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tv   Squawk on the Street  CNBC  February 29, 2016 9:00am-11:01am EST

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laughing. i looked over at and dru. >> i don't know what this gentleman is talking about. >> come to berkshire's annual meeting and confess. >> like a gold medalist. we can win the gold. thank you. >> i'm glad you were listening, joe. >> make sure you join us -- >> great to be with you. >> "squawk on the street" is next. ♪ >> only joe can get away with that what a great show, guys. good monday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. closing out the month of february with a leap day. and a busy week ahead. super tuesday, auto sales, adp, jobs number. we'll get you set up. futures relatively steady. eurozone cpi don't 0.2. that's a miss.
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watching oil to see if it can crack 35. our road map begins with the oracle on the markets. warren buffett on why he's buying now and his latest thoughts on ibm. >> valeant ceo michael pearson back after medical leave. and ge's annual letter just received. the next moves plus harsh words from government and jeff immelt. warren buffett offering his take on the markets. earlier on "squak" the billionaire investor said he bought more stocks since the end of the year and is more aggressive when they're going down. buffet also optimistic about long-term prospects for the market. take a listen. >> i never know what markets are going to do. there's never been a time in my life -- i know what markets will do over a long period of time, they'll go up. in terms of what will happen in a day, week, month or a year, i
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never felt that i knew it. i never felt it was important. i will say that in 10, 20, 30 years i think stocks will be a lot higher than they are now. >> classic buffett you could argue today, jim. >> one of the things i liked about it, he was talking about some concept we talk about here, the political gloom has created opportunity. people are way too negative. a lot of what he says is so long-term oriented m of the short-term people who trade overnight say, wow, i guess i can buy stocks off it. he's not saying that. he's saying over time, progress is going in the direction of america, don't forget that short-term but long-term the gross domestic product, what people do, the actual progress in this country sun stoppable. >> he was very optimistic. >> yeah. when asked on "squawk box" about that in a long question by joe in terms of the future for the american worker or frankly
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workers around the globe, though, buffett was still somewhat sanguine, i guess. i'm not sure i followed exactly the thinking, given the concerns about the growth in robotics, and artificial intelligence, not to mention things like self-driving cars. >> i think there's an undercurrent to everything these days. they divide between those rich and poor. he was talking about how the farm workers were being paid at the same price at the turn of the century and there's great divisions. peggy noonan has a piece today in the "wall street journal" has dove tails this, the notion about the protected and unprotected. the protected class are very out of touch. i think buffett, maybe because he's from -- where he is from omaha, or he spent a lot of time with people, you know, regular people, i think it has a good view of both things. he is clearly an elite,
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objective individual, but i think he has a feel for the common person which is unlike what most rich people have. >> and always a good reminder, as he put it today, if you're born in america, you already won the lottery. people being born in the states today are, in his words, the luckiest crop in history. >> i think we're all feeling what he talked about, which is that there's less of a hope in the future, and he just dispels that. he dispels that empirically saying here's what happened before when my parents were alive. this will continue. he doesn't want to get caught up in the presidential election. trying to think about long-term philosophy towards life and stocks. they kind of dovetail. >> they got him on driverless cars, on privacy versus security and the whole portfolio and let's start with ibm and whether that was mistake. >> i don't think so. it could be. we've owned stocks we lost money
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in. sometimes when stocks go down, we're wrong and we sell them. sometimes we think we're right, we buy more. sometimes it turns out we are. a stock going down is a good thing unless the company itself is losing value. sometimes that's the case. sometimes it isn't. i don't think it's the case with ibm. i could be wrong. >> hasn't sold a share. using watson to tweet geico's algorithms, things like that. >> i found his comments oddly removed from what's going on at ibm. ibm is involved in this transformation go towards cognitive, higher margin -- let's say faster growing revenue, the old margin for the old margin was good product but it's bleed-off. can the bleed-off part of ibm defeat the new part of ibm -- >> or can the new part grow fast enough to out-pace the slow, slower and slowing part? >> 628 to 632.
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i kept waiting for him to say i have great hopes for the cognitive portion. i have great homes for the strategy to make sure the faster growing stuff, the cloud, okay? that he would endorse that strategy. there's a component about ibm which is buying back stocks which is to please this man. i was hoping he could make a judgment about that transformation -- they keep emphasizing, i'm not emphasizing, they every time you speak to them are emphasizing it. i thought he would weigh in on the thing they keep talking about. he was oddly distant from that. when he talked about watson, he was talking about i don't know if they should pay us, if we should pay them. watson is metaphorical. watson is about the new ibm. none of that came up.
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maybe because that's too granular for warren buffett, or maybe that's what they're talking about right now and he's thinking longer term about a company that's not the company. i don't mean to be critical. maybe they're saying this has to happen at ibm in order to make it a growth company. he didn't talk about whether it's a growth company. that's the fundamental question they're raising about how to get growth. it seemed immaterial. >> on the defensive on a number of fronts, having to talk about coke's slowing carbonated growth, or amex has a good reputation in his words. >> again, when you take a long-term philosophy, you are able to dismiss short-term until short-term in itself becomes long-term. >> right. >> so he mentioned the costco loss. he talked about paypal,
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competitors, but no recognition of the market share going far away from american express or that the technology at american express has been defeated. you sometimes wonder, well, is that because -- is american express where it is because its largest shareholder seems to endorse it long-term? so the short-term, which has turned into long-term in american express -- not stock price, i'm talking about loss of share, sheer momentum going out of it, major changes by other players that are far more technological, and it doesn't figure in. >> i think it's interesting that you mentioned american express in particular, jim. remember last year value act got in the stock. there was some -- some question as to whether they would get active. instead they got out. they got out, i think, largely because mr. buffett is the man when it comes to american express. >> yes. right. >> if he supports management and mr. chinault, you can't
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accomplish a great deal if you wanted to affect change there. >> yeah. >> that's where it stands right now. the question is whether mr. chinault can change enough at the company to reignite some sense or growth that they have not seen facing, as you point out, the likes of a visa and mastercard that really are loaded. >> when i listen, if i were the ceos of any of these companies, i'd feel great. i would feel great. what he's saying is don't sweat the program, guys, your franchises are good. in reality they don't feel great because they know other than buffett they're looking at a market -- they got charlie sharpf and they are carving american express up a lot. that didn't seem to bother oracle. coca-cola, i think there's a transition there that's working.
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he talked about shuffling the bottlers. did this, did that. i would feel, if i were one of these ceos that is involved whether it's bank of america, which he endorses or the rails, burlington northern, you would feel good. buffett is saying it's business as usual. except for the fact that it's not. it's not business as usual. why do i say that? ibm is saying it's not. >> why do i say that? >> coca-cola is saying it's not. american express is saying it is. they're not saying it's not. i speak to the companies that he's sanguine about, and they're not. they're like, wow, don't worry about it. we see the problems. we are addressing them. ibm every day is telling you they're addressing them. he doesn't see the problems. maybe that's because he thinks they're addressing them or he doesn't think they're concerned. i'm not criticizing him. the companies are into me saying we're very worried.
