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tv   Squawk Box  CNBC  January 25, 2016 6:00am-9:01am EST

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where business never sleeps this is "squawk box." good morning, everyone. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernin and andrew ross sorkin. and we all made it back from the snowy mountains of davos, switzerland, to some of the snowy streets of new york and new jersey. airports in new york, philadelphia and baltimore resuming limited on sunday, after the storm, some areas 3 feet of snow. close to 15,000 flights were cancelled as the major airlines plan to resume service throughout the region today. the nation's capital shut down. the storm also claimed the lives of 29 people. people killed by carbon monoxide poisoning, killed by heart attacks after shoveling and accidents on the roads. new jersey shores getting
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battled. we'll have more on the weather woes coming up in a few minutes. in the meantime, let's talk about what's going on at twitter. big corporate news. jack dorsey, biggest move since returning last year. heads of the company's product and engineering and human resources team are leaving. dorsey has confirmed the moves saying all four have chosen to leave. in a tweet, he says, all four will be taking some well-deserved timeoff. that's an interesting euphemism. dorsey says coo adam bain will take over some of the responsibilities. of course, he is trying to, dorsey, trying to manage both at twitter and square at the same time. and the changes come after twitter stock hit a new low. you're looking the it right there, 1720. joe. johnson controls is reportedly in advanced talks to buy fire protection and security company tyco. remember tyco.
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johnson controls manufactures car batteries, tv and ventilation equipment. this could be inversion. tyco is headquartered in ireland. the purchase would let johnson controls cut taxes by moving its domicile from the u.s. to ireland. no word at this point on the terms of the deal or if johnson controls would plan to do this as an inversion. another week of corporate results coming out. mcdonald's reporting fourth quarter results before the open are expected to get a big boost with the launch of all-day breakfast. we're also getting earnings from home building and kleenex maker kimberly-clarke. and big tech names like microsoft and apple and facebook. google paying $185 million in back taxes to the u.s. after the probe of the tech
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giant's low tax returns. some critics want more calling this a sweetheart deal. i don't know if you guys knew, while we were in davos, tim cook went to brussels to potentially try to work out something. because there's a similar kind of situation going on over there, where the tax bill could be as much as $19 billion. it becomes much higher. yahoo! reportedly changed its stock option policies. to begin investing after one month rather than after the standards one-year period. and shares in rubbermaid, and barons arguing that the stock could jump 20%. after the deal was announced last month. gas prices, as you might imagine are slumping at the pump. the average price of a gallon of regular fell scene ce14 cents i
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last two weeks. the lowest week according lundberg survey. the cheapest gas can be found in tulsa. the highest, as usual in los angeles, $2.80. let's get a check on the markets this morning. the futures have been lower an two big days of gains thursday and friday of last week. last week actually the first time we've seen gains for the like for the markets since we started this new year. looks like the dow was up by 105 points. you can see the dow futures are down 38 points. s&p 500 down by 3, nasdaq down by 11. in europe, in early trading this morning, at this point, it looks like things are mixed. things are slightly higher in france and germany and weaker in asia and spain. overnight, positive moves with the nikkei up almost 1%.
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the hong kong's hang seng up by 1.3%. oil prices up by 1.80. and wti, the strength in oil with gains through the week in the stock market. with the ten-year note yielding back at 2.033%. and the foreign exchange market, looks like the dollar is down against the euro at 1.0814. down against the yen at 1.1841. gold prices up about $8 to $1,104 an ounce. stocks posted their first positive week of the new year. let's get more on what wall street should expect from the energy and equity markets. kevin brook joins us from clearview energy partners, along with david bianco chief
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strategic at deutsche bank. kevin, how much do you trust that it's an actual gain that we key continuing? >> last few days have been good. a tough january. i think we're going to have a tough next few months most are focused not only on what's going on with oil prices but central banks around the world and what's going on with currencies. what we're advising the investors to do is keep selling energy and keep buying the rest. we've looked at the price targets and looked at the earnings estimates with the s&p. cutting it from 125 to 120. the energy sector has zero profits. but the point is, that's not normal at some point in time, the energy secretary letttor wi money. look at the s&p s energy, it's about 5% earnings growth this year.
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>> so every sector but energy? >> we're still awaiting industrials. and industrials have their challenges, most at risk more than technology if the dollar would appreciate in a rapid pace. now, i have six overweight sectors that just raised financials and consumer discretionaries to overweight. >> got like three. here. up here a lilt bit. >> sector? >> you don't have any sectors, do you? >> and back here. >> got no rear. >> no. but one, two -- >> you got less than you had a week ago. >> you have no overweight sectors. >> thank you very much. >> everything is underweight. >> it's going to be wasted on me. >> hey, kevin, we are looking at oil prices picking up. but as david points out, he's
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not expecting any profits in that sector for some time to come. what do you see? >> well you know, fundamentals haven't changed just box. snowstorm. that was kind of an old school classic oil response. markets looking at the northeast props myopically. oversupply continues through the second half of the year. probably starting to balance in the second half of 2016. additional bears that iran brings to market ahead of expectations pushing back that rebalancing. yes, i do think they rebalance. energy will come back into the balance. but right now long oversupply. >> you think wti is heading back up? >> it's unclear where the right number is, if 20s is where it should have been, 20s is protect back where it's going. >> you think iran will be able to bring oil production and more
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barrels back on line faster than people are anticipating? part of what we've heard, they're going have a hard time meeting the delivers that they're kind of promising? >> no we don't, we thing they're actually on the low end of the range. that's another shock on an oversupplied market. >> david, the reason you like all of the sectors, is it simply valuation and prices have come down too steeply? >> i would say valuation at this stage, not just relative to history. if you look at the overall market, particularly x energy. beyond oil, look how low 20 year, 30 year, global yields are. people are going to find it's not a recession at our door step. it's going to be several years of slow growth.
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and interest ray rates are goin stay exceptionally low. >> mario draghi really boosted the markets last week when he suggested that the eu is going to be stepping in with even more quantitative easing. do you expect to hear the same from the federal reserve. what would they say that would turn the direction one way? >> well, we expect weak, and we expect no action on this meeting wednesday. investors want know what it's going to do. this is not a typical hiking cycle. i don't think the next hike will be or should be until june. so i don't think the fed should take any hiking action for the most part the first half of this
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year. we know that the ecb wants to continue to stimulate it. but i think it's important to figure out some way of hitting their growth inflation targets without overdriving the currency market. why? because the currency is bottom low right now. if they use that channel, other currencies did devalue. and the fed won't be at the hike. i think it's important that the ecb take their time. >> hey, kevin, you said at some point you expect oil prices to normalize. blah is normalization and what do you expect that to happen? >> the average price of oil is about $35 a barrel since 1859. so, we're below that sort of real price average. it's actually more about the break-even pricing of the marginal barrel. we're probably look in the 50s. $55 a barrel most american price over the long haul which means we have upstiesd gain. demand is the other side of the
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story, the trend line 1.2 million barrels a day, 2016 with the growth, looks optimistic to us. in the long run, what you do with prices is you encourage demands. in the short run, it takes a long time to build roads, sell cars and invest. that could skew the price even farther up than the 50s. >> that is something that we're talking about years from now? >> years as in more than one, sure. 2017, we're probably going to start to seat inflexion point. it probably speeds up in 2018. >> it's fascinating when you take that $50 output for the oil, the sector is 20 times that multiple. so even with that outlook for 50, slightly higher than 50 normal prices, the energy sector is overvalued. >> david, thanks for coming in. kevin, nice to see you.
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time for downgrades and upgrades. home depot agreed to buy from deutsche. and caterpillar agreed to downgrade to saks. and bristol-myers to market perform to bmo. price is reduced from $74. and cedar fair adds to the conviction list at goldman sachs, the target remains $60. the forecast for super bowl 50 has now been set for a slot in the game. the afc championship was a real nail-biter right to the finish. tom brady patriots quarterback almost did it again, hitting rob gronkowski in the end zone. bringing the new england patriots within two points of the denver broncos. peyton manning. i'm sure as you saw it, the pats
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missed the two-point conversion. it was tipped. manning is the oldest quarterback to lead his team to a super bowl. in arizona, we found that you can take the quarterback out of cincinnati. but you can't take cincinnati out of the quarterback. the panthers walloped the cardinals in the nfc title game. it was carolina all the way. they had a big lead early and never looked back. quarterback cam newton running it in himself for a score. leaping at the goal line. carolina wins 49-15. wasn't even close. it will be carolina versus denver in super bowl 50, sunday february 7th at lehigh stadium in santa clara, california. what was proven yesterday, if you can get the quarterback feeling insecure and feeling like -- >> brady -- >> brady got absolutely -- 20 times he got. he still managed to make that unbelievable play at the end. >> he did.
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>> even the one before that, fourth and 10 or 20, and hit gronkowski. an absolutely perfectly read pass. >> i thought anything can happen. 12 seconds. anything could happen. >> watching carson palmer. i mean there were a couple where the guy was literally six feet from him. and he threw it like eight feet over his head. it was just a gagging type -- i mean, it was very disappointing for arizona fans. there was pressure. denver has the best defense. the offense, you know, if peyton -- he looked pretty good. but it was the way -- they were rushing brady that, it was really amazing. and you had amendola, all of the receivers back. just had no time. he was constantly on the ground. constantly getting hit. >> also check this out, you may have seen this over the weekend, the giant panda at the national
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zoo enjoying the show. tian tian is 19 years old. he weighs 260 pounds, he's a father, but that doesn't stop him from frolicking in the snow. sliding down the hills. playing in his enclosure. some said he was making snow angels. donald trump picking up some steam in iowa. but what the gop front-runner think about another new york billionaire that could possibly be getting into the race. we'll talk about it when we return. and the big cleanup, we'll head to washington where snow has shut down operations. check out this day in history.
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actions. they speak louder. we like that. not just because we're doers. because we're changing. big things. small things. spur of the moment things. changes you'll notice. wherever you are in the world. sheraton.
