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tv   Squawk Box  CNBC  February 16, 2016 6:00am-9:01am EST

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business never sleeps, this is "squawk box." good morning and welcome to "squawk box" here on cnbc. i'm michelle caruso cabrera along with becky quick and brian sullivan. joe and andrew are off today. we're going to start this morning with oil, because top oil officials from saudi arabia, russia, and several key opec producers are meeting in doha. the oil ministers agreeing to freeze output. but there's a caveat. they add that the deal is contingent on other producers, that means also iran and iraq. it's important to note that iran was not at the meeting and has been planning to ramp up shipments due to the easing of sanctions. right now the price of oil is higher by 41 cents, a gain of more than 1%, 29.85. seeing brent way back above 30 here. 34.06 per barrel a gain of 67 cents, a gain of more than 2%. the correlation between u.s. equities and oil seems to be continuing this morning because u.s. equity futures are higher this morning as a result, perhaps. dow would open higher by 172
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points, the s&p by nearly 20, and the nasdaq by about 57 points. also being helped, i'm sure, by the news from china. >> what do we think about this? i saw the rally in oil prices on friday. basically a rumor that you were going to see something like this. if it's contingent on iran and iraq both playing along with it, that raises all kinds of questions. >> seems to be the same caveat we've heard over and over again. iran has -- they've walked back some of their more explicit talk about ramping up production. still, they're so eager to get back in the markets. and iraq is desperate too. >> let's not forget iran boosted output a month ago by 500,000 barrels a day. if saudi arabia and russia and whoever else want to get together, they need to get iran in the room. and let's not forget that a freeze is not the same as an output cut. if demand grows, then theoretically supply-demand will come back into balance. if demand slows because of china, the freeze leaves the gap where it is. oil is still under $30 a barrel.
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>> and below where it was a week ago. >> something else was they had seen production come offline. not nearly as much as you would have expected. in fact, here in the united states, shale is still coming out more than 5 million barrels per day. there have long been predictions. we haven't seen it that much. >> i think the fact we're seeing these kinds of headlines and the price of oil is up 30 cents tells you where the market is. all right. here are more of your top stories on this tuesday morning, including another nice rally for chinese stocks overnight. china closed higher, extending monday's rally. the shanghai composite rose more than 3%. japan's nikkei closed marginally higher after yesterday's big gain. by the way, we'll have more on china and why it matters to you and your money in a few minutes. those moves did not help european stocks. every major market there in the red right now. yesterday in a speech, mario draghi said the ecb is ready to act and could ease policy further in march. draghi suggests policymakers
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will look at risks from weaker emerging market growth and evaluate whether lower crude prices and market turbulence could derail the ecb's efforts to boost inflation. perhaps the ecb and opec should get together and have a combined meeting. meantime in corporate news, apollo global reportedly close to a deal to buy adt. apollo would buy adt and merge it with another security company it already owns. no price tag reported yet, but adt is valued around $10 billion. and if you own shares of miner anglo american, your payout just got cut. the company suspending its dividend after posting a nearly $6 billion pretext loss in the most recent quarter. the company also announcing plans to sell as much as $4 billion in assets to try to turn that business around as it struggles through a major -- you might have heard about this commodity slump. >> just a little bit. although, commodity prices picked up overnight and in the last two days. in the meantime, let's get you up to speed on a couple other
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markets. checking again on the futures. big gains for this morning. dow futures are indicated up by 176 points above fair value. you should bear in mind that the markets, even with the big gains we saw on friday, the dow was down by 1.4% for the week. s&p futures up by 20. nasdaq up by 57. take a look at oil prices once again. the energy prices up by about 1.5% if you're looking at wti, sitting just below $30 a barrel. let's take a look at treasuries. the ten year really saw a massive amount of action last week. you saw the yield on the ten year slip as low as 1.53%. it's rebounded, still well below 2% at 1.757%. take a look at the currency markets. this morning the dollar is down across the board. you're still looking at the euro right near 1.12. dollar-yen at 113.78. and gold prices, which have been on fire lately, are down by $27
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this morning. that's a severe pullback from that risk trade that had been on last week. right now down by 27.30. we'll get back to the markets in a moment. the other big story over the weekend, the death of supreme court justice antonin scalia. the court vacancy has already sparked a battle between the obama administration and senate republicans. john harwood joins us with more this morning. >> reporter: this is a fight that's going to play out on at least three levels. first is the constitutional level, where it pits president obama against mitch mcconnell, the senate republican leader. president obama reasserted over the weekend his constitutional responsibility to negotiate a successor to antonin scalia and have the court up to full strength with nine. mitch mcconnell asserted his constitutional authority not to act if the senate chooses not to act. the question is, can he sustain that position throughout the year under political pressure from the administration? the second venue for this fight
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is the presidential campaign trail. we saw republican candidates all urged the senate leader not to move forward, not to affirm an obama nominee. there's a lot of pressure from the republican base not to do that. ing hillary clint-- hillary cli opposite view, of course. she said it would be disgraceful for the senate republicans not to affirm a nominee. everyone noted that justice anthony kennedy was affirmed unanimously by a democratic controlled senate in president ronald reagan's last year. the republicans are saying in an election year we shouldn't do this. finally, it's going to play out on a human level once the president announces his nominee. you can bet he's going to try to pick a consensus choice, one with broad appeal to republicans, like a couple of appeals court judges approved unanimously. sri srinivasan is one.
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jane kelly from iowa is another. we're going to have to let this settle in and see how the politics play out. you can't assume that either side has a position that's going to prevail at this point, guys. >> john, i thought it was interesting, "the new york times" has a story that takes a look at what justice scalia had written about what he had said he might like to see in one being chosen as his successor. we talk all the time about diversity. he said he'd like to see someone who hadn't gone to harvard or yale, someone potentially from south, and maybe an evangelical because there's not much representation on the court from any of those constituencies. >> becky, we have a court right now with six catholics, three jews. there are no protestants on the court. there are no evangelicals. justice scalia talked about tall building lawyers and the insular world of people who had gone to elite law school. that's a point that's well
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taken. we'll see whether president obama goes in that direction. of course, president obama is someone who comes out of harvard law school, and people look to those that they know and are most familiar with. jane kelly, the appeals court judges i mentioned from iowa, she was a harvard law school classmate of president obama's. >> john, it's michelle. let's say somebody doesn't get put on the court and you end up with some 4-4 decisions. it's my understanding that doesn't necessarily mean that you don't have a result. it just falls back on whatever the appeals court had decided, right? so it's not like we're hanging in some unknown abyss. >> exactly right. it lets stand the appeals court ruling, which in some cases, as in the case of public employee union rights out of california, would go the liberal direction. others, like the appeals court ruling that would hold up president obama's clean power plan, would go in the
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conservative direction. but those rulings would not have presidential value. it means they can come up again in different cases and be reargued for the court. so it delays consequential supreme court decisions, doesn't necessarily mean they're put off forever. >> the court started with six. it went up to seven, then eight and nine in the 1830s. it added a tenth, john, but this could alter the kinds of cases the court chooses, correct? >> you mean over the next year? >> yes, exactly. there's thought maybe they'll back off the most controversial cases because they don't want to have it come down to a theoretical tie. >> yes, exactly right. so again, democrats are going to portray this as something that would be another sign of government dysfunction, that it would prevent the supreme court from doing its job. republicans are going to argue not that big a deal. we can wait a little bit for the nominee.
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ultimately, it's going to come down to public pressure. the administration will make a two-fold argument. one is republicans don't want to make government work. this is akin to the government shutdowns that we've been through in budget disputes. the other argument they're going to make is everybody's going to raise the temperature. we've already seen that on the trail. ted cruz yesterday was saying we're one justice away from losing our fundamental freedoms as americans. he's going to try to rile the republican base that way. democrats are going to say republicans are holding this up because they want to take away your rights to an abortion or to gay marriage. the question of whose base is more energized by that and who can make a crucial difference politically is one that we're just going to have to see play out. >> john, people wonder for it makes a huge difference if this seat is filled very quickly or not. scalia himself made the swing vote that decided the president's climate change bill was a step too far.
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that's something that happened just in the last week. so if you wonder about the influence that's there, certainly did have a major impact. >> absolutely. and we've got a court that has a soft -- or had a soft conservative majority. you know, five conservative justices, four consistent liberals. this poses the potential for a real change in ideological direction on the court. that's what is fueling the opposition of republican presidential candidates and so far republican senators behind mitch mcconnell not to affirm. >> john, thank you very much. we'll talk to you again very soon. >> i don't mean to startle the control room, but just crossing the wires, reuters is quoting a senior iranian official saying iran is willing to discuss an output freeze once its production has reached presanctions level. >> that's a caveat. once we're back to where we want
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to be, we'll consider it. >> if we can add a few more million barrels a day to the market, then we're happy to freeze at those higher levels. this is just a confirmation iran wants to keep pumping more oil. >> all right. let's talk about the other big issue moving the markets. china rallied into the close, still remains a major fear factor for investors. chinese chairs among the world's worst performing this year. year to date, shanghai is down 19%. shenzhen is down 22%. hong kong down 12%. concerns being fueled by potential economic crisis, near of further devaluation of the yuan is still to come, even though today the chinese central bank let it strengthen more than it has in a decade. joining i first, let me ask you about today's action. what do you think it signals, if anything? >> we've been talking about this for a long time. they're not looking to devalue
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in the near term. they're not looking to allow massive depreciation. they're trying to signal stability and they have a real plan in place. so the idea they're trying to send a message to markets is really what's going on here. they're trying to say there's going to be stability and we'll make sure people understand that. >> what makes both of you interesting this morning, i think, is that you have a very contrarian position to people like kyle bass and george soros, who have been explicit that the chinese will be forced to devalue despite having 3 trillion yuan worth of reserves. that's not going to be enough considering what the economy is facing. you think actually it would help them to let the yuan strengthen, that it would help the economy. how? >> yes, actually what china needs is a lot of people have said this, it needs to shift from a dependence on exports and investment to a more consumer-based economy. i think that's one of the
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reasons why china's central bank has been very supportive of it over the past year. a lot of people are out there, they're howling about that it's inevitable that it will have to devalue because of the debt problem in china. what they're missing is that the bear case -- and aye been as bearish as anybody about china, whether it's the stock markets the property market. but the bear case was always that to draw a comparison with japan in the 1980s, and japan had a massive slowdown in its economy, had a property in stock market bubbles that popped. it did not have a currency crisis because it was a structurally surplus creditor country. and this is -- now, a lot of hedge funds are treating this like it's the asian financial crisis, debtor crisis. it's not an emerging debt market debtor crisis. it's a different kind of crisis with a different kind of solution. >> do you agree with that? if you let the chinese currency
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strengthen, the chinese population has more buying power, and therefore you help build up this path to a more consumer-based economy. >> absolutely. by keeping it strong, you're putting purchasing power in the pockets of households. if you want to switch from investment to consumption, this is one of the easiest ways to do it. this is something the pboc has been pushing for several years now. >> i never thought about it before until i was reading the notes over the weekend. the idea that if you are a creditor nation, you don't want your currency devalued. we devalue currencies so you can pay back your debts at a much cheaper price. that completely is the opposite problem of their situation. >> the problem china has right now is that capital is freeing the country. and that's why there's downward pressure. the reason why capital is fleeing the country is because of a failure to rebalance, a failure to make that shift. so they don't want to -- i mean, let me be very clear here. i'm not predicting what tchina
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will do. i'm saying what they should do or what they don't necessarily have to do, which is devalue. they may make a policy decision. they've been sending a lot of mixed messages about shoring up. they're hearing a lot of mixed messages, whether it's coming from imf or treasury. they're under a lot of pressure to float the currency as some kind of market solution. but i think what that ignores is the need to unravel the past intervention in the currency markets that have created a lot of global imbalances. >> i think we forget china is a very poor country. we treat china like it's a global super power. the average income is about $25,000 a year. >> second biggest economy. it's just per capita. >> there's just a lot of people. they're not producing a lot of valuable output. some of that manufacturing, the risk is -- and this is the idea behind bass. if the rmb goes up, we're going to see more manufacturing leave
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china. we've already seen manufacturing leave china, laos, cambodia, myanmar, et cetera. that's going to put downward pressure on the overall economy. $3 trillion, while it sounds like a big number, it's not that big when you factor it up to private sector debt. >> this transition you're talking about is called restructuring. it's what the chinese say they need to do. >> but history says will take generations. >> absolutely. >> we're pretending china is going to do this in a decade or two. it took the united states 100 years to become a first-world economy from a manufacturing economy and 100 years before that to become a manufacturing economy from an agrarian economy. >> when you start talking about kyle bass argument, there are certain things taken as presupposition as fact. these numbers don't work. second second, you have an imf number
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under which you have a crisis level. there's no reason that number is right. all of these things are arbitrary. it doesn't mean their economy is not slowing or in trouble, it just means they have far more fire power than a commercial banking system has. i think that's where the analogy goes flat. >> i think it's important to make the distinction between the domestic debt situation in china and the bad debt situation, which is internally funded. there are a lot of losses there. it's going to drag down chinese economy in significant ways. but the exposure is not to foreign debt, where countries run into currency crises is when they owe a lot of money abroad and the dependence on foreign financing. china is not in that circumstance. >> all right, guys. provocati provocative. thank you so much. >> great to be with you. >> we're going to take a break. first, if you went to sleep early last night, you missed "uptown funk" winning record of the year at the grammys.