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>> their time horizons may be different. one is worrying about march 30, one is worrying about 2030. now they can rest ash chored their largest shareholder, if you read the whole letter, is very happy. >> it was not business as usual for ge last year. we'll get to his shareholder letter after the break. >> we'll talk about what jeff immelt wrote. >> he's happy. maybe they're happy like bank of america. i guess it's all good. >> when we return, meg whitman blasting chris christie. we'll look at that and a preview of super tuesday. the challenges facing newmont mining. we kick off a very busy week from post nine in a moment. low,. >>what about cashing out? no! i'm trying to build something here. >>how about using fedex ground for shipping? >>i don't need some kid telling me how to run a business!
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well, it was a very momentous year last year for ge which released its shareholder letter written by jeff immelt just 14 minutes ago. of course 2015 was a year in which ge decided to largely divest its financial services assets in the form of ge
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capital, keeping a small portion of that firm to help support its ongoing businesses. all the acquisition of alston, something they expect to generate 3 billion of cost synergies from over the next five years, adding 5 cents a share in eps, up to 16 and 20 cents in 2018. in that letter mr. immelt also sets his sights on government. and on the current environment. interesting quote from the letter here, he says what is unique in this cycle is the difficult relationship between business and government. the worst i've ever seen, he says. technology, productivity, globalization have been the driving forces during my business career. in business you don't lead these changes, you get fired. in politics, if you don't fight them you can't get elected. as a result, most government policy is anti-growth.
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in the u.s. we want exports but seem to hate trade and exporters globally. governments love small business but regulate them to death so we perpetuate a cycle, slow growth, poor job creation, populism, low productivity, higher regulation, poor policy and slower growth. interesting that he delved into politics in a sense in the lo letter talking about that relationship, saying it's the worst he's seen it between business and government. talking about activism, failures on the part of institutional investors, not so-called activist investors. he said it's confusing for investors when he's told the company leadership is filling out forms. eventually several big investors publicly criticized company
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force being too short term oriented, they may be right but large institutional investors are to blame as well. >> i wish ge had not sent out this note the same weekend as buffett. just trying to turn a company back into an industrial company, how quickly they ended up doing it. the notion that there's so many head winds, but they're still trying to get over them. the portfolio, which where they say, listen, we have all these other things going. i felt very good about the company after i read this. i felt kind of sad that everything else that there's just a lot of companies that are caving to political correctness. i felt better about the chinese government. we're working with the chinese government. >> this is a giant muscular letter. this is not the letter you see from a rookie ceo. this is the letter you get from
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somebody doing it for 15 years, and knows they're sort of in their final innings. not of life, jeff, just of next few years, right? >> didn't you think the whole notion of the digital was very smart? >> yes. >> digital industrial. >> saying not just digital is important, but it's not new. we don't have software envy. they have been making acquisitions in this area for a long time. >> i think that's great. the move to boston understated in that letter how important that is, the east coast technology company that happens to be in industry, as opposed to the west coast technology company that just so happens to be in technology. this company is run on sales force. it doesn't necessarily have to be the reason there are other parts that are not sales force. but jeff immelt has given presentations and said i run it
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all on my handheld. there's a lot of technology going through the different divisions. i felt good that immelt was reflecting about how the company needed to be transformed to stay alive. >> yeah. last year was notable, also because ge stock price outperformed the broader markets by a lot. something we had not seen since i was a young man. coming off a strong year in a lot of ways, perhaps feeling that in his shareholder letter. he's not the only ceo speaking out. >> no. ahead of tomorrow's super tuesday, hp's meg whitman blasting governor chris christie for endorsing trump. she wrote chris christie's indorsment of donald trump is an astonishing display of political opportunism. donald trump is unfit to be president. he's a dishonest demagogue who plays to our worst fears.
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that's not stopping him on leading in national polls on cruz and rubio. >> senator sessions, too. people who may endorse trump now will be criticized. i regard meg whitman as part of the established group of republicans. you saw mitt romney talk about t taxes. i'm never comfortable talking about politics. i know meg whitman is a very serious business person. i've been waiting for serious business people to come out and say -- >> they will, they are. greg hayes almost did it with us last tuesday. >> yes. >> by the way, meg whitman will be our guest, as she always is, hewlett-packard enterprises ceo after they report on thus, she'll be our guest friday morning. we'll be sure to bring this up. i'm not sure it will make a bit of difference to people voting
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for or not with mr. trump. >> whitman's statement? >> yeah. >> no. not christie. christie's statement made it so you're not talking about rubio. it did seem like christie came out -- that was like, wow. really? i heard him critical of trump a bunch of times. >> that's why friday was one crazy day. >> it was. >> and we ran the whole speech, which i thought was different. >> yeah. >> merry christmas. >> the libel stuff, great to be a journalist. >> as we open up the libel laws. >> we'll count down to the opening bell. talk about what's coming down the pipe. futures almost exactly at flat line.
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. mad dash for a monday. hitting the rails. >> it's important to point out warren buffett's great strength in business is already about the businesses that he owns. he says it's not as important. geico, obviously, incredibly important. one of the things that was manger was the turnaround at burlington northern. he had been openly critical of the business in the last letter to the point i cringed thinking i hope those guys get it right. what he was saying is, man, they don't know exactly how to be competitive. they came back strong in 2015.
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to the point where even though they said 2016 will be a down year, it made me feel like wow, csx, northern pacifburlington n northern pacific. i felt good about the railroad industry, x, crude by rail, which is 4% he said about. x coal. could there be x? he's saying yes. they had a good year. these guys didn't versus -- it made me feel like there would be consolidation. maybe someone says i can buy these guys into a better job. >> if burlington had been public, probably would have been down a like amount. >> what he's saying is no. he's saying that 2015 was so much better for these guys, you might have had this. >> what are they doing differently? >> it's just they took out a lot
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of costs. spent a fortune to become more competitive. the notes about burlington were the most exciting in this. he may say these other guys were get this efficient, you would see it, they would be better. they're not. inefficiency is holding them back. that makes me think this will not go right like that. anybody who gets it like this or doesn't will be taken over. >> wow. a lot going on there. >> yes. >> the opening bell coming up. we will talk valeant, which looks to be down on mike pearson coming back, that's because they also withdrew guidance. a lot more "squawk on the street" coming right at you.
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you're watching cnbc's "squawk on the street," the opening bell in about 30 seconds ahead of a week where we will get some interesting numbers, jim. auto sales tomorrow. the jobs number on friday. looking for 195. the rate to hold steady at 4.9.
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>> look, if you're buying stocks here, you're betting march is off the table for a rate hike. you know, every one of these numbers this week is going to be discussion about rate hike. if they're very strong you bet discussion will bring the stocks down. >> on top of adp and factory orders, super tuesday tomorrow. buckle up. there's a look at opening bell and the s&p 500. at the big board, ubs celebrating the launch of its etracs crude oil return index. at the nas dak, e ashg nasdaq, . >> reuters say some shale stock will start producing at 40. they used to say 60. >> there is a remarkable efficiency gains being made. there was a lot of bid up for
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workers. and that's gone down. i keep thinking about wpx, talking about 10.00 to 11.50 is their cost. 33 to 35 is where a lot of these guys live. above that, they're fine. that 26, 27 is where all these oil companies need to be tested in terms of debt. i just think that -- i know that a lot of oil companies, it's very variable. the balkan has some sections that are good. the permian has almost every section that's good. eagle ford. colorado, no. just no. oklahoma, some parts, yes. so it depends on your acreage. every time they go up, it will be self-fulfilling they go down. every time. these companies need to be in the market selling oil.
