tv Squawk Box CNBC January 12, 2016 6:00am-9:01am EST
business never sleeps, this is squawk box. >> good morning, everybody. welcome to squawk box here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. wti was down as much as another 2% earlier. things flattened out here but still looking at wti. a lot of calls about what all of this means. now breaking overnight, a couple of opec members requested an emergency meeting because of the current market conditions. nervousness in the field and even some calls for oil to fall below what we have seen to this point. as low as $10 according to some. analysts are cutting their 2016 outlooks for wti. listen to this bearish view from standard chartered. prices could drop as low as $2
barrel. it's caused by fluctuate in other asset prices including the dollar and equity markets. harang gets roll harold hamm will join us today. we're talking crude price with him and see what he sees in the future. >> among the other stories we're watching today. the fed must assess economic data as it unfolds. >> stop the presses. >> and carl icahn knocking down media reports that said he was buying up shares of time warner. speaking to scott, the activist says he doesn't own one share and adds that it annoys him that certain speculators use his name to make profits at the expense of other shareholders. >> well, when carl gets annoyed. >> you might remember that i took a stake in time warner in
2006 and earn urged the company to split up but i'd say successfully. >> he gets annoyed a lot though. >> starbucks planning to open up 500 stores in china in year. they haven't seen any slow down even as other companies blamed the cooling economy for soft results at 4:00 p.m. eastern time howard schultz will be on closing bell and talking about china and a lot more. >> a developing story out of turkey this morning, an explosion in a popular istanbul tourist zone killed at least ten people and injured 15. the cause of the explosion is under investigation and could not confirm reports by a state owned tv station that the blast was caused by a suicide bomber.
we don't know enough to go with -- >> some of the early reports. >> but we'll keep you updated on the story as it develops but yesterday there was another one. we don even pay attention to a suicide bombing in iraq or afghanistan but certainly istanbul is frequentedly many werners. never been wanted to go. >> might put that -- >> in the sorkin family. we wanted to go too. it's on hold. it's on the list though. >> here we are being effected by what we're not supposed to be effected by and the chances are minuscule that you'll be in the square at the time when it happens. >> and i did buy that lottery ticket. >> did you? how much money did you put into that? >> well, the first time or -- >> another one.
>> 20. >> yesterday. >> $20. >> must be nice to have that to -- burn. light someone's cigarette with it. no one smokes anymore. >> the enjoyment that it gave myself and my wife to be able to talk for half an hour about what could happen, that half hour was a valuable moment. >> i'm on andrew's side on this. >> yeah. >> gives you a chance to think about what you'd do with a billion dollars. >> would you go to vegas. >> i'm not going to have this discussion. we can have it any at a you want. let's pretend it's a trillion dollars. i think i might build a spaceship. i might go to mars. >> so you have thought about it. >> no, i haven't it's stupid. >> >> alabama or clemson?
>> do you know what i liked last night? making a murder. that's what i was binging. >> do you think you should have been surprised in the on sidekick in the fourth quarter. >> i can only tell you about blood tests, viles. >> i used to go to -- who went to the testing agency all the time? was that you i used to give grief about. >> wait a second, your foils are merging together. you can't remember who you were mocking. >> i can't remember. >> whoever is there it just depends on what point in time i did that. >> maybe it was carl. maybe david. >> let's turn back to the markets this morning. take a look at what's been happening with the futures this morning. you'll see that at least at this point stocks are looking up again up close to 100 points.
s&p futures up by 13 and the nasdaq up by 33. this is after the dow was up yesterday. the s&p up by a point and a half and the nasdaq was negative. in europe and the early trading you can see gains as well. and the dax is up by 2.6%. a gain of over 1.5% for the ftse in london. the nikkei and japan still down 2.7% and oil is one of the more volatile markets. crude oil dipped below $31 before it settled. that was the lowest settle since december of 2003 and we're below that today. right now down another 5%. but this morning we were 2%.
ten year note yield right now all the way back to 2.193% if you can believe i even said back to 2.193%. the dollar is up across the board. euro at 108.5. and gold prices right now look like they are down by about $4. $1,091 an ounce. >> i guess that people would say at this point that the market is so oversold that oil all it has to do is go from down 50 or 60 cents to down 4 cents. >> things have stabilize. >> the market is oversold plus you're seeing -- did you see rbs? >> yes. >> jp morgan and equity analyst, yes. >> so they want to get ahead of this and in past market breaks they never do get there.
it's good that some of these guys are trying to get out in front of it and we'll see how they feel if it bounces back 6 or 7%. we'll see how they feel. that's even a worse feeling than riding it down sometimes. >> convincing people to sell. >> if you got it out and you're not in 6 or 7% higher. global stocks talk about oversold lost $2 trillion in market value in the first week of the year. investors now, what will i do with 2 trillion if i had that? if i won the lottery. looking ahead to fourth quarter earnings for guidance on growth for stocks and i eluded to this already joining us where the markets are headed in 2016, research partner and chief investment strategist and james norman, qs advisors president -- am i right? buy here? it's oversold. >> these things get a luf of
their own and will probably be some sort of event and there will be somebody taken out toes first probably in the energy or material sector and that's usually what results in some sort of policy response. >> 30 firms out. 13 billion but it's only $13 billion. >> it's not the financial sector. i think the biggest difference, there's a tennessee sy after the financial crisis and it's the big one and the 100 year storm. they have to get used to the fact that they're part and parcel of financial markets. if you remember it's the longest period ever where you didn't have a 10% correction. now the fed is starting to normalize rates. this will be a more normal part. >> i'm not sure you're a market
timer because i think looking at your strategy you figure if you buy quality stuff that has yield and can buy through periods like this. do you ever go through all cash or stay fully invested? >> we try to stay fully invested. it's better to be prepared and when you have a lot of volatility and they're moving the markets around and have overreaction it's best to if he cuss on those stocks that pay high yield because that will help you develop the storm more effectively. >> did dividend plays workout over the past year as well as dividend plays. >> the low volatility defensive space hit out extremely well. it was very large out performance last year. >> you didn't lose money. >> we actually made money and we were actually positive last year and you're seeing that year to
date. >> you think normally a down year is better and it's an election year. i like the nfc too. the teams there. >> from the super bowl indicator. >> yeah. i'm thinking -- >> let's put it this way. you have to play the odds. there's no economic model we have ever done which would tell you that you get recession in the united states after prices are down 70%. >> right. >> it was a first time for everything and we thought supply would never go up. they had us by the throat. >> a situation where the unemployment rate is 5% by the short throats. you know, unemployment rate of 5%. you have auto sales close to 18 million units. >> i feel like you paid that forward. >> it's in but i would also say that again you have to look at the fact that wages seem to be
bottoming. oil prices in the united states, my goodness, it is an enormous tail wind. it's a tax cut. >> you saw united airlines used it as a reason that their naubs were down because they are fewer people flying into houston? their hub. >> you can climb anything but it's very tough to make that claim in a developed market, especially in the united states which is so consumption driven. >> rosenberg is out saying investors fasten your seat belts we're entering a period of irrational pessimism. he says you're already looking at a lot of stocks in correction territory and below. this is the best buying opportunity he's seen in awhile so relax and check out some of these. >> that's the other thing. you look at really quality names it's staggering. some stocks are down 30, 40, 50%. >> amazon and apple help stem
the losses. >> the average stock and the s&p 500 is down 20%. >> the consumer is still strong and you look at a macy's. just typical stocks. >> i just think from most -- from big pools of money, cash is not an option. you have cpi plus 4, plus 5. it makes it in a world where ten year treasuries are 220 you don't have a lot of options so ultimately that's going to push people. >> china is not systemic you always underestimate the ability of china. you just can't underestimate it. it's not a big enough trading partner. we don't export enough their right to kill us, right? >> that's my opinion and the market itself -- >> emerging markets -- >> people are con flating the
market and economy in china. the china's market is not a professional market. the consumers are not leveraged to financial assets the way a developed country investors are. so i just don't think that it's -- china i think is a misallocation of capital but i'm not sure that it's a thing that's going to get us. >> they tighten four more times today? it's not for sure. >> we're leading with that. that's big -- did you ever think for sure they were going to tighten four more times. >> just because we're going to have this volatility there's going to be a lot of growth con serns. it's not going to happen. >> and may want to have a little bit of credibility. they're trying to focus on that and establish the credibility so they don't actually have to do it. >> all right. thanks. >> thank you. >> what was your mother's name?
>> i think of you as like a sort of a mediterranean -- >> yeah. >> it just doesn't -- >> no. >> all right. >> do you ever think about just going with it. >> maybe i should? >> we're going to go to washington right now. president obama set to deliver his final state of the union address this evening. john harwood joins us now with more on what to expect. >> andrew it's his final state of the union address and you can expect the president to be reflective. talk about the distance that he's travelled since taking office in 2009 amid a financial crisis. collapsing auto industry. a tremendous stress on the american economy and he has a good moment to talk about it because he gained 292,000 jobs last month. he doesn't need a lot from congress anymore so i wouldn't
expect him to do the traditional list of items. he wouldn't get those items anyway but he can talk about things he's done by his own executive authority including the recent action on guns to try to expand the scope of background checks for gun purchases. he can talk about the effort to close the guantanamo prison which is one of the largest met promises of the campaign and i would expect a significant amount of motion to this. it's the original and including the woman who coined the phrase fired up and ready to go. so that's a little bit of what you can expect from the president andrew. he only has a year left in his office but he has made clear he's going to try to use every single day of that to advance his agenda whether you like his agenda or not.
>> let me ask you, given that we're a business network do you think there's any chance of anything meaningful happening in terms of the tax reform front. >> zero. >> zero. >> i would expect that basically the deal that was struck between the white house and first john boehner and then paul ryan at the end of last year calmed the waters for the remainder of the obama presidency. we have a rough consensus between the two sides on lifting those spending caps for defend and nondefense but this is going to be a year where candidates talk about tax reform a 4% surcharge on incomes above $5 million which will raise $150 billion over ten years. republicans have major tax cut proposals. that's where the tax discussion is going to be. it's not going to be legislating in congress.