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we'll have more of the big winners coming up. . >> coming up, could be a good start to the trading week for your money. futures indicating a higher open helped by a rebound in china and a slight turn higher for oil this morning. also on deck, the market strategy session for you and your money.
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xfinity lets you download your shows from anywhere. i used to like that song. welcome back. 6:21 a.m. here on a tuesday morning. nice to have you with us. it was a nice little rally for china stocks today. the shanghai composite rose more than 3% overnight. japan posted a very slight move higher. nikkei, though, still down 15% this year. oil getting a little bit of help this morning. four opec members reportedly agreeing to freeze output, not cut supply, but freeze output. that's an important difference. we're going to dig more into this in a bit. all of that is helping u.s. futures and your money this morning. take a look at where we are trading at this hour. we're seeing the dow jones with an implied open of 175 points. apparently everything is just fine. joining us now, david joy,
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ameriprise. what a difference 48 hours makes. last week things were dire. now we have oil catching a bid. china seems a little better. what's your take on how to strategize and invest for the rest of the year? >> well, you raise a great point. if you had stopped paying attention on thursday, you would have thought that the world was ending. we hit a new low in stocks and low on oil for this cycle. all of the sudden things have changed. i think the market is kind of grasping at straws here a little bit. we did get some decent information. okay, we got a little freeze. i'm skeptical that means that the bottom has been put in here. china came back online after some soothing comments from their central bank governor. so that calmed things down relative to the yuan. so, you know, the worst possible news has been averted here. i'm not so sure that's up to a sustainable, durable rally. >> when i think about your
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clients, i think about the fact most are probably more retail-type investors. maybe they own a business. they don't want to talk about mario draghi on the people's bank of china. they just want to know, is microsoft or ge or ibm or whatever it is going to make them money over the next ten years. is the u.s. stock market right now at this price a good place to invest? >> yes, i think it is. there's been a lot of damage done already. i think there are some real opportunities emerging in certain sectors. i would put energy in that group. i'd put financials in that group. even consumer discretionary stocks. those are parts of the market where i think for the long-term investor, you'll do well. and you're absolutely right. our clients don't really want to know about the ecb or boj. what they want to know is this 2008 all over again? obviously from our point of view, it's vastly different. this is not the same kind of
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scenario. we've seen a lot of deleveraging, particularly in the u.s. markets. we do think for the long-term investor, this is something of an opportunity. but i would caution if you do have cash, i would scale back into this market over time. i don't think the developments of the last 48 hours, as i say, represent a durable rally. i do think there are some opportunities. you'll get rewarded eventually. >> how do we explain a 13% drop for the nasdaq just this year? that's a big decline, david. >> yeah, and it's somewhat puzzling. it almost feels as though a switch was thrown on january 4th when we all got back to work. what changed? i think what changed really is that as you look out over the course of 2016, earnings expectations have consistently been lowered. all of the sudden now you look at where valuations were in the market to start the year and you say they don't add up, something has to give, prices need to come
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back down until we see some stabilization in the earnings outlook. so markets have recalibrated. they're a little more attractive now than they were. i wouldn't call them cheap across the boorard, but in certn sectors, there is some cheapness. >> if you had cash to put to work right now, you wouldn't dive in head first but scale in slowly. so you still think we could go lower from here. >> yeah, i do. i don't think we've seen in kind of washout, evidence of a washout in this period of volatility. we haven't seen a big blow off to the downside with high volume. we haven't seen a real spike in volatility. >> it's been drip, drip, drip water torture, right? day after day after day. >> exactly. and it's been very debilitating to the psyche of investors, but we've been through these kinds of things before. we'll be fine. i think you do need a washout event.
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i haven't seen evidence of that yet. >> all right. got it. thanks, david. >> you're welcome. >> when we come back, we've got some media stories getting buzz this morning. big winners at the grammys. plus, "deadpool" dominating the box office. and problems with kanye west's new album. we have those stories next. as we head to a break, a look at last week's s&p 500 winners and losers. e*trade is all about seizing opportunity. and i'd like to... cut. so i'm gonna take this opportunity to direct. thank you, we'll call you. evening, film noir, smoke, atmosphere... bob... you're a young farmhand and e*trade is your cow. milk it. e*trade is all about seizing opportunity.
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welcome back, everybody. right now it's time for the executive edge. if you went to bed early last night, you missed a grammy's showcase that was filled with mostly hits. rapper kendrick lamar brought the energy level up with his performance. he was nominated for five top awards and won best rap album. taylor swift took home album of the year for "1989." lady gaga put together a memorable tribute to david bowie, melding ten of his songs into a psychedelic sing along. and adele returned to the grammy's stage, but her performance fell a little flat as her audio cut out for a few seconds at the beginning. it's always the audio. >> still sounds awesome. >> the tv always works fine. >> given it's the grammys, that's not a good trade. >> no, exactly. >> we need the audio for the grammys. it's pretty much all we are. all right. movie audiences didn't want romance at all this valentine's
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day weekend. they wanted action, violence, people in full body costumes, and four-letter words. "deadpool," the superhero movie starring ryan renynolds, topped the box office with $135 million. that topped the best debut ever for an "r" rated movie. it's also the biggest opening weekend ever for 21st century fox. >> who would have thought? >> yeah, not me. >> it helps ryan reynolds. he was having a cold streak there. "deadpool" is back. take the kids. don't, don't, don't. >> no. speaking of "star wars," filming on the next installment in the franchise began in london yesterday. disney has announced two new cast members for ep soed 8
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roimds. laura dern and benicio del toro. details about their characters aren't known. episode viii is set for release in december of 2017. >> and listen up, kanye west fans. the rapper says that his new album will never, never, never be on apple, and it will never be for sale. i think he means discount on sale, not on sale itself. kanye tweeted that the album will only be available on streaming service tidal. by the way, that's a venture he has a stake in. the album was originally available for sale as a download from tidal, but the rapper changed his mind and removed the ability to download it, but not before some users already paid for that privilege. the album is still available for streaming and tidal is working to resolve the issues for customers who actually paid for a download but never got it. >> i wonder what the economics are there that he suddenly changed his mind. >> you saw stuff over the weekend that he was saying he was $53 million in debt or something. >> i did not see that. i'm shocked. >> page six. >> he said that was the
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investments he's made in his company. he actually tweeted out something to the effect, i can still buy my family houses and furs. >> there you go. priorities. >> then he tagged mark zuckerberg in a tweet and said, why don't you invest a billion dollars in me, i've got great ideas in arts and culture. so he sort of went fishing. did you get my tweet? i asked to borrow 20 bucks. >> i missed it. >> can i borrow 20 bucks? >> at least that's what he's claiming. >> coming up, plenty of fed speak on today's calendar. we have a full rundown of the events that could move the markets. then, fast company unveiling its list of the world's most innovative companies. there's a social media company that made the top five. so did a retail pharmacy. we'll dig through the list. that's coming up next. right now, as we head to break, a quick check of what's happening in the european markets. as you can see, they're mixed. the ftse is higher but not by much.
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all right. time flow for your squawk planner. there's still lots of data on the american calendar, including reports on housing, inflation, and the minutes from last month's fed meeting. today look for the february empire manufacturing survey at 8:30 a.m. eastern time. and the monthly sentiment survey from the national association of home builders at 10:00 a.m. several fed officials are speaking throughout the day. what's new? fed officials speak every day now apparently. philadelphia fed president patrick harker, new minneapolis
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fed president, and the boston fed president all on slate. and earnings get interesting a little later on this week when we hear from retailer, including one you might have heard about, called walmart. they're popping up in a town near you. >> and a multibillion dollar takeover deal just announced. security firm adt will be bought by apollo global management for $42 per share. adt will then be combined with protection one. the combination will be operated urn under the adt name. adt does have a 40-day go shop period in which it can seek out a better deal. you can see in the premarket action what a huge move that is for shareholders. a gain of 44%, almost 45%. >> yeah, okay, that'll get your attention. >> right. almost back to the highs of earlier president year. >> fast company unvailing its list of the world's most innovative companies.
