tv Squawk on the Street CNBC February 9, 2016 9:00am-11:01am EST
it has been a busy morning at cnbc. still to come, wholesale trade and the jolts report, and dow component disney after the bell. scott, thanks for being here today. >> all right. >> join us tomorrow. right now it's time for "squawk on the street." ♪ good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. another ugly morning in the premarket. more worries about banks, about oil. we do have earnings from coke, viacom, wendy's and more. the nikkei down 5.5% overnight. the worst session since mid 2013. europe since again unable to hold some early gains. german industrial production was a miss.
ten-year, 1.7 now. oil back below 30. our road map begins with banks under pressure as the index enters bear market territory. deutsche says things are rock solid. >> viacom misses expectations what is next as the battle for control at that company continues. >> it's decision day in new hampshire. polls are open across the state. we'll take you there live later in the show. after monday's selloff, stock markets around the world unable to shake concerns about global growth. the nikkei down 5.4 overnight. the yen rises to 15-month high, and the japanese ten-year yield dropping into negative territory. european markets once again being dragged down by banks in this letter to employees, clients may ask you about how the market wide volatility is impacting deutsche bank, you can tell them that deutsche bank
remains rock solid given our strong capital and risk position. futures were okay until that e-mail came along. >> i was speaking to someone in sports, a guy told me, listen, don't worry about the defense. i said, oh, was i supposed to be worried? you know, deutsche bank puts out a note, don't worry, all good. reminds me of jpmorgan saying if you're credit worthy, it's too late. let's take the negative here. we've been sugar coating a lot, we're not trying to drive anything down here ourselves, not that we're masters of the universe. the european banks have a plan. the government has a plan. you may look at the common stock and say that's going away. i don't think it is. but this is not 2008. at the same time what david said yesterday, they never raised equity.
deutsche bank has exposure to america. credit suisse trying to sell desks, getting away from that business. nobody knows what's going on in these businesses. >> they have always been black boxes, as to a certain extent our own banks. we do know the capital cushions are significant. leverage issues have come down. they have come down significantly in europe, jim. but this continued conversation one way or the other has an impact. you have guys that can push out the credit default swaps to make things look worse than they are, which can exacerbate fears. that's an old game. we saw that in '07 and '08. we saw what it did. it does have an impact. to your point, it's always difficult to fully understand what the true capital position is i think there were some -- there were some instruments out there in the case of deutsche bank that people didn't know
existed. >> but that was socgen. >> but there's some securities out there -- >> we don't know the oil and gas book. >> no. >> nobody seems to know the oil and gas book. everyone says they have oil and gas loans, but they're majors. exxon is the only one that dois maj major that you should be leveraged today. this is shadowboxing. whoever wants to stand up and say our banks shouldn't trade with them is risking the idea that they do, and you will be a laughing stock. so you kind of just say, hey, listen, they're all going down. >> meantime japan's action has surprised a lot of people. it's starting once again this conversation that central banks, especially those that have been as aggressive as the boj, out of
gas. >> japan has structural issues, demographic issues. how many toyotas can you sell? they don't have -- they've been propping up that market for a long time. the chinese were immediately criticized for propping up stocks. the japanese have been propping up stocks forever. >> brings to mind bill poole's piece in the "journal" talking about covering up negative interest rates, they don't work, he says. >> they don't work. you want a functioning credit market. do we have a functioning credit market? >> we did. >> we still do. we even have a functioning high yield market. the food service part got a bond deal done. we still have a functioning credit market. >> what's important is we're much better than everybody else, but we are also more highly valued. so you get a situation where you
have a lot of stocks still above where they were during the january dow jones lows. i when over that list yesterday, johnson & johnson is doing better than we thought, mcdonald's is doing better than we thought. we have financials. the financials and techs, that's where the -- that's where the pain is. >> the pain in the financials has been manifest, as they say. >> is it manifest destiny? >> i don't know what the destiny of the financials will be. >> it's a rendezvous. >> morgan stanley down 28%. >> i wanted to call gorman the last night, he's the ceo. what's he going to say. >> i don't know. >> should i call ruth porat? >> no. she's at alphabet. >> nice exit. >> after extraordinarily strong earnings, that stock is far lower than it was after the numbers came out. >> they have a model that's so acid light, so not worrisome,
but you do need to see ipos. i heard, confidentially, there might be an ipo. >> come on. you can't be serious. >> friit's from good sources. >> they haven't pulled it yet? on japan, it's a historic ten-year negative yield and 7 trillion in government bonds have yields below zero. >> in 1989, the -- we were sitting here thinking, well, how could japan be worth so much more than we are? their dow was at 38,000. we were at 3,000. then, you know, take a look, there was reversal. then japan ran up. japan's stock market is too high. but is there that much interrelation between japan and us? we kind of want -- if you're working with mark fields at ford, you're saying, listen, i hope that yen goes higher. japan is not a friend when it comes to trade. they're a friend when it comes to being an ally.
>> they're more vulnerable on trade. they have to import everything. >> i know that all our futures are linked. i know when i got up at 3:00, it was before europe had rolled over and oil was still up 7 cents, so i was hopeful. then that came out and wrecked the whole scenario. we can totally be dependent on oil. we can say we'll go down less because we're in a rolling bear market. when i look at city, city reported pretty good quarter. city's down another 80 cents. everything goes down 80 cents, 86 cents, nothing goes down 7 cent. randgold, with dr. mark bristow, the ceo, i said you are in places i would never dig for gold. he said gold mining is not for sissies, chief. he chiefed me. gold goes up, everyone is against gold. i think gold is going much higher, much higher. >> why? >> why? because it's the safe haven if
you're china. it's a safe haven if you're in any currency that can be de-based. if the japanese had any horse sense they would be buying gold. >> you always said it's good to own a little. now is it good to own a lot? >> the junior gold index, i was working with a guy who was terrific, the junior gold index could double and no one would care. it's nowhere. still down huge. gold companies can make a lot of money as gold creeps up to 1400, 1500. randgold has the assets. bristow is a funny guy. but the junior guys have a high break even, yet they could be great as gold goes higher. watch gold. it is the bull market. when i say there's always a bull market, there's a bull market in clorox and gold. by the way, you need color
routine to g chlorine to get gold out. >> i'm still shocked by the b t brita news. >> one place you have not been able to hide is media. that's been for a while. we'll get to the earnings this morning. viacom and 21st century fox had earnings in line with what was estimated. revenues for both shy of what was expected. fox lowered its year-end guidance on the ebita because of the strong dollar, some sub erosion or the lack of new entrants, ala apple, where they thought they could sell programming to. which didn't materialize for this year. fox looks like it may be down a bit. you can see it there down over 5%. viacom, the call has been going on. i was able to listen to it until we started with you this morning.
phillippe dauman taking over from sumner redstone and praised his successor as chairman, as you might anticipate he would. >> that's nice. >> went on to say a few other things including we're going to restore our stock to its proper valuation. >> shoot, how much is it going down. >> whatever that may be. >> that was a joke. >> he believes mtv, he admitted, didn't adopt fast enough to change tastes of its audience, but now is deep in a turnaround and headed in the right direction. here's what mar dr. dauman had say about sumner redstone. >> i want to address the speculation about viacom and our future. our outlook and the facts have been distorted and obscured by the naysayers, sell-interested critics and publicity seekers.
