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tv   Squawk on the Street  CNBC  April 15, 2016 9:00am-11:01am EDT

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potent things of a flat tarks it's border adjustable which means all exports are tax-free and imports pay the 16% flat tax. that will brick millions of high-paying jobs back to america and it's a much better solution to donald trump's 40% tariff and will drive up costs for americans and start a trade war. my solution fixes the problem. >> thank you so much. >> time for "squawk on the street." we'll see you on monday. good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber with the premarket exchange. the stock is focused on three things. stock. inlienld and the opec meeting this morning. europe is ready to start their session.
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empire comes in ahead of expectations and we'll get industrial production in just a few minutes. our roadmap begins with a close eye on dow 18k and what to expect from doha. >> citigroup sharers are trading in the green, this after the company reported a better than expected quarter despite a decline in profits. >> and senator sanders going after it again with jeff immelt in a very heated debate in brooklyn last night. first up stocks looking to extend their winning streak. the dow ending within 74 points of 18,000. meantime oil prices falling this morning ahead of the meeting of the top producers in doha. and the chinese economy grew 6.7 in q1. that's exactly in line. >> they're starting to deliver on the government's numbers. the fact that they couldn't deliver the government's numbers is showing that they've really
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got their act together. by the way, the state owned companies getting a little more leeway. they generate stuff they don't need. oil, i think it was amazing to me that it kept ramping right into the meeting. it's very hard for the market to rally. it's very hard. proven to be a state-bid market. oil's got to start churning up. i still think china's coming back, but this oil number's got to be -- it's got to be up to 43, 44 in this meeting, and it's not going to. >> of course, the gdp number is the slowest since '09. >> right. >> fixed asset number, it got a lot of people's attention. the estimate was 10.4. >> 25% of the exports, they go right to europe. so if europe gets better, china, they're much more connected than our economy. i still believe that the dumping is going on everywhere because
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they don't have the need. the values of houses, they're getting inflation. the rate hikes are working, but i do think that obviously so much in china and oil -- i think china's fine. oil is not. they're let manager think that this meeting is going to be a fiasco. >> in china, you're talking total bank loans up 25% jeer over year. >> those are leak -- >> well, i mean it doesn't appear that they're dwiting as much growth for flooding the market with as much money as they are. >> that's true. not yet. i think this is the lead indicator you want to look at. this shanghai deposit didn't go down. we talked about it all the way down and then it went up and we didn't care. >> and the service sector is not coming around for the way they anticipated. >> i just think you've become
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sanguine on china. >> i am becoming san jean. yesterday you were talking the regime. >> i was talking on the regime. >> i were hoping they were cracking down. zombie companies. they have a lot of zombie companies. >> they do. if things are starting to look better, will they keep cracking down or let it ride? >> i think they might let it ride and it might be up to every country on earth. right now it comes to the i.t. -- you know, the trade commission is looking at dumping aluminum. look at what happens is they put the tariffs on. things more than double. people have to protect themselves from china. this has become more universal with politicians, almost universal. obama, very strong protection. much stronger than people acknowledge. >> speaking of emerging markets let's get to citi. first quarter earnings of 1.10 dollars. that beats estimates.
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revenues above consensus. citi grew loans into deposits but added market-sensitive products. trading down 13, they had guided down 15. ib revenue down 27. they guided down 25. >> march was good. april's in line with march. that's a very good sign. this is 72% of tangible book value. if they get the highs, they can buy a ton. like the fact that citi holdings is going away. remember, that citi holdings has been real. it will go away by the end of the year. a magnificent work by corbett corbat. i think corbat is going to be the worst of first in terms of what he's done with citi. this is very encouraging.
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>> really. >> no. i just made everything i just said. >> no. i listen to what you have to say very seriously. >> i do a serious amount of work so i think it's good you do that. >> i'm aware. >> i worked on this and the phillies. >> don't even start with the phillies. >> i'll start with corbat. >> what about book value? let's work from there? >> the biggest discount they've ever had and you're going to be buying a particular for 72 cents when you get that buyback. >> and you think these banks will trade back to book? >> if the government decides that thiel return, corbat will buy dividends. if you want to put rangings in, it's going to be jpmorgan, then citi, then bank of america, and
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then wells. >> that's interesting. jpmorgan down 11, then citi and b of a with 16. >> b of a is -- it's kind of interesting. they buried the lead. their mobile app is struggling. it's by far the fastest growing app. as your app grows, you're allowed to cut people. let's say i check my banses three times a day. that costs them money. if i can do it on the app, it doesn't cost them money. their growth was extraordinary. it wasn't like they went to the q & a. you know how i like to write conference calls, how my next life i would advise conference calls. i mean don't bury the lead, mr. moynihan. that is the story. they have the best tech. the best tech. >> speaking of that, how about this bloomberg piece.
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they're cutting out airfare, hotels, entertainment. >> what are they doing there? >> they've done a lot on transitioning to younger bankers. >> that's right. in his letter in the annual report, blankfein and he focused in part on how they've been able to reduce expenses and reducing head count. they've done that, but apparently there's a lot more. >> when i worked at goldman sachs and the professor at bucknell, i had dinner the other night, he's a great professor. when you submit expenses, you travel. hotels. i mean you try to find the cheapest hotel. i was a motel 6 guy when i was on the road for them. i was going to syracuse and i was like, do you have any roadways? >> here, roadways? mcdonald's. >> you weren't sharing rooms like they do at walmart. >> no, but you did not do -- i
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mean if lloyd blankfein looked at my expenses, he would say, cramer's good. he takes the subway, the rocket up town number black car for cramer. nifr took a black car once for goldman. are you oust your mind? when i went to go see balmer, microsoft, when i brought that in, paid for it myself, the airfare. >> i love it. >> i worked for bill kruver. geez. he's the best. he's the best ever. they never let that stuff go. the most intense presidential debasement hillary clinton and bernie sanders squared off ahead of new york's tuesday's primary. sparred over a number of issues including wall street banks, minimum wage. bernie sanders took aim at jeff immelt once again. take a listen. >> what we need do is to tell this guy immelt who's the head
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of general electric, he doesn't like me, that's fine. he has outsourced hundreds of thousands of decent paying jobs throughout the world, cut his work force and by the way, it turns out that both verizon and general electric in a given year paid nothing in federal income tax despite making billions. >> of course, the two sides have been going at it. immelt's op-ed. and sanders earlier in the week saying i welcome their contempt. >> yeah. this is a new philosophy. i think that those of us who follow technology companies, i think it's interesting that he's not thinking tech. the tech companies make nothing here. i mean there is no reason for jeff immelt to have a factory in vermont. he could have that factory in mexico and pay those people $3 an hour with no controls, no
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health care, no unions, but he keeps it in vermont. >> mr. sanders' tax plan includes what he believes will be 100 additional billion from corporations that don't pay their fair share, a trillion over ten years. of course, that's not the key part of his tax plan which evolves around a financial transactions tax. if you look behind the research it starts with the caveat emptor from the guys who wrote it in 2012 but it would call for 50 bases points. 50 basis points on bond transactions. they think it would perhaps cut trading by 50%. but raise $300 billion a year according to the research. >> to make sure nobody trades and we make a lot of money. i don't want to make fun of the guy. he's a senator and there's only 100 of them. how does he feel about the workers? >> ted cruz's tax plan is worth a read too.