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joining us to take us through picks is the editor of fast company. thanks for being here today. >> thanks for having me. >> let's talk about the criteria. what were you looking for? how do you rate these companies, and how do you decide? >> our reporters spend thousands of hours going through companies all around the world. there is as much art as science in putting this list together. we're trying to identify companies that represent the trends that we feel like are defining the economy right now. >> we're going to reveal the lest in a moment. just to walk people through the first three. buzzfeed, facebook. those two don't surprise me. number three is cvs health. i want to hear why cvs health winds up at the top of the list. >> sure. part of the reason is because of their courage. they made the decision to stop selling tobacco-related products, to focus themselves on the idea of health. it's aligning them with their customers, with the customers
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they want to get in a long-term way. it's not a near-term help to their bottom line to stop selling a product they were making a lot of money on. >> some people say it was maybe a billion-dollar hit to the bottom line in terms of sales. >> in trying to differentiate themselves from other retail stores like that, it allows them to do that and attract a different kinds of audience. this is defining what the mission of this company is. it's a kind of innovative approach we embrace. >> let's jump back to the number one company, buzzfeed. why buzzfeed? what did you see there? >> well, buzzfeed is redefining and shaking up the media and news business across the globe. they have now more than 50 billion views a month, more than half of them are video. what really defines them is a pace of change. they have used data to identify stories and to move those stories to reach readers in different kinds of ways, through different channels, in a much
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more sophisticated way than anyone else is doing. and they are more than that, even more they have created a culture of learning. the company is consistently changing. there's a cadence of change inside the operation. to give you an example, buzzfeed motion studios, their facilities out in los angeles where they do most of their video, the teams change every three months. every three months, everyone has a new job and works with a new team. that's by design throughout the company. >> we should probably point out our parent company nbc universal owns a stake in buzzfeed. but how much of this is central to one or two driving people at the top? >> well, jonah peretti, the ceo and founder, is the inspiration for all this. he does drive a lot of this change. he is restless in this way. but he's surrounded himself with a team of people who are all buying into this, this kind of change i mentioned of changing the job every three months. everyone there is aware of it. everyone there is on board with it. and this idea, this cadence of change, this is something that
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is a thread through all of the many, many companies on this list. >> the lead videos on buzzfeed video right now, just looking here, bearded women kiss their boyfriends to show them how it feels, porn stars teach couples secret sex moves, if going to the drive through was a dance party. that's a sponsored video. >> news you can use. >> that is changing the world right now. >> but where are you looking at that? buzzfeed.com. which by the way has more traffic than thenewyorktimes.com. >> you can see why. >> we all use buzzfeed. we love jonah. i'm just saying, if we look at companies changing the world, shouldn't they also be doing -- i don't want to say something of value. >> like taco bell. number ten. >> they are changing the world. >> i think you're missing the larger point here. first of all, the amount of people that buzzfeed reaches on their site is a fraction. what they're doing is reaching out and using other channels in
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ways that i believe nbc and others would love to be able to have the same sophistication. >> but you say i'm missing the larger point. is there a larger point? is there a larger point, or is it just that people like to look at stuff that's easy and fun and entertaining? >> the dialogue of the future is happening on buzzfeed. you may want to think that it's happening in other places, but if you're not paying attention to what's happening on that channel and the reasons they're connecting with people, then you're missing out on the trends of where our world is moving. and that's the reason that they're there. >> taco bell, number ten. my favorite fast food chain. all of these are very technical companies in some way. they're almost all internet based, even cvs health. >> thaco bell is there because they're changing at a pace in the same way buzzfeed is. every three weeks they're coming out with new products. those products are test products at certain times.
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>> which is amazing because it's rice, beans, cheese, and tortillas. >> it's about a culture. it's about creating a culture inside an organization that matches the pace of change in our world. many companies are not doing that. >> and making new foods that do not exist anywhere. i'm going to go to mexico city and be like, may i have a quesalupa, please? no, it doesn't exist. >> robert, how many years have you been doing this list? >> for about eight years. >> in terms of the companies, just to michelle's point f you look at the want to ten, buzzfeed, facebook, uber, netflix. looking at some of the companies that are long-time established, other ones that are new companies, how much staying power do the companies on this list have? >> if you look at this list year after year, each year there are a handful of repeats from the year before. five, six, maybe seven companies repeat year to year. and that is absolutely by design. if this is a list about innovation, we need to be
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finding and presenting new companies that are doing new things. >> so it's hard to keep ripping up your company and reinventing it. >> some companies -- innovation does not happen in a straight line. we all have moments where you accelerate faster. other times you accelerate slower. it's recognizing that is the pace of change that is a reality for companies to achieve. some companies, facebook, amazon, apple, they seem to have that pace. other companies catch pieces of it at times. we all need to try to get that pace if we're going to be able to continue to compete at a very high level. >> and you know i'm looking at this list here, guys. buzzfeed, are they new york or california? >> they're both. >> facebook, california. cvs health, rhode island. they're northeast. uber, california. netflix, california. amazon, seattle. apple, california. black lives matter, i'm not sure if they have a central headquarters. and thaco bell is kentucky.
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the point is, california still has it. >> there is a certain culture in silicon valley. >> are we falling behind on the east coast? >> not necessarily. buzzfeed started out of new york. they're in new york and los angeles. there's a lot of tremendous change going on in new york and in other parts of the country. >> don't forget, rhode island and kentucky on the list. >> rhode island and kentucky. >> that was fun. thank you. >> thank you, guys. thanks for having me. >> coming up, this morning's big currency move. the yuan hitting its highest level of the year against the dollar. huge intraday move, one of the biggest moves we've seen in a decade. and take a look at oil. it's well off the highs of the morning. we'll talk about the currencies and oil. more coming up next. later, we have the ceo of h&r block. he says the risk of identify theft with tax returns is higher than ever. how to protect yourself against hackers. ♪jake reese, "day to feel alive"♪
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big move in asia overnight. the chinese yuan touching its highest level against the u.s. dollar for the year. take a look at the chart. china's central bank strengthen more than it has in a decade. joining us to talk more about what happened and what impact could it have is manner of fx strategy and a cnbc contributor. it seems to be so arcane to talk
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about moves in the chinese currency. when we see it devalue twice it threads turmoil. >> second largest economy in the world. it's interesting. i think they are playing a game of chicken with the market because ultimately i think everybody fundamentally analysts believe yuan has to weaken. if you look at the latest trade data the exports were down by 20%. they really need to have a weaker yuan at this point but can't afford it because if they make a weaker yuan market will think there's capital flight and it's going to create more turmoil. >> we should highlight for the viewers and i'm sure you were watching at 6:00 a.m., we had two guests on who were firmly convinced they should let it strengthen because that will help the chinese consumer when it comes to purchasing power and if they are trying to do the shift in transition to a consumer based economy that would be the smarter move. >> it's an interesting argument. with oil price sos low the
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chinese consumer has gotten a tremendous boost in purchasing power. but hard to imagine that the chinese economy with a $5,000 purchasing power cab consumer driven economy at this point. >> bingo. that's the point i made. >> and you're always right. >> no i'm not. but $5,000 a year is not a lot of money. >> you can't squeeze blood from a stump. >> we had very high-profile statements from people like george soros that their world view is like yours. how expensive is that trade to put on? it must be very expensive. >> it's very expensive. first controlled currency. it's expensive and a negative carry trade. all of them are making the same kind of bet that paulson made during the credit crisis. it's expensive and you have to pay your dues but when the bottom fell you got paid out
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huge. they are betting on a 20%, 25% devaluation of the yuan. >> it would have to be that big. >> for sure. >> do you think they are short the physical currency because to your point it's a controlled currency. china can retract almost from the market if it wants. it could hammer them if they were physically -- >> very hard what they have. they have contracts with counter parties. maybe they have some offshore -- it's hard. they clearly are making a very clear call that this is unsustainable and if you look at their track records their track records have been good. i'm on their side. >> how about this question. the guests at 6:00 were smart and made a good case and suggested if it were allowed to free flow it would go up meaning the chinese currency. they said let it appreciate. i'm going to ask you. if the chinese currency were thrown out in the global markets without any kind of fixed range what would it be.