we will not be distracted or deterred as we build for the bright future ahead of us. my singular objective is to protect and build value for all of viacom's share holders, and in doing so for all the beneficiaries of sumner's trust. >> there you have it. of course that speculation will continue despite what mr. dauman may said. shari redstone, sumner's daughter and board member will continue to at least fire at the current management of the company. either in part to try to get some change there or perhaps to get some change on the trust, of course, which mr. dauman is a trustee with six other people. >> cable is not that bad. >> no. >> i expected things to be worse. >> terms of cord cutting or subscriber erosion? >>ing about disney
tonight. >> we have disney tonight. we'll see what mr. iger chooses to say and what the numbers look like. it's not that bad, you could argue, but it's moving obviously -- not moving in an up direction. >> but it's not an oil company. >> no. >> is that the standard now. >> that's the new benchmark. >> not an oversupply, no sense of equilibrium -- >> no dry holes there. >> if you have a compelling content, these companies will tell you it doesn't matter what platform, they'll get paid for it whether it's an over the top streaming service or whether it's in the bundle that cable providers still offer, they're going to get paid if you're a viacom or time warner. they all say the same thing, the question is do you really need your mtv or your tnt? >> i don't know. you need your video games. >> i don't know what you need. that's the question. >> your needs may be different than my needs. >> maybe you need a book. >> a book? >> a book. here's bernstein.
we continue to old the view that the old business of serving kids and teens with linear television networks is doomed. >> doomed. >> doomed. >> doomed. >> what are they doing? >> interesting. >> what are they doing? are they playing video games? just trying to get into college at the age of three? like s.a.t. prep? s.a.t. prep. >> for viacom, they have an affiliate deal with dish coming up in the not too distant future. will dish re-up for the viacom channels? the sumner saga is going to overshadow all of this. >> do you think if 21st century was better? they had pretty good cable? >> their cfo said that their ad market feels pretty good. this is the cfo of fox. john nailon. thought that was positive. >> he thought they had good visibility on affiliate fees. thought the stock would be
down less. everybody knew the movie "slate" was subpar. >> i heard him say trevor noah was a star. >> trevor noah. >> trevor noah is a star. is that true? >> i don't know. i'm worried about cam newton. >> oh, boy. >> i don't know. >> a lot of discussion about cam. >> yeah. >> when we come back -- >> the stock is trading at much to high multiple, like tableau data. >> when we return, an interview with james quincey, coo of coke cola the s&p will open near its lowest close in almost two years. more "squawk on the street" in a minute. [bassist] two late nights in tucson.
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coca-cola better than expected quarterly results. the dow component helped by higher prices. in the next hour, an exclusive interview with coo james quincey. in north america they ease up on pricing, volume goes from flat to one. >> a good quarter. i liked the top line revenue. i liked the refranchising. this is kind of an asset like model. it will finish in the united states in 2017.
this is a higher return company, less capital intensive company. mutar ken has had a reformation. this is the stock to watch for today. it's a stock that if the futures bring down, you want to buy. >> noncarbonated volume up six. led by juices and teas. >> the company is not emphasizing that to me when i was trying to get the narrative to be focused on that. they're focused on the fact that the costs are taken out and the refranchising model is good. global growth is good. again, if you look at what's happening in the market, it's bifurcated. companies are just doing really well, and they have a dividend you can trust as opposed to bank dividends, which you can't. the markets are saying that's wrong. the oil dividends, which you can't trust, the market and everybody agrees with that. then you have companies like --
i was doing work last night. if you look at coca cola you look at campbells soup, a company like procter, which i think is incredibly undervalued, you see companies selling at 22 times earnings, they can raise their dividend. they have okay organic growth. and they're safe. so when you see where the money is coming out, it doesn't just all leave the market. it goes to these. coca-cola is on the go-to. >> some has left the market. then you wonder -- procter & gamble has the same multiple as alphabet. maybe alphabet's multiple is lower. >> nobody wants to think about that. they don't want to look through it. they know they had -- organic growth going up. procter & gamble has the 3% -- procter is just a buy. i would buy that. i would buy that stock aggressively today. aggressively. aggressively. >> aggressively. should we buy it aggressively? >> look, you want me to be negative as everybody? >> okay. >> i can be negative. i read a book last night.
i'm trying to rid the third part of rick atkins trilogy of world war ii. i felt like i should put cable on, play video games do what everybody else was doing, but no, i was reading. >> good for you. >> i'm so old. >> you are really old. but your brain is still young, my friend. >> nobody wants my demo. i made up my mind about everybody. i can't switch. >> we'll get you on snapchat cu during the break. more "squawk on the street" in a minute. and boxes in every room. mother, we are settlers. we settle for cable. and the simpler things in life. like our drab clothing. that's right, daughter. and homemade haircuts. exactly, boy. besides, if it weren't for wires, how would cousin tobias get his privacy? hey - shut the blanket! i need my privacy! (vo) don't be a settler. get a $100 visa prepaid card when you switch to directv.
about chesapeake. about freeport. about the debt, the liability side of the balance sheet, which is much more important than the equity. >> yeah. there's three twos, and it's not three of a kind. we have sprint and we have chesapeake, and genworth. >> genworth has a new name. >> if we draw another five, we'll have a full house of sub optimal situations. jeffries comes out and says m&a can save freeport. it says while freeport is unlikely to be acquired outright -- come on! it's like i can be jackie mason. no, it will not be acquired outright. they talk about the idea of selling some copper assets and buy time. the problem is the debt is somewhat humongous on freeport. it's a carl icahn name. chesapeake is a carl icahn name.
cheniere. >> he has significant stakes in the equity. this is a guy who knows his way around the debt markets. he made a choice to go into equity, not debt. he may own that, too. you don't know. >> i don't know. but this piece will get people to sell it less aggressively. if you were selling this down to 3 or 4, you might stop at 4 1/2. >> so different levers they can pull in terms of asset sales. >> freeport is at risk of running out of liquidity by 2018. that's a bullish forecast. 2018 which is the year that the 76ers have in terms of a game plan. >> right. >> that's like -- >> it's not that far away. >> no. it could happen even, you know -- 2019. freeport -- this is a very, very
bullish report on freeport. bullish! >> b-u -- >> we'll take a break. opening bell coming up. we'll focus more on some of these natural resource names and the broader market when we come back. oh remotes, you've had it tough. watching tvs get sharper, bigger, smugger. and you? rubbery buttons. enter the x1 voice remote. now when someone says... show me funny movies. watch discovery.
