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tv   Squawk on the Street  CNBC  January 11, 2016 9:00am-11:01am EST

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merger, if that one wins, the current conference is used as the current indicator. >> what was carolina? do you know? what the hell are they. >> we're out of time. >> nfc now. >> join us tomorrow. right now, time for "squawk on the street." ♪ >> remembering david bowie this morning, dead at the age of 69. what a loss. good monday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. we set the table on a busy week, earnings season unofficially kicking off. alcoa tonight, futures with a modest gain after the dow loses 1100 points last week. europe's hanging on to gains at the open despite shanghai down 5%. inflation data not good, mostly in line. oil is a big talker today, down
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for the sixth day in a row. our road map begins with china's big drop impacting markets around the world. we'll dig in on what to expect next. >> and another big pharmaceutical deal, shire acquiring baxalta. could some of macy's massive real estate portfolio be up for grabs. starboard making a push. futures are higher following a week in which the s&p lost $1 trillion in market value. the rise this morning coming despite a 5% drop in china overnight. oil prices continue to decline. morgan stanley saying it sees a way for brent to fall to 20. the nasdaq also kicking off the year with a one-week drop of 7%. the dow and s&p each down 6%. jim, a lot of calls today, jpmorgan saying exactly what you've been saying, sell into rallies. >> yeah. the jpmorgan -- i agree with
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that. here's the issue. the futures are up because europe turned up. why did europe turn up? euro went down. the pajama traders look at europe and start buying us. they don't think about the idea that the reason they're going up is because our dollar is getting stronger, which is why oil are go down. china down 5%, oil down. these are the tells of what our market needs. the people who do the algorithm trading here and in various basements throughout the northeast like to look at oil and china and sell the market. if you want to love the market and sell on an bounce, look at friday at 3.55. that was last friday t happened already. >> it happened already. >> yeah. the opportunity. now what you are basing it on? oil's down, copper's down, euro's down, china down.
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what is that hook? apple, down 4% to 6% on the iphone? give me something. give me a reason to go earth, wind and fire. >> at some point valuation would come through. >> 17 times s&p. >> all right. broadly speaking. but it's not as though there's not many stocks trading below that and might present some value. might in the view of potential holders given that the u.s. economy added 292,000 jobs on friday, we don't seem to be going into this recession that everybody seems to want to talk about as a real possibility. and that china, while it's important, it's not a consumer led economy. maybe we're making too much of it. by the way, i've talked to a million people, none of them understand what's going on in china. >> i think china is in recession. i think we'll pass their growth. >> you think china is in recession? >> baltic freight at 400.
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whatever they're doing, maybe there's a consumer pick up. i got starbucks having good numbers over there. but i think that what we're clearly involved in here is a changing of the guard. >> what happened to you this weekend? where did you go? did you go to a very dark place. >> it's went to "star wars." bob iger, i had do that for you. sold out on saturday. i'm tired of the complaining. i went to see it. >> "star wars"? >> yeah. >> still the number one movie. 1.7 billion now globally. >> yeah. i bought some merchandise, too. bob, we're all cool now. i watched espn. the whole package. >> it's going to take more than that. >> i did it all. >> what do i have to do? >> i don't know. >> crawl. crawl across razor blades from here to los angeles. >> to get -- to get back in? >> yeah. >> geez. >> that's what it's going to take. >> i agree with david, macy's is too cheap. we're totally algorithmically
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grabbed. disney is up. i didn't feel like i was foolish. at the same time i know the things that drive it. the fxe at 106.88, it's at 106.89. >> crude oil down 2.1%. when we started the show, it was 1.6%. >> i think i was going over the high yield index this weekend. hyg, broke that one down, not unlike what blair walsh did and the vikings. broke it down. i come up with 2% of the thing is oil and gas. sprint is almost equal. >> yes. >> but the weigh on the arch coal, $4 billion restructuring. that's the other side of the equation, the energy complex which does not produce a lot of jobs, even when it was booming. i love to agree with you. i want to agree with you. i'm saying when the futures are up big on a monday and we don't have a single factor that makes it good, we have to hope. >> there is always mutual funds pulling out 200 billion from
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stocks since 2014, percentage of cash now the highest since '07. remember that year? >> that's a -- whoa. wow. >> yeah. >> obviously there's a lot of negativity. negativity is powerful. we know that. but i would love to have is a bit of catalyst. we did have constellation brands last week, that was a fabulous quarter. walgreens, amazing quarter. this morning i'm hearing kohl's -- kohl's did have a great quarter last time versus relative. macy's, you know, at 72, they love the breakup story. now the 2 for 1 split. oh, no. >> it's a market split. >> in an area we're used to, pharma. shire agreeing to acquire
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baxalta. shire shares trading over here, down a bit. shire expects the transaction to close mid 2016 it sees more than $500 million in annual synergies within three years. if you recall, baxalta was a spin off from baxter. >> when? >> july 1st. july 1st of last year. they were never able to get a shareholder base, because they were a spinoff, it takes a while to develop ownership. these guys with their offer, they came public. they approached them ten days later. they came public early in august with a bear hug. back then, it was all stock. we were less than sanguine on their prospects, it was 0.1687. some defenses there. six months past, now it's $18 a share in cash.
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and 0.482 shpg. that ustock, let's keep an eye n how that stock trades. >> shire was up. >> was. the call began at 8:30. we'll get headlines off of the call. the key certainly is that synergy number, shire is moving back -- is moving to the uk. isn't that funny? from dublin. they'll go move to the uk. ireland to uk starts happening now. apparently the uk's tax rules are getting even better than they've been. >> then possible brexin. we haven't talked about that. >> we haven't. >> we should. it will be on the radar screen for the next few months. >> that's important. given what we've seen in merger and acquisition activity where they have not been particularly positive responses to some of the deals, whether it's dow, dupont, starwood, or pfizer
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allerg allergen. number one platform in rare diseases. that will generate 65% of the company's combined company's total rev newenues. >> >> the three stories that generated this market are the three takeover bids. if you had starwood -- my travel trust has starwood. i think that fritz vanpatrick who bringing out more value, if that deal were to vanish, starwood would trade up. starwood would say marriott has been trading down, too. starwood was doing things right under fritz, and he was shown the door even though he was doing special dividends, things right. fritz deserves his due here. he was doing betterment i have
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restrained myself from calling what i feel about the starwood people. i have become jeffersonian. >> that's what i think of you, jeffersonian. >> i'm on the nickel. this deal was a travesty. >> dupont is complex with the split into three different companies. >> dow has been dropping endlessly. >> we need to keep an eye on the performance of these acquirers. if m&a is going to continue that has got to be key, not to mention broader market. i spoke to a number of bankers last week, a number of firms came in with a large backlog, meaning a lot of deals that had a chance of getting done and announced. if you keep seeing an equity market like this, you can scratch them off the list.