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>> it would come down. >> what's the natural level? >> it's hard to say but the consensus view is somewhere around 20%, 25% lower because that's where it needs be to rebalance the economy and reflate their trade picture. >> imports and exports. >> you constantly forget china is not as great import nation. china imports about $125 million of u.s. products a year. most is literally waste and scrap. 125 billion sounds like a lot of money. it's the gdp of arkansas. that's. how much they buy from us. >> different mentality of the chinese consumer versus u.s. consumer. you can't turn a chinese consumer into a u.s. consumer overnight. >> give them ten credit cards you can. >> there you go. >> boris, thanks for coming in. when we return the impact of
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boost slumping sales of it? we'll head to the international toy show to get some answers. second hour of "squawk box" begins right now. >> announcer: live from the beating heart of business, new york city, this is "squawk box". welcome back to "squawk box" here on cnbc first in business worldwide. i'm becky quick. we do have a developing story. major oil producers agreeing in theory to freeze oil output levels. we should take this with a huge grain of salt. this is russia, saudi arabia, qatar and venezuela all saying they will freeze if other countries do the same. that is a big if. wti is reacting but only up by 44 cents. a gain of 1.5% to 29.88. also playing out what we've been seeing with the futures because obviously as oil prices have gone higher in recent months,
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you've seen futures follow. dow futures this morning are up by 200 points above fair value. s&p futures up by 23 and nasdaq up by 65. here are the other stories investors will be talking about this morning. security company adt being bought by apollo. apollo will pay 42 a share for adt and combine with it protection one. a company that it already owns. apple pay is live in china. the fifth country for the mobile payment service. apple pay went online today for customers of the industrial and commercial bank of china. a big chinese bank. 2015 was a great year for airline safety. according to the international air transportation association, not a single passenger died in a jetliner accident anywhere in the world last year. that compares to three fatal accidents in 2014, six in 2013, one important caveat to that data it does exclude zwroets
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have been brought down by criminal acts such as the germanwings flight, accidents only, guys. pretty big milestone. major markets in asia off to a happy lunar new year. year of the monkey. let's see how it's going. >> reporter: good morning. china coming out of a week long closure. a lot of people expect ad catch up to losses notably with japan down 11%. preemptively the chinese central bank governor basically gave assure jarances the yuan would weaken further. we got record trade surplus figures as well in the month of january and that means that china is running a current account surplus or taking more than they are spending out and alleviates pressure on the r and b to weaken further. last night we got confirmation
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that the chinese authorities pror -- are providing ample liquidity. 19 month high when it comes to money supply. talking to a few traders, there isn't a whole lot of volume in these rallies so they are not conviction trades. probably more short covering than anything else. same thing with japan. last week macro funds dumped out of japanese stocks. the weakness we saw the yen weakening versus u.s. dollar and more domestic buying than foreign buying because foreign funds have been selling into these rallies. one point i want to make to you guys and we should take a closer look at the chinese consumer this is something to trade off and someone you shouldn't discount because they bought 46% of all luxury goods last year and by the way the weekly box office take last week in china broke global records and surpassing any week in u.s. or
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canada combined. susan, stick around. we'll talk more about this. the u.s. markets are set to open after the long holiday weekend. joining us to talk about the weekend is david kelly. david, we tied this at the top to oil and this talk that opec might actually consider freezing its production levels right at these levels but there's a lot of caveats to this. futures are up 200 points. this is what happened in china when they came back from the new lunar new year and markets didn't collapse. they rebounded. japan up 7% after their weekend. so, what do you think is really moving? >> first of all, i think we're completely overdue for rebound. i call this is immaculate correction. earnings, interest rate prospects it just doesn't amount to the kind of correction we've seen. lot of equities around the world are cheap right now. if disaster doesn't occur on any given day i would expect the
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market to move higher. >> i like that immaculate correction. >> you don't know why it happened. >> people say we must be in a recession. no we're not in a recession. we're not even close for a recession. we worry about oil prices being low but fundamentally that's a tax cut for global consumers. it's not enough to justify this correction. >> do you think this is investor sentiment? we have seen some frightening things in terms of what's happening in china, in terms of whether it impacts us. the slow down in europe. >> there are uncertainties. trying to understand the chinese data, chinese economy is difficult. you have to secure self will the chinese authorities who have so much control over information flow and their financial markets and economy will they let it fall apart or at the cost of some increase in freedom stabilize things. i think they will stabilize things. on europe i don't see a slow down in europe. when i look at the pmi data, when i look at gdp -- because
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>> bank stocks have traded -- >> i know. i come from europe so i can say this. europeans see glass as half empty, americans see the glass as half full. the glass is three quarters full. europeans are frightened. >> gdp was down. >> the gdp is growing in europe. >> barely. they don't grow. >> but look all of us, all the developed world is in a trend long term very slow growth rate. like we're all sort of in our 60s in the economy and not going to grow that fast. europe growing at 1.5% is faster than its long term potential and, you know, the unemployment rate in europe has come down by 1% in the last year. you know they are growing fast. it's not fast. >> is point the entire wipe out
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of stocks over the last 45 or so days was a big cognitive convenient wealth funds selling stocks because they needed to raise cash because they want to make the painful stuff done at the beginning of the year to sort of have a little bit of a stored chest for the back half. >> sales are contributing to this but the single biggest problem is we don't have any interest among. retail investors. >> there was some uae headline that the uae may agree -- >> just like today. >> just like today. >> stock market at 2:00 in the afternoon went like this. soaring. apple went up about 3%. on an opec headline. apple shares went up 3% which tells me that that's not a human being, that's not mom and pop saying let's buy apple because opec will cut.
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it's an algorithm, a computer, a giant program and has nothing to do with the fundamental economic views. >> that happens in the short run and increasingly will happen in the short run in the past few years. long run it's about long term money. long term money has been sitting on the sidelines because of these fears. as the economy improves itself and earnings rebound, the federal reserve takes its time raising interest rate you'll see long term money come back in. >> we're all breathing a sigh of relief the asian markets opened after the lunar new year holidays and things went up instead of down. we're probably still at that long way before we can say things settled down. >> talking to a lot of traders and investors in the past few weeks no one is convince this rally will continue. in fact they are still piling on betts. shorts are still pretty healthy. more rotational at this point. no one believes the currency, the r and b is going to hold steady. they are still betting it's
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going to weaken. and the yen, people are looking oppositely so more weakness. there are calls for the march 14, 15th boj meeting we'll get more added stimulus given that big contraction we saw on monday in the japanese economy. >> david, the central bank susan brings up what the japanese central bank did not work. it did not work. the yen strengthened. have world central banks finally completely lost credibility? >> i think to some extent they have. the problem is they are focused on the wrong thing. they are trying to stimulate economies to low interest rates or negative interest rates. >> negative interest rates. >> what they should do, we have these enormous balance sheets. if they focus on stabilizing currencies in a coordinated way that would deal with so many problems. >> tell me the implications. if you think central banks lost
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credibility that's a completely different way to think about the markets than we have thought about for now nearly a decade. that changes things in a dramatic fashion. >> well, it's a few step process. first thing you need realize we don't need the drug. one we get over this idea yes the economy can grow even if the federal reserve isn't stimulating once we get past that the economy can do better. our mistake has been -- >> to michele's point you can be looking at rough waters between then and here as we try to learn to walk all over. >> used to be so easy, right? central bank x will stimulate buy. >> the whole point is that the central banks have not stuck seed in stimulating the global economy and move out. they are not going to help any more. they western helping in the first place. eventually people will figure out the global economy can grow on its own. >> markets are valuations that are fair game based on the economy -- >> great opportunity for long term investors to figure out
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what is mispriced in the global prix cash. >> central banks are trying to do all this stimulus package. monetary policy. software is killing human productivity and therefore this constant long term battle between central bankers and forces of productivity which are going to overwhelm humankind and never have four or five percent gdp growth ever again because technology for people's jobs will be replaced by one computer on wall street. >> if gdp was measured correctly it would add to growth. we don't need -- >> isn't it pressidepressing fo tuesday morning. >> if you have more productivity. >> i've he in they are been called theoretically sound. >> this is noted your father's global economy. it will not grow 3% or 4%. >> my point is why to central
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bankers continue to try to for the toish make that happen? >> of all the professions i can't think of one which is more doggedly insisting on something that has not worked. it's extraordinary how little reflection they do on this doesn't work. >> a coach could want a 75 yard field goat doesn't mean the kirk -- they can change the ball, change the strategy. >> david thank you for coming in. susan thank you. we should point out this is happening on a day when markets are up by 200 points this morning. dow futures up 200 points above fair value. we'll talk more about the markets. confirming next the supreme court justice. senate republicans vowing to block any nomination until after november to fill the vacancy lefted by antonin scalia. what it means for the race for the white house. time of the year again that we all love so much. it's tax season. h&r block ceo is our guest.
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welcome back to box. if you were just waking up dow futures are indicated up better than 200 points this morning. a gain of 204 points. s&p futures up 24 and nasdaq up by 65. top u.s. officials travel to cuba to sign an aviation pact
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that allow scheduled airline service between u.s. and cuba. the signing brings into an effect an agreement that cold war foes signed upon back in december. u.s. airlines still have to apply for permission from u.s. regulators to fly specific routes. in the sum engineer a decision will be made which airlines will fly from which cities. the death of supreme court justice antonin scalia setting up another major battle between president and senate republicans. joining us this morning, more to talk about scalia's legacy and what's hide for the supreme court is ben white. and george hicks served as a law clerk to the united states supreme court chief justice john roberts. george and ben welcome. george i'll begin with you. what is the next stage, the next two steps in the fight to find at that replacement for scalia? >> well, i think that when you
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think about finding a replacement for scalia, i think it's wise to understand that he really is sort of irreplaceable. he really was a legal titan. in general he really was a transformational supreme court justice and one of the most influential justices of the last century, really. he kind of changed the debates about the law and the way we think about the law. and really to those on the right, he really was sort of their ronald reagan of the judiciary and when you think about today all the candidates on the republican side trying to claim that they are the heir to reagan and this is 30 to 40 years after reagan i think you'll be seeing people talk about justice scalia in those same terms for 30 to 40 years to sko come. that's what's generating the conflict because he was so beloved by the right that trying to replace him will be a very
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contentious battle. >> in speaking of a replacement, george, there's bean natural assumption looking at press reports over the weekend that there's going rush to find a replacement, that the supreme court cannot and should not operate with eight justices. we know it began originally as a six justice court in the early days of the supreme court. how long could the supreme court operate with just eight justices? >> well i think it's not ideal but i think it certainly can function. the idea that it can't function with only eight justices is a bit overstated. the court does decide cases with eight justice when there's a recusal in a particular case and that's including very important cases and times when it's only gone with eight justices for a more extended period and that includes sometimes when a justice is out for medical reasons or there's a confirmation fight. and the court has survived and it decides cases and there's a
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number of different ways it can approach that. it can decide cases on narrower grounds, that has happened in recent past. it can make different decisions in the types of cases that it takes. so right now, until justice scalia's death, the justices -- it takes four votes to take a case, to hear it. and the decisions to take a case may have been mitigated by the idea that there might have been five votes for something. now that you don't have that any more you may see justices taking different types of cases that may not be the hot button 5-4 headline grabbing cases but will still be the type of cases that resolve unsettled law and are important for various sectors. >> ben, scalia is so beloved by the right. is there anybody that president obama can put forth that would actually get some kind of consideration before congress at this point or is this just -- they are going to fight this
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until there's another president? >> they are going to fight it until there's another president. it doesn't look like the republican controlled senate is going to consider any obama nominee. you've seen even republican senators who are up for re-election in 2016 in states that obama won and thinking about ohio, new hampshire, florida, some others, who have said he shouldn't even nominate someone. that's an indication that the republican party as a whole is unif unified in this strategy, we won't confirm anybody you send up even if it's a relatively moderate candidate. so, very clear republicans will not approve. the question is, to what extent do moderates in swing states take a hit if they don't have hearings and don't have votes, if democrats can say look you guys are blocking the constitutional process, you're
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nullifying the president's authority to nominate justices, so they are taking a bit of a risk but the bigger risk republicans in those swing states see is getting a primary challenge from someone on the right who says they are not tough enough on obama, they are not protecting scalia's seat so they are going with the idea that the base, republican base will reward them for protect scalia's seat and leaving it to a successor to obama. >> if it had been anybody else but scalia it wouldn't be a touchstone moment. >> absolutely. if it was ruth baden ginsburg or somebody on the left it wouldn't have bean touchstone moment. >> even somebody less right. >> right. we're talking about a conservative hero. one of the most influential justices of the last century, somebody who has, as george said, is very much the ronald reagan on the court for republicans. it would be an absolute abdication of republicans sort of responsibility if they were to just let obama fill this seat. i think the tension here is do
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you just say don't nominate anybody we won't even consider them or do you say look threat process go forward, you can nominate whoever he wants, we'll have hearings and likely we'll vote down whoever he puts up there. it's a risky play for republicans to absolutely stonewall this thing and not even consider a nominee. that give democrats a big opportunity say these are huge obstructionists. this is unprecedented. >> to that point, what does the administration do? what does president obama do? does he nominate somebody who is a moderate and say okay you guys are taking who in the past you unanimously voted to get to the appeals court or does he put up somebody to rally his base, who is an extreme leftist? >> he won't put up an extreme leftist but if he went that route like loretta lynch the current attorney general, somebody who would be more of a rallying cry for the left and somebody republicans could easily dismiss and say this is not the type of nominee that is
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a consensus nominee he'll opt for someone who could be confirmed in another scenario, somebody who is approved unanimously and in that way say republicans are being -- obje obstructionists. >> george, we got to go. there's a lot of long time republicans on the hill that still remember robert bork and may make democrats pay for that. thank you. coming up because it's never too early for booze news. if you think millennials drinking habits are limited to keg stands and shots, think again. the generation is reshaping nation's appetite for wine. that story next. as we head to break let's take a look at u.s. --
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>> you had to clarify. >> u.s. equity futures are indicating a higher pop. the dow could open up 200 points. china was higher. europe is lower. we care now about china. looks like a good open for your money. we're back right after this. know your financial plan won't keep you up at night. know you have insights from professional investment strategists to help set your mind at ease. know that planning for retirement
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loving this song. keep playing it. a new study shows americans aged 21 to 38 drink half the wine in united states last year. an average of two cases per person per year which doesn't even sound like that much. the group makes up 30% of high frequency drinkers. those who drink several times a week, more than half of the wine drinking millennials say they talk about wine on facebook. coming up like it or not it's tax season. h&r block ceo is ready for business. he joins us after the break to talk about earnings and the implications for these taxing times. we'll being right back.
