wti, what he's using 320 for nat gas, he's got ahujs 654 million in excess capital top of the --
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>> are they going to buy more stuff. >> buy, buy, buy. buy everything distressed that's going to be thrown up that's what they're going to done he had the brilliance -- he didn't see the oil price going down using $70 budget but the capital structure makes him number one acquirer of everybody else that will go belly up. this is the company. sensitive to oil. they have co2, but you go -- please read the call rich kinder speaks english, which i love. it's my first language. >> it can be a beautiful language, too. >> it works for me. >> many words mean the same thing. >> i didn't get to mention sandisk, the opposite of kinder morgan. >> we'll do it around the bell. >> customers count to like their product, the takeaway. one customer. >> you speak english, too. >> one customer. when you hear one customer and don't mention the name of the customer, guess who that is? i won't mention him either you get in trouble mentioning apple. >> i won't either. we'll head to the opening bell.
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keep an eye on eurodollar. sara eisen is. >> she retweeted me at 3:00 a.m. >> 1.14.
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ecb president mario draghi continues to make headlines, addressing greece and potential for asset bubble. steve liesman back at hq watching that. >> focus on that greece portion there. european central bank president mario draghi saying there are no special rules for greece for the european central bank to buy those greek bonds but existing rules that they have to have a program in place what's important here, there are issues with the greek elections coming up that we'll hear from michelle caruso-cabrera from athens today about the issue of whether or not they want to stay with those programs. if they don't stay with them the european central bank will not be in there buying bonds what mario draghi is saying. back to you for the opening bell. >> steve liesman, thank you very much for than we are awaiting opening bell. ecb the headline today but secondary acts. verizon earnings amex ebay you mentioned sandisk quarter. and a lot of analysts coverage. ge with a buy at ubs, 3m same
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story. >> merrill lynch slashes everything infrastructure. [ bell ringing ] >> a lot of this is energy infrastructure, which we know is grinding to a halt in canada and some parts of the united states. >> there's the opening bell and s&p at the top of the screen. here at big board this morning, low-cost airliner gol. and nasdaq world economic forum annual meeting where joe, becky, andrew continue to deliver the guests. >> jamie dimon interview yesterday where he basically said listen you know what? the regulators are doing the job. >> walked it back. >> walked it back. >> rolled back, walked back. >> i thought he did a very nice job, actually. >> look -- >> pretty strong. >> is he right? i mean to you ever pick up the paper and not see there's some new entity? they ought to form an entity
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anti-bank entity every state it gives money and they throw things at banks. banks did things wrong. >> they certainly did. >> they did. nobody went to jail. everybody kind of did well. >> nobody went to jail. >> where you go to when you do things. >> it's not just banks. aig, nobody went to jail. >> no they did great. >> good bred at the open you mentioned ten-year which swung. >> oh boy. >> we were at 1.92. now 1. 8. when will we know the treeue reaction to the move. >> the markets are so thin. it's scary to watch treasuries. i used to trade treasuries 200 million. feels look a 200 million swing. what happened to the market? no one positioned? >> i don't know. you've got the yields back down here, as you point out. yields, spain, italy falling rather -- >> did you see ireland? >> -- dramatically. euro falling against the dollar
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strongly. 1.145. >> i went to ireland to buy property three years ago, the rates are so high, euro so high, i said forget about. i'll do something over memorial day. >> come back to corzine trade. hold on. wow! >> great trade. >> sometimes you -- >> he didn't figure out the other stuff but the basic trade was good. >> if you can play blackjack for ten straight days you'll make more than the house. >> did want to come back to a story i've been following a long time family dollar it's over. we told you last week it's over. it's officially over. shareholders approved the deal to be acquired by dollar tree. recall last week i reported when dollar general did not effectively respond with anything, in terms of improving its offering to the antitrust authority, saying we'll keep talking to ftc, i declared it over then. shareholders have declared it over.
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74% roughly supporting the dollar tree deal. it is done. i think talking about a late february early march close. i don't think there's any change. dollar general says today's vote is a loss not only for family dollar but consumers across the country. all right, guys. really was a loss could have gone hell or high water and figured something out. >> one segment of retail we know is very strong. there's some other part of retail that make me wonder. i'm sure american express didn't take my comments my charitable trust owns. but that does not seem to be the people who -- american express people don't intersect with dollar tree people. >> right. right. i should add, rick dryling, recall last may, chairman and ceo of dollar general, told us he'd be stepping down within a year. he's now extended. he was going to extend if they did the deal. but now he's actually staying on as chairman and ceo for january 29 2016. >> very good.
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>> another year. >> not ceo-less. >> another year while they look for his replacement. conceivably good news. well- well-regarded the way he's run the company. >> keycorp had good expense control. beth on tonight, doing remarkable job. ohio bank done fantastic thing. and also, by the way, the bank group, david talked about the idea could be mergers in banks. russell gold smith one of my favorite ceos in banking who never had bad loans banker to the stars, city national selling, huge premium. >> 26%. >> a shocker, by the way. i have said over and over again, this man's built a great national bank for wealthy people, stormed new york fantastic job. he has been so pro-shareholder, $74 yesterday.
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$93 today. where else are you making that kind of money. >> wow. >> where else are you making that money? >> between that and kinder purchase two biggest m&a moves which has gotten out to a slow start. >> sure has. shrink to grow ebay it's going higher okay. you get this city national deal where he's becoming -- you know canadians are solvent, though currency's weak. kelly evans, story about that. >> yeah yesterday in particular. >> another place you've got to go prince edward island went there to buy land. they didn't want americans buying beachfront property. >> coming to your town soon jim cramer looking for land. >> when you're not allowed to own stock, what do you do? >> right. >> take stock in land. >> i've got a bridge not far from here. >> if it's a toll bridge. >> no it's a nice bridge. built in 1800s, famous. >> toll bridges in pennsylvania a lot of money in that fame. >> talked to gary kelly at southwest. alaska air with earnings record high today.
