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tv   Squawk Box  CNBC  February 12, 2016 6:00am-9:01am EST

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but maybe someone will notice a $25 million purees chas. it's february 12th, 2016. "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and we are coming to you live from the at&t pro am at pebble beach, california, where business leaders are gathering on the golf course, but of course they are keeping a close eye on the markets and they are talking to us. later this morning, we'll be joined by at&t chairman and ceo randall stephenson. in just a few minutes, we'll be talking markets. the cio of guggenheim partners. in the meantime, scott woman ner and kayla tausche are holding down the fort in new york. >> good morning to you guys. it is earlier on the west coast,
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but we're holding down the fort. japan's nikkei reopening after yesterday's public holiday and it plunged. 4.8%. it closed at its lowest level since october 2014. the index is down in seven of the last eight sessions. that is coming as the yen has been rising against the dollar and it comes after yesterday's big sell-off in the u.s. this year's lowses have erased nearly $1.8 trillion in value for investors just on that index. the s&p is down 10.5% since the first trading day of 2016. but u.s. equity futures are rebounding this morning. part of that is because of firmer oil market. take a look at what crude is doing. it is bouncing back today following late afternoon comments by an opec energy minister from the united arab emirates that sparked hopes of a coordinated production cut. and though we've heard this story before and haven't gotten anything out of it, the markets are interpreting that as a
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positive. wti he crude currently up nearly 4%. 27.21. brent is sitting above $31 a barrel, up nearly 4%.. but we are gearing up for a potentially volatile session next weeks. markets in china will reopen monday after a week long holiday. u.s. markets will be closed for presidents' day. it could make for a wild open on wall street on tuesday morning. do you have a lot of traders who tend to be really keeping their eye on their trading screens, starting on, you know, 6:00 p.m. or so the night before. >> yeah. well see what certainly happens, especially given what the japanese markets have been doing. on today's economic calendar, january retail sales out, 8:30 a.m. eastern time. sales expected to have edged up slightly last month after dipping in december. we'll get january import prices at 8:30 a.m. and then at 10:00, we get february consumer sentiment and december business inventories. bill dudley speaking at about 10:00 a.m. on household debt and
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credit. jamie dimon reportedly buying 500,000 shares of his company stock recently. that's worth $25 million. jpm down nearly 25% this year matching the overall performance of the stock index. dimon's purchase is noteworthy because it's only the third time he's bought shares on the market in did 12 years. now back to joe and becky in pebble beach. >> it is a nice set you guys are on. isn't it? it is. >> amazing. >> now let's get another check on the markets this morning. we're doing a lot of this. obviously, oil is a little better .that's helping the futures. but after what we've seen, the beginning of the year, we know that 98 points is not what it used used to be. thank got 200 is not what it used to be. but 98 we'll take in the morning. but it doesn't mean anything
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about where we'll close the end of the session, especially on a friday. we've got a little bit of a bounce this morning in europe after another horrific session yesterday. take a quick look there. then the ten year, all of these things, watching them out here, mind boggling. i think mark rand said 1.5%. >> 1.35% is the level we hit yesterday. it sounds ridiculously low until you look at the sorchbs debt in europe want or go to japan where the best laid plans didn't work out the way with it was intended. the dollar, what everybody was worried about this year, has not been really the problem, at least against the euro. but the yen with the negative interest rates and the flight to quality has kind of the open set of what policymakers were hoping for. finally, it took the gold bugs a
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couple of years to be proven right, but i'm reading on some websites about lines around the corner to buy krugerand. >> yesterday, gold watt at its highest level since february of 2015. >> five years ago, we had to do the predicts at the beginning of the year and seven out of eight people said it was going to hit 2,000 that year and it never did. >> no. but it's back at 2,000. >> for more on the sell-off in japan overnight, let's get to slee standing by in singapore. how is everything going? >> yeah. japanese markets were punished this week. it was the worst weekly loss since 2008. and we saw the yen at 15-month highs. very bad news for the export sector. toyota, honda got hit, as well.
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and then there are lingering concerns about negative interest rate policy by the bank of japan. what a does to a japanesemaker margin and profitability. we're not out of the woods yet. but next week, monday, q4 japanese gdp and the chinese market and the mainland are back onli online. back to you. >> all right. thank you. >> he's in the middle of that mess over there. joining us to talk about the volatile week in the markets, scott meyer, global chief investment officer. i don't even need to ask you a question, really. i can just say w-t-f. the way i look at it, scott, if we have a world that for years benefited from central bank
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policy, which can make things look better but not actually make things better, necessarily, when one place start saying maybe the end is near or goes in the opposite direction, i'm not saying it was the quarter point that does it, but when you live off that for five years, when it's no longer going to work and when you see it hasn't change that. and it combs home to roost that we're on our own. and i think that's what we're seeing. >> for sure, joe. basically, the central bank around the world have gotten themselves stuck in a game where they are forever going to have to hold large amounts of securities and keep interest rates low. we haven't done anything, as you would know, on the policy side to deal with the structural issues. we've done nothing in the united states. we've done nothing practically in europe. we're seeing it now in the banks. we see it in deutsche bank where banks had opportunities to clean
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their bat she's off. they didn't do it. so we are still in a fairley precarious state around the world and central banks are the only game in town. >> so nothing cleared in the last selloff. can you go back to 2008, 2009? and if we try to mitigate the pain back then with all of this central bank, these extraordinary measures, and now who is going to bail us out this time. there's no central banks on mars, right? this is all we got, right? >> well, this is the only game in town right now. and i think we're starting to see that the central banks around the world are upping the ante. the move to negative interest rates, the move to try and put more and more liquidity in the system with a means to jack up asset surprises to keep the world aflowed is distracting. >> tlgs a big piece in the journal about the credit isn't getting out to where it needs to
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go. >> more credit is not -- >> yeah. the banks are paying -- the central banks paying banks to hold assets and there's, you know, savers aren't making any money. we've tried this. we've tried this for seven years. we see where we are. what was last year's gdp in 2015. why keep doing the same thing if you're expecting a different outcome? >> i think that's the definition of insanity. but look, the rope they're stuck here is congress isn't doing anything. >> what do you want congress to do? >> except for -- i mean, both sides have different ideas. one side wants, you know, to spend another $1 trillion on infrastructure. >> right. >> the other side wants corporate tax reform and to get rid of some of the regulations we've piled on top of already piled on regulations. which is the right way to go? >> i would take it all. >> you would do both, $1
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trillion and another trillion to -- >> well, you know, it's interesting. we take on a trillion of fannie mae and freddie mac and we don't count it os part of on our debt. but if we took on $1 trillion worth of infrastructure debt can, then we would count that. so my view is that the raelz reality is that the government should stay out of the business of building the infrastructure. we should run off fannie mae and freddie mac, right? when you go to a bank today, i can get a conventional mortgage at a rate under 4%. but it doesn't conform. so why do -- if banks are willing to lend money below 4% for mortgages, why do we need a u.s. government agency? >> the thing that you have a problem with all this, scott, is that the sudden hi we can make bolzmakers around the globe for not doing something in the past couple of years. now, we got along fine with
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socialist europe for the past 10, 20 years. we got ahopping fine woun the government or congress doing things to make the economy work better. so this is all happening in a concerted fashion at once because governments aren't doing enough? >> i'm not saying government is not doing enough. >> the structure of things in europe and -- >> but look at dog fray. it's a fight mayor i'm not saying they're not doing enough. they're doing the wrong stuff. and we need to get -- >> oh back ma care. >> go down the list of things. the supreme court finally had to step in and say enough with the executive action, right? >> we need to lighten up the regulation on the banks. we need to let them price loans in a way that makes rational sense rather than having this
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convoluted thing we call macro peru tental policy which is a spaghetti of regulation. >> let's talk about what is happening with the markets. the markets are signaling there's a recession coming. in the "wall street journal," they're saying there's a 350% chance of recession. if you add in the economic data, it gets you back to a 25% chance for recession. which is right? >> i think you have to be careful that we don't have correlation related to caution ace. risk asset hes likes stocks, like junk bonds go down in price when economies go into recession. however, if risk assets go down in price, that doesn't necessarily cause a recession. so when you go back to periods like 1987 or 1987 to 1998 where we had severe bear markets, yet at the same time we didn't have a recession. you would say, why didn't we
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have a recession? because the policymakers ended up reversing court. in '98 during the asian crisis, the federal reserve lowered rates and i think that ultimately policy measures are not going to sit back and let a recession happen and they will do whatever they have to do and that could include the federal reserve reversing court. it could mean that joe will get his wish and we'll do more quantitative easing. >> and then i wonder about the whole political back drop and whether any of that is -- you know, people like to ascribe some cause and effect there, as well. you do have one side talking about -- not less bank regulation, they're talking about all bankers should be in jail, the whole capital market system that we use here we're questioning. and on the other side, you have
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equally extreme views and maybe in certain areas. that helps the current, as well. b but, i don't know, the notion that we're going to im portion a recession, i don't know how many people have said, look, with here in the united states, things are fine. the consumer is fine. the auto sales are fine. the housing sales are fine. this is the best house in a bad neighborhood. no reason to in this. and suddenly we're watching it on a daily basis import the weakness in the rest of the world and all these people might be wrong. >> look, you've always got the chance of being correct me if i'm wrong. ir personally always question myself. but in the port war period, every recession in the united states has been a result of monetary policy. >> i think it's twitter, social media from around the world.
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>> because? about because we can import everything right now because it's all instantaneous. the world has gotten smaller, globalization is more prevalent and we seem more connected. we're at 4. % unemployment. we're at 1.5% on the ten year and that's bureauly because of being dragged down by the rest of the world rates. >> and probably going lower. >> and probably going lower. >> so if you think rates are going lower, what do you do right now? are you buying stocks? >> look, in the respect that i said in davos, i'm sort of in the howard marx camp, which is risk assets are getting so cheap that you have to start putting money to work there. but, you know, the other side of it is if your risk budge, whatever that is, you shouldn't be fully invested. so one of the things that we're looking to do is buy call options on treasuries.