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they have to. in order to pay bills, they have to sell oil. got to pay the bills. >> got to pay the bills. >> i don't think this is a great time for the banks given the fact that the banks have the wrong interest rate yield curve and the banks will be on the hook every time oil goes to 26. >> the banks have been the worst performing sector. >> look, also the leverage loan market which we don't talk about enough. not exactly a picnic. >> it's not. interesting high yield, saw some inflows, i think, last week in the mutual funds. that can be a precursor to equity rallies occasionally. there is a link between high yield and equities. after a lot of outflows from high yield, which has been hit hard largely due to energy. not just, but spreading from there a bit. >> yeah. there's an undercurrent in that market of we want high credit companies. when you get them, people go crazy. they love it. they love it.
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>> you may want to stay away from energy. pick your spots carefully. >> i think you got to stay away from energy. you're just betting oil future also stay up here and go higher. why bet that? one thing we know is nobody seems to know that market at all. we keep thinking where is iran? i was watching the iranian elections for some sign they get a moderate -- they can sell more. how many moving parts to this oil market? what happens if venezuela defaults. who is on then, standard charter not as good as our banks. i don't want to be in those banks. a lot of moving parts. here's who sections to avoid now. a lot of the banks and pretty much any oil. exxon has a meeting this week. they'll give us a longer term view. you don't feel sanguine about oil stocks unless you believe oil is going to 35. then i can craft a positive thesis. >> chevron is the best dow component for the moment followed by apple which will
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have an event on march 21st. 25 firms this week will file briefs in support of their position on apple versus fbi. microsoft, verizon, yahoo! facebook, you name it. >> i've been waiting for that. they all have privacy issues. apple hangs in here incredibly well. the stock. it hangs in well. some of that is because cyclicals did better. some of it is because people recognize the service revenue is good. focus on that. also the iphone seven, as we get closer and closer, you have too many telco companies saying it's going to ab big deal. >> i did want to talk valeant, which we have been mentioning. the stock is down about 7%. mike pearson who has been out on medical leave has rejoined the company as ceo. however he will no longering chairman. there was an interim chairman, mr. ingram, who will take over
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on a full time basis. i reported last week mr. pearson was ready to come back to work, but there was some division on the board as if that would be best for the company. so he did come back, but he is no longer chairman. the stock is down largely because the company has withdrawn guidance. it was supposed to be speaking to the street today. you would imagine the timing of that is somewhat difficult after mr. pearson has been out for a couple months, to come back immediately and start speaking to the street. they expect to provide preliminary financial information for the first quarter of 2015 and 2016 guidance for the near-term. it was a withdrawal of its prior financial guidance that's concerning investors when it comes to valeant. looking back, the last time we got guidance from the company that i can see, jim, back on december 16th when they provided a financial guidance update.
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december 26th of 2015. mr. pearson's health is better, lost a dramatic amount of weight. shareholders waiting to see. also a new competitor to a key drug they had when they bought saylex. a number of different things layering on here for the company. mr. pearson's re-emergence is viewed as a positive by many, but not along with this withdrawal of guidance. >> withdrawal of guidance just says whatever you think we're done with the s.e.c., we may not. i read through the notes, pearson said business is pretty good. they have recognition -- the recognition didn't seem behind them is the way i would look at it. a lot of people talk to me -- a lot of bulls talk to me who about not like the stock higher. it does have tremendous cash
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flow. the problem is, accounting irregularities equals sell, unless it's boeing or valeant, don't mean to put them in the same sentence, if you have accounting regularities, you don't know what you're relying on. if you don't know what you're relying on, i don't feel that good about it. >> many say the board would not have brought mr. pearson back if there was anything they had seen in their continued investigation, working on that philidor issue, if there was anything scary, i think they would not have brought him back. >> i find what's scary verses what the s.e.c. cares about, there's a diagram, scary, s.e.c. cares, it doesn't seem scare you are to you, s.e.c. cares. then someone on the audit committee thinks it's scary, s.e.c. cares. so this no-care care is a little
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more fluid. >> understood. >> the stock is down. >> down 7% back to below 75. >> it's not lumber liquidators, that was a stirring series of questionable -- raises eyebrows. sub optimal situation over there. >> wanted to come back to my story, all of last week, the continued pursuit by honeywell of a purchase of united technologies, despite united technologies says no way no how. over the weekend i tweeted the fact that united technologies added goldman sachs as one of its advisers in defense against honeywe honeywell. this morning ubs simply says we believe the antitrust defense will make it extremely difficult for honeywell to navigate the antitrust review process. in the past companies have used antitrust to slow down or get a
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better deal or price. but we believe this ubs version is meant to stop the honeywell takeover attempt. they have been nothing but scorched earth. >> the fact that dave cote sold half his stock position of interest to you. >> $36 million worth. i don't believe it was half, but done on the 16th, three days prior to his proposal and meeting. it was a little curious. i got some explanations. >> i don't think it's that relevant. i know there is an undercurrent among many executives that i speak to saying why did cote have go against this united technologies guy? i'd like to depersonalize it to say that i think united technologies was on the verge of an earnings break out. i think dave cote saw that. if he could get the company because mr. hayes originally
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pondered the deal. a lot of companies ponder deals and say wait a second -- >> no, it's one thing to ponder internally. it's another thing to reach out and have 16 separate meetings. >> he did reach out. >> that was not a pondering. >> i didn't mean pondering, that's the wrong word. you can go further and deeper into this and say one of two things, well, maybe it won't pass muster, or, wow, i thought this would be a friendly deal. next thing i know i'm out on my butt, cote is taking us over. we went from being interesting merger of equals to -- >> that's because one stock went like this, one went like this. >> one stock i thought was about to come back, united technologies. david asked me questions last week about what do you do? i know you like both these guys. i thought honeywell is doing spectacularly. i don't change my view. hu hayes had worked hard to turn
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the company around. he was dealt a bad hand, he turned that hand into a better hand. that stock was at 87 before this began. you better believe they'll pull forward that greatness or you know something about 100-odd bid that cote will pull off. >> one other stock around 87 is disney on february 10th. now close to 96. introducing tiered pricing at the theme parks. and we're finally getting early oscar numbers. they look to be -- ratings. down about 6% versus the prior year. last year was also down from the prior year. >> we were talking every minute about espn, the granularity of espn and the issues. we don't talk about it. what happened? how did that not become -- we're not buzzing about espn losses anymore. >> we'll be talking about it again at some point in the next quarter or data point. >> the idea of theme parks