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>> another unbelievable operator. that stock is another one that is just -- if you look at that chart, is this really an airline? isn't this what a tech company's supposed to look like? gary kelly, can't say enough good about him. am i in praise of an executive? absolutely. just pointblank saying gary kelly's the best in the industry. doug parker pretty good executive, too, american air, could be good. >> forget to mention travelers but we should, 307, above 254, dropping catastrophic claims, higher premiums. >> jay fischman this stock downgraded several times. really, several times in the last quarter. he's monster, he's so good. those with travelers, your premium never goes down. he owns certain businesses. and when people started texting too much and driving, and death rate went up fatality rate went up, whoa backs away from that.
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small business start creating more small business he's your small business insurance person. i own a little restaurant. you -- it's like hey, let's get a bunch of insurers -- no travelers. who else writes? travelers. travelers. >> wow. >> what a business bushman has. great investor. never bought bad stuff. praising here jay fischman. >> two-year gain of almost 40%. >> monster. big buyback. take a look how much he's bought in. it's quiet, he's not promotional, i have to promote him. someone has to do the job. >> someone who doesn't need promotion, carl icahn. gannett shares up less than 2%, after he filed to try to tap two nominees join the board of directors. his focus, as it was and is at ebay govern of the split-off, seemingly very much focused on trying to make sure that they
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have a lack after defenses in place, if you will to preclude possibility of consolidation in their various industries. in a letter to their ceo over at gannett, he makes that clear, does mr. icahn. and gannett responds you're getting ahead of us, aren't you here? after all, we haven't decided what the governance provisions are going to be for the split-off companies. their ceo also going on to say, calling his campaign overreaching in advance office his agenda will not deter the board continuing to serve the interest of all of our shareholders. note his new focus, i believe he'll be a guest on the fast money halftime show with scott wapner. here what mr. icahn has to say specifically help owns 6.6% of the stock. back in august, beat him to the punch, potentially wage a fight to get them to split the company but announced they were
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splitting, and his filing hit afterwards. >> wow. everywhere. he's everywhere you want to be. >> he didn't have the greatest 2014, for the first time in a while. remember, energy. he had some energy in his portfolio. transoceans and some of those names. >> speaking of '14 union pacific started 114, it's now 118, going higher. >> much higher? much higher? okay. >> domestic. >> google back to 525. >> google hasn't fallen yet in price. diesel is about to fall dramatically. it's lagged the price of regular fuel. and now union pacific's going to plow that back in. you want to buy that stock. >> get to bob pisani see what's moving on the floor. >> mixed open for the u.s. stock market. but of course, the story is the ecb fired that big bazooka, all you call it a trillion euro program, and implied open-ended there i don't know what more anybody could ask for. look at european stock markets. germany, at a new high by the way, moved to upside on an
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intraday basis. jumped around but modestly on the upside. i don't think you can judge it by looking at stocks though. if the goal lower bond yields and weaker euro it's got to be a success so far. eurodollar the euro plunged against the dollar here. we've got a ten-year low for that. . up the euro versus the dollar the a ten-year low you'll see. the big thing is, just on that the program's a success so far. there you see, look at the plunge in euro against the dollar here. u.s. futures up slightly going into the announcement. a lot of noise. we're still up fractionally. sectors that are up techs, industrials, consumer discretionary stocks are up. material stocks are on the upside. there's your leadership, growth areas for the u.s. economy. earnings are starting in big way today. bank earnings in particular. regionals, bb&t huntington bank corp, did fairly well. they've struggled with mediocre loan growth lower yields net
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down. jim, talking about city national, here's another big regional bank that's done really well signature bank. look at some of the numbers they put up. loan growth of 32%, deposit growth of 32%. loan growth 3% 4% for most of the big regional banks. earnings up 24%. few banks putting up exceptional numbers, most on the small side. the stock's up 1.5%. bigger banks all trading modestly on the upside this morning as well. bank of america, citi jpmorgan u.s. bancorp trading up. transports having a great day. transports up over 120 points. big thing, off of their highs. but the big thing here is the airlines. hope you saw southwest ceo on our air, right here just a few moments ago. but united continental announced they terminated all fuel hedges. they had a loss on remaining ones. remember, delta, the other day, said they would have had 7% more savings if they didn't have a
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fuel hedge. fuel hedges really becoming a big discussion of among the earnings here. finally want to note, we haven't talked about ipos in a while, but big tech ipo, interested to see what's going to happen. box as opposed to price, big cloud-based storage company, first tech deal of the year 12.5 million, 11-13, the price talk. good news good news big space, hot space, rapid growth. but remember there's lots of competition. microsoft, google, amazon and you've got no profitability. in fact the company made a point of saying we do not expect to be profitable for some time. still, a lot of the other stories in the enterprise space have done well recently. we have had zen desk and hub spot doing well. if the deal goes well, expect to see drop box and others coming soon. right now the dow is flat although transports continuing to have a very good day. back to you.