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as an offset to the deterioration in the credit market. but i think for the average investor, catch isn't a bad place to be right now. opportunistically, i would be putting money to work, especially if you're a retail client. you can look at things like closed down funds that are yielding 13%, 15% and if wefth the recovery thald expect sometime in the second half of the year, you'll be well pleased to own it. >> and people say there's nothing this time around system ekly or existentially dangerous to us. i don't know whether the european banks are enough of a problem. i don't know how many cvss they're holding on to. but the last time ben bernanke himself told you subprime isn't big enough to take us down. we never know whether something is big enough to take us down. is there something big enough to cause the threat to the global financial system that we don't
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know about right now? >> yeah. the -- i mean, joe, you certainly have risks in european banks system because they didn't clean the mess up. but vs having said that, the policymakers today as oppose dollars to seven years ago, five years ago have a mechanism to step in and resolve the issue. now, you know, the question about some of the cocoas, the contingent coupon bonds in europe, this was spoef to give us cushion so we could shut off interest payments. my view is if we stop paying the interest payments on the contingent debt of any bank, that bank is gone. so the then that the policy measures have invented to turnon us from a down turn might be the thing that causes the crisis. >> to david stock to know and just the idea that, you know, it's been all central banks for
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the last five years and we've paid failure a lot of prosperity that they didn't deserve, perhaps. and now we're not going to be able to service the dealt that's built up. the world only ends once and we're always talking about it happening. it will happen at 450 co2 parts per million, i guess. anyway, with we've got that going for us, as well. thank you. much more from scott throughout the next two hours. >> the futures at this point, if we can show the board, you are looking at the futures, the s&p 500 futures up by about 14 points above fair value. also, you can see the dow futures are up into triple digits. when we come back, up 4.5% in yesterday's stock market sell-off. dennis gartman gives us his read
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all right. welcome back to "squawk box." we're going to get back out west to joe and becky and pebble beep. in the meantime, let's talk gold. it is stapling a km back as
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equities remain under pressure. price of gold right now, that is where it is right there, 1242. had its biggest one-day move yesterday since the crisis. so it sort of gives you an yp idea what kind of assets people have been flocking to lately. hey, dennis. >> good morning. how are you? >> i'm good, thanks. so talked to mark cuban yesterday miss day and he said he was buying way out of the money calls as a momentum trade. not necessarily for the fundamentals, just trying to ride the momentum. is there more room toug. do i think it's a wise move over the next three or four days or so? probably not. having been bullish of gold in yen terms and bullish of gold in gold derls for the past several weeks, i have to say having
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taken spot gold to 1250 yesterday, would it tell anybody to buy gold this morning? no, i wouldn't. i think that would be ill advised. it has been a sporty run to the up side. the public hat suddenly gotten a little interesting and that is a good reason to say i bes bet we settle backwards, go back down to 1225, 1215 or so. is that because you think the stock market sg go to have a bit of bounce here? >> the stock market needs to have a bit of a bounce. today, you might get a little bit more than that. it's a long weekend. the stock market has been under duress. a correction in gold is probably necessary. before a long weekend, before the presidents' day holiday, a movement in the other directions that have prevailed for most of the week will probably occur. it shouldn't be unexpected. it's very normal. it's usually what happened. >> you've seen the the correlation as clear as day
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every day, dennis, between oil and the market. you only need a really regarding opec and you can see what happens not only in the commodity itself but ekds. would you believe anything that you hear? do you think opec is ready to make a move and cut production? >> if you had told me that several days ago, i would say likely not. but the fact that the fellow who has been most adverse to change who has been absolutely opposed to a meeting has change his tenor a little bit. most of their production comes from siberia. they can't shut those wells off because they'll freeze have have to be redrilled. so do you think the meeting is going to be held? probably. will anything come of it? maybe.
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if an agreement is made, do i think they'll all agree to it and follow through? absolutely not. whatever opec says about curtailing product, never comes to fruition. everybody cheats. >> yeah. >> you learn that opec cheats. tt margin, can you expect venezuela to follow through even though venezuela is having for a reduction in production? they cannot. they won't. >> all things considered, that is a surprisingly optimistic tone from mr. gart man. >> yeah, short-term. you expect the bounce and maybe some selling up in gold. let's get back out to pebble beach. becky, guys, what do you have coming up? >> thank you. we have a rundown of today's global markets moves including a rebound in european banking stocks.
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but first, i caught up with huey lewis yesterday and talked to him about everything from the changing music business to the stokt market. and as we head to a break. >> can you tell me who this is? >> that's janet yellen. >> very good. >> what costs more, a barrel of oil or a barrel of beer? >> barrel of beer. >> beer. you're right. >> what does eps stand for? >>ings per share. hey mac. ready to shave?
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today, qualcomm's big challenge as the tech sector debates the big move for the markets today and now. good morning and welcome to "squawk box" on cnbc. u.s. equity futures at this hour are a bit firmer than they have been all week.
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the dow would open by 112 points, the nasdaq by 39 and the s&p by 5 hup. price of crude is term he he by about 5% as is brent. that's been the story for this entire year so far. but, of course, much of that is on the back of the opec manager minister's comments yet. >> a lot of gloom and doom out there, but not everyone is hiding money under the mattress. johns paulson says the u.s. is not facing another financial crisis and he's seeing value opportunities. our michelle crusoe cabrera catching up with paulon late yet. >> it's a distext, particularly that we've invest issed in our port follow he yo, that the companies are actually doing very well and yet the stock prices are declining. so that is kind of an im bag and eventually that will sort itself out. so i would say that the market
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is somewhat overreacting to the current state of the economy. >> meanwhile, mr. paulson says the u.s. is on solid ground, he counselors concerns would be more from china. more from this interview coming up in the motorcycles hour. right now, back to joe and becky at pebble beach. he's pretty much mirroring what you guys heard at davos and what i presume you're hearing from some folks out there, as well. >> yeah. a lot of these issues, with yeah. >> in davos, we were thinking it was getting overdone in deveaux. when was that? >> in terms of where the market was at that point? >> no. how long in terms of time? >> that was january, less than a month ago. >> here we are. and we've turned up the heat. >> larry thinks he wouldn't be surprised if there was more blood in the streets before things got better. >> didn't twitter yet say that actually use is down or they had a bad record and that could be the light did he end of the
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tunnel. i really think, though, once we start coming into our shells and going back into our cage and hiding. >> back back outside, interacti interacting, doing things not at home, loob at other people's pictures of their vacation -- >> back to the real world. >> yeah. instead of the end of civilization. >> we are out here in the roold real world here. this place is a who's who of business leaders. we got a chaps to spend some time with rock and roller huey lewis. we started our station talking about why golf and touring bands are a perfect combination. >> golf is a great compliment to rock and roll touring. we spent a lot of time in the midwest. there's great golf courses everywhere. you get out of the hotel. no cell phones, no people. it's fantastic. >> a good place to be. >> yeah. >> you're going back on tour this spring. is that just because you love
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it? >> actually, we have a new record we're working on that will be out early this century. but we -- and i don't even know why, but we've written these four or five songs which we're excited about. so were going to work on the record and release it and then tour hard. but we always good on the road. we're the best -- what we do best is play live. and in order to do that, you have to play. kwa take more than a couple weeks off or you lose your chops. so we actually work at it. >> i read a little bit about when you did ports sports. every song on that, you wanted to be a hit. how has music changes since then? >> immakerbly. what's really interesting is to watch the expert and the effect it will have. i'm not sure it's good. spotify and all that. when music is free, who is -- i mean, we just lost glenn frye
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this year who is a sad deal. but the eagles, you look at the eegings who made these wonderful reports. they spent a lot of money on those reports, a lot of time and a lot of money. who is going to do that when music is free? it's actually is very worrisome thing, this new -- you know, they're going to -- where are these iconic bans going to come from? >> has it changes how you operate at all or you guys do things your own way? >> fortunately, we were branded in the 80s when there was a editing process, top 40 radio. that determined who was going to get the attention and who wants. and so now with less of that around, our brand is on the rise again because there's less new bands coming up with that kind of branding because of the interpret. it's interesting.
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>> i happen coca-cola pursued you heavily at one point. why did you know no? >> i don't know. because i was an idiot. i never did anything for money. we just started selling out concerts and making more money than we had ever made and i thought, why would i do this for money, you know? i'm an artist. >> would you change -- >> an artist and an idiot. >> would you change your mind today? >> oh, yeah. >> where do we hear real blues music? on ads, toyota ads. our influences were bohemian in those days, but now people who are my age in the corporate world, they're bobos, if you will. but their tastes are rooted in that and that is where we go all the right moves. a lot of it is corporate driven. >> even bob dylan has done that.
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>> anything above does is cool. >> so coca-cola, if you're listening, huey is in the market. he would take your calls today. joe, i know you know hyey very well. did you know he got a perfect score in math on his s.a.t.s? >> i do pep has some screwy liberal policies. eight years ago, he told me this was going to be the greatest things. and now he's like -- >> so we'll get him back. listening to his voice, you can hear -- >> i know al michaels, we have a great voice over, but could we throw in a rhuey once in a while? >> we did get him to say on camera, you are watching "squawk box." . >> he has a great voice, as well. count up the huey like number one albums and this is like 25
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of them almost. it's pretty amazing. coming up, european equities are rallying this morning, helped in part by a rebound in european bank stocks. we'll talk about that. >> oh, my god. they will be picketting outside. some people like roaches. you've got to say rock. and he may get in trouble with that. randall gives us his read on the hebl of the economy. speaking of rocks, we've live from pebble beach. and why stop to find a bathroom? with cialis for daily use, you don't have to plan around either. it's the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night.