you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in 60 seconds on a day where, again, early gains in europe could not be held. a rough session in japan overnight. the worst in almost a couple of years. and that means some red arrows in the premarket. jim you have been watching retail names. we have gap and sears with some preliminary results. >> yeah. the sears -- wow. i don't know what to say about sears. i -- it kind of takes your breath away how badly they've been doing. they've been a continuing annuities dream for home depot and lows. that may not stop, but they don't have enough customers anymore to make a difference. they continue to -- by the way,
because of that real estate investment trust they did, they have got better liquidity than you think given the decline. that's important. the liquidity is still there. >> right. but decline is the key word when it comes to sears. >> comps down 6.9. >> yeah. >> and for the full year down 11. >> i don't know how when you get those numbers consistently that you're able to -- >> eventually, i guess you get to zero eventually. it takes a long time. >> and below zero, what happens? >> i don't know. you're at 100 and then down 10% 10%, 10%. >> you're talking real declines. >> i remember when karen cramer used to tell me don't worry about a thing, stocks stop at zero, don't sweat it some of those position on the sheets won't go to minus 2, that's why i have faith in you. >> that's why it's better to own than short. you're unlimited when you're short a stock. >> yes, that's infinity, but the stock stopping at zero is an important thing for people to
think about. >> at the big board, global x, celebrating global x scientific beta etfs. at the nasdaq, legg mason celebrating the launch of its etf funds. talking about retail comps, gap minus 8. >> yeah. estimate for minus 4. the guide wasn't awful given their implied guide from the quarter prior. >> why got just guide. guide the -- guide that we don't have what people want right now. the merchandise that people want. laugh lauren doesn't know what people want. lb does. the stock got hit any way. i see that amazon does, but that's the last thing anyone seems to want to own. f.a.n.g. continues to be de-f.a.n.g.ed. i'm waiting for a short cover move in f.a.n.g., that's facebook, apple, amazon, netflix, google. alphabet. i thought apple hung well
yesterday. some people took a shot at it. >> f.a.n.g. is down 17% for the year. after rising 70% last year. >> right. >> nasdaq, even though we're on the cusp of this bear market for the naz, trades at a 24% premium to the s&p. >> that's crazy. dow jones is surprisingly strong. well above -- >> what's the multiple disparity? i would assume it has higher growth rate. >> yeah. >> higher growth rate but no one cares. i was going over some of these nasdaq companies doing so well, like adobe and it's like, you know, no thank you. they're doing so well. but the tableau software, linkedin changovhang over remai do you pay for a company 50 times earnings? do you keep it there? there's been no takeovers no rationalizations. by the way, in terms of the ipos that want to come public what does this say? >> i know. when you look at facebook and
the quart their company had -- the acceleration of the top line and its incredible ebita margins, you look at it and you're in an environment where the ten-year now is yielding 1.8, let's be generous. >> right. >> why wouldn't you be willing to pay a multiple for that. >> my travel trust owns facebook. it's 70 points from here. i do not want to -- the trust doesn't want to take a profit for it. the stock is inexpensive versus 2017, doing everything right. the fact is it will go down then it will bounce. the second that will bounce is google. that stock is cheaper than the ones i mentioned -- much cheaper than colgate, much cheaper than kimberly, much cheaper than colgate and campbells soup and better for you. >> facebook is a five-bagger? >> you look at it. you say why don't you just ring the register. it's not a head fund.
cramer partners are like facebook, i would have sold at $75 already. i had to stay away from twitter for a couple of days. there is an overwhelming feeling. how you can hold on to facebook during this decline? i say one day the fundmentals will assert themselves. i don't know what day. maybe it's this afternoon ahead of yellen. >> burns itself out eventually, doesn't it? >> selling? >> yeah. >> it does, but two funds that are momentum oriented that apparently are having a great deal of trouble, don't want to call attention to them, i will be a diplomat. nice fellas. >> right. we've had a lot of hedge funds raise cash. and they have suffered draw downs in the market, meaning they lost money.
>> right. >> they've taken risk off as they often use t taken the nets down as they like to say, gross down. >> facebook is a $98 stock -- $97 worth of stock that you can raise capital and show, look, i have got money. if someone wants their money back, i can -- i'm ready for you. there's no doubt about it, stocks are being thrown away. if you try to identify stocks being thrown away and it's in the cross hairs of one of these funds -- yesterday was interesting. between 1:00 and 2:00, we stabilized. 2:45 traditional rally, when you hav have -- when you see the margin calls are done, you wait for 40 minutes, you come in and start buying. 2:45 the rally started. started too early for some people. sellers came back in at 3:40. that's been the pattern. i think you'll see that pattern again today. >> yeah. on oil, morgan stanley out with a note today. they lower their oil forecast to
high 20s for the next year. they push out any recovery about 6 to 12 months. >> bullish forecast. goldman is still much less. bullish. i'm looking at the inventory numbers, they're bad. some very good stuff at rbn today about how it costs too much money to take a lot of the oil out of the balkan because of the rail costs. so, we are pumping natural gas, you need to have a 50% decline -- 50% decline according to ihs in the amount that's being drilled in order to find a bottom. is that not extraordinary? you will not find footing in natural gas until the drilling is 50% down. so much natural gas in the country. >> yeah. one company that buildses a lot of pipelines to transport it was energy transfer which we talked about yesterday. up today, up sharply. i wi >> i will ask you a question. >> they built a lot of stuff to take it from fayetteville, but marcellus is much closer. >> now, lest anyone think i'm
smoking something here -- >> okay. >> because i was in oregon where pot stores are everywhere. kind of strange. >> sure. >> ete has the finest network for natural gas in the country. >> right. >> there's just no doubt about it. and williams steel better. if chesapeake were to reorganize, why is that a -- not some sort of monumental reason why you should have a -- >> it's carved out of the merger agreement. >> come on! is there anything they didn't think of. >> the relationship is between wpz, which is williams, and chesapeake, which wpz transports a lot of chesapeake natural gas and liquids. that's carved out of the merger agreement, and you won't get a mac there if -- >> no, no. >> what it does mean if they
were to, they will take those contracts lower. you have a lot of these -- >> you're telling me they put that stupid clause in? >> yes. >> where is that cfo? >> had good lawyers. >> where is the cfo of et -- >> unaccounted for. >> is he like the brixmor people. >> i called jamie, the phone was unconnected. >> et, call home, right? >> yeah. >> turn out your heart light. >> or kelsey warren, if he want kwants to come on and talk about this. not as rich as he once was. >> no, watch facebook, netflix, alphabet. these stocks are so oversold, it's perfectly realistic they could bounce. at the conclusion of the margin selling, i'm giving you bullish scenario here. i love when it's down. this morning at 3:15, might be -- not down enough. but, you know, you have is a
couple companies saying you did a good job. i told you coca-cola was good. i think the pressure on facebook, amazon, netflix, and google, alphabet, when europe closes, people will want to buy growth stocks. those stocks bounce today. >> one stock not bouncing is media. we told you, of course, about fox, which reported after the bell yesterday. lowered its ebita guidance. james murdoch, the co said we -- film came in lighter than we thought. and really sort of prevented us from being able to continue to meet what our guidance is for the second half of the year, which they point to. the overall tone in media is terrible. i don't know if the viacom call exacerbated that. that stock is down 9%, viacom. >> man. >> we looked about 2 1/2% before we opened for trading this morning. the call is still going on. time warner, one of the biggest losers on the s&p down almost
4%. it has not reported anything. we will hear from disney tonight after the bell. >> disney had an 8 handle for a moment this morning. has not done that since the ebola crisis of late '14. >> at a certain point that's overdone. cvs reported a number, instant reaction was stock down 3 bucks. cvs reported an inline number. why the stock is down 3, i don't know. cvs had a good quarter. retail stocks bottomed yesterday at 2:45, had a bit of a run. that's important. some of the critical situations that caused us to go down last week like tableau, symbol data, that can find footing. i'm saying -- my god, that's worse than the raised eyebrows. now you're giving me a frankenstein look. he gave me a frankenstein look, carl. >> i'm working on my looks. >> that's a combination of
frankenstein and meerkat. you were meerkating me. >> i'm trying to vary my looks for you. can't always do the raise the eyebrows. >> some stocks are doing well. at a certain point it won't matter. is it today? we have to see how the margin call is in. this high growth is one where you want to cover high growth ahead of janet yellen. >> jim,ing could google's up, up, ebay up. >> really? just like that? >> all green. >> williams jenning bryant. burn down your cities and -- if you keep the farms, the cities will grow back as if by magic. i don't want to totally get that thing wrong. i do think there is a notion that you can have a magic resurrection for companies doing well that have been brought down by data and hideously brought down by linkedin. a lot of people don't want to be short ahead of yellen. you have these great -- the shorts are -- they have been
pressing the short bet in netflix and google forever. do you want to go in to janet yellen -- let's say janet yellen said, hey, you know what? maybe we wait and see here. maybe we take four off the table. you will wish you covered. that's what i see. that's why i said when they were down, i said they could bounce. >> all those names -- >> it's a long day. there's a lot more trading left. it's 9:43. >> great deal more trading. >> see that? >> i see it. the black hole on your wrist. beautiful. >> that's saving battery. >> that's the future right there. all staring at black screens. >> watch apple. >> nothing in them. >> i'm watching apple. >> your cynicism is getting to me. >> i want born this way. >> yeah. >> you know what tomorrow is for me? >> what? what is it. >> for a moment here the s&p has lost as many points for the month as it lost in january. let's get to bob pisani on the floor. hey, bob. >> we're not at the january low.