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when we come back, a courtroom showdown today between a government and a firm which shows shares of fannie and fredd freddie. and terry lundgren. we're going for four straight days on the dow and the s&p. more "squawk on the street" from post 9 in a minute. 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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breaking news. let's get to rick santelli. >> down 0.6 on our production. of course, that's a month over month number. a last look also, lost a tenth from down a half of 1%. now stands down at 1.6. let's look at the ratusage rate. they've been sliding. that's well below the expectations we're looking for.
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also a downgrade, the last look, february originally received 76.7 now stands at 75.3. no matter how you slice it, it's a tough one to quantify and various aspects of mining and economy all figure in. it seems to have turned. all in all, lots of questions going on here. david fab eric back to you. >> all right. thank you very much, mr. santelli. stand by because i know you'll be interested in this story. in about a half an hour oral arguments are going get in the way between perry capital, large hedge fund here. now, the case states back to the government's decision in 2012 to change the terms of its bailout of fannie and freddie. what had been a payment of a 10% dividend became a sweep of all the profits to the treasury, and
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those profits have amounted to $250 billion in total versus $185 billion that was contributed for the bailout. perry along with other shareholders sued contending the government was taking money from shareholders. after a loss in 2014, perry appeal and new documents unsealed this week which seem to poke a hole in the golf's defense in its change to the approach to the gncs and their profit may bolster an appeal. the government contends funneling it would help to protect tax players from future expected losses but perry capital will argue the government knew just the opposite. profits were about to explode and they'll rely on a deposition of a former ceo of fabny may in july to make their point. here's perry capital's attorney
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matt mcgill. >> the ceo testified that fannie mae and freddie mac were going to be profitable for the foreseeable future and that would result in a write-up of some $50 billion of deferred tax assets and it was at precisely that moment, literally days later that the government made a decision to take all the profits of fannie mae and freddie mac for themselves. >> mcfarland testified that she told the treasurer on august 9, 2012, that fannie mae was, now, quote, in a sustainable profitability, that we would be able to deliver sustainable profits over time. now mcgill says the reasons the treasury and faa cited for sweeping profits have been shown as false given the testimony received since perry first lost in court.
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>> in the lower court the government told a story and the story was in 2012 fannie mae and freddie mac were on deaths door and that the only way to keep them alive would be to do this trade where they would trade this dividend for a nemt worth sweep. what it showed is that was false from the beginning and this, of course, is always happening right at the moment, at the very moment that the government is experiencing a crisis over the debt ceiling. it just so happens that the billions of dollars that poured into treasury over the course of 2013 staved off the debt ceiling crisis for several weeks. >> this morning perry's lawyers, mr. mcgill, mr. olson from gibson dunn, they're together, and, of course, the government will be in front of the d.c. court of appeals making a case looking for an order that will
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come from the court, they hope, that vacates that third amendment. they should get a ruling let's call it anywhere from six weeks to nine week, something like that. a fascinating story that continues to be followed closely. a lot of twitter traffic earlier in the week when the documents became unsealed and therefore were allowed to be in the public realm as will the arguments today. >> preferred or -- >> that's what perry holds. it's also what berkowitz and fairhome -- where trials were being used are going to be useful, they believe, and then you've got ackman in a lot of the common and some prefer. but, jim, if the d.c. court were to rule in perry's favor, all of the -- all the equity related to these gscs would go up as they did this week when we at least saw these documents for the first time. >> i want to caution people. that's a very -- what we heard was a very compelling argument but the other side has been
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winning. >> they didn't even get to make real oral arguments. >> right. >> we'll see. d.c. court of appeals has heavy hitters as you know. douglas ginsburg. they either have been considered for the supreme court or are always talked about. >> professors of mining. >> we'll find out about that. we'll get crime 'eers "mad dash," count down to tauping bell and take a look at another premarket. the dow is coming off its best close since july and the s&p, its best since early november. don't go away. (boy) ma, pa - why do we settle for cable? (mom) because we're settlers and that's what we do. (girl) but with directv and at&t, you can get your tv and wireless service from one provider. (dad) are not we your providers? do we not provide you with this succulent jackrabbit pie? this delicious graywater soup?
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all right. we almost got another week in the books. of course, villanova is going to ring the opening bell. mr. cramer may have had something do with that. >> the wildcats. there's the coach up there. >> all right. time for the "mad dash" as you hear the cheers on a friday. where are we going? >> this may be a deal too far. this is 57 million shares being priced at 9.25. this stock did go out much, much higher. ten and change. here's the problem. when oil's down as it is today, they may not hold. this is the one right ahead of doha, but it is a terrific discount to the blast sale. >> remind everyone of what ensco does. >> they're an oil driller. if we were to look at it a couple of years aerks it used to have a very big dividend. if you believe -- and i don't.
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deep water drilling is so out of favor. i mean we saw energy 21 the other day. deep water drilling. it is best. if you can bierks get them in. they upsized the deal. it's going be 50, you're going to be able to flip and make a little money. i want to warn people all these deals have worked. initially they not when oil dips. pioneer did. >> all these primary offerings from these oil related companies -- >> right pioneer, devin, newfield. >> their coffer is getting more money in. >> when you listen to the bank conference calls, you know the bank are pulling the strings here. when they say raise equity. >> bingo, they do equity. but they made you a fortune. >> by the way, we want to be the underwriter.
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>> no. >> see, the banks, of course, they say that. >> i mean -- keep this in mind that this is the fight. what better than transocean. >> all right. >> all right. we've got a few minutes to the opening bell. this is the ncaa champion, villanova wildcats will ring the bell. jim's going to talk with head coach jay wright.
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you're watching cnbc, "squawk on the street," live from the financial capital of the world. opening bell in minutes. we got citi's earnings. that comes in advance of next week. 103 s&p names next week. goldman, netflix, ibu, qualcomm, you name it. >> you can't really do homework all on this. there's too many. that's the way it is. >> meanwhile industrial production was no good. you heard santelli tell you down 0.6.