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>> you watch goldman sachs, the stock is well below where it was when china crashed through the 3000 barrier. this is a very myanmean market. an angry market. it's exactingt's toll on everything. i was surprised to see the deal done this weekend. >> when we come back, the final score, amazon 2, netflix 0. we'll talk about that. also ahead, eli lilly shares up 22% in '15. an exclusive with john lechleiter on the pipeline, pricing and growth strategy. look at the premarket. trying to start the week on a relatively solid note. futures are well off the highs. down session for the nasdaq, eight in a row. last time we did that, 2008. more "squawk on the street" in just a minute.
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♪ discover the magic of scottsdale. plan your getaway at the china stock market slide continues as shanghai falls over 5% overnight. our susan leigh is in long congress with more. >> we saw some big volume across asia pacific today and people are selling into the markets and big volume despite the fact that
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japan was shut for a holiday. it's so easy to be bearish on the markets. the currency, they don't know what way it is going. after eight straight days of the fix being weaker, the last two sessions, it's stronger. speaking to a big institutional invest investor, they say that's what authorities want, they want to stamp out one-way carry trades. also deflationary pressures, since we got the latest ppi numbers. still showings that you there's no uptake in china. ppi has been down for 46 straight months and counting. that tells you now that no one is able to charge higher prices in a slowing economy. speaking to this global institutional investor, they say remain constructive for the median term. that's because they're looking
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at pro consumptionary reforms this has more do with fiscal reform, refinancing cost, rolling over debt. look into the medium term, things will get better from here. speaking to some investors today, they say technically we could be retesting the shanghai lows. >> susan, thank you. susan li in hong kong. some reports overnight quoting some state researches who argue it will be hard to keep 6.5 in the five-year plan. >> these guys, they're -- i'm not -- they make -- whatever they want. they don't know how to run a stock market. we know that. they created a tremendous lack of clear prices when they created this. prices are not clear if they're buying back stocks. in terms of growth, show us. show us some numbers that would be quantitative rather than --
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quantitative rather than actual industry. how is the steel industry growing. >> did you say earlier 2% 3%? did i hear that? >> yes, you did. >> i want to make sure i heard you correctly. >> show me what industries are growing. put out a real report. give us a federal reserve-like report. >> it's asking a lot. some people liken china to a teenager trying to figure out how -- in terms of becoming more mature, an adult. it's difficult. this is a new path for them. >> okay. >> it is. it is. come on, try to be -- even though they're the second largest economy in the world. it's not like they've been doing this this long. >> i know stock markets are new, too, but some retired people say give us a sense about what we should do. why not do that? they don't know how to run a stock market. if i wuas over there with the prc, let some of these companies
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go. drop this down. >> is the stock market a reflection of the economy over there? >> no, but there's 90 billion people caught up in the stock market, and this thing looks like an overlay of 2,000 or 1987. and they don't seem to know that. they are hapless. there was no man behind the curtain. >> this morgan stanley note, looking at a path to $20 on oil. they say if the dollar goes up 3%, meaning yuan comes down 15, that could push it down $22, $5 barrel. >> you are seeing reduction in russia and brazil. there's a new book out "domino effect" and you're seeing a new way to pull oil out of our ground. we are the marginal seller of oil besides china every time oil goes up at all, these guys just
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rush to be able to sell futures in the united states. to be able to raise cash flow. those guys are not going to let this thing live. there are tremendous number of producers that can still make money here at these prices. they're not stopping. >> yeah. >> so there's -- it's not irrational. >> no, demand is not really there. to your point, it's not stopping. storage is full up. i spoke to an oil and gas person this morning, somebody well into the industry. there's not even floating capacity anymore. >> no, some numbers last week, every tanker they have is going up in price and they're storing it. look out. there's too much oil and oil should go down. >> we'll get cramer's mad dash and count down to the opening bell. another look at the premarket today, the dow, nasdaq and s&p. .
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ohh ah ah aflac! aaaaf-lac! ta-daa! he's not a very good magician. he paid my claim in just one day. one day?! shh! how does he do it? in just one day, we process, approve and pay. one day pay, only from aflac.
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i thione second it's then, woosh, it's gone. i swear i saw it swallow seven people. seven. i just wish one of those people could have been mrs. johnson. [dog bark] trust me, we're dealing with a higher intelligence here. ♪ the all-new audi q7 is here. ♪
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♪ >> that was sad news this morning to wake up and hear about david bowie's death. >> i got the bulletin last night at about 10:30. we have a monday morning here after a poor week last week. let's get to a mad dash this morning. i want to start with research. >> i want kevin plank to hold his ears for a second but stay with us. and eric wiseman to not listen. put us on mute for 30 seconds. morgan stanley committed an
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unbelievable -- let's just say decision. they took ua and vf corp from hold to sell. outright sell under armour. average selling price is falling, accelerating price. maturity in u.s. apparel. five-year sales and earnings per share trimmed by 1% and 3%. unbelievable. but is it even worse at vf corp? key outdoors coalition is stalling. 11% growth to 5.7% growth in 2020. timberland and north face has peaked. oh, my! they prefer nike to ua and listen to this insult. that's why i didn't want eric to insult. they prefer hane's brand to vf. i don't know what to do. >> they're making a more specific stock call on these two? >> yeah. look at this it happens to
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represent everest. this is a devastating call. why? the stocks have already been hammered endlessly. people felt they reached a level of valuation. when you talk about expensive stocks -- we were talking about cleerp stock cheaper stocks. >> that's the number for you, 15 times 16 numbers on the s&p. >> that's where i think we can pound the table. these are coming down. this is a great stock -- is a great company, but obviously -- >> you and i do say you pay more attention to research when it's negative like that. >> yeah. >> this is very thorough. >> in terms of where they believe things are going. >> these are both long reports and very thorough. honest honestly, the big risk to the upside of vf corp, they do an
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acquisition. vf corp, they are -- these are great companies is what i'm saying. but the reports are really rigorous. people should read them before they decide to bottom fish. it's excellent work done by morgan stanley. >> all right. we will keep an eye on both of those stocks. they are looking down. we're also keeping an eye on that broader market after that very poor week. at least if you were long last week. the beginning of trading this week after this.
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you're watching cnbc "squawk on the street," live from the financial capital of the world. the opening bell in just under two minutes as we kick off the unofficial start of earnings season. alcoa is tonight. csx tomorrow. banks heading into thursday and friday. jim, the outlook is not great. looking forest ma estimated ear down 5.3, materials down 26. not many sectors will show positive earnings. >> that's one of the reasons why i'm concerned.
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the s&p multiple is too high going into that. maybe we do get surprises. i know that the goldman note on wells fargo is very positive about how they're doing. i know we got the walgreen number, walgreens was extraordinarily good. we have baxalta. the problem is the dollar, the dollar, the dollar. you can't beat it. it's not just against the euro. a lot of these emerging markets are doing quite badly. not taking a lot of our stuff this is that manufacturing recession we talked about. you can't make it all up by pepsico. which i think will have a decent quarter. >> decent quarter. >> yeah. this fang -- cnbc people, i came up with f.a.n.g. -- >> we know this. >> they didn't. they said who came up with it? it was a query. i didn't have the ability to give them a little jingle. those stocks are highly -- very overvalued now.