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putting through an increase. i know a lot of people feel how important is that? this is a big mosaic of businesses. this stock has stock going down. technicians are saying it just went up and will come back down. the chatter -- maybe we moved on to other chatter. maybe we're in a different space now, talking about the industrials. >> yeah, it's in the background for a while until it come backs to the foreground. >> viacom traded up. time warner. it was almost like all these stocks were in the critical care list. now they're in rehab, doing good stuff. walking around the building. pretty much about to be discharged. in some cases they've been discharged, right? >> totally agree. >> going back to work. some of them are going back to work. >> some are working at home, some are at work looking good. looking thinner, trimmer. >> training for a triathlon. dow is down 14. let's get to mary thompson. >> very choppy open here on wall street. the markets have been
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fluctuating between gains and losses since the opening bell. right now the dow jones down just about 12 points. i'll remains a focus here in the u.s. i wanted to mention the vix, on friday it closed close to the 200-day moving average, an area it has not broken below in all of 2016. it's rebounded a bit. nevertheless, as it approaches, it's something to watch, this is a fear index. so a spike in the vix means higher volatility in the u.s. in asia overnight, we saw weakness in the asian markets after china cut its reserve requirements. in europe, deflation numbers were disappointing. it raised expectations we could see added simplus in europe. as a result european markets have come off their lows. in the commodities markets, oil is higher today. nat gas weaker because of forecast force warm weather. gold continuing to get a bid. copper, while lower, also off
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the lows on expectations for added stimulus. quick check of the energy sector. this group is leading the market higher in today's session. actually that's the crude right now. take my word for it, energy is looking better. we want to check the banks. deutsche bank is the latest to come out and cut not only its first quarter before you the markets for sensitive banks this year. let's head to chicago and rick santelli. >> thank you very much. two day of tens gives you some interesting information. virtually unchanged, look at the way the rates are coming back. two-day of bunds. somewhat similar pattern, not nearly as much horsepower. if you look at year to date of tens, you'll see big rate drop. down over 50 basis points. here's the key. look at a one year chart of bunds. first of all today it traded ten basis points, getting close to its all time forever low yelled
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close of 7 basis points. now let's look at the spread, divergence, not movement i have, the spread. we're up to the mid 160s. i think many traders are looking at this thinking i have to buy bonds because this bread is usually in the 150s, and consistent the value trade. today is an important day to match. look at the march '09 pound versus dollar. that was one of the most breath taking moves in a short period of time that i've seen in currencies. all right. it's 9:45. chicago pmi is out. 47.6, alice, 47.6, what was the previous number? >> 55.6. >> that's down. what can we garner from the headline number. >> all of these are down except these two are up. >> new orders up or down? >> down.
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7.1 to 51.7. production down 18.5. >> production down big. >> order backlogs, down again this month. >> down on backlog. employment down 3.7 to 5.2. >> let's talk about this one. how does this stack up on a week where we're getting two numbers, adp and the big february report? >> rick, this is the lowest number since november of 2009. down 3.7. this is not good. i'm hearing from purchasers there are layoffs, big for people 50 and over. the more experienced higher priced people. prices paid, i learned my lesson. after years of watching this, many of the experts and the strategists say watch the service side more than the goods side what are we seeing on prices paid? >> down 2.6 to 41.1. >> employment down since the
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lowest since when? >> november of 2009. >> both around the same time period. is that by chance or a relationship there? >> not really a relationship. this is due to the lower commodity prices. specifically everybody is mentioning oil and gas. >> we did have a special question on price paid. 50% said lower oil and gas is helping them to the extent it brings in better transportation costs. 26% said it hurts to the effect where capital projects are delayed. that's our big story here. >> inventories has been a huge deal. first quarter looks like we're building again. anything to tell? >> this is typical for quarter one. some companies are telling us that they'll have a strong end of quarter one, beginning of quarter two. this is a pocket this is like packaged goods, commodities, pharmacy. >> nothing good news here? >> i see no good news.
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>> no good news in chicago. we'll see the national this week. carl, it's all yours. >> a lot of important information right there. thank you very much, rick santelli. still to come, a live interview with apple's attorney, ted boutrous. we're back in a moment. (son) pa, i know we settle for cable... but directv has been number one in customer satisfaction over cable for 15 years. (father) how 'bout over 15 satisfying years with that woman over there boiling your clothes. her layers and layers of...layers. hair that i've rarely seen because it's always under that bonnet. and how she fought off that grizzly and made him into these slippers. that's satisfaction son. (vo) don't be a settler, get a $100 reward card when you switch to directv.
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time for cramer and stop trading. >> two of my favorite companies got push today. first was foot locker. they said they were puzzled with the decline. i read through the quarter. the company is an honest company. they said we made some mistakes but business is good. i agree it's time to buy this stock. nike didn't go down. under armour, steph curry, i don't know if anybody watched the highlights of that. >> ridiculous. i would bother defending him. >> very exciting. under armour, i think it's time for foot locker to start going
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down. piper likes the turn in chipotle. i've been saying chipotle is for real. i think people can put this in the rearview mirror. i think they're getting ahead of themselves, but chipotle bottomed. and one of the reasons why it bothered is the company had such conviction in itself. they bought a huge amount of stock back. this brand speaks for long-term health, short-term concerns put in the rearview mirror. i encourage people to recognize. if you have been to your chipotle lately, people are back. not back howholly, there's goin to be an overhang, but i think the stock bottomed. maybe the next quarter will be disappointing, but they came back. >> interesting. >> in record time because they have such a good ethos. >> what's on "mad" tonight? >> workday, one of these companies trying to figure out if that's tableau software, or whether they're with sales force. i have my own views, which will be the latter.
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i know they'll be up against oracle. i like mr. bhusri very much. you want to know. that quarter will control a lot of tech tomorrow when they report tonight. >> one of the few names we get this week on the earnings front. jim, we'll see you tonight. >> dueling news letters, my wife is like what are you doing? reading a couple news letters. really exciting. when we come back, breaking news on pending home sales, and a live interview with the ceo of newmont mining. at ally bank, no branches equals great rates. it's a fact. kind of like bill splitting equals nitpicking. but i only had a salad. it was a buffalo chicken salad. salad.
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professor richard thaler. you are called the father of behavioral economics. i've been called a lot of things. i have read all of your books. did you learn anything? i learned that humans are complicated. we're emotional. absent-minded. and we make some really bad decisions. my trade-off analytics can help companies make better decisions, but i am still learning what makes people tick. what makes you tick watson? natural language processing, reasoning algorithms, statistical parsing. now you are just showing off.
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. >> good monday morning. welcome back to "squawk on the street," i'm carl quintanilla with sara eisen, simon hobbs, david faber. dow is up barely 4 points, watching oil trying to get back to 34. chicago pmi was a big disappointment.