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welcome back to "squawk box". 7:30 tuesday morning. good morning. among the stories front and center today a few economic reports are ready to kickoff the shorten trading week. we'll look at new york fed state of manufacturing. 10:00 a.m. eastern time we'll get the latest on home builder sentiment on the
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optimistic/pessimistic. third of all oil producers are at risk of falling into bankruptcy. according to a new study of more than 500 publicly traded companies of 175 with the highest risk of more than $150 billion in combined debt. check out shares of groupon this morning. they are gaining ground on news alibaba bugt a -- bought a 5.5% stake. groupon soaring along at $3.15. soaring. yes. tax season is here and our next guest runs the world's largest tax service provider. joining us here in studio is bill cobb. good to have you here. donald trump names you specifically, he says he wants
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to put h&r block out of business, he says the tax code is too complex. it says here in the notes that you don't like the fact that the tax code is complex. i don't believe you. i think you like it. it means people need to use your service when it's complex. >> here's the situation. the tax code now is 74,000 pages long. there are ways to simplify the tax code. weigh have ways we can simplify the tax code. there are five definitions of a child. some of this is silly. we have to train all these people. we have 80,000 employees. who do taxes. we have to train them all. there are ways to simplify the tax code. i think it's silly to talk about just ripping up a 74,000 page -- it is too -- it's too complex today to go to zero. what needs to be done is the government needs to figure out how they are going administer social programs because the tax code is the way you use -- >> i was going say now they are
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using to enforce different things. >> affordable care act, earned income tax credit, child care deductions. they go through the tax code because they know citizens have to interact with the government once a year and the tax return is the way to do it. that's the fundamental issue about the tax code. is that it's not about rates. it's about all the refundable credits that add to the complexity. >> you're in favor of that being stripped away? >> what i'm in favor of is having a serious discussion about the ways that we can continuously improve and simplify the code. i'm not in favor of going to the postcard. i don't think -- >> most americans, bill, probably wouldn't be either because the dirty secret that most politicians will never say, politicians like to say you're over taxed because most people believe they are, middle class net effective tax rate meaning
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post-deduction are at 50 year loss. if you make hundred grand a year, have two kids and a mortgage dr. >> see that's an argument. >> because stripping away the deductions would increase everybody's tax rate. >> i'm getting policymakers hesitate on, it's refund season. the refund is very important to most americans. it is their bonus. that's why we have two busy seasons. everybody thinks about april. you know when many of us go in and have our taxes done. it is really this season in beginning around the 20th of january through about now where people are running in to get their refund as quickly as they can. that bonus if you will of about $3,000 on average is very important. retailers it affects retailers. refunds have been delayed this year. retail sales are soft per >> not the only ones to run to
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get refunds also scam artists to claim it before can you. how big of a problem is it? >> increasingly it is a problem. we've been working with the irs on this issue. and it is really done by organized crime and organized countries where people are stealing identities and going in and filing a tax return. basic issue was the irs has very outdated systems. the social securitys is number is the only identifier for a tax payer. >> social security number is over used by every company that asks you. >> absolutely. what we're working on now in the public/private partnership with the irs all tax preparation companies are working together to try to come up with different ways, we're going the share information more, we're now taking suspicious returns that we see and sending the home the irs before we file them. we also have additional data elements so we're trying to fight fraud. but it is a race as you can imagine.
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>> will you build out your financial services part of the business. the average refund 3,000 bucks. somebody comes in they get a refund opinion your business, i would imagine is a huge opportunity in helping people figure out what to do with that money. >> yeah. >> don't go buy a new fur coat for $3,000. >> tax planning is so essential to helping people with their financial -- a lot of people don't have access to good tax planning. we launched a new brand called block advisers to announce the launch of that plan. it's more for complex situation. people say can h&r block do my tax. yes. we can do anybody's taxes. we wanted to get a brand and a service that has private offices year round service, tax planning as you mentioned so that people can come in. its called block advisors. it's open now. >> it's for more complicated tax filings or people with small businesses what's the target
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audience? >> small businesses, more complex clients. people who need tax planning who have a small business and want to figure out how to really understand the tax implications. >> and your infrastructure before that didn't speak to them? >> i think we could always do that but we didn't have a brand or a service directly intended for that. that's why we launched that president as we look at segmentation of various clients in the tax business. >> i heard the statistics before. maybe you know it. the small percentage of americans that actually file and i templi itemized tax record. we talk about take away the home mortgage deduction, simpson-bowles pointed this out small portion of americans go through the trouble of filling out itemized detucktion. >> half of people. >> half of americans are missing out on any potential deductions.
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>> that's why we're big advocates of minimum starteds for tax preparers. in 50 states you need a license to cut hair. four states you need a license to do taxes. >> you shouldn't need a license to cut hair. it's ridiculous. >> you should need a license to do tax. it's so important to your point on various ways you can save people money. >> to me you try to be a vested interest. >> we're in the help business, michele. even back when the company started in 1955 and tax code is relatively simple. people are afraid of the irs. >> they should be afraid of the irs. how many people come through h&r block every er? >> we do about 20 million tax returns. >> what type of complexity? >> about 13 million come through our offices and have situations where they sit down with a tax preparer, about 7.5 million do it themselves. we're the only tax preparer, we
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have a digital solution and an assisted solution. >> good to have you in. >> nice to see you all. >> good sport. bill cobb ceo of h&r block. >> coming up securing a deal. securing a deal. security company adt agreeing to be bought by apollo global but still has time to shop around. we got details on this tuesday. take a look where futures are trading. could be a good day for your money. dow up 200. china recovered. things feel better this morning. "squawk box" will be back after this quick break.
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welcome back to box, everybody. good tuesday morning. could it be a good tuesday for the stock market abuse futures are car itting a much higher open for your money. s&p, dow and nasdaq all indicating a gain in the open. dow implied an open of 200 points. becky, you're welcome. >> brian woke up this morning -- >> when the alarm goes off at 3:possible i need believe there's some psychiatrdoes psyc somebody. >> adt agreed be bought by
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apollo global. adt has a 40 day go shop period in which it can seek out a better deal. that stock is up by 52%. vodafone will be paying liberty global $1.1 billion to combine the he neterlands portion of th company. >> disney, its hong kong theme park lost $90 million in 2015. fewer visitors from china. i thought everything was fine in china. susan li said 40% of all luxury goods were bought by china. they are buying bags and not going disneyland. >> it's full of choice. >> if you upgrade and downgrades
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to talk about. qualcomm upgraded to an out perform from a market perform. largely a valuation call here. stock just got too cheap. stock is down about 9%. autozone upgraded to an out perform from a neutral. that firm says youautozone shou continue to do well. shares of anglo american rising after the firm announced it suspended its dividend after posting a $6 billion pre-tax loss in its most recent quarter. the company announcing influenza sell as much as $4 billion in assets to turn its business around. we don't see pre-market trade on the screen but we're seeing positive move in pre-market trading and could be more because of the issue of selling of assets rather than cutting dividends.
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outside of corporate world mostly a night filled with the hits at the grammys. lamar brought the energy up with a rousing performance of his anthem "all right." he continue for best rap album. taylor swift sang her latest single "out of the woods." lady gaga put together a people norable performance to david bowie. adele returned to the grammy stage but her performance of "all i ask" fell flat because our audio cut-out for a few seconds at the beginning of that performance. movie audiences did not want romance this valentine's day weekend. they were looking for action, violence and four letter words. "deadpool" tops the box office with 135 million. that's a record opening for an r rated film. and the best february debut
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topping "50 shade of grey." speak of "star wars," filming on the next installment in the sci-fi franchise began in london today. disney announced two new cast members for episode eight. details about their characters aren't known yet but episode eight is set for release in december of 2018. let's check in on the markets at this hour. oil -- >> who would you have on if you could have one person -- >> john millenkamp. >> you're scaring me. >> i will admit i was a bit of a
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stalker. he was here one time, remember when they had one of the primetime shows here, john mc mcenroy he brushed his teeth and i snuck in the green room and stole his tooth brush. >> we just made history here this morning. would you rock america. >> go to a pink house. >> let's talk about oil prices. >> wti is up by just over 2% this morning. you can see it's a gain of 64 cents. $30.80 a barrel. take a look at the futures. dow futures up by 200 points
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above fair value. s&p futures up by 23 and nasdaq up by 63. stick around, "squawk box" will be right back. in new york state, we believe tomorrow starts today. all across the state the economy is growing, with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. like in the hudson valley, with world class biotech. and on long island, where great universities are creating next generation technologies. let us help grow your company's tomorrow, today at business.ny.gov
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♪ the barbie brand has seen better days but mattel is trying to orchestrate a come back. margaret brennan joins us. it says you're at the toy fair but hire on set.
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>> we'll go the toy fair later. mattel is hoping for this come back for this doll that the brand has found a bottom. after eight straight quarters of double digit declines, mattel's most famous doll increased 1% last quarter, up 8%. contributing to the stock's 9% gain since the start of the year. so mattel has been retooling the 67-year-old brand to make the bomb shell more relatable. more eye colors, skin tones, hair styles. more body types, specifically petite, tall and curvy barbie dolls. using more tech. last year mattel unveiled a hello barbie. it as artificial intelligence. there's and an mated doll hostage that reacts to voice commands and a hover board being demode at the toy fair a remote
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controlled drone with barbie perched atop. it comes with a remote control that's pink and blue and all of this will be overseen by a new head, lisa mcknight. mattel is hoping that all of this will stoke demand and something analysts say will be crucial to toy maker's turn around strategy especially now that rival hasbro has taken over disney princess and frozen license which is estimated $500 million a year. >> does curvy mean overweight. >> she's more buxom. a little bit wider than your classic barbie doll. >> the original barbie doll had a tiny waist. >> is there a new ken? >> not yet. >> is he is like fat suburban dad? seriously. what does the new ken look like?