we got close yesterday. not there today. triple digit decline on the dow, now only double digits. want to show you what went on overseas. it was ugly and still tough in europe, down about 2%. the japan nikkei is down 5%. the yen has been strengthening all month. 114 and change. now 121 at the start of the month. that's a problem. germany is off the lows, down about 2%. france as well. the weakness is in the banks. putting up some of the banks here. down 2% to 4%. this is not as bad as earlier. deutsche bank still down 4% there. if you want to take a shot at buying all these banks. there's a european bank etf, it's been ugly in the last year, you can own all the european banks in that etf with eufn. utilities are leading today. staples not doing bad. discretionary having a tough time because of viacom and cbs are weak. financials, morgan stanley, gold
mran down about 2%. they're leading it to the down side. a couple company earnings caught my eye. i love masco, not only because i was a real estate reporter, but it is a great play on the housing market. plumbing, cabinets, patient. easy to understand. a u.s. play with excellent numbers. r revenues are growing and outstanding margins. that's how you value these companies. excellent report on the u.s. market. in in ingersoll-rand, their numbers also good. here's what disappointed me. first quarter, 0% to 2% growth. there's the global economy staring you in the face. 0% to 2% growth. kind of disappointing. but the report itself was excellent. a lot of debates about whether we're in a bear market or not. i find it academic when you have
the russell 2000 25% off the highs, transports off 25%. energy 31%. banks and materials, 25%. big swaths of the market are in bear market territory. that's good enough for me. we don't have to officially declare anything, but you get the point. one thing that's amazing is not much is outperforming. value is such a big play. remember the beginning of january we were all talking we will buy value now. value is not outperforming growth. you note growth names, apple, microsoft and google. but the value stocks are all of the energy names like exxon and chevron, all of the bank names like wells fargo, jpmorgan, they're not doing better. that's not working. a couple things outperforming, you know about utilities and telecom. people are not opening that, they're too small. people are pile nothing them and driving up the p/e, but they're
too small. low volatility, people will talking about v.a.t. at the end of last year. low volatility, campbell soups, procter & gamble, verizon, those are doing better than the high beta names, solar and energy material that is working a bit. s&p 500 is only down 9.1%. i guess my point here is that outside of a very small group of telecom, utilities and a few low volatility names, it's been pretty tough to stay ahead of the game and in green territory so far this year. the dow is down 30 points. coming back a bit. >> bob, thank you very much. when we come back, an exclusive can david kostin. we'll find out how he thinks you should navigate these volatile markets. as bob said, we're down 31. s&p 1850.
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did want to note the poor performance of shares of viacom after the company reported earnings this morning not particularly well received, but to be fair the earnings number itself was more or less in line with analyst expectations. revenue was a bit weaker than had been anticipated. the call apparently has not gone particularly well despite what are comments from chairman and ceo phillippe dauman indicating a turnaround is underway. this is what he had to say about expectations for domestic advertising. >> excluding the performance of comedy central and mtv, our domestic television ad sales growth was solidly positive. once ratings at mtv and comedy
central turn around that work is underway, the rebound will be even more clear. >> perhaps investors wanted to wait until that day. when you exclude two of your key networks, mtv and comedy central from domestic ads rebounding, i think it speaks for itself. that stock also speaking loudly this morning. again viacom shares down over 10%. not far from a 52-week low. >> that's bad. >> yeah. in the meantime, tesla, a negative piece this morning. really just very negotiate live about barclays. jeffreys has been a big bear on salesforce.com, they go from sell to hold. stock is roaring. we're seeing good action. i told you i thought coca-cola was go that is doing incredibly well. some bigger moment pum names ar finding footing. in the end we will get buy
furcatifu bifurcation of the banks. people think in the case of morgan stanley that there were some negatives, bad loans, it's not panning out. it's not panning out. i think morgan stanley is -- a buy. >> he said sounding ashamed. >> please don't hurt me. >> we'll get stop trading with jim in a moment. as he has pointed out, markets quickly working their way back to the flat line. this just got interesting. why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain,
or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis and a $200 savings card stop taking cialis and get medical help right away. at ally bank, no branches equals great rates. it's a fact. kind of like bill splitting equals nitpicking. but i only had a salad. it was a buffalo chicken salad. salad.
time for cramer and stop trading. >> one dow stock what has fallen apart is home depot. down, down, down, even though they're going into the spring season, hiring for people. masco is a tremendous read for home depot. home depot is masco. if you wanted to know what should go up in the dow off of something that masco does give you the green light to buy home depot. that's important. retail has been under pressure. notice cvs down 3 points, it is now up. why? it was a good quarter. people have been shooting and asking questions later. it's proven to be a wrong philosophy. yahoo! saying they're interested
in yahoo! pieces. i'm crafting scenarios, people are afraid to be short ahead of yellen tomorrow. they will cover the teslas, the f.a.n.g.s, the cummins, mcdonald's, this is the traditional thing that happens in a bear market. people get excited, they think it's over. don't get all excited. but understand that people want to cover ahead of yellen. that's -- it's entirely possible she goes up there and says, you know what? i looked at the biotech stocks, they're down enough now, i probably want to get long them. >> the smaller biotechs. >> she was dead right. >> she was early but right. >> dr. stanley fischer will urge her to cover those. >> what's on "mad" tonight? >> a company that's been in the cross hairs of one of the worst downturns, agco. there is a sense out there that the ag business is so horrendous
that you hear a lot of companies talk about how the commodity costs have helped their business. clorox was the first company that point blank said this lower oil price is great for us. i tried to talk him out of it, he was so positive. procter is the stock to watch, doing best of all and can go much higher. ladies and gentlemen -- gentlemen, thank you. you got rid of the frankenstein stuff? not even raising your eyebrows. >> just giving you the love. >> that was nice. like i just took a warm bath of optimism. >> i like that. disney tonight, we'll all listen. bob iger's birthday tomorrow. >> that's one birthday we got tomorrow. >> see you tonight, jim. "mad money" at 6:00 p.m. when we come back, gold mmas david kostin.
