tv Squawk Alley CNBC January 25, 2016 11:00am-12:01pm EST
♪ changes ♪ don't want to be a richer man ♪ ♪ changes ♪ turn and face the strain ♪ changes ♪ it's gonna have to be a different man ♪ ♪ time may change me but i can't trace time ♪ welcome to "squawk alley." with me is john fortt. carl is off. michael santolli also joins us and zillow group spencer rascoff. stocks are lower today despite friday's rally amid the first positive week of the year. it is still an ugly start to 2016. the dow, s&p, nasdaq all down more than 7% on the year. energy prices yet again weighing on the market. oil prices sliding lower. we seem to be repeating these headlines.
oil, though, now down more than 16% year-to-date, spencer. what looked like a bounce last week we know now is potentially not a bottom. >> you know, it just goes to show how confusing the difference in the divide is between wall street and main street. most regular americans think the price is oil is down, i get to save money at the gas pump and yet we're telling them that's really bad for everybody and that's why stocks are down. clearly investors have rediscovered risk. they are caring about valuations for the first time in a long time and it starts in the public markets and certainly trickling upstream to the private markets. i see this in my angel investments and in the venture capital community for sure. >> we seem to have this reliance again, mike, on rhetoric as they kick off the two-day meeting this week. >> i think the muscle memory is very strong. and there was a lot of anxiety going into the december fed rate increase. so i feel like the backdrop is, okay, it seems like they're kind
of taking a leap of faith here by being able to go up by 25 basis points, doing something different than the rest of the world is doing. and the market's verdict was maybe the risks were pretty -- i don't think anybody can be traced directly to short term funds or 25 basis points more expensive today. but i think the signalling probably is what has to change or is likely to change. trying to stick to this idea that everything is great, because the u.s. economy domestically is pretty good footing by the things we look at that they want it three or four more times this year. that's probably going to change. so i think we're on the same treadmill. >> am i the only one that can't get into the total doom and gloom aspect of this market? yes, it's down 7%. wasn't everybody saying we needed a correction? we got one. now we're worried about oil. hey, i get happy every time i drive up to the gas station. i know it's bad for some people. but it's good for some people when the price of oil is really high. and paying a lot for gas. that doesn't cheer me up. >> i think you're right. >> home values are up. >> the american consumer is
healthier than i think people realize. clearly, china is growing more slowly than some people thought or the chinese government would have had us believe up until now. that should surprise nobody. of i think the american consumer is doing much better than people realize. and part of that is price of oil being lower, which actually helps american consumers. what's happening is investors had five years of free money, and that boosted valuations, created this huge bull market, boosted private company valuations, because late stage investors and mutual funds had started looking for more yield by going into the private markets. and you saw mutual funds investing in private companies. that era of free money, as the fed raises rates, that is ending right now. >> there is a real effect on companies. the fourth quarter was the worst quarter for tech ipos. and there is a worry that consumer looks at these headlines, looks at the market performance, and their psychology starts to shift and they start to move their money. that hasn't happened yet but still could. >> no, it has not happened yet. i think one of the reasons it seems to matter more, we're not
operating a fat cushion here. best case scenario for most people, 2.5% growth. nominal growth not that strong. the idea being that the swing factors don't have to be that big to drop us into what feels like a not so great economy. dallas fed survey looks horrible right now. so pockets of the country are feeling like they're in retrenchment mode. but to your point, spencer, i totally agree. we had a few years when wall street really partied when on main street, the recovery wasn't that evidence. i do think maybe a year ago that process started to reverse. >> yes. >> meanwhile, twitter shares are down 5% this morning. the company announcing a major management overhaul and changes to its board. twitter now tumbling 26% for the year, down more than 50% in the last one year. cnbc's julia boorstin joins us from los angeles with the latest. julia. >> kayla, that's right. twitter shares trading around an all-time low this morning as investors show a lack of
confidence in leadership amid some big departures. jack dorsey twitter ceo tweeting about the departure of four top executives. alex rotor, skip shipper, katie stanton and kevin weil. dorsey tweeting they have, quote, chosen to leave the company, and quote, all four will be taking well-deserved time off. and the head of vine, jason toff leaving to work at google. adam bane has responsibility for all revenue related product teams, as well as oversight of media and hr. and to help fill the executive void and to also help address criticism that dorsey is not delegating enough, cto messenger will be engineering. dorsey saying, quote, i will be partnering day and night to build the right experiences.