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>> our road map for the next 60 minutes. it's the final trading day of the month. it's been a choppy one but we cut our losses. super tuesday tomorrow, and payrolls data on friday. we'll talk to the chairman and ceo of eaton vance. >> warren buffett telling becky quick he's bought more stock since the end of the year. his view of the rail sector and that ibm holding. >> and ad blocking, how big a threat is it? comscore has profiles on who is finding a way around it. >> let's get to diana olick with a check on pending homes. >> pending home sales down 2.5% in january. month to month that is a miss. the street was looking for a slight gain, down 2.5%. this is a forward looking indicator for close sales in
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february and march. though it's been up for 17 straight months in an annual basis, that gain is the second smallest in two years. sales down 3.2% in the northeast. down 4.9% in the midwest. up slightly, 0.3% in the south. down 4.5% in the west. that's why the realtors are saying, well, sure the blizzards in january caused trouble in the northeast and midwest, they're blaming it all on overheated prices, saying affordability is really getting hurt due to short supply, rising prices. that's why you're seeing prices down in the west. pending home sales down 2.5% in january for the month. >> thank you very much for that. stocks relatively flat on that news as oil prices are rising. china deciding to resume its monetary easing policy. perhaps another move aimed at boosting the global economy. joining us to discuss more is
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tom faust of eaton vance good to see you back. good morning. >> good morning. >> for a while you guys were arguing that recession fears were underpriced. now you're arguing that they're overpriced as we have gotten through the rough couple of months. >> we've gone through a few week now where we've seen positive economic data and at the same time we experienced a fairly significant correction in the market. we think because of those changes we believe the risk of recession has gone down. and that we think more of that risk is priced into stocks today than the case 6, 12 weeks ago. the housing number we got or this pmi would argue that we're still in slowing growth mode. how do we look past those? >> i think we're in a position where the u.s. consumer is benefiting substantially from the fact that energy prices are at levels that we have not seen for many, many years.
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we think the positive economic data suggests that probably some of that is starting to be spent in a way that perhaps we didn't see in the second half of last year. >> i wonder how you square that rosy view of the economy with what you've been seeing in terms of money flows out of mutual funds. wasn't january one of the worst months since the financial crisis? >> mutual fund flows tend to follow market sentiment, with the economy on firmer footing, with the markets positioned at a better value point, we think there's a good case we'll see improving flows in the mutual fund sector in coming months. >> which fund flows are getting hit the hardest at this point? is it emerging markets? europe? u.s. equities? what are you seeing? >> it's fairly across the board, where actively managed strategies have been seeing for some time now net outflows. it's been worse, i would say, in areas as you would expect where you have seen the most weakness in price. you mentioned emerging market
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equities. that would be one of those. >> tom, let's talk about the product for which you rang the bell at the nasdaq. the aim is to put more active investing at the hands of shareholders through etfs. can you talk us through the exchange traded managed fund? and the difficulties that you've had in gaining traction on distribution? because it is so complicated to price, as i understand t during a session. just talk us through where you are with that, if you would obviously it's groundbreaking for you guys. >> yes. nexshares exchanged traded funds are a new way to invest in active investment strategies, because they are actively managed they have the potential to beat benchmarks by applying proprietary research. because they trade on the exchange, they offer tax and cost advantages that can potentially increase investor returns. you mentioned the fact that
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we're launching our first fund. that fund called eaton vance debuted on friday and became available for broad purchase today. we hope to launch two more products before the end of march and have a series of additional products from eaton vance and other upon ssponsors to roll ou year. we're hopeful to see additional distributors in the near future. >> nonetheless, i'ming ing assu the 11 or 12 sponsors as you call them, they want to get their brand name on it, the etf will mimic what happens in their own mutual funds, there is some reluctance, they want to see how the product fairs during the course of a session. what is the thing you're most watching? is it volatility? when people buy it, they will buy it above or below the net asset value at the end of today's trade, correct?
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>> that's correct. the fund will trade on an exchange but at a price determined by reference to the day's ending net asset value. what is the main concern? what do you need to see to get the big names piling in as they said behind closed doors they're willing to do? >> this is a significant transformation in how people buy and sell active funds. the same way that etfs transformed how people buy index strategies, we think nexshares offers that same potential on the active side. this is a business largely conservative in its approach. people want to see evidence they will trade as we expect, that is at narrow premiums or discounts, tight trading costs, and the kinds of performance benefits we expect will be realized. >> tom, back to fundamental investing. your firm at least is a top 20 holder of united technologies. that might be at the portfolio manager level. i'm curious, given the case that
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honeywell has been making as to why it should have at least negotiations to bayou nighte l buy e buy united technologies, where do you stand? this is an attractive franchise in terms of business characteristics but also current price levels. we're not surprised to see this franchise would attract interest from someone like honeywell. >> okay. >> i'm curious why target is a top pick among the retailers. >> target is a -- one of the best if not the best broad-based u.s. retailers. we think they're well positioned across the businesses for an improving consumer environment. particularly have had notable success in their electronic sales efforts. they're far ahead of the competitors in that regard.
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>> the other stock that you wanted to single out, u.s. bancorp. the banks have had a rough year, worst performing sector in the s&p 500. do you see that tide turning for the banks? >> we think so. we think as we see an improving economy start to show up in the numbers, and we get more clarity on the exposure of individual banks to losses in the energy sector that there will probably be a separation out and the performance of different banks. one thing we like is u.s. bancorp, which has a relatively conservative underwriting profile in terms of credit exposure, but also has a significant exposure to processing type businesses that we think can perform relatively well. >> finally, tom, everybody waits until the end of the year to do tax loss selling. you have a tidbit of advice arguing they should do that now. why? >> because we think there's always -- it's always a good strategy to use the tax laws to
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capture some of the value of losses that happen. so use volatility, not only as an opportunity to refresh portfolios, but also use that volatility to try to minimize and manage your tax exposure. >> something you should be thinking about all year long. tom, thank you very much. covered a lot of ground. tom faust joining us from eaton vance. warren buffett sitting down with becky quick this morning saying he's betting on equities, he discussed the rails and that assertion that politicians are dead wrong on the strength of the economy. becky joins us now with the highlights. i never know, becky, how you will pare down so much dubuffet into these quicker reports. >> you and me both. you should have seen me trying to cram this into 90 seconds. we were very excited to sit down with warren buffett today, because we had not gotten a chance to talk to him before this morning, all the way back
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to september. there's been a lot that's happened in the markets between september and now. just looking at the start of this year, it's been the worst start of the year that we've ever seen in terms s of stock performance. we think you sit down with warren buffett, you ask him about these volatile markets. i'll let you in on the secret that he told us. here's where he thinks stocks are headed right now. >> there's never been a time in my life -- i know what markets will do over a long period of time. they'll go up. in terms of what will happen in a day, week, month or year, i never felt that i knew it. and i never felt it was important. i will say that in 10, 20, 30 years i think stocks will be a lot higher than they are now. >> all right. he's not going tell you exactly what to do with stocks, if you should buy today, hold, sell. that's warren buffett's message. that's been the message for
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investors for years and years. you should be an investor, not a trade, and you should not worry about the price of stocks. he did admit when stocks are cheap he likes to buy a lot more of stocks, but he also says berkshire has so much money that they're putting away, and he would not clarify if this is one of the times where stocks are cheap. we did talk about the economy. warren buffett has a good idea of what's happening in the economy because of the 90 businesses he owns, he has a good idea of seeing what's coming when it comes to the consumer and what's happening on an industrial front. over the last eight, nine years berkshire has become a more industrialized company. they talk about the powerhouse five or six, those are all big industrial areas. when you talk about berkshire energy, marmon, when you start thinking about the imc, the international machine works company. these are things that are telling you what's happening in the industrial company. we know it hasn't been great.