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you know, a new poll shows up up by 11%. this is really happening, people. >> guess what, america, i don't really thing this guy should be president. i'm just here because he promised me a spot in his cabinet. and i belong in a cabinet because i'm full of spiece and got a great rack. >> that was tina fey dropping in on "saturday night live." and trump is pulling ahead of senator ted cruz. gaining 15 points in the last two weeks. another high profile politician
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and billionaire, though, may be eyeing a run for the white house with the iowa caucus just a week away. sources say the former mayor mike bloomberg is laying the ground for an independent bid should democratic leader hillary clinton fall. a third party bid would be tough. the last major candidate, ross perot, won 90% of the vote in 1992 which some say helped beat george h.j. bush. both trump and clinton say they'd welcome the challenge. >> well michael has been a friend of mine. i would love to have michael bloomberg run. i would love that competition. i would love to see michael bloomberg run. >> meantime, bernie sanders threatening hillary clinton in new hampshire is cool to that. he said american democracy isn't supposed to be a contest between
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billionaires. my thought to this. i think this is a wish fulfillment thing around the part of the mayor. the mayor is not going to begin contemplating it unless he do win. >> if he's talking about not making a decision until march, how long to even get on the ballot? >> literally, i think it's the first or second week of march. but their team has decided that would be the end state for them if they were to go ahead. then you have to go -- the amount of money that you have to spend. >> it would be a huge uphill battle? >> right. they talked about it internally as a billion dollar game. >> i thought he wouldn't run if hillary's running. the only way hillary's going to falter if there's an indictment from the fbi and there's probably not going to be because the justice department probably wouldn't pursue it.
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there's no way he's running against hillary. the right is not enamored of bloomberg. >> look. mayor bloomberg said in 2013, he thought it would be impossible -- >> right. i don't thing you need to -- >> i was just trying to temper that. you're tempering even more? >> i don't think it needs to. i don't think anyone takes it seriously. we'll hear what they have to say. let's talk about this weekend's blizzard, it did weigh on the box office but lee nanar "star wars" taking in $14 million. overall, the movies falling about 10% because of the snowstorm. coming up, uber and lyft
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slamming the doors on yellow cab competition. find out which taxi company is really feeling the heat from the rivals. as we head to break, here's a look at s&p's winners and losers. ♪ i've been called a control freak...
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it's survival in the city ooh ooh ooh when you go from day to
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day ♪ welcome back to "squawk box." temperatures are slowing the removal of record snowfall from the mid-atlantic to the northeast. and records were broken for baltimore and in outlying areas of maryland, virginia and new york. nbc news correspondent edward lawrence joins us live from washington with the latest. i'm feeling it today. i did a lot of that yesterday. lots and lots and lots. >> did you? >> you? >> no, i did nothing. >> jeans -- >> reporter: i'm calling this the big dig. maryland suburbs, tens of thousands of people from the maryland suburbs all the way to new york city are digging out. i brought out a cup of ice out here -- a cup of water out here. now it's a cup of ice. folks are still dealing with 30 inches of snow on the ground. now the story turns to storm
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cleanup. cities dig out while dealing with below freezing temperatures. >> roads, they're okay. the main roads are great. they're open, they're flowing and there's a lot of spots they haven't touched yet. and there's a lot of mess out there. >> reporter: at least 30 deaths are blamed on the storm. many of them came from traffic accidents, others from heart attacks relate from shoveling the snow after it fell. several roofs also collapsed after the storm. >> getting back to business as usual is going to take a considerable amount of time. >> reporter: some neighborhoods are buried because nows can't get there yet. chris gephardt can see out his window. >> my second story window completely filled with snow. >> reporter: the mayor of baltimore could not give a time line for clearing the streets. >> given the condition of many of our streets i believe it's safest for all citizens to minimize traffic on our roads. >> reporter: on the eastern shore of new jersey, it's
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flooding, not snow, causing problems. but in d.c., residents are making the belt of a cold, uncomfortable situation. and this is the very first time that the same storm dropped 19 inches of snow on washington, d.c. and new york city at the same time. reporting live in washington, edward lawrence. back to you, joe. >> thank you, edward. yeah, we didn't get slighted in new york. it was not d.c. -- >> it wasn't the big oversnow. >> like the big dud last year. >> did you go sledding? >> no. but it's weird about the heart attack dude. you know, when i was doing it you got to do it in layers, you start at the top but then i wonder, i mean, it's really sad when that happens obviously. but have they been like sedentary for like the last 12 months. >> no it's serious exertion. >> no, but you got to -- i mean, it seems to me that you must be
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pretty -- you must not be doing a whole lot of other stuff throughout the year. >> but you're so constricted. >> i don't know. it's amake the way it would. >> there was a -- when i was a child, a friend of our ours who was in great shape. absolute great shape and had a heart attack. he's okay. but, no, he was like in perfect shape. >> he didn't have occluded arteries? >> i don't know. i was a kid. i was surprised because he was in good shape. >> everybody shoveled yesterday to get out of the front door, with drifts. even if you didn't have to drive, you still do the driveway. but there's no way to do the driveway. >> snowblower. >> snowblower. all you need is a guy to come with a thing in front. >> a snowblower. i don't know any of this. skiing. we've got time now for the
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executive edge this morning. there are problems with therrien nose, and it could be getting worse. u.s. officials found serious inconsistencies. failing to test the lab could put the lab at suspension. led by elizabeth holmes, she's been on our show before. one of the silicon valley's most high profile startups. questioning the firm's technology that was supposed to use a few drops of blood rather than vials. ma they found over time, they weren't actually doing just the one prick. they were using the old school system. >> you know who weighed in on this, tobey cosco. cleveland clinic is going to be testing their own. they want to see what happens.
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and san francisco's taxi company is filing for bankruptcy for the latest in a string of traditional cabs feeling the heat in the rise of uber and lyft. according to court paper, yellow cab cooperative, favoring challenges among them a high number of accidents related claims with a rise in claims. >> there's a new message to employees, when you go, they want you to leave your 401(k) behind. this is a big shift of what companies said in the past. it used to be, when you left the company, they wanted you to take the 401(k) with you to roll it into an ira because they didn't want to deal with the costs. >> it's an effort to make you mobile. >> they're saying now you're leaving but that doesn't mean your 401(k) has to go, too.
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the change is now the baby boomers who are changing en masse. when you're a big player with a lot of money, you can negotiate much lower fees. >> oh, okay, the fees. >> they're no longer worried about the management, the hassle of dealing with this stuff, they like to be big and bulky so they can get lower fees. >> if you had a great manager. and you're getting 20% -- >> i would leave that. >> it makes sense that you don't need to necessarily -- >> the bigger thing is if you're on your own on an i.r.a., the fees can run to 1.4%. whereas, it's closer to 45 basis points. >> or the big rollover. >> it all winds up in the same place? >> yeah. i thought you were going to say uncle sam.
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>> well, you do get taxed on it. >> of course. i know. i used to say, i'm not going to -- 59 1/2 thing, it sounded like 59 1/2, you can start taking it out. not that you have to start taking it out. >> but at 59, you can put more in. >> that was an age that no one really has to actually face, all of a sudden, it's like, wow. you know, the aarp i got at 50 was the start. that was the beginning of the thing. >> my mom got it at 40 because she was married to my dad and he was older. she's like, are you kidding me. >> and i see you over there. it's never going to happen. coming up, the table is set for super bowl 50. you weren't even alive, your parents probably hadn't even met each other when the first super bowl happened.
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the patriots who won 15. vegas has its favorite. we're going to talk about that big game next. as we head to break, here's a quick check of what's happening in the european markets right now. they don't know whether to go up, based on what happened to us us friday or go down based on oil. it looks like oil, because it's down today. so you're a small business expert from at&t? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep it all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberry apple scones smell about done. ahh, you're good. i like to bake. get expert advice for your small business at att.com/small business.
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welcome back to "squawk box." you're looking agent washington right there. was that for you or me? >> me. u.s. equity futures, we've been watching them this morning. after the markets finally ended up last week. for a slightly higher week they're giving back gains. the dow is about 65 points. nasdaq down by 17. check out the price of oil. this has been dictating the markets. oil was higher on friday. wti down by 3.5%. and two number one quarterbacks going head to head. peyton manning is the oldest starting quarterback to lead a team to the super bowl. more touchdown passes than anyone. then there's the panthers cam
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newton at the opposite end of his career. making the big debut in the game. the current average for -- list price for super bowl 50 is jut over $6,000. it was 40% cheaper than last year. joining us now, brian manley, senior staff writer and sb nation. is that squawk box nation? >> sure, we can say that. >> i would say, do the broncos have any chance at all? but i would say if they can use that pass rush can they use that pass rush on cam newton? >> i mean, they can certainly use that pass rush to make him uncomfortable in terms of his performance as a passing
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quarterback, whether they're going actually bring him to the ground -- >> or catching it as he runs around. >> that's the big question. the broncos were able to hit tom brady 23 times. >> was that not painful? >> it looked awful. >> and he's in the best shape is of any quarterback. he doesn't ran anymore. did you see where peyton took off and ran 13 yards. his teammates would have actually laugh at him running down the field. neither one of those guys can run. they can rush. >> it was not the most impressive performance of his athletic career, certainly. >> but i think the question was, we didn't necessarily think that this denver team could stop him. yet they went out there and were able to hold the patriots down under 20 points. if they can ugly up that game against the panthers and keep it a low -scoring affair, it kind f
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feels like it can tilt either way. >> and in those ads, he's so deluxe. and you can't bring him down, he's fast. and he's going to be the sixth quarterback to wined heisman and win the mvp. he's going to win the mvp, no doubt in my mind. >> yeah, the season he's had, statistical statistically, across the globe, he's been the most improved. this is a team that hasn't even trailed for one second in the playoffs this season. it's just astounding. especially when you look at where carolina was last year, they just made such a leap forward. >> and denver, it was like four, five weeks ago, osweiler -- >> osweiler, yeah. >> and then the way they got here was one little bounce either way they couldn't be here right now. >> yeah. >> but my daughter -- tim tebow
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she started following him three or four years ago. i guess you say, you never know, what's the spread right now? >> last i've seen, i think it's around a touchdown. i notice they're moving right now. the big question, i think, in terms of the game and the spread is going to be carolina has two major defensive players who got banged up last night. john stamos broke his arm but said he's going to play. >> i saw the way he was cradling it. that looked like a bone. is it a hairline or -- >> got to be a hairline. >> not a compound, i didn't see any bone. >> and harper, one of their starting defensive backs had an eye injury. >> i saw that. his helmet got smashed into his eye. i bet that hurt, too. >> those are two guys that, i think, third and fourth on the defense in terms of snaps that they play. if they're allowed on the field
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for carolina, i think that changes the game drastically. >> peyton's foot looks fine. and his arm, it's not the arm of years ago, but it looked pretty good. throwing bullets. in addition to everything else he does. >> and he's got greg olsen, while he's not rob gronkowski, he's got kind of the similar elements. saw, especially late in that game with the broncos, gronk was the one getting them fixed in the middle of the field. >> what's the problem with the ticket price? not big media city? >> it may be that. it may be that people are just sort of gearing up to figure out, certainly for carolina, it's a longer travel for their fans. but i think that will gradually pick up the more denver fans probably realize this may be their last stand with peyton manning. if they want to go see him try to get one more ring.