twitter shares a loss of half their value since he returned july 1st. raising some questions about whether the company will be a target for an acquisition or an activist investor. now we're awaiting the announcement of a new chief marketing officer, as well as a new head of pr, and potentially the announcement of some new additions to twitter's board, and of course, all eyes will be on that february 10th announcement of twitter's quarterly earnings report. i'm sure there will be a huge focus on those user numbers that twitter has been struggling to grow. back over to you guys. >> all right. thanks, julia. spencer rascoff, how quickly does twitter need to restore confidence? >> i feel badly for people working incredibly hard at twitter and the fact that their company is constantly in the spotlight, executive turmoil and boardroom it turmoil makes it hard to do good work at the company. the challenge for twitter, they need to explain to my mom what twitter is and why should she
should care. >> you haven't done that? >> i have tried. it is hard. my mom is kind of sorta on twitter. she follows me and no one else. but it's not my job to do that. it's twitter's job to articulate to its users and nonusers what it is and why they should care. and that's the challenge for them. they have actually improved dramatically over the last two years. but i don't think they have articulated the value proposition and what the purpose of the service is. that's the challenge before them. >> so half of your executive team -- your number two quits, right? >> god forbid. >> what's the impact on your work force and morale? what is it you have to do the next day, the news leaks out over the weekend, days before you are planning to spin it to the troops? >> it's a mess. and i feel badly for them. i mean -- >> you're ceo. what do you do in that situation? >> what do you is i think what jack is doing. i think coming out ahead -- not ahead of the news, but earlier than he wanted to on a sunday
night instead of later this week was the right decision. everybody already knew the news was out. but you have to try to rebuild. and you find great people like anthony or adam bane already on the executive bench and willing to step up and take on more responsibility. you have to attract new people and articulate the value proposition to your employees, first and foremost and get them back on mission, get them focused on the product and users rather than the stock price and media speculation. >> not just rebuilding the executive bench but also rebuilding the board too. and that's something that is a priority. if if you are twitter, what sort of expertise do you think the board needs, and who do you think this big-name media exec is? >> i think what they need is other executive operators, other people running companies and are in the midst of trying to create corporate culture at their own company. that's what i think they need. i don't know who this big media exec will be. martha stewart-type or who knows who as another director. but i think that they would -- they would benefit from having other people that are actually trying to build companies rather
than kind of big names. we'll see. i don't know who the other people on the board will be. clearly they need to restack the board as well as the executive sweet. >> which is from an investor perspective more of a big deal, product trouble or people trouble? because twitter has product trouble. we have seen that in the growth. but jack dorsey's story, i've got a great team, we're going to figure this out. now that story is falling apart. half that executive team, adam bane aside, is gone. >> and the fact that it's happening three months after he was formally installed as ceo again. you would think by three months, you kind of already marshalled the troops and decided this is going to be the plan. and then you're getting the signal today that maybe that's not the case. again, you could have kind of a fresh start. i did from an investor perspective -- it becomes just exactly what the ultimate ambitions of this business are. are we still explaining it to your mom and trying to really vastly expand the user base, maximize returns from kind of the existing user base. and just kind of participate in
media some other way. and you know, i think right now, it's not clear at all. and i also think there has been -- maybe spencer has a thought on this. jack dorsey and his team have been too wedded to the original concept of twitter. >> my mom is on twitter. my dad is not. just for the record. >> twitter has evolved a lot over the years. i think even in the announcement last week about the next company or even in jack's announcement last night about the changes, just as a little example, we all use the product. you can see, they attached a screen shot of a word document or in dick's case i think notes from his iphone. that's how they sent a long tweet. so to pick on an example. they're using their own service to make a larger announcement and the product doesn't support that. these are things they know they need to change and improve. the other people we shouldn't forget about are the employees at square, who today, their ceo is fighting this other fire at twitter. and, again, they're doing great work at square. but it's very difficult for them to get caught up in this