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he did say the railroad itself, burlington northern, santa fe, has put in a much better performance last year than the year before. when we got the chance to talk to him he said the economy is not firing on all cylinders and it is showing up at burlington northern. listen in. >> i would have expected the industry to do better in which case we would have done better. we were coming off a bad year, which helps in comparisons. we ran the railroad a lot better last year than the year before. but overall the rail industry had a disappointing year. got poor during the fourth quarter. been poor in the first quarter of this year. there again, some of that is secondary. >>, so, in terms of the industrial recession, it's shown up in the berkshire shares as well. when asked if that has bled out to the consumer?
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he said not necessarily. he thinks the consumer is doing well. yes, low oil prices are good for the overall economy. it's just you see the damage that is inflicted on stock prices, on capital and some of those areas. that's played out immediately in the stock market. we have not seen some of those positive gains. he does say you can see it from the strength of the consumer. i'll tell you quickly, too, he did break some news this morning. he talked about how he's starting his own march madness bracket for berkshire employees, 360,000 of them. these notes are going doubt today through managers. you know how difficult it is to pick the perfect bracket. if anybody can make it through the first two rounds down to the sweet 16, that berkshire employee will win $1 million for life. sounds next to impossible. he said it's 32,000 times more likely than picking a perfect bracket all the way through. >> very hard to do. we'll talk about the news you
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broke all day long. we are getting breaking news in the world of argentinean debt. let's get over to dom chu. >> we have an agreement in princip principle between the hedge funds led by paul singer's elliott management and some of the funds he manages along with other hedge funds and argentina for the settlement of that 15-year battle between them and the nation of argentina about defaulted bond payments in the past. daniel pollack who is presiding over the negotiations says there is an agreement in principle in place. it would be worth around $4.7 billion and would possibly allow argentine in to tap debt markets thereafter to fund some of these payments. if the settlement is consummated it would cover about 85% of claims in this dispute between hedge funds and the country of argentina. an interesting development here.
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again, an agreement in principle, not yet consummated, but it could end a 15-year battle between argentina and this group of hedge funds. back over to you, sara. >> thank you very much. david, this has been a long-running saga. >> sure has. elliott has been the leader in going after them. a change in government recently seemed to open the window for negotiations. the key is giving access to the capital markets for argentina will be beneficial for that country which has been prevented from accessing those capital markets for some time because of this dispute about years and years ago of a bond exchange where these guys, of course, singer held on to the actual old bonds, and wanted to get paid for them. at one point seized an argentinean frigate, i think it was. this has been a back and forth that's going on for many years. >> do you have a sense on whether they made money out of this? >> that's a great question,
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simon. i'm trying to understand that. i wouldn't know at this point. we can find out and we will. >> perhaps some resolution. >> all right. when we come back, trump and clinton marching ahead as we count down to super tuesday. larry kudlow will have his take on another wild weekend on the campaign trail. and exclusive data from comscore on the digital advertising market.
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tomorrow marks super tuesday, or the so-called s.e.c. primary. the biggest republican delegate haul in the race. 595 gop delegates at stake. voters in 11 states, mainly southern, head to the polls. if opinion polling proves correct, donald trump is poised for big wins. one question remains, can ted cruz hold off trump in his homestate of texas. john harwood has more. good morning. >> good morning. democrats also voting on super tuesday. hillary clinton after her overwhelming win in south carolina is expected to cruise there over bernie sanders in almost every state, not in his native vermont. but the real action is on the republican side. let's look at the targets for various candidates. you mentioned texas for ted cruz. if he doesn't win texas, his campaign is effectively over. late polls show he has a lead there. that's promising for him. you have gone kasich hoping to snatch delegates in states like massachusetts and vermont, more moderate republican states.
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marco rubio trying to pick up delegates. this is still proportional, not winner take all in states like virginia and tennessee. trump is competing everywhere. if you look at this new cnn/orc poll out this morning you can see how strong donald trump is nationally. republicans have talked about a ceiling on his support. that ceiling appears to be rising. he's at 49% in this survey. just one poll, but we'll have to see others. very promising for him. 30 points ahead of his rivals. donald trump has faced an intense firestorm over the weekend after he failed in an interview with cnn on sunday to condemn support from david duke, the leader of the ku klux klan. take a listen to donald trump's explanation for that yesterday when he talked to jake tapper of cnn and how he explained it today. >> i don't know anything about david duke. i don't know anything about what you're talking about with white
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supremacy or white supremacists. i don't know. i don't know. did he endorse me or what's going on? i know nothing about david duke or white supremacists. you're asking me a question i'm supposed to be talking about people that i know nothing about. >> i'm sitting in a house in florida with a bad ear piece they gave me. you could hardly hear what he was saying. >> episodes like that are why many republicans are in a panic over the prospect of donald trump may not be able to be stopped after the super tuesday primaries. of course over the weekend you had meg whitman, former co-chair of chris christie's campaign, condemn chris christie for having thrown in with donald trump calling it outrageous opportunism to side with the demagogue. tough days for the republican party now. >> absolutely. we'll pick it up there. john harwood in washington. joining us with his thoughts, cnbc's senior contributor, larry kudlow. on this kkk issue, the failure
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of donald trump over the weekend to disavow the kkk, david duke, no matter what he says about it. if he becomes the party nominee, what does that say about the republican party? >> hang on a second. there's some confusion here. let me amend john harwood's report. on friday, on friday trump tweeted that he does not accept, that he revokes the david duke endorsement, the so-called endorsement. the odd thing was on sunday he didn't seem to understand it. i'm not sure he heard the whole thing correctly. i think he did correct that on "the today show." he has to clean that up and make it clear. i don't think trump has anything do with that. i think it's much to do about nothing. i admit he has to clean it up to get out. the big issue here is not going to be david duke, it's not meg whitman. the big issue here is how many
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states trump wins tomorrow. the answer probably is going to be most of them, but not all of them. ted cruz is going to take texas undoubtedly. and he will take a couple other states as well. i think after tomorrow's elections, you will see a two-person race. i think rubio will be gone. i think it's cruz v trump. that's what i think. >> really? a lot of people think it will be rubio v trump, at least rubio will get the backing of the establishment and the republican party. >> yeah, sara, you and i would do a lot better without the republican establishment. we need to put our chips in a stronger place. i don't know who the republican establishment is, except they're powerless. there's a lot of loose talk that mitt romney is waiting to get in. i don't take any of that seriously. none of that is coming together. regarding rubio, his end game is march 15th in florida.
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right now polls show he is losing very badly to trump. that could change. i admit that. it's just a poll. that's where he's going to come into play. rubio is not likely to win a single contest tomorrow, sara. people will ask themselves, well, look, this guy hasn't won anything. and therefore what is his case to be made? this is, after all, a bunch of elections. cruz has won some, trump has won most of them. rubio has got to win something someplace. i don't see it. >> i see your point. i guess i'm wondering can the republican party, can the congressm congressmen, senators and party leaders get behind donald trump? >> i believe they will. i believe they will. that will all happen at the convention. maybe not everybody will support him. you know, he's got some loose ends. i don't want to be his defender here. i'm not endorsing him. i like his corporate tax cut, beyond that i'm not in the endorsing business.
