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tv   Squawk on the Street  CNBC  February 4, 2016 9:00am-11:01am EST

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from the courthouse to capitol hill. martin shkreli faces the house oversight committee on a hearing of drug pricing. that begins in a few moments. we'll bring that to you live. good thursday morning, welcome to "squawk on the street." i'm carl quintanilla with david faber and jim cramer in san francisco. weak productivity, elevated planes, eu cutting growth estimates, negative news from conoco, kohl's, ralph lauren and more and oil down a touch. pharma execs in a hearing on
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drug prices. the infamous martin shkreli. >> sumner redstone steps down as chairman of cbs. viacom elects successor of chairman there expect it to be felipe deman. we'll have more. >> gopro stock falling more than 80% from its high. >> house oversight committee hearing on drug prices getting under way on capitol hill. shkreli among those called to appear. last year he sparked outraise when he raised the price of a life-saving drug from $13.50 to $750. shkreli arrived a few moments ago and said he will not answer law makers' questions. valeant ceo shiller at the hearing expected to provide testimony. we know the travails the sector has had. how much of it is this drag from the political risk on pricing
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regulations? >> given the fact the quarters have almost uniformly been positive, i would say this hearing, just the chatter about pricing, obviously what the democrats are doing, each one sanders versus hillary constantly trying to figure out who can one-up trump calling for medicare to negotiate prices. that is the kiss of death in the industry. the political is driving almost everything here. >> it's certainly a broad story. shkreli said the hearing is nothing more than advertising for congressional members trying to make a name off his name. >> right. >> we'll see, it could get feisty today. >> it could. as much as shkreli will attract a lot of attention, it's more interesting to see howard shiller will be there from valeant. that does become more about the debate going on in terms of politics and drug pricing and impact on the stock market. we watched valeant stock price decline in part because of
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concerns about how much it has raised prices and what pushback there would be from congressional, congress and regulators as well. i go to their may 21, 2015 conference call who mr. shiller is quoted saying excluding recent acquisition marathon, price represented 60% of valeant's growth and would have been 80% with marathon. i refer to that express scripps note that came out on their own blog last week in which they said valeant pharmaceuticals increased u.s. prices on more than 60 drugs by 50% in 2014 and had the highest average drug pricing in the industry. 65% across 50 products in 2015. that's the key here. >> get a sense of what tone this hearing is going to take. this is congressman chaffetz
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from utah. >> 2014 the federal government paid out $77 million in medicare part d prescription benefits. it's difficult to sustain this. one way that affects the cost is the increase access to generic drugs and drugs that have been on the market for some time. our committee is very fortunate to have one pharmacist. i think there is one pharmacist in the united states congress. he happens to sit on our panel so i would like to yield a minute to mr. buddy carter from georgia. >> thank you, mr. chairman. i'm disgusted that we are here today to talk about drug price increases. as a pharmacist over 30 years i owned and operated numerous pharmacies in southeast georgia.
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as the only pharmacist in congress i know free market principles are the best way to provide quality, affordable health care to the american people. but what was done here is different. perverse business practices were employed to exploit a patient group trying to do nothing more than to extend their lives. none of the witnesses here today have had to look into the eyes of someone who is trying to make a decision between buys groceries and buying medication. no one here today has seen the look on a mother's face when she realizes that she can't afford to buy her child's medication. i have. but as a health care professional, i've worked with these people in order to make sure that they can get their medications and to make sure that my business and my employees stay afloat. so some here today may hide behind their shareholders and corporate boards and say this is
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free market principles. i for one don't agree with that. i'll tell you you can meet your shareholders' needs. you can meet your wards' needs and still take care of the american public. but then again, i'm not sure that those who are hiding behind their shareholders and their boards really care about that. mr. chairman, i yield back. >> i thank the gentleman. the fda, the food and drug administration is responsible for approving applications to the manufacturer of generic drugs, but this drowning in a backlog of applications. >> we'll obviously monitor the hearing. back at this discussion where the line is between letting the market discover prices and trying to avoid companies from literally exploiting their own customers. >> these hearings, these are not for show and they are not for show because it's presidential election. the idea it can be one and done is ridiculous.
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we have a new hampshire primary coming up. drug companies are not loved. this feels like 1992. i went to law school. one of the things i learned, i know the constitution is a document. the bill of rights, fantastic. but that fifth amendment when you take it, there's a lot of people who think your silence is indicative of something less than that you're thrilled about what they are asking. >> all right. we'll watch this. obviously, the debate is not going to go anywhere any time soon. oil big story today. companies out with quarterly results in the wake of a slump in crude prices. conoco, wider than expected loss, cutting the dividend to 25 cents, cutting the full-year capex target 17%. royal dutch with the lowest annual income in 13 years as the company is in the process of closing its takeover of rival bg group. this conoco news has gotten a lot of attention. we've been talking about that dividend a long time. >> they said over and over again it was their key thing.
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it's what they would preserve. they spent too much money. suddenly it's a priority, not the priority. while we've been talking, oil turned up. everything that was bad is good again. i caution people to recognize that conoco had told you good things about this dividend. when oil ticks back down, this comes back down. royal dutch was simply, we thought it would be horrendous. it was horrendous. in this market when oil picks up, horrendous oil that keeps the dividend goes higher. >> is this something the market has been waiting for, watching for, applauding, the conoco move? >> no. i think conoco, once again the big problem with this industry, you are looking down saying, holy cow. conoco still produced bigger production than anyone thought. it's up year over year. we've been waiting for dividends to be slashed. there are some companies that came through and didn't. you look at exxon. you realize it's just a bank.