whirlwind. >> quickly before we move oranges spencer, you're a ceo who is a big deal. is twitter an m & a story? >> i don't think it is. if i were on the board or ceo, i don't think now is the time to sell the company. you tend to sell out of strength, not weakness. i think it's interesting and fun to speculate, but i do not think twitter is a takeover target. >> and how do home sales data -- zillow is out with new housing forecasts. predicting home values to rise 2.6% in 2016, and that relief is on the way for renters. this as dr horton is out with results this morning. the stock down 5.5%, though, on mixed results. but there is a little bit of strength in your data. is that broad brush? or is that the energy patch? >> what's happening in housing now is it's a very localized market. certain parts like denver, seattle, bay area, new york, which are appreciating 5 to 10% and other parts that are flat or in some cases declining in the midwest. so very localized story. the big change, though, is rent
affordability. so for the last couple years, renters have just had their relent sky rocket. the typical american is spending 30% of their income on rent. historically it's supposed to be 25% and in san francisco and new york, over 50% on relent. zillow data shows finally rent is starting to taper because multifamily apartment buildings have come online. it took them a couple years to build the inventory. it's now online and that means rents won't rice as quickly. >> could we head into a somewhat long period of stagnation or declines in the real estate market? it seems like rents have gotten unsustainable. perhaps this boom that we have seen in prices recently was driven by low interest rates that are perhaps creeping higher. what do you say? >> yeah. i mean, last year home values increased 4% year offer year. this year we forecast 2.6%. so you're right, sean. this new normal is kind of boring. and prior to the big run up during the housing bubble and then the down turn during the bust, 2.6% is sort of what we
expected. so we're basically returning to kind of the good old normal days of around 3% home price appreciation. boring is good when it comes to housing. that's where we're getting to. >> you always come to us with some unorthodox metrics to gain the housing market. this time in your new edition of your book, the proximity to trader joe's and whole foods. >> in the past, zillow talk, our book, we looked at proximity to starbucks, and homes in the u.s. in general over the last 17 years have appreciated 70%. if you're near a starbucks, you appreciate 100%. but if you're near a whole foods or trader joe's, you appreciate 140% over that 17-year period. so for home buyers, go by near a whole foods or starbucks and you'll do great over the next 17 years. >> and the checkout line probably begins at your front door. always good to see you. >> thank you. >> spencer rascoff, ceo of zillow group. his book released in paper book tomorrow. congratulations on that.
>> wonder what happens if you're near chipotle. cara swisher joins us later on for more changes coming. and the weekend snowstorm continuing to delay flights and other travel today. more next. and apple and microsoft earnings. more on that ahead on "squawk alley." d last tuesday. one second it's there. then, woosh, it's gone. i swear i saw it swallow seven people. seven. i just wish one of those people could have been mrs. johnson. [dog bark] trust me, we're dealing with a higher intelligence here. ♪ the all-new audi q7 is here. ♪
thousands of flights delayed or cancelled over the weekend, and the trouble continues today. our phil lebeau is in chicago tracking the damage. phil. >> john, for those flying into washington, specifically dulles or those flying into newark, it's still going to be a tough sled, so to speak, because they're still struggling to get snow out of there. the good news is, when you look at the airports on the east coast, today is much better than it's been over the last three days. flights are gradually returning. the d.c. airports, they are hardest hit, along with newark. slowest to come back, regular service, generally speaking, resuming at all the airports by tomorrow. in total, more than 12,600 flights cancelled since friday. this brings the worst storm in terms of cancellations to airlines since hurricane sandy. and in terms of individual airlines, who is most impacted, american and united are feeling it the most. no surprise on united, given the fact that it has hubs both at newark, as well as at dulles, and as you look at these airline stocks, some have said, well, are we going to see an impact in
terms of shares? keep in mind, the airlines' budget, if you will, for a couple big storms, every winter. so they expect something like this. perhaps maybe not every storm to be as impactful as this one. but they do budge it for these types of storms, guys. and they are lower today with a few exceptions. >> all right. thanks, phil lebeau with an update on the storm impact from chicago. phil, thanks. coming up, mcdonald's out with quarterly results this morning. strong u.s. sales, and the stock is up sharply this morning. all day breakfast, the big driver for the quarter. the call is happening right now, and we'll have highlights from it, just ahead.