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>> thanks mr. pisani. want to move back to telecom. a lot of different things going on including earnings this morning from verizon. if you missed it the numbers, let's call it okay. ads were not bad, 2 million, ahead of consensus. some concern about ebitda margins which came in at 42%, lot of analysts looking for 43.543.8%. they did take cap x up at verizon. you can see stock's down over 1%. actually let's call it about 1.7% right now. the call is going on as we speak. the revenue number not bad. and again, it was addition of new subscribers better but a little concern around ebitda margins. those, though, who say, listen you know at this point, they're trending in the right way, cap x seen as a good sign you have this overhang of the spectrum auction and that's kind of the case for a lot of different
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telecommunications companies right now, investors are trying to ascertain what may have happened in that huge auction we've been talking about, that will end now, let's call it any day within the next week or so. they're at $45 billion, roughly. a lot of people trying to figure out did at&t spend more than we thought they would have? did verizon spend less than we thought going? some people noted at&t in a.k. as i mentioned to new borrowing. citi's probable outcomes to give you one of many different reports out there, t-mobile maybe they spent $4 billion. dish they probably bought uplink spectrum only uplink. verizon, they thought maybe spend as much as $15 billion but we'll see. and they had at&t at maybe less than that but again, seems to be argument now that perhaps it's going to be more than that for at&t. and less than that for verizon. all of which could then mean
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that verizon perhaps will still look to fill its spectrum need somewhere else, maybe doing something with dish. again, all of this is speculation. other part of speculation, who else was in that auction? did carlos slim step in at all? love saying his name. carlos slim. got to love saying that name. >> cramer fat, carlos slim. >> excuse me. >> cramer fat, carlos slim. >> no longer of course everybody has relationship with at&t. is there something that could happen there? and figures into speculation around the germans position in t-mobile. my point, once we get results here it's going to clarify certain approaches that investors have to telecom. not to mention this google gambit that involves that we've been reporting that we're hearing about that involves buying capacity from t-mobile and sprint to offer some wireless service to people. the only thing i would point out, probably says how important it is for do toll work mobile
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harder, get people search on mobile and using the google entrance into search on mobile. i don't really think of it as a major effort. >> you don't. >> no not at this point. >> played up as it is a major. >> it is. when they buy a wireless carrier or step in and buy an enormous amount of spectrum i will believe it as a major effort. but we are starting to see this idea of, once again, convergence. cable companies buy wireless companies at some point. cable companies, domestic companies, again, america first, cable companies uniquely domestic. how do they do in this environment? all of this talk about cord cutting, go higher. it's domestic focus on domestic. >> if i hadn't mentioned of course at&t did increase or put in a new borrowing facility with number of banks, over $10 billion, again lending. it could be for directv but lending speculation that they spent more on the auctions.
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let's get to rick santelli at the cme group in chicago. rick? >> thank you, david. lots of volatility. what are traders are here looking at? something i haven't heard anywhere else, and i agree, they're trying to handicap mario draghi and the ecb's wiggle room. it is chicago. you don't think wiggly field. here's the deal. if you have a lot of other programs liesman pointed out being molded into one big program, it's really hard to differentiate exactly how much additional. one thing nobody's talking about, program begins in march. we had a ruling that gave the wing and a nod. and the big court's supposed to hear three to five months after that. well march gives some time to move up that time line should the courts decide to also gives merkel a chance to make a comment, should she desire. these are thing they're whispering about on the floor. two-day of tens. if you were buying treasuries buying sovereigns for lower rates, a home run. a lot of guys took money off the
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table. we're up to 195 at one point but you can see we're lower. now, rubber band today working. we're only several basis points from unchanged on treasuries. two-day of bund remember it got up to 58 almost highest yield that we've seen all year. and now back at 44. year-to-date, really shows you how the market leading up was liquidation driven how the market for months in front of qe driven. look at spread between the two, i've told you many times i like to look at 1.3507 look for the spread to widen out. takes incentive of continued buying potentially year-to-date of the dax, dax all-time highs. watch the lesser equities like the cac and italian stock market, that's where most of the action could be. year to date of the euro listen, about weakening their currency. to that end and the equity side they've been successful. we did have a bounce close to
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1.16, didn't last long. back to you. >> we'll watch that closely. as you said ten-year back to 1.85. union pacific as ceo, jack koraleski a lift on quarterly earnings. early gains are slipping. dow down about 50 points. back in a moment. in my world, wall isn't a street... return on investment isn't the only return i'm looking forward to. for some every dollar is earned with sweat, sacrifice, courage.
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i have our personal perspective, and that's helped influence the culture of the company, but we also have patient advocates at company. and even our key business decisions, i asked my team think about it. if you or a person living with the disease, if you were a parent is this new technology, is this something you'd be excited about, even with the risks, going into the clinic? and that's kind of the fundamental basis of who we are. >> what a piece of sound from last night's "mad money." gentleman, his daughter was on
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set, has another child with. might have seen "extreme measures" with harrison ford a chronicle of his life. he's done everything he can. the small pharma companyize like trying to solve an illness his kids have, big guys don't move fast enough. stock getting hit. biotechs getting hit. biomarin did a big deal that's an orphan drug play and they did a deal it went through syndicate bid. there's some people doing great things who wereare executives and making money for shareholders. >> great coverage on the sector. >> thank you. >> "stop trading" in a moment. dow down 25.
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time for cramer and "stop trading." >> i think tech semis have been o'daywe okay other part of data storage. f5 a disaster today, this is japan. and xilinx used to be one of the most consistent companies in the industry hideous numbers. be aware that there's undercurrent of communication software and also communications hardware and also data storage hardware that is -- you call it
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into question. don't hide in tech. know your stuff. >> whats on "mad." key with the monster quarter, united reynolds company did well. harmon acquisition. cyprus semi tjrodgers. i can't wait until tonight. never have four guests. >> a big show. >> wow. see you tonight. >> waking up at 3:00 to learn these things. >> when we come back more on ecb, unprecedented stimulus plan and head of union pacific. 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
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because wherever you go, you'll find us doing everything we can, so you can.