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welcome back to "squawk box," everyone, live from the at&t pro am at pebble beach. we are keeping close watch on the markets this morning. in fact, if you want to take a look at the futures, things have tablized from yesterday. at one point yesterday, down over 450 points. this morning, you see the dow futures are by 125 points. s&p futures are up by 17 and the nasdaq up by 42. >> we're live, but that shot wasn't live. >> no. it's not quite sunshine this morning. >> that would be weird. although that was very -- since we've been out here, that's what it looks like every day. hopefully again. great weather. the market are bouncing back. a little bit today at least after yesterday's sell-off. peter joins us from london. he's head of the european rate strategy at rbc capital markets. does that just means we can go
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long bonds no matter what anyone saying? >> first of all, good morning to you. i think we have to look at how this is evolving. i happen today is a bit of a better day. but when you look at a number of indicators, stress in the system is increasing. you've seen some of the money market spreads. if that's conditioning, i'm aphrase bonds, it's going to remain a little bit. >> why? what is the key -- what's -- you know, denmark is part of europe. last i checked. what is rotten in denmark right now? what is it that we don't know about? is there something we don't know that is or is it all the usual suspects that are kind of bad, but not going to mean the end of the world? >> there's a b in of things going on. on the one happened, you clearly have the global --
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>> some ham it. something rotten in denmark. there's this english guy, he wrote a bunch of plays. just an expression. i didn't mean denmark. never mind. work with me here. >> it's 3:00 in the morning here. >> i shall. i shall. i'm working with you here. >> thank you. it's like pulling teeth. if we are -- if we're looking at europe as a whole, look, we'll skip the global implication and that's clearly weighing in it. what you do see is weighing on inflation and inflation expectations. that is down down and down even though oil has stabilized. the second thing, if you look at the southern european issues and
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soerp european countries, some of them have tactics. look at portugal. thirdly, look at bank. we know the stock market is going down, but there's a big discussion about what the ecb has done with negative interest rates, whether or not that's harmful for the banks and whether it ultimately will help the economy. throw this into the mix, you have a situation where it's uncertain at the moment. and let me start the hard economic data so far is still okay. but the turmoil on the market might weigh on that going forward. >> peter, the divergence that we're seeing between the decline and bond yields in places like germany and what is happening in spain and portugal is this basically telling us that there is a complete breakdown in the confidence of the ecb to manage to hold this had thing together? and have we run out of bullets
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in monetary policy to save europe? >> no, i wouldn't say that. first of all, i definitely wouldn't say that. what you do see, in fact, is a little bit of the opposite. what you do see is even though the pore tu ghee spreads are rising, most on the other spreads, even though theorizing, the absolute yield levels are relatively well behaved. so i think we have to call a spade is spade here. having said that, there are question marks about how much more the ecb can do. and as i was alluding to earlier, the they have they have done, when it's helping or not. and that's unclear can at this stage. as we go into march, they have promised that they will look at all their instruments that they're currently using and see what they come up with.
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>> all right. peter, thank you very much for joining us. when we come back this morning, the fallout from the tech wreck. the rough start to the year from technology stocks. we have the ceo of dream funded who will be joining us next. his company gives access to tech start-ups before they go the public. and then mark grant says the central banks have lost chrisbility. if you believe that, how should you be investing? we will ask mark coming up at the top of the hour. [ male announcer ] fedex® has solutions to enable global commerce that can help your company grow steadily and quickly. great job. (mandarin) ♪ cut it out. >>see you tomorrow. ♪
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feeling the brunt of the losses. the nasdaq has given back its gain. this year it's off 14%. joining us right now is green fund ceo. it's an equity crowd funding platform connecting angel investors with pre-ipo technology companies. thanks for coming in. great to see you. just for people who don't understand what this is, dream funding is about taking and matching up people who are working at a lot of companies with equity, would like to get some way of getting out of the equity before the company goes ipo and you match them up with investors who want to jump in? >> that's what we do. >> that seems like a perfect idea, something as wonderful as these technology stocks are
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going up and up and seeing these unicorns coming. what happens in a year like this where we've seen the nasdaq down 14% and the nasdaq internet index down by 21%. does that dampen investors enthusiasm? >> it's real opportunity for many because now we can be able to get access to shares at terms that are better for investors, if you will. so, if the market is volatile as it is we'll be able to buy at a price that's more realistic, if you well. employees are seeing what's going on in the market so they are also being able to sell at a price that they understand is more realistic. >> the same thing happens in the pre-ipo market as what we're seeing in the actual market, the shares come down substantially? >> no, i think people on the private pre-ipo market are thirdithird i -- thinking 24 to 36 months. there's no volatility. there's a lot of belief in these great companies and, you know, i
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don't see it being a negative thing. >> you just said that you can get more reasonable prices. that suggest prices have come down. >> supply has definitely increased, but it's just better for the investors that are interested. some people are tied up with their emotion so they make designates that are not the best over the long term. >> what does that mean? >> people get up with the news frenzy, stocks are going down and things are challenging so times they push the sell button too early where they could have rode out. >> i'm curious. if you're in the pre-ipo market and assuming that the company did do an ipo, what sort of discount relative to where they would trade on an ipo basis could you buy the shares in the pre-ipo market? >> that's a good question. what we do we have an internal metric that we look at. what kind of return can we make over 24 to 36 months.
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we look at the numbers and pack it up on our share price. >> for an investor like me if i invest with you i got liquidity in an ipo, with you i don't have liquidity i want to hair cut that price to some extent. >> sure. you can get liquidity in the private market. you can sell after a year. by the time it goes to public most of the returns are gone. if you study what happened from google to twitter, we have a chart where most returns are gone by the time it goes public. if you're looking for big returns it's not happening. >> so the investors are dumb? >> no they are sophisticated investors but it changes the dynamic of the investment. >> that's one thing we talked about back in 2001 when these ipos, internet companies came, big dot-com bubble and retail investors got left holding the bag.
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the the supposition is where the pain would be kept and held and doesn't make its way out to retail investors. is that what's happening? >> people are getting in the pre-ipo market and waiting before it goes public is getting a bigger return. 24 to 36 months getting a potential two to three times return. this has been happening all around silicon valley. never been publicized on cnbc. by the time it goes a retail investor, early investors get out but other investors getting in, they just got to be able to -- >> that describes the upside. if you're dealing with the down side market where things are coming down and not going out to the retail investor that implies the pain is being taken in a pre-market instead of after the ipo? >> not just take one example and paint with it a broad brush. each company does different things. you got to look at each company and see what will happen with it. >> okay. i guess my question is the
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reality that's playing out in the market does it play out in your market in the pre-market as well or is this -- there are no connection between the two? >> there's always a connection. everything is connected. so what's the specific question? >> i think the question is when you see pressure on the nasdaq like we had 15% down this year, are you starting to see prices come off a little in your market sore it just tacky that you can't get buyers and sellers together because buyers drops away. does it affect your pricing at all? >> what we're find cigarette a boom based on what's happening in the stock market. the opposite. some savvy investors are realizing they can get an opportunity before it goes public and at the same time you have employees that to able to get some money off the table because they never know what can happen. >> i think if i were an employee and seen what was going on here -- >> be egger to share.
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i would be worried my company will never have an ipo at this point. >> i can tell what the future will hold. what i'm finding these private tech stock markets are acting very much like people can buy and sell within our platform and that's going to be an interesting thing that will happen in the future if this keeps happening. >> thank you for coming in. >> big delay on what we've seen on the monitor. i was totally safe. i had the biggest yawn. my alarm was set for 2:00 a.m. you try that. so then -- i looked there and it came up -- oh, i was fine. i was not on camera but i was on camera. it's 2:00 a.m. much more on rebound on equities and u.s. and europe plus more of michelle caruso-cabrera's interview with hedge fund manager. that's after this.
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another wild market week. big swings on wall street. a huge tumble in japan. crude bouncing off 12 year loss. should investors retreat to safe-havens or is now the time to buy. >> are we facing another financial crisis. john paulson says no. the reasons he thinks the stock market is overreacting right now, straight ahead. >> golf, business and music. rock and roll all-star hughy lewis tells us how he's investing in a market in turmoil. second hour of "squawk box" begins right now. ♪
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>> that's my motto. welcome back to "squawk box" here on cnbc. first in business worldwide. i'm joe kernen along with becky quick and we are coming to you live from the at&t pro-am in pebble beach and you're looking at shots we took throughout the week. we're waiting for the sun to come up. most people can do the math. it's three hours from the east coast. markets around the world are awake. and probably ready for this rough week to come to an end. fridays are always a little dicey. we're okay so far in term of what the futures are indicating. opening bell for the friday trade on wall street is now just two and a half hours away and our guest host continuing this hour, scott minor. >> 240 billion but not all mine.
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>> you really manage that. that's u.s. dollars. >> u.s. dollars. not yen. >> later this morning we're going to be joined by at&t chairman and our host and ceo randall stephenson and get his take on the economy and also on the consumer and regulatory issues and directv and net neutrality and football and golf and everything else. >> in the meantime let's check the markets this morning. japan's nikkei re-opening after yesterday's public holiday. plunging 4.8% to close at its lowest level since october of 2014. that index down in seven of the last eight sessions. back here in the united states, though, the futures seem to be stabilizing at least at this point as you know it's early in the session and anything can happen. right now you see dow futures are up by 144 points above fair value. for the week it's bet a rotten
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one. dow is down 3.36%. s&p in positive territory now up almost 20 points. s&p down by 2.7% for the week to date. second negative week in a row. europe in early trading there are strong moves to the upside. you can check out once again what's been happening with the futures. and with what's going on in europe. you can see that the cac is up by 1.3%. let's look at the currency markets. looks like currency at least at this hour the there are is up once again, the euro at 112.78. oil prices, which were one of the big movers yesterday, wti coming under pressure it was down by about 4.5% to close at 26.21. this morning it is back up pretty sharply. also the ten year note which yesterday touched a yield of 1.53% has been picking up it's
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1.6% and change. right now et cetera toss it over to scott wapner and kayla tausche. >> in corporate news jpmorgan ceo jamie dimon buying 500,000 shares of his stock. shares are down 25% so far this year matching the overall performance of the kbw bank stock index. dimon's purchase noteworthy because it's the third time that he bought shares on the open market. activision getting hit hard. it increased its quarterly dividend to 26 cents a share. pandora under pressure. the stock had jumped in yesterday's regular session after the "new york times" reported pandora has held discussions about selling itself. >> and earning seasons is more than three quarters of the way
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through and dominic chu joins us. activision and pandora not a good quarter. >> everybody knows it. everybody realizes the weight that energy is drag down things with the overall s&p 500. we all know about the weakness in financials. let's put it in perspective. as you talk about this ad, 369 companies have reported as of yesterday. so that's important. like you said three quarters of the way through. 68% of companies have still beaten the average analyst estimates. at least for now that's about little worse than normal but still in line. 11% of met estimates. 22% missed estimates. now if you take a look at some surprises. we know about how energy and telecom. energy is supposed to be the biggest drag. telecom is supposed to show the biggest gains in ernls of earnings growth. take a look at this one.