>> and john, it's like it always is. the sitting president. the good things that happened are because of him. the bad things that happened are because of congress. >> yes. that will definitely be the tone of his message. >> exactly and it's important how this is framed for the -- because there's always -- when one president has his last state of the union there's an election going on to see whether his party continues his initiatives or whether the other one comes in and i think it's important and i don't know some of the stuff coming out recently about hillary clinton might have some a little bit nervous. it's national poll can we count on that? 16 or 17% nationally above bernie sanders. did you see that? >> yes, a tough race in iowa and new hampshire. >> but nationally. i thought she had that southern
firewall where people thought even if she does lose she still have it down everywhere else. >> her campaign is still confident that if that happens they will be okay but primaries are unpredictable and they certainly do not want to see bernie sanders bin both of the first two states. they're prepared to lose new hampshire. but if they lose iowa as well that's a big problem. >> do you think they wish for a wider field like the republicans had? >> martin oh mali is not providing the width that she needs. >> do you expect the fbi to send something to justice on hillary clinton? on either the conflict of interest in the clinton foundation or the security stuff? don't you think the justice department would decide not to
pursue it? >> i do not expect hillary clinton to be prosecuted on either front. >> i hear there's a lot of pressure that they're going to do it here. >> i think the case is pretty different from the situation with hillary clinton. >> but some of the stuff is even more widespread and if there are people that want to do it but the justice probably wouldn't pick it up. >> that could be true. >> thanks. >> coming up, when we return, the next powerball winner is getting some advice and this time its coming from a billionaire. he owns a basketball team. you probably know who he is. that story and a lot more when we return.
right now it is time for the executive edge. these are stories designed to give you the leg up on the day ahead. we have been taking a look at a lot of different things. we talked about this a moment ago but the rbs call out there today this is a call, sell everything. we talked about this briefly. a lot of different calls that are out there really generating
some attention. it wasn't just rbs. there was a jp morgan equity analyst saying sell every one of these rallies. we talked about the $10 oil and it does feel like there's beginning to be a bit of hysteria out there. i should point out that the jp morgan equity analyst is not one i heard of before. and it reminded me of the super spike in oil from goldman at $200 they were calling for before oil prices crashed in 2008. >> i was trying to figure out i buy water, you can get kings water for like 20 cents a bottle or something. >> is oil below that? >> yeah. absolutely barrel. >> so just -- it's cheaper than water. >> yeah. >> has to be. >> that's kind of weird. that's a little weird. >> and it's cheaper than -- >> and you have to drill it out of the ground. >> tequila or patrone, much
cheaper or that red bull stuff. >> do you remember when i first started the show i used to drink that stuff because it was so early in the morning. >> have you thought about going back for it? no that stuff is bad for you. >> just elevate. it gives you wings. that's what they say. >> yeah. you get wings and i'll be the wind beneath your wings. >> thank you, sir. we have another story for you. this one is a fun one. a guy named steve hilton who is a entrepreneur that says he doesn't have a cell phone. doesn't have a cell phone or iphone or any phone and walks around and thinks he lives a much better life because of all of this. >> i think it's true. >> he says he's more creative, comes up with better ideas and apparently people ask him, the question he gets all the time is what happens if something happens to your children. >> that was going to be my question. >> so he says this is the one that strikes me as the most ridiculous. my children are 8 and 4 and with
a responsible adult at all times. i love them more than i could ever say but why do i need to keep tabs on them every minute of the day. if something happens there's always somebody there to take care of them. when people ask me this question i feel like giving them a slap and yelling what's the matter with you and usually reply what do you imagine your parents did and parents for all of human history. >> if all you had was a flip motorola phone that's one thing but for me i'll sit down -- i'm only there for five minutes when i think i'll go check a couple of tweets and i have seen them better and the 15th time i'm like well, what's huffington post saying and i'll look at that and i'm sick of it. i go through them and then i'll put it down for a second. >> we got to get you a flip phone. >> i'm sick of looking at twitter and i don't even have facebook. people with facebook there's always something to do on their stupid electronics. >> instagram.
>> yeah, i don't have that either. thank god. >> there you have it. >> oh and -- >> i think as a parent that would be the worst thing. >> flip phone. >> or have the one that can't be traced. like they use -- >> burner phone. >> on sons on anarchy. >> we can hook you up with a burner phone. this is my favorite topic for you to give me -- >> i'm going to have some comments. >> mark cuban has some advice for the winner of the $1.4 billion powerball jackpot for those of you that enjoy dreaming about what it can be like. he told the dallas morning news the winner should get a tax attorney, that's top of the list. avoid the lump sum. >> i always thought -- i didn't know -- i thought you were supposed to take the lump sum and he says importantly, decline request for cash from friends and relatives. >> so we're out in the cold. >> no, you have to give but otherwise you'll get taken to the cleaners by everybody. >> here's the thing that he says, don't expect that you're automatically going to be happy
from here on out but you have seen the articles written and they go back and check what happened to all the big lottery winners in the past. some committed suicide and others are in the gutter somewhere. so maybe not winning and having the dream of winning is better than actually winning. >> that's a nice way to think about it. >> his advice is probably a big part of that too. tax attorney and don't handout money. >> he was like some bartender or something and then instead of riding the tech bubble crash down he sold a lot of -- he bought a lot of puts or something to protect the stock that he got because he got paid in stock. >> i don't know if we're going to talk about -- we got a tease but we were going to talk about the other lottery winner rupert murdoch that just got married to jerry hall. >> was that your decision to call him a lottery winner. >> no. >> i see some type of gender
bias. >> who is the lottery winner. >> jerry hall could have won the lottery by being with murdoch. murdoch could be a lottery winner. >> for what because she's -- >> let's just leave it alone. >> either way you're in trouble. you're doing gender privilege. >> let's just go with the news. these are words coming out of your mouth. i don't know what you're talking about. >> why not celebrate love. >> i am celebrating love. >> she's a smart woman because mick jagger went to the london school of economics and now another very smart business oriented man. >> 25 years is not that unbelievable nowadays. you know? that's what 84 and 59. she's not, you know, 19. >> you're coming up with some very -- >> hugh hefner, he's 89 and his latest is 29. that's 60 years.
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welcome back to squawk box this morning. a developing story out of turkey this morning. an explosion in a popular tourist zone killed ten people and injured 15. official stays cause of the explosion is under investigations and could not confirm reports by a state owned tv station that the blast was caused by a suicide bomber.
we'll keep you updated as the story develops this morning. >> u.s. equity futures indicated higher. they have been up by triple digits a few moments ago. you can see the s&p futures are up by 11.5. nasdaq up by 31. mixed day for the markets yesterday. the nasdaq was weaker and the s&p was flat. you can take a look at price of crude oil this morning. thing versus actually picked up by 15 cents. s&p 500 profits will contract 4.4% in the fourth quarter. that would mark the second straight quarter of negative earnings growth and the fourth straight time that profit growth declines from the prior period. joining us is lindsey bell. senior analyst at s&p capital iq. what can we expect? do you think we'll start to see better earnings growth?
>> i think 2016 will be better but the fourth quarter we have to get through those numbers and like you mentioned in your intro it's going to be negative earnin earnings. excluding a 68% decline. earnings from the s&p 500 will be up only .14%. you have materials weighing. behind that you have technology and consumer staples each down 4.6% and 3.6%. the dollar seemed to stabilize a little bit but we'll be keeping our eye on energy prices. >> what did you think that tells us? when was the last time you saw back to back quarters like this. >> in 2008. the important thing to note is consumer discretionary will have the second best growth.
that speaks to the strength of the consumer and we'll hear from the banks and they'll give us an indication of how consumers are feeling from a loan perspective and credit cards and fico scores and things like that. >> we have been looking at the weaknesses and it's an industrial recession at this point. the real question is whether it's bleeding over. but more important is the guidance. >> guidance is key. everyone is looking forward to -- we did a study when management teams guide full year guidance above where consensus is at the current level, not only do they have a pop that day but it's a long-term pop. near term their impacted negatively but longer term it doesn't matter. the investor gives them time to prove themselves. >> the question becomes how much clarity do managements have at this time and is it worth saying
you'll beat the numbers, why don't you ride it out and see what happen with the economy and currently earnings growth for 2016 is expected to be 7% off of 2015 which is negative 1% if things play out as analysts currently expect but that 7% growth rate is back and loaded. the first half of the year is a little bit more difficult from a comparison perspective in 2015. the best growth we had was the first quarter at 3.2% growth which is not robust by any means. >> it's cutting 4,000 jobs. >> upstream business globally but i wonder because we just now have harold hamm on. not a lot have already happened. i wonder if that starts effecting the friday numbers we get once a month and if the fed sees a lot of market turmoil has
also like job growth starting to slow we could be done and done. >> there's another one of the fed speakers yesterday that said they don't see anything january or in march in terms of reason for another rise. they're looking for inflation. that could keep them at bay. >> how do you offset the loss of jobs in the energy sector. >> where does it pick up? >> you need it to come -- >> you need it to come from services. >> services. >> which have been strong but is it going to save the economy? that's a great question. >> 292 could be tough. >> it got closer to the 300,000. it's a month by month thing. we'll have to continue to watch it closely. >> it also impacts the election too which is interesting. >> even the banks. it's the political overhang and with the interest rates there's so much. >> sorkin banks, there's going
to be lay offs there too. >> and by the way, we have bonuses coming on so people don't try to fire people before the bonuses still. that's what happens. two very senioreople just left jp morgan last friday. the big u.s. bond traders that ran that group. >> the average bonus i saw was like 175,000. a lot of money to most people across the country. >> the numbers are not what they used to be. >> but in new york -- what's the base pay? like 70, 80, 100 -- >> no, 150, 200,000 dollars and then plus. >> new york not looking at the same schools that andrew ross sorkin is looking at. >> thank you very much. >> not knocking out walls of the apartment. not building like steps up to the third floor. >> we have to go to a commercial
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>> it killed at least 10 people and injured 15. a syrian suicide bomber is believed to be responsible for the blast. this is still a developing story but we'll bring you the details as we get them. >> it's a company attempting to turn an average joe into a hedge fund manager. it's a crowd sourced hedge fund that allows users to get paid to write investment algorithms. forbes is calling it one of the top 50 disrupters in the finance. joining us is the founder and ceo of the company. he is the cto and founder of the company as well. good morning to both of you. >> good morning. he knows how to do pascal. i can do basic. that's about as far. >> can you? >> i used to. back in the day.