types of ways we can talk about what's happening with the market. let's take a look at some of the names overall that may be the target of some of this buying on the dip speculation. so we looked at the s&p 500 stocks, and then looked for stocks over the last week that have gained at least 5%. so a lot of buying action over the course of the last one trading week. we then said out of those, how many actually still have positive performance over the course of the last 12 months? therefore you're not buying some of these really beaten down energy stocks or mining names. only ten actually emerged in that screen and some are large cap names we know. first of all, take a look at some we want to feature here, the shares here of verizon. one of the big telecom stocks to focus on, still riding that wave after a better earnings report than some anticipated last week. that stock still up, and analysts have a bullish price target on that share as well. so analysts like it and the wall street traders like it now. also on the tech side, shares of
a semi conductor maker, invidia. they have been higher the last 12 days. analysts are bullish on these shares, as well. and then there is a huge winner from last year. that is shares of online retail giant amazon.com. of we know the shares have almost doubled. they have been up 6% over the last trading week, and analysts here still have about a 25% up side target from where shares currently stand. so there are, kayla, folks out there looking for some really beaten down deep value names to buy. others are saying, hey, are there still positive names out there that we can get at a discount? those are a few of the names that pass that screen. of course, we'll wait and see whether or not the market really does bottom here or not. but still, kayla, interesting to point out that some of those names, only ten of them, have positive one-week performance along with 12-month performance. amazon, invidia, and verizon just three names, guys. back over to you. >>dom chu, ever the bargain hunter. we appreciate it. mike santolli, looking at
verizon, invidia, amazon. any safe to buy? >> verizon is safe to buy in the fact that it's a dividend play and the sustainability of the dividend is key. i think what we see with names like invidia and amazon and the outperformance of the nasdaq in general, once the selling eased up, the market gave me another chance to buy this stuff that seemed like it went nothing but up last year. those are related ones that make some kind of sense. you haven't seen a tremendous dips response. you had a reflex. we ran out of sellers at the lows last week. i don't think that professional money managers who have cash have felt in a hurry to put it to work, which might be kind of a bullish thing for contrarian reasoning. >> so do earnings matter, more or less? >> i think they matter in pockets. one thing i'm fascinated by as the week goes on, how the industrial earnings play out. so caterpillar went from 90 to 60, and today got a downgrade to
sell at goldman sachs. so the stock is reacting negatively so maybe not all sold out. but you have united technologies reporting, you have 3m, these companies that can say something about the strength of the global economy. we'll see if that gives a signal that the selling is done or fully priced into weakness. >> i'm glad we have you watching the big picture. i want to see if amazon has a big move and if it actually sticks. always great to have you. thanks for joining us for the first half of "squawk alley." coming up, john steinberg joins us and maybe sits in the seat that mike kept warm here. major changes at twitter. we'll follow that. four executives departing and new board members. cara joins us next. and markets set to close in europe in the next few minutes. the wrap-up of trading there after this break.
i'm morgan brennen. here is your cnbc news update at this hour. . the supreme court has upheld a federal program that pays electric customers to save energy during times of peak demand. the ruling is a win for the obama administration and environmental groups who argue the plan saved billions in energy costs. an american airlines flight made a landing after severe turbulence injured several on board. the turbulence was so severe the injured were taken to a hospital. the flight was bound for milan,
italy. and ford says it's pulling out of japan and indonesian because market conditions have made it difficult to make a profit. last year ford sold 6,100 cars and trucks in indonesian and 5,000 in japan. and cbs says the coverage of the championship game yesterday was the highest-rated afc title game in 29 years. it was 31% higher than last year's game and 9% higher than the 2015 nfc championship. that's your update for this hour. back to you. >> many thanks. we're counting down to the close in the uk. stocks lower after they notched their first positive week of the year. that being last week. oil, wti and brent were positive, but fears of oversupply brought them back into positive. oil output reached a record high in december, according to reuters.