trying to hold levels here in the states. breaking data on wholesale trade. currently at the bottom of your screen. and a close eye on crude, which is higher but still below 30. >> here's our road map for the next 60 minutes on cnbc. with markets under pressure again today early, though climbing back, currently 19 down on the dow, goldman sachs' david kostin will join us live. >> and coca-cola out with results beating on the tom and bottom line. the company's president and coo joins us live. and with the oil market in turmoil, why is exxon one of the top performers in the dow this year? more on energy and dividend i investing coming up. stocks are mixed and feeling the rippling effects the turmoil in asia as investors are cautious in the potential slowdown in economic growth. for more, david kostin is here, chief u.s. strategist at goldman sachs. good to have you back. >> nice to see you. >> goldman's stance has been that this smells more like a
growth scare than something truly dangerous. why is that the case in your view? >> well, it's about the consumer. the u.s. consumer will continue to grow in the face of what's clearly an industrial contraction. our view is that's likely to be the case. if the u.s. consumer continues to grow, this will be more of a growth scare than what could be worse, recession. i just came back from visiting our clients in europe and in asia. in the prospect of visiting them in the last three weeks, that boils down to the key question. the question of what fed's policy is going to be, durability and demand, but ultimately about the consumer. if the consumer is there, we look at growth in jobs, wage growth, balance sheets, that gives us more confidence that the durability of the consumer will remain. that's ultimately what leads the company and overall market.
earnings will grow. that leads to an s&p 500 that will rise towards 2,500 by the end of the year. it's a modest increase after the selloff at the start of the year. >> that's more than enough to offset a dangerous dislocation in banks or in energy? >> we look back in the last year, oil prices down 75%. that's been difficult for materials companies, industrials. that's where the source of the industrial weakness is. but whether that spills over to the consumer, that's the issue, that's the question of the day for fund managers. our view is that's not likely to be the case. >> do you still believe that there will still be three interest rates this year. >> the first one in june, december, not a rate increase in march. >> what do you think the fallout for financial markets are of that? >> the idea of low rates for at
least the intermediate period would be a positive. relative to evaluation of stocks and the idea of the -- more time to lapse for the companies to -- the economy to show more strength. ultimately, you know, today is the primary in new hampshire. are you an investor based on what happens between now and super tuesday or what the market will look like in november, nine months from now. in that contest the economy should be stronger, earnings should be more durable. we'll see more growth. that leads to the market moving higher. if you look at now as opposed to tactics is -- in january, when the market was weak it was weak in the early part of february, that's when corporate buybacks do not take place. that's your blackout window before companies report earnings, and that's what's different about right now compared to last month, companies are back in the market. 75% of companies are now able to
repurchase shares, and that's the only source of demand for u.s. shares in the market. that's it. it's not coming from other sources. it's about corporate purchases. >> i like the way you say that with confidence, like that's a good thing. >> it's a -- >> the only source of -- the only net source of buying on market is cos buying back their own stock. >> we're looking at the money flow what takes the market higher. >> don't you think there's something wrong with that. >> the question is what would you prefer to see companies do with the cash? >> invest for jobs and growth. if the past utilization is running around 80%, 40-year average, no particular reason why companies need to do more than maintenance capex. they are already spending the largest share of their spending is for capital spending. after that the next source is repurchasing shares. repurchasing shares now, the market is down 10% versus the start of the year. this is more attractive than at the start of the year. >> your point is their money is still green. you are not going to shut out a
buyer because it's the wrong kind of buyer. >> when there's macro news that's negative, companies are not repurchasing shares, that explains why the market is weaker at that point and now we have a situation where companies are back in the market, repurchasing shares. that's likely to be the driving story. less about concerns in terms of rates on hold. >> the stress right now is being feld in so many more place answer that just the stock market. from junk bonds. look at what's happening with the bank stocks with goldman sachs and others, the rise in gold. do you think it's all about questioning the growth of the consumer? >> if you think about the junk bond market. 25% of the high yield market is composed of materials and energy credits. 9% of the s&p 500. it's where the source of the weakness is in high yield.
makes quity particulmarket, tha more contained part of the economy. if you look at the economy as a whole. if 12% is industrials, 65% is the consumer, the consumer is the issue we need focus on. if there's growth in housing, growth in wages, new job creation, the consumer remains reasonably strong, then that leads me to the conclusion that it is still an expansion that continues. that's positive for earnings, that's a positive for why the market moves higher. >> when do earnings come back then. >> earnings will grow -- >> do they rebound? if you look outside the energy sector, earnings will grow 5% this year. 5% is a modest increase. not huge. it's not a margin expansion. it's about nominal gdp growth and higher. >> david, remind us of where you thought the equity market would do this year. you point out it's down 10% so far what did you think it would do? where do we go from here. >> thought process at beginning
of the year is the market would end at 2,100. it started at 2,044. thought there would be modest increase. from a path perspective i was not anticipating a large -- >> nonetheless, if you nail your colors to the valuation -- >> to the end of the year, where the market will be pricing, pricing off of 2017 earnings, so we're looking at $117 of profits for this year. that's -- $126 for the following year. that's the modest increase. it's not about margin expansion. it's about the fundamental growth. >> we'll make that this 10% and then some. >> my -- that would be -- >> 14%, 15%. >> your prior tag line is that flat is the new up. >> yes. >> 2100 is 300 pointses away almost. >> that's right. so we started -- it's a rough -- it's like a cam newton market. the market has been roughed up. it's been difficult. the source has been mostly energy, mostly in technology.
a lot of industries the market moved down. from a fundamental perspective it's about the consumer. our view is the consumer has remained resilient. >> david, good to see you again. >> good to see you. coming up, we are on the ground in new hampshire. yes, voting begins. it is the big day today. and an exclusive interview with the president of coca-cola which released results this morning. as far as the markets are concerned, after we started in negative territory a decent rebound on the dow. currently 14 pointses to the upside.
o . it is primary day in new hampshire w vo hampshire, with voting underway for the gop, it's do or die for several candidates. donald trump may have a significant edge, but the race for second may be up for grabs. let's check in with cnbc's senior contributor, larry kudlow. >> we had a great meeting in his campaign bus with governor john kasich of ohio. i asked him about has he finally found the right message, you'll see we had a little debate about solving social security. let's take a look. >> i've been this way since july 21st. it's just the debates are not the best format for somebody that really wants to project who they are. i'm better at them now, but, you know, doing things, trying to
explain, you know what does the speed of light mean in 30 seconds, i don't know many people that can do it. when you think about it, even one of the guys i most admire, jack kemp, was never great at debates. you have to talk. you want people to see who you are. that's why going forward this bus is headed to south carolina tonight. we'll try to figure out how do these town halls, no matter how big the audience is. i want people to see who i am, how i think and how i feel. because, you know, when you look at the last election with romney and obama, president obama and governor romney, governor romney won every single question about competence, job growth, management, when it came to does he understand my problems, obama won it by 80%. if people can't feel you understand who they are, and you have reasonable programs to answer, i don't think you win. when you can, it's like you -- you know, you're hitting a home run.