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i've been saying that the whole way. now it looks like netflix has to come up with "murder 2" and do it now. >> one reason the nasdaq is on track for the worst month since may of 2010. there's the opening bell. and the s&p at the bottom of your screen. at the big board, arkansas governor asa hutchinson doing the honors. at the nasdaq, oasmia pharmaceuticals, specializing in veterinary and human oncology drugs. we talked about shire and baxalta. activists are circling in on various names, whether it's yahoo, time warner, mentioned kohl's and macy's. >> kohl's had a very good last quarter. underrecognized. those of us at kohl's recognize the sonoma label and how good it is. this is a company that does not get enough respect on wall street. maybe they do want to take
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matters into their own hand. they do have real estate they can monetize, like macy's. the main thing about kohl's, they're fed up. they got this giant affinity program. i don't know if people realized -- i was rejected for a credit card at kohl's, which stung. the line behind me was very big. >> you tell us this story, i would say, every three to four months. >> it was a major defeat for me when i went to kohl's and didn't get the credit card. they have greatness agenda. >> they do. >> comps at 1.2% in the fall. $500 million in cash. big debt paydown. who recorded this story. where did this story come from. >> b. ether. >> i don't know where. a couple people i know looked at their models and point out to me they don't see a large cost cutting opportunity because the company is focused on sg & a to keep margins stable. they could close underperforming stores, but a lot of these stores sustain current sales. and you got to shift online of
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some sales, obviously. any cut to expenses would barely offset costs of online fulfillment. "a," i have no idea where the story come from, but "b," lbos in this market? >> the croft & barrow, their shirts hold up well. they introduced smaller format stores. i think kohl's as a retailer might be a buy if you believe cold weather stays. the stock is down very, very hard. any way, i this i they're just fed up. comp stores -- comp sales were good the last quarter, relatively. >> yeah. carl, i have not seen time warner. we talked so much about it.
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nothing new to talk about. >> cbs upgrade. >> we'll update you on that if there is something to say about twx, beyond what we reported. yahoo, the endless press on yahoo! is unbelievable. >> the times takes marissa mayer to task. plans are coming, but nothing yet. >> that article was so negative. >> robert peck comes out and said it could be stand-alone. stand-alone strategic. he was on earlier this morning. might be willing to pay a lot of money. it does seem like a wasting asset right now judging by that article this morning. >> the key will be what their decision is, if they do decide to engage with potential buyers of the core business or not. i think that may -- we may get a better sense, perhaps we'll tell people about that in the not too
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distant future. right now they're pursuing the spin, as we said. did want to move on to nsam, north start s asset management. goldman sachs has been hired as a reviser to review strategic alternatives. 2 billion market cap. nsam is up almost 10%. they have a couple of externally managed wreareits, nrf, nre. this guy had been well thought of at goldman sachs. that is worth a mention. up over 10% now, northstar asset management. >> i will look at that today. we should look at mckesson, which is along with cardinal health coming out preannouncing they won't make the numbers. this is a stock that you could set your clock by, mckesson. to see that is a reminder that
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this wholesale drug group is hard. if you go over the walgreens conference call, they talk endlessly about the valeant deal, cutting out the middle man. the -- many of the questions were about can this happen to others? other drug companies? walgreens certainly left it open. walgreens very positive about how the rite-aid thing is. is that joyful optimism. >> i don't know. antitrusts and in terms of that? >> yeah. >> i don't have a good read on that for you. that guy, pissena has been very aggressive at walgreens. mentioned valeant, mike pearson still quite sick. you have that new interim ceo, shiller. that stock -- you can see it there. well below 100 again. >> did you see, when you look at that high yield index, how much is valued? >> yeah. >> sprint and valeant dominant
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that hyg, along with al tyson. >> altese. >> that is a story in and of itself, with patrick draghi. >> high yield, people are focused on financings taking place for leverage transaction. dell is the largest. you have the solera deal, veritas coming back to the market. and this morning micro semiput a press release out. they're buying p pmc-sierra, they're raising 450 million bucks at a blended interest rate of 5.4%. not too bad. >> are you serious? that's all? >> that's all. that's a small number in terms of the overall raise, perhaps a sign of life in what is a critical component of the credit markets and broadly speaking important, that is if some of
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these companies are unable to successfully raise in the high yield market, it will have a much broader effect than on their prospects. >> did you see pinnacle foods was upgraded? they got a good deal last week to buy good capital, to buy older brands. there could be some -- ppf is reacting positively. pf is a company, mrs. paul's, vande kamp, hungry man, these are household brands. the problem -- the problem with pinnacle foods is they don't have enough access to the -- bob doesn't have enough access to the natural and organic. the hope is that bolder will get them in there. they were able to raise capital. >> hospital stocks doing okay. we got this ebita guidance from hca. >> i saw that. >> speaking at a jpmorgan conference today. >> they could refinance a lot of debt and come out on top. this is a stock, this whole group, has been hurt, with the
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aca hangover. that's a good sign that hca is up. that group led us down, including tenet. those stocks have been horrendous. any movement there would bring a sector back that is kind of morbid. >> not particularly good news for humana after the bell on friday. they had negative things to say about the affordable care act, about enrollments. >> yeah. i know. unh, remember, they're trying to banish -- >> finally, this morgan stanley suggesting that for the first time in three years under armour is losing share, nike is the best dow component, under armour down. >> i heard from under armour, thank you mr. plank. they're talking about the 150,000 new downloads every day. they're trying to present themselves as a tech company at ces. we're leaving out their connected fitness system, not giving them credit for that, or the great technology they have
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for ua record available for download in the app store. premature to write this company off given the fact they have so much technology. nike and apple, i've been awaiting tim cook and mark parker to unveil the killer wearable. of course tim has to buy harmon while i'm at it. >> you're pushing that deal. >> why not? i get a big percentage if i get that done. oh, no, that's when i worked at goldman. >> you're not a banker. >> that was 30 years ago. i had hair. i was hot. >> i get you. were. >> you would be surprised. i wouldn't be surprised at all. >> smoking. >> smoking. >> let's get to bob pisani with most of the dow components initially in the green at least at the open. >> all ten sectors are on the upside. and, in fact, europe is holding up fairly well on top of that. let me show you the shanghai stock exchange. you can see two things. one is obviously they let go of the circuit breakers. more importantly, the national
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team clearly was not in buying. they typically will buy in the last hour or so we ended with lows for the day there. they're not involved. not a lot of damage overall, particularly over in europe. if you look. the ones you want to watch are the auto americas. they were down double digits last week. all of these were down about 10%. they haven't been hit at all here today. modestly to the upside. no real damage going on right now. here in the u.s., mentioned all ten sectors up at the open. energy just slipped into negative territory. it was positive. tech, consumer discrechary, staples and financials leading the way here. some retailers are up. maybe the kohl's thing is helping a bit. i suspect not. a lot of these are dramatically oversold. macy's up 6%, lowe's, nordstrom up fractionally.