>> so that's a great starting point. the most important thing is anyone can show up and try this and anyone with a mind for finance and analytical skills, a lot of people our show up with justify nance background and have them coded before and they're able to get started and they can do things that people can't do annually. scanning equities every single day and looking for values so things that have strong fundamentals and low pricing me tricks. >> he pick what is the value signs are. >> exactly. it's so define how to calculate value and how to compare it to
price. >> how complicated can they get and how far can they go from looking at stocks for example to co correlate with stock options and scan news. how far can you go? there's people doing very clever things. >> we started with u.s. equities and we're working on adding futures but the other exciting area is adding all sorts of data. sentiment data, shipping data, various data sets. a couple of dozen data vendors putting our data into the site and they can subscribe to the data fees. >> you go on to your website and you do this. how much do you pay? >> nothing. everything is free. >> how do you make money? >> by finding the best algorithms that our users produce and working with them to license their ideas and actually invest in those ideas. >> we're an investment company. >> you guys are investing in the algorithms people are using on
the side. >> and giving the user a cut in the profits too. >> how sophisticated are these relative to what is going on in the big hedge funds. >> i think the platform that we built is actually state of the art. it's completely cross sectional. and then just all the data that we have available. the tools for doing research and the tools for developing the strategy are leading edge compared tooec compared to even the biggest firms. >> so long-term the goal is to have enough people come to the sight and for you to invest in those. >> exactly. so the way we think about it is we built a machine that produces algorithms so people from all over the world show up and use our platform. a huge data base of strategies overtime. >> are you going to make more money on the licensing or investing? >> the primary business model sin vesting so we want to be an asset manager, deploy capital and take a share of returns that we generate. >> if you take any of the stuff all the way back to its roots
it's still 1s and 0s and it's still binary. >> yeah. >> and you can deliver movies over thin air into someone's little iphone using binary code. >> yeah. >> that's impossible. no. no. i don't get it. i don't -- that's unbelievable isn't it? >> we live in a magic time right now. >> we saw that guy with the -- remember the guy that came in, there must be magic. >> back by the way. >> it's not binary. >> thank you guys. >> thank you. >> i want to do this now. >> how much do you have to know how to code this thing? >> we chose a language called python because it's one of the easiest languages to get started. it's almost like writing english. you can use if and then and those words. >> there's lots of examples to get you started. >> we'll check it out. >> thank you. >> thank you very much. >> when we come back getting fit for the new year. the ceo of planet fitness joins
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business is growing. you up the company's outlook last quarter, and yet the stock is trading 5% below ipo price. offering too high? >> no, i think it's the market ad as a whole. i'm comfortable with it's at considering the market, and i continue to support the market to the members. >> new year, new resolutions, what are expectations for 2016? >> the winter months, january through april, the business yeiy busier season, but contributing 2% to the national ad fund every month, driving memberships 12 months a year? >> no numbers to grab on to? >> just driving the market share. >> what's the retention rate? >> something we do not focus on honestly. because we cater to the casual first time user, we make it a fluid transaction, easy to join, ten bucks a month, and easiest
cancellation policy in the business. we offer free fitness training in the facilities, we don't charge for it like most. we get people to turn into lifers, if we can. >> in terms how much people use the gym, one things, some of the membership counts are dramatically higher than capacity. how many people are coming to the gym on a regular basis? >> we average 6600 members per store. because we cater to the first time gym user, they are not heavy users, not in there seven days a week, but two days a week for 30 minutes. we service more members of the community than a typical health club would. >> with members of $10-$20 a month? what's cost mother member? jour you're on wall street even. rents are not cheap. >> we don't have a lot of moving parts and pieces like pools, juice bars, day cares, so we have 20,000 square foot
facilities, they are large, and it's a fixed cost business model. besides the rent number rp, tha all that moves. in new york, more density, so more memberships. >> knew year's eve. >> that was great. >> a big marketing campaign, sponsoring the celebration in times square. how do you plan to maintain marketing costs? >> the natural ad fund, 2% that the franchises cricket, allow us to do the new year's celebration and sponsorships, and at our size and scale, there's not many mountain industry that has a budget to do that, and new year's eve celebration, what better industry to sponsor new year's eve, and we were the largest to do it. >> my very last question for you, one of the things you do, offer free pizza and bagels. there's been a backlash on social media in terms of those initiativ initiatives. >> yeah. it's one 6 those thing wes feel the average -- working out is a chore, not a hobby, how i look
at it, and, you know, if you work out and coming in a couple days a week, you deserve a treat, a and ward. you can't eat perfect forever. a treat makes motivation to come in again. >> if you eat pizza, it's that much more imptous to come to the gym. got to be part of it. >> you know, it is between the staff and members, it's mentality to have fun that night. >> thank you. >> thank you. >> guys, back over to you. >> morgan, thank you very much. when we return, a top investment officer from goldman says the bull market is not over yet. the economy is not as bad as it looks. she'll explain next. then the selloff in oil prices continues, we'll talk crude with herald hamm from continental resources. stick around.
crude oil falling to 12 year lows, and oil man, harold hamm joining us, see if he's standing by $50, and ask how many producers go out of business this year. the president's final state of the union address. >> mr. speaker, the president of the united states. [ cheers and applause ] >> what he hopes to accomplish over the next year and challenges that lie ahead frustrate country. a preview of tonight's speech with the chair, and house majority leader. >> plus, the man behind the bullet proof executive. biohacker and creator of the bullet proof diet joining us to talk silicon valley startups and the science between coffee with butter. the second hour of "squawk box" begins right now.
live from the beating heart of business, new york city, this is "squawk box." >> welcome tok to "squawk box" here in cnbc, first in business, and morning news that was unfortunate to once again report on an explosion rocking central us stan bull in a popular square for tourists, 15 injured and ten killed. officials saying before there was nothing for sure about how it happened, but now a -- they are saying a syria suicide bomber is believed to be responsible for that blast. they even not only a suicide bomber, but talking about a syria suicide bomber. bringing you details as we get
them. we heard maybe even a female. >> obviously, the gateway for refugees going to europe and with the tensions that have risen recently between turkey, kind of getting involved, maybe not surprised to see this. >> okay. let's tell you about the other headlines right now, stocks are pointing to make further gains this morning. the dow and s&p managed slight advances in monday's trading, but the nasdaq lost ground for eight straight sessions. also, president obama will give his final state of the union address tonight at 9:00 eastern time. the republican response given by south carolina governor haley, and we'll speak with jason furman, the chairman of the white house council economic advisers and kevin mccarthy, and we'll get a fresh read on the labor market later this morning as well. the labor department out with the so-called report for november, a measure of job
opportunities. >> i know it's wishful thinking -- >> what's that? >> majority leader, actually. house, not majority leader, house leader. >> yeah. >> you think that was just a fluke? >> i would have blamed it on you, but i saw it in the teleprompter. it's pretty much, this is the media, it's new york. >> it's the media. >> pretty much pervasive. freudian slip. maybe next time. maybe at that point, but, you know, i wouldn't count on it. >> we will see. >> hope springs eternal. >> earnings season is here. alcoa marks the unofficial start reporting after the bell. the aluminum producer beat by two cents, but pressure is on the company. to balance the falling overseas, they shift to the profitable business of making parts for the auto and aerospace markets. on "closing bell," despite weak prices, he's still optimistic.
>> we have seen the price decline over the course of the year in aluminum of 30% and over 40% and basically did everything that is in our own control, reshaping the business, and look where we are, standing, making a profit, so look at cash, look at productivity, all of this, all that we have on our own control. >> alcoa shares slumping 50% in the last year, down three quarters percent after hours. we had a billionaire investor on the show yesterday, saying alcoa is a business he likes because of the profitable move they are making to get into the more profitable businesses. the dow and nasdaq in bear market territory, each down 10% from the recent highs. with the s&p getting very close, it's down 9.9% from its highs. dom is here to walk us through the biggest drags. good morning. >> good morning. a massive pullback in stocks,
there's been a pullback in the dow, 10% thereabout from the record high in may of 2015, so that correction market is something that a lot of traders focus on, the idea of negative moment momentum. whether corrections are bought or sold, what this is an indication of is slowing momentum for the dow. that's a host of things weighing on the market. i can't go through them all because the wall is not big enough, but we have the big ones to focus on recent events and trends traders are focusing on here. first of all, transportation stocks. if you look at the dow jones transportation average and etf that follows, airlines, trucking companies, shippers, that sort of thing, that is in bear market territory, down 25% from the recent high of this past year. the high in the market, health care, specifically biotechnology stocks, we talk high valuations,
however, they pulled back 27% from the all-time high if you look at the main etfs that tracks it, ibb. another drag on the market. one stock specifically, we talk about it often, but we want to mention it one more time because it is the biggest stock in the u.s. target. we're talking about apple, down down 26% from the record high. it is in bear market territory, and, remember, we're talking about just year to date. losses here for apple totalled around $37 billion. some of the big drags shave billions off market values in the u.s. and across the world. back to you guys. >> dom, thank you very much. joining us now is the chief investment officer of the private wealth management group at goldman sachs, and numbers pointed out get people nervous. how long have you been getting calls from investors wondering if the bull market is actually over? >> that's the main topic of our 2016 outlook. we call it the last innings. the point is we are closer to
the end, but, obviously, than the beginning, but it's not quite the end, not calling the last inning, but innings. it can go on longer, or base case expectation is that we're going to have about a 3% return for the s&p for the year. growth will be around 2.4%, and a little bit more left in dollar appreciation, so in all of these areas, we still have a few more innings left, and so we see the headlines, the markets are volatile. we have a lot of risks out there. they contribute to market volatility, but we don't think it's the end of the bull market. >> 3% gain for the year does not sound like much until you consider we're down 6%. that means we need double digit gains to get back to that level. what tells you that the market will do that? >> well, in terms of our expectations when we think about a 3% return, already, the market is somewhat expensive so we went into this year in what we call the valuations that are somewhat expensive, and from here, we can't say we'll get a lot of
multiple caption, so what drives returns? dividend yield and little earnings support. >> the tenth circle of hell? what the the nine decile? >> of valuations. there's no one metric to figure out when to get in and out of the market, so you have to look at a mix. >> to be in a bull market, do you have to expect new highs in the averages? >> well, actually, depends. expecting positive or negative return? >> that's the point. 3% on the s&p doesn't get us back to the previous highs so that means the bull market ended when we hit the last highs. >> depends on whether it's a one year number or multiple year number. our base case is 3-4% for the next couple years. we're not expecting a return -- >> oh, okay. >> we're not expecting recession, and if you're not expecting recession and have good earnings growth -- >> slowly go up, may take years to get to the old highs and go above those? >> if we're 10% below the highs,
it's not going to take that much to get there. >> does this all happen before there's a full 20% pullback? not going down 20% between now and new highs? >> nobody knows the answer to that. obviously, there's a lot of volatility. >> wouldn't be in a bull market if there's a bear market in between, we're not in a bull market. >> that's not the case. do we think 10% hike moves? we have the moves all the time. >> don't go down another 10 from here? >> that's not the base case, no. we don't think you get those negative numbers unless you expect recession, and our view the is u.s. economy is on solid footing. all these worries about secular stagnation or stocks from china we think are not warranted. we don't believe in secular stagnation. look at the recovery, it's the slowest on record. >> right. >> but there's factors that explain immense deleveraging. never had a recovery in the u.s. in the post world war ii period
where you had this deleveraging. the u.s. economy deleveraged by 30%. >> that's why the economic growth is anemic? >> several reasons. that's one. another possibility we think is mismeasurement. if you think about the amount of technology and the pricing in terms of both hardware and software, our view is there might be about somewhere between half a percent and 1% under statement in the price deflator, and if that is the case, that means real gdp is probably understated. there's a number of factors. we think if we didn't have this deleveraging, but had what we would have had in normal recovery, growth on annual basis would have been 1% higher. look at the combination of the factors, you would have had a normal recovery. >> why is productivity growth dropping off? there's a been another question. >> so the other side of this mismeasurement issue of the price deflator would actually mean productivity numbers are
probably higher. if the growth numbers are actually a little bit better than the productivity numbers would be somewhat stronger as well. another key theme is that whenever you had new innovation, and it's true of electricity, true of the initial computer, true of desk tops, when you have new technology, it takes decades for it diffuse throughout the economy, and the impact takes a long time, and there's some disruption and value creation, and it's a mix, and we're not settled yet. we think that has another decade or so to go. >> 2016 will be the greatest year to be alive in the history of the human race. that's true. right? >> is that why? because of lower mortality or -- >> health care. technology. number of people that are not hungry. number of people that have come out of poverty. right? diseases that have been cured. technology then. >> there you go. >> virtual reality for you and what the possibilities are there, right?