>> entitlements, i know you're a hawk on entitlements. you mentioned cushing the spending on medicare and medicaid. social security, let me ask you this question. fellow governor chris christie is saying seniors who earn $200,000 or more should not get any social security benefits, even though they paid in their whole life. what's your take on that? >> i have a plan. i would say the wealthiest americans will get less than what they thought they would get. those who totally depend on it can get what they need to have. that will balance out the system forever. we're working on all the numbers. i'm working with some of the smartest people i worked with in washington. i don't think you wanted to -- i don't like the idea of turning it into a welfare program. >> that's what you're doing. that's what you're doing. >> i think what you can do is be in a position of where for those who have been healthy, those who have been high-earners, they'll get less. not zero. >> just grow the economy at 4% that will take care of those numbers. >> no, it won't.
>> yes, it will. >> no, it won't. demographic problem is too severe. >> not medicare, but social security. >> social security as well. i had a plan in the late '90s that would have changed from wages to the prices, it would have balanced the program for 75 years, with the $5 trillion surplus we could have given every young person 2% of an account. they ignored it, spent the surplus and back down again. >> just late bit of politics. what do you need tomorrow? you need second? >> no, i need to be a big story. i think i will be. >> so, john kasich has found his message. i think it's really helping him. i think he'll do pretty darn well today. positive, optimistic, pro-growth. as he said it's a jack kemp message, which, as you know, is my message. kemp was my mentor.
on social security -- i've known john kasich for 25 years, i just disagree. i don't think people should turn it into a welfare system, you should get something. if you grow the economy at 4%, you will cover these liabilities, i think you should give people the option -- just the option to invest some of it in private savings accounts. kasich is hot. he has a good chance of finishing second. >> around the world this argument is the same in most developed countries. if you change it into a welfare system, it will basically lose the support of voters moving down the line. that's what happens. tell me about the implications of rubio by all accounts not doing so well in the last debate. does that mean kasich, christie and bush stay come what may today, tomorrow and in south carolina? >> my crystal ball is not any
better than anybody else's, i would venture this. i think the second place race now is kasich, bush and cruz. that's my take. i think senator rubio is on a down trend. he's like a fighter who has been out, on the canvas trying to get back up on his feet, find his legs again. i'm no genius on this. it doesn't look good. as i say, kasich -- we interviewed jeb bush yesterday. he's coming on strong, too. ted cruz is always strong. we had trump on yesterday, he was strong. he had a positive, optimistic message. it's an interesting thing. republicans are getting their act today. that's the part i really like. i think the democrats are in somewhat disarray right now. >> i love the conversations with you to get more on the policy than argument that comes through on other channels. larry, we'll cross to you throughout the day and for the
result tonight. larry kudlow there as we await the second primary. when we come back, john taylor with our own rick santelli as negative interest rates spread around the world. plus more on the selloff this morning. and a look at this year. the major indices in 2016. boy, has it been rough. the nasdaq down more than 15% this year alone. more when "squawk on the street" comes right back.
european stocks off their lows but banks under heavy selling pressure again. an initial 5% rebound in deutsche bank short-lived after its co-ceo e-mailed employees saying their rock solid. the stock down almost 10% just yesterday. the primary concern in europe is that banks will increasingly be forced to recognize non-performing loans, which they have been very late to do. but if they do, the fear then is that they'll have to recapitalize or raise extra cash, a process that will further dilute the value of the shares or in extreme cases
investors holding senior bank bonds will be bailed into losses under new rules. this is also an unintended consequence of a super dovish ecb intending to force banks to lend more by imposing negative interest rates which still make lending far less profitable, whether it's increasingly risky to lend any way. jpmorgan suggesting to weaken a stubborn euro. the ecb will cut its deposit rate to minus 0.7% by the end of the year, that's at a time when the volume of negative yielding bonds has doubled around the world in the past five weeks. major selling on banks is one area of the equity market that can itself have an impact on the behavior of those banks, therefore the credit cycle and the overall health of the recovery. markets will be closely listening to janet yellen's testimony on capitol hill tomorrow. our senior economics reporter, steve steve is back at hq with more on that.
good morning. >> good morning. it is one of the most anticipated testimonies by a fed chair in recent memory as yellen takes to the hill tomorrow for two days beginning with the house. the most likely bet is that the fed chair will offer concessions on the four rate hikes this year but not concede defeat on the fed's current policy direction of raising rates. the question is whether anything short of total capitulation, that is yellen saying rate hikes are unlikely this year will satisfy this hungry bear of a market. fao economics says we could see janet yellen this week looking more uncomfortable than she ever has looked. the stakes remain high. here is what yellen will likely acknowledge. tighter financial conditions caused by the market decline. softer u.s. growth and a u.s. growth outlook. trouble overseas but strength in the job market and the housing sector. it will also take longer for the fed to hit its 2% inflation target that shows the market she
is at least pushing ahead future rate hikes. it's rare for a fed chief to speak when the market is so at odds with the current policy. the median fed forecast has four hikes, fed officials have not convincingly backed away from this in their speeches. part of the problem could be that yell haen has been silent 55 days. it was 1733 dow points ago. the cnbc wrap it up shows gdp forecast for a 2% fourth quart their has come in at a half a point and strong doubts about a first quarter rebound. since the last meeting japan has gone negotiate sieative and the promised additional stimulus next month. yellen has shown she does not want to front run her committee and there are still five weeks before the next big jobs report but yellen could feel the numbers may have changed enough
and she needs to get out in front of where the committee is right now. that would be big news. >> after 55 days of silence. amid the turmoil in the energy market, one of the best performers in the dow is exxon. morgan brennan has more on that. >> the s&p energy sector has shed roughly 43% of its market cap since crude began collapsing in june 2014. but look at exxonmobil. that has held up relatively better than the broader sector. it is the fifth best performing stock behind pure player refiners that up until recently benefitted from cheaper oil. exxon has been seen as the defense play within the sector. it has a balance sheet that held up better than other integrated oil giants enabling it to grow its payout for 33 straight years. that's unlikely to change with management calling the reliable and growing dividends a top priority. that's not to say exxon is not
still feeling the pain of lower oil and gas prices. it is suspending share buybacks, while it held on to its coveted triple a credit rating, standard & poor's put exxon on negative credit watch. that stoked analyst fears that it's not investing enough in future growth, we'll get more insight on the company's plans for 2016 and beyond early next month at its annual investor day in new york city. meantime it continues to be attractive because it really is the closest thing to a guaranteed dividend in this sector. that's something that has become particularly in focus with investors, just with conocophillips dividend cut last week. back over to you. >> morgan brennan, thank you very much. coca-cola out with results. profit and sales beating estimates. the coo, james quincey is with us after the break. here at the td ameritrade trader group, they work all the time. sup jj, working hard? working 24/7 on mobile trader,
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good morning, everyone, i'm sue herera, here is your cnbc news update. president obama spoke with leaders of south korea and japan following north korea's recent rocket launch. he reassured them of u.s. support. the white house saying the president spoke with the two leaders by phone separately last night. director of national intelligence james clapper in an opening statement to the armed services committee said islamic militants will continue plotting against u.s. interests overseas
and on u.s. soil. he said the u.s. will continue to see cyberthreats from china, russia and north korea. the obama's administration 2017 budget proposal arriving on capitol hill. it calls for a 35% increasing on spending in cybersecurity to $19 billion. it also creates a position of federal chief information security officer. that position would coordinate cybersecurity efforts. a horrific accident. two commuter trains crashed head-on in southern germany killing at least nine people and injuring 150 more. it followed an automatic safety system that failed to stop those two trains. black boxes from both trains have been recovered. and they are now being analyzed. that's the cnbc news update. back down to sara. the dow is down 47 points. dow member coca-cola out with fourth quarter and full-year results for 2015 beating on the top and bottom line and
announcing it is speeding up plans to ship north korea bottling plans to franchise operations by 2017, three years ahead of schedule. shares under some pressure, down about 0.3%. we welcome james quincey, coca-cola's president and coo for an exclusive interview from atlanta, georgia. this is his first interview since being named the number two a few months ago. welcome. >> thank you. good morning. on the share price reaction. are you surprised investors are not giving you guys credit for what was some pretty notable improvement in the results and that big announcement on re-franchising? >> i think, look, it's a tale of two stories. we've clearly had a better result in the fourth quarter. a solid transition year in 2015. big news on the re-franchising. of course currency still weighs on results going into 2016. we're pleased with the underlying performance and the global health of the business.