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>> starting earnings season today. you will see the stronger u.s. consumer show up in the consumer discretionaries here. remember, 60% of tech companies -- 60% of the earnings of tech companies are outside the united states. a lot of it in emerging markets. that's a big issue. jim mentioned the weak dollar. consumer staples companies get large amounts of their money overseas. they've been hurt. we've been putting up these names for month after month, quarter after quarter, hurt by the strong dollar. jim is right to mention that. that's a major problem we've been dealing with for three consecutive quarters. as for what earnings look like. down about 5.7% this tends to get better. likely we will be down 1%, 2%, that's where we lend up. these always improve through the quarter. the big weakness is in energy and materials.
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auto loans numbers will be stronger, telekom will be stronger as well. we mentioned the financials this week that will be reporting right on the button. wells fargo was upgraded over at goldman sachs. jpmorgan was downgraded. you can see that has an influence today. all of these reporting this week. we want to hear about consumer loans and how that's doing. i think some of the business loans will be impacted by the energy concerns out there. we'll talk more about that tomorrow. one troubling thing is the asset managers. last week they were killed. these are affected by assets under management and global risk, and this is telling us a lot of concern about the overall investment community, the retail investment community. you can say, oh, we have a lot of people investing in etfs out there. and that's taking business away
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from these people. invesco owns power shares, blackrock owns ishares. the average retail investor thinks there will be more volatility, lower trading. and this is more of a warning sign than i saw in the big monster banks move together down side. jim was mentioning whether the market was overvalued. >> right now, 2015 pe for the numbers that we have now, s&p is 16%. -- 16 multiple. if you use the forward numbers, 2016, it's 15. these are in line with historical averages. the market is not overvalued, but it's not cheap. this is a major problem. you can argue that we should be bringing the multiple down based on the volatility. that's what the bears have been arguing. finally, david faber, rip for david bowie, the 1972 ziggy star dust concert in the tower theater in philadelphia, probably the greatest rock show i saw in my life.
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don't even get me started, i'll get choked up about it. david, back to you. >> thanks, bob. i remember seeing him at a robinhood event after 9/11, he gave a rendition of "america." incredible. he will be missed. wanted to move on quickly. typically we talk about public companies here. but in this case, i will talk about uber, which, by many -- well, at least in a lot of different ways is resembling a public company given how broadly it raises money, or from such a broad base of investors. the latest to share with you is an offering taking place through morgan stanley. they're using morgan stanley's brokerage, high net worth network, if you will, high net worth clients, people who could invest 250,000 in a private placement being raised to 48.72 a share for uber. valuing the company, i'm told, by people who have looked at this offering.
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and have been brought in by their broker, a value of $62.5 billion. that's not really news. i think a number of reports have had uber raising money at that level or close to it. not sure if this was close to the billion dollars the company was looking to raise or a new round. it does appear to be a new round of funding for uber what is interesting is you get to the point that you're raising money through the retail network of a major brokerage firm, like why aren't you already public? there are plenty of reasons why they're not, jim. interesting to note. 48.72 a share. new funding would value the company at $62.5 billion. 250,000 minimum. and of course a nice amount of fees that go along with that. you do have to wonder if they hit everybody else by the time they get to high net worth. >> i was skeptical that the last -- this is -- it's a great
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thing to be able to get into one of these deals, this stock has gone -- valuation has gone higher, higher, i see they're lowering some rates. i don't know if. i were a broker at that firm, i would offer it, but i would not push it because there are people with a considerably lower basis. and just kind of doesn't seem like a bargain. >> no. >> kind of late to the game there, you know? i use uber. i used uber friday. the same way i saw "star wars" and i will watch clemson monday night. things that have nothing to do with uber, that i'm walking on razors to get to the west coast to disney. i think the last people in -- to me, i don't think there will be another round of uber hire. >> you're crawling on razor blades. >> crawling. i don't think there's another round of uber higher than this. maybe they find some people in
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norway, norvick. >> ubs has done this. there's a way to get to high net worth chinese investors. when they have gotten to this point and already valued at $62.5 billion, when will they list behind us? get it done already. >> mark denneroff would say get the deal done. will you guys please do your deal? square did their deal. >> look how that turned out. >> yeah. well, let's move from uber to oil prices, for that a closer look at them from jackie deangelis who joins us at the nymex. >> i'll prices trading at $32. 32.24 was the session low. we're down about 2% approaching those levels again. morgan stanley distributed a note this morning about what
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further weakness in the chinese yuan could go to the dollar and to oil prices. they say the yuan is roughly 20% of the dollar index. if we saw a devaluation of 10% that could cause a 2% to 3% rally in the dollar. that alone could take oil back into the 20s. this is something to watch for. it strays away from that supply/demand story. still, we have not reached that low we saw last week. the intraday low of 32.10. still hanging out at that level. this is the kind of pattern we've seen for oil prices. a comfort zone, a trading range, we stay in it until we break and test. it will be interesting to see how it shakes out today. especially with equities being higher. carl? >> thank you very much. when we come back, former u.s. ambassador to china jon huntsman, what the former presidential candidate has to say about the market turmoil in china. off the highs early on. dow is up about 49 points.
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some modest gains for the dow, getting more modest by the second. we're up 12 points, led by intel and home depot and nike. stop trading with jim in a moment. it's a fact. kind of like reunions equal blatant lying. the company is actually doing really well on, on social media. oh that's interesting. i - i started social media. oh! it was
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time for cramer and stop trading. >> i want to talk about the real market which is represented by freepo freeport. people say i want to buy that stock, they have done everything they can to reduce the debt load. still talking about almost 20% in debt with businesses in oil, natural gas. trying to diversify away from china on copper. copper back to 2009 prices. this is everything that's going wrong in the market, high debt, copp copper, oil, gas, gold not even rallying. i want to keep this in front of people, these are the things that are really worrying me. it's not whether the under armour which has got a lot of good things going for it is a problem. it's fcx, you could come in one day, they say, listen, we have to reorganize. chesapeake, similar situation. still not overweighted in hyg,
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freeport not there. but this is the conversation. at first they talk about making of a murderer, then they go to fcx. could be some synergy there. >> yeah. i didn't see a golden globe for fcx last night. >> it didn't get one? >> amazon got a couple, which was amazing. >> maybe there's another series of awards that are coming up. >> best performance in a distress situation. >> jim, what's on "mad" tonight? >> alcoa. we'll see how alcoa is doing. and horizon which was a serial acquirer of companies, if you remember. we have guys that use the high-yield market to get things done. let's see how they're doing. i'm focused on high yield and credit. david taught me in you focus on the stock, you might miss the bigger picture. i've too long focused on the stock and not on the bigger picture. >> we'll see you tonight. important week coming up. "mad money" at 6:00 p.m. eastern
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time. when we return, an exclusive with lily's john lechleiter. we're back in a minute.