i mean, this is going to be -- >> that's true. >> huh? >> yeah, but i know what his virtual reality is. >> what do you mean mine? >> i know what you're talking about. >> what year is better? some pine for the past when times were simpler, but there's no doubt, life expectancy, right? >> yes. >> great. you looked at me like i was crazy when i said best year ever. >> not at all, but there are risks. >> well, nuclear attacks are bad. >> terrorism. >> right. >> so those are probably going to be greater. >> right, but a nuclear -- that would ruin everything, but -- >> playing in the stock market, do you pine for 20 years ago? >> nuclear oblivion? >> no. >> the target. >> no. >> yes, you would. >> no, i would not. every day is the greatest day to be alive, andrew. >> okay. >> thank you very much for coming in. >> thank you very much. >> great, thank you. >> when we come back -- >> if you look at what the stock market did over that period -- >> we're going to find out if oil man harold hamm sticks with
the prediction that oil returns to $50 in the first half of the year. he'll join us after the break. later, what does the president say tonight about the state of economy? jason furman joining us. we'll have that interview followed up with house majority leader, cell phone mccarthy and the republican response as we head to a break. look at the major companies reporting this week. we got all that and more when "squawk box" returns in a moment. flr in new york state, we believe tomorrow starts today.
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. welcome back to "squawk box," 12 year lows in oil, however, crude, down 15% for 2016, one noted analyst thinks half the shell players could be bankrupt before the crude markets reaches e kwquill lib y saying they don't have business to be in a business where the price forecast in a recovery is going to be between say $50-$60, they need $70 just to survive. harold hamm is here, founder of continental resources. we had all analysts, i think there was one with $10 oil. we've had $18, and saying thought it was in the 20s. if we're in the 20s, you're in trouble, my friend. >> well, you know, there's been a lot of predictions about
bankruptcies in this business, and, you know, it's a different situation than it was in the '80s. most have long term money that's not coming due tomorrow, and so they in a lot different situation and can ride this out. a lot of bankruptcies were predicted early, and they are just not happening. some of them have. weaker companies are folding maybe, but very few of them. >> how long can you sustain at these prices? >> oh, we can ride it out whatever it is, but the pendulum goes both ways. this is the sixth one i've seen, in a processing environment. that's what's happened. saudis turn 1 billion airlinbarn us to drown us, but it's a trillion dollar mistake, and a lot of things occur from that, chaos in the middle east, and i don't think it'll work out for them. >> to the extent you believe
we'll get back to $50? >> supply and demand works. that's a range that's predictable, yeah. >> so what is the tipping point that gets us there? >> well, getting back to e ququ libri librium, and what people have not thought about is conventional production that is about 4-6%, 5%, and half of our production today is made up from shell production. declines much faster, you know, looking at the 20% average decline rate as people are not taking that into, well, they are not thinking about that. >> meaning the shale is just in the cost effective at these prices, so it washes out? >> it is. the reason you drill whosonnal wells, becky, is for two
reasons. they accelerate both production and decline rates, and it works, and we've proven that. it works big time. you know, as a result, though, you're going to have first year declines of up to 70%, and so that's going to bring production down a lot faster than most people thought, particularly, you know, when you don't have a level of profit in here that can sustain new investments in the business. >> let me ask you another question, saudi and what they are doing, they want to talk part of it public. what do you think the implications of that are? >> here's the implications. they are selling part of the business to do what they are doing. you know, it's not working for them. that's not a good indication it's not working for them. >> in that they will then change course? >> you know, i think it goes against the culture to borrow money. we've seen them go to the market in the last year, and offer
bonds. i mean, that's good indication that it's not working. >> right. >> you know, they are having to sustain a country. we're sustaining companies here. we cut cap x, quit spending money, ride it out. that's what companies are doing. >> we'll hear from the president tonight, state of the union, something you want to hear from him tonight about energy policy? >> back off some of the outrageous regulatory, you know, demands on the industry. i mean, it's been terrific what epa has tried to do with our industry. certainly, that would help some. >> administrations change, free markets work, and you get $30 oil, and hydrocarbons are not less prevalent in use. >> in fact, we've seen that. >> suvs -- >> yeah. >> you name it. across the board. anywhere near $40-$50, all this stuff, renewables, there's not
enough subsidies in the world. run out of money subsidizing that before you stop using hydrocarbo hydrocarbons. >> absolutely. that's correct. >> there's an election in november anyway. >> certainly not. so -- >> don't get all teary tonight. >> i'm not, just raising the question, but there's other policy things -- >> i'm very -- >> our ability -- did get back to the debate of exporting. >> this is windsing down, his years, and i'll be nicer to you as the, you know, during the exit, the swan song, as it plays out. i just want to let you know, i'll be sensitive. >> i'm not taking sides, but i want to see what will happen in the fall because if it doesn't go your way, which it could not, maybe -- >> i don't know issue, just a change, we know that. unless we change -- get rid of that amendment. i know you want to get rid of the second one, but -- >> bernie is now beating --
>> anyway. >> that's what i mean. >> who's you know candidate? >> i don't have one. listen to all the candidates, certainly we have a lot of good candidates out there, but, you know, not picking one right now. >> support the republican nominee? >> well, we have awfully good republican candidates. >> okay. >> under any circumstances, do you support bernie sanders or hillary clinton? >> well, they haven't, you know, have not rung my bell. [ laughter ] nor yours, i think. >> that's not for whom the bell rings. >> yes. >> tolls. >> rung our bell, so thank you. >> good to be here with you again. >> thank you very much. >> take it easy on me, i appreciate that very much. >> tough time for you. >> yes, difficult. >> hope and change and all. >> when we come back, a wild finish to last night's national championship games, the highlights next. we'll preview the president's final state of the union address, and address the issues that matter most to your money.
>> congratulations to the crimson tide, beating the tigers in the college football playoff championship game. heisman trophy winner scoring late to clench the game. alabama winning its fourth title in the last seven seasons. that's, like, inequality right there. some type of trophy inequality to deal with. somebody's got to -- i don't know whether congress can do this, probably won't. >> you are the pc police, joe. >> probably the congress that won't do anything about the trophy inequality. fifth national championship for coach nike saben, leaving him one shy of the alabama coach, the most of all time, and i saw people saying because of that, that call that he made in the 40 quarter for the onside kick, that elevates him to start talking to him in the vain as you talk about brian. >> wow. >> four out of the seven, you
know how hard it is to win a gnarl title? >> no, impossible. >> four out of seven, incredible. explosion rocks turkey, and we are in us stan bull with the latest. hear from white house council of economic advisers chair, jason furman, followed by kevin mccarthy. i'm val, the orange money retirement squirrel from voya. val from voya? yeah, val from voya. quick question, what are voya retirement squirrels doing in my house? we're putting away acorns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? no, i'm more like a metaphor. okay, a spokes-metaphor. no, i'm... you're a spokes-metaphor. yeah. ok. see how voya can help you get organized at voya.com.
welcome back to "squawk box" here on cnbc. first in business worldwide. among the stories front and center, although many predict four rate hikes by the end of the year for the fed, one fed official at least says that's not a sure thing. dallas fed president robert kaplin says the volatility is reason enough to change that outlook. europe's airbus beat rival, boeing, for new orders in 2015. airlines ordered 300 airbus jets last year compared to boeing, however, boeing outdistanced air bus in jet deliveries. mcdonalds faces antitrust complaints in europe. three groups claim the chain is imposing illegal term on
franchis franchisees by imposing represents above market rates. an explosion kills ten and wounded 15. the turkish presidencies a suicide bomber was responsible. we have more coming up in moments. >> okay. tonight, president obama speaks to the nation in the final state of the union address, and joining us, congressman kevin mccarthy and we're going to talk to jason furman, have you actually respond to the mr. furman, but leader mccarthy, you got to go first here. i've seen enough written. i think you know it's going to be in the president's speech, hard to respond to what's already been given, but if you were to deliver a state of the union from the opposing side, what do you think the state of the union is right now? >> well, from what i read, it sounds more like a farewell tour than state of the union to change it up. i think there's more work to be
done. the people want to see the economy grow. look at median household income, we are lower today than we were in january 2000. that's a challenge before us. look harris to san bernardino to philadelphia, istanbul this morning. the world is not safe. we need a stronger foreign policy to put america and put the world in a safer more secure position. >> well, leader, to your side and president have differing views on how to accomplish that. i don't know if urging him there's a lot more work to do, but -- >> and that has not worked very well, has it? >> well, it worked well for him in terms of doing things that avert the legislative process and do it on his own. so i don't know that i urge him, you know, there's more to do because maybe you ought to wait until the election to affect some of these things.