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mining down 12.9 year on year says a lot. >> troy global got an upgrading. caterpillar is upgraded. be careful. those stocks have run. >> there's the opening bell. the nasdaq today, it's cnbc's "make it," a story-telling platform fueled by america's on tre pentrepreneurial spirit. over at the big board you can probably see by now it's the villanova wildcats celebrating their ncaa victory and jim is going to talk to jay wright and the team's captains in a few minutes. you must be thrilled. >> i am. this is philadelphia. we haven't had much to cheer for. i did my show there in 2013. just love the school, love the people. love the model. we're going to talk about how
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their model is different. >> yes. and maybe coach wright's future. >> coach wright says he's never going to leave nova. >> very nice. what have we gotten to. a couple of other things going on. actually today mcdonald's. i was looking at a chart of fast food versus casual dining. they've been showing off at their operator's conference. >> now, remember, estabrook has done a remarkable job. he's going introduce whatever's been best working around the world and the kiosk moving in and out. he's going to do loyalty too. he's going to get to everything. you know, the idea that you don't have to wait in line -- you'll not have to wait in line. it would be really fabulous. estabrook is very forward thinking. >> i mean because you're early here and right in terms of the movement of the stock. you liked it below 100 as i
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remember on the turn. >> yes, i did. >> and you believe in estabrook. here you are up significantly and you think there's a lot more to go. >> i look at what howard schultz has done with technology and starbucks and what patty doyle has done with domino's and i know that mcdonald's has been the least technological of any of these company, even panera 2.0 as they bring in shakes. technology gives you another leg up and you haven't seen that with mcdonald's. 's ta brooke has seen what worked in australia and in europe. he really gets it and everybody's bought in. the franchises have bought in. these are a remarkable figure. he's really energized that. people want to have a mcdonald's franchise. >> today by the way, the anniversary of ray kroc's first restaurant opening in des plaines, illinois, what a story. >> what a story that was.
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>> it sounds like you don't take a gander ahead of this meeting. >> no. look. this meeting -- remember, the chatter of this meeting started february 11th and if you take a look, that's when it's streaming 26. there's no way anything that great can come out of the meeting. i understand that. but, remember, i think it has. been underneath them. that's different than where we were. the demand has picked up around the world including china. yesterday the iea came out with statistics. the u.s. is beginning to drop. it's finally dropping really hard. if you're on the wells fargo conference call, you know that's a major concern. they're the kind of companies you may not want to lend to. be aware that these marginal producers really -- >> they're getting driven out.
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>> yes although there is this belief if they get higher, they'll come back quick sflie that's true. they'll sell futures oil if it gets that high. >> because they know they can lock in. >> that's what they know they have to do in order to please the banks. at the same time there's nothing you can do if you can't start new drilling because it's a little too expensive. i saw a downgrade today. actually the finest drill never the country. then you're a little concerned. what are you hearing about baker use by? >> there are various reports. you saw them reporting on the potential of carlisle being a buyer. by the way, we're getting close. april 30th. either one can walk away and there's a thought they could use to do so. the breakup fee is $3.5 million. as of now, you know, we need an update on that, but it appeared they were willing to go to cord against the doj when it came last week and a lot of it was
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focused -- you were talking earlier it was focused on deep water drilling. it was all about deep water drilling. every market -- they're within deep water. >> i understand deep water drill -- the reason they like it is there's millions. it's not just these are short lived assets. by the way, exxon field started in 1928. they did it. they bought another oil company. paid too much money. but deepwater drilling makes a lot of sense. chevron's got lots of coming on this year. the problem with deepwater drilling is it costs a fortune going in and the only ones you see going are the ones that have been much in advance that did years ago. it takes a little time. >> lots of discussion in fo
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footwear. they say they're seeing a lot more promotion in men's basketball, teen high-profile names. >> this is the mall. the mall is the theme. i mean i was asking the guys from gamestop yesterday, he said, listen, their mall traffic is not as e everybody else. canon admitted it's terrible. footlocker mall, hearing numbers down 15%, 16%, 17% traffic. the mall is going away so fast it's kind of astonishing. the really good retailers are amazed at the millennials. >> there's also some thought that people still go to mall bus they have their mall with them and it's a social experience and then they buy stuff on their phone anyway. >> them they take pictures of each other. the only store i know that's doing well is sephora. the reason is so they don't have
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blemishes when they whack out of the apple store. >> who says i don't do that anyway. >> how come i break out like a teenager if i don't take it off? >> on the subway, you know -- >> we're going to talk to lundgren later this morning. >> he's still making some money in that segment. you've got ask him. the mall traffic is hideous. i'm not kidding. i'm talking secular decline. >> talking about declines, i'm looking at allergan. >> are you kidding me? >> it's up 28 cents. >> that's fine. >> i mention allergan because other than the day that brent saunders, ceo sat here the morning after the deal with faiz er pfizer, that stock has gone down
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every day, jim. there were reports of negatives from some research i had never heard of, but it's one thing after another. you talked about it. 217 on this stock. do you now take a look? it seems to be sold by everybody. >> i did a consult with my travel trust. we had some allergan. i said, listen -- we bought some here at 220, probably will buy some at 200. the fact is there's a note out saying they're going to indeed close. they've got a little more than $40 billion in debt. as david said yesterday, they can go buy someone. that's the idea. that's what they'll do. some say they won't get there. i have a pretty high conviction on it. you listen to sara eisen and jack lew yesterday, secretary jack lew, and you do get jittery about what can and can't happen because it seems like everything that hasn't -- everything that's gone wrong has gone wrong from
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companies. verizon was it. >> yes, right. >> so just be aware that allergan being up is like a three-point play with four seconds against unc. it doesn't happen all that much. >> no. it's a rarity. at least lately. >> you know, i'm waiting for unc to stop and play at the floor rather than going half court. >> how about the game opener for nfl in september, carolina at denver. >> that's smart. >> yes. >> how about the two home games around christmas. the phils and eagles. the wife doesn't like that. >> that's all right. >> i can tell her we're going on vacation to philadelphia for a week. >> who would want to do that? >> w.c. fields. >> it's almost perfectly flat let's get to bob on the floor. >> it's almost perfectly flat. oil is down and not surprisingly
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the stocks are down, but not as much as you might think. even between oil and energy stocks. the more important story is financials. not only a story today but a story all week. citigroup, you see it at 2.5% on its earnings. good nuchlt regents financial. also good enough. not great, not outstanding. some flaws. not as bad as many people feared it might be. there you see it moving. i want to emphasize what it's looked like for the week overall. regions up, bank of america, jpmorgan, even wells fargo. remember, this is unloved of all the sectors. teen value guys weren't picking on them. this has changed a lot this week here. we have seen modest loan growth in most of the big names. and, of course, while there has been some provisions set aside for possibly defaults on the
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energy book and some of the marginal producers are being squeezed out, we have seen comments that they have lowered the chances for big energy defalls down the road. there are defaults but the concerns about really big ones have mitigating it as you see oil has moved up. of course, the interest has come up and that interest margin we have talked about is very tough for a lot of banks. tough for regional banks. that's because they get most of their money. they get a lot of their money from loans. they don't have a lot of the trading that the big money center banks have. so they need that interest income higher t regional banks, to be able to make their money. the bottom line here, a pretty good week for most of the bangs. i want to turn our attention to the other. the ipo market finally starting to open up. that's the exchange operator. that's good news. that's high theiren the initial
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amount of shares offered. the price stock, 17-19. they priced at the high end of the range. take a look at the background on them. they found that in 2005 they are the second largest exchange, they say, by -- for equities by market share. they have 21% of the share of the equity volume and they're most famous for a 2012 trading. they caused quite a stir in the markets. >> apparently there was some kind of system overload. the system itself crashed. i'm trying to be fair to everybody. this was an epic embarrassment. >> the rest were erroneous trades and a few pennies. my question here, when did it happen, when is the stock going to reopen if at all. >> and four years later it is supposed to reopen today. i anticipate it will open around 10:30 a.m. eastern time. as for what's next.