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good monday morning, welcome back to "squawk on the street," i'm carl quintanilla with sara eisen, david faber, and simon hobbs. crude is a focus, down 2% below 32.50. >> here's our road map this monday morning. with the markets after the worst start to the year, stocks are marginally higher. china's market slipping again. more analysis on that throughout the show. >> apple music hitting 10 million subscribers, taking 6 months to hit that key milestone. >> and the detroit auto show kicking off. elon musk making news with new tesla features. >> amazon the big winner from the golden globes last night, as streamers take center stage, but netflix striking out. >> coming up later, the co of eli lilly, john lechleiter for
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an exclusive interview. in the meantime, another weak session for the chinese stock market to start the week. shares in shanghai down about 50%. eunice yoon is in beijing with more. >> reporter: rumors in the mark today that the government wasn't intervening and that was the reason for the fall. we saw inflation data that wasn't encouraging and that didn't ease the anxiety about the economy here. the main focus was the weaker yuan. the country's central bank guided the yuan higher but there's a lot of uncertainty about its direction. so we went out to talk to some informal money changers on the streets. these are people who stay on the curbside and help citizens here to get around the tight regulatory curbs and controls here. and they said that their business is up by 40%, they're seeing plenty more customers coming to them asking to
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exchange out of remembi. they say people are using four times the annual limit here officially, these are big numbers. the people moving all this money around are parents, they said who have children, who are studying in the united states, and are worried they'll lose out on the currency exchange. also people in business or people looking to travel overseas. in terms of their outlook, the outlook for them, they said, was pretty grim. there's so much demand for u.s. dollars, and they said that it's getting harder and harder for them to get their hands on it. they are worried they'll get shut down because the government is getting tougher about controlling capital outflow. guys?
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>> eunice yoon, thank you. u.s. stocks are rising, but barely. they're in the green falling more than 5% overnight. when will things in the market calm down? let's bring in our guests. joe, it looks like we're bouncing a bit. nothing got figured out overnight in china. oil still under pressure. how do you feel about this rebound, semi rebound in a jittery market? >> doesn't feel like the short covering that people said we would get. the markets moved so far so quick. the other issue is the fed. the economy is not great. data on friday pushed the fed towards more hikes, which only hurtses risk taking. one has to worry about an economy that barely grew last quarter and won't do much better this quarter if this continued weakness weighs on the 2016 forecast.
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>> yet the labor market continues to strengthen. >> it does. >> hiring into the end of the year with flat gdp growth. will that dynamic continue into 2016? >> no, it's a bad sign because with weak real gdp and strong employment, by definition productivity is negative. margins are under further pressure. investors need to not look at employment. employment was great last quarter, but you need to look at forward leading indicator of employment. claims are better to look at. but things that i look at are troubling, the ism new orders index is slowing, yield curve is flattening. these are things that typically are pretty good measures of where we're likely to be. the things i look at, as i've been saying for some time are moving down, not up. >> coming from you, that's something. it says something. you have been positive for so long. >> yeah. these cycles last a long time. business cycles last six, seven,
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eight years. i will be bullish most of the time. >> steve, with that background, would be buying into the weakness we've seen into the beginning of 2016 or wait it out? >> i think now is a good time do your research. this is a stock picker's environment. i've been saying that for a while. the volatility we've been seeing over the last six months is a testament to that. broad markets in the u.s. equity space. we see a flattish, maybe slightly up year. we are advising our clients they need to look global. we would look in europe first, in terms of equity opportunities. we'd look in japan as being a distant second. right now we think there's going to be some tough yards in the united states. i would stress they will be tough yards. in this earnings environment, dollar exposure, the chinese currency situation, the european central bank, bank of japan still into and accelerating quantitative easing. this will be a challenging year.
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do your homework. i don't think you wanted to bail but you need to do your homework and still with your long-term discipline. that gets you through some of this volatility. >> the optics are really bad, steve. what did we lose last week? 6% on the s&p. nothing really happened. i know china deval yued slightl. to lose 6% and half of the s&p 500 stocks are basically down 20% from their highs. those are stark things to see in the market. >> they're stark. it's an excellent observation, and we have a redux of what we saw last summer, the echoes of june, july, august of 2015 are revisiting us. we still get the big three, the fed, earnings, the u.s. economy, and china. so this is act 2 of what we saw six months ago. we're getting similar action. that said, markets had a spotty,
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sporadic q3, q4, ending flat for the year. that could be some volatility that could be taken advantage of. but it's multi asset and it's global. >> do you see opportunity here from what's happening in this market? you mentioned what happened in august. the markets came back strongly after august. i know that they don't look so good now. there was a trading bounce out of that. does this what happened last week, does that expose opportunity? >> i think it does. there's a lot of similarities. i think the discipline is similar coming in the third quarter, fourth quarter that you ought to implement. energy will continue to be challenged. we know that, fixed income space, equity space. the other side of that is oil in the low 30s that we should begin to see in 2016, some of the positive benefits globally, europe, japan, the united states, one of the largest tax cuts in history coming through on the consumer side. it's not a one to one ratio. if you can look through what's
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happening in the energy space, where that theme could play out a bit. we do think this will be a challenged earning year. again, the dollar will exacerbate that challenge in the u.s. so i would be looking europe first, then i would be looking at japan second and globally fixed income can provide opportunities right now if you understand currencies. >> joe, are you on the lookout for any sign the dollar tops and brings stability to oil and puts some positive domino falls in place? >> sure. absolutely. the dollar has had a record run. probably has seen most of the run, the depreciation will slow, if not reverse. carl, you have to remember two other things. one, we had what looks to be a large inventory correction in the fourth quarter. two, global growth is weaker. it's not just a dollar story. if the u.s. economy, which is not healthy to begin with, undertakes a massive inventory correction and overseas growth is soft, yes, a weaker dollar will help, stabilize parts of the economy and the energy
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sector, but it's hard to get bullish. look at it this way. last year we had the best year of vehicle sales in 15 years. were they going higher this year? no. what's the driver going to be of growth? what will accelerate us from a 2% rate to 3%, which we have never hit yet in the cycle, post gdp revision and keeps the cycle going for another several years? >> a lot of what's going on in the market has to do clearly with energy prices, oil prices. what you could see and what stanley fischer, the vice chairman of the federal reserve said last night is that oil prices come back and could come back rapidly. >> stan has been saying that for a while. here's the problem -- >> they're betting monetary policy on it. >> that's another show. but, look, here's the problem. this energy tax cut which was mentioned, was a record tax cut for u.s. consumers and businesses. people saved it. the fed shouldn't help energy prices come back because people might save more of it. the fact that consumption has
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not accelerated in the past year given the job growth and the energy price drop is telling you something fundamentally different is with this cycle. i don't know what it is, but it's not good. >> we'll leave it there. joe, steve, thank you very much. >> thank you. when we come back, some merger news on a monday. shire buying baxalta and an exclusive with john lechleiter for more on the turmoil in china's market, timothy moe will join us later this hour, and keep an eye on f.i.t. dropping below the price of 20 bucks for the first time since going public, joining an increasingly not exclusive club. sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time.