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consumer discretionary. we thought it would grow. it grew by 11. the blended rate. also financials we thought they were going to do well. we thought we would see 11% earnings growth. it's 1.5%. financials not great. as we talk about what's happening, scott this idea that earning are going to come in a little bit worse than expected if everything comes to fruition for the rest of the season we'll have negative 4% earnings growth and negative 2.5% or negative 3.5% sales growth. it stills look a little bit sketchy as we go to the last quarter of earnings season. >> thanks. let's get back out the joe at pebble beach. joseph? >> okay, scott. thank you. our next guest has been raising the red flag that a global recession could be on the horizon for quite some time and now advising clients to weather the brutal economic storm by retreating in to safe harbor
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investments. mark grant, hill top securities managing director, scott minor continues with us. good to see you. i have to read a lot more of your stuff. i have some questions for you. >> sure. >> i get the feeling that -- i don't think you tie the selloff in all this flux to the quarter point hike that we saw from the fed, but to some extent i think now that they are headed in the opposite direction for the rest of the world you think that's part of the problem and i'm just wondering, many people view it differently in that they stayed too long and did too much already and that maybe they should have done this a year and a half ago. you think what they did was needed and even more qe and maybe more negative interest rates are needed. inso what's the overall problem on the planet that put us in this position where we need so
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much stimulus. >> let me address your last question first. the problem is not a single problem, the problem is a multitude of problems that's hitting the markets at the same time. the first is china. i estimated the growth in china the real growth not the made up number that the government gives us is 2%. whatever it is, and it's difficult because you're trying to mine data that may or may not be accurate, whatever the number is, it certainly is not the 6% that the chinese or 7% that the chinese government says. two, you'll have the oil issue. what that is you have hundred year cycle that's been broken. what's broken it is america and technology and we can produce more oil and deliver more oil than anybody in the world which means that all the producing nations, russia, saudi arabia,
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yemen, libya, you go through the whole litany are toast because they will never recover and so the whole energy game has changed. the third part is oil is also deflationary. while the press, and i under because of the consumer talks a lot about how the cost at the pump is lower, which it is. much bigger economic issue is that it's very deflationary and that the oil prices hit, natural gas, obviously but also influence a great amount of other industries. >> in listening to that, mark, there's a common theme. i mean we know what happened in japan, mal investment from central plan towers keep priming the pump. and churning out steel that no
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one will use just to keep people ememployed. could you say part of the super spike in oil up to over hundred was investment money and a lot of money sloshing around when people weren't making returns in other places. everything you're saying right now seems to be -- that's the common thread that it's mal investment from the cheap money. why is more cheap money the answer to what got us into this situation in the first place? >> that's a really good question. let me address that because you're referencing earlier about the fed. in the 2008-2009 financial crisis, joe, all the central banks were working in concert, it was not the same kind of crisis that i believe we're in now. that was a crisis of the financial system. what we're in now is just a recession and i think the fed is acting incorrectly, improperly
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by raising rates when every other central bank, every other major central bank, bank of japan, china, ecb is continuing to lower rates. so america is pretending like we're this island and the fed, in my estimation has had this very arrogant viewpoint that they can go the other way, one the timing wasn't correct to do it. and two, you can't go the other way when everybody else in the world -- the world is global these days -- is going the other way. so now the fed tried to raise rates which got everybody nervous, they wondered how many more were coming, how soon they were coming and now it turn out even the fed is beginning to recognize they made a mistake. the best thing the fed can do now, joe, is to say we're standing pat. we're not going to do anything. we're just going stay here. >> mark, it's a quarter point, unemployment at 4.9%. quarter point.
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not just -- even the change of a quarter is diminimus from zero. none of these numbers make any sense unless you're in some bizarro wynn verse or unless it's not a 4.9 and that's a totally misleading number because of participation rate, part timers or obama. but we can't handle a quarter point when what would seem to be almost full employment. >> okay. let me address two issues. one, i don't believe the employment rate because the bureau of labor statistics keep saying all these people left the workforce and i don't buy it. and two, the issue with the quarter point isn't really the issue. the issue is that the fed charged off in another direction and then they keep saying they might raise more and that's what worries the market especially
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bond market investors. >> scott, go ahead. >> but, mark, this is scott minor i was here with joe earlier talking. how much more efficacy is left in monetary policy. does cutting rates again or going to negative-interest-rates will this keep crashing down on us in the end? >> you have to be concerned about that. we've seen the effect of what the ecb as done. as an example we have a ten we're jermaine rate of 0.21%. i wonder and i think everyone should wonder if they keep doing this and keep driving rates down the 10 year japanese yield is now under zero, where we're going with this and what that does especially to investors and to money that people are saving
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for their retirement you're creating a very, in my opinion, a very dangerous situation and i don't think anybody knows where this is going because we're in very unchartered territory. >> yeah. you say recession and i assume you're talking just a global slow down, mark, because it's a lag thing. we don't have that here yet. but you figure it's coming. it's on the horizon in 2016 in the united states? >> yes, i do, joe. i think we're in a global recession, not a meltdown, just a recession, a norm cycle. look at where treasurys are. there's some belief in that. >> hard to raise rates when you talk basic points around the world. thank you. >> thank you, joe. when we come back, the scene from the mall. retailers facing a tough environment. the chairman and ceo of the mall
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real estate investment trust will give us the pulse of the consumer. plus why hedge fund tighten john paulson thinks the stock market is just overreacting right now. "squawk box" will be right back. it's hard to find time to keep up on my shows.
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retailers still facing a tough environment. the national retail federation forecasting sales growth of just 3.1% for all of 2016. that's slower than previously predicted. the s&p retail index is down nearly 16% this year alone but with gas prices at their lowest level since 2004 could the consumer be primed for a come back. joining us now for a firsthand interview of the retail sector the chairman of taubman. >> i'm good be here but i rather be out with joe and becky at pebble beach. >> what are we, chop liver? >> we're happy to be with you, guys. >> we at least have a sunrise. they continue have that for a couple of hours. we get retail sales at 8:30 eastern time. we're trying to size up what retail looks like. you got a great view because you
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own the mall sector. you have such a good bird's eye view. what your seeing? >> the consumer as far as we can see are still in the mall. traffic is up. we can see in restaurants and food leases, stars like starbucks are up over double digits. shoes are up. when you look at those kind of categories you see the traffic is up in malls and especially in the high quality assets. so we think the consumer remains shopping. we see it in our numbers. we see it from our retailers, our lease space is up, our occupancy is up, our average vent up. all the key metrics within our business and freeze warningly within our industry are high quality peers are up as well. >> do you expect sales to be up, bob? the challenge is always translating foot traffic into someone actually making a purchase. have retailers gotten better at
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that jayne? -- january? >> we think they are make purchases. we can see it in our numbers. we see them using their mobile apps and using smartphones to edit before they go into the mall. when they go into one of these stores converse rates are very high, transaction -- average transaction rates are very high. you end up seeing increases in sales. the consumer absolutely, the retailers were hurt by warm weather, especially in the northeast and tourism has been hurting all the gateway markets and florida is an example. we've been hurt by the lack of the american customer, strong dollar is impacting as well. but having said that across the country, we see very good consumer and we see transactions and we see average growth in sales >> you're also being helped, bob, by the continued drop in interest rates, the retail read
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space is down 4% so far this year and in the last week it's almost flat. you're one of the rare sectors that actually gets to benefit from this. how much longer do you think it can last? i know you're hopeful that it will last a lot longer but what does it say about the economy? >> well, obviously the low interest rates don't say a perfect thing about the economy. it does help big capital users, the real estate sector always needs capital. so, yes, interest rates are helping our balance sheet. having said that, i think that all of us would like to see interest rates climb because of what it means to the economy generically. >> i'm seeing in my notes that you think it's been an especially bright spot at victoria secret. is that because you're going into valentine's day weekend or is there something else going on? >> well there's no question that victoria secret is having an incredible run. one of the aggravate businesses in america. it has a unique brand and a
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unique dominance within that area. but, you know, as i said there's a lot of categories doing well. i mean home furnishings and lifestyle sector, restoration has been incredible. you see the home sector has been very strong. women's apparel has been pretty good. so you really, you know, i know there's a lot of school of thought out there that the consumer isn't there but we see the consumer there. we're getting ready to open a project in china. there's been a lot of conversation about asia, obviously and china specifically. so we're opening on april 28th. it's million-square-foot. we have inline mall space in 2,200 stores. we'll hop 200 stores with that opening. there's demand for retailers. there is consumers in the malls. >> we hope for you that that chinese consumer gets to your mall one it opens.
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bob, have a great long weekend. >> thank you. delighted to be here with you guys. >> bob taubman and we get january retail sales at 8:30 eastern time. let's get back to becky at pebble beach. >> when we come back, hughy lewis has some news how he's playing these wild swings in the markets. we'll get his advice to viewers after this break. >> i'm reminding you you're watching "squawk box" right here on cnbc. >> announcer: time now for aflac trivia question. approximately how much do americans spend a year just on candy for valentine's day? the answer when cnbc "squawk box" continues. ohh ah ah aflac! aaaaf-lac!
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huey lewis is getting ready to gown tour. he shared some of his investment ideas. >> i know you're an investor. have you been watching the stock market this year with the horrific start to the year? >> yeah. >> what do you think? >> i think it's looking for a bottom somewhere. i'm an investor. i'm not a speculator. you i know just sit tight. i think, you know, we had an amazing run. so this is a correction of sorts. i think if you just buy good blue chip stocks that pay dividends and hang on you'll be fine. >> what do you buy >> i'm a fund guy. if i was a stock man i would have to watch the market every day. i can't do that. so i buy funds. nice blend of funds and leapt it go. >> nice to hear him talk about
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that. >> he was, made a lot of money obviously in the '80s. but he's going out on tour now and making -- i don't know what they can bring in but got to bring in $400 or $500,000 a night. huey is not as young as he used to be. traveling from hotels and stuff but he's got eight guys in his band and can aspirin money still because people will go see huey lewis for sure. >> a lot of these guys are doing corporate events. you don't have the noise or overhead. get paid half a million to do a corporate event. >> hard for them to do one of his signature songs. he'll do other people's songs and stuff but you want him to be huey lewis. >> he said this is his 24th year here. only missed four years in the last 28. >> i've seen him do it one time.