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>> and it might be -- you know, also their defensive ends, no one was open. we don't know if anyone would have gotten open because brady had no time. but it was really denver's defense. it might be a great game. >> i think denver's defense is good enough that at least it's going to be a close game. i don't think it's going to be a carolina blowout. i like the panthers right now. >> i think they were a four-point favorite. >> is that all? >> on the low, that's kind of a big deal and go into somebody else's home stadium and be the favorite. >> can i talk about -- >> concussions? >> no, i want to talk about gambling in tennis. >> oh, yeah. >> the question how widespread do you think it is? is it happening all over tennis?
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>> i think it's pretty why spread potentially at the lower levels. >> and you think this is happening at the australian open? >> yeah. >> that's a high level. >> the men's doubles. >> but top players. when you talk about it happening at the lower levels the reason they were able to figure out that this was probably happening because it was a lower level game and all of this money came flooding in. you would see all of that money flooding in on the higher level games. >> i guess my best defense for the higher level players they're wired in such a way i don't think they can. >> and they're making so much money. >> novak djokovic said he was offer eed $200,000 for a match wasn't even going to be playing in. he threw it out and said, no, why would i do that. >> do you think we're going to be hearing more about this? >> absolutely. these rumors. >> reporter: bubbling around tennis fore.
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>> if a lower level player isn't going to win anyway -- >> did you see tennis apparently is the second most bet on sport in the world. >> i have not seen that. >> it said soccer, then tennis. tennis and then football, our football, is lower, number three or four. >> i do a little built of everything. "squawk box." >> all right. coming up, big question, what is apple going to tell investors? the analyst who panicked about red flags in the supply chain work. and baked into the beaten down stock. coming up at the top. hour, former treasury secretary lawrence summers. "squawk box" returns in just a moment. and an infinite reserve of patience... ...to create a vehicle that looks,
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>> i feel like we really were able to get our heads around a lot of the problems roiling markets. welcome back to "squawk box." apple set to report earnings tomorrow after the bell. the stock, while recovering last week, still down over 20% from its peak. ceo tim cook ahead of earnings met with the pope last week. the vatican not saying what was on the agenda. maybe he was looking for a blessing on the next generation iphone or divine intervention on the stock. everybody get all those little nuance things? here to get us set for the biggest earnings release of the week.
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brian white. do you have a view on what he was talking about with the pope? >> if you have an opportunity to meet with the pope you're going to. eric schmidt did it a couple of days earlier. >> he an opportunity, he took it. good for everyone. >> you don't think he was going to confession for avoiding all the taxes just like schmidt? maybe he was asking for forgiveness for not paying the european taxes. >> i think he had an opportunity to meet with the iconic figure. on the tax front, the reason he was in europe was to meet with folks in brussels. what will happen there? some analysts talking about the liability could be $19 billion. >> this has dragged on for a while. we don't know the outcome. apple doesn't know. irish government doesn't know. they have huge cash reserves and generated 81 billion in cash flow. they have more than enough to make a payment. let's talk about the earnings. you're bullish on this company. it's been hard to be bullish on the stock, though. >> near term, it's been a
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challenge. if you look at over the past few years it's been holding on. >> what's going to change the sentiment? we've talked about this over and over. what is going to change the sentiment that would push the stock up? >> i think what people are looking for -- we're in the very late stages of a 6 series iphone. the 6 came out in september 2014. 6s in september 2015. in the late stages of one of those series, a 5 or 6. things start to trail off. the big innovation comes in the round series. the iphone 7 comes out in september 2016. we like apple. we said it's dirt cheap even if you cut earnings 30% it's trading at ten times. >> that suggests or indicates that you think this is a falling company and that's the main and perhaps dare i say not only driver but the biggest by a square mile driver.
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>> i look at -- that's over 60% of revenue. almost all the profits. i look at it as a mobile internet play, right. a phone is one piece of it. but obviously wearables are coming on strong. apple watch is still a baby. we have to look longer term. they're big into the car market. that will be a bigger push potentially with a full-blown car. i see a tv on the horizon and they're connecting the home to the internet. >> you have seen a tv on the horizon for many years. >> they've had problems negotiating with the content. >> why do you think there will be a breakthrough? why do you think there will be a profitable breakthrough? >> i think it's an ambition but it will take time. maybe it won't be a full-blown tv. at first it won't. they're trying to work on a streaming service. there have been media reports of them trying to buy media assets. >> for your price to make sense, they need to make nothing else? >> that's just based on what we
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have in the model. ipad, apple watch, mac and the iphone obviously. >> no dependence on an additional -- >> breakthrough. nope. nothing changed based on that price target. that's on a calendar 2016. soon investors start to look at 2017 numbers. they'll start to value. we can walk through the waters. s&p is 4. sugar water -- >> what would change your mind? you have held strong on this despite a significant downturn in the stock? >> i think, if i saw their position in the smartphone market start to erode, that would be a problem. but, again, i am going to point this out again. the two big areas. china has been a monster, and the growth slows but nowhere at 85% of the households. india is this year's story. only a billion in revenue. china is like $58 billion.
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india will double smartphone users this year. >> we'll see where things land. >> $200 price target. >> we're sticking with it! >> okay. good. >> i stand behind that. you can put a gun to my head. i'm not changing. >> the market is wrong. you're right. okay. we'll see. when we come back, our news makers of the morning. we'll get a pulse on the global econo economy. stick around. "squawk box" will be right back. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?
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that's why i switched from u-verse to xfinity. now i can download my dvr recordings and take them anywhere. ready or not, here i come! (whispers) now hide-and-seek time can also be catch-up-on-my-shows time. here i come! can't find you anywhere!
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don't settle for u-verse. x1 from xfinity will change the way you experience tv. central banks front and center this week. the fed ready for its first meeting of the year. the bank of japan and bank of new zealand holder major meetings.
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jean claude trichet joins us. iran's first sale headed for greece. oversupply issues remain a problem. now a possible emergency meeting by opec. former new mexico governor and energy secretary bill richardson joins us. airlines cutting services monday in the wake of the weekend's big snow storm. >> a live update on which flights are canceled and when you can hit the skies again. the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." look at that. >> welcome back, everyone. this is cnbc. first in business worldwide. we've been watching the futures. they've been giving background this morning. this is off the worst levels of the morning. right now looks like the dow
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futures would open down by about 47 points. s&p down by close to 4 and nasdaq down by 12. oil prices this morning have been headed lower as well, probably the reason we have seen the lower future prices. wti is sitting just at $31 a barrel a decline of 3.4% to 3109. if you look at what's happening with the ten-year the yield back above 10%. 2.031%. our special guest is larry summers, the former treasury secretary and professor at harvard university. a lot to get to with larry. we'll get his take on the fed. china's oil slowdown. first to andrew with the top stories. a couple of things to tell you about going on. today marks the beginning of the busiest week of earnings season. latest numbers from mcdonald's in about an hour arnold 8:00. analysts watching to see how much of a boost mcdonald's is getting from the all-day breakfast menu. investors looking to the two-day
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fed meeting. feds raised interest rates in december. more than fed in a minute. we should tell you apple executive is leaving the company after 16 years. his departure is said to be for personal reasons. the important point, he has been in charge of the company's electronic car project for the past few years. he also worked on the iphone and ipod. people speculating what does this mean. twitter's jack dorsey shaking up the management team in his biggest move since returning as ceo last year. the head of the company's project engineering, media partnerships and media sources team are leaving. recode reports twitter will appoint two new board members including one high-profile media personality. >> is that you? >> it's not me. >> hmm! becky? you're not going to the board either? >> no. i -- i was trying to figure out who this might be. >> i think twitter signals the
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end of the world. so no. when everyone is just tweeting all day long. no, they wouldn't ask me. i would close it down. >> i'll give you my guess. ryan seacrest. >> that's interesting. >> that's a random -- totally random guess? >> he uses it frequently. entrepreneur, businessman, media personality. >> that's a really good guess. >> that's a wild guess. i know nothing. >> i am looking up how many followers -- 14 million followers on twitter. >> you could throw out lady gaga if you would like but i won't do that right now. i just did. >> i'll take her. dorsey confirmed the move saying all four had chosen to leave. in a tweet he says all four will be taking some well deserved time off. dorsey says ceo bayne will take over some responsibilities. the changes come days after twitter's stock hit another new low. i think 40 points down is -- do you remember last week? have you forgotten what we -- every time we were away from home, in the freezing cold --
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>> we haven't strung together three positive days for the markets in over a month. >> futures were down 300 and 400 points every day. we're down 40. crude oil at 26. it's at 31. we survived last week, all of us, in many different ways. >> crude oil is back down. >> to 31. it was at 26. we can turn around and instead of down 40 we could be up 40. when you're not coming back from down 350. >> true. >> every day last week it seemed like that, god, here we are in davos with all these elites, you know. anyway. we solved the problems. they did. they once again were able to solve all the problems. a couple other things. gas prices slumping at the pump. average price of a gallon of regular fell 14 cents in the past two weeks to its lowest levels in seven years according to a survey. national average is $1.91 per gallon. cheapest gas is in tulsa.