we have to deal with the macros to get through it. >> do we read fundamental strength in the american economy or specific moves that coca-cola is making on the business here. >> clearly the north american economy has been doing better, but what is driving results is reinvestment in extra marketing spend, the program to drive forward on smaller packages, new premium packages and offering consumers more of what they want. together with the reenergized franchise system that is driving momentum in north america. the best result in three years. 4% revenue growth in the fourth quarter. >> let's talk about that bottling announcement. that's a big deal. you're speeding up this process. how should investors think about it in terms of cost savings in the long-term and what will it allow you to do in terms of focusing on the business?
this franchising, we're bringing it forward because we've been able to fix what we needed to fix, generate momentum in the bottling business. we have done what we wanted to do. at curre our current and potential future partners see that. so we can bring the re-franchising forward. that will allow us to get back to what we do best which is building great valuable brands across the world. creating value for customers and leading the bottling system and building capabilities to drive the business forward. that will help us drive the business and make a healthy business into the future. >> what you guys have repeatedly called it a tough macro environment. you referred to currencies. this is your background. you came internationally from europe fr europe. you worked a long time in latin america. how tough is the macro environment compared to previous years looking ahead to 2016.
>> i think the 2016 environment will continue to be volatile and continue to be tough. we're expecting total global growth to be similar in '16 to '15. clearly there are markets under pressure, whether that's brazil, russia, china, some of the oil exporting countries in the middle east. we see continued pressure and volatility. but we have a long track record of managing through volatility by focusing on our long-term game plan, building those brands, investing even in the downturns to gain market share. so we see this, yes, as a tough environment, but also an opportunity for us to push ahead with our strategy that we know works in these tough times. we gain share again globally in the fourth quarter and for the full year. we see that we have a winning plan for this environment and that's why we announced that '16 outlook and that we will increase momentum, slightly increase momentum going into 2016 despite the macros.
>> one of the problems is the impressive volume growth in bottled water, tea, juices, which is a growing part of your portfolio but not your core business as a soda company. how much does that need to changes? why aren't you talking about that more. >> we're talking about it more because we are in the business of offering the brands and categories that consumers want. i would underline that the sparkling business globally also grew in the fourth quarter and the full year. it is true that as we entered some of these other categories, juices, teas, packaged water, given our lower starting point, they have tended to grow faster. overtime our portfolio has shifted in the last ten years from about 90% sparkling to about 75% sparkling. i think importantly sparkling has continued to grow while we have stepped up the stills business. we are in the business of offering a much more broader
portfolio. >> james, i'm trying to place your accent. you were educated in liverpool. are you a britt? if so, i was going to commend another britt for climbing another commanding enterprise. >> my accent has varied a little, but i was born in london. >> when they created the position for you, they leapfrogged you over three co-coo's, to take some pressure off muhtar kent, and to get in step with the business around the world. can you tell us the difference the creation of the position and your job has made over the past six months? >> we were clear when muhtar set this up and we announced the coo position, we concluded that our strategy that muhtar announced was beginning to bear fruit. once you decide a strategy is the right thing to do, picking up the pace of implementation
can only be a good thing. we needed more capacity. i've come in, you know, i've gotten to grips with helping the operations around the world. pick up the pace of the implementation, whether that's the re-franchising, rolling out of our new global marketing campaign, the one brand strategy on coca-cola. and we're finding that the two of us together can just get a lot more things done. i think that's showing in the results in '15 and our belief in acceleration for '16. >> so does that mean investors should look to you to continue the strategy? you're not the ceo, but if you were to be, as many investors expect will come in the not too distant future, would you do anything differently? >> look, as i've said often when asked the question, no one was ever successful speculating about something else. i think what we're focused on is we've got a strategy, it's working in '15. we believe in it for '16. one of the things i'm doing is helping focus on accelerating
the implementation, but also we got to put in place more hows of how we get the strategy implemented. again, reference the global marketing campaign, the one brand approach for coca-cola, bringing together all the different sub brands of coca-cola under one brand umbrella and driving them. we have to roll that out. we have more stuff coming in terms of more ways of getting this strategy executed. of course it will evolve. it is evolving. muhtar and i talked about it, it will evolve in the future. >> james, for now, thank you. james quincey, president and coo of coca-cola. >> thank you very much. did want to check shares of viacom, which is today distancing itself from the performance of other media stocks, not in a good way. stock down over 14%. it was not down nearly this much going into a conference call at 8:30. it is the first call on which
philippe dauman is not just the company's ceo but also chairman having taken that title last week when sumner redstone stepped down as viacom's chairman. on the call it's hard to say any one thing is responsible for the significant loss of value. they talked about domestic ad sales down 4% in the quarter, but a sequential improvement overall. domestic affiliate revenues roughly flat in the quarter, they talked about positive organic growth offset about timing available to certain digital distributors. they announced a new deal with snapchat to actually deliver and place some of that company's advertising. but overall the tone on the call not particularly positive. it's one of the takeaways here. and film and entertainment continues to ab problem for the company as well. also their leverage ratios is kind of high. they want to get that down. any number of different things perhaps responsible here, simon, for what is a significant loss of value.