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anyway seen him in concert. coming up we're facing another -- are we? said we are. are we facing another financial crisis or are big dips in the stocks and stock market just an overreaction. find out what john paulson thinks about stocks and the economy right now. plus state of the health care industry and the future of the exchanges after all the recent news with former humana ceo micha michael mccallister. cnbc will be right back.
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don't settle for u-verse. x1 from xfinity will change the way you experience tv. welcome back, everybody. among the stories that are front and center we're about an hour away from the latest retail sales figures. economists think sales were up by .1% in january following a decline of that same amount back in december. visa has taken a nearly 10% stake in mobile payments company square. according to an sec filing. that makes visa one of the five largest shareholders. and groupon, the company earned adjusted four cents a share. analysts had been expecting a break even performance. revenue well above estimates. however the stock's price is a
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far cry from the $20 ipo price when the stock first debuted back in november of 2011. >> amv reports earnings and rush to get them on. we got to get with the times once in a while with some of these things -- where is groupon going to be in five years if it's at $2. where will the nikkei be in five years. markets this morning. nikkei re-opening after yesterday's public holiday. look at that thing. in a week 11% in a week. 4.8% just yesterday to close at its lowest level since october of 2014. the index is down seven of the last eight sessions. what was the high back in the old days, do you remember? >> almost 40,000. >> 40. shows you what can happen. and they've done nothing but qe.
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>> and zero interest rates. >> and zero interest rates. >> now negative interest rates. >> the u.s. futures right now have been improving steadily all morning long up 145 points as you can see this morning with the s&p up 19. the s&p broke through a lot of support levels that people said were important. and the next is 16.50. >> 16.50 is the minimum. we could be between -- >> because at least it goes 16. here's what's happening in europe. less than 2% gains mostly except for italy. let's toss it back over to scott wapner who is on the east coast, on the right coast, we're on the left coast. >> billionaire hedge fund titan john paulson talking about the markets at a summit in puerto rico. he was on a panel moderated by our own chief international
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correspondent michelle caruso-cabrera. she's back and on set and joins us now with more. great time to speak with him. you never hear from him. >> rarely ever talks to the media. so big investor conference sponsored by the puerto rican government because remember they have a debt crisis, trying to get people to invest there. he's already invest ad lot in hotels. part of what happened yesterday was he literally showed a slide show of photos from his hotel. a lots of discussion why he's investing in puerto rico. because the nashts have been through such a tough session, through a tough time, he and michael tennenbaum. he thinks what's happening in the u.s. stock market is not reflective of the u.s. economy. >> it's a disconnect between the performance in the stock market and the performance of many companies particularly, you know, that we've invested in our
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portfolio, that the companies are actually doing very well and yet the stock prices are declining. so that's kind of an imbalance and eventually that will sort itself out. i would say that the market is somewhat overreacting to the current state of the economy. >> so he suggested it was overdone but in a follow up question it doesn't sound like he's jumping in head first. he said we picked up a little bit on our positions and talking long term positions. picking up some but everything you buy goes down. so perhaps ate little early yet. >> i wonder just given he talked about the disconnect as you see the financials, for example, sell off not only in europe but here in the united states. ridiculous losses over the last, you know, two, three weeks. what his opinion of what's going on there. >> i asked specifically what's happening in the european banking system could cause a
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financial crisis here in the united states like back in 2008 and 2009. he said i don't think so. he thinks the u.s. banks are much better capitalized. so generally more positive. little time for follow up to say does that mean you're buying at this point. >> no one knows what's on the books. >> they are trading a third of book. maybe nobody believes the book that's why. >> great stuff. >> cool, thanks. it was warmer. way warmer. >> good food too. >> thanks michele. let's send it back out the becky and joe in pebble beach. thank you very much. it's bean bumpy ride for thaee t health care industry. some carriers questioning their future on the exchange. joining us now to talk about this is mike mccallister, former chairman anne ceo of humana. great to see you. thanks for being here. let's talk about what we were
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just describing what's happening with the affordable care act and particularly with humana. i want announced it's not sure it will stay in obamacare. what's happening? >> well it's clear there are some issues with these exchanges. the news is coming. some of it i think was predictable. the aca put together a package of components that when they all work together had a decent chance of this actually being successful. but some of those components have been taken away over time. and you got a situation now where people always act in their best interest and so people are making decisions whether they are willing to pay thousands of dollars in premiums or a penalty. that risk pool started out much weaker and much more high-risk than people thought it would be. it was priced in a way that expected more people in the system. so i think you have to look back, all right, had it been successful in getting everybody enrolled that we hoped the have enrolled there was a chance we would be in a better spot today.
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>> part of the problem was there were higher penalty physician you didn't enroll and have health insurance and if you missed the sign up period you couldn't sign back up later. >> there's been separate enrollment periods for various reasons and it didn't take much to say look i was confused was one of them so therefore i can enroll outside of that window. once again people act in their best interest. the data is telling us people are waiting and when they are sick then they go in and say look i got this problem and allowed to join and it doesn't take much of that for the risk pool to start deteriorating. >> healthy people and no young people are signing up and you can get sort of gaming the system too. that's not the way it was intended for you to get sick and then sign up once you get sick. >> insurance doesn't work that way. you can't buy insurance the day after you get a car wreck. the health will pay for the sick. simple premise. so, you know, our goal and hope
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will be over time you get enough enrollees that the thing becomes more rational and we have more healthy people. again the penalties are probably too weak to get to that end game. i mean the first year penalty was $95. it's ramping up. becoming to become more material. >> they say it will end up looking just like medicaid. what do they mean, the end result looks like medicaid? >> well i don't know -- >> i heard that yesterday. the story about humana. >> look at the plans inside the exchanges many have very tight networks because the plans are trying to deal with unknown risk and built products with whatever is structured inside these plans. one thing that has occurred the networks have been tightened up. so if you're buying a lot of these plans you have a relatively narrow access to doctors and hospitals. there's nothing fundamentally wrong with that depending where you live.
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but that's where it looks more like medicaid because medicaid is tight in terms of access in the system from the standpoint of getting to doctors and hospitals over the years. that's where it's starting to shape up. >> mike, let's say, and there are some indications that -- i don't know sometimes you look at an economy like this might favor the party that hasn't been in the white house, also the intensity level of the two parties, they measured that and it's like 11%. let's say a republican word to get in -- it's early and i don't know who that republican will be. donald trump is obviously the leader right now. but with a gop controlled congress will obamacare be rolled back in your view in the next year? >> i think that would be very hard to do. we all hear the rhetoric around repeal. if there's not a replacement sitting there ready to go, just think about the die eruption.
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>> couldn't paul ryan work on that as speaker and get, figure out something to replace it? this is all -- this is the only way to do it or it's taking away the insurance. it's the way it would look in the mainstream media if you took away the insurance. >> a number of things you can do. you better be quick. think about the disruption. if you repeal obamacare today you have millions of people that now have insurance for the first time because they have pre-existing conditions or whatever. and, what your going to tell those people? you have to have something else for them. there's some real complications with wiping it out. i would suggest that will require very serious thinking before major changes occur. >> how would you do it if you want to do it. >> we have to think if these exchanges make any sense. why do we need these exchanges in all these states. maybe a more centralized approach. look at the medicare program. the government exchange for the medicare folks worked quite nicely. a level of overhead that can be
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taken out of the system. we may have to think about this risk pool implication. there has to be a different way to do it than currently being used. those would be a couple early things we have to think about. some overhead issues as well as the whole risk pool issue. you know, on some of the policies matters whether we should be expanding medicaid you can have a different point of view. those are really two crucial pieces. >> mike let me ask you. we've been trying to figure out for a while what's been happening to the excess money that consumers have because oil prices have been solo. one of the things we've been poingt in the direction and look up the data americans are spending much more on health care in the past. they are paying a lot more for their insurance premiums too. >> both. deductibles have gotten high over the last ten years. and that actually gets in that conversation about whether health care costs have been brought down by virtue of this.
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when you combine the deconductibles and you assume consumers have some level of choice, you see would see costs come down. deductibles are inside even inside the obama plans are pretty high. we're all speculating as to implications of that on buying patterns and use patterns. there's no question that the deductibles are big and getting bigger. consumers are being exposed to price of services and drugs in ways they were never before and starting to get people's attention. >> it's a pleasure seeing you here. we appreciate you joining us. come back. >> pretty early. >> thanks for getting up early. >> thanks for having me. >> go think it range right now. coming up, it turns out albert einstein was right again. a new discovery is creating waves in science. did you see what it could mean? >> i didn't see it. >> possible time machine. that story straight ahead. you're watching "squawk box" and
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>> welcome back to box. it turns out albert einstein was right again. scientists have finally detected
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the gravitational waves or ripples in space for the first time and that's proving part of albert einstein's general theory of relativity. when huge objects collide their gravity sends waves through space and time and one of the theoretical consequences of this is the possibility of, you know time -- >> is that a worm hole? i don't get it. >> believe me there's nothing about general or specific relativity that's very easy-to-understand, but if you go back -- if a butterfly, you know flaps its wings -- everything can change. there are a few things i might change in the last few years. >> like what? >> i don't know.
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coming up, the signs behind your swings and how athlete are using data tracking technology to get their moves up to par. we'll get into the game with one company behind the sports analysis software business. that's next. check this out. "squawk box" producer matt greco hit the links yesterday and quizzed some spectators on their nice bus i.q.. >> who is the treasury secretary? >> lu. >> lu who? >> janet yellen. >> if you had a million dollars what stock would you buy? >> probably look at facebook. >> get a nice dividend paying stock. >> i would go with home depot.
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well gone are the days of pros spend hours watching film to improve their game. companies are going beyond wearables adding hi-tech tools to track and collect data on athletes. one sport start up puts data in users hands and it's called blast motion. it's video capturing movement on
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equipment like baseball bats and golf clubs showing the holes in your game and tracking the science of your game. joining us now michael fitzpatrick, blast motion co-founder and ceo and if anybody has seen andy circus when they are making some type of hi-tech, all those little thing you can put on and measure the exact sequence of the motion in someone's sport activity whether golf or baseball. is that basically how it works? >> that's one form of the technology. you know, i don't think people understand and appreciate how hard these pros work on their swing, and working with equipment which costs thousands of dollars, working with the best coaches in the world, and what we're trying to do at blast motion is bring that to the average consumer. >> we need it. anybody that plays golf knows that. i got a lot of accuses.