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the highest where the average is $2.80. former energy secretary bill richardson will share his thoughts on the crude market and the impact of gas prices. before we talk to larry, we'll tell you the johnson controls transaction -- >> i didn't think it would happen. >> not helping me at all, i should tell you. >> that's you. i got it. >> got it? did you get your news edge on? >> it's not working very well for me. >> really? okay. yeah. it's jci. and tyco. >> johnson controls will earn about 56%. >> of the combined companies. the other 44. spin off. on track for at least 650 million in synergies have been identified and it is expected to maintain tyco's irish legal
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domicile. that's another one of these deals to lower the tax bill by domiciling in ireland. >> it will be named johnson controls plc. >> i don't see the actual -- there is a press release. probably in there are the terms for the merger. aggregate cash consideration of $3.9 billion. obviously it's a -- must be some combination of stock and cash, right? >> that's what i'm looking for. >> yeah -- 56% of the company. 3.9 as you said. >> all they're saying -- >> bizarre that they have not put -- >> jci gets 50%. >> tyco will effect a reverse spock split. shareholders receive a fixed range ratio of .9550 shares for each of their existing tyco
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shares. wait. shareholders my elect -- johnson control shareholders may elect to receive one share of the combined company for each of their johnson control shares or cash equal to $34.88 a share. >> which represents jci's, what, five-day average or something. all right. okay. big week for central banks around the globe. the first fed meeting of the year happens later this week. the bank of japan and bank of new zealand in focus. they'll meet to discuss rates. joining us jean-claude trichet former ecb president and along with us our guest host larry summers. and we'll go to jean-claude first. mr. president, last week, in the midst of all the market turmoil, as soon as we heard about perhaps more accommodation, more easing, additional steps, that really did a lot to put a floor under all the markets. we must still be in a world
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where we request whether there is enough demand and whether we still need to stay in easing mode. >> yeah. i really think that it is very normal that we have an easing mode in europe because, again, the cycle in europe is very late in comparison with the cycle in the united states of america, not surprisingly, because we had not only the financial crisis of the sub prime and lehman brothers but also, of course, this sovereign risk crisis which was specifically, of course, the crisis of the european. and i would expect, you know, that it has created some kind of lags in the recovery in europe in comparison with the u.s. with a difference of perhaps three years or something. so we have to live in a universe
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where policy is accommodating in europe and less accommodating in the united states. >> i think, larry, you didn't want the fed to go. i think last week given not just what happened with equity markets but just in general, the resolve of four more this year. i don't think anyone believes it now. that sort of became clear last week. and, you know, i think that maybe we're still in a position where we're so fragile that maybe we ought to stay near zero. at least people started thinking that and the fed will think that way as well. do you think that's what happened? >> joe, i have thought consistently that it was not a confident bet that the economy could withstand four rate increases this year and continue to grow robustly and continue to provide support for a very weak global economy and certainly the way markets have moved this year has done nothing but support that view.
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so my guess is that, if things continue to play out with relatively weak economic statistics and with relatively weak markets, that you won't see anything like the four increases that many people were looking for. on the other hand, markets are very volatile, and market psychology can change quite quickly. so just as i thought it was a mistake to overreact to the bits of strength in the middle of last fall, there is also a danger of overreacting to the weakness at present. but no. markets have never believed the fed on the pace of the fed's expansion. i think the fed has been quite unwise when it has criticized markets for not believing it because i think that markets reflect a collective judgment of a large number of people and it
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seems to me there was substantial grounds for concern. i think one of the issues that is going to be out there is that, if you see a substantial divergence in the monetary policy paths in the united states and in other parts of the world, you may see the main impact of monetary policies work through currency values. and that would be a problematic thing, it seems to me, for the american economy because it would represent a substantial shifting of demand abroad. and i guess i would be interested in jean-claude's thoughts on whether, if you have a situation where the u.s. moves and where europe moves the other way and the euro moves towards parity one for one, whether he would regard that as a constructive step to stimulate
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demand in europe or whether he would regard that as a problematic market judgment on the euro. >> president trichet. >> well, larry, if i -- if i may, first of all, i would say that i don't look at any move on the exchange rate from the present situation which seems to me quite appropriate, to be frank, but on the other hand, of course the cyclical situation is not the same. i mean, in the u.s. we are close to full employment, it seems to me. and the core inflation is significantly higher in the u.s. than in europe. so both on the unemployment side and on the, i would say, inflation side, there are reasons for our monetary policy not to be alike. i would avoid as a bad consequence, of course, if we have moves in the exchange rate that are too significant, and i
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certainly would not recommend to the european to go down and down and down because i share your view, larry. it's not good from a superior, i would say, global standpoint and certainly not for in the interest of both parties on both sides of the atlantic. that being said, again, you know i slightly defer on you even if i have nothing to do, of course, with the federal reserve decision. i think the fed was probably right to do what they did. and of course they remain extremely pragmatic, it seems to me. as far as we're concerned on our side of the atlantic, we really have to put our house in order as regards, of course, inflation because we have an inflation which is not at all satisfactory. and it calls not on only the central bank but lots of effort in some countries particularly those who have room or maneuvering. this is of course a very important message also for the
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european governments. >> president trichet earlier was saying that we're in different parts of a cycle. he seems much more hawkish than you, larry, at this point. >> i'll leave that aside. i think the question is, normally monetary policy operates substantially through the mechanism of lower interest rates, make there be more investment, raise asset prices and all of that. in europe where the ten-year bund is at 50 basis points there is little scope for that. so the main mechanism through which it will tend to happen is, i think, likely to be currencies. then you have the concern -- and of course that concern is there with respect to emerging markets as well that concern is an issue in japan. and it seems to me that, as you look ahead, if markets surprise
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in the extent of their divergence, then you're likely to see potentially fairly significant currency moves. and so i -- i wonder about whether you can be as jean-claude is with conviction towards more tightening for the fed, with conviction towards more easing for europe and with conviction in favor of relative stability of the dollar euro. i think, if you get surprises that are in that direction, it's going to tend to produce a currency movements. those may be consequential. >> we've been the best house in a bad neighborhood for a long time. why shouldn't europe want to join the party? they probably feel justified to have a lower euro so they can export more and recover and get
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to where we are. they're behind in terms of growth. they probably think it makes sense for their currency. >> that is a reasonable position. that's why i asked jean-claude about how he felt about a weaker -- weaker euro. and he was, i think, understandably, with some concerns about it. >> we're in an industrial recession already because of our dollar. it's not just a monolithic economy. anyway, never enough -- you want to respond? they're telling us to get out. jean-claude, you want to respond? >> if i may just say one word. i share the view of larry that i would say a race for currency depreciation would certainly not be appropriate. and i always was of this opinion. let me only say that, in europe we have a guard against surplus of 2.5% of the gdp. so what i expect, really, from the overall monitoring and financial environment is that it
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would permit to unleash domestic demand, which, again, in europe is in a situation where we have really maneuvering from that standpoint. particularly in some countries which have big current account surplus. so what i would expect would be really activation of the domestic demand, investment, and so forth, that would play in favor of both, i would say. what we need in terms of getting back to a normal level of price stability and, on the other hand, it would help considerably to get out of the, i would say, modest growth where we are today, without having prejudice for the exchange rate, it seems to me. maybe we can square the circle. >> jean-claude, you have spoken with characteristic logic, eloquence and clarity. just to draw this out for our listeners, you spoke a number of times of domestic demand in
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countries where there is room. would i be right to hear that as a call for larger german budget deficits and for germany to spend more since it has the largest current account surplus and the most fiscal room? would i be interpreting you correctly if i heard that? >> larry, i would insist first on wages and salaries dinimism, which is overdue now it seems to me. first. second, investment and particularly private investment. and i would remain not surprisingly a little bit cautious on the public finance because, if public finance deteriorates in germany, the confidence of the people, of the household of the public opinion in general would be hurt. but we have at least the dinimism of wages and salaries.
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it is key for domestic demand, seems to me. and we have of course, the investment which should normally start again. you have also, as you know, a situation where the business in germany is asking for workers, and that's the reason why that we're at the beginning extremely open to immigrants. i think we have some reasons, perhaps, not to be that pessimistic. >> president trichet, thank you. larry will be with us for the rest of the hour. >> it was a pleasure. great pleasure. good-bye, larry. >> good-bye, jean-claude. when we return iran making its first oil sale since trade sanctions were lifted. more oversupply hitting crude prices again. we'll speak to governor bill richardson, former energy secretary, when we return.
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. coming up. 12,000. that's hopefully not where the dow is headed. no. that's the number of flights canceled nationwide since friday. we'll get an update on when airlines will get things back up and running. i felt for the airlines. i was mad they canceled our saturday flights. can you imagine trying to get in? anyway.
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we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberry apple scones smell about done. ahh, you're good. i like to bake. get expert advice for your small business at att.com/small business. . much of the east coast is still digging out from this weekend's snow storm. the airlines are doing the same. for them it's getting people where they need to go. phil joins us with an update on
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flight cancelations. it's very difficult to try to run an airline on a weekend like that. >> no, it's not an easy situation. we just got an update from washington reagan saying the first flight has just landed, for them reopening operations and another flight will be taking off shortly. they'll gradually be increasing flights throughout the day. generally speaking, washington and new york, they're still in the process of digging out. at least the airports getting up to speed. here is what we're looking at for cancelations. dulles, 44% flights canceled. reagan, 24%. looking at the three new york city airports newark liberty, 44% canceled. laguardia and jfk just 5%. baltimore, 16% of its flights canceled. philadelphia, 9%. those guys are a little further ahead than the d.c. and new york airports but it's all a matter of how quickly you can cancel flights and get the schedule back up. altogether, flight aware.com says just under 13,000 flights
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have been canceled due to the winter storms. the schedules are gradually improving and we expect full service, generally speaking, by tomorrow. i get this question all the time, guys. how come they don't open up right away once the storm is over. it's hampered by staffing challenges. the airports are run by municipal governments or agencies working in the state and city. they make the decisions. bottom line is this, guys. we'll gradually see the schedules improve throughout today. back to you. we take it for granted. we move all around the world and think, it's my birth right that i can go anywhere at any time. it's not that simple. when we come back, former energy secretary and new mexico governor bill richardson joins us to talk oil prices and iran's first oil shipments. "squawk box" will be right back.