the gop would do it a lot different. >> a lot different. this weekend after the state of the union on wednesday, all the republicans in the house and senate get together for a conference at a retreat, and we'll do that the next couple days, working on and talking about big bold ideas for tax reform, health care, welfare reform. look at the positive disruption happening in the economy, in politics and the idea from a taxi to an uber. think about the transformation we have in government if we have positive disruption at the same time. think of the v.a. system then. these are the changes to be made. you know, we're living through the fourth industrial revolution, but government is way behind. people have greater choice. more accountability and government will be smaller and more first time. >> people probably -- the voter is tired of hearing one side, all the good things, that's what we hear in a moment, that the
unemployment rate and jobs created in 2015, and, you know, inflation, that's because of the obama administration, and the negative side with income inequality, stagnant wages, because the gop congress, and than from the, you know, from your guys, they hear that, well, you know, urn this president's policies, you know, there's stagnation in middle class, and so, i mean, people are tired of it. i don't know what the answer is. >> people want to see government work. they want to see a solution. that's why i sit here from one per special circumstan perspective, and i can work with those who want to work. walk across the country. why is participation rate the lowest it's been since 1978? why are 94 million americans out of the work force in the process as well? there's so much room for improvement here, and that's why i don't think it's time for a farewell tour.
it's time to actually solve problems. >> we're -- it -- you can argue about whether things are great or not, but even if they are better than we expected, this is with zero interest rates for seven years, and we still are not strong enough to go up above a quarter point after all of this help. that's the bottom line. we're still barely above stall speed in the worst recovery in the post war period. >> this is the worst coming out of any recovery in the process, and it's the longest. from a couple different pperspe a new approach. >> maybe corporate tax reform will be talk about tonight, but don't hold your breath, leader. >> well, if he doesn't say it tonight, i guarantee you it's said and mapped out at the retreat this weekend because we know we have to have tax reform if we want to compete across this country and across the world. >> okay. congressman mccarthy, senate
majority leader, we demoted you earlier, but we'll see. hope springs eternal. anyway -- >> thanks for having me. >> all right, you're welcome. >> breaking from the traditional format, the president promised a speech to cut through the day-to-day noise in washington. two topics, people are eager to hear about, the state of the u.s. economy and state and security of the country. joining us to talk more about it, jason furman, chairman of the white house council economic advisers. jason, thank you for being here today. >> thanks for having me. >> what is the economic message you expect to hear from the president tonight? >> what you're going to hear from the president is app optimistic forward-looking message. he's going to talk about the progress made, record streak of 70 straight months of job growth, but hear what we need to do to continue that. he's someone who believes in our strength, that's why he wants to
expand markets with trade, why he believes in immigration, but we have to make it work for everyone, raising the minimum tax reform. >> jason, i don't know if you just heard from the senate -- from the house majority leader what we were just talking about with leader mccarthy, but there's anxious out there, people who are not confident in the economy, and they feel like they have not done well over the last seven years, what do you say to address that? why do you think that exists, that situation? >> that's there, but the case that consumer confidence in 2015 was the highest it's been in over a decade. nominal wages are rising the fastest they have in the recovery. gasoline prices are low, so real wages are rising quickly as well. absolutely. we need to do more. you know, the one thing i think i, you know, most disagreed with, you know, that i heard from your previous guest is we're not taking off the year 6.
we want to continue to get things down for the american economy. we don't want to take off every fourth year because there's an election. the president did a lot last year and wants to lay out the next year and further ahead. >> what are the economic goals for 2016? >> you know, one thing is the transpacific partnership. that's something we'll be submitting to congress. it has 18,000 tax cuts on american exports at a time when some exporters have a tough time with what's going on in the global economy. the sooner we take a step like that, the better. he's going to, you know, reiterate and continues to be in favor of, you know, immigration reform, raising the minimum wage, paid leave, you know, whole raft of things, many of which he's talked about for yeayear yea years, but, you know, really some of them we could and should get done this year. >> corporate tax reform is
something that seems to have bipartisan agreement that it's a lousy tax code. do you think that's something that might be settled in 2016? >> well, look, i'd love it to be. it's something that, you know, we've laid our vision out years ago, cutting the top rate to 28%, broadening the tax base, reforming the tax code, dealing with an international system that collects very little revenue while imposing substantial distortions on american businesses, so i think there's something really good to be done there, whether it can be done in the next year, frankly, depends on whether the republicans are willing to separate business tax reform from cutting lower rates overall, a more controversial issue. >> you know, jason, one of the weird dichotomies i noticed is when you talk to democrats, they say the economy's going great but don't think the federal reserve should raise rates any time soon, and opposite on the republican side. the economy's lousy, but the fed needs to raise rates quickly. how do you explain that weird
dichotomy? >> you know, i think that's an interesting point. i, myself, don't comment on the fed, so i don't have that problem, but, you know, the question is, you know, to what degree do you think we're recovered sicklically, and i think we've made progress, but there's things like part-time employment, labor force participation rate that are not where we'd like them to be, and then to what degree problems are, you know, structural, things like productivity and income inequality, and some of those, the fed has tools to deal with, and some it does not. we focus on the things we have tools to deal with like productivity inequality. that's request we talk about tpp, and talking on your show about the minimum wage so much. >> we did have a guest earlier who talked about the participation rate and thinks some of it is just an error in how we are measuring things. or productivity is an error in how we measure growth, growth is underestimated. do you ascribe to the view?
>> i spent a lot of time looking at that question, and e it's pussling because you see very rapid employment growth, you don't see gdp growth anywhere near it, and, you know, we trust the employment numbers a little more because it's more of a direct survey. there's less that can go wrong with it. our economy is definitely getting harder and harder to measure, but, you know, there's always been difficulties measuring it, so i'm not surprised if we always undermeasured growth to some degree. all right, jason, thank you for joining us tonight. we'll be watching. >> okay, thank you. coming up, a live report from iz stan bull. we return in a moment with that.
and on long island, where great universities are creating next generation technologies. let us help grow your company's tomorrow, today at business.ny.gov key to weight loss and boosting iq is butter in your daily cup of joe, the idea behind the bullet proof lifestyle, flipping the food pyramid upside down saying your diet should be 70% fast. it's part of biohacking, using tech and data, tracking to manipulate the way the body functions, and we have the founder and ceo of bullet proof, and, i've been psyched about
this for a long time, baa i read about this, and everybody's doing this. coffee with butter in it? >> with another oil that does something different to the brain. >> what's it do to our brain? >> turn on key tones so you burn two energies rather than just one kind. >> oh, it is good. >> really, good, right? >> i only drink coffee with milk. >> it's creamy. >> milk sticks to the good stuff in coffee, and this avoids that problem. it tastes good. >> before you sat, if i drink this, i don't want anything until lunchtime? this is breakfast? >> you won't care about food. i could put a bagel in front of you, i want it, but if i eat it, it's a bad person. >> because, what? >> it works because when you turn on key tones in your body, which are fat burning molecules that come after four days of fasting, it gives you enough to manipulate hunger hormones. it's a neat hack. >> it's weird, because, you know, january 1st, as always, back on the no carb thing, and
eat all the meat i want. i need -- why do we want carbs? that's all i want. it's the key tones kicking? >> well, your body is saying turning protein into carb is hard to do. high protein diet is not a great way to lose weight. high fat with the right diet works. >> give me a high fat diet. >> i can. >> i will embrace this, seriously. >> it's right here. >> this is it? give it to me. >> it works. >> give me fat. >> no carbs? >> well, you can, a few carbs in the evening, one day a week, a lot of carbs. >> what fat do i love? pie? >> well -- >> meats? >> you can do a pie made from nuts. there's a bunch of desserts. you can have sweet tastes. sugar wrecks metabolism. >> i want fat. >> olive oil, but avoid canola
and vegetable oils, corn oils, those are damaged, and your body does not use them well. >> peanut butter? >> almond butter, but it's good. >> you're doing bullet proof, and a lot of people are doing this at their own jobs, just stealing your -- >> it's not stealing, like, i would love to see the whole world put butter in the coffee rather than milk because of the benefits. what i do differently with the coffee beans is it's another process to make green cough foe eliminating mold toxins that are regulated in every western coffee other than america. we get coffee rejected from europe and japan, we drink it, and then we get jittery. this is the upgraded coffee beans, grass fed butter. when you do that, everything rocks. >> starting across the country? >> working on it. >> you don't have a keurig thing? >> i do. >> where? >> bulletproof.com. >> i have to order? >> yes. >> and it has butter in it? >> does not. this is just the beans.