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a lot of them coming. three big naples, mgm growth properties, american renal, and secureworks. let's see if we can get this busy going again. guys, back to you. >> would that be something? >> that would be something. you see a city. listen, no ipos. obviously goldman cutting expenses, that would be good for goldman and morgan stanley. the equities business has been ill. >> it's been dead. first quartering nothing. >> you can see why these stocks would go up. by the way, there was a downgrade to sell kwels fargo to piper. wells is the one that's become the whipping boy this quarter. this would be big for goldman. there have been no deals. they kill us and get it.
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if they kill the deals, the heck with them. we'll come at them with everything we've got. >> got it. >> let's check in with rick santelli. good morning, rick zbhood morning. we're going to have a long-term charge of utilization rates. but today merit as look. this chart goes back to the summer of 2010. why did i pick the summer of 2010? because at 9:15 eastern when i brought this number out, i knew it was weak and i talked about the trend being lower, but the read of 74.8 is the lowest since august of 2010. we need to factor that in. let's look at an intraday of tens. let's be fair. we test the upper end of the range which has recently been around that 180 level. yields are definitely up on the week but they dip down a bit on the day versus yesterday's close.
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boy, you know, the '08/'09 level held. does that mean we're done testing it? i'm not sure. it'sing is can't it held that level. we've been talking about the hyg. this is the investment grade. wow. what a moon shot. reach for yield. even yesterday and the day before, tens and 30s were invokeded on the auctions. a dollar/yen. what a week a difference makes. we're toying with, 109 now. it's been higher. when you look at the year, you get a bit depressed, that's for sure. carl, back to you. >> thanks so much, rick santelli. when we come back jim is going to talk with jay wright, the head coach of the villanova wildcats.
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from from the opening bell, wildcats. three-point shot at the buzzer. coach jay wright. senior captains. right? i want go right there. this is a different kind of program. you go to school. you graduate, you graduate. tell us about the program, why this is not just another team, okaysome. >> it's important to us. we get guys that want to come and be a part of something bigger than themselves, you know. we've got a 100% graduation right. every guy that's been there for four years, they graduate. that's why they can be here today. they're way ahead. kris jenkins, he made the shot, he's had a dream to be here. he watches. >> that's the essence. repeatedly, we all watch the games. always undervalued like the stock. what was it like to be able to play and realize that even the
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great announcers say, look, these guys can't be counted on and then blow out everybody. >> i think it's an attitude we have every single day in practice. we try not to listen to anyone on the court but focus on the 25 to 60 feet. >> how about the teamwork? when i see everybody play, i don't think, two years and gopro. you want to go four years and finish and get a degree. >> definitely. everyone understands as soon as you come in the program, we're hard workers yochl u start working from day one. you're so good you can leave early, so be it, but if not, you get to the point where ryan got to. he has great leadership. want younger guys who lead great examples. >> the idea i see about villanova is teamwork, which is what you get in business. the great businesses that win are ceo inspires, everybody bice in. it seems like the noble way to do things. >> that's what we want.
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we want each guy to benefit individually but we want him to believe that the best way for me to be successful is to give everything to the team. both of these two will graduate on time and i think they will play in the nba, but it's because they gave it in to the team, being a part of villanova basketball. that's going to get them the result they want. >> and the idea we've seen you grow in your role, you want the best guys you can coach. not necessarily the best players, right? >> exactly. we want the best most talented people that believe if i go to villanova and i become a apartment of that program,ly be the most successful i can be as opposed to a guy that says i'm a great player, i want to go to villanova and get out of there as fast as i can. i want to be a part of it and i want to believe in it. >> coach, you yourself -- obviously other opportunities have been open to you. you seem to bleed 'nova, bleed
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wildcat. jimmy is putting me on the spot. >> i know you're staying. i know you're saying. >> i love what the program is about. the university, our president. father peter donahue, our athletic director, they believe the same thing. they want these guys to graduate more than they want them to win a national championship. >> so do we. >> it just fits. i love become a part of that. >> i love the family. father peter sat with my dad during the show in 2012. my father was so proud. i spoke to your dad right before the game. he didn't want to talk about the stockmarket. i said, listen, i think your son's about to win the national championship. but obviously it's family place, right? you guys are very much involve and your program is very family. all the families are at the games. >> as a matter of fact, some of their parents are here today. but our group of parents that come to the game, they're like -- they're like a mob, man.
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they come together, they stick together, and, you know, we have a saying once a wildcat, always a wildcat. that's for our players, the parents of the players and all the family members. we want them to be part of this for life. >> we're very proud of you. i want to thank you so much. i'm going go back to carl. congratulations once again. >> thank you. >> great stuff, jim. we'll get stock trading with jim in just a moment. ♪ there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.
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- omg. you are so funny. in the time it took me to type that, if i were driving 55 miles an hour, i'd have driven the length of a football field blindly. not funny at all. don't text and drive. the more you know. great time for a shiny floor wax, no? not funny at all. don't text and drive. not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend,
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if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. nice work. that was amazing. >> they're fabulous, my hooers. fitbit. pipe eer comes out and says stick with it. they keep it as a whole. this is one of the most if not the most controversial stock in the market right now because the bulls say the health and wellness play, which i'm saying, target gave it to all of their employers, the bears say it's just a fad not unlike gopro and i have to tell people, look, you've got to judge.
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i believe, but i've been dead wrong. winner, jay wright, loser, fitbit. >> jim studied up this weekend. >> yechlt hs. >> very nice. >> that's such a big win. >> they said it could never happen. >> they did. the odds were so bad. wow. like molly no show in the movie "the gauntlet." >> congratulations to you. >> thank you. when we come back an exclusive with terry lundgren. don't go away. if you're going to make a statement... make sure it's an intelligent one. ♪ the all-new audi a4, with available virtual cockpit. ♪
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technology moves faster than ever. the all-new audi a4, with apple carplay integration. good morning, welcome to "squawk on the street."