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good morning, welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, simon hobbs, david faber at new york stock exchange. we get quantitative out of the european central bank. moves not just equities was currencies and ten-year where the yield all over the map. oil down a percent to 47.27. >> the road map, reaction to
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today's ecb decision from around the globe. live reports for you from here in the united states from athens coming up. >> plus airlines are soaring today, as fuel costs keep falling. a lot of stocks reporting, of course, southwest, alaskan, we'll have analysis. >> box set to price its ipo tonight. how does box keep its customers and generate its revenue? inside box. >> later, union pacific a big rise in profit as demand continues to power the rail sector. the ceo of union pacific will join us live for a first on cnbc interview later on. >> let's get more on today's action out of the ecb. historic day announcing a bond-buying program to try to revive the eurozone economy, get inflation up. coverage around the globe. steve liesman is back at hq. chief international reporter michelle caruso-cabrera live in athens. steve, let's start with you. judging by the euro's reaction weakening significantly, draghi
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got the desired effect. i don't know if we have steve liesman. let's check on the euro because this is the ultimate key about whether the -- how the markets are judging this 60 billion per euro monthly bond purchase program, equate to almost more than 1 trillion euros. 1 1.1469 weaker by 1%. after weakening 15% in the past year, in anticipation of this announcement. >> i'll go with you on this. it seems like there's something of a surprise here when i look at the euro. if any market was going to be tuned to what the ecb was going to do anticipate it you think the euro. it looks like it looks a bit surprised here. let's talk about what they did. 60 billion euros, talk about 50 billion yesterday from news port. this would be adding sovereign bonds to the portfolio. includes other ecb purchases that are made there is risk sharing, nod to the germans who want the national banks to
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effectively take on most of the risk of their national sovereign bonds. greece can play too, but some special rules that deals with countries like greece or those countries in countries in eu imf. draghi talked about how long the program will be in place, take a listen. >> they are intended to be carried out until end september 2016. and will in any case be conducted until we see a sustained adjustment in the path of inflation. >> and the key right there is that there's an open ended nature to. what isi said ecb has delivered an aggressive and open ended program that meets our qe-2.5 standard and comes close to talking the u.s. federal reserve's qe-3. bank of tokyo, it's hard not to see this as a positive but lingering doubts.
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is it enough? are they riding to the rescue, breaking foundation of the financial system? here's the euro again, sara talking about, it was kind of even for a while, and then it had that plunge around 9:00 this morning, down to 1.14. that's 1.5 cents right there, sara. it's something worth watching. you saw movement also in european interest rates. u.s. interest rates initially, simon, stock market liked it and then seemed to sell off in reaction. >> but in fairness we've had a run-up on all of the trades. fresh record lows on spanish and italian debt. >> great point. >> love the point that you made about targeting inflation. we'll come back to that in a moment. for now, thank you very much steve liesman, back at hq. let's get analysis now. capital's ahead of european rate joining us and chief investment strategist mark lashiny. financial markets get numbers in their heads, and in our head
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last year was put the idea that they should increase the balance sheet by a trillion euros, for so many months we went back and forth, last year as to whether they would achieve that. now they tell us they're going to buy 60 billion a month for 18 months. hey, it's 1 trillion they hit the mark and that's why the markets react this way, mark. >> i agree with you, simon. i think the risk going into today's meeting was that the ecb and mr. draghi would disappoint because we've seen plenty of evidence of course in terms of the precedence of previous meetings that didn't come out with qe it was more talk than action. the worry, i think for us, certainly they would come out and have another timid response relative to expectations that were built into qe that i think were reflected into the euro already. and instead, not only didn't disappoint, i think they came out with a package that collectively between its size duration and quasi open ended nature of it is i think helping
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to deteriorate the euro a plus for many of the peripheral countries and good for european risk assets. >> let me pick that up with peter. steve liesman, very importantly, raised the -- in the key sentence they make here peter, they are going to pursue this asset purchase or these asset purchases and still -- until there's a sustained improvement in the path of inflation towards 2% target. now, if you believe that qe doesn't work and you believe that they can't actually push inflation higher as many people do believe, they are now fully in on this with their colors nailed to their mask peter, for a very long time potentially even for the disbelievers here. >> well yes, definitely. i mean as we just heard, one of the things that comes out of this is that the purchases are going to be much bigger, the size of the balance sheet after they are done or you know during the operation, is most likely going to be significantly bigger than the 3 trillion
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target they've been putting out. as you rightly point out, given the targeted or link it very closely to inflation, inflation expectations, there's every opportunity for them they've left the door open very wide to increase their purchases even further. so, that's i think, forward the expectation of the size of their operation now, must be bigger than just on paper. >> mark, immediate impact of the move is on the currency. look at it from the u.s. perspective for a moment. stronger u.s. dollar starting to hurt corporate america. you hear it from every single company that does business overseas and there's a lot more with big consumer names reporting in the coming weeks. dozen this complicate the -- does that mean that they perhaps will stay on hold for the rest of the year, because if they do go the other way and raise rates, according to plan can you imagine what that's going to do to the dollar now that the
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euro's sinking on the news. >> i agree, a nontrivial chance this helps delay the federal reserve's lift-off date twroord interest rates if the dollar continues to strengthen vis-a-vis trade weighted basket of alternatives. that said we know exports, a percentage of u.s. gdp, about 15%, of which 15% go to europe. so, it's a relatively small part of our overall gdp affected by the dollar/euro cross, but that said if the de facto effect still is towards seeing the dollar strengthen which we've seen going to work counterproductively to multinational profits we know in addition to de facto tighten tightening, in addition temper inflation in the u.s. which we know part of the dual mandate the fed is attempting to resurrect. >> argue the reason the fed is nailing its colors to the mask going for rate rises, walk back in that later which is monetary
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easing. leave that to one side. what do i buy now? what assets -- this is hundreds of billions of dollars, trillions of dollars, that are going to be unleashed into europe and potentially flood across the world in addition to what the bank of japan is doing, what assets peter, do i buy now? what is this not already factored? do i buy european equities? can bonds go higher and if so which side of the atlantic? >> well look i mean first of all, start here in europe biggest implication in the bond market you'd see everything that has spread on it effectively you two things that are going on one depressing core rates, risk-free rates even further. and ultimately drive people further out the credit spectrum. secondly in the peripheral space, that's going to help we've seen that in the strong rally of the bond spreads are still coming in which is very strong statement. but it should ultimately also help all other sorts of assets.