german business sentiment down sharply, slowed to 11-month lows there. most of the european oil majors, because of the move in oil under pressure today led there by down 3%, and repsol down 3%. italian banks taking another hit amid loan problems. the nominal value of shares are very low. so we will see some pretty volatile percentage swings, but that continues to be a story there. so that's the european close for you. john, over to you. >> all right. and twitter shares lower this morning by 4%. ceo jack dorsey says four amazing executives have chosen to leave the company. here's what dorsey told us about his leadership team when we asked him in november about being ceo at two companies. >> it's definitely hard. it's definitely something i approached with a lot of self awareness, and i've been very
thoughtful about. but i benefit massively from our leadership team. you can't do anything alone. and that continues to prove out every single -- in every single industry, in every single role. and i just have the best teams on the planets. >> or at least he did. on this cnbc news line is executive editor, kara swisher and john steinberg, former ceo at daily mail north america and cnbc contributor. of kara, this is a big loss. you take a look at twitter's executive team listed, aside from jack and adam bane, half of the team is leaving with this announcement. any sense of what sparked this? did jack sort of marissa mayer style ask for a multiyear commitment? why are they heading out at the same time? >> no. i think this has been -- these are all ongoing and for different reasons. and they just group them together, just to make a big old mess for all of us to study and
analyze, i guess. but they are all different in their own ways and have been proceeding. for example, they had brought in another executive and product over kevin weil and removed some of his capabilities. you know, it just depends on the person. katie stanton has wanted to leave for a while, from what i understand. and so i think they decided to group them together in some way to show before earnings, which is next week, i guess, you know that the change was afoot, and they're ready to make the changes needed to improve twitter. >> kara, i was intrigued in one of your scoops where you talk about a media personality being someone who will join the board. and it makes me think that someone must have said something very specific to you that you use the term media personality. all i can think of is like a host or something like that. can you tell us more about that? >> well, you know, i've reported before, a long time ago, they had been interested in oprah at one point. that kind of personality. although i'm not sure --
although she is quite a tweeter. she tweets about her garden all of the time. i think they were -- they were interested in a media personality, well-known like that. they do have obviously peter turnen on the board, who is a well-known hollywood personality, content personality. i think they were thinking more of someone who had a higher profile that uses twitter more. obviously there's all kinds of media executives. i think jack dorsey would dearly love to have bob iger on the board. he's on the board of disney. that's someone you can think of the media personality, i guess. but either a large-scale media figure or media executive, i think, is what they're talking about. >> kara, there has been an expected restacking of the board ever since dorsey came in, because we have been talking about how there are so many co founders and former ceos that are on the board. but what about the day-to-day org chart? who else needs to come in, and
can these capabilities really be recentralized under a handful of people? there are quite a few jobs going to just a few people. >> yeah. i think they'll probably -- peter will probably leave. maybe david rosenblat, maybe peter turnen. almost anyone is up for grabs for leaving. they do need someone prominent in advertising, probably. probably someone who is a media personality would be important. probably a technical person. you know, there's all kinds of people they could have on the board. you're not going to lose an evan williams, who is the other founder with jack of twitter. but you certainly could have more people that tweet, maybe. people that actually use the product would be nice. lot of the board members do not use twitter regularly. and so i always find -- that's sort of an easy media slam, but it's really actually true. they should be using the product more regularly. >> cara, what happens to jack's
great team narrative for how he will run both twitter and square, now that that appears to have blown up? he has already acknowledged they don't have product, a couple calls ago said we tried a bunch of stuff but i've got this team. now the heads of engineering are heading for the door again. we saw jeremy gordon a couple years ago. what does he have to say? what is he going to say now? >> well, that he's putting his own people. that's what people do. you wait for a little bit and then you put in your own people. he did bring in jeff seibert in product, the person i was referring to before. so the question is, who can he bring in? i've reported he's bringing in a cmo, and i think it's this woman from american express, super qualified. the question is, can he bring in a new team and get them up to speed? and i think the real question is, how much time is wall street going to give him? maybe it's a little -- i think the investors suddenly yesterday were all super grumpy with me on the phone so suddenly they were