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does he have problems. does he need help in the bedroom? >> this is a family show. >> it is. >> how far seen the ken. >> cialis ken. >> they have been revamping -- i'll dig myself out of this. they have been revamping barbie specifically and then all of barbie's accompaniments. >> lipitor ken. that more pc. >> and tall barbie. >> there's a tall barbie. petite barbie. of all the barbies, fashion lineup. the barbie that's been demoing the best with girls is one that looks like katy perry and that's long blue and black hair. >> when they had the 1% sales increase for the first time in eight quarters. >> after eight quarters of double digit declines. >> is that u.s., all over the
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world? we talk so long about the emerging middle class in these bric countries. any overseas or here? >> that's a good question. i don't know the break down. that's globally gross sales for the brand. >> all right. good luck, barbie. >> and ken. >> and ken. >> thank you, morgan. my goal is not to be asked back. that's the strategy. i'm supposed to thoechlt. sullivan, just sleep in. grammy watchers and one nominee for a nonwinner monday night and that was cbs. took to twoirt complain about the network streaming app. cbs all access pop couldn't watch the early part of the grammys with some saying the site kept crashing. cbs said there was a brief issue verifying users location. it's aimed at younger view who are don't have a cable subscription. cbs offered a one week free
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trial to lure fans. i'm shock people on the internet would complain about anything. ken would complain but he can't reach the keyboard. >> speak of complainers -- that's right. check this out. north korean leader kim jong-un and his wife attend ad concert for scientists. north korea state-run television network released the video overnight. i want shows the audience applauding as a rocket launch video was shown on the screen. the state's all female pop group performed. krt said the concert was held on saturday during a welcome banquet for sign ticht, technicians and officials involved in that rocket launch. north korea launch ad long range rocket back on february 7th carrying what they said was a satellite. the launch sparked renew condemnation. >> it's so weird. look at that.
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>> i want to key kim jong-un barbie. he would be 6'4" and ripped and chiselled rather than the 5'2" rotund. >> he should be curvy. >> kobe your answer to curvy barbie. >> the cool thing about kim jong-un one guy in the world you can make fun of without any worry of repercussion unless you're in pyongyang. >> tell that to sony. oil prices on the move. four major oil players potentially will freeze output. there are some major concerns about the deal. energy experts will join us next. i think it landed last tuesday.
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happening now, four major oil producers agree to freeze output. did energy traders expect more. >> meet the model x and kick the tires while you're at it. new this morning, elon musk want buyers to get excited about the new tesla. he's pushing test drives in markets across america. attention james bond fans. one of the super spy's famous
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astin martin could be yours. details emerging from a big auction. "squawk box" begins now. >> announcer: live from the most powerful city , new york, this s "squawk box". welcome back to box, this is cnbc first in business worldwide. i'm becky quick along with michelle caruso-cabrera and brian sullivan. joe and andrew are off. if you're a bull things are looking up. dow futures are up close to 180 points. we were up over 200 points. s&p futures up by 20 and nasdaq up by 56. after some big gains on friday. oil prices have been helping things out. up 1.8%. wti back to almost $30 a barrel as we hear about this talk of four nations potentially talking
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about freezing their production levels at this point. we'll talk more about that in just a moment. check out the markets in europe at this hour. right now, things are mixed. the dax is down by .7%. france is higher, up fractionally, ftse in london is higher. apollo global is buying adt for $42 a share or about $7 billion. that stock trading at 41.15 getting closer to that $42. that's about a 53, 56% premium. apple music passing 11 million subscribers. up 10% from the figure mentioned on apple's earnings call a few weeks ago. alibaba is buying 33 million shares of groupon take a 5.6% stake. giving the stock a 12% move. but we're only at 3.24. this will make alibaba the
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largest stakeholder in groupon. >> few other stocks on the move. hormel posting better than expected revenue. pork producers decline. a mixed bag there for the spam maker. generac beating street estimates. mobile products to energy industry customers fell. company has retrenched. community health systems posting an unexpected loss for its latest quarter. the hospital operator's revenue falling short of street forecast. total hospital ad misses up 3.6% for the quarter. and baxalta topped estimates. it led gains in treatments. ge is exploring potential business opportunities involving oil and gas in iran. this follow as recent visit to the country by the ceo of ge oil and gas.
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meantime amgen's drug met its goal late stage trials. the goal is to reduce the need for red blood cell transfusions in certain anemia patients. >> deposition are insisting president obama's choice to replace supreme court antonin scalia get an up or down vote but republicans are vowing to block it. so the next president can fill that vacancy. hampton pearson joins with us the latest. >> reporter: the supreme court will operate with eight justice for the foreseeable future and given that's political battle between the white house and senate that could be over a year. when you look at the conservative versus liberal split absent justice scalia that means 4-4 ties are possible, even probable, especially in some of the hot button, hot profile cases on the calendar. if the supreme court is tied that means the ruling of the lower court stands but there is no national precedent. those cases also could be reargued at a later date. let's look at some of the most
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controversial cases and see how this might play out. fredrick versus california teachers association. lower court said employees have to pay union dues whether they are members or not. in this case a 4-4 tie would be a win for the public sploe unions. in zubik versus burwell it's a religious challenge to obamacare. this case has not been argued but in 2014 the high court did give some for profits an exemption. another case to look at whole women's health versus hellerstedt. this could affect abortion for decades. providing tougher standards for doctors. and u.s. versus texas. challenge to president obama's immigration plan that defers the deportation of 4 million illegal immigrants. lower federal court said the
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administration's action violated federal law. now those are just a few examples of some of the more closely watched cases this term. the issues waiting in the wings, voting rights and affirmative action. as far as what the justice might do behind closed doors we could see different types of decisions more narrowly focused. justice roberts, of course over to last decade has found lots of ways to surprise all of us from time to time. >> we keep calling this almost a situation where a lot of 4-4 splits could reign. but you're looking at 3-4 split in favor of the liberals with kennedy being the deciding factor. sometimes he sides with the liberals, sometimes he sides with the conservatives. that's why republicans are so up in the arms. >> you're right. it's a soft 4-4, if you will. as you said justice kennedy, of course, has been the swing vote. going forward. and that goes back to okay while
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the political battle plays out at both ends of pennsylvania avenue how does the court itself manage itself going forward? and that's what we're all going to find out over these next few months sfp. >> you understand why the senate republicans feel like they've dig in their heels here but the risk that comes with this, political wi political risk is they lose some swing states who voted for obama in the past. say president obama put up some moderate choice, people who have already been confirmed by the entire senate to get into the appeals court, if that's the case and they lose those seats in the senate, potentially lose the white house they could be looking at a different situation where a democratic president, if a democrat were to win would have their way with putting somebody in later. >> what this does is you now have the whole issue of electability coming in to focus because of the importance of the supreme court and it's not only electability of who is the next
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president but who has the power, especially, to control the senate. the supreme court vacancy, justin scalia's untimely death brings all of that info cuss because the supreme court choice is not only for life injustice scalia's case it's a generation. he was on the court for more than 30 years. >> all right. hampton, thank you very much. it was great talk towing. now to your other big story of the day and that's oil. oil prices right now are a little bit higher. we're seeing wti -- guess what. they just turned negative. they were up by 2% most of the morning, wti crude is now exactly unchanged and here's why that's interesting. down a penny. the last headline leading all the major papers cnbc.com, et cetera, russia, saudi arabia, venezuela and qatar may have agreed a prodiscussion freeze. that bid is wiped out. global head of energy analysis
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for the oil price information service and jack girard president and ceo of the american petroleum institute are with us now. tom, amazing. we get story after story this morning about a possible production freeze. not a cut, but a freeze. oil moves a little bit. now flat to even down a little bit. why isn't the market buying more into this story? >> i think, brian, it's because people recognize that getting those four parties together and actually have a production freeze is a little bit like getting johnny manziel and charlie sheen to pledge living clean lives for the next few years. so there's been very little effort or very little surveillance to enforce any freezes. i think you can expect that they are all going from duce willy-nilly like they have and it will take some time for the oil market rebalance. >> if they do freeze, let's say they do, are they not freezing it pretty much record output
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levels anyway? >> they are. they are freezing at levels where if the economy is hopping maybe we're producing 2 million barrels a day more crude than we need. if the economy slows down that could be 2.5 million barrels a day too much oil. the united states is going to have somewhere close to 560 million barrels of oil in commercial stocks this spring. we've been able to get by on one half that much for many, many years. there's too much oil. it's that plain and simple and they would have to cut not to freeze really to impact it. >> jack, i don't know if you knew this. i was in your office in d.c. great people. i appreciate you having me there. the idea, jack, steamed be this that okay let's say we get a headline not necessarily buying in to that headline because iran is this giant wild card sitting out there saying okay maybe we'll freeze when we get to pre-sanks levels.
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between iran and iraq does anybody have global control of this oil market now? >> brian, you raise a very good points and going back to tom's earlier comment that is if you read closely what they announced there's a number of contingencies in it and that's including how iran and iraq will react under the circumstance, will they agree, if you will, to freeze what they are doing? iran is now trying to get back into the market as a result of the agreement with the united states. so my guess is they are pretty anxious to move forward. the other thing i wouldn't overlook this is something we're focused on and we appreciate you coming by the office, always anxious to visit with you is what the united states is going to do in response. if you go back to just last week, the president proposed a $10 a barrel tax on the domestic industry. i would suggest that's absolutely the worst thing to do at this time to make us noncompetitive. the reason you see this shuffling taking place around the world is because the united
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states is emerging as a major player and a lot of our competitors out there such as saudi, russia and others are happy to realign and adjust what they are doing. the worst thing for us to do is to remove from us that competitive role and so we're focused on domestic politics trying remind the president, look, don't penalize the american producer and thus the american consumer, keep focused on what we can do as a nation, the market will sort itself out and hopefully demand will increase and thus happy stabilize the process. >> jack there's this view and seeing we've been trying report low oil prices mean low gas prices. inherently a good thing. there are hundreds of thousands of companies involved in the oil supply chain from consultants to trucking companies to pipeline companies. it's not just big oil producers that are getting hurt. what your hearing from your companies and even companies we may not think of as oil companies who are getting
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whacked? what are they telling you >> that's one thing we shouldn't overlook. when you look at oil and natural gas it's the foundation of our entire economy. you talk about energy efficient is , doing more with less. make our cars next to with lighter blastics. we impact the broader economy. we're hearing now as we all well know we're in a very challenging time. there's been thousands of people laid off in the u.s. so the worse thing for us to do is to make that more difficult. we're realigning the global geopolitics of energy. it's moving in our favor. it's moving in the american consumer favor. the last thing we want politicians to do is to mess that up. >> tom, last question to you. any reason to believe we'll have $40 plus oil by fourth of july? >> no, i don't think so. the last time we hit $40 it took about 12 to 14 years before we
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hit it again. solo oil prices for a while but higher gasoline prices, have to tell you that. they will be 30 to 50 cents higher. >> because of refinery issues. >> just annoying american people. >> a lot of grumbles. >> great discussion. have a great day. see you soon. when we come back, warren buffett plans to live stream the berkshire hathaway annual meeting for the first time this spring. we have new details straight ahead. first as we head to a break check out futures. they are still hire. but well off their highs. dow futures were up over 200 points. they are still up 176 point. s&p up by 17 and nasdaq up by 50. stay tune you're watching "squawk box" on cnbc first in business worldwide.