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at the end of the day, lower discount rates, it has pushed up inflation expectations already and help assets. you go across the board, that's more tricky. obviously that depends what kind of assets there respect you heard there might be other elements, for instance in the u.s. regards to dollar that's more tricky. clearest implication for financial assets in europe no doubt. >> right. mark, what has happened this year on equity markets is that europe rally strongly, up 5% and u.s. equities are down. what happens now? will this market in this country rise because of what the european central bank is doing? >> i think ultimately it will, simon. i think it will rise on its own merit. i think a lot of cross current early in the year that affected u.s.-based equities. valuations full in the u.s. investors more demanding of perfect news. at the end of the day, if it helps inflate risk assets in europe and help the european economy, though i think the
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economic efficacy is in doubt, that will pull forward u.s. equities awell. that said i hold the belief european equities are very cheap on valuation basis, and the fact that they finally started to pull ahead of the u.s. equity market here year-to-date is encouraging and as well, we have conviction that they'll put in a better performance over 2015 than the u.s. entity market. yes i i inty will pull u.s. equities doubt. >> an historic day. thank you for joining us mark peter. >> thank you. >> let's head to athens. there was a big questioning whether the ecb would be buying greek bonds three days before the country's election. michelle caruso-cabrera is there live with latest on the snap election and reaction to the ecb. michelle? >> sara yeah. the answer is no not at first. apologize for the loud music. the communist party is holding a rally beneath us. quantitative easing for everyone
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in the eurozone beginning in march except greece. draghi said, during the conference, that for technical reasons buying of greek sovereign bonds will not be until july. two facts, first of all, remember the ecb has already bought greek bonds, in large quantity, 27 billion euros worth weech built we've built a wall graphic how much greece owes to whom. nearly 350 billion euros of debt. largest amount of debt 200 billion to other governments. second largest amount to ecb 27 billion euros of bonds when jean claude trichet ran the bank. early days 2010 2011 he did that to bring greek yields down to re-enter the capital markets than didn't happen. but those still remain with the ecb. what's the second fact that you need to know? big repayments to the ecb from
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greece coming in june and july. we built you a calendar. a lot of repayments but the ecb supposed to get repaid 3.5 billion in july and another 3 billion euros in august. let's add another fact. the next prime minister of greece during his campaign, he's campaigned they shouldn't pay the ecb back that soon. they want some kind of forgiveness or extension of maturities. one of his advisers that i spoke with who is a marxist, admitted marxist, says ecb should do that it's the right thing to done i said to him, look if there's anybody in the situation who can really put the screws to greece and i know i don't speak delicately, the ecb, they can threaten to not fund your banks if you bring them to the wire. and he said he done doesn't think they'd ever do that. >> it's not going to happen because the door will be open for the next country to exit the markets are going to
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evaluate exit a risk for italy, for spain, for portugal for other countries and this is going to create disaster. so, we are not going to have -- >> that's the leverage that the greek future potential government has they put the skrees back ss screws back to ecb, they'll cave, they don't want other countries to see their rates rise. it's going to be interesting. >> i've been trying to listen to what's coming from below. can you e-mail what they play at a communist party? what is it? keep the red flag flying high remix? how do you dance at a communist party? >> earlier playing an anti-vietnam war in vietnam song back from the '60s and '70s, apparently according to our local translator and consultant. i'll find out what the song is too. >> thank you. viewers love your apology on
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behalf of the party. thank you so much. michelle caruso-cabrera in greece. area line stocks soaring and united and southwest jumping after quarterly results. fuel costs continue to drop how should you be playing the airlines. we'll talk about that when "squawk on the street" comes right back. your old 401k is rolled over into a td ameritrade ira. yes! so no set up fees! wooh! yeah! so i get help from rollover consultants? wooh! yes! no rollover hassle. great.
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♪ ladies and gentlemen ladies and gentlemen an event♪
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>> welcome back to "squawk on the street." watching shares of lands' end, stock plummeting, down 23%, after the apparel seller said fourth quarter profits and sales come in low expectations. at sears, stores shares you can see, down 24%. as for sears shares it's also moving lower as well down by 1.5% so far on the day's trade. back over to you. >> dom, thank you so much. in the wake of deflate gate bill belichick addressed the media, saying he has no explanation for what happened in conference championship. take a listen. >> no knowledge whatsoever of this situation until monday morning, i want to know more about the process in the last three days than i knew or talked about it in the last 40 years i've coached in this league. i had no knowledge of the various steps involved in the
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game balls and the process that went through that happened between when they were prepared and went to the officials and went to the game. so i've learned a lot about that. >> learned a lot about that. joined by nbc sports dave brigg. good morning. >> good to on on. >> the early take is belichick is throwing brady under the bus, you agree? >> it sure felt that way. a couple of things, i'm covering the patriots every practice every game four a four-year span, a couple of things. bell belichick controls every single aspect of that patriots franchise, nothing happens without his knowledge, his instruct. number two, bill belichick knows everything about every aspect of football he can tell you what he ate at lunch ten years ago before he played the jets in game three of the season. for him to say he had no knowledge of the various steps
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vovled in the game balls that made me fall off the chair. did feel like he threw tom brady under the bus, brady's personal preference on the footballs something he can talk about in better detail. tom brady's press conference moved from tomorrow to today. now that just got exnoengslily more interesting what tom brady has to say about the condition of his footballs. >> dave what do you say to people who argue, no way psi's made the difference in the game. at the same time if they did bend a rule it has to be addressed. what's fair? >> look first off i don't think it had any factor in the game. look at the footballs, they were taken away at halftime. tom brady threw an interception in the first half some felt that was a close football game. took away footballs, put in backup ones in the second half. patriots went 28-0 in the second half. brady threw two touchdowns no
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interceptions. i don't think it had any factor in the football game. even the colts said they could have played with beach balls and still beaten us. i agree with that. this business the integrity of the game testimony you are messing with that there's got to be a heavy, heavy price to pay, given their situation with spy gate given what roger goodell tried to do in cleaning up the game ethically. look they knew that they would be hit hard if they ever messed with integrity of the game. if in fact they did, a stiff punishment. >> brady and asked about this on his show earlier in the week i don't respond to this stuff anymore. would you expect his press conference to be much different? >> look you've got to speak to his personal preference about the football that's most important thing. he said back in 2011 on the weei interview, that he does like a slightly deflated football. now he sounded like he said it a