high on jack dorsey and now they're less high on jack dorsey. we'll see. you know, we'll see how long he has this investor. >> one of the interesting things, when i read the "wall street journal", he said he needed a completely new set of directors. i wondered, is he super courageous or is he just arroga arrogant? basically is he making the bold move of totally putting in the team he needs, or how much he can flex? i'm going to be the ceo of two companies, i need an entirely new board, i need an entirely new executive team. at what point does it become destabilizing hubris? >> i'm not sure that report was entirely accurate. i don't think he has the ability to do that. so -- because it was written doesn't mean it's so. for example, evan williams is not coming off that board, unless he wants to, unless it's of his own volition. so, you know, it's not something that a ceo can demand at this point, especially at that company. so we'll see. he certainly has choice over the
board, and he is spending a lot of time doing it. don't leave out coretosani, the executive chairman. i think he's influential in this, and working a lot in this and helping jack in that regard. super -- another very strong advertising personality, a lovely guy, really collegial. so that's a good thing. so, you know, i think he's at work here more heavily on board improvement the and other things and helping run the company. over at square, dorsey has got a very strong executive team. fascinatingly largely made up of women, which is interesting, in the very top echelons of that company, which is laudable in silicon valley. >> and very strong board at that company too. larry summers, former ceo at morgan stanley. you mentioned potentially oprah, other media executives like bob
iger. andrew ross sorkin suggested maybe ryan seacrest. >> sorkin said ashton kutcher, which is crazy. that was a crazy one. i think i'm glad kara said iger, because i was wondering if it could be him. it seems that would be the dream. but i don't know if bob would do that or not. >> john, any guesses? >> i don't think he would do it until next year. >> i'm guessing probably not snoop dogg. >> and chris sacka has taken himself out of the running too. >> i don't think -- i think he shouldn't wait by the phone on that one. >> all right, kara, great scoop, as always. thanks for joining us. john steinberg, you're going to stick around. >> yep. and coming up, all day breakfast paying off for mcdonald's in spades. jane wells has more from that call next. and first, rick santelli. what are you watching today? >> a lot of lessons to be learned about chipotle and mcdonald's, as you just brought
latest shakeup and what may happen next. and we are live from the biggest etf conference in the country. is the fast-growing industry only adding to market volatility? we will answer that question. john, as well. see you in 20. >> sounds good, scott. thanks. mcdonald's, the best performer on the back of strong results. our jane wells joins us with highlights. jane? >> hi, john. i saw a new mcdonald's billboard driving into work this morning which said "actions speak louder than words, watch us." interesting billboard. beat on the bottom line at a buck 31, and that rose as mcdonald's had its best same-store sales growth in the u.s. in four years, up almost 6%, finally turning the entire year positive in comp. growth. and the reason is, one word, mcmuffin. ceo steve easterbrook said customers are coming to
mcdonald's to have lunch and people are adding breakfast items. imagine a mcmuffin and fries. and while the overall number of people coming to mcdonald's is lower, people are spending more while there. >> we'll take breakfast positions after regained market share we have given up in recent years. in fact, since the all-day breakfast we have experienced positive weekly comparative sales gaps relative to competitors and ended the quarter with a positive gap with 2.9%. >> and look at the stock hitting a new all-time high. management plans to give shareholders this year about $14 billion in dividends and share repurchas repurchases, bringing it to $30 billion. east easterbrook says it will take another six months of steady growth. china comp. store sales have more than 450 restaurants in china this year, the most in any market. management expects continued top
line growth in new experiments like the mcpick two menu. here in california, tableside delivery service at 600 restaurants. easterbrook said the company is getting positive feedback, finally, on the quality of its food and doing things like cage-free eggs. and guys, no one has brought up the "c" word yet but i do wonder if mcdonald's has benefited from everything happening at chipotle. >> jane, i don't get it. mcmuffins all day and all of a sudden the stock is up this much? wasn't it supposed to be organic was destroying them and their food was nasty? really, this is it? >> well, organic started making people sick. but mcdonald's -- while he'sterbrook has said on the call that breakfast during the day has been the main growth driver, won't continue to be the only growth driver. there are other things. whether it's the way you sear the beef or you toast the bun. there are getting more feedback that people think the food is