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of its 52-week low yesterday. tech the most heavily weighted sector in the s&p 500. about $330 billion in market value shaved off. helping to lift the sector today, trying, salesforce.com off more than 20% in the past few sessions, rising today on an upgrade from jeffries. other leaders, electronic arts, fidelity national, fli rshg systems and corning. still, technology, david faber, trying to hold on to gains now. it's very important. the most heavily weighted sector in the s&p 500. back over to you. >> thank you very much. new york city has some serious reservations about altice's deal to buy cable vision. this morning the city filed notice with a group that will make the ruling on the deal at the city level. and expressed concern about the viability of the transaction. city expressing similar concern last week to the state's regulatory body which is set to meet on thursday. still at issue is whether the city actually has jurisdiction
to block any deal. here to explain all of this is the mayor of bill deblasio's counsel. a lot of people wonder about altice's plan to save $900 million. you expressed reservations what are they based on? >> our reservations are based on part on that. the city is responsible for ensuring cable providers are able to have the financial wherewithal, the managerial wherewithal and the technological wherewithal to deliver the services their supposed to deliver to residents. in this case, 900 million in synergies suggests to us that there may be issues with whether they can meet those obligations, and we need to look under the hood of that used car. >> and have you been able to do that? >> we requested information from altice, we have not received it, quite frankly. we're not in position as i stand here before you today to say whether or not we can recommend
approval of this transaction in the absence of receiving any assurances along those lines. >> to this overall question as to whether you have a role to play here in saying yes or no, altice seems to be indicating and perhaps by its actions in not providing everything you're asking for that you don't have that jurisdiction, that it resides at the state level. >> we were clear under our franchise we have the right to weigh in on this transaction. because, again, it's our franchise. we're the ones who give the private public rights of way to the cable providers to say dig up the streets, to lay fiberoptic cable which is something we want to see happen. but it's clear to us from our franchise we have approval or disapproval authority. >> it's not just weighing in you can weigh in, doesn't mean you have the ultimate authority to say yes or no. >> we weigh in at state level and from the public service commission where we ask that the public interests be served by the transaction. in terms of our franchise, which is a contract with cable vision we have the right to say what
happens with ownership transaction for purposes of our franchise. >> okay. so you could say no. and you -- therefore not give them that contract. >> correct. even if you weigh in at state and the state says we don't care what the city has to say, which has happened a few times when our governor and our mayor. >> we have a very good relationship with the public service commission. the public service commission is charged with making sure the public interest is actually taken care of. in this instance the staff of the commission has already raised a lot of the concerns we have also raised with the commission. we think we're in alignment. what >> what do you need to hear from altice? >> we have not formed an opinion because we have not received information to form an opinion. in the absence of altice giving the city this information, the
city cannot possibly say whether or not a contractor can meet its obligations without seeing the information >> i expect they will furnish that. they want the deal done. >> i hope they will. we have noticed, as you noted earlier, we noticed the public hearing on this matter. right now our agency that administers this cannot say that it can recommend approval in the absence of any of this information. >> well, we are going to be monitoring it closely as well. perhaps we'll have a conversation down the road. thank you for joining us. >> thank you for having me. >> maya wiley, council for the city of new york. back over to you. >> up next, markets are closed in china this week. what that means for las vegas. we're taking a look. celebrating the chinese new year with jane wells after this break.
are witnessing the dollar really getting tagged pretty good against the yen, and against the euro currency. one of the big issues with normalization, of course, is the strength of the dollar. do you see any place for the fed to implement or use some of the current dynamics in policy? or is that just too flexible for an entity so big? >> i think what it says is they should try to continue on this normalization or whatever you call it. it's what they've got to do. they've been reacting to the turbulence in the markets in some sense causing the turbulence. if they take this opportunity to say we've got this strategy to normalize, it's out there, we're going to continue with it, i think that will create some certain certainty and be a good opportunity to do that. chair's going to be testifying the next couple of days. >> there's obviously legislation to try to make the activities in the fed according to some more transparent. maybe rules based. i know we've been down this road many times, john, but don't you
think it's time that that occurs, or do you think that the lendl slative issues that congress brings to the table would have negative side consequences? >> no, i think it's times like this that makes it so clear that they should lay out a strategy and that's what some of this legislation is simply asking to do. tell us what your strategy is, what your rule is, there's a lot of economists that are in favor of it. they've expressed their views. i think it would be a benefit, it would -- you can see the advantage of it at a time like this when there's so much turbulence. if we knew at least to some extent what the fed was up to, it would improve. so i suspect this issue will come up, in the hearings the next couple of days. >> in the final minute, john, as we look around the globe with the turbulence that you mentioned, do you think that the international turbulence, all things being equal, if it doesn't push the u.s. into a recession, do you believe that the fed will take the path of continuing to try to push rates
towards more normal levels? or is that at this point something that has evaporated along with the equity price structure that we've witnessed of late? >> well, you can see a lot of it has evaporated. they seem to have moved back their times to re-enter, renormalize. so you can see its impact. i think if they give up on that it will be disappointment. after all the rate is very low, even for the conditions reflecting the turbulence. so, they need to preserve that strategy, that flexibility, and if they keep moving off of it, each time there's a little turbulence, that makes the turbulence worse. it causes more uncertainty. so, i think what people are craving for, of course, we don't want to have a slowdown. we don't want to have something even worse. but the main thing is to make sure that the policy -- monetary policy is on track and after all there's a lot of other things that can be done to get growth going. there's taxes, tax policy, tax reforms, regulatory reforms, a whole lot of things are out there, not just monetary policy which gets all the attention.
>> john, thank you for weighing in on today's issues, and this year's turbulence. sara, back to you. >> rick santelli, thanks for the conversation. it is a year of the monkey kicking off in las vegas, where we find our very own jane wells with a critical time for the gaming industry. >> yep. i'm here at the aria, i saw dragon dance last night. it is the year of the monkey on a town that prides itself on monkey business. ♪ now, every property is rolling out the red carpet. this was a dance i saw at the venetian for what is one of the most important revenue driver of the year but if you use baccarat wings as an indicator of chinese spending they were down and last february they were down 24%. union gaming predicts those declines will continue, and that nongaming spending by chinese tourists may actually be up. >> we love to gamble. we love to eat. and we like to spend sometime
with family. >> this is a nice place to stay, has good food and we enjoy staying here. >> are you going to do any gambling? >> i think the brothers are doing that. >> we something like 65% to 70% of all chinese inbound volume to the u.s. has las vegas on their itinerary. and most of that is not to gamble in a notable way. >> when you're talking about chinese new year's and the kinds of guests matter you're talking hundreds, not thousands. >> not that big deal to the bottom line? >> yes, it is a big deal. the right guests, hopefully. >> all right mgm is optimistic chinese new year in vegas will be flat. but overall vegas has been a bright spot thanks in part to low gas prices in california, fuelling visits from its largest market. also, lack of new rooms coming out of the market, meaning higher occupancy, and higher rates. but there are concerns here that if the economy stumbles again, well this is a town that just dug itself out of the last hole, guys.
much >> better than macau then, jane. with the year of the monkey in vegas. let's send it over to jon fortt with a look at what's coming up on "squawk alley." >> we're still watching these markets. the nasdaq for once not underperforming the dow and s&p. what does that mean? also, media stocks, viacom plummeting down 13.5% after a revenue miss. disney at 52-week lows. what does this say about media, which had been doing okay, and then finally the cfo of red hat is going to join us, enterprise software's been taking it on the chin. is it overdone? we'll see what he has to say. all that and more coming up on "squawk alley." e wants to stay . i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird. this just got interesting. why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph,
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