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did you finish your derivatives pricing model, honey? td ameritrade.
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welcome back. backs a baxalta getting purchased buy shire for $32 billion in cash and stock. $18 a share in cash, 0.1482 shpg shares, as you can see. shpg is down about 4.5%. conference call began at 8:30 this morning in terms of the company explaining the deal itself. it's been in the works for some time. baxalta itself only a public company for a short time it got spun off from baxter on july 1st of last year. ten days later was approached by
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shire, early august shire came public with an offer to purchase. back then it was an all stock offer. they then went away for six months or so, came back and have been able to get this deal done that will make this combined company a leader in treatment for rare diseases. they're talking about $500 million in annual synergies, that beginning within three years of the completion of the transaction itself. there had been some concern as to whether or not the backs alt isbaxalta spin would be on the back of this. the ceo of shire said we had a chance to look at that and said it will not interfere with the tax-free status of the baxalta spinoff itself. tomorrow, i think, meg is going to have shire's ceo join her at the jpmorgan healthcare conference. a place where they talk deals nonstop. last year was a huge year as people know for pharmaceutical
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m&a, and it would appear this year perhaps is going to continue. this was a deal that followed through from last year's failed attempt by shire to make this acquisition reality. baxalta itself never had an opportunity to get a share holder base behind it. given that it was only a public company for such a short amount of time. 14% premium to the last close. 37.5 premium over the close of the price in early august before shire first made its interest in baxalt baxalta. >> that healthcare conference at jpmorgan. meg terrell is there. >> dr. john lek lechleiter thanks for joining us. >> what is the impression from investors and how they're feel being healthcare?
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>> i think investors will be cautious given that this is an election year coming up. i think there are aspects of our industry that are easily demagogued in an election year process. having said that, i think the fundamentals of our industry have never been stronger. the substrate is this great base of science that we work from. and you're seeing today meaningful advances in our fight against cancer, certainly lilly has, i think s weshgthink, is wd in the area of alzheimer's research. i think we're well positioned for the year ahead now that lilly is out of its period of patent expirations, launching new products and getting back to growth. >> how do you view the focus on drug pricing? does that make you change the way you do your business? >> we focus drug pricing based on value, the value the medicine brings to the patient, the value the medicine brings to the
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healthcare system. clearly at a point in time when we were losing patents in 2011, many of these products at that time became variable, low-cost generic forms. i think the -- some of the sound bites, the noise you hear around prici pricing neglects the fact that we must pay deep discounts in a market based environment where we're competing in many cases against other alternative therapies, including those low-cost generics. >> is the way the drug industry is communicate being this issue working? do you have to change the way you're talking about it? even some of what you do? especially in this election year when there's a focus on it? >> i think all of us in the u.s. have a concern that we can access the medicines we need and our children need in the event that we do ever require those
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medicines. we want to know they're within reach and affordable. you see many companies like lilly offering copay assistance. you see patient programs that we have for individuals who for one reason or another do not have insurance and cannot afford the medicines. i think that the focus has to get back to disease, the cost and burden of disease. that's the -- that's the real cost driver. that's what we're trying to deal with. with our medicines, which today are still a fraction of what we spend for total healthcare. >> let's talk about one of the biggest cost drivers and burdens on society, that's alzheimer's disease. you have tremendously anticipated data coming later this year of your drug solanezab. tell us about your confidence level in that trial. it's been such a tough area. we had so many failures. how you are looking at this? >> it is a difficult area.
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lilly has been working on alzheimer's research for 27 years now. we are looking that the bake through with that drug trial. that drug trial came from two earlier studies that were in 2012. while we did not meet the end points in those two trials, we felt like the data we saw was compelling enough for us to undertake this new trial. now, it's difficult, impossible for me to say what the outcome of that study will be. but i will say we learned a lot from the first two studies. for example, in this third trial we're screening everyone for the presence of the analoid plaque. in the first study we were not able do that because the diagnosticry agent was not available and some people in that first trial did not have alzheimer's, they had dementia
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but they were not diagnosed correctly because the limited scans we had showed they did not have the plaque. that's an example of how we're helping the current trial putting us in a position where we will get a more clear answer. now, beyond that individual molecule, we have others in development. we talked about a number of these in december at an investor meeting. we hope to share more data from earlier studies looking at other approaches to the disease throughout 2016. >> dr. lechleiter, we could ask you so many more questions, but we have to leave it there for today. thank you. >> my pleasure. >> coming up, the shire ceo, fleming ornskov coming up at 2:30 today. >> looking forward to it. coming up, amazon a big winner at the golden globes last night, despite all the nominations, netflix got nothing. more on the winners and the
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[so i use quickbooks and run mye entire business from the cloud. i keep an eye on sales and expenses from anywhere. even down here in the dark i can still see we're having a great month. and celebrate accordingly. i run on quickbooks.that's how i own it.
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the stars were out in
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hollywood for the golden globes last night, but only a few companies turned out to be the winners. julia boorstin has the night full of bleeps. a lot of bleeping. >> that's right. a lot of bleeping. all the streaming services were out in force at golden globes, but amazon turned out to be the surprise winner. they won two of the five nominations, both with mozart in the jungle. amazon tide with usa's mr. robot with two wins, beating out "game of thrones" and "narcos" for best drama. netflix, which led all of the networks in terms of nominations lost in all eight categories for which it was considered and hulu lost for its sole nomination. now, among the movie studios, fox swept nearly all the top
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awards with six globes including the top film and best actor for the martian and the revenant. paramount went home empty handed. the golden globes are determined by a small group of foreign journali journalists, but they help studios lure talent in an increasingly competitive marketplace and they act as free marketing to drive viewers or help boost the box office. now, also with the oscars more than a month away, they can help shine a spotlight to give momentum on certain films over others. as the academy makes its final votes after the nominations will be announced later this week. back over to you. >> i thought it was interesting that you mentioned usa took home a win, basic cable, not a sexy netflix or amazon. i wonder if that means they're back in the game here. >> there's a lot of talk about how now you can have a hit show anywhere. mr. robot has had huge critical
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acclaim, it's a buzz worthy show. and people love it. now these days it doesn't matter what channel a show is on. so many people are watching it on different formats. dvr'ing it, watching it later, downloading it. we've seen shows be separated from their network in terms of the association of where they come from. >> julia boorstin, thank you very much. keep watching those stocks. when we come back, shares in china closing down 5% overnight. what's ahead there? we'll ask goldman sachs' chief asian strategist.