better. and for those who think there's no crossover between say a chipotle and a mcdonald's? you're looking at her. i mean, there are people that go to both places. and you have to wonder if it's having an impact. >> john, i am with you. i think this is a huge concern. they had same-store comps up 5.7% versus 2.7%. i think it could be a one-time pop. a lot of people saying, hey, i want to try breakfast all day, because it's such a cultural phenomenon. and after you've had your hash brown at 4:00 in the afternoon. >> you wouldn't go to mcdonald's if they were going to serve you at your table, john? >> no, to be honest, i thought about going and getting all-day breakfast a few different times. if i thought about it, i'm sure a lot of people wanted the thrill of eating eggs at 2:00 in the afternoon. >> chrissy teague en says french fries first thing in the morning. but she is pregnant, who knows. >> they're saying 25% of customers are value-based. and this mcpick two menu where you get two things for $2 and
choose, it's very early days steve easterbrook says. when i have the company doing bill boards, saying, look, we're trying, our food is better. maybe at some point people start to listen to them. >> jane, we trust you to do all of the on the ground research needed to prove that that is true. jane wells out west. our thanks. now to rick santelli and the santelli exchange. >> thanks, kayla. i'm going to continue on. there are so many lessons to learn from mcdonald's. you know, the world we live in, many consider their own personal opinion on what's best to eat to lead a good, healthy lifestyle. and that imprint, of course, goes on to everything like investing. and even though it seems so logical, chipotle regional suppliers, there is a down side there that caught up with them. i guess my point is, is that john fortt just says, was it so easy to change breakfast?
the hard part is changing investors' minds that people may say they want to eat healthy, but sometimes they don't. and it's hard to find statistically when that crossover is. it's the same for markets. i'll give an example. when it comes to japan, okay? there's a lot of experimenting going on there. but the one thing that doesn't chan change, and i hear it all of the time now. are we going into recession? many say it's a fed recession. see? history is going to get distorted again, just like it did in 1937. 1937 and the outcome wasn't because there was a rate rise. maybe it was a tax rise. but my observations after reading about that period, that it was just a period they were in, pulling out one thing is ridiculous! but history is going to get revised this time. it's always going to be about the fed. do you really think the fed could prolong recession forever? if anything, the fed should be credited for stretching out the business cycle. all right. let's look at dallas fed manufacturing today. such an interesting number. we all knew it wasn't going to
be good. minus 34.6. worst since april of '09. let's think about what that means. we all know that anything with manufacturing in that area is going to be affected by what's going on in commodities, particularly energy. does it mean there isn't a diversified part of that economy making up for it? of course there is. because china is slowing down and japan is disappointing. and europe may be did he say disappointing. what does it mean? kind of the same analogy. kind of the same metrics there. there are good things and bad things, and not one single thing is the entire issue. but at the end of the day, it's about contributions! there's less contributions in the global economy. real quickly. look at a 20-year chart of the nikkei, okay? excuse me, dollar yen. the reason this is important, qe 3 started there in 2013. the big break, the weak yen ended, basically, in 2012. >> quickly, qe 1, 2001, qe 2,
2010. this is from st. louis fed. the reason this is important, this is thecanary in the coal mine! we want to see the outcome of quantitative easing over its prime. this is when it came at a horrible time. the yen turned up from the carry trade, the perfect storm for 2010. demographics, gdp close to 250%. it used to be demographics -- they hold all their own paper. now they're retiring and will start turning that paper in. and let's not forget the easy comp.. 20-year chart on the nikkei wouldn't show that. where is it today? if there is acanary in the coal mine about the outcome of qe, it's japan. the problem is, it's going to take a lot longer still to see it, and by the time we see it, it will be just like mcdonald's and chipotle. the reasons will already be morphed. back to you. >> all right. thanks so much, rick santelli. up next, apple and microsoft earnings coming this week amid a
nervous investor climate. what it may mean for both companies. plus, the search for the 2016 cnbc disrupter 50 is on, once again looking for the next game-changing private companies. more information and a link to the official nomination submission form is at disrupter 50.cnbc.com. e td ameritrade trader group, they work all the time. sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivatives pricing model, honey? td ameritrade.