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welcome back to "squawk
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box." right here on cnbc. first in business worldwide. johnson controls and tyco announced they are merging. johnson control shareholders get $3.9 billion in cash consideration. the company will be known as johnson controls plc. john hall burn. the company earning 31 cents per share. revenue missed forecasts but he was able to benefit from cost cutting amid falling oil prices. ford shutting down all its operations in japan and indonesia. the auto maker says, quote, sees no clear path to profitability in those countries for now. as we were just talking about. halliburton, there on oil prices. from iranian springing oil production back online to fierce china slowdown. bill richardson joins us, the
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former gf overnor of new mexico. still with us professor larry summers. let's go to you, bill, on this. one of the things that we talked about last week when we were in davos with so many different people was what was driving the oil price. gary cohn at goldman sachs had an interesting view, which is he thinks it was an oversupply issue not a demand issue at all and to some extent things the stuff is being priced to be put on barges effectively to sit out in the water. does that make sense to you? >> i think the oversupply argument does make sense. there is an oil glut. secondly, the chinese economy demand is down. the turbulence in the chinese economy. there is another factor that nobody talks about. this has been a hotter year, so there is less demand for oil and gas. despite the political turbulence
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that generates higher oil prices, that's been negated by the fact that we have this oil glut. so my prediction, my prediction, is that the iran supply will come in, price will go down a little bit more, and you know, when larry was treasury secretary, i was energy secretary. it was $10 a barrel at the beginning of my tenure. so it's a boom-and-bust cycle, but i think eventually you're going to see, after the iran supply, which is probably going to be about 500,000 barrels per day. after that hits the market the price will stabilize and start moving back up. that's my prediction. >> are we, though, overstating the impact of iran bringing all this oil back into production? we talked to john kerry last week as well. he suggested to us -- i don't remember if it was during a commercial break or on the air -- that it will take them a little bit longer than most people expect to get this stuff online. >> i think it's a speculation. it's going to be about 500,000
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barrels per day. it's going to come online fairly soon. they probably will be able to do more later. the key to watch is what the saudis do. if there is an emergency meeting of opec, which is possible, and the saudis change their minds, which is to cut production, i don't think they will, then there may be a change in oil prices. but the saudis hate iran. they're their geopolitical rivals. they don't want to see iran's economy get any better, and oil prices are a big factor in the iranian economy. so i think you're going to see this price go down a little bit more, maybe to the low 20s. but then sometime this summer, after you see the iranian oil come in and it's stabilized and it's part of the market the price will go back up. it will go back up to $40, $50, maybe ideally $70 a barrel. here in new mexico, we're an oil
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and gas state. but oil -- i just saw the price of gas $1.62. but at the same time we get oil and gas revenues, that affects our budget on education and shale and oil and gas is really down. so this boom and bust is typical of the energy economy. >> all right. larry, do you agree or disagree with this? >> let me ask bill a question. bill, one of the things that we've seen is that, when oil goes down there is a tendency for the stock market to go down. that's sort of paradoxical. you tend to think that -- for example, in japan where they don't produce any oil and where they're all importers, that lower priced oil would be good news rather than bad news. how do you explain events where some morning we learn that iraq or iran or somebody is going to produce more oil than we thought, the price of oil goes down because of a supply side bit of news and that pushes the
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stock market down? that seems to me to be a big paradox in the behavior of markets right now. how do you explain that? >> well, it is a big paradox, larry. and you know that very well. the issue here is that, in the past the opec nations could control the price of oil by increasing or decreasing production. but now what you're seeing is, for instance, you mentioned japan, india, china. the opec countries are selectively lowering their oil price so that they can get the market share from those countries. and so, what you're seeing is the energy, the oil economy, is so pervasive across the globe, by consumer countries, producer countries. this is why i believe that the commodity of oil will continue boom and bust but eventually it's going to recover. again, it's a geopolitical issue
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involving the dissolution, not the disunity of opec itself when in the past they were able to control stock market prices, oil prices, but now, since they're splitting and you're seeing the saudis go off on their own, trying to say, look, we're going to combat shale and american oil and gas growth by keeping the price where it is, not increasing or decreasing production, so, you know, it's very complicated, but, you know, larry -- larry knows these issues very well. >> we're going to leave the conversation there. thank you, governor richardson. we'll continue this with larry in just a moment. we want to thank larry summers for sharing his morning with us and some final thoughts. i don't even know where you want to begin on this, larry. we talked a lot about monetary policy. i just wish the overall state of the global economy was in better shape. i think it's your secular
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stagnation that we're seeing. >> i guess i would say a couple of things. one, bill -- on oil, i think it will be maybe quite a while before we see high-priced oil given the fracking revolution. i think you're going to see huge amounts of oil come on-stream quite quickly if the price gets to $50 or $60. >> high price being $80? >> i would be surprised if you see it. you could get a geopolitical thing in the middle east that could cause a spike for an interval but i think we're in importantly a new world because of the fracking technology. globally, i think the thing people have to look at is what the long-term fixed income markets are saying. and they are saying that nowhere in the industrial world are we really going to get solidly to the 2% inflation tarlt over the
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cour -- target over the course of a decade, and that real interest rates, the neutral rate, are going to remain epically low. and that's being driven by fundamental factors in the economy. it's being driven by the fact that people don't build hotels because of airbnb. law firms need more space because they store everything in the cloud rather than file cabinets. you can purchase more computing power than a supercomputer used to have for a $600 iphone. it's being driven by the fact that people are -- the income distribution is shifting towards high-saving, rich people. and all of that is, i think, operating to mean that we're in a quite different world with respect to interest rates. and i think the great fear that i don't see policy-makers focused on is maybe the economy will slow way down this year, maybe it won't.
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i think it's one in three or so. but whenever that next problem comes, there is nothing like the 300, 400, 500-basis point declines that usually central banks deliver to stop recessions. yes we might be able to take rates slightly negative, do a bit of q.e., but there is nothing like the usual capacity for response. and the one thing that's certain is not everybody can depreciate their currency. and that's what i think needs to be focused on. that's why the right thing to be worried about right now is not -- is low-flation or deflation. that's why we'll have to be thinking about fiscal policy in the years to come. very good. thank you, larry. >> good to be with you. >> good to see you, sir. >> great to have you.
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we can call you secretary still. or president. when we come back, the stage is set for super bowl 50. and the advertising wars are heating up. for the first time, sun trust will air a super bowl ad. we'll find out why they're making the investment in the big game and talk earnings with the company's ceo next. high tech trends that will drive disruption in 2016. a major executive shift at twitter. "squawk box" will be right back. with creative new business incentives, the lowest taxes in decades, and university partnerships, attracting the talent and companies of tomorrow. like in utica, where a new kind of workforce is being trained. and in albany, the nanotechnology capital of the world. let us help grow your company's tomorrow, today at business.ny.gov may not always be clear. but at t. rowe price,
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the super bowl is two weeks away and advertisers are offering sneak peeks at the ad campaigns. sun trust will debut its first super bowl ad this year targeting financial stress hoping to give americans tools to tackle financial hardships. the bank offered a cautious outlook. joining us to talk about it is bill rogers, sun trust's chairman and ceo. great to see you. >> good morning. thank you. >> let's talk earnings. the numbers that you reported were better than the street had been anticipating. the outlook characterized as cautious. what do you see? >> well i don't know that
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"kaur "cautious" is the right word. we had good growth in the balance sheet. continued on the path of efficiency gains for the last four years. so the overall, if you look at the general economy and maybe energy specifically there was a little bit of focus. >> we have been looking and talking interest rates all morning long. we just heard from larry summers. we spoke with jean-claude trichet earlier this morning. larry summers said he doesn't think the fed will be able to raise interest rates the four times that markets are expecting. what do you think? >> i think four times might be a little bit ambitious. if we look at march in terms of what's coming up with the fed, they'll have unemployment data. it's continued to be good. inflation data probably won't have a lot of data at that point. right now we have two based in our forecasts. i hope that's conservative. >> let's talk super bowl, bill. why are you going to advertise in the super bowl? first time ever. >> it's a very unique ad.
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you have a trailer in there. but it's about raising awareness about financial stress, and most importantly inspiring people to do something about it. financial stress is stress in this country is debilitating. we want to play a role in helping people to take the first step towards financial confidence. >> we've seen recent statistics that talk about how people don't have $1,000 to spend in case of emergency. is this what you're referring to? >> there are a lot of statistics beings becky. one third of americans don't have anything saved for retie t retireme retirement. most americans live paycheck to paycheck regardless of income levels. we did our own survey using $2,000. we found most americans don't have $2,000 saved for emergencies. that number goes up to 60% with millennials. >> what can people do about it? how do they squeeze blood out of a rocket? >> it's getting started. that's what the whole message is
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about, about taking that first step. too many times we think about, here is the big number you need for retirement or here are the things you need to get to the finish line. you can't get to the finish line if you don't take the first step. what this is trying to inspire people to do is take the first step. start the saving plan, start that my i.r.a. start putting stuff -- start your 401(k) plan with your employer. it start with control. control builds confidence. >> will we get back to the point where a savings account gets a decent rate of return at some point? >> we all know what compounding does. it's all about getting started. even whether it gets a rate of return or not, the fact that it's started. think about the value of something like a 529 plan for the college savings. that's not all interest rate related. it's tax savings as well. >> sure. thank you very much. a good message. we'll watch for it during the super bowl. >> great. thank you for talking about it
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on your show. i think it's critical. >> thank you. coming up when we return. twitter chief jack dorsey confirming the exit on four big executives. a sneak peek on what will drive the cnbc disrupters list in 2016. futures. down market. dow off 48 points. squawk returns in a moment. we're the hottest young company around but if we want to keep the soda pop flowing we need fresh ideas! >>got it. we slow, we die. >>what about cashing out? no! i'm trying to build something here. >>how about using fedex ground for shipping?
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>>i don't need some kid telling me how to run a business! i've been doing this for 4 long months. >>fedex ground can help us save money and deliver fast to our customers. not bad, kid. you remind me of a younger me. >>aiden! the dog is eating your retainer again. let's take a short 5-minute recess. fedex ground is faster to more locations than ups ground.
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as we put out calls for the annual list of 50 most disruptive companies. julia boorstin is looking at the companies driving the trends. she joins us from los angeles. good morning. >> virtual and augmented reality technology is expected to disrupt not just video gains but a range of industries. a wide range of vr potential was unveiled last week including entertainment with fox introducing a martian experience and a range of hollywood studios investing in start-ups. experimenting with v.r. to show case clothing to destinations and furniture. the ways v.r. and a.r., augmented reality are shaking up medicine. used to train surgeons and treat ptsd. cnbc was told to look beyond the obvious for the range of
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industries to benefit from v.r. >> architecture. automotive. you'll see the rift throughout a lot of automotive show cases. different destinations will start to feature this. there is a huge range of applications. >> most people still have yet to experience virtual reality. there is nothing as convincing as trying it yourself. i have done a bunch of demos earlier this year with the latest headsets and i have to say, i'm hooked. companies can start to submitting nominations. tomorrow i'll look at the rising trend of artificial intelligence. in the next hour of "squawk box" i'll be back with more on the management upheaval at twitter and what it means for that company. back over to you. thanks. when it comes to returns, mcdonald's is not clowning
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around. the fast food giant serving up earnings after the break. ronald has seen the stocks fly up over the past month. up 26%. we'll get the reaction straight ahead. later, steve young is the co-founder of the firm's greco. yeah? okay. he didn't make it in. he was going to be in the studio. would have been cool. his thoughts on the game and challenges facing the p.e. industry. he is running a firm now. that when we return.