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carl quintanilla, sara eisen, simon hobbs, and david faber. we go to rick santelli. >> this is a preliminary read. it isn't a final. we lost the nine handle. i'm a little surprised. 89 president 7. our last final read, of course, for march was 91. how bad was it? if you go back to september it was 87.2. here's what's interesting. yo view to go back to november '14 to find another. they're not common as of late. when you look at the current conditions, it was 105.4. just a little dip from our last look. so we want to pay attention to this, of course. but it will change in about 2 1/2 weeks. simon, back to you. >> thank you very much, rick. >> gop front-runner donald trump looking to regain his winning mojo over the weekend.
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new york, of course, sets for primary on tuesday with trump holding a commanding pre-poll lead. an ohio governor john kasich vying for second place taking a not so direct shot at trump's anti-trade rhetoric during an interview with our own larry kudler last night. take a listen. >> competition innovation is good. i think, larry, the problem is when we do not enforce the trade rules because these countries are sneaky. you can't not let people cheat. so if they cheat, you've got punish them. if they don't cheat, you trade with them. that's where innovation comes, that's where consumers benefit. so this whole business about we're going to put all these tariffs on. willy nilly? no, that's not the issue. the issue is when they cheat. >> john kasich speaking to larry kudler last night and cnbc contributor larry is with us this morning. good morning. >> good morning, simon. >> kasich has gotten better at
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this. >> you're right. that's a pretty good observation. he's got good messaging now. he's on a growth message. i like his liberalized trade position. i think he's exactly right. at the beginning of that there's another clip. he kind of hedges. then i push don't tariffs hurt consumers for example. and then he went into the competition, which is very good. so good for john. he's got a good tax plan. he's pro grouchlkt i think, by the way, he's going to edge cruz out for second place in new york which in delegate terms is actually worth something. >> i'm glad you raised something to ted cruz because, he was on "squawk box" for an hour this morning. it was a wide ranging interview. pra perhaps the most poignant was playing it. take a listen. >> the fed has for those with assets has drin up stock prices
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but that's not built on anything new or an increase in the intrinsic value. it's based on playing games with money which means a crash will be coming. >> in a sense echoing trump's prediction of a very massive recession. >> yes, yes, yes. look. i agree with most of what senator cruz said this morning. i thought he did very well. by the way, i thought arthur's solution was good. deregulate. cruze has a good progrowth tax refo reform plan. trump has one. it is very heavily comes down very heavily on businesses and very heavily on workers. 71% of the revenues in mr. cruz's plan comes from that business vet. to me, simon, with the greatest
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respect, doing want the u.s. edging toward europe. if you want to get rid of the income tax and appeal the 16th amendment and i was there when it was signed, that was in 1916, i believe. >> get rid of the income tax and go to a consumption tax. i'm okay with that. >> cruz says it comes in all stripes and shapes. >> i understand. all these plans have to be tweaked. the main thing is they want to lower marginal tax rates particularly on business which i still think is the key and i like what they're saying. trump i like, cruz i like. i thought kasich was impressive too. >> trump's at 15% on corporate taxes. cruz gets rid of them entire lchlt but he gets that 10% flat tax. trump is at 0, 10, 20, and 25.
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how does the -- how do these plans not blow a hole in the deficit. >> look. it depends how they're finally constructed, okay. mr. trump has too large a standard deduction, however, if he puts in full cash expense in, that will have a lot of growth impact. i want to say generically, i wouldn't pay too much attention to these models. they're good guys. if you lower it. full cash extension kbochlt territorial, i'm telling you the growth impact will be greater than any human living being believes except for me. sf i could whisper this silently, yes. i'm an old reagan supporter. by the way, if i can help this
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economy, business is important, we're not competitive, money is leaving, blah, blah, blah. >> let's talk about tuesday which is when they vote. i don't know if you can help me out. the "new york post" is endorsing trump with an interesting message. trump is now an imperfect messenger but carrying the best message. he's the best of new york values and the best hope for americans who rightly feel betrayed. >> mind you i haven't endorsed and i'm not going to endorse but it's an interesting editorial. trump does have the perfection. kasich was endorsed by t"the daily news" which doesn't have quite the following as "new york post." the times endorsed him, am i right about that? okay. it's an imperfect process. trump got there first with respect to the anger of the middle class which hasn't had a
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wage increase since 2000. whether i agree with that or not, okay, and then, of course, cutting taxes, he got there first. he tapped into that vein and he's never given up that number one pochlgts he's widening his lead. trump is plus 32 points. trump is at 54. kasich at 52. >> we're running out of time. we must mention what happened on tell investigation where bernie sanders and hillary clinton were knocking the hell out of each other at one point. i mean clinton may win this. she may win the fight, but for some of the bouts, she really looks as if she's on the ropes. >> i think it's a good point. she can't seem to put him away. you're right. last night was a screaming match. it was like your worst argument with your wife or husband. >> i heard -- what did i hear.
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i heard a lot of tax increases. i heard a lot of expand obamacare last night. i didn't hear stuff that i like to haefrmt other people may disagree with me, i respect that. but it just shows me she's in a tough fight right here in new york, by the way, where these -- >> she didn't want the debate in the first place, really, it would appear. she was reluctant to have the debate on new york territory, budget she? wasn't she? >> yes. i have to say one thing. poli mrs. clinton has to take positions. last night she dodged. i'll give you an example. bernie sanders wants to raise the payroll tax for upper end people. he wants to do that. mrs. clinton six different times didn't want to make a commitment. i think she's got a problem there. at some point he's going to keep hammering away. >> if she moves further to the
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left she might not win further down the line. we have to leave it there. >> nice to see you, simon. >> larry kudler. we have to talk about another big bank. citi's earnings and revenue topping expectations. the stock is trading right now. wilfred frost is back at hq with all of the details. hello, again, wilfred? >> hello, sara. coming in at $1.10 versus $1.03. the all important energy provision was $455 million. this was in line with forecasts. on the call we got the clear ens guidance of any of the banks on future writedown this year. if oil prices are close to $30, then we can expect another $1 billion of charge this year, whereas, 'above $40, the picture is a lot better. the cfo saying he's not confident yet this was the worst quarter for energy provisions.
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on the capital market size, they painted another picture. banking down 27% whereas equities and fixed interest were only down 13%. the call suggested that the m & a pipeline had an opportunity to bounce back on their own calls. some weakness in their consumer business in asia, but in the u.s., john says they definitely saw growth for the first time since 2008. as you know, also touching on the living women issue, they passed their living will earlier this week and the cfo said there's certainly recognition. we've put in a lot of hard work and that is somewhat reflected here. no doubt he delivered that line with a wry smile, albeit i could
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only hear him and not see him. city gained 2%. sara. >> thank you. wilfred frost on the banks. up next all banks launching significant gains. the dow inching back toward 18,000. we're off 26 points right now. can it hold its gains and will the momentum continue. and later an exclusive interview with macy's ceo terry lundgren. we'll be right back.