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but i'm saying if mr. trump gets the nomination through the election process, it's a democratic process, they'll get behind him. of course they'll get behind him. nobody is perfect. a lot of people didn't like mitt romney years ago. a lot of people didn't like john mccain. these things happen. the key point, i want to make this again, ted cruz's position is very significant. i believe he will win texas. he also may win arkansas. he may also win one other state in the south. he may win oklahoma. that's possible. so i think at the end, sara, you'll have a two-person race. and then they're going to take it up north to michigan and then ohio and so forth. you know, john kasich is a good man. i don't think he'll win those states. i think it's a two-person race. i think the republican establishment doesn't want to acknowledge that. they think they're waiting for a white knight, like mitt romney. take it from me, there's not going to be white knights.
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what you see is what you get. >> got it, larry kudlow, thank you. >> my pleasure. >> strong views as always. coming up, gary goldberg of newmont mining on the state of his business. and tomorrow kayla tausche sits down with jes staley. we'll be right back.
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barclays reporting tomorrow. kayla tausche has more on the state of europe bean banking. hi, kayla. >> as we know, the european banks have been at the center of the market turmoil. for the last week the focus has been on the banks in the uk. we've seen steep and surprise losses from hsbc, standard
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charter and that has spooked investors. when barclays reports tomorrow it will be a key focus for a quarter marked by an onslaught of lawsuits, not drying up. then a sluggish european economy, fears about exposure to emerging markets, negative interest rates, now this new fear percolating which is brexit. the uk government issuing its latest warning out today saying that the biggest effect, even though it could effect the lives of millions will be on the financial markets, on investments, and on the value of the pound and in this report saying that the uncertainty and this vote to leave the eu would be the start not the end of a process that could lead to up to a decade of uncertainty. now, that would have far reaching consequences for the banking sector. the top four banks in the uk represent 300% of gdp. by comparison, in the u.s., all banks represent just 58%.clays
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indicator for the market. they have had three ceos in just the last four years. the stock is down 28% in the last four months and the market cap is half of the company's total assets and it has the lowest valuation of any bank with forward earnings. tomorrow they will talk about revamping the investment bank, cost cutting there, refocusing efforts in the u.s. and uk and give an outlook for legal charges which has eaten m neaup nearly all of its current profits. tomorrow on "squawk box," an extended interview with ceo jes staley. we'll hear what he has to say
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when those numbers come out tomorrow. for now, back to you. >> good stuff, kayla. can't wait to talk about it. when we come back, digital advertising will surpass tv advertising this year. but is it a zero sum market or is there room to grow? new data from comscore in a moment.
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good morning, i'm sue
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herera, here is your cnbc news update. iranian moderates have won a majority in parliament. a blow to the hard-liners in the first elections held since the nuclear deal with world powers. the moderates favor expanded social freedoms and engagements with the west. patients were treated with a number of injuries after being caught up in two bomb attacks in baghdad. at least 78 people were killed, over 100 others were injured. isis claiming responsibility. macedonian police firing tear gas to disperse hundreds of migrants and refugees who stormed the border from greece tearing down gates as frustrations boiled over. restrictions imposed on people moving through the balkans. there were about 8,000 people at the border site. back at home. disney is hoping to use ticket prices to ease traffic problems. the company rolling out surge prices for single day tickets at three values, regular, value and peak. the prices value from $90 to
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$124 a day. critics counter it's just a way to increase pricing. that's the news update. simon, back down to you. >> you might think the critics have a point there. >> having been there a number of times. this year is expected to be the first in which digital advertising will grow beyond the total ad spend on television. our next guest says it may not be a zero sum game. the advertising price for both tv and digital may grow because of better cross platform data. joining us now from miami is comsco comscore's co-founder, gi gian gulgoni. thanks for joining us. >> thank you very much. >> what is different now? >> what's different is that the many different ways in which you can view television content today. right? you can watch it in the traditional way, on tv, you can watch it on time-delayed basis on tv. you can also stream a lot of
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content. increasingly the content owners are providing that option for consumers. so you stream it over the internet, then you view it on your television set or computer, whatever device you want to use. having the information on what those viewing patterns are is critical for the planning and the buying of media by the agencies. as those data become available, it is expected that total ad spending will increase, both in digital form as well as on television. >> interesting. the report you got here is fascinating in many senses. clearly you believe that digital ads in themselves have their own problems. it's not just ad blocking. you say that half of all digital ads are not actually viewable. are the people that are buying these and bidding in real time are they aware of the problems you're highlights? >> yeah. that's certainly now become an issue that advertisers, buyers
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and sellers are well aware of. this issue of viewibility is a big one. as you say, about half of these ads that are delivered to the page but are loaded below the screen, and the user doesn't scroll down and see the ad. that's somewhere around 45% of the impressions are delivered in that non-viewable manner. you also have 7% of the ads that are delivered to bots, which is fraud. these are computers that don't really have any human being behind it. they have been hijacked, if you will. what is happening today, i think, the advertisers now knowing that are saying to the publishers, look, you got to charge us only for the ads that are in view. i think increasingly the publishers are willing to do that. so, as you deliver more of these impressions in a viewable manner, the impact of these advertising campaigns grow.
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we're also -- another interesting point that we're seeing is that the premium publishers, for example, the "wall street journal" or cnbc.com, the premium sites are getting significantly higher viewibility levels and the impact of the ads running on those sites in the context of those sites, the credibility of those sites is generating about a 70% higher lift in brand benefits. so, what i think -- >> gia nshggian, what are you s there? a "wall street journal" advert changes the way people are viewing the ad? changes the perception of the page? what is the analysis here. >> it changes the perception of the brand. the credibility of the site, think of it as a halo effect that comes over on to the brand. consumers are saying that they trust brands more that are advertised on these premium sites. now, the other issue that i
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think is becoming now clear is that if you go on to what's called these open-ad exchanges where computers do the buying, so it's an efficient process, there's no human seller of the ad, no human buyer, it's all computerized. that's where fraud is really lurking. the fraud problems there are significant. again, i think the advertisers are now becoming aware of that. at the same time the price being charged on those open ad exchanges is really low compared to the prices being charged by the premium sites. you kind of get what you pay for. >> right. >> so i think as all of this learning increases, it does nothing but help digital ad spending. it's growing at 15%. >> interesting. >> it has been for the past several years. it will continue for a while. >> just want to specifically mention the ad blocking, which i know is a big thing for you. the irony in what you're saying here is the demographic most
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targeted by advertisers, young men between the ages of 18 and 24 are also the group that is most likely to block digital ads. which seems -- >> yeah. >> that because everybody is hurling stuff at them? why is that? >> 18 to 24 account for -- i think about 20% of them have ad blockers on their computers. as you say, these young millennials are very attractive to advertisers. so they have to figure out ways -- and they are figuring out ways to reach this segment of young men who have ad blockers in different ways, because they're pretty important consumers to reach. >> which arguably comes back to our point about tv. we'll leave it there, sir. gian fulgoni joining us from miami. cold has been on a tear this
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year as investors ran for the safe haven trade. gary goldberg of newmont mining will talk about the business and how it's doing in a moment. we needed 30 new hires for our call center.