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earnings alert. mcdonald's serving up quarterly results as its stock trades near another all-time high. twitter is trending. this morning ceo jack dorsey confirms four executives are leaving the company. with the social media site stem
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the stock lied. >> as the fight for the white house heats up a new name could be getting ready to enter the race. the final hour of "squawk box" starts right now. ♪ live from the most powerful city in the world, new york, this is "squawk box." ♪ welcome back to "squawk box" here on cnbc first in business worldwide. along with becky, andrew. the east digging out this morning. trying to get back to business as normal after the weekend's blizzard. the second biggest snow storm in new york city history. in washington, d.c., non-essential federal workers -- redundant -- ordered at the stay home. more than 12,000 flights now canceled since friday. many more delays also are coming. phil lebeau will bring us the
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latest on that in a moment. checking the markets. supplement equity futures looking down. looking like the market will open lower this morning. dow looks like it would open off 41 points. s&p 500 off 2.5 points. nasdaq. johnson controls and tyco international merging. johnson control shareholders will own 56% of the combined company. it's a big one. we'll talk about it hopefully in the next hour. twitter ceo jack dorsey shaking up the company's top ranks with four executives leaving. also planning to bring in two new board members this week. we'll talk to an analyst in the next half hour. "wall street journal" thinking a famous media personality joining the board. the apple exec who has been seeing the electronic car project over the past two years leaving the company. steve zadesky. the team says the departure is
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due to personal reasons, not related to performance. stocks to watch. ford will stop all operations in indonesia and japan by the end of the year. the auto maker is pulling out because it doesn't expect to achieve sustainability profits. halliburton beat the street by 7%. dr horton results topped expectations. kimberly clark's profits and revenues both fell short of consensus. stock just down fractionally. numbers out for mc's just now. if i am reading this correctly. diluted earnings per share of $1.31. the street was looking for $1.23. the company's new ceo. steve easterbrook making comments about how they took bold action in 2015 to reset the
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business and position mcdonald's to deliver sustained profitable growth and they ended the year delivering positive sales for bo both the quarter and the year. he said it's a testament to the swift changes they made. talks about how they're entering 2016 committed to managing business for the long term. u.s. up 5.7% comp sales. revenue above by a hundred million or so. >> this says "significant." it's kind of announcing exactly what's happening. you can see the dow component up by 3.33%. you can sell the egg mcmuffins all day long. what do you expect? >> starting in october when they opened breakfast for the rest of the sales day. >> opened 60 restaurants in russia too. 60 more restaurants in russia. >> strong performance in the u.k., canada, and in australia.
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where they saw comps for that international segment up by 4.2% for the quarter. >> company has been written off many, many times, rights? it shows you, you bring in management that knows what it's doing and you just make it fast, you make it clean, you make it fresh, and people -- >> back to basics. >> people will keep eating mcdonald's no matter what mike bloomberg says. we should also tell you happening now. major airlines back to business after the weekend's storm forced cancelations of thousands of flights. phil lebeau janoins. >> reagan announcing its first flight has landed and taken off. we'll gradually see the airports increase the number of flights throughout the day. washington and new york are the most impacted areas in terms of getting through the storm and moving on to a full schedule. for the airlines, here are the most impacted airlines. not surprising that united and american are seeing the most
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cancelations in terms of their flight schedules on the east coast. united has a hub at dulles and at newark. those were the two hardest hit airports. southwest losing 12% of the flights. delta losing 10%. the losses from the storm cancelations, however, will be limited. traditionally most people who have a flight canceled will eventually rebook that flight. not everybody, but most people will eventually rebook the flight. there are some near-term losses for the airlines, but generally speaking, they budget for this, guys. they expect two or three storms in the winter season. maybe not as severe as this one, but they do budget for this. that's why, when you look at shares of the airline index, it probably won't move relative to this storm. investors are more focused on farther out. it's not that they're going to be focused on the impact of this storm. we're starting to see the airports increase flight schedules today. still a lot of cancelations but they're improving. >> question for you. if you were on a flight that got
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canceled, you choose not to rebook because you find ultimate means of transportation. do you get your money back? >> it depends on the ticket. generally speaking most airlines will work with you on that. if they come back to you and say, look, becky, we've rescheduled you. this is the time for your flight. >> four days later. >> meaning later. then it comes down to whether or not it was a refundable ticket, et cetera. >> okay. thank you. now to some sports news this morning. maybe political news too. john harwood is here. a week away from the iowa caucuses as the presidential campaigns heat up. we're learning another high-profile billionaire may be considering a run for the race. hillary would have to not be the nominee so i don't even know why we'd think about it seriously. i'm more concerned with you versus chuck todd tonight, the blue devils versus miami. what's wrong with duke this year, john? they're not even in the top ten. >> we're just barely hanging on
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to a spot in the top 20, joe. we're a little thin. we've got an injury with a senior leader in emil jefferson. we have some talent. we did break a losing streak over the weekend. you're right about the mike bloomberg news. it's a little bit of politics and sports mixed together. one more wild card to enter into this race. you've got over the weekend mike -- reports that mike bloomberg told his aides to look at what it would take for him to get into this race, willing to spend a billion dollars or so of his wealth to get on the ballot as an independent. you would probably have to do that by springtime in order to seriously compete. and donald trump, another new york city billionaire who has been taking this race by storm, welcomed mike bloomberg into this race. >> i would love to have michael bloomberg run. i would love that competition. i think i would do very well against it. >> now, of course, the reason
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that donald trump would love michael bloomberg to get into this race is that he would take precisely the kind of college-educated moderate voters that democrats are counting on to win. you immediately see when you look at polls, a new one out this morning showing that mike bloomberg would create a two-way tie at the top between donald trump and hillary clinton. donald trump and bernie sanders. bloomberg would take about 12% of the vote as -- of the current accounting. hillary clinton, needless to say, is making the argument that the only way a bloomberg candidacy makes sense is if bernie sanders is nominated and she'll make sure that doesn't happen. >> he is a good friend of mine. i'll do the best i can to make sure that i get the nomination and we'll go from there. >> so you're not worried about him getting in? >> well, the way i read what he said is if i didn't get the nomination he might consider it. well, i'm going to relieve him of that and get the nomination so he doesn't have to.
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>> third-party runs have been an elusive siren call for a lot of people who are disgusted with the two-party system. of course, the most viable one we have had recently was ross perot in 1992. he didn't get to 20% of the vote, didn't carry any states. it would be a daunting path, joe, for bloomberg if he decides to get in. interestingly could make the chances for republicans, many of whom are freaked out right now at the possibility of donald trump as their nominee, could make it easier for them to hold the white house. >> the left's panties are all in a bunch reading "huffington post". oh, michael bloomberg. >> everybody's panties are in a bunch in this race right now. >> that's true. it's uncomfortable, john. i can tell you that, when it does happen. uncomfortable feeling. [ laughter ] >> good luck tonight, john! >> you bet. >> see you later. turning back to the markets, we've been watching the futures this morning. they have been weaker.
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dow futures down by about 50 points below fair value. s&p off by about 6. nasdaq down by 14. joining us is jim paulson. he is capital management chief investment strategist. we were talking about concerns about global growth. watching the markets down by hundreds of points each morning. you say the real reason is not global growth. what do you think it is? >> well, i think it continues to be what we've been dealing with for almost 18 months now, becky. that's moving to full employment in the united states. a lot of things that happen with that. an aging earnings cycle, certainly, this long into the recovery. a fed that's pulling away from support. worries about how fast and how often interest rates will rise. some challenge to profit margins as wages pick up. i think that's really at the root of this market that's finding a new valuation level to deal with full employment.
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the catalyst for the recent selloff has been the slowdown in global growth. and probably the market won't do well on a sustained basis until we see evidence of global growth picking up. but i -- i am feeling better about this, becky. i don't know if we have to go down and break through 1800 yet and have another scary bottom. we might. but i do like the fact that there has been a big reevaluation of most stocks. the median valuation is down quite a built. the s&p 500 has had a good reval. we're gut-checking sentiment. i would be more optimistic. i would be a buyer below 1900. >> we may have hit our lows for the year last week you're thinking? >> it's possible. if you push me, my guess is we'll break back down again yet and break 1800, get everyone convinced we're headed for a
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recession, scare everyone. it's a bear market. but i think we have been very close. i don't think we'll go a lot lower than that. we'll be at 16 times trailing earnings around that level. i think it's a very sustainable multiple. even if we're facing higher interest rates here over the next couple of years. and i -- this year i think the investors ought to look at a flat market like 2050. but right now, 1900, you could buy that and with dividends get almost 10%, if we do that between now and year end, if we fall to 1800 you could do 15% to 17%. i think the upside potential even to get back to flat this year is starting to be in line or maybe a little bit better than the downside risk from here. >> jim, you think this is basically a buy on the dips opportunity, though, not that stocks are incredibly cheap here but that they're cheaper than they were and you can see things normalizing so every time the market dips you would tell people to buy? >> becky, i think we can't trade
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at 19 times earnings if we're going to raise inflation, wage pressures and interest rates a little bit. but we could trade at 16 to 17. say we end flat this year. we would be trading around the 17 times earnings. then maybe, if the bull continues, we could just follow earnings higher over the next few years. those won't be dramatic returns, but if earnings grow 5%, we get 2% dividend, we could get 7% buy and hold returns for however much longer the bull lasts. you have to be -- i don't think i am expecting 20%, 30% returns, kind of what we've had in the earlier part of this bull market. i would be a buyer on dips and getting myself positioned for what will lead the market once we do find a bottom here. i think there's going to be a lot of change. i think international markets will do better than domestic.
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i think industrial and producer stocks will do better than consumer stocks. small caps may do better than large caps. in other words, it's not just about finding a market bottom. i think the entire leadership of this bull is changing here as we go forward. >> jim, thanks a lot. great to see you. >> thank you. coming up, mcdonald's shares jumping to a new high this morning following better than expected quarterly results. find out if it's all-day hash browns and eggs, if that's what gave this company's bottom line a boost next. first, as we head to break, check out the price of oil this morning. it's down over 3% but still above $31. stay tuned. you're watching "squawk box" on cnbc. first in business worldwide. 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... you can feel confident... ...in our experience. call a t. rowe price retirement specialist or your advisor
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welcome back, everybody. time for today's upgrades and downgrades. home depot upgraded to a buy hold to deutsche bank. they're making the new price target set at $135. caterpillar down graded to sell. cut from $51 from 67. bristol myers squib cut to market perform from out perform. the price target reduced to $70 from $74.