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good morning. i'm sue herera, here is your cnbc news update. the powerball jock pot continues to grow. now at $1.3 billion. the largest in history. it will be even higher by the next drawing, which is wednesday night. since november 4th lottery officials say it has soared from its starting point of $40 million. >> afghan peace talks getting underway in islamabad. the taliban not represented, vowing to talk only to the u.s. and not the afghan government. a paris square lit up last night in the colors of the trench flag capping a week of commemorating the charlie hebdo attacks. people came to the square to pay
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tribute to the attacks one year ago. and rock legend david bowie has died succumbing to cancer. a representative saying bowie died peacefully surrounded by family. he turned 69 on friday, the same day he released a new album called blackstar. that's the news update this hour. he was an innovator in financial markets, too. bowie bounds back in 199, i think it was. >> yes. i remember that. much missed. sue, thank you very much. in the stock market, another brutal day, certainly for the chinese. shanghai has now lost 15% in the six trading sessions of 2016. down to levels that we've not seen since september. tim moe is goldman sachs chief equity analyst. he joins us on the phone from hong kong. how does it feel out there at moment in hong kong? what is the atmosphere surrounding this continuing erosion of the stock market?
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>> first, good morning, simon. thanks for having me on the show. sentiment is pretty poor. not surprisingly given the figure you've cited. the broader regional banks are down about 10% over that time. as you know, this has been the worst start to the year in the 29-year history. >> i remember you off the top of my head as being upbeat about the chinese stock market. so i went back and looked at some interviews that you had done. in fact, when you last came on on october 13th, you were talking about a trading bounce but you did say you thought there would be trouble in store for 2016. what is the message now to the clients?
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>> the message is certainly more downbeat. thank you for checking the record there. we were more upbeat in the middle of the year. we did expect a fourth quarter bounce but had a variety of reasoning looking more conservative in 2016 which we reiterated in earledy december. so we expected a weak first quarter. the magnitude of the decline has been more than we expected. and it's a way to summarize this quickly is that there are three main things driving the china market, groetd, it's liquidity and policy. early last year, the story was growth was slowing, but not excessively. that liquidity was strong and the market was embracing reform, willing to pay for optimism about reform. today the delta, the changes in
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each of those three drivers has been negative. so we expect a much more con consequential slow down this year. as i mentioned on the show back in october, we think that sort of other activity measures for china suggests growth might be 1%, 2% lower than that. growth is softer. number two, liquidity is still okay. but it's nowhere near as flush as it was a year ago. in terms of reform, there is less room to pay up front for the benefits of reform. much more of a show me the money type of mind frame. put those three things together, it will be a tougher market. >> on that last point, on the policy uncertainty, where are the regulators? where are the authorities? people thought that with this weakened number of inflation coming up half the target that opens the door for a rate cut. we have not seen that, have not
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had a lot of firm communication about what they're doing with the currency or the stock market for that matter. or the economy. are you surprised not to see more open communication and open policies and stimulative policies? or is that coming? >> those are good points. this goes along with why the market is more skeptical on the reform side. the policy side. i think some credibility -- policy credibility has eroded given the way that things were handled over the summer in terms of the stock market decline and the august 1 1 1th devaluation. when it turns out those were dysfunctional, they were quickly rescinded. there were rules to limit large shareholder selling which have come out because people were concerned. that was a catalyst for getting the market down last week, is the six-month ban on shareholder selling was going to ewrote.
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there's a bit of volatility, so to speak, in terms of how policy has been enacted. there's been a shift in the reaction function of the policymakers with respect to the currency, ie allowing a greater depreciation, not just against u.s. dollar but more significant against the trade weighted basket. but there appears to be a stronger citing today to stem some of that erosion to currency. the bigger point is that is not as clear guidance in terms of policy. the final point is that the market was expecting some sort of a reserve ratio requirement cut or some policy easing over the weekend in response to the weakness in the equity market. part of the reason for the 5% down day is we did not get a clear easing of domestic policy over the weekend, which as i said market had been expecting. >> given everything you said, tim, do you believe the
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regulators there have credibility around the globe or deserve credibility? >> we do have to contextualize things and remember a lot of positive, constructive things have taken place. we don't have time to go into detail but we have long lists of very good things which have taken place in terms of structural reform along a variety of avenues which can subdivide into the financial sector, in terms of s.o.e. reform, legal and administrative reform. there's a strong factually based case for the fact there has been progress in terms of reform. also also fair to say that some of the unwavering credibility has been shaken by some miss steps which have taken place. so they need to perhaps -- you
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know, regain some of that trust through perhaps clear and consistent implementation of policy measures. >> tim, i find this interview disconcerting. it worries me a great deal. the reason it worries me is because those that are bullish, those that want to negotiate gate what is going on with china and say, look t doesn't matter to everybody else, we will do so on the basis that the market there does not accurately factor in what is happening to general growth in china. it's not an accurate reflection. but from what you're saying, you're treating it as a very grown up market. this is a market that went into full fever mode last summer or summer our time, where people were buying stocks hand over fist and arguably in illogical ways. certainly in a bubble-type way. you seem to be suggesting now it is accurately reflecting what is going on in the chinese economy. >> i think it's a blend of both.
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your point is well taken. if i might interpret or express what you said in slightly different terms. i think that the way to understand the single extraction from the price declines in china, this is what is worrying investors in the united states, china is down what does that 15% drop in the market mean to the united states and other regional stock markets. the mental math, the way to understand this is there are technical factors and then there's some fundamental factors. the technical aspect which we touched on briefly, things like circuit breakers, limits to shareholder selling, new ipo selling, that is something which would result in -- in inappropriate read across. so some part of this 15% drop in the asia market is domestic technically oriented, more along the lines of the retail investor
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nonfundamental aspect. parts of the concern that are more broadly reflected, regionally and glob globe globa are about growth and the remimbi. on the growth side, we have to remember that the context is that investors are jittery about the growth outlook in asia. so, any concern that china's growth may be slowing further, and we had a poor pmi number last week and some other indicators that suggested growth may slow, that's real fundabilitial read across. and part of that is reflected in the china stock market's decline. then the other aspect, the weakness in the currency, understanding that this is something that people are concerned about.
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>> we're out of time. we have to leave it there. always a pleasure to talk to you. thank you for spending the time. i appreciate that it's late there in hong kong. some welcomed news for apple this morning. its streaming service is attracting a lot of new fans over the past few months. josh lipton has that story from san francisco. good morning. >> good morning. sources confirming to me that apple music now does have more than 10 million paying subscribers. that after just six months. apple's biggest rival spotify took almost six years to reach that same milestone. apple music launching last june. members pay $10 a month to an on-demand streaming service with more than 30 million songs, 24-hour radio station, and new social service allowing artists to connect with their fans. now, the launch of apple music did come, remember, with its own challenges. pop superstar taylor swift
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objecting to apple's initial decision not to pay artists royalties during the free trial period, a policy that apple then reversed. some have criticized the service as too complicated. still analysts covering the music industry do tell me apple does boast real competitive advantages that rivals do not. it controls the platform, payment system and the devices on which the music is streamed. this news coming about apple music just as the company's stock has been under pressure, down some 12% over the past 12 months as investors worry about iphone growth in the quarters ahead and a critical look at the company's efforts with apple news in today's "wall street journal," the company mismeasuring the number of people reading its stories according to executives. analysts don't think apple music will have a material financial impact for the company in the near-term, but piper's gene munster thinks the service is
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important for broader reasons, as it becomes more popular it could become a reason for consumers to buy those iphones. >> apple shares up today, 1.3%. josh, thank. when we come back, more from the detroit auto show, including the effect of a possible slowdown in china on manufacturers. and shares of under armour are down sharply, almost 7%, finding themselves in the unusual position near the bottom of the s&p 500. more on why when we come back.