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>> yahoo! announcing it will live stream berkshire hathaway shareholder meeting. it will appear on yahoo! finance across all device and set to reach 75 million monthly users. the meeting will take place on april 30th. joining us right now is yahoo!
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finance editor-in-chief. this is just the news that they were going to be live streaming. caught a lot of people by surprise. for years berkshire hathaway said no video allowed, no tape recorders, anything you see you have to be there in the person. as a result they get 40,000 people to pile into the stadium. why did they decide to live stream. . >> not to speak for warren buffett. i got a call in december from warren buffett asking me as head of yahoo! finance to do this. i said why do you want to do this? he said i want to make it bigger. he felt he was tapped out especially last year was the 50th anniversary, 40,000 people went. i don't think they can fit any more people in the place. there's a lot of demand particularly from place like china, people can't go. he just wants to make it as big as possible. get it out there. >> you pay for the nfl, will you pay for this?
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>> no money changes hands at all. it's interesting you hear about people doing business with warren buffett and this is my first time doing it. do this, do that. if you guys can figure it out with 15 days fine. if not i'll go somewhere else. sort of like a hand shake over the telephone. >> there was a contract? >> yes, one sheet. literally one sheet. you guys stream it, don't screw it up. we'll give the wire. you plug it in. goes to a satellite you're done. easy peasy. >> you selling advertising? >> we can. we don't know how many people will watch it, right? >> i think it will be high. >> is it ten times 40,000, 20 times 40,000. >> becky, what do you think? you go every year. you're close to warren buffett. y >> what are the ratings going to be. >> internationally particularly. identify traveled with him to china and korea and to india and
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you've never seen crowds that swarm him there. >> like a rock star. >> oh, my gosh to the point they had to get security because they were worried about him getting crushed. >> nehe was insistent on doing this in mandarin. we're working those things out. again this, is kind of new ground for all of us. then we decided in europe we would just leave it in english. in india as well. i think you're right. but we really don't know. the stream itself will be completely -- the meeting is unimpeded. >> will it be like a cam during oktoberfest you have this wide view of seeing people moving around. what will we see. >> they record it now. basically we're taking their broadcast of it. >> you'll have about four and a half hours of warren buffett and charlie taking questions. what you'll see the two of them
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answering and responding. >> then we'll have a halftime show because there's the lunch break. we're talking to him about that. it's a lot of fun just trying to figure this thing without him. basically, i feel that he just really wanted to make this thing bigger. there was a story in the omaha paper will less people come it's a huge hit four tourism. >> it boosts tourism to omaha when they see a massive surge. more people show up than they can handle in terms of flights coming in and car rental. >> if you want to go to it live you'll go. >> i don't think omaha has nothing to worry about. if anything it might generate more interest at the event. i saw you walk by on the stream cam whatever. i don't think omaha has a reason to worry. >> i do not. not because of this, i don't think so. >> uncomfortable question, how is it going at yahoo!.
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what is it like going won all this consternation. >> yahoo! is yahoo!. there are a lot of smart people there working really hard. alibaba thing is complicated competing against facebook and google is difficult. i think they will figure things out. i'm an optimist and a lot of fun. i've been there one year and bean great ride. >> in terms of what happens with this weekend's coverage with the may weekend around omaha did he say why he chose yahoo!? >> i think because of the scale. we're really big. 75 million monthly users. then i think he kind of viewed us as switzerland that we are an independent company that way. this gets all close to our business, your business, bloomberg's business and i just felt like he wanted to go with someone -- the other thing that's very important. >> google couldn't live stream to china could it? >> i don't know about that. very important point, this is what was the deciding factor was
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the nfl game. when yahoo! did the nfl game successfully he said bingo. 19 million people saw that. so if we were able to execute that we should able to do this. >> there were some questions last weekend when you had super bowl, there was a cbs app. if you don't know how many people will show up how do you plan? >> we have this capacity. infinite capacity. i was telling brian i'm not a streamologyist. >> is that a real word? >> no it's not. >> it is now. >> technical people at yahoo! know about this. the problem with streaming not like tv. it didn't work. swell your dsl connected? know is your internet provider? there's so many different parts and elm are lals blaming. the nfl game went great. people complained. people a complained about the grammys last night. if you look into it it's not the internet company doing the
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streaming there are other things not working. >> you mentioned to do it in dman rhine at some point either live. you don't have the same issue with india. they have 15 languages. you'll do it in english. >> we decided two languages. everyone else either mandarin or english or you can't under it. >> it's a telling note to underline, first berkshire hathaway streaming event will be in english and mandarin. speaks to the moment. >> maybe somebody can translate later. >> you can sit in china and watch a live streaming broadcast of the berkshire hathaway annual meeting with translations live in real-time from a cell phone sitting on a plane on a runway and people want to complain. >> right. what your complaining about. thank you very much. >> a pretty amazing thing. but if it doesn't stream perfectly out come the wolves. >> you won't be able to answer this question but what if he says something negative about china, he could be asked about
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it. do they block it? >> not as far as i know. who knows. maybe implications later. >> thank you very much. >> good to see you guys. >> coming up want to drive through the streets like a super spy. now you can. james bond suspect terrify astone maraston martin is up for auction. we'll tell you how much it will cost you after this. here at the td ameritrade trader group, they work all the time. sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivatives pricing model, honey?
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>> coming up the james bond auction. plus a makeover fmonopoly. getting rid of cash. in new york state, we believe tomorrow starts today. all across the state the economy is growing, with creative new business incentives, the lowest taxes in decades, and university partnerships, attracting the talent and companies of tomorrow. like in utica, where a new kind of workforce is being trained. and in albany, the nanotechnology capital of the world. let us help grow your company's tomorrow, today at business.ny.gov
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♪ he ain't heavy ♪ he's my brother ♪ so on we go joy don't know why we're playing it. >> i do. jeb bush. george and jeb campaigning together. >> second derivative song, alex. couldn't we find something more uplifting. welcome back to "squawk box". now that we feel like weeping. here are the headlines. medical device maker stry kerch r is buying physio control. it's currently owned by bain capital. remember actual physical books. apparently consumers are remembering them as well.
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new data for from the consensus bureau book store sales rose 2.5%, that the first increase since 2007. at the same time sales of electronic books declined mostly due to a slump in the child's book category. >> you want real book for your kids. >> i wrote an article two years ago, i'm going back to cds and print magazines because i stopped reading. when everything is buried in my ipad i forget about it. just out the new york fed empire state index came in at negative 16.46. an improvement over the negative 19.37 registered in january. i don't know what those number mean but they are both negative. >> that music we were playing is because of this. george bush hits the campaign trail and audiotape pared with his brother jeb in a rally at south carolina. their first joint appearance since jeb announced his candidacy. >> i'm proud of his candidacy.
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i'm really proud to have been invited. i came here for two reasons. one because i care deeply about jeb. and two because i care deeply about our country. >> both george. w. bush and his father george h.w. bush carried south carolina in their presidential primaries. check this out. james bond sfans now have a chance to grab a slice of the super spy's fly lifestyle. spectre aston march incident is up for auction at christie's in london this week. it's expected to sell for between $1.5 and $2.2 million. the first time it goes on sale to the public. other memorabilia items up for auction from the latest bond movie the skeleton costume that bond wore and an 18 karat rose gold wrist watch. monopoly getting a make
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over. ditching cash for cards. eliminating paper money completely and instead using a mini atm to keep track of financial transactions. it's not the first time that hasbro gaming has tried to speed up the price of play. it can quickly scan each player's credit and chance cards. new version hits shelves later this year. i don't know how i feel about this. good to get rid of the paper money but i'm leary of change. >> we're old-fashioned. >> whole purpose of the game was to help kids count. now it's just automatic. always buy a hotel on baltic. >> buy property. every property you line on. >> leverage up. borrow everything. >> let's get back to markets. it's a holiday shortened trading week here in the united states but investors will get a handful look at stats, housing and jobs. we've been going back and forth
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all morning. what is the economy telling us right now first of all because the market has been up and down, thinking recession is coming, thinking things are okay. what your seeing? >> the market seems a little schizophrenia. when you step back and looks at the data the economy has slowed. it's running at a low 2% pace but it's not in recessionary territory. you're still seeing improvement in consumer spending, retail sales out last week show a pick up momentum early this year, housing activity is still accelerating. we'll see what the 10:00 housing index shows. should show builders are confident. manufacturing is in a recession, and that we see across a variety of indicators. we just got the empire manufacturing state survey. it moved a bit to more positive but still negative. still contracting. there's areas of concern, it's easy to tell a story how a lot goes wrong but based off the data right now it seems like we're still in a low growth
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environment. >> how concerned are you about what we've been sweeg the europe -- seeing with the european financials. concerns about whether or not china is growing enough. does that have big impacts on the u.s. or no or the chinese currency which we're so focused on today. >> these are the down side stories that are again easy to tell but are not a baseline. where can things go wrong? probably the biggest concern is if you have a freezing of credit. there's some signs that standards have started to tighten. if you look at the senior loan office survey lending standards tightened for commercial real estate loans. very modestly but starting to tighten. if that becomes more extreme and you see difficulty getting credit then you have a bigger slow down in the economy. >> there have been so many questions asked about the manufacturing recession would spill over into the rest of the
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economy. aside from what you just talked about are there other things you're watching to see if that's being approached? >> on the manufacturing side, so we look at the manufacturing ism as one gauge that is going to give you a big picture of the manufacturing environment. and it's in contraction territory but hasn't hit the level yet that is indicative of the overall economy going into recession. put that around 43 and it's hovering around 48. right now it seems the manufacturing downturn is largely contained, contained is a bad word to use. but largely in the areas that will be most exposed to what's happening abroad in oil. outside of that it seems like there's still some areas of growth. >> in term of the numbers that we're getting this week, what are the most important? you mention we get the new home building number a little bit later today. what else are you watching? >> i think more than the numbers it's the minutes out on wednesday.