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whole foods down graded to underperform from market perform. they think the valuation to shrink. amex cutting price target to $64. american express is at 54, 65. goldman sachs upgraded to a buy from neutral. the same firm downgrading jp morgan from neutral to buy. >> american express. yes, sir. >> that's $50. andrew. down from $90. >> what happens with some of the new -- >> all these partnerships. this is the big issue. >> millennials use paypal. >> that's not what this is about. they don't have any money. this is about costco, jetblue. about every airline and every partner -- not every but many partners over the past year and a half effectively breaking ties with an american -- >> who is going to pay, just to use that card, all that money? it's like an -- it's a dow
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component. it's like an existential threat for this company. >> i was ringing the bell. i talked a lot about american express in the past year during a lot of these issues. you haven't paid attention when we've talked about all the partnerships. >> that's true. >> all the partnerships that they've lost. >> the whole idea of paying that money to use -- when there are all these other -- >> oddly enough, that's not where -- if you talk to the analysts, that's not been the thing they're worried about most. >> the millennials? >> not just millennials but who is -- how much does it cost a year. >> i don't know. >> the main card business is not the thing people are nervous about. it's the fact that there are such a huge swath of cards that they've effectively lost to jp morgan, to citi, everybody else. >> they make fancy cards too, right? platinum. >> the fancy cards but we're not talking about the fancy cards. we're talking about airline cards. talking about costco cards.
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that's what we're talking about. >> to get miles? >> the credit cards that used to have the partnership. costco, the only card you could use there was american express. some of the airlines. >> costco branded cards. that was the business. that's what people have become anxious about. on top of that there is the other issue about the high fee card and whether people will pay the high fees and what it takes to keep those customers. the service fees on those cards, meaning to service the customer, is actually pretty high, right? the travel, all the stuff, when you call american express and it always works. >> i understand this a lot better. and why we're hitting new highs. mcdonald's posting quarterly results beating estimates on the top and bottom lines registering a 5% increase in global comparable store sales. joining us now, the morning star global director of consumer equity research and senior restaurant analyst. we know the new guy is doing well. i imagine that breakfast all day long has been part of this too. what else, r.j.?
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>> i think you look at the numbers today and clearly the u.s. comparables sales is the standout. all-day breakfast has been a big part of it. simple things like order accuracy, speed of service and improving customer experience has gone a long way. it all traces back to steve easterbrook's plan to streamline the process at the restaurant level. the key takeaway with the all-day breakfast is the fact that they rolled it out in under six months. this bodes well for a lot of the new initiatives. they have all the stakeholders aligned. the franchisees, the suppliers, the marketing team. it's led to a much more effective push for new product launches right now. >> it's amazing. so there is nothing really wrong with mcdonald's. i don't know why one new guy can come in at the top and suddenly all the execution issues start working. did he hire -- did he hire all new people to do the execution? does he -- i don't know.
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is he more motivational? how does that happen? >> yeah. a lot of it just is getting the right people in the right places. getting rid of a few executives in certain spots as well. i think getting the right mix of management in place at all tiers. i think the reorganization helped too, aligning a lot of the business along, you know, the maturity and the competitiveness of the market. putting the national and lead markets together. this is a better sharing of the lines. >> you didn't really reinvent the wheel. you didn't come up with a new -- i don't know -- mic rmcrib. just doing it better and fresher. blocking and tackling. >> i think certainly better ingredients in some of the products went a long way. but simple blocking and tackling
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here. something the company struggled with. we're looking at a much more nimble mcdonald's. that bodes well for positive sales across a lot of the system this year. a lot to like right now. >> you have a buy still. do you have a target on it? >> $118 fair value estimate before today's numbers. we'll look at it and adjust for what was a strong quarter for the company. >> thank you. see you later. coming up when we return, it's a party at the pump. new survey shows gas at its lowest level in seven years. we'll bring you the details when "squawk" returns in a moment.
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welcome back to "squawk box." let's check out the futures right now. dow down 68. they've been from 40 to 70 down this morning on the dow jones join 60. under 20 on the nasdaq. oil prices down over 3% for most of the morning after a pretty good rebound at the end of last week to above 30. the $31.11 today for oil prices. that's probably casting a pall on equity markets. speaking of energy prices,
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americans feeling less and less pain at the pump. average price of a gas falling 14 cents in two weeks to $1.91, the lowest level in seven years. the cheapest gas can be found in tulsa, oklahoma, at $1.48, a gallon. the highest in los angeles where the average price is $2.80. update from j. michael pearson. he was hospitalized with severe pneumonia late in december. in a memo to employees he says he is on the road to recovery but is uncertain when he'll return from medical leave. valiant's former cfo is acting as interim chief executive for now. twitter is in the midst of a major overhaul. shares down more than 25% this year. can jack dorsey turn it around? we'll ask an analyst when "squawk box" comes back.
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welcome back to "squawk box." right here on cnbc. making headlines right now, the busiest week of earnings ahead. 121 s&p 500 reporting on a dozen dow industrial companies. the policy statement comes out wednesday afternoon. more on the fed in just a moment. former turning ceo martin shkreli may or may not testify before a house panel tomorrow. he has been ordered to appear to talk about why touring raised -- what did i say touring. i keep saying turning. raises the price of its drug by more than 5,000%. joe, i know that's a pain. shkreli said he will not answer questions. he's trying to get out of the appearance based on the fact that he is under travel restrictions following his recent arrest on fraud charges. check out -- check this out. remember when you spent hours or days trying to unscramble your
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rubik's cube? i actually do not. this robot solves -- you do? this robot solves the puzzle in less than two seconds flat. setting it up to smash the current guinness world record for a robot at -- robot at 2.3 seconds. the fastest human is on record for cracking the code in 4.9. >> somebody did that in under five seconds? i'm not impressed by a robot doing it. but a person. i have a friend who used to peel the stickers off and put them back on. it's fed week. time to speculate about how the federal reserve will respond to the market turmoil. >> what the bankers are saying is they'll not help janet yellen t dig out of her tightening policy.
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the governor of the central bank of japan saying we won't hesitate adjusting policy including easing policy if necessary. last week you'll remember the ecb president saying the governing council saying this. mark carney, bank of england. the bank most likely to follow closest to the feds saying now is not yet the time to raise interest rates. progress has been insufficient to warrant a tightening. so an avalanche of comments. one says the recent market turmoil will force them to recalibrate the plans. >> we spoke with larry summers about that this morning. he said they would be surprised if they actually would. he has been saying this for a while. >> i think what the fed will do here is signal some form of a pause or a time-out in the words of krishna. i think it's a second step or a
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second leg down. the fed needs to change its outlook on the recovery here in order to reverse course. i think it's still far from that. i think it's very significant that all the other central bankers are challenging janet and not going with her and going the other way. >> though the ecb's former president, jean-claude trichet, was here this morning. he said he thinks the fed did the right thing. he is the one who wants the euro to come under pressure. >> jean-claude is a brilliant man who has not been on the right side of policy for a very long time. he is a man i have enormous respect for but he's made some mistakes over the past several years, i think. that's part of the reason why most economists think europe is as far behind the united states as it is. let's bring in the chief economist at jpmorgan chase. do you agree with the assessment? >> of trichet or the fed? >> fed first. >> i agree.
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i think the fed will be more nuanced in the sense that it will talk about the disappointment in growth we've had and emphasize that it looks temporary. i think where the fed will be strongest is in terms of its concerns rising about low inflation and increased -- >> you think they'll say there is a time-out? >> i don't think they'll say it explicitly. the guidance in the statement is non-committal. i don't think they'll change it. i think in the language they're going to use they'll tell you march is likely to not happen and the bar is pretty high to get them to do anything here. >> i want to get to the bottom line. did the fed make a mistake? >> we'll see. i think the issue is what's happening now. the risks have gone up a lot. the fourth quarter, which will get the first print this week will come in close to zero. if the economy is still resilient here and if it's growing at 2%, 2.5% base this year, i think the idea that the fed has begun a tightening cycle is good. certainly it makes sense for the fed to stop and take time. if it is the case the economy is
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weaker we'll feel the fed made a mistake. >> larry makes a big deal this morning of the idea that -- that growth is really permanently lower than it had been. >> yep snoo a. >> and that the fed should not have been in the business of hiking. especially given what's happening in recent market turmoil. and that fisher -- he makes a big deal of this. fisher said the market is wrong. the market said, no, we're not wrong. we're right here. is the fed out over its skis a little too far? >> i don't think so. look, the fed moved policy rates up once. when you saw the decision to raise rates, they were extremely dovish in terms of the forward guidance, notwithstanding the dots. i think the fed recognizes the risks. i think we have a situation where growth is permanently lower, but part of that is because the supply side of the u.s. economy is so weak. we're seeing late-market tightening. we're at an important juncture.
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if the u.s. is close to a recess the fed will have made a mistati mistake. if the economy shows resilience and tracks a 2% growth rate the fed will likely have to come back and continue to tighten. >> your boss was on our air from davos, switzerland, last week. jamie. he did not think a recession was likely. he was not even talking about it that way. >> i think right now our economic indicators are telling us the risk of recession has gone up but it's still not high. i would say it's sitting -- in terms of our metrics, sitting somewhere at 25%. but we have seen financial markets move in a negative way. we have seen growth disappoint. and we've seen a couple things on the edge that i think is concerning. jobless claims, to me, is one of the most important signals, if a big momentum shift is happening in the economy. we have had a big move in the last four or five weeks. if that is not stabilizing in the next four or five weeks, i
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think we'll feel differently and it will tell us something about what the next payroll reports deliver. >> two options here, i think. one is obviously january will not happen in terms of rate hikes. but do they formally take march off the table and signal a time-out for longer than just -- right now there is a 30% chance in the futures market, of a march hike. would they take it off the table in their language? >> not explicitly. by talking about concerns about inflation and by talking about concerns about the international backdrop they're basically telling us it's very unlikely they're going to move in march. but i don't think their guidance will become committal in a way that says we're not thinking about tightening until the middle of the year. i think the language will tell you the bar is high not only for march but for the next three to six months. >> does it matter that they've all been going the other way? >> it matters in the sense that
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the dollar is continuing to push higher. it matters in the sense that these guys are reflecting what's not just been disappointments in the u.s. but disappointments in their economies. it matters in that context. what the fed is reacting to is what it sees in terms of the u.s. economic backdrop. there are enough things to keep it concerned. while i think they'll look at the growth numbers and give you the message, they see the slowdown and they still think growth rebounds going through the first part of 2016. >> thanks, bruce. appreciate it. >> steven, thank you. nice to see you. coming up. four top executives at twitter are making an exit. will an attempt to reshape the company get the blueberg off its lows? "squawk box" will be right back. its lows? "squawk box" will be right back. its lows? "squawk box" will be right back.