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what's ahead for oil and the critical week? jackie deangelis has more. good morning. >> good morning to you. that's right. our oil survey polled analysts, investors, and big energy as well to get their pricing as we head into the weekend where we get an answer out of doha. obviously it's created a lot of volatility. opinions are pretty much split. oil prices could move higher from here, but it's not necessarily much higher. in fact, in the second half of the year, most of our respondents think that you're going to see a wti and brent price of $40 to $50. remember, street estimates right now are going to see bigger rue bounds, maybe 60%
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$60 to $70. meanwhile it's definitely put a premium in this marked even though they don't know what's going to happen. more than 50% of our respon accidents said they think there's a greater than 50% chance something will happen, but they don't know exactly what that will be. and while they feel that a no deal outcome could take these prices lower, they don't necessarily think it will be much lower. most respon accidents said they don't think we'll see the bottoms that we saw earlier in the year when we got to close to $26 a barrel. the most important factor influencing prices right now, still over supply. that's the main issue. remember, go have an oil glut on our hands. global demand and dollar fluctuations still key factors. with respect to sunday, who holds the power? everyone agrees it's saudi arabia. but others say it's the iranians and others as well. some headlines how the oil minister will not go to doha, a
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delegate will go in his place, it's thoord see how they'll have an accord if you don't have the influences, the important people that you need to have the important conversation. guys, back to you. we'll wait and see. >> we'll see you monday if not before, jackie. thank you so much. jackie deangelis. meanwhile they upgraded. christina lagarde was with sara yesterday at the world bank meeting. here's what she said. >> we have slightly upgraded because we took into account the measures they have announced recently under the plan. we have a slight concern and we certainly will convey the message to the chinese authorities and hope they follow through and implement on some of the major reforms all such conditions that really need to lay the ground to sustain a sustainable growth and transition in china.
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guys, happy friday. good to see you both. maybe the story this week, stephen, is how cool some of these numbers are running whether it's inflation, retail sales, michigan just now. does that sort of cancel out some of the good news we receive with pmis? >> i think it's very mixed data and we receive an economic psych frl our forecast, 2%. real gdp. a recession is not our base case but neither is mixed growth. it's showing more milk toast, macroenvironment is going to be with us for a while. i think this is where we're going to be for a while. >> you think we bounce around for the remainder of the year? >> i think so. it looks kind of flattish. more flat than ish maybe.
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we would be looking globally. looking for a global opportunity. but i think the u.s. markets from here kind of flattish in the face of, as you mentioned, the fed's not going to move aggressively. earnings are coming in negatively. >> do you agree and if so is there a more creative trade than to try to buy some high-year-olds? >> i think he makes some great points. you talk to clients. they wonder why am i globally diversified when i can be in the u.s. but really better investment opportunities are around the world whether it's japan, emerging markets have been beaten down. so i do think there is a sense that going global could be where some of the better market opportunities are. >> when it comes to china, you heard this a little bit out of lagarde just there. the message seems to be things
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are better and that's why the overall market has been able to rebound. they're not out of the woods and people are expecting bumps along this transition in their economy and it's clearly a riching to u.s. talks. >> and it's a multiyear road that they're traveling. this is not multi-month. they're transitioning from a three-decade-old development strategy into a new one. there's going to be a lot of bumps. i think the 6.5 is where they have. we've seen it from emerging markets. >> i guess -- and i'm wondering, jeremy, what the strategy is then. you do have to be wary of economies or emerging markets or things directly tied to the story given the process is far from over? >> this is one of the big stories i've been writing about. there's old china versus new china. the old china is state run banks. new china is sort of technology, consumer companies. they said they have a goal of
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making an assumption based on economy. for the long run you have to be focused the newer china. like alibaba, ten senn, csxe is it. that's where you grou. not the old china state run companies. >> stephen, the biggest buyer on this market are ceos buying back their own company stock with their own funds. reuters ran a story suggesting that the number of companies that have announced buybacks is falling quite rapidly, and as their cash flow, you don't see companies able to increase their cash flow moving forward through the year. so you oom see what they're able to buy back diminish. >> mm-hmm. >> what does that do? >> again, we don't -- >> so the market will be flat because ceos are not buying back their own stock.
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>> that's a part of it. but another pa of it as well as valuations. you know, in the medium to long term, evaluations matter a lot. your points are well taken, but in terms of valuation, if one looks at europe or japan, a merging market switch are beginning their evaluations or they're your alley. >> valuations are much better for next year, aren't they? you could argue that the earnings rebound the second half of the year. the stockmarket could rise quite confident lie li into next year if we're to believe what the analysts say. >> you could make that argument. you can look at where valuations have been and are likely to be in 2017. your ally, you want to look there as well. not to disagree with you but valuations are very important. >> stephen, jeremy, good thank guys. good to see you both. >> thank you. coming up on the program, an ipo did not work four years ago.
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bats is trying again this morning. we'll have more on that after the break. owen! 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. oh, i don't hire people. i'm a developer. i'm gonna need monday off. again, not my call. 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,
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b.a.t.s is trying again on its own. bob is on the floor. any indication? >> we've got it. b.a.t.s is open. it's trading around $22. there we go. thank you very much. $22.50. let's recap what happened here. the important thing is price last night at $19. 13.3 million shares. that's above the initial talk. they've increased the size. 17-19 was the price talk. now trading at $22 and change. the company itself, remember, founded back in 2005 here. tight second largest exchange for equities. it's got about 21%. they compete against nasdaq as well as the new york stock exchange and it's the biggest. this is a very important ipo because it's a bellwether.
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number one, they have to get it out for their own purposes, of course, but, number two, as a bellwether or how the rest of the market may go. this is the first significant ipo since the beginning of december, believe it or not. and there's a lot of them that are waiting in the wings in the next week or two to see how this is going and determine whether or not they want to go. next week, we'll have mgm growth properties, which is a big casino read. many of the big casinos in las vegas. kidney dialysis owner and secureworks. that's the dell spin-off. there's many, many more waiting in the wings. at least 120 are on file. 50 as well. a lot riding on this. as you see initially, a very promising open for bats open manchtd remember they had that famous technology glitch.
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guys, back to you. >> we'll see what happens. straight ahead, macy's ceo terry lundgren live for an exclusive interview. we'll hear what he has to say about the future of the retail industry, malls in america, and the state of the consumer. don't go away. nothing unleashes power... quite like the human foot. introducing the 255 horsepower lexus is 300 all-wheel-drive. with twenty-five percent more base horsepower. once driven, there's no going back. this is my retirement. retiring retired tires.