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with a single click. then simply select the best candidates from one easy to review list. you put up one post and the next day you have all these candidates. makes my job a lot easier. (announcer) over 400,000 businesses have already used ziprecruiter. and now you can use ziprecruiter for free. go to ziprecruiter.com/offer2 last trading day of february. things are flat. the dow jones is pretty much unchanged. so is the s&p. nasdaq slightly higher. with the nasdaq, the only one of the major three indices that is tracking for a loss in february. a brutal january where stocks lost about 5% of their value. the big winner is gold for 2016. gold is on track for its best month in four years. coming up on the show, we'll
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talk to the ceo of one of the nation's big gold minors, newmont mining, that's on the other side of this break. whole communities are living on mars and solar satellites provide earth with unlimited clean power. in less than a century, boeing took the world from seaplanes to space planes, across the universe and beyond. and if you thought that was amazing, you just wait. ♪ hey kevin. hey, fancy seeing you here. uh, i live right over there actually. you've been to my place. no, i wasn't...oh look, you dropped something. it's your resume with a 20 dollar bill taped to it. that's weird. you want to work for ge too. hahaha, what? well we're always looking for developers who are up for big world changing challenges like making planes, trains and hospitals run better. why don't you check your new watch and tell me what time i should be there.
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we were talking about the big year for gold. newmont mining shares up 40% this year thanks to the run up in the price of commodity. brian sullivan is with the newmont mining ceo gary goldberg in hollywood, florida. >> quite the shock, the best performing asset class of the world, minus a weird thing we don't know about is gold. believe it or not. gary goldberg knows a bit about gold. you're a lifetime rock guy. a mining engineer, now running newmont mining. thanks for joining us. >> good to be here. >> what is behind gold's run-up this year? best performs asset class of the world. >> fundamentals medium to long-term are good for gold, both in supply and demand side. you expect new mine supply to drop by about 17% over the next five years. demand is still strong. asia still the major place for gold. half the gold is consumed in china and india with middle class in china today at 300
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million going to 500. india moving to 500 million by 2025. that's all good for gold. here over the last couple of week, what's happened? you had a lot of uncertainty. yourates, which i think dampened the price of gold last year. you finally have seen that come off over the last -- >> it sounds a lot like the oil story, honestly. multiyear price decline. lack of capital investment. lack of capital spending will ultimately lead to a supply constraint. with oil, that is not happening yet. where are we with gold? and other commodities? >> well, i think we've been out a little bit ahead. you've started to see the price of gold drop since 2011, when it peaked. so we've been at it a little bit longer in terms of that reduction. the industry has been responding sooner than some of these other industries. >> without getting too -- i'd say in the weeds, but i guess it's in the mines. what is the outlook for gold in a negative interest rate world? >> i think that's a very positive thing. when you look at -- where would you put your money? would you rather put it in gold,
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that doesn't -- has less opportunity to depreciate? i think the better place, of course, is to put it into equities. and, of course, new mining would be one of those. >> and that's another question that i've heard from our viewers, is why should i buy newmont mining when i can just by the gld go together? >> i think the key thing, and i think in the past that might have been a good case, because we as miners didn't do as good a job of maintaining our costs under control. so as prices went up, we followed it up with our costs. we have really been focused getting our costs down, running our business, our mining business, like a mining business, like you said. been in mining for 35 years, and that's been a big focus at newmo newmont. make sure we get the technical fundamentals right, make sure we're doing the discipline decisions effectively so we can return the best. last year we returned the highest total return in the first quartiles. >> a lot of discussion about a global macro discussion. do you think we will have a recession? what do you see? >> we see different parts.
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i think the u.s. will avoid that. i think europe, we're keeping an eye on right now. other places -- ultimately, i'm not the chief economist to depend on this. our focus is really controlling what we can control within our business. i think we're doing a good job of that throughout the business. >> how important is the low-cost of oil to you guys? talking to folks last night, oil and fuel costs are your biggest costs. are they not? >> it's one of the biggest costs. labor is still the largest cost. >> still larger. but oil is a major deal, right? gasoline, out in the middle of the forest. >> exactly. for every $10 change in the price of oil, $40 million to our free cash flow per year. it's significant. >> for every $10 -- >> it's $40 million of free cash flow on an annual basis. sara and simon, that's not a bad trade. $40 million in free cash flow. we did not get into the discussion of whether gold is a currency. i'll leave that to sara. she is the currency expert.
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>> not a currency. thank you. i did enjoy that conversation. he agrees, right? >> thanks, sara. >> brian, thank you. and gary, as well. we do want to talk about the oscars. there were a few big winners during last night's academy awards. "mat max" "fewer owe road" and leonardo dicaprio with his best performance in "the revenant". let's look at the winners and losers. justin chang, chief film critic for "variety" and lena rizic. best picture was an upset with "spotlight" is that a bigger winner or what about mad max with the most oscars? which is more profitable, which has more staying power and value in terms of home entertainment? >> i think for "spotlight" the major win, the fact that it won best picture when it was a little underdog in the race. it started out as the film to
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beat and then as the season progressed, "the revenant" took the reins won a couple awards, best director award, and he made a little bit of oscar history as one of the few to win back-to-back directing awards. for "spotlight" that's the kind of impact that best picture prize that they can trump on their posters, on their dvd boxes that's going to be the main thing to take away. and "mad max" was expected to win the below the line awards, the film making craft award. so while it was a great night for them, it wasn't entirely a surprise. >> do you agree, justin? >> yes, i agree with that. absolutely. and it was really heartening. "mad max" is one of my favorite movies of the year and to see the love that was shown, that film and its director, george miller, probably the most thanked person on stage all night, but this is a great victory for "spotlight" as well, another win well-deserved.
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you have these two films, one, you know, of a modestly budgeted independent film from a relatively new player on the scene, open road films and then this massive you know, studio juggernaut that dominates in the technicals, that's been the narrative of past oscar shows but it was exciting to see "spotlight" the revenant coming on strong, and you know, to have won best director. that was a surprise at the end, i think. it's rare to see a film that's low key and modest and this good to win the prize. >> justin, the standout for many people will be the degree to which chris rock and the team took on the issue of diversity again and again yesterday. and even the academy at one point lecturing people in the auditorium about the role they had within society, which as a foreigner was like, wow. i mean, obviously, the academy had to pit on a good tv show,
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that was clear, in order to make the whole thing fly. but do they become a hostage to fortune in calling out the audience as strongly as they did? do you think the industry is going to move as rapidly as they asked them to? >> i don't think -- >> i don't know. >> justin, go ahead. >> no, you please go ahead. sorry. >> well, i mean, the film business is a slow-moving business. movies take a long time to get made. so to see that call to action, i think, was great. and probably overdo. whether, you know, it will result in us not seeing the oscars, hash tag next year, i hope so. but i'm not entirely certain that's going to be the case. >> justin, do you want to complete the thought there? >> i agree. it's a slow-moving process, something that needs to be brought home every year. i do wish chris rock, who did a great job with his opening monday log, had focused on the fact that diversity is more than just a black/white issue. i think that really egregious and awful asian kids should have
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been cut from the script. i don't know what they were thinking. and it's kind of a shame that, you know, asians, latinos and other minorities were stim relatively invisible on stage last night. >> it was a very political oscars between that and climate change and joe biden. thanks, guys, for weighing in. good to see you both, justin and mill ana. coming up on "squawk alley," apple's lawyer. you can't miss this interview in a few minutes. this just got interesting. why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision,
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