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investors are nervous about it. josh lipton is at the 1 market bureau in san francisco. >> john, nervous is right. that tech sector in the s&p 500 down some 7%. 33 tech stocks, or nearly 50% in the index now in bare market territory, meaning a drop of at least 20% from a recent high. three of the worst-performing tech stocks in the index, include micron, western digital and seagate, all down 60% from their 52-week highs. investors await three critical earnings reports that will give a better indication of how tech performs from here. apple reports earnings tomorrow after the close. already that stock down about 20% in the past six months, as investors worry about iphone growth in the quarters ahead. also, will ceo tim cook continue to sound as bullish about that company's business in china, given that economy slow down.
mainland china accounts for 30% of revenue, according to pipers gene munster. ebay down 50% in the past is it 12 months. the focus there, user growth, profitability. despite the nose dive in the stock, scully remains on the sidelines for now. checks indicate continue muted growth, he says. and on thursday, we'll hear from microsoft. we know investors are fans of sacha nadella and the cloud business. the stock up 10% over the past 12 months. but intel's latest report highlighted weakness in the pc market which could spell a challenging quarter for microsoft. guys, back to you. >> all right. thanks so much, josh lipton in san francisco. up next, speaking of microsoft, it's deal with the nfl not resulting in the type of coverage the company is looking for. that all happened yesterday, and we'll explain, next.
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is the one who took a hit when cbs reporter evan washburn reported the patriots were having trouble with their tablets. a network issue was the problem, not the tablets. microsoft has had a deal since 2013, and until now people have been calling them ipads. total rodney dangerfield moment. no respect. when it's working, they call them ipads, when there is a problem, microsoft saab tablets. >> it seems to me you're in a giant stadium, and lots of interference and stuff is going on and everyone's networks go down. and so that seems reasonable. >> but they have a private network for security reasons to have these tablets being run on. so -- a little hole in that theory. >> but a private wireless network is a slightly less congested highway. it's still a highway, right? >> the problem could have been in the way it was configured. it could have been at the network level. it could have been on the tablet
with the way it accepted the vpn connection. still, a rough bum rap for microsoft. >> they were only down for 20 minutes, which is according to my math, 1% of a football game. >> and that giant laminated multifolding thing he looks at all of the time. the coach or guy looks at. that's why they have their laminated backup. >> we will find out whether any publicity is good publicity for what microsoft has said is the most productive dis on the planet. journal has a story that steve zadid he say key running the electric car project is leaving the company. is this significant? >> no. i mean, it's a product that we have no idea when it's going to come out. if it's going to come out. so i mean, you hate to see anybody leaving. this isn't a twitter level situation. >> thoughts? >> i think that the -- nobody really cares about the car. the fact the guy is leaving and they admit they have a car is more positive than negative. >> well, we'll see how the shares do when they report
earnings later this week. it will be interesting. a lot of tech to look forward to. hope you guys eat your wheaties. always good to see you. that does it for "squawk alley" on this snow monday. let's send it over to the halftime report. >> all right, kayla,tation so much. welcome to the halftime show. our game plan looks like this. inside etfs, the popular investments causing shakeup. why so many top executives are flying away from that firm and whether shares which are sinking again can ever recover. we begin with the markets. stocks coming off their first positive week of the year. oil coming off its bes