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hour. the magnitude 6.5 quake toppled houses and buckled roads. 1,600 soldiers were deployed to help with the cleanup exports. transport minister resigning after details of absence of reports were leaked. she resigned after a discussion with the belgium prime minister. according to south korean and u.s. officials. they said the missile exploded in the air just a few seconds after liftoff that and you've got to see it to believe it. in montana three gunman decided to rob a local bar. one couple was oblivious because they only had eyes for each other. they continued to kiss throughout the robbery. the robbers left with an undisclosed amount of cash. they only ha
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back over to you. >> stocks trading near the flat line right now. the dow is down. the leaders on the s&p, transocean, chipotle again and macy's. macy's ceo is coming on the program. >> they're going to discuss the future of the industry and the changing consumer. our courtney reagan is live with ceo and chairman terry lundgren of macy's. take it away zbhood morning. i'm here in arizona on this beautiful morning. good morning. congratulations on a great conference so far. >> thank you. >> wrapping it up here today. i want to start by talking about the state of the consumer. last year when we talked you said consumers are spending but they're spending on their cars, their home, and putting in savings. they're not buying what you're
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selling. has that changed? >> that's what's driving whatever positive news there is in consumption and therefore gdp, such a large part of it, it's been in those other categories and the savings. the consumers have been saving. which is ultimately a good thing over time. but they're not in our categories to the degree that we would have expected them to be at this point in time and we're seeing that throughout the fashion retail industry. but, you know, it's just a matter of time when they've got their house, they've got their room extension, their automobile. they're still going to have savings left over. so we forecast our own sales to be positive in the fourth quarter and i think that's what's going to happen. >> and negative till then. >> we had -- you know, all of our industry had a tough year, so when you do, you buy the inventory early in advance and then you own it, you know. and then you've got to clear it through that first quarter, so i think we're now -- we call it our -- 2015 was our setback. first half of 2016 is our setup and then our comeback goes
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toward the end of the year and that's how we've database that's how we've planned it. planned or inventory, receipts, staffing. that's what we're looking at toward the balance of this year. >> one of the students hoar at the university of arizona really respects macy's and everything you do for the school and business. they shop at fast retailers. how do you win them back if at all? >> listen, clearly we've seen this impact of fast fax over particularly the last five years. there's an appetite for that growth and you're seeing more of that and you're seeing young consumers going to product that's very inexpensive, may not last for a very long time but it didn't matter for them. they buy it friday afternoon for friday night. so how we compete with that is always about product. so last year we've launched several new lines specifically targeted. we purposely -- we have a -- certain quality standard that we're going to live up to always and so there's not going to be
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exactly what they're going have, but it is going to be focused on lower price, great value, one, but also where we are getting them now is in the athletic category. so the millennial consumer is really driving that business for us. it's been one of the fastest growing part of our business. athletic footwear. athletic apparel. i would say that and some of the home furnishings have been doing well with young consumers. they're moving out of the house, getting their own place and they're buying furniture which they can't get from fast fashion. they're buying it from macy's. >> there's been a lot of talk about real estate. you made a couple of key hires. what are the priorities? >> first of all, thinkty last time i was on the show, i said we're looking for this person who has these skill sets that we don't have in our company. they had a true real estate expert that understands joint
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ventures, that understands transactions in the real estate world, that understands maximizing the value of your real estate portfolio. that doesn't exist in most retail companies. we have it now. so thank you. we had a flood of responses and we hired and outstanding guy with all of these skills and all of this talent. and doug, as he said yesterday to me when we were communicating back and forth, drinking from a fire hose right now. we've had all these advisers from east hill, green street, and, of course, some of our banker relationships that real estate expertise who have been working with us for several months on all of these subjects of real estate valuation and opportunities to maximize that value. and so doug is catching up. so his short term objective is to leadership all we have learned up to this point and then start representing us. >> doug tesler, i wanted to
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correct myself. simon has a question for you. >> good morning, mr. lundgren. you will be aware more than everyone else that stock this year is down 40%. on one of the key drivers is what you do. hence the reason you've made the appointment. hence the reason you put a specialist on the board. are you open to this? do you say, look, i think we can maximize that by going through a full spin-off. would you be open to that conversation given what's happened in the past? >> i would be. he's the expert. i'm not the expert nor is anyone in our company. so we actually, as you said, we now have some of that expertise both on our board as well as on management side. and so i'd be open to that. i'm just telling you it would be hard for me to imagine that he would conclude something different than the experts have concluded and the experts as i described the outside advisers have been the ones who have made
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the recommendation up to this point. but simon, we're wide open to all the best possibilities for us to make sure that we're maximizing the value and at the same time, you know, first and foremost driving our sales at top line because ultimately that's what's going to drive the top price for macy's and all of our competitors who have had similar challenges with the valuations of their company's portfolio. >> simon has another question. >> you would be one of the most respected management teams throughout in a details environment. what would you shay seay to shareholders? what would turn that around in the future given what you're doing now? >> well, simon, as i began to sark certainly we're going to maximize that with real estate, but the most important thing that's going to drive our business or drive our stock price is our business topline sales. when we grow on the top line, we're very good at converting
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that to bottom line. just a year and a half ago, we achieved that. five years of growth of averaging a billion of growth without adding new stores and then we reached 14% ebitda which is the highest. we know how to do that. we've got to a terrific broad-based management team of experts, but that's the key. that is the absolute key is making sure all of these moves we're doing now in the setup period are going to pay off to grow the business overtime and we forecast that for the fourth quarter. speaking of growing the business, another venture that you've entered into recently is with alibaba in china. how is that going? what are the learnings so far and are you looking to expand that for growth? >> yes. so this has been -- first of all, i think alibaba is, again, they're the experts in online retailing in maybe the world, but certainly in china. and so we have put the -- not only put the team of people in china, we've also put our inventory in china for this business we're doing with our
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relationship with alibaba there. so it's a relately narrow invento inventory. this is a learning process for us right now. we expect over time -- and this is where the eyeballs are. this is where the people are. but the eventual tourists. getting them exposed is part of our business, part of euro strategy here. i'm very excited about what's going on. by the way, ten years ago when i started looking hard at the china market and visiting there every year and multiple time as year in some cases, i thought we were going to open big giant physical stores. i've changed my mind completely by learning and being in consumers' homes and studying alibaba. this is a consumer that has been faster to adapt mobile technology than the americans have, okay. so i get it now. and so this is the way for us to
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start. we may eventually have stories there, but, you know, all of this is just changing in the way that we're thinking about how we're going to get to the largest middle class in the world. >> so a good start but a lot still to learn. >> a lot to learn. >> thank yo so much for joining us, terry. i'm going to send it back to you. carl back at the new york stock exchange. >> thank you so much. still ahead, recore's kara swisher or should we say san francisco mayor kara swisher, maybe not quite yet but kara will join "squawk alley" to talk about her potential plans in politics. we'll be right back. whoa. what's going on here? oh hey allison. i'm val, the orange money retirement squirrel from voya. val from voya? yeah, val from voya. quick question, what are voya retirement squirrels doing in my house? we're putting away acorns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? no, i'm more like a metaphor.