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tom used to say he hits ball every day. if he misses one day it takes four days to get back to where he was. that gives us an excuse. the timing involved with the movement of your body w-the movement of your arms in golf is something that all amateurs, especially me, we deal with and it makes it very difficult and very frustrating. could this help? >> it absolutely can. you're right on. we found after talking to lots of top professional golfers and it's the same in any sport, baseball, basketball, track, what we do is we've developed a very tiny sensor. this little sensor actually contains an accelerate monitor, gyro processor, lots of equipment in this little package that weighs less than one-third of an ounce. >> does it have a flux com
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compacitor? >> it measures the timing of your swing. there's a relationship between your back-swing and your downswing that's very important. >> i know. >> golfers struggle to get it to your back-swing being two times the length of time of your downswing. when they do that whether it's the putt or it's in your full swing game they play better. >> wait a minute. going back should take twice as long as coming down. >> that's true. >> but also from here coming down to about here shouldn't be very fast either and then it could pick up speed -- when you cast which is what i have a problem with, with my arms i'm decelerating by the time i get the ball. >> you're right. in the full swing it's the back-swing is three times longer than the downswing. and in putting it's two times.
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one of the reasons -- >> i do half and three. three times as fast on the way down. >> the thing you find is every swing is a little bit different and on the really good swings when you hit the ball well your time cigarette really good for you and your swing. that's what we do. it's very difficult to change if you don't know what works for you. >> right. >> we actually give you the measurements that tell you what's good for you and when you are swinging well, when you are putting well can you go back to all of our data is captured, sent to the mobile app, you see it in real-time and stored in the cloud. >> i want to start crying out of joy for the possibility of something happening after, doing this for 40 years and never really -- so i swallow this? >> that's one way. it's a little bit easier if you take a little attachment like this. this just slips right over the butt of the putter. >> no way it would fit over my
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butt. okay butt of the putter. >> sensor fits in like this. it's not available for, in the tournament for example, i can use it but i can go out to the putting green and i can dial in my putting stroke for the day. >> thank you. you know, it works with golf and many things. we have to get back to the markets. thank you. maybe there's light at the end of the tunnel. >> there is. joe, just to make sure you do make the cut, a little present for you. blast motion sensor for you. >> thank you very much, michael. scott thank you for joining us today. pleasure to see you. more "squawk box" right after this. 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. ♪
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. a wild finish to an even wilder week. the nikkei plunging overnight. now futures are pointing to a brighter start at least here at home. will it hold or should investors be worried about a friday fade? we'll break it all down straight ahead. "squawk's" executive edge live from pebble beach. our special guest this hour, at&t randall stephenson and david doreman. we'll get their take on the
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economy. >> breaking news on the economy, a key read on the health of the consumer. retail sales for january. we'll find out if plunging oil prices are trickling down to the mall. final hour of "squawk box" tees off right now. >> hi everybody, i'm huey lewis reminding you you're watching box right here on cnbc. ♪ it's all right ♪ it's all right ♪ now listen to the beat be about to box. i'm becky quick along with joe kernen and we're coming to you live from the at&t pro-am at pebble beach, california. business leaders are gathering on the golf course and keeping a close eye on the markets and talking to us. u.s. equity futures this morning have stabilized pretty substantially after the declines from yesterday. remember the dow was down by over 400 points at one point wred before coming back to tend
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day down by 250 points. you can see that the dow futures are up by 122 points. s&p futures up by 15 and nasdaq up by 35. >> you think with the nikkei where it is we would have some problems. nikkei catching up with problems that the rest of the world had because it's re-opening after yesterday's public holiday and it promptly plunged almost 5% closing at its lowest level since october of 2014. index is down in seven of the last eight sessions, down 11% for the week. remember, it took years for us to get a 10% correction and the nikkei was one -- look at the absolute number there. 15,000. under 15,000 and remember the high in that, in that market was almost 40,000 at one point. all the way down 14,000. been years where it hasn't seen those levels. some whoep it ghope when it got 20,000. here in the states two key data
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points. at 8:30 eastern we get january retail sales. import/export prices. jpmorgan jamie dimon buying 500,000 shares of his company's stock recently worth more than $25 million. j.p. shares are down 20% so far this year. that merely matches the overall performance of the key bank stock index. all right. at&t's randall stephenson and dave doreman of cbs will be back with us this hour but first we'll go back to new york where kayla and scott have another check on some of the markets. scott. >> thanks. let's get more on the global market mayhem as investors look ahead to retail sales figures here in the u.s. and start to shore up positions ahead of a holiday shortened trading week. head of investment and portfolio strategies at morgan stanley wealth management joins us along
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with david liebowitz. good to see both of you this morning. we just finished on the story about jamie dimon buying shares of jpmorgan. what do you think of the banks with so much fear in the market around that sector specifically should you buy like jamie are beware? >> it's funny. going into tend of 2015 the thesis was we should buy the banks because rates are headed higher. what we're seeing the fed will move very gradually and that's why banks are feeling pain. in europe it's a different story. i want has to do with negative interest rates. it looks fine. banks should recover. we do think banks represent value. >> lisa, david makes an interesting point. the economy looks fine. but yet the stock market and individual stocks keep going down. pretty similar thought we heard from john paulson out in puerto rico with michelle caruso-cabrera doing that interview where he said there's
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a disconnect. kind of looks pretty good. stock market keeps going down. do you agree? >> absolutely. our read of the fundamentals are that the fundamentals are quite stable. quite frankly. i don't think slowing growth is new news. i think what's spooking markets right now are the immediate period this idea, this concept of negative interest rates and the sense that potentially the market is losing faith that central bankers can cure all ills. >> no more tools in the tool box. >> we don't agree with that. we think there are tools in the tool box. if you think what are the implication of negative interest rates. while the academics think it stimulates credit demand what it really -- you can't create credit demand, right. if people don't want to borrow you can't force them to brother. and that's really, you know, the issue. in the united states we don't have that problem.
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actually credit growth is growing, you know, 8% 1to 10% year-over-year. the idea we'll move to a negative-interest-rate environment doesn't have a lot of credibility. >> corrected demand has been improving. when we think about the stock market, we talk about china, stock market there is not the economy. there's so few people invested in the stock market there. here it's different. even if people are feeling better there is the risk that because so many people own stocks they look at their portfolio they see the performance they start to feel worse than they did before. how does that risk play out? >> that is in our view the key risk and you would agree with me on this. this is 2% to 2.5% economy. when people turn on the news when people pick up the newspapers and read about stress in the european financial sector, possibility of a hard landing in china which we don't think is the case, it spooks
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them. you know, one of the things i like to remind people nothing spreads like fear. once fear starts to spread that can take hold of markets and cause markets to do irrational things. when markets do irrational things stocks go on sale. if you look over five years valuation is a great predictor of return. we don't view any fundamental weakness in the u.s. economy and as a result we view this as an opportunity in equity for investors going forward. >> good stuff. thanks for coming in. david and lisa appreciate the time. coming up we'll go back out to becky. scott, thank you very much. when we return right here we have a "squawk box" news maker. at&t chairman anne ceo randall stephenson joins us live. we'll talk business, the economy and much more straight ahead.
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♪ ♪ i've been missing you ♪ for so many days now ♪ i keep wanting you welcome back everybody. we are reporting live from the at&t pebble beach national pro-am today. joining us right now is the host of the event, randall
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stephenson, at&t's chairman and ceo and randall, thank you for joining us this morning. we know it's early and we appreciate you getting up. >> thank you. it is early. >> we were just listening to a markets conversation where people were talking about whether the markets eventually weigh on ceo confidence and on consumer confidence. have you seen it show up anywhere with the consumer. >> right now i worry about everything, right. it's an interesting environment we're in, because you know coming out of the fourth quarter and through december, consumer is still spending money. when he a good holiday season. our industry had a good holiday season. so the consumer is spending money. its not as robust as you would hope with $30 a barrel oil prices and $1.50 gasoline prices but what consumer is spending money. but there's a pull back, if you will the reins by businesses in investment and so forth. while that's not manifested
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itself into slower consumer spending that's always a precursor you worry about and we watch really, really closely. there was in december a pull back of investment by businesses. we felt it. we saw it. and we see it as we come in to this year. hopefully we get into this year and that will, you know, subside. but right now everybody is a little bit guarded, a little bit cautious. >> we talk all the time about how lower oil prices have had a big impact on the stock market. it's bean boom for consumers. if prices come back up do you worry that will have an immediate impact on consumer spending? >> no, because i don't think the consumer spent it all when it came down. it was obvious to us the consumer was saving a lot of this. and i think in the united states we've also seen just how important a driver investment in the oil and gas sector, energy sector is and how that investment drives economic stimulation and hiring and so forth. so i'm actually one of the mindset and being in texas i'm
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biassed, right. i'm of the mindset as oil prices begin to normalize and move up investment comes back and i think that's a net positive for our economy. >> randall, we talk net neutrality a lot and you try to handicap the way the supreme court is thinking. not everybody knows all the nuances like you do. but it's in front of the court right now, isn't it? how many different facets are there and i say this in reference to this recent epa decision that maybe the court is looking at some of the executive moves and i've read editorials that, you know, they finally raised -- it's raised a few eyebrows how far executive actions have gone at this point. is that a favorable -- i mean do you see the body language as being favorable and what would help or hurt at&t based on what's in front of the court? >> as we look at net neutrality
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and the case we have pending before the courts, obviously, the epa decision is an interesting one. so the courts are pushing back on some of the regulatory overreach. and in our particular situation net neutrality, we believe that this regulatory body the fcc has overstepped in three different places. >> three different places. are all three up -- could it be a split decision? >> all three issues are up. could they regular the wireless industry at its core. can they regulate this last mile of broadband going into the home? then there's kind of an arcane issue these interconnection agreement where's we do deals with other network providers to hand traffic off. can they regulate those. at its core very simplistically that's what the issues are. the fcc has to hit a triple bank shot to win this in court. our view is if any one of this fail this whole order itself
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probably does not sustain. and we actually believe and the courts when they had oral arguments on this, seemed very skeptical of the fcc's authority to regulate wireless. at the appeals level, right. and they seemed very stekeptica. they are skeptical where companies do agreements between each other to hand traffic back and forth. they are open to fcc regulating the last mile and that looked like they were open to allowing the fcc or deferring to the fcc's judgment on that. but the problem is if any one of them fail it feels like the whole thing fails to us. that's why we think the fcc has to hit a triple bank shot on this. it doesn't seem likely but who knows. to your point the court's action on the epa issue gives you some confidence there's willingness to push back on overreach. >> this is before the appeals court right now. how long before the supreme court could pick up on something like that. what kind of time frame?