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inv . welcome back to "squawk box." futures right now up, down, somewhere around 78. that's the worst i have seen this morning. 77 points on the dow jones, down nine, almost ten on the s&p. 500 on the nasdaq. indicated somewhere around 21 points, the nasdaq. a couple headlines in corresponde california news. that's becky. that has an "a" on it. >> calm down. >> it says animation, not andrew. >> calm down. >> what's happening in corporate news today. a california judge ruling that
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viacom executive chairman can be examined by a doctor hired by the media mogul's ex-girlfriend. part of a legal dispute about his mental competency. i like to talk about the gossip. >> i think maybe the girlfriend should be checked for mental competency. >> iran says it will buy 114 airbus planes to revitalize its fleet, the first major commercial deal announced since the lifting of sanctions under its nuclear agreement. sun edison gives hedge fund green light capital a board seat according to the "wall street journal." this officially is for me. twitter ceo jack dorsey making moves and some high-profile executives leaving. julia boorstin has more on the twitter upheaval. julia. >> it's certainly the first -- the biggest management shakeup since jack dorsey's return as ceo last july. comes as twitter shares hitting
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a new low last week. dorsey tweeting about the departure of four top executives saying i am sad to announce that they've chosen to leave the company. the loss of the vp of engineering, vp of resources, head of media and twitter's product chief leaving a major void. they had a vine, jason toft leaving to work at v.r. at google. adam bayne will take responsibility for product teams and media and hr. dorsey is saying he'll partner with them day and night to make sure they're building the right experiences. twitter shares have lost half their value since dory's return last year, raising questions about whether twitter will be a takeover target or attract
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activist investors. american express marketing chief tops the list. andrew, there is certainly a lot of questions now about the company's future and what it will take to grow users. they do report earnings coming up in a couple of weeks. >> thank you, julia. before you go, you have to tell me, there is speculation -- maybe re/code, rather, not the "wall street journal." that there will be a media celebrity of some sort joining the twitter board. do you know anything about this? >> i do not know who it would be, but there has been a lot of expectation that dorsey was going to remake the entire board, which means pushing out a lot of folks and adding a bunch of new names. there are some we could might think it would be. i would speculate maybe ashton kutcher. he is a big user of twitter and was an early investor. he is one name i could throw out. at the end of the day you have to wonder what kind of advice dorsey will want to get in order to help to grow the company. it's about growing the user numbers.
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>> julia, thank you. to talk more is rob humphrey internet analyst. rich greenfield tweeted only 5 of the 15 twitter execs that presented at the analyst day are left. what does that say? >> two-thirds are gone, obviously, right? i think what it says is the old regime wasn't getting it done. today's announcement, particularly kevin weil, didn't surprise us. we have been hearing that jack's guys, actually surpassed kevin within the organization. i think you're seeing jack putting his own fingerprints on the company, putting his people in place. >> this is a positive to you? the fact that these folks are leaving. >> yeah. >> we can't really tell are they leaving on their own volition or to the. >> we can't tell. >> to the extent they are, is that positive? >> it's clear under the old regime execution wasn't getting done which led us to the problem as far as the lack of growth.
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jack now putting his people in place. moments have rolled out. google integration. double-click integration. periscope rolling out. it's time to execute. i like seeing the fact that he is putting his people in place. >> what's your stock target? >> $26. >> that's down from? >> $34. >> so what do they have to do to get to $26 at this point? >> right now stock trades at about ten times. our target is three times. we think what's interesting here is that if the stock continues to go down m&a becomes more of a target. you have some of the verizons of the world. their interest in aol. >> you're $26 number, how much of that has to do with the possibility of a takeover or activist emerging? >> nothing. just having the stock trade at where the other internet companies trade on their multiples. >> on the takeover front.
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if you handicapped that. doesn't sound like jack dorsey has any interest in selling the company. >> no. i think he needs to go through several more quarters of trying to execute on the new plans. moments has only been rolled out in u.s., brazil and uk. it's not global yet. you need time for the products to resonate. toward the end of the year if you don't see an inflexion point, you have a fiduciary responsibility to listen to outside offers. >> you're giving them an 18-month time period? >> second half of the year. if you don't see an inflexion point in users, from what we can see at this point they're not going to report -- >> that's them having a fiduciary responsibility to look at these things. it's $12 billion right now. you think you would get an offer higher than that? >> right now the stock trades ten times e. somewhere around seven, eight
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times. for media properties it's a pretty fair multiple. because of the overlaps with some of the acquirers it's very feasible. >> you talk about user growth. everybody seems to focus on the user growth. what do you make to the extent they're able to increase revenue? >> a couple of things. realize they just started rolling out increased monetization. new ad units, buy buttons. carousels. all that stuff. >> will that be enough? >> if you don't see user growth but you see revenue growth, what's that do? >> it's partially enough. for the stock to work you want to see user growth inflect. going from adding a couple of million every quarter back to double digits. >> no way. i'm leaving! >> okay. >> i'm not adding to users. >> you're on it. you're on twitter. >> i know. i never tweet. i look at it, though, i look at it. >> the vast majority of people don't tweet. that's the important part. it's your news feed of the day. your former newspaper. your former rss feed. >> i appreciate that they do that. i give them no money and there
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is no advertising that accrues with me. so how do they keep -- it's a charity? they do it for me? very nice of them. >> like facebook you have native ads that show up and people click on those or install apps off those. et cetera. >> supposedly. >> supposedly. >> i think it makes a lot of sense to knme that it keeps goi down and down. >> you think it's going to zero? >> the world might be a better place. >> to be clear, it's growing. >> we're just questioning the rate of growth. >> you can't mon tietize it. >> $3 billion -- >> only search works in terms of online advertising. >> i would argue twitter is the best realtime search out there, period. better than google. do you agree, andrew? >> if you're looking for a realtime search, absolutely. nothing like it. >> for something that's happening. >> if you want to know what's happening this second, there is nothing like twitter. >> even for a news item.
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>> i've only used the search to find somebody's twitter handle. you can use it for -- >> you can put in the patriots. then you can see everything about -- >> do i put in a number sign? hash tag? >> you can do a number sign for a stock if you'd like. you can do a hash tag for different words or phrases. >> and that's not lost on google. there are reports, preipo that google tried to buy twitter for 10 billion. >> it's almost there. >> i agree. >> would have a pay a prum. >> the m&a math. all the cost cuts. you could pay seven or eight times ebitda. great to see you. when we come back, mcdonald shares getting a boost after the fast food chain's earnings beat expectations. we'll get jim cramer's take from the new york stock exchange. first, check out the price of
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oil. down by about 3.8%. down $31 a barrel for wti. you're watching "squawk box." ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪
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mcdonald's posting quarterly results and also posting 57. 5.6% in the u.s. and in other food news, grubhub. the delivery service guiding its fourth quarter revenue to the high end of the prior range. the company also authorizing a small share, a purchase program that won't be buying back any of the larger shares. >> let's get down to the new york stock exchange. jim cramer joins us right now. what do you think of the deals? >> that's a remarkable same-store sales deal. the all day breakfast that started out as cosmetic turned out to be a home run. they simplified the stores. i think the guy's in the first
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inning. he's going to do a lot of technological stuff that no one is thinking about. he's monster good. he turned around the international and the u.s. and the stock's still real and very inexpensive. >> you think it's real? >> he just simplified the menu. he has technology issues that he's going to unroll like something he did in australia which is incredible to be able to make the lines move faster. he's got a lot of menu changes he wants to do and he hasn't even started the promotion activities he wants. the guy is amazing. and he had very easy compares because there were issues before. but you're seeing the very beginning of a transformation of mcdonald's. >> tim, we're watching wti back below futures. are we inexplicably tied to the irreversible price? >> that's all you need to know.
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it was tick for tick. i would point out schlumberger had an amazing point where they said the u.s. is kind of done and they expect it will be a very bad year for oil service in 2016 but therefore there'll be -- at the end of the year in 2016 there will be a stabilization of oil. i know that's a long time from now, but it kind of puts out -- i say it takes away the $20 scenario, but it takes away the $40 scenario too. >> what's the stabilization of oil prices? >> i think at these levels. the current level thinks $45 out ten years. >> whoa. jim, thank you. we'll see you in a few minutes. >> coming up, a blizzard video gone viral. stay tuned. you're watching "squawk box" on cnbc, first in business worldwide. so if i wanna go to jersey and check out shotsy tuccerelli's portfolio, what's it to you? or i'm a scottish mason whose assets are made of stone like me heart.
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welcome back to "squawk box." almost triple digits now. i was so happy down 40. now we're almost 13 on the s&p and 27 points on the nasdaq. a lot of it has do with oil price, which are down more than 3%. now more than 4%. you know, we're not that fair from another two-handle which
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maybe it would help if we stayed above three, stayed above 30. that might help the equity markets. who know's. >> we've got to check this out. we have a video gone vie rah. the giant panda at the national zoo enjoying the zoo. it's gone vie rah. 1.7 million. tian tian is 19 years old and is a father. cameras caught him sliding down hills and frolicking around in his enclosure. some say he was even making snow angels. >> something said this is something they do to clean themselves like snow dogs do. >> dogs love -- german shepherds, so cute in the snow. >> jumping around. >> they get it on their nose. they're a descendant from wolves so it's not like snow is an unnatural thing for them. >> unless you're a little itty
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bitty dog. >> "kung fu panda 2" is coming out. this looks like he could do karate. the dow's fed survey due out at 10:30 eastern time. mario draghi will be due out. and in washington, nonessential federal workers were ordered to stay home. they're still digging out from the snow there. johnson controls and tyco are merging. johnson controls will own about 56% of the combined company. >> it's weird the way this works. tyco shareholders get less, like .99 a shafrmt johnson controls gets below the price. i think it's tax-free to the johnson control people and there's a tax that the tyco shareholders end up paying. it's not the average here's your set deal on this.
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we should tell you one other stock to watch today. caterpillar to downgrade. the price cut well below the 58.40 where the stock closed. >> wasn't it over 100 at one point? all right. we're done. make sure you join us tomorrow. we're all done. "squawk on the street" is next. good morning. welcome to "squawk on the street." i'm david faber along with jim cramer. carl quintanilla is off this week. you can see we're looking down right now. european markets, well, they're not helping. if you take a look at this point, we're down across the board there. all less than 1%. as for that ten-year note yield which, of course, crossed below the 2%

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