the keytone stuff is in the bottle. pour it into the coffee. >> the coffee is missing something that other coffee has? >> the coffee -- i take away the bad stuff that forms in fermentation. >> what else do you sell? >> bulletproof brain performing enhancer things that we make. >> so you're bordering on snake oil. >> no, no. >> just coconut oil. >> you swear -- how much more expensive is the coffee? >> it's a buck or two when you buy the small bag versus st starbucks. >> you got to come back. >> and butter and brain octane. >> there's a longer conversation here, but the other hacking things you are doing. >> i lost 100 pounds and kept it off for ten years. i used to weigh 300 pounds. >> come on. >> true. >> come on. >> just saying. >> thank you. when we come back, richard engel is live in turkey, and in
were you home? you didn't have to go there to cover this? >>. >> the explosion happened in the center of us stan bull, and i can guarantee viewers who have been to this location, we are right in the square between the blue mosque and the most photographed place in the city, all the tour groups were here this morning. there was a school group here as well of fifth graders. this is a place that's generally packed, and around 10:30 this morning, a witness heard a loud explosion, then silence, and he came running to the area and saw bodies on the ground, some people were dead. at least one woman, he saw, was
screaming. the tour groups and school children here went into the surrounding hotels, restaurants, a lot of them pull down their shou shutter, and the government in istanbul, the president, one of them, saying that a syrian suicide bomber is believed to have been responsible for this, and by the body parts, they believed they identified the suicide bomber saying that the person was born in 1988, but not releasing anymore details, but a terrible incident in what would be the tourist hub of this city. >> and you've heard that perhaps the suicide bomber was female, but you can't -- at this point, that's not been released, or have you even heard that? we heard that's possible. >> reporter: we have heard that was a rumor, but not able to
confirm that. just it does appear the bomber has been identified by turkish authorities because they are saying that he/she, the suggestion is that it was a man, but really we have not been able to confirm either way. born in 1988, and syrian suicide bomber, but at this state, that's all i know based on what officials are saying about the identity of the attacker. >> richard, i don't want you to necessarily have to conjecture on who is most likely responsible in terms of having a, you know, reason to do this. we hear syria already, maybe you don't want to talk isis or what might be happening, who would have the most ax to grind right now with turkey, and we have not talked to you in a long time about the whole situation in syria, but how do you view what's happening right now? >> reporter: well, when i first heard about the explosion this
morning, and let me preface that there's not been an official claim of responsibility that i'm aware of, but when i first heard about this, the immediate suspicion in the country is falling on two groups. one, the kurdish pkk and they have been in active war with the turkish government, and that war is mostly carried out in the southeast, but it is a real war zone in the southeast, and the kurdish threatening to bring the war to istanbul, to bring it to the turkish government to make them pay for what they say is unequal campaign waged against the kurds in the south. the other group that you would suspect immediately would be isis or somewhat affiliated with isis our motivated by isis, and then when you hear today they say that it was a syria, that makes the other angle, isis
connection much more possible. >> right. i hesitate -- >> reporter: why do they have an ax to grind? oh, there's so many -- >> yeah. >> reporter: why would they have an ax to grind? isis has operated any country for a transit point for a long time now, for several years now. on their way in and out of syria, and the turk irk government recently started to actually tightens borders. you may remember there was an agreement reached where u.s. aircraft were going to be able to use turkish air space and to use the air base in southern turkey to carry out attacks against isis, so it is very possible that isis decided they had enough of just using turkey as a transit point, but we don't know at this stage if it was official or syrian freelancer
with a personal grooechx, we don't know. >> richard, great to see you, thank you for the report, and have not seen you in a while, not sure we want to because it's always like this, but thank you, appreciate it. okay, when we come back, founder and chairman of quicken loans talking about the raise in the rate environment and more. at ally bank, no branches equals great rates. it's a fact. kind of like working from home equals not working.
bears on parade. >> i immediately regret this decision. >> the slump in crude, start of the earnings season, will all the negativity draw the bulls back into the market? >> putting money to work, dan gilbert's plan to focus on technology and sports, and how the new robert mortgage works for the lending giant. >> zero. liftoff. >> and the rising cost of prescription drugs, front and center at the jp morgan health care conference, exclusive intervie with dr. sam waxall, who is taking the hot bullet ton issue head on. the fine hour of "squawk box" begins rights now.
live from the most powerful city in the world, new york, this is "squawk box." welcome back to "squawk box," it's 8:00. this is cnbc, we're first in business worldwide, i'm joe with becky and andrew, and if you were just watching this, talking to richard in -- >> engel. >> yeah, over in istanbul where i think he lives there for a large part of the time, and there's a developing story out of turkey this morning. apparent suicide bomber detonating a bomb in istanbul in the tourist district today, ten killed, 15 wounded, victims mostly foreign. the prime minister says the bomber, which i'm still trying to figure out how you know -- richard said they had pieced -- literally pieced together parts, i guess -- >> identified this person and
know -- >> know who the person -- a syrian syrian, and we'll keep you updated. oil is bouncing off another low, down about 2%, and then it had made back 2%, only 60 citizen at this point. it was trading higher. china was quiet, shanghai up a little bit, and europe was up double digits across the board. this, as you can see, right now, yeah. good moves in germany and france, and good moves across the board there. andrew? >> okay. we got other news for you this morning. nigeria says a couple opec members requested emergency meetings due to market conditions. meantime, analysts cutting the 2016 oil forecast as wti and brent dropped to $30 a barrel. standard charter bank taking a super bearish view saying it could drop to $10.
we had legendary oil man, harold hamm saying opec is making a mistake. >> predatory processing development. they turn barrels on to drown us, but they have not got it done. it's been a monumental mistake for them, i might add, trillion dollar mistake, and we are viewing a lot of things occur from that, a lot of chaos in the middle east, and i don't think it'll work out for them. >> let's check on the oil prices right now, wti crude at 31.43. >> catching you up on today's other headlines, president obama will be giving his final state of the union address tonight at 9:00 eastern time. the republican response will be begin by south carolina governor haley, and starbucks plans to open up 500 stores in china this year and has not seen systemic slow down in the country, but
comes as kfc blames china's cooling economy for soft results. at 4:00 p.m., the chairman and ceo on "closing bell", and disney is adding nike's ceo to the board, bringing the total number of board numbers to 12. the dallas fed president says four interest rate hikes by the u.s. central bank are not baked into the cake. speaking to reporters yesterday, he points to a global stock market volatility situation, also says that the fed must assess economic data as it unfolds. >> he's new. he's easing his way in. he said, you know, the fed, a lot of guys talk a lot, say controversial things. let me try this. we may or may not do four over the next year if things change, we may not do four, and that's a headline that he is headlines. that's not a headline. that's not saying anything controversial that could get you in trouble in your first couple
-- >> that's probably wise. your first few steps out, test the waters. >> before that, a quick thing, i thought about this, hillary clinton, the candidate, deciding we need a surcharge, a wealth surcharge on people. we'll sock them -- >> anybody every $5 million, right? >> you got to make over $5 million a year, and you get taxed 4%. now, i can get behind this, you know what i mean? now, i feel like people that always want to tax the wealthy, right, but usually i get, you know, i'm way down there, at some point, but if you're going $5. >> all in. >> all in. >> tax those guys, get the pitch fork, okay and the torches, go to their houses. >> you're part of the mob now? >> yes. they don't need that $5 million, andrew. what will they do with it? they don't need that money or deserve that money. they just blow it on frivolous, expensive things. this is a good idea. i'm, boy -- >> you know who is not behind
that? >> who? >> dan gilbert, quicken loans founder. >> horrific. what about those people make them selectively prone to a higher out of something called fairness because they've done better than everyone else. >> we could debate about this, but there's a distribution curve in terms of -- >> i know that. that's not their fault. >> it's not their fault. >> not their fault. >> the distribution curve changed in the country. >> you're going to penalize -- >> i'm not. i'm not saying it's right, but it's the argument. >> i thought it was absurd by saying i'm for it, but all the sutden, we're just right on the same side of things. >> dan, kicking off the new year, and plans to invest $35 million in early stage tech companies focusing on sports. quicken loans launched rocket mortgage campaign, and we'll talk about that too.
dan gilbert is on the floor of the detroit auto show. great to see you. >> hear you're fired up there in new york about something about distribution curves, but i couldn't catch the rest. >> there's a plan from hillary clinton that says she would tax people who are making over $5 million. she would tack them 4% surcharge, a wealth charge to bring more equality, her way of addressing equality. what do you think of the plan, dan? >> i always ask who creates more jobs and does more with that same money, the private sec sore who would hang on to it or the government? that's how i would put it, becky. >> all right. i think that clears up exactly what you think about it. dan, a busy start to the year, out at ces last week and now the detroit auto show. what are you doing at the show? why are you there? >> because we're investor in robb report, the luxury brand, international and domestic luxury brand fast getting into
digital and into the digital space, and, you know, they are both magazine and online now, and so we're investing here and just here because we're, you know, part of detroit, and i got to tell you something, the show is beautiful. not open to the public yet, but i've come here for many years and the people putting on the show did an unreal job and that's why it's the post important auto show in the united states, maybe even the world with 5,000 or 6,000 media people here, and it's an exciting sight to see. cars are technology on wheels. that's what it's all about. we saw that at ces last week, and we're seeing it here in detroit this week. >> do you think that's sort of just indicative of insurgent of detroit overall? >> it's helping. when you go to vegas, the main topics in the show or the whole consumer electronic space was cars, autos, and technology related to that. we're seeing more and more and innovation on that front from
all kinds of sources and people worldwide and all developments, developing here in detroit, some in silicon valley, but, you know, weaver trying to be an investor in that as well as the sports technology too. >> dan, i know that you're invested in a lot of things, real estate in detroit, i think you're the largest real estate investor in detroit outside the government there. we talk about the cleveland cavaliers. we know some of the ventures you do looking at technology an other issues out there, but we've also seen such a volatile public market, just in the first six trading days of the year. it's been something that has really spoofed investors. not sure how active you in publicly traded company, but i just wonder what you think looking at some of the volatility and chaos. way you think about equities overall right now. >> i try to take and listen to the warren buffet philosophy, and only time a stock or company matters as far as price goes is the day you buy and day you sell it. we're not selling too many things these days, becky, mostly
invested in private equity and v venture capital and city of detroit and sports entertainment business. we have enough stress to worry about, you know, the market going up and down. >> let's talk about the housing market because, obviously, quicken loans, i think you're the third largest provider of mortgages. you have a very good idea what's happening in the housing industry. what do you see right now? >> i think the housing industry is doing well. as eyou know, it's local, and it's a local market, and you see parts of the country that it's really taking off. actually, here in southeast michigan, around detroit, we e had a huge gain in housing prices last year, but not unhealthy, not like 20%, numbers that are kind of nuts and you know then there's an event when you have prices going that high that quickly, so you like to see a steady growth of housing prices, but keep it affordable. i think interest rates stayed low. we did not see the long term end