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>> we expect the appeals court order to come out this spring, march, april time frame and whatever the outcome it will be appealed to the supreme court. those arguments will be heard later this year and not having an answer from the supreme court until 2017. >> i thought there was something that was -- >> now there is not. what we have right now is guaranteed litigation between now and well into 2017 and the fcc, the way they went about this and it was just kind of fast and they created a bit of a jumbled mess to be quite honest with you for the industry. the industry is in a messy situation for a period of time here. >> you'll be dealing with the my administration. we don't know who will thereabout. my administration between now and then. is that good news if bad feelings rancor on both sides. new administration. maybe there's some sort of compromise that could be reached? >> i don't know i would call it rancor between industry and the
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fcc, but it's a very active fcc and obviously we're going to be very active in protecting the interest of the industry. >> sounds like rancor. >> people are friendly and we get along. the head of the fcc i've known for many years but he's a very active chairman at the fcc and he's not afraid to take a little bit of what i'll call legal risk in his rulings. so if there's a new administration and new chairman does that change the dynamic? it always has. a new chairman gives a different flavor to not only the fcc but candidly to the industry and that's when you know you have very active regulators when individuals moving into these positions influence the entire flavor and dynamic of the industry. >> for let's say for me versus i have this, you know, we're owned by comcast. we're frenemies. >> we are. all out competitors.
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>> so, with the package now with directv what is it that would indues me to get rid of my x1, football. what else. how do you compete against that what's a pretty good product from comcast? >> i suspect comcast gives you some kind of employee concession. it's hard to compete with you. but look here's what we believe. that is that the consumer wants to -- wants one simple process. i want broadband, i want tv and need mobility. those are the core pieces of product structure. if you can integrate those. by the way everybody is buying bundle of content. if you want a bundle of contend you can buy it and we can integrate it and deliver it over your broadband, deliver to it
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your 80-inch screen tv in your living room on 4k television and deliver it to any of hour bill devices. by the way if you want content delivered just to one or all of those we can accommodate that. as you saw last month we introduced the ability if you're an at&t tv customer and our mobility customer then all of your data is unlimited. so you stream all the video, all the directv content you want to your mobile device. it costs you no more if you use 10 gig, 30 gig or 15 gig. it's the same price. those are the advantages we bring to the mark place. >> we saw president obama call for a new cyber secure plan and that means beefing up i.t.. what does that mean for at&t? >> for at&t the issue for us, looking at our corporate customers that are here this week, the issue for us and for them is security. and network security.
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it is where we are investing an unbelievable amount of money. first of all the president is focused on it is spot on. what he laid out is the priorities getting the government beefed up. you've seen opm hacks where chinese have gotten into personnel files. that has to be addressed. their infrastructure needs to be beefed up. we salute the president and administration for taking that on. for us specifically it means we're on the right path. so we have invested a lot of money to ensure that the customers that are here, they have a mobile hand set, their workforce has a mobile hand set. they are using that to access very, very important company information and customer information. what we're doing is delivering from the hand set through the network into a cloud, unique cloud environment where microsoft, achmazon or anything else.
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if you can produce that in a secure encryptic fashion that's a huge benefit to these businesses but also to society. >> i had a conversation with someone here this week who was explaining it really is safer to keep things in the cloud because of all the security you can build up around it than it is to keep it on your laptop which is counter to what most people think. >> we think that's right. getting to that information over a public internet is not a good idea. we're getting to a solution to fit you in and outdoor of the cloud an secure network. >> have you been talking to kevin spacey? >> i have, yes. >> inside joke. five years from now, will wireless be a big part of our revenue and everything else at at&t? what's at&t going to be in five years? >> wireless is the lion's share
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of our profitable. we made an announcement yesterday afternoon on 5g. right now we're at 4g wireless. 5g meaning the last mile, fiber going into your home actually we're getting performance and testing that says we can get as good a performance off 5g wireless technology into the home as we're getting off fiber today. >> you're kidding me. >> we're measuring our fiber speeds in a gig. fugate gig in the home you're doing well. we're getting ten to hundred times that in our wireless testing. that's what 5g is about. we're going hard at this first as a fixed application meaning to a home not a mobile application, before the standards are set and the government gets the option, that's going to be a 2020 time horizon. we believe we can get fixed applications to the home running in short order. >> crazy. that definitely -- we need
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donovan to explain that. even more sophisticated squigglies. >> he can kwil yill you with sqy stuff. government has to get spectrum policy right to allow this to flourish. >> sounds like there's plenty of spectrum left but at a price? >> a whole different place. you don't want to get technical here. we've all been investing a lot of money in this spectrum. the latest government auction we put $18 billion down to buy a block of spectrum that's at a 2 gig frequency. what we're talking about 5g is at 28 gigs. this is a place where nobody has operated before. we think this has a lot of promise. >> randall, thank you very much for joining us this morning. >> can't figure out our back-swing and you're figuring out all this stuff. daunting. coming up, breaking economic
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news. retail sales and import/export price. stay tuned. "squawk box" will be right back live from the at&t. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.
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coming up, breaking economic news, retail sales and import-export prices, data and market reaction up next. but first as we head to break take a look at the ten year yield. down 15% and consequently sitting at 1.68%.
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you're watching "squawk box" on cnbc, first in business worldwide.
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welcome back. watching shares of deutsche bank which just moments ago put out a
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statement they will pursue a multibillion dollar and euro bond buy back. shares are up 9.25% taender offer for the bank's public bonds will consist of 3 billion euros in euro denominated bonds and $2 billion in dollar denominated bonds. this will not include the cocoa convertible contingent bonds. we want to get over to rick santoli asan told -- rick santelli. >> if we look at retail sales up .2%. arguably a tenth better than we expected. and we gained .3 on last month's revision from minus 1.10 to up .2. let's go the internals. strip out autos, up 1.10. strip out autos and gas.
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control group up .6. not a bad number we're expecting up three. now if we look at control group our last read pretty much still sticking at down .3 so up .6 would be the strongest read going back to may of last we're when it was up over.8. let's look at the import prices for january. down 1.1. that's a big negative number except we're expecting a bigger number, down 1.5. last month was revised to .1 less negative from minus 12 to minus 11. same dynamic minus .62 less negative than we were looking for and we gained a tenth from minus 8 to minus 10. import prices reflect energy going on and maybe everything else as the world is trying, of
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course, to export just about everything under the sun to the united states. maybe that will slow down because we're slowing down. retail sales was definitely better than expected. but still we like to see even some bigger numbers, speaking of numbers we're still hovering around the same yields going in. 169 on the ten year. very important to see how close to 1.70 we get. yesterday we got close to 1.50. volatility reins supreme. joe you're in your element. back to you. >> yeah, exactly, rick. i wondered what you have been thinking for the last couple of weeks. i don't know. we'll get to your, to the anti-regular. steve liesman is at cnbc headquarters. steve, i guess -- why don't you comment on the numbers first and maybe some of the nuances there and then we can talk about the imploding global economy. >> i'm pro rick just for the
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record here. >> okay. >> i just want to say, i don't know that the u.s. consumer can say what's going on in the economy, but this is the fir time we've had a little bit of outperformance from the u.s. consumer. i went back and looked at economists have been overestimating the strength of the consumer in part thanks to they can't estimate what's happening with consumer prices. they are falling at the retail level. this 06 speaks to a little more strength in january. it's a very good way to start the month, start the quarter in terms of growth here. i think it's going to help boost depending on what happens to prices here. it's going to help boost the outlook for gdp growth and the notion of a bounce back for the u.s. economy in the first quarter from the fourth quarter and you're also going to get a touch more strength in the fourth quarter that had been originally forecast. the import prices, what can you say? they are falling beyond energy. rick was 100% correct that you
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have this decline in prices. 13.8% i think i saw 13.4 for petroleum prices but also nonpetroleum prices are falling. joe, i don't know that the market is listening at all to what's happening in the economic data. certainly not as bad as the stock market has suggested. but we still don't have definitive signs of strength and a first quarter bounce back from the fourth quarter but that's what i think anybody who is still maintaining a shred of bullishness out there has to be hoping the u.s. economy can step forward and perhaps what's the word i'm looking for, contradict the view of the market and the outlook here. >> yeah. just trying to figure out what everybody -- i'm talking about markets came to grips with, steve. obviously a quarter point is not enough to knock everything off, you know, off kilter. it's not significant enough to
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caused this. i'm wondering if it's the realization that all the king's men and king's horses and everything that the fed and everybody else has done has largely been ineffective and really generating any type of consistent global prosperity or growth. maybe we're realizing that's not what will do it for us. it could be a look in the rear view mirror what happened was no long or a look out the front window saying if they do it again it won't be any good. there's a couple of things. what you have is you had a combination of concern about the economy, certainly concern about earnings and i would even separate that from what's happening with the federal reserve. whatever the quarter point was, a 4% decline in earnings year-over-year for the s&p 500 trumps all of that and that makes a lot of sense -- what the market has done makes a lot of scene. the notion that quo be going into softness and the fed not having any bullets there that's
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what i think is the worst part. like wiley coyote. >> i was being nice. i wasn't saying they were part of the problem i was just saying they were ineffective in dealing with frontal boundary. who knows why what you said about profiting being down. you buy into the mal investment thesis. corporations are doing other things with interest rates being solo. instead of minding their ps and qs because of the fed then you attribute some of the problems to the action instead of just being ineffective in dealing with what was already negative. i don't know if rick is still here, you know the book is not written on bernanke, yellen yet. >> i don't buy the mal investment thesis. i've been looking for it. could have been some of it. i like your idea. i like the where it could have driven the oil boom in the united states.