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bit in jest because it was from gronk spiking the football on the ground. brady is very honest open in these situations although i can't imagine that bill belichick already hasn't had an extensive conversation with him about what to say and what not to say. they have meetings before press conferences about what questions they might be asked and how to answer them. i don't know if -- but the patriots do that give them sample questions, sample answers. in this case tom brady lass to come completely clean about the process involved with the football. >> going to be an interesting one to watch. dave thanks so much for coming to the phone on short notice. dave briggs. >> gallup 66 airlines having a great morning. shares of southwest soaring more than 6%, others, united continental, alaska air a boost
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after reporting bullish outlooks for the first quarter, because of lower fuel costs. an hour ago we spoke to the coo of southwest. >> it's unnerving to see energy prices drop so fast so quickly, but our energy marks in texas are holding up very very well in something that we're watching very closely. our short haul markets, which also can be impacted by this dramatic change in energy costs, are also holding up very well. so so far, so good. and our goal is to continue to grow our earnings at least at the pace that our capacity's growing. >> gary kelly, southwest earlier. joining us on the phone is jpmorgan airline analyst, jamie baker. welcome to the program. your sector's on fire at the moment. what are you telling clients? >> you know the general message for clients right now is that they are the ones who are
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pocketing the fuel price savings. frankly, i'm a bit shocked that the market hasn't paid up more dearly. year-to-date performance has been dismal. i think investors fear management will instead squander the savings. but based on what we're learning this week that missed perception is starting to change. >> hang on southwest doubled in value over the last year jamie. are you suggesting it should be far more hand that that the valuation warrants a higher share price? >> well, you know if you look at share price gains that we you know benefitted from in 2014 vast majority of them occurred in response to industry's fundamental, you know rehabilitation, in fact equity performance began to stall as fuel prices started to come down. yes a lot of noise around ebola but look how market caps increased since fuel has come down the market's only putting
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a fraction of value on these fuel cost savings. >> presumably they believe competitive pressures, consumer pressures, i mean, they'll have to drop some fuel surcharges or cut prices. but i think you were saying something else. are you suggesting they might engage in some deal making m&a, when you say they'll squander resources that they have that will be the fear? >> well no i think the fear is that management would deliberately lower ticket prices because of lower input costs. quite frankly, i think that's fantasy. i think that's folly. gary kelly hit the nail on the head today there will be some businesses and consumers directly exposed to energy that could suffer. obviously if you want a cheap fare to russia or africa you're in luck no better time to cash in miles for a free ticket to moscow from dell tap on the other hand u.s. consumers pocketing $180 billion saving as the gas pump. travel is discretionary. when people have more money,
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they travel more. >> we asked gary at what point fares start to reflect the lower fuel costs. he says i can't go there. but what would you expect? what's a reasonable amount of time for fares to respond as some of the oil hedges come off? >> well look you know i think if managements were undisciplined we'd be seeing those types of pressures. and the fact is we're not. you know again, i think, based on the guides this week from alaska, delta, southwest, united, 100% of fuel savings are being retained. it's owners of the stocks reaping the direct benefit. passengers will enjoy indirect benefits such as newer planes on board wi-fi, you know on trays you can recognize, for what the industry couldn't invest in. >> i like airline food. before you go what is the top pick? where would you herd people at the moment. >> focus on american delta united stocks we think, from
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here, despite pretty healthy gains in 2014 those are the ones where outside market trouncing returns are still quite possible. >> good to meet you. jamie baker from jpmorgan on the airlines. next on the program, box's long awaited ipo set to price after the bell finally tonight. but just how does this company that competes with giants like google and microsoft generate its revenues and keep its customers coming in the future? more on that when we come back.
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welcome back to "squawk on the street." jackie deangelis. the department of energy out with weekly report on natural gas, draw of 216 billion cubic feet. prices going down on this, 282, around 290 before the report came out. context on this. this is more than what we saw last time this year it's more than the five-year average as well, but what traders are focusing on is as of last week stocks were 11% higher than they were last year. you all know how brutal the winter was last year so traders looking at forecast for cold for
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the next ten days or so. but still, because there's no talk of a polar vortex because it's not quite as brutal as it was last year these prices are staying under $3. right now, 2.83. back to you. >> thank you very much. in the meantime box shares finally set to price tonight after the bell and of course start trading tomorrow friday. what should investors know about the cloud storage company much hyped by many quarters. cnbc's julia boorstin looks inside the box. good morning, julia. >> good morning, simon. box charges companies monthly fees for its cloud storage sharing collaboration and security tools. since box launched back in 2005 and the ceo was in college, cloud storage has been xlod advertises, google microsoft, drop box which focuses on consumers have moved into box's business. but levy has said what distinguishes box is its work collaboration tools. box has a premium model, basic
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toolg tools are free but over 44,000 companies paying customers, including half of all fortune 500 companies and the company had 32 million registered users. its client list includes general electric, in the process of rolling the product out to 300,000 employees, companies as die ver as proctor & gamble directv, as stra accidentfullyzenaccident astrazeneca and gap. health care, one of its fastest growing sectors, retail, media and entertainment. grew in the first three quarters of last year but was concern is that the cost of the revenue isn't really shrinking. with net losses of 121.5 million, in that same time period, a hair lower than a year-owing
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year-ago period. box defending aggressively -- aggressively on sales and marking for us in custom virgins, verticals investing in the new sales team and new collaboration tool. >> thanks very much. highly anticipated one after much delay, julia boorstin thanks for running us through box. ahead of the ipo. as you can see, stocks climbing higher in the wake of the big ecb decision quantitative easing, dow up almost 70 points. s&p 500 up more than a half percent. nasdaq up a half percent as well. check euro below 115. weakening by more than 1%. one and only art cashin joins us to break it down after the break.