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whack back to "squawk on the street." rick santelli with one of my favorite guests. yra harris. he was already trading foreign exchange. boy, if you stacked all your
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cards that you traded over the years, it would probably be as tall as the empire state building. we could talk a lot of things. let's talk macro. if everyone is bank rolling us quarter after quarter, year after year, we lose money we keep running back to them and say we need more money but we trade them exactly the same, how dwloung think they're going keep sponsoring our activity? >> not very long. >> if you're the ceo of gm and all you want to make is volts and volts aren't selling and you keep making them, what happens to your stock prize? >> you go bankrupt. >> they might have their hearts in the right place, but no matter how much they do, they end up with more debt and no progress. is there just a fear that if they change strategy it's a sign of weakness? what is it? >> they hide behind a village of counterfactuals. look it. you and i may have discussed
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this. qe 1 was necessary. that's all they had and all they kept doing. so now we have the imf meetings this week. >> and jack lew is like no intervention, please. >> let me speak norm times language. imf is a remnant of the colonial past. it sevens no purpose. they're about as purpszful as is naacp is. they're gone. their royal is gone. the imf is going give me more money. they don't need any more money. they're sitting on a pile of gold. there's nothing like hoarding gold like it meant something. why are they not securitizing gold. congress is right, don't give them another dime. do something with your assets.
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you have a huge art of liquidity. now lagarde is coming out. she's talking about all the tax grab that's going on in the world. she came out of a giant tax world that came forward. go back and fix it that way. the world has really lost its way and everything becomes a counterfactual. stop. a good trading? what happens when you get in a hole? stop digging. the central banks have stopped. they stopped working in japan. japan is actually a classy case. they were able to get away with some of the policies because the rest of the world had enough growth. why are we in a kurrency war. everyone is fighting for growth. this is not the '90s where they could try these policies and piggyback on the rest of the world. unfortunately we're coming in on this. we see how much. there's larry summers talking about fiscal stimulus. >> you know what? you know what? i've heard all that been. here's my one comment.
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there's been a lot of talk of late about tsa, right? >> yep. >> we appropriated more money. did we really? it goes into the general fund like so much does. infrastructure, general fund, slush fund. it seems like the money goes to the wrong place. yra harris, i never saw anybody's veins pop more than mine, have a good weekend. back to you. >> a lot of vein popping. up next, a lot of suv luxury makers getting in on the craze. will u.s. makers be able to compete? more on that question when we come right back.
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sport utility vehicles and cross overs jumping 16% last year. but now luxury auto makers are getting in on the action. we're talking mazarati, and bentley to name a few. all debuting recently. u.s. companies are not taking the competition lightly. joining us to explain is jim stewart. you recently went to the new york auto show. is that what inspired this? >> that is what inspired it. but there was nobody there.
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they were all at these giant suv displays and in one little area there was the cadillac ecalade, the bentley, the new mazarati and there was a line. >> this is the far end luxury auto makers getting into the sweet spot of luxury suvs. >> they're moving for the high margin. so starting to wonder why it took them so long but also the detroit auto makers were talking about ford and gm. they have opinion a little slow moving off market here. yes you can easily drop six figures on a cadillac but we're not talking 200,000, 220, 250 very high profit margin area so they're moving in, they're trying to squeeze the segment from the top and then i think also very interesting, jaguar is coming in with one that starts around $40,000 so they're coming in right at the middle. the real sweet spot and this is
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very significant for the auto makers because they each had about $10.8 billion of profit last year almost all of which comes from trucks, suvs, and cross overs. >> is this because of lower oil prices? >> there's a debate about that. some of this has to do with oil prices and i talked to customers and said does this bother you at all? absolutely no one cared but the fact is that the fuel efficiency has gotten a lot better on these things. i was surprised that they're not that different from a lot of the larger cars. partly because many of them are being built on car platform but also people are not making their purchases based on the cost of gas. they don't care about the cost of lots of things. >> it might be allowing a marginal buyer to consider this price range. >> it's definitely pushing vehicle sales but i think that's effecting more than mid range
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and the lower end than it is this high profit margin area and one of the things that i found, look, this is competition is capitalism but the way that the market is being segmented now there's narrower slices of this suv pod and range rover has come out with this tie in with a gun manufacturer and i was thinking oh, right i bet a lot of suv owners are gun lovers, naturally. so they have combined. the car has the same wood as rival stock and they have the gun storage compartment but they sell for about 280,000 or something. you don't get a gun. you actually have to bring your own gun to those. >> you couldn't sell it in certain states. >> let's think about it a little bit. i wouldn't know how far we would want to push this tie in guns and suvs.
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>> how large is the universe of buyers for $250,000 cars. >> i wouldn't have thought it was very big but they're saying the dem graphics there are big and growing and even especially in places like china. even they were telling me africa where there are some very highly concentrated wealth at the top where there's a big market for cars that can go over potholes because the roads aren't good that are perceived as safe, whether you have a gun or not and there's a market for this. >> for those people that are watching in europe and asia, the americans have been made fun of for decades for having gas guzzling cars but if you live here and live through the weather that people have to face all through the state of the road which is is a real issue particularly when you get through winter you can
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understand why people have these types of cars. if you have to get a family to work in the middle of all of that stuff going on. it's a harsh environment often but not always in this country. >> given your background, one of the biggest growth markets for suvs believe it or not is europe. >> well, they're not dead. what do you think they're doing. >> but the streets are so tiny. you can barely get through them. >> all the streets are tiny across europe. have you not been down an autobon. >> yes i have. they're doing well and europe is a strong growth market. >> everybody should take a ride at least once. >> because there's no speed limit. >> but the one thing it's a safety thing. they want big. they feel it's dangerous out there and if they're in a crash they want to be in the biggest vehicle. >> there's crazy people out there. just remember that this weekend. >> good to see you as always. >> before we go to break we do want to mention today is our verial lenlted line producer's
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last day. she is in charge of this 10:00 a.m. hour. she has been trying to make it sing despite our efforts to sabotage it every day. she has been at cnbc for 8 years. congratulations as they start their new life in texas with their soon to be born baby girl. >> she is an excellent juggler. thank you johanna. >> coming up on the program, why one journalist says no one needs an apple watch. squawk alley is next.
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welcome to the cognitive era. good morning it is 8:00 a.m. an it's 11:00 a.m. on wall street and squawk alabama sli live. squawk alley is live. ♪


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