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but then you have to say that $100 oil has to be a lot more incentive than 0% interest rates for an oil boom and whether or not that would have happened anyway seems to be, you know, they created a new technology so i'm not sure that's monetary policy horizontal drilling. >> we know there's "fast money" in that market when they weren't making money anywhere else. >> i think where the fed may have messed up is the funding source of it being in the debt markets rather than maybe through the banks. >> you probably -- go back and read the piece from yesterday about it's just not getting to the place where it's needed. >> that's for sure, joe. this negative-interest-rate thing makes me nervous. what we're seeing is the concern in the market which by the way goes back toy think the work of bernanke as a ph.d. student in his 20s the banking system is the root that matters that you want to follow. if negative-interest-rate hurts banks and hurts banks earnings
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make them less able to loan and would really end up hurting the u.s. economy and other stocks more than even if it's the right theoretical rate it's definitely the wrong rate in practice. >> all right, steve. thank you. >> have fun out there, guys. >> thank you, steve. when we come back another executive joins us on set right here at pebble beach. dave doreman is here. the chairman of cbs health. we'll talk about the health of the economy. "squawk box" will be right back.
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accommodation. wow. that's a beautiful shot. welcome back to box. we're live from the at&t pebble beach pro-am and right now we're joined by david dorman former chairman and ceo of at&t and current chairman of the board at cvs health and founding partner at center view capital technology and he's here to completely explain 5g technology to us and squigglies. that works, doesn't it? >> squigglies, i think it's hard comprehend being -- >> there's a lot of reasons why youth is wasted on the young. you know our kids now,
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grandkids, whatever, they think nothing of movies coming through thin air into a little device like here and having hd quality. somehow coming -- to me i'm still -- >> we were talking yesterday, stewart said his mother had jimmie buffett on eight track and i think it was roberta castro who said what's eight track? >> even that i'm stimulus impressed that little tape had sound on it. so what is it? you're all over the place. what's the state of the world? just as a guy sitting on all these boards. what would you tell people? >> very hard to make sense out of it. you try to look at china and say that's, should it have an effect like we're seeing in our markets. i can't connect the dots. what's going on in our markets, obviously, is a reaction to other markets but not something to me seems to be as connected as the result is showing.
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>> what do you think about technology stocks in particular? they've been down so much more than the broader markets. >> they were up, you know, dramatically and driven by the product market values the unicorn effect so-called, we'll see the product market values are adjusting now. i think people who need to raise additional rounds of financing in out the front of an ipo are trying to do it. but at the same time i see investors trying to raise funds now because they figure that some things will be on sale, valuations that we haven't seen before because multiples that are trading today in the private markets, you know, in my view have gotten to the point where we clearly had a bubble. >> we were trying to figure out the medium landscape with randall in telecommunications. you're still part of that. you got to figure out health care and cvs. how do you position cvs -- what
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will it took like five years from now? >> if you look at the opportunity to participate across spectrum, cvs is obviously primary care with mini clinics, specialty drugs that are either infused or injected or inhaled have to be administered in different ways, sometimes even at an infusion clinic. thart part of the market is growing so fast. it's $100 billion market today and is growing at 30% to 40% and because the use classes for some of those drugs while they are narrow are life-saving, life changing drugs. so we talk about especially three years ago as a place, gee, we ought to be in this and suddenly we have a $40 billion business in specialty. you look at some of the other things that we're hearing a lot of noise about in the market today, pharma pricing is not a
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new subject. the cost of r and d is always referenced as a part of the issue got to spend billions of dollars developing the drug and how do you recover it before the patent runs out and so these things follow a pattern. more recently, others have come to the game, bought drugs that still haven't run their course in patents or where there may not be substitutes. our friend -- >> martin shkreli. >> who didn't testify before congress is an example of that. for the most part this is an industry that ethical, works hard, finds great life-saving drugs. we're at the end as a distributor. we're not setting the price but we do adjudicate prices for our clients. we have 70 million plus health plan members that we provide the prescription plan for it. it's our job to find the right formula for the right use case and make sure the price paid for that is fair.
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>> definitely a politically charged environment right now. martin shkreli did no favors to anybody else anywhere else. how does this play out in an election year? >> made the comment that the big pharma guys have become a pinata to be beaten. you can look at the valeant story and sleek sleek and others when you have an increase 1,000% that's an easy target to hit. more importantly when you look at the hep-c drugs where cvs went out to negotiate with suppliers, we made the decision with our clients we're going pick one of these and negotiate the price for that drug and able to reduce the drug price by 50% because of our volume. so you don't tell that story quite as often as you do the other because as you say, current news cycle is ridiculous drug prices. if you have someone as your advocate you can actually see
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prices going down. but on the other hand if you look at things like the toe nail fungus craze going on television people go to their doctor i need this toe nail fungus cure, maybe it's 20% effective, not 100% effective, two or three other compounds that are anti-fungal that work equally as well. difference in price is 2%. 2% as much. 98% less. >> i had a friend that went to a pharmacist -- >> there's a ceo of a very large company who i said once you must have a toe nail fungus crisis because you're spending $6 million a year in your drug plan. he looked at me and said what? i said here's the data. you're spending $6 million bucks on toe nail fungus. >> don't worry about zika.
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if toe nail fungus takes over none of us want to live in that world. >> where people understand the be facts, of course it's ridiculous and they will take steps to management but part of our job at cvs is to raise awareness to say you can do this another way and you're not is going affect your employee's health. >> the other way is to tell them to use this other formulation. >> let's put this other formulation in your set and see what happens. >> phil sims is it in a bathtub with howie long. >> talk about toe nail fungus in the bathtub? >> yes. >> hopefully it wasn't a cialis commercial. >> i don't know where you're going with that. that's fine. >> can we ask you about young brands. you sit on the board there too. there's been a lot of interest around the spinoff of young china or whatever you guys will call this new company.
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>> young china will do. we don't have a name yet. >> we've seen so much chaos in china. we know how far it's affected yum. looks like the numbers are picking up. >> it's almost a $10 billion revenue business. >> $10 billion. >> in china. approaching or near 7,500 restaurants. it's the largest restaurant in china by far. there's a lot of interest in this business. i chair the spin committee for the board of yum and what we're doing is carefully looking at timesing, things like where the business will be listed, who is going to be on the board. our commitment is to make this a china company. so there will be chinese directors, large amount of management is chinese. and we believe that over time it's long term prospects are earn hansed by being truly a china managed operated and run business and will retain an
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interest through a royalty for, in per period at any time business but won't have anything to do to support the brands in china. it is correct, we're seeing see improvement probably through better execution versus just the china macro, which is still tough. >> it was one of the super bowl 50 commercials. the title is jublia spa day, it's howie long, deion sanders and phil simms all in bathtubs with smelly toenail fungus. >> very motivational. >> great to see you. he's a good golfer. he can hit it a long way. >> sometimes in the direction that i want it to go. >> i know. with the new technology, i can hit it so far out of bounds. it used to be it was not where the houses are. >> randall does a great job
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telling people don't worry you'll wake up at 3:00 in the morning in a cold sweat. >> and you do. >> the joy is being able to play pebble beach on thursday when no one is there. saturday, there are enormous number of targets. >> in the crowd. >> do you go to jail for involuntary manslaughter, don't you? >> i think there is no intent. you will probably get off with a suspended sentence. >> i worry. when we come back, california dreaming this morning. but not everything is perfect on the left coast. the ipo market is cooling in silicon valley and now there is trouble in high-end real estate. smart devices are up. cloud is up. analytics is up. seems like everything is up except your budget. introducing comcast business enterprise solutions. with a different kind of network
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real estate prices have surged in san francisco, now some brokers are saying buyers are becoming more cautious, at least on the high end. josh lipton has that story. josh? >> well, that's right. a year ago real estate agents say there was a fervor in the high end of the market, now that tone has shifted. >> the buyers i'm working with now who are heavily vested in tech stock are proceeding with caution. they don't know what to expect.
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they're not sure if they lost 40% of their net worth in linkedin last week, i have one client who is at linkedin, that particular client is proceeding with caution now. >> reporter: now, mcadam is quick to point out demand is still strong for the 1 million to $2 million homes and luxury homes like this one that went on the market today are still selling if they boast all the right bells and whistles. this property, five bedrooms, four baths, 4,200 square feet of space, price tag, 5.5 million. but a tanking tech sector with the nasdaq down 15% this year and private tech valuations takesing a hit as well leaves potential buyers feeling more cautious according to nina hatvani who has been selling high-end homes in san francisco for 25 years. in the last quarter, 18 homes
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sold for 6 million or more. in the fourth quarter, that number dropped by half. one question is whether any cooling in the high end will bleed into the $1 million category and lower. analysts at fitch say the market here is overvalued by more than 15% with home price growth now exceeding income growth. scott, back to you. >> josh, thanks. coming up, highlights from the big newsmaker. squawk will be right back. ♪ ♪ ♪ for your retirement, you want to celebrate the little things, because they're big to you.
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cash is not a bad place to be right now. opportunistically i would be putting money to work, especially if you're a retail client. >> actually we are getting performance and testing that says we can get as good a performance off 5g wireless technology into the home as we are getting off fiber. >> for the most part this is an industry that is ethical, works hard, finds great life-saving drugs. if you have someone as your advocate, you can see prices going down. >> that's a great morning of newsmakers on "squawk box." live from the at&t pro am at pebble beach. scott minerd, at&t boss, randall
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stevenson and david dorman. interested to hear the executives perspectives on what's happening now. from the market perspective. so far it doesn't necessarily seem to think it matches up. >> the scenery and feeling out here had a calming effect on the financial markets today. looking better on this friday. >> have a great holiday weekend. join us on tuesday. right now time for "squawk on the street." ♪ >> good friday morning, welcome to "squawk on the street," i'm kafrl carl with sara eisen, simon hobbs, david faber at the new york stock exchange. cramer is off today. stocks looking higher on this final session of a tough week. retail sales come in okay. for the week the dow and s&p down about 3%. europe's rebounding as dich cha


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