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stocks on the rise across the board, euro is weaker. art cashin at ubs financial services. i cannot remember more telegraphed central bank decision, leaks, reports, anticipation, the hints, even mario draghi, whatever it takes. yet we still look like got a surprise. >> yes, you do. and you had quite a whip saw as different asset classes tried to figure out what the implications why. now it's becoming increasingly evident what they've achieved is a weaker euro but not much else. reliance on ltros is not going to increase bank lending in europe, as far as i can tell. we'll wait and see. i think the u.s. stock market is probably going to revert back to looking at things domestically things like the oil price and whatever.
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it was nice that we had our first three up days in a row since before christmas. >> can i just reframe that very slightly? >> sure. >> he first talked about doing everything to save the euro the week before the london olympics in 2012. this has been a massive run-up that has moved asset prices phenomenally around the world. the fact we've held on to the gains gains is in itself remaskable don't you think. >> we've had qe here japan, japan's on the verge of buying not only more bonds than are issued but in some cases coming close to buying more bonds than are available. globally, you've had a massive push to get assets financial assets anyway higher. but you know i don't think it's going to get into the economy. you're right, it's worked with the asset classes but not the economy. >> that's where efforts to get currencies lower does work into the economy. i mean what we learned today is that we're in the middle of a
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severe currency war. mario draghi firing this latest shot. the number two at goldman sachs talking about it overnight at davos. how does that end? and what are the implications of that kind of heightened risk for equity investors? >> well so far it is a war, but it's being played look a chess match. that laid back sur reason bralcerebral attitude will disappear. someone will get the currency in place to cause pain to somebody else. >> we're already having pain in the u.s. with the stronger dollar. so many different companies. >> we have discomfort we don't have pain. when we get to pain you'll see. >> it's more than that isn't it? if the foreign exchange levels are falling for japan and europe, everything that comes out of the japan and europe is falling in value. that's massive waves of deflation that at the very least are lapping at shores of this country. you can argue the stock market will still ride through, and it's a very strong economy but we should acknowledge that's the
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effect of what's happening. and it's only going to get worse. those waves of deflation will get stronger as the currencies fall. >> you're quite right. these nations had been exporting deflation. but it just hasn't turned into a tsunami yet. when it gets close to that then you're going to see central banks all around the world decide they better get more cooperative. this currency war cannot go well. they never have. >> all right, art cashin we'll leave it there, for today, equity investors are focusing on the positive stimulus factor of all of this quantitative easing. dow up 72 points. art cashin thanks. >> thank you. >> keep your eye on oil. >> and the sports world. not only did belichick make the press conference, but jeff gordon of nascar saying 2015 his final full-time nascar season. jeff gordon, 43 won the daytona 500 three times, number three
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with 93 career wins battled with back spasms in the past and had back therapy. big news if you're interested in nascar sports. over to the cme group and collect in with rick santelli and get the santelli exchange. >> good morning, carl. boy, a fun day on the trading floor. fun denoted by lots of movement some surprises, some nonsurprises. quickly, before i get with my special guest, look where swiss rates are, just to get an idea of what's go on in the world. one-year minus 105 basis points. two years minus 102en minus 1% in threes. 5s minus 70. ten-year minus 20 basis points. a chart of that wow, all i can say. >> if you remember the rule of '72 double your money, minus 1%. if you stayed there yooud lose 100%. that's the rate of decline by
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investing there. >> a lot of themes today. give me your first blush on the ecb and mario draghi did and then let's go back and forth. >> i think the first blush is that he put in inflation target on. he said that we're going to continue to buy euros at 60 billion a month until september 16 or inflation rate gets to 2%. >> wait a minute. wait a minute. they're going to do this until something else happens, which is inflation, i don't know, like us giving up steak until larry summers gives a speech. sorry, what's the correlation? anybody ever proves the correlation? >> no. that's what the market sees too. they're going beyond september '16, keep going until 2% inflation. that's why the market is looking at this as upside surprise. >> now the other dynamic out there that traders don't agree with, but generically it could be correct, they delivered more. i don't know if they delivered more because the 60 billion is wrapped in a package and we
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can't unbrap itwrap it yet. point a. point b, i talk about the carrot they leave you with is what the currency looks at most okay. go backwards. what carrot did they leave? >> they left you with the inflation rate out there. >> open-ended. >> exactly. leaves exit strategy to be more difficult further down the road as well. but to your first point, you're right, 60 billion a month, but it also includes all of the other program as it they had in place. how big are those? no one can answer that question. that's what happens when you have a central bank governed by 19 countries. it's so complicated we can't figure out how much new money's going into the program. it's not a simple answer. >> tell me if you agree with the axiom, the reason open-ended works because the market's going to demand more and it gets its way a lot. but what does that do to the normalization on the backside? >> i agree with you, this program is dictated towards markets, markets get what they want. it's to benefit markets.
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listen to the guests i've heard on the network this morning, it's good for markets. is it going to create jobs inflation? not sure about that but it's going to push markets up. that's why markets get what they want and if that's a nice way of saying you're manipulate markets higher exit strategies manipulations always messy. >> i could never add anything to that. we have to tend there simon hobbs, back to you. >> that's what happens when you surround central bankers with other bankers. rick thank you. shares of union pacific have had a great year and in fact on the rise again today, beating quarterly estimates on the earnings front thanks to surging rail traffic. will the trend continue? the coo of union pacific when "squawk on the street" comes right back.