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the detroit auto show kicking off today. already a number of product unveils and announcements and the ability to get up close and
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personal with the ceos. phil lebeau joins us from detroit. the question is the strength of china's economy. >> right. we'll talk about that in a bit, simon. keep in mind the auto industry is doing relatively well in china you're seeing optimist from executives here. let's run down some news today at the detroit auto show starting with car of the year and truck of the year. couple of foreign models. truck of the year, the volv volvo xc90. car of the year, honda civic. they take the honors this year. one other model getting a fair bit of attention this is the latest minivan from chrysler. they pretty much invented this category in the '80s. this is the chrysler pacifica. it replaces the town & country, and coming at a time when minivans are not in style. sales of chrysler's minivan down 28% last year. looking at shares of gm, ford
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and toyota. commentary regarding the chinese market. most executives have said there's volatility in the chinese stock market, but when you look at the chinese consumer and auto sales, they are still optimistic. >> yeah. i think there is a split. you know, you have a lot of variation and volatility on the stock market. at the same time, what we have seen in 2015 which has been a hectic year in china with a lot of ups and downs. at the end of the day the chinese market grew by 5%. >> any time you had an economy as big as china's growing as fast as it's been growing, some imbalances will show up, and we're getting back to a much more maturing growth rate. >> we will talk more about the chinese economy with jim lentz joining us on "power lunch" he's with toyota motor company. has a perspective in the u.s. market and the global market as a whole. bottom line is this, a lot of questions about china, when you're looking at the automakers
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they see growth particularly inner china. that market has yet to be fully tapped as far as the auto industry is looking at it. >> i remember mark told us that in an interview last week. phil, thank you very much. under armour shares getting slammed here. want to point this out after a downgrade. morgan stanley downgrading the sports apparel company to underweight, taking the price target down to $62 per share. we are just under 70 now. they took that down from 103. j. sole is the analyst at morgan stanley saying the company is losing market share and average selling prices are falling partly due to the warmer weather, and also saying that under armour may be "reaching maturity in u.s. apparel faster than previously thought." this is a stock that has shot up 70% in two years. basically gone in a straight line up until last fall. since last fall it's off more than 20% over the last few months, underperforming the s&p and larger rival nike, which is
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doing extremely well right now. however, we should mention not everyone is upbeat. under armour ceo kevin plank was in ces atlas vegas to unveil health box, which includes a band, heart monitor and wifi scale. under armour has made strides in connected fitness. analysts are applauding this move saying the bad news has already been baked in the stock in term s of the weather and discounting. investors paying attention to that morgan stanley note. the stock is getting whacked. when we come back, "star wars: the force awakens" winning another weekend box office in the u.s. and opening to a record in china. the ceo of imax is with us next. but at t. rowe price, we can help guide your investments through good times and bad. for over 75 years, our clients have relied on us to bring our best thinking to their investments
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it's gotten squarer. over the years. brighter. bigger. it's gotten thinner. even curvier. but what's next? for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. stocks in china hit four-year low, closing down more than 5% overnight. despite the turbulent markets, chinese consumers apparently still going to the movies and spending at the box office. latest "star wars" film taking in more than $53 million for its first weekend in china. it's the country's highest film
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weekend opening ever. joining us now is the ceo of imax. rich, good morning, it's good to have you back. >> great, it's great to be here. >> it's pretty understood that the chinese don't have the love affair with this franchise we do here in north america or europe so what do these numbers tell you? >> they tell me first of all that it's a great movie with global appeal. second of all, disney marketing machine is unparalleled to anyone. you can't walk into a mall in china, i'm told, without seeing "star wars" everywhere. not just in the big cities. i guess they lined up "star wars" troopers on the great wall as part of the publicity. shanghai disney world is coming along. then imax itself, we did a lot of viral marketing that appeal to consumers. over the last month, if you saw what we thought would happen a month ago to now, you'd be very surprised.
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it just picked up a lot of traction the last couple of weeks. >> any time someone tries to build a bullish or more positive than negative economic picture on china, they cite things like electricity generation, internet use and box office. do you think it actually says something about their broader economy? >> i think definitely, the box office does. i mean, our gross box office in china this year was up over 50% from what it was the year before. last weekend, we set a record for chinese language film. it was called mojan. we did $27 million for the run. i actually got a call from an analyst who said, gee, that was last weekend. now that the market crashed, what's going to happen this weekend with "star wars"? and i think we saw. so i think there's a disconnect between the market and its focus on the export economy versus ways going on in consumer discretionary. i think people want to be entertained. they go about their lives normally. that doesn't necessarily coexist
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with what the rket's saying but that's what we've seen. >> i found it interesting that you went ahead with plans to actually ipo in china or in hong kong with imax china. the stock has done very well. bucking the overall trend of the last few months. i'm wondering how you see the market volatility there. >> yeah, one reason we went public in -- on the hong kong exchange was because we were really highly correlated with the shanghai exchange. so if export numbers or manufacturing numbers were down, i max would be down. so we thought by going public there, we could get a true read on what investors in china were thinking about this sector rather than the overall market. i heard on the lead-in before you came to me that china was down again last night. you probably find it interesting, we were up about 6% last night in china, and i think that breakage in the trend is because people understand the difference between particular
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sectors. we're still up more than 50% from our ipo. one of the best performing ipos in china. we're really hoping, even though we have a lot of china exposure, that investors could see what's going on in the business rather than mack crowe economic field. >> true. i want to ask you as a moviegoer, or not so often moviegoer, the degree to which you can control the environment in which your technology is placed. so one of the things about "star wars" is a lot of people who don't normally go to the movies went to the movies and i went on christmas day, but we were appalled that it wasn't assigned seating because we kind of assumed that it would be and it wasn't, so we were all sat at the front like looking up like this and got neck cramps and that's fine because we're old people but i just wonder the degree to which you're able to control the experience and insist that it be assigned seating on occasions? >> well that kind of experience we can't because that's controlled by the individual theater chains who we're
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partners with. we're in 66 countries and we have different partners. we've done over 10% of the worldwide box office for "star wars" so can't control the micro. the experience, the vsh wall experience, though, that we can control, and in fact, we get real-time feedback from thousands of theaters around the world. we know what's on the screen, how loud the volume is, if the bulb is getting dimmer. so we can make sure you have this optimal experience but e n unfortunately it doesn't go to what row you sit in. >> good to see you, thanks. >> thanks, carl, nice talking to you. meantime, dow's gone slightly negative once again, down about six points.
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