of the market respond or react to the short term move the fed made last month so rates is not moved. there's a misconception about that, you know, move short term automatically moves a long term move. it's not happened. you know, it's a very healthy environment. rare, i think, that you have such low prices on homes or relatively low prices and affordable while rates are so low. it's sort of a perfect sunny day after a perfect storm for today's market. >> what the heck is a rocket mortgage? something faster? >> it truly is a revolutionary product with 450 people, and you can get your full-blown mortgage approv approval, lock in the interest rate digitally in less than 8 minutes, and rocket mortgages take off fast and get it all done. not a lot of people are sort
of -- a lot of people are questioning that, but it's true. we built interfaces into employment data base, into banks for bank statements and property valuation services, so you can actually go on, put all your information in, and instantaneously, we check everything we need to check and issue an approval, and that's it. a lot of that, you don't need to follow up with any further documentation on paper because we've already electronically verified it. >> dan, why has no one else been able to do this thus far, and how quickly will others follow on and try? >> it's a monster, joe. i mean, it is -- it truly is like rocket science, no pun intended. every single state and municipality you deal with has a separate set of regulations and laws. as you know, the consumer finance bureau or protection bureau put in another layer of laws with what they call this whole obligation in trid laws that mortgage lenders have to follow. you have federal laws, state laws, and you have local vendors. you have massive complication
when it comes to verifying all of this data and information and trying to get proprietary data bases to do business with you, and goes on and on and on, and it's very complex, very detailed, and it takes a long period of time to put it all together. we do think there's competitors, of course, we think it's going to take a while, maybe get up to where we are with rocket mortgages, and it's taken us three year, and we think we know the retail mortgage space pretty good. >> you know, tell us, too, about court side ventures. we heard this announcement yesterday. what is this that you're doing? focusing on media and technology companies that play in the sports arena? what's that about, dan? >> well, we've had a lot of threads, as we like to call them, a lot of investment related to sports starting with the cleveland cavaliers, flash seats, wsc, a helmet maker, all these things coming out from the
investment into the sports, and as we started to know george pine and martin at wpp, it seemed to be an interest of putting together a front end vc technology related to sports investment fund. bruins raised $250 million, george pine, one the most experience executives in sports in the united states, but he invested in a little later stage company, but he's getting a lot of deal flow, if you will, from that, just from that reputation and from the contact, and from the fact he has a fund, and so we needed a fund or space to invest into digital sports asset, and that's what we're doing. tell you what, it's very exciting. so much going on. like the car technology stuff on the sports side, an explosion of innovation, creativity, and sometimes it's like alice in wanderland is little bit, where to make the bets and everything, but so much going on in the space, i can't tell you how
exciting it is. >> lebron is working on the three point shot, as the owner of the cavaliers, do you talk to him about his shot? >> not specifically about the three-point shot, but overall, he's having, as you see, a great year, and we're fortunate that we've run off seven wins in a row here now, leading the east, but the nba season is very long, a lot of ups and downs, coming up to the halfway mark with a big game monday night against golden state, but three in texas ahead of that time. we have challenges. we have one game at a time. we try to never get too excited or too low, lose or win, and focus on one game at a time, becky. >> rooting for you, dan, visit us in studio soon, okay? >> i will. thank you. nice talking to you. >> you too. >> we're going to go to break, but i'm -- this makes sense to me, if you do the $5 million a year to tax those people. the whole democratic -- the montra on how to win elections
here. so this is .02% of the people. >> right. >> basically, you can get 99.98% of the people are going to say yeah. >> it's a good plan. >> let's get them. out of 10,000 people, only two people will be mad at you. >> one is not you. >> one is bill clinton. if they file jointly, they are $5 million. >> probably. >> he might be mad. i'm starting to see the beauty of these plans. you get all the votes, right? basically? if you say you just tax those guys? >> get the pitch fork out. >> get the fork out. a brutal start -- what do you think bernie sanders will propose? 10% on $500,000. >> do you think tax rebates should follow the curve? >> what? >> you mean progressivism? 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 so in a variety of market conditions...
nasdaq particularly hard hit to start the year, on an eight day losing streak for the first time since 2008. yesterday, biotech was just hammered. stocks, global market strategist at jpmorgan funds. what's the word to describe your current view of the market? are you looking at select opportunities? where are you? >> not petrified, but patient. i think the only bullish thing going on for us right now is how bearish the attitude has gotten towards the u.s. market. maybe that's enough for a near term bounce back and why futures are popping up here, but it's not enough for a staep esustain rally. theish i have with the market now is we go into the earnings season, all the head winds we had last quarter like low oil prices and high dollar and china, all those things got more uncertain, right? look at oil, today, for example.
to me, those things, until those things start to stabilize, oil and dollar stabilizes, it's going to be very difficult to see a sustained like higher here in the market. so selective is right, patient is the other word. it will be different from the second half of the year. >> from what you described, could be near levels in all those things in addition to oil and the dollar throwing in china. ? right. >> you might be at levels where they could all be expected to be bottoming. i mean, 30 oil, you think, are close -- i mean, people -- >> yeah. >> you know, 60 is the bottom, 40, 0 is definitely the bottom then. maybe china, under 3,000 again, that's where it went last time. all these things could just bounce a limit, and that might give support. >> that's right. again, it's a matter of time. i would argue that in the near te
term, there's nothing supporting oil prices. there's a visceral price recovery are sewn now, but in the near term, next month, three months, there's iran we have to get through and the liftoff of sanctions there. you have maybe another rate hike that would lift up the dollar and push down the price of oil, so there's just nothing good going on in the oil markets right now, and until it becomes evident that the u.s. shale oil production is actually declining, and, by the way, it is. that decline is only going to accelerate through the the year, yes, joe, that's right. >> within the year, everything should bottom. >> within the year, right. >> end of the year, we're in a sustained uptrend? >> i think we are in an uptrend. i don't believe the bull market is over. that's not the case. the fed has not tightened enough or knocked down the consumer just yet. it's not over. my playbook in the first half of the year versus second half is different. i think the first half of the year, yes, you do buy the
pullback, but look at the u.s. dollar strength to continue. with that, you want to own new economy stocks. you want to own beneficiaries of lower gasoline prices and consumer stocks. once oil bottoms, and the u.s. dollar stabilizes, i think you can look at emerging markets, can look at large cap oils. >> so do you remember in the financial crisis on the way down, do you remember any major wall street firms saying sell everything? did any of them get out in front of that this early? 10% down? i don't think any did. >> i don't remember. >> there were some people in mid-september after lehman. >> after lehman, though. >> by the way, that was not a bad call. >> right. >> the problem is you have to be right twice, get out of the market, and then you have no know when to go back in. >> three firms say this is a
bear market, get out so far. >> well, i don't know who at those firms. >> right. >> rbs. >> i think certain people have said and will say it this year and we will eventually. i think what this year and last year is a reminder we're not in the early stages, maybe not the mid stages of the business cycle. to your point, joe, absolutely, approaching the latter end here, look at nonresidential construction, all those things -- >> i want them to sell everything. then they get nervous as the market loses. >> all right. thank you for being here. >> thank you. >> nor many a moment.
>> still to come, peter kraus, chairman and ceo of ae rises the flag on the widely popular investment tool, that, plus whether or not the u.s. economy has anything to fear from china. and we have an exclusive interview with sam welcomesaksag at the drug pricing issue in the next half hour of "squawk box." stick around. you don't want to miss it. right now, heading to break, look at the u.s. equity futures, higher all morning, dow up by 145 points.
welcome back to "squawk box," everyone. let's look at stocks to watch this morning. apple upgraded to buy from neutral at bank of america. the price target, $130 saying concerns over reduced iphone production are already reflected in the stock's price, and that apple could be prime for a bullish cycle involving an upgraded apple watch and possible new iphone. that stock up by 1.75 today. starboard cut stake in darden o 8.1%. and lululemon raises forecast on strong holiday sales a month after the retailer trimmed retail expectations. stock is up over 8.5%. shares of bp higher this morning after they said they are cutting 5% of the global work force, that is about 5,000 jobs, and it's because of the ongoing slump in oil prices. >> okay. it's been, of course, a rocky
start 2016 in the market so far as investors rush to protect their portfolio. why are they looking? etfs account for 70%. to talk about that, pete every kraus, ceo and chairman at ab and i want to talk about china, and you look at the etf market. has it broken down everything that's taken place? not really? >> no. etf liquidity is strong. etfs traded well. there has not been any real selloff in the equity market as seen in august, although, the mark has gone down, but it's been orderly. >> you were ringing the bell, sounding the alarm before? >> i think the alarm is appropriate, but we need a warning label. understand the risk of etfs, and there can be disconnects between the underlying price and etf and
that's really dangerous when it happens and hard to predict, but it generally comes in a market when sellers get a little rattled, and they accelerate the sell orders, and when that occurs, and you hit disconnect in the market, seen in august, etfs become incredibly experiencive. >> we talked this morning a number of big banks putting sell orders on the market across the board telling investors to get out. what are you saying? >> i would not tell investors to get out of the market. i think that's a little hyperbolic. i do think that there is higher risk in the markets today. i wouldn't be adding risk in my positions today. i would be watching for market stabilization. you know, china has been a big issue. talk about china. take perspective on china. six to seven years until 2014, china was the significant demand in the world.
it was significant demand for energy, for commodity, for capital goods, for equipment. 2014, that stopped. that marginal demand, when it went away, what it left was excess capacity in steel, excess capacity in iron ore, excess capacity in the capital goods, falling oil prices, falling prices for capital goods all around the world. that had a significant impact, so it's not surprising that all of the companies in the earnings growth that we were hooked spoo for six or seven years becomes more volatile, and it's not surprising markets became volatile. what's happening in china is it's trying to move its economy from the capital economy to consumption led economy having some success. consumption in china, that part is growing at 10%. the capital goods part of the economy growing at 2% or less. we're witnessing a big shift in a very large economy, and that's going to have an effect in the world. >> the problem is that as they shift to a consumer led economy,
they have to make sure wages go up for the people, and as a result, that makes it much more likely that companies would shift to other sourcing areas. >> well, you know, unemployment in china has not been a problem. wages have continued to go up in china, and consumption, again, look at services in consumption, led industries in china, the growth rate is robust, which suggests that, actually, people have money to spend, and they are spending it, and they are actually improving their life and china is going about the business inside of china, but that doesn't mean that the capital flows are not negative. >> the value of the yuan, otherwise their standard of living goes down. >> chinese have been aggressive as a government trying to support the yuan, and so people who believe the yrgsuan deprecis in a short period of time, they are not watching what the government is doing. the government is trying to stabilize that. it will devalue to some extent. it had 28% inflation over the
years, not surprised if it goes down some. i think that's -- we're in that structure, in that change, and when you have a change of that size, you're going to have volatility. that's what we're seeing. >> funny about investing, the easiest thing to do is usually the wrong thing, and hardest thing to do is the right thing. with all the volatility, you think, wow, i'm going to cash. i don't need this. that's easy thing to do. you feel worse when the market rebounds from there and you're out. you feel more panic watching that go back. you never get back, always in 10% higher. i wonder if that's where we are now? it's the easy thing to do now, say, i don't need this, i'm out. too many third-degree babad thi and then you buy back higher inevitab inevitably. >> etfs tend, in the hands of many, allow them to move in and out of the markets quicklying and that's why people own etfs.