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♪ ♪ we have a triple-digit gain on the dow. take a look at telecom sector,
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down sharply today. dom chu has more at hq. >> right, far and away the weakest sector in the s&p 500. thank verizon for that. verizon's reporting earnings that match wall street forecasts but pension costs are weighing on its bottom line. results hampered by competitive pressures as well. moving lower, at&t frontier communications and wind stream. but remember sara telecom the smallest sector in the s&p 500 and verizon and at&t dominate the way that the sector trades. back over to you, sara. >> also the verizon news weighing on the dow as well. shares of union pacific are higher up nearly 4% this morning, after the rail operator announced fourth quarter profits jumped 22% from last year. joining us here first on cnbc union pacific's chairman and ceo, jack koraleski. good to have you on "squawk on the street" again, jack. >> good morning, sara. good to be with you again. so forget central bankers mario draghi, i want to hear from you.
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your outlook on the real economy. you move everything from autos to lumber. what's the outlook for this year in the u.s.? >> you know our outlook is pretty favorable. we see the economy continuing kind of a nice moderate growth pattern that we saw at the end of 2014. so automobile business, if you go back in fourth quarter, auto sales were strong. construction products like stone, sand, gravel cement lumber up 10%, fundamental building blocks of the economy. and it's also consumer confidence. we feel good about what's happening. >> one of the things you point out in the release is that one of the biggest uncertainties is the outlook for energy markets. talk about how the dramatic plunge in oil prices has helped or hurt you, because as i understand it oil has been a big source of growth for the rail industry yet good to have lower fuel surcharges. >> yeah, overall when you look at what's happening in the
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energy markets today a lot of people concerned about the sudden drop. and i guess the question that fundamentally is kind of on our minds, how low will it go how long will it stay there, will it stay there long enough to significantly change people's behavior? from our perspective, if the consumers have discretionary spending brought by the lower gasoline prices and things like that, they're building houses buying automobiles, furniture, all of those things sweet spots for our franchise. it's a win forrous either way. lower fuel prices a help overall. >> i get that. have you seen change in behavior in the energy companies, lower capital spending lower plans for production? starting to feel the impact there? >> you know at this point in time, we've seen the announcements, but if you look for instance fourth quarter results, up 35%, even oil business up 7% we've been one of the railroads trailing oil year-over-year.
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we haven't seen it in our business model yet but we have been watching announcements. we're going to play it carefully and work with our customers to take advantage of every opportunity that we have. >> talk a little bit about your intermodal business. a lot of the analysts are looking for you to gain market share, you and your competitors out there in rail especially with what we've been seeing going on with truckers the short supply of truckers and the sort of tightening market there and how you are actually taking some of the on-line shipments away from the trucking industry. do you expect that to continue this year? >> you know we do. . we just completed i think our sixth record year of intermodal growth on the domestic side. right now we have this little problem on the west coast impacting our international business negatively but our domestic business was quite strong, up 10% in the fourth quarter. it's the whole value proposition of being able to take the fuel efficiency and effectiveness of rail against trucks and actually you partner the trucks with the
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rail and the intermodal world. you have the truck that picks up freight within 250 mile radius bring it to rail head we take it long haul thousands of miles to another rail head where they pick it up and deliver it. you've got the best of both worlds and the fuel efficiency and you also have the environmental friendliness of rail making the long haul. we think that will continue to spur growth. >> you mentioned the difficulty that you're having with the sports on the west coast. longer term what about the panama canal and the upgrade that's coming there and this view that it will allow asian importers or exporters to more readily access the northeast of the country, without so much over ground rail activity? what are you saying to investors about that longer term? >> you know, simon we've spent a lot of time studying the panama canal. we saw the shift that took place in 2002 where some of the business off the west coast moved to the gulf coast and the
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east. we think the bulk of that business has moved. there might be incremental, 1, 2, 3% more that might shift when the canal opens and is established, but we're really not afraid of that competition. we think what's gone is gone and we think the stronger value proposition when you look at west coast ports, partnered with great rail service, that's our competitive advantage and we'll -- we will fight hard and win in that world. >> jack thanks for joining us on earnings day as i mentioned the stock is up and by the way, the broader market up 120 points on the dow. jack is the ceo of union pacific. when we come back new york has been the center of the luxury rental universe. that could be changing. chicago is giving nyc a run for its money. we'll talk more about that in just a moment.
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the luxury rental market is not just for new york city anymore. the windy city is getting in on the action. diana olick is live in chicago with more on that story. good morning, diana. >> good morning, carl. we're coming to you from 500 lakeshore drive, a brand new luxury rental apartment building owned by the developer behind hudson yards in new york.
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related just broke chicago records, selling another of its new properties just a stone's throw from here, 500 unit luxury rental building for $328 million. now the rents there, range from 1700 a month for a studio to 12,000 a month for a penthouse. i know that's cheap by new york standards, right, but it says something very important about what's going on in this market. >> i think it talks most to how chicago is one of the great american cities and whereas in the past maybe hasn't been as recognized as much by the very high-end purchaser, today the people that drive investment across the country are recognizing the viability of the city. >> reporter: now related is embarking on yet another tower that's right down will you can't see it but it's on the lot next door. both condos and rental apartments. rents could be as high as $15,000 a month. why now? jobs. jobs are moving downtown.
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witness the founders of groupon bought the wrigley building and are moving tech start-ups in motorola at the merchandise mart. and google with new space downtown. while the city overall lost population in the last decade its core downtown head count was the fastest growing in the nation, fueled by millennials who like to rent and demand all the top amenities. now there is not a lot of international interest here at least compared to new york or california, miami. but that may be about to change. there is a brand new chinese development slotteded to start -- slated to start in 2016 that's going to have close to 300 condominiums and expect a lot of chinese demand there. back to you, sara. >> as long as it can brave the cold windy winters of chicago. thanks very much. diana olick. over to jon fortt with a look at what is coming up next on "squawk alley" with the dow up 150 points jon. >> a lot for you, sara. we've got microsoft, the writer for wired who got the first look
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