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that's important. everybody is trying to understand from the fed officials where do they see the risks, how concern are they and how does that impact monetary policy. last week we heard from janet yellen who i think tried to explain the views out there, baseline is things are still okay. still continue with the normalization process. they have become more concerned about these risk scenarios. perhaps it will give us an opportunity to find out exactly what that looks like from the fomc. what are they focused on. are they focused on china or the good side of my is weakening. are they worried about the flow of credit. minor insight will be important for the markets. >> do you think they will hike? >> absolutely. >> how many times? >> right now our forecast is that they hike three times. that seems perhaps a little bit bold. but i think what we're trying to communicate is that zmoosh it sho -- it shows where everybody was. >> yes. the bottom line is the fed wants
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to continue with the normalization process. if you have a low 2% economy they will continue to hike. >> michele thanks for coming in. when we return a good start to the new year for china. major markets closing higher extending monday's rally. experts say there could be more volatility on the horizon. challenges ahead for the chinese government and how to manage slowing growth. we'll talk to an expert next. first though as we they'd a break check out the dollar. it's down across the board. euro is at 111. dollar/yen is at 113.82. you're watching "squawk box" on cnbc first in business worldwide.
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welcome back to "squawk box," everyone. we've been watching the futures this morning. it's a big you're the of green arrows all morning long but we're off the highs on the session. dow futures were up by 200 points. right now still up by 151 points above fair value. s&p 500 up by 18 and nasdaq up by 51 and this comes after big gains on friday as well. in europe markets there are mixed. biggest decliner is the dax in germany which is down by three quarters of a percent. other markets are relatively flat. ftse is up by half of a percent. >> apple plans to sell u.s. denominated debt coming in an sec filing. waiting on other details. they've done this before. yes they have piles and piles of cash, lots of it is overseas but at the same time interest rates are very low. use to it buy back stock, take a
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dividend, et cetera, apple will issue some kind of debt. stock is higher at this hour by more than 1%. stocks to watch today including ziatas. vodafone will pay $1.1 billion to combine the netherland operation of the two companies. disney hong kong theme park lost $19 million last year. first annual loss in four because of fewer visitors. speaking of china markets re-opening after being closed for the lunar new year holiday. markets closing higher across the board. shanghai higher by 3%. shenzhen higher by 4%. joining us now is the managing
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director for asia at the eurasia group and former senior director for asian affairs at the white house national security council. what do you make of this move by the chinese central bank today allowing the currency to strengthen, signalling what? >> it's a big move for the chinese because the chinese government recognize that they need to stabilize expectations about the a even b and indicate it's a two way trade to stop speculators from putting downward pressure on the r and b. ate big deal. even more significant is the fact that over the weekend the central banker of china gave a big interview to a chinese newspaper. he's been silent for months on the issue of chinese exchange rate policy, chinese policy on capital outflows and inflows and that interview was a big signal to the markets that the chinese do have a coherent approach to managing the price of the r and b. >> do you believe that? do you believe they have a
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coherent approach? we have carl bass betting they've devalue. two well spoken guests this morning arguing they do not. i was listening to a well-known china watcher and spoke in a blog post and said he's not sure the chinese government knows what it wants at this point. what do they want? >> well, there's no question the r and b will devalue in 2016. the question is the pace of that devaluation. and what i think is most likely is that they are going to devalue somewhere between 5% and 8%. it will be gradual over time. you're going to see more volatility in the price of the r and b to try to squeeze the speculators out of the trade. but i think there's a broader story here. the broader story is can the chinese government stabilize market expectations about their broader growth strategy because the exchange rate is one part of their strategy but what's more important is that markets
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understand that the government is committed to long range economic reforms to ensure that the chinese avoid the middle income trap. that's really the broader more important story here and to do that the chinese government will need accelerate the pace, broaden the scope and pay very careful attention to the sequencing of economic reform, especially how they deal with their debt problem. >> i get all that. but chinese government we think of them so monolithically. if you're an exporter you want that devaluation to happen more. if you have a consumer products company you want it to strengthen, give your consumer more strength when it comes to purchasing power and if they will shift to being a consumer economy. i think the temptation and certainly people betting on the currency are betting on something much bigger than 5% to 8%. looking at 10%, 20%, 30%. >> that's the wrong bet. when you have this past weekend
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coming out and saying it will be a modest gradual depreciation they don't think a major depreciation will give them any major export advantage and be a negative for the chinese because it will kick off a round of competiti competitive depreciation. >> why do you think the u.s. market moves so much based on what we don't know or know about the chinese currency? when we've seen those two devaluations august and then inn january, it seemed to cause just this tremendous ripple effect within the global markets. is that justified? why did it happen? >> well, i think that movement of global markets about, regarding the price of the r and b is a reflection of nervousness
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and lack of confidence that the government can manage the growth challenges. so i think that's why it's just microcosm of the broader concern that markets have that the chinese government doesn't know what it's doing when it comes to reform. >> are you convinced what they are doing? are your convinced these bureaucrats can, you know, coalesce this economy into something? >> yes. i think the chinese government understands their problems. i think they identified a whole series of reforms necessary to avoid the middle income trap. the challenge that they have is a political challenge which is mustering the political resources necessary to ensure that reforms occur fast enough and i think that's where the real challenge is but if you look at the trajectory of chinese economic reform over the last 35 years, it's a pretty good track record in term of the government sort of avoiding any big mistakes in terms of implementing their own economic reforms.
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>> we'll see. thanks evan. i see you braved some pretty rotten weather there. >> thanks, michelle. great to be here today. >> we hop behind the wheel when we come back and talk about why tesla is pushing test drives of its new model x. and as we they'd break take a look at oil. down a few cents again despite headlines that some opec members may have agreed a production freeze. still stock futures are up. we're back with more "squawk box" right after this. convicted felon and con man. that was a long time ago. you know, they made a movie about it. you were shown to be quite skilled at fraud. times change. now i help catch the bad guys. me too. i help banks detect fraud by applying cognitive analytics to public financial records and social media. so if somebody said, "catch me if you can...?" we can. let's do a sequel. it could be a buddy movie. i would like to have a buddy.
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welcome back to "squawk box." another oil and gas producer falling victim to low energy prices. paragon off shore filing for chapter 11 on sunday. 60 oil and gas companies have filed for bankruptcy over the last 16 months. paragon was able to negotiate a deal with lenders to cut its debt and keep operating. >> tesla is making a push to convert reservations for its model x into firm orders for the electric suv, and do that elon musk wants to put you behind the wheel. one of the first test drives is today in highland park,
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illinois, outside chicago. that's where we find phil lebeau. >> these test drives are all about tesla converting more than 20,000 reservations for a model x electric suv into a firm order. so here's what tesla is doing. they started this actually last week in fremont, california. today they're beginning it here in the midwest in chicago. it's the meet the model x tour. reservation holders will come in, have a chance to drive a model x for about 15 or 20 minutes. it's all about converting those reservations into firm orders. here's why. when you look at the deliveries of teslas scheduled for this year, between 80,000 and 90,000, a growing percentage of those will be the model x. in 2015, they only delivered about 208 of them. they were just beginning production. in fact, they had some challenges. they stopped it for a week in january. but by the second quarter they expect to be building and delivering more than 1,000 model
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xs each week. on the conference call last week, elon musk talked about some of the challenges that have gone into the delays behind the model x. >> we put too many new features and technologies, too many great things all at once into a product. in retrospect, it would have been a better decision to do fewer things with the first version of model x, and then roll in the features and new technologies over time. >> guys, earlier today i was getting a cup of coffee at starbucks, ran into a mold x reservation holder. you know what he said to me? i can't wait to get behind the wheel. i haven't been able to sit into one when i have gone into the tesla store. those test drives begin later this morning. we'll be with some of those reservation holders. let's see what they think when
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they finally drive the model x. $5,000, that's all reservation holders have to put down. >> they never sat in one. they're willing to put down $5,000 to get a reservation on this? >> yep. >> it shows -- >> until you lock in your order. it's refundable until you lock in your order and configure your car. once you configure your car, that's it. you're locked in, otherwise you give up your 5,000. >> unless you publicly trash tesla and elon musk -- >> that, too. >> with the model ss behind you, if i were to part my model x with its gull wing doors in the line of cars behind you, could i open the doors? >> yep. >> a lot of concern if you're at a strip mall or a shopping center -- >> i've seen it. >> concerns that you can't get in your car. >> brian, i have seen it work where you are right next to the door. there are two hinge point there's, one that goes out and one that goes up. if you have a car really close
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to you, as long as you can squeeze in there and there's enough room for you to shimmy your body in, you can get inside even if somebody is parked next to you. or if there's a low ceiling the doors open this way. i know people are skeptical. i know it works. >> i'm not skeptical. i predict a whole wave of something called model xs, some teenagers saying there's a mold x, let's pull in next to it as a thing. >> you know what you do, brian? you have the summon feature, you can have it come out and meet you. you just control it with your phone. okay, pull out, meet me here. >> model x, come to me, my son. it pulls out? wow. >> that is cool. >> summon feature. >> that's why people pay $5,000 for a reservation, sight unseen for a tesla. spectacular stuff. >> thank you very much. i was driving up the turnpike last year, just my commute, i
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look over and i see phil lebeau driving a tesla. i had no idea he was in new jersey. >> let me guess, you started razzing him. >> riding his bumper. doing this. >> i know how your mind works. >> i got problems. >> coming up, bank of america's ceo brian moynihan getting a pay rise. how much and how it stacks up to his rivals comps. [ male annous 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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bank of america is giving brian moynihan a pay raise. the company raising his compensation by more than 11% to $14.5 million for 2015. that includes a $13 million stock base award. moynihan did not get a cash bonus. that's also in contrast to moynihan's pay package. jamie dimon got a 35% raise to $27 million. bank of america was down about 4% in 2015. this year the stock is off nearly 30%, probably not a shock when you look at a lot of the financial stocks. >> very quickly, pfizer will pay 785 million to settle a long running dispute with the government. settlement does not include
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admission of liability. this occurred before pfizer bought wyeth. i'm speaking very quickly because the show is almost over. >> 15, 14 -- >> thank you for being here. >> i'm here tomorrow, too. we'll see you guys today on power lunch. >> 1:00 to 3:00 eastern. >> right. >> join us tomorrow. right now time for "squawk on the street." ♪ good tuesday morning. welcome to "squawk on the street," i'm carl quintanilla with sara eisen, simon hobbs, david faber at the new york stock exchange. cramer is off. futures higher after the best day of the month so far for the major indices on friday. big week ahead with i flags dnf data. china is open after the holiday. europe largely unchanged after draghi says the ecb won't hesitate to act in a crisis. oil is a big story, russia and

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