professional investors, money managers, that's what they are supposed to do, and they buy etfs when they are cheap and sell rich. they are good at it. everybody else has a harder time at it. if you do the math of how often do you have to get the changes right in order to beat the buy-in old strategy? it's 75% of the time. >> what about people who decide, i own etfs rather than mutual funds because on the bay i get in, i want to get in at 10:30 rather than the end of the day, and the day i want to get out, for bhawhatever reason, i want do it then. there are people who treat it like a mutual fund other than they -- on -- >> emergency release vehiclealv. >> on their timing opposed to waiting for the -- >> the question i keep asking or the point i keep making is, okay, but what is the cost of that? can we know that there's a cost. >> is there a value or above or
below nasdaq? >> we know etfs trade at the value, not at the nav. >> that's what i mean. >> that was the problem in august in the equity markets, and you say, i'm not saying or buying at that time, but you might have to. >> even if it is at the end of the day than some supply and demand skbrgenerated price. >> that's the argument. in less liquid spaces, talk about your opening comment about etfs being liquid. well, etf liquidity is useful in places why the index itself is less liquid. that's what we see most of the growth. but there's a reason for why etfs are liquid and indexes are less liquid. there's a cost there. no free lunch. yes, get in and out when you want, but there's a cost. >> quickly before you do, oil, your thoughts on where we are? >> well, look, there's a structural change in the oil markets. we've seen oil continue to drift
lower, and i don't think, unless there's any geopolitical changes that there's going to be much of an increase in demand for oil, which is the likely catalyst for increase in prices. so we're either going to need to see a significant increase in demand or see some change in the oil sector where drillers stop drilling. until we see that, we are likely to see oil at this price for a while. >> thank you. >> thank you. great to see you. >> other shows do, how does your dock view you, and we do etf liquidity against characteristics of the net asset value. why don't we have 100% of the viewers in the country at this point? really? do you understand why? >> i don't know, joe, but i hope it happens. >> it's entertaining. >> i'm not kidding. >> it's an important conversation. he's in a pink watch. bank pants. >> yes, i am. maybe everybody should shift on
the dog show to the pink watch show. >> your beard is perfect. every hair the same length. anyway, coming up, the topic raising the blood pressure in the pharmaceutical industry, prescription drug prices, sam waksal founder of kadmon, and anyway, he may talk about all the things taking on that issue in the squawk exclusive interview next. you know, to show the importance of saving for the future. so you're sort of like a spokes person? more of a spokes metaphor. get organized at voya.com.
welcome back to "squawk box" this morning. futures, dow opening higher, 120, nasdaq 37 points, and s&p looking to open 15 points higher. >> drug companies proving the industry's pricing power among those raising prices of branned drugs 10% in the last month citing high cost of research. the ceo of pfizer, ian reid, speaking in an interview about prescription price hikes in light of political pressure. >> we're in an election year. it's politics in reality. the pharmaceutical industry represents 10% of the health care spend. weaver the most efficient 10%. most pharmaceutical companies like pfizer, we make our products available up to 400% of the level for individuals who have no insurance or poor insurance, and so i think it's a political issue. when you look at inside the total health care spend. >> joining us now from jpmorgan health conference, sam waksal,
founder of kadmon, sam, good to see you, thanks for joining us. >> it's a pleasure, thank you, joe. >> you're going to have an op-ed about this, and you make points that both justify the, i guess, higher raised at turing, but also differentiate that situation for most pharmaceutical companies, but, basically, what is your thesis about pricing in the drug industry? >> well, you know, we live in a complicated world right now and there's so many pieces of it that are affecting how we all think about it, and are affecting our industry, the pharmaceutical and biotech industries dramatically, and everyone here at jpmorgan is talking about it. you would have never heard that five years ago. my thesis is that with the outliers aside and the companies
like the turing's of the world are outliers. most of us go to work every day in the farm suitable call and biotech industries trying to come up with drugs for real unmet medical needs, and if we don't do that, society will actually become bankrupt in a few years. if we don't have a cure for alzheimer's, we're going to be seeing every country, especially the united states spending a trillion dollars a year taking care of patients, so what we do actually saves money, and if you think about it, in the first quarter of the last century, people's life expect tancies we 43 years of age, and now the life expectancy in new york city is 83 years of age, so it's our industry making people live longer, but there's been big changes. look, when you have bernie sanders proud to have the
pharmaceutical industry as an enemy, you see that it's not just -- he says that for a reason. the people out there no longer look at our industry as the industry that's really bringing them life saving drugs, but rather the opposite, and more importantly, in the '80s, the most respected ceo three years running on the cover the "fortune" magazine was roy at merck, and merck was the most respected company in the world. that doesn't exist anymore, so we have to timely take a leadership role. we can't just say, look, if we don't raise prices, we actually are not going to give you innovative drugs. that's not enough. we have to be leaders in this field, and we have to start thinking about what we raise prices for. we have to start explaining to the public gilliad was attacked
because of the cost of the hep titus c cure, and yet as it cures people, those patients are gone, and in a few years, there's no more people with hep tit titucc, and we are kecures ourselves out of the market. ian read said it beautifully, it's 10% of the 18% of the gdp that are health care costs, and, yet, we get attacked, so i wrote an editorial a few years ago in the "new york times" which said that in reality we have to start charging when drugs work, and i used cancer as an example. fact is that journalists and people talk about the fact that we charge a lot for only an extension of several drugs, and
15-20% of the patients live for year, and we affect outcome. those drugs don't work on everyone else. what we have to do is not charging when drugs don't work. people are doing that. that's one thing we can do, and i think payers and patients thank us when we do things like that, and we will reverse this animous that exists out there right now. bernie sanders also, you know, threatens the financial industry. fact is that we have to start explaining to the people what we do in pharmaceuticals, what we do to save lives, and the fact is that over time, drugs go off of patent, and it happens quickly over probably a ten-year period from the time they are launched or less, and yes nagen
come in and prices drop dramatically. in order to get new drugs on the market, we spend an enormous amount of resources, but i think in america we're going to start seeing changes. we have to start being the leaders in those area, and we are going to start seeing people not putting drugs on formulary if they don't think they are worth the value and what they do for the patients. >> all right. >> it's already happening in europe. it happens in england. i think we have to become the leaders in how to correct all of that. >> and, you look at the difference of a hospital stay, managing a chronic condition, or surgery and cost benefit analysis on that as well. what bernie sanders says something -- he's a socialist. hard to take it seriously from the start when you look at the last 200 years and socialist experiments, and anyone a
socialist, right from the start, you question that, but you also got hillary clinton -- >> it's annoying. >> but the drug industry on the other hand, hat number one, the -- it's a vacuum. they let that fester without addressing it, and there's fester. there have been times where they spent too much money on marketing, extended release formulations to extend patents, not developing new drugs. there's blame to go around. then a guy like bernie sanders or hillary clinton can use a situation to put a brush on the whole industry. come in next month at some point, i think you'll be in studio, we can have some type of a summit or something, you can guest host, we'll talk about drug pricing and all. seriously, a lot of people will be old in ten years, that means alzheimer's, diabetes, cancer. we better do something or we'll be bankrupt. the pharmaceutical industry -- >> i agree, joe. thank you, i'll see you soon.
welcome back. let's get down to the new york stock exchange. jim cramer joins us with more. i know you were watching earlier when we had harold hamm on from continental resources. harold was talking about how he thinks it's a trillion dollar mistake for the saudis to keep drilling and keep the spigots open. what is your take on that? >> it's been a winning strategy. rusty brazil wrote a fantastic book "the domino effect." if the saudis were to take their foot off the gas and allow oil to go higher, harold hamm will take market share and the rest of the oil companies will do better. that's not the goal of the saudis. the saudis want to wipe out our production. saudi arabia and president obama
have diverged. harold is talking his book. love the guy, but he's talking his book. that's like me coming on saying i love shire. shire is the greatest. then you ask me if i own shire, oh, yeah, i do. it's no different. >> he didn't seem to agree with the $10 oil call that was out from -- >> no. look, it goes where the saudis wanted it go. there's no room to put oil. we can have a trading bounce, absolutely, but it's in their interest to break oil. they can come back from anything. they have a $9 cost structure. you can wipe out a third of our oil companies, and the saudis can take back the share. this is a market share game. it's no different from procter versus unilever. >> we will see you in a couple minutes. thank you very much. coming up, powerball fever. some early winners and how much every american would get if we split the pot right now.
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mike santoli has more. >> this is like a stealth tax increase in states that participate in powerball. states got together and they made the odds longer but jackpots bigger. so the jackpot also roll. what's interesting is people only buy when there's a record setting jackpot. they only get excited if the jackpot is bigger than the last time. otherwise they'll play the $1 state lottery. they chase the big number. >> make is a trillion. but you say it's a stealth tax. >> a voluntary tax on people who dream big is what it is. >> okay. >> dreams don't cost anything. i can dream all day long. >> they don't. >> without blowing my money. >> makes you feel like you have a shot. >> two bucks. >> tax on the stupid. stealth tax. >> the odds are radically worse than they were when powerball started. because the headline jackpot gets bigger, we want more. >> that's my strategy, i buy
mega millions and buy that. >> you're a value investor. >> i'm afraid to walk outside. number one, i could get struck by lightning, and at the same time i could get attacked bay great white. >> better chances. >> all right. >> thank you, mike. >> make sure you join us tomorrow. i'll share my winnings, joe. >> dream on. >> "squawk on the street" is next. ♪ >> congratulations to the alabama crimson tide on winning college football's national championship. good tuesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. futures with some bounce this morning as we get alcoa earnings under our belt. a few upgrades including apple, decent guidance on consumer names. europe in the green, germany up 2% or more. oil is the spoiler, some new forecasts prect