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they did well. chevron preserved the dividend. charitable trust. conoco really did leave me cold. conoco has been the most vocal that that dividend would be protected. people are in these stocks for the dividend. they sure ain't in them for growth because there is none. >> dividend is key for so many other names, smaller they may be, and perhaps more risk as a result of that. i'm thinking of the pipeline companies. we saw kinder morgan making the decision to divert dividend payments to payments of interest, essentially. that's going to happen. we are not done at all. >> thank you. mplx was a disaster yesterday. if oil had not gone up 8%, this is the marathon pipe. they told people they were going to keep distributions at 25%. they slashed that in half
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yesterday. this stock is now down 44%, down 25% yesterday. this is where the real pain is. chesapeake. freeport is going up. why? because copper's going higher. whoever thought it was still a copper company? and gold is the best performer this year. watch gold. what does it say that gold is really flying? >> i come back to ete and etp and whether they can maintain the dividend there as they continue to potentially move forward with this deal with williams which they are going to have to spend $6 billion to buy in cash, not to mention there's the possibility of accelerating $3 billion in debt that is on wpz's balance sheet if it were to get downgraded. one wonders, given the reliance on the ete level, on the etp dividend and the leverage they have at ete, not to mention etp. it gets confusing, folks.
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how they can do it all. i just don't know. >> mplx where they assured you, it took your breath away. etp last week told you not to worry about the dividend. my charitable trust owns etp. these declarations may fall on deaf arias. ete is losing to etp. ete knows this is an energy transfer. they know their company will not be able to get any financing to go forward and build pipe if they screw etp, but they paid too much. they just paid too much. >> there is more to be done. >> you've been on it. >> williams a couple of weeks ago said we are fully in favor. don't try to split us up. we are fully moving ahead. we expect with the acquisition
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that you have committed to and that has an extraordinarily tight contract, as well. >> you've been on this from the beginning. when you look at these stocks, they trade together. they are really in etfs. that cannot take a slashing of the energy transfer partners dividend. it can't without breaking down. >> got to get to viacom this morning. board of directors going to be meeting momentarily. judging from the conversations i had with people familiar with the situation, the board is expected to elevate or add the chairman title to felipe dauman. sumner redstone resigned as viacom chairman. i'm told he's having a difficult time communicating at this point and it made his ability to act
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in that role a virtual impossibility. the question now becomes dauman, if the board elects dauman, it is putting in light, i think, a real battle here between that man felipe dauman and sumner redstone's daughter. she yesterday put an interesting statement out which she made it clear, in her opinion while her father's trust stated its intention she take over as nonexecutive chair at cbs and viacom and she is a trustee of the 80% ownership, which controls cbs and viacom. it is her firm belief who succeeded her father should not be a trustee of his trust or involved in various family matters.
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it seems she is making her play to get mr. dauman removed from the trust or not become chairman of viacom. at this point though from what i'm hearing, the board of viacom is going to elevate him to the chairman role, as well. he would have gotten an $88 million payment if he didn't get that role as chairman. but that does appear likely. from everything i hear, he is not going to step down as a trustee. it's very interesting what's going on here in terms of this battle now between shari redstone and management at viacom. a company she is vice chair of
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and her father owns the controlling stake in. he is not doing much communicating and she is firmly, if you will, in control. >> is anyone trying to characterize her own interest having a larger role than she does? in terms of taking over one of these roles herself? >> yes. i think many people believe that is what she would like. i have not spoken directly to ms. redstone. in the case of cbs, lesley moonves is chairman and ceo. jim, take it away. what's up? okay. i think it's really important because we talk about this. there is something going on here. this whole group has been fabulous. i don't know if i saw it, comcast stock yesterday was best performer. viacom is one of the worst
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performers in the s&p the fourth quarter. it is doing incredibly well. cbs going up. what the heck is going on with the group? this is a stock people want to own. what is happening? have things gotten better? less cord cutting? disney could be better. what is happening? >> there has been a pick-up in terms of ads or ratings at viacom. i also think you saw the move up yesterday when we reported that redstone would no longer be chairman. and this hope there would be movement from a strategic nature at cbs or viacom as a result of mr. redstone no longer being chairman. also had a lot of people short viacom, long time warner because of all this chatter we shared some time back about the possibility of activism in time warner. they were offsetting that. yesterday a lot of those guys scrambled to cover. i don't know if there is anything beyond that and there is some fundamental change here that would argue for why the
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stocks have had a nice move lately. >> i'm going to mention i own shares in comcast. we work for comcast. that quarter was the chatter that people got really got a lot of people going to say, wait a second, are we overdoing cord cutting? that was a countertrend rally turning to be a trend rally. a lot of people feel these stocks, including time warner which sells about 11 times earnings have gotten what i too lower. i am sure consolidation is going to be the talk now that redstone is less involved. >> yeah. charter reported as well this morning, charter a few months away from closing that deal to acquire time warner cable and bright house. they were not great on the top line but did beat on estimates for earnings before interest, taxes depreciation and amortization. >> they are all facing the same dynamic of cord cutting but not equal to the degree which they are leveraged to sports rights.
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the cost of having sports over time. that's the main knock on espn. not that their cord cutting is larger than normal, they are spending a lot of money in the meantime. >> right. if you spend a lot of money and you don't grow the number of people taking the product or if you cannibalize, you watch on their unbelievable hand-held application, you are not going to produce revenues people watch versus comcast where things are going right in terms of cord cutting being overdone. broadband. we keep hearing about share being taken. from satellite, that satellite technology is turning out to be less effective in delivering novel products to people in a broadband cloud world. technologically, cable is better than satellite. and it's starting to be visible to a lot of people. >> it's always been the case. you're right. that's been a real question mark. video is the key thing that can be delivered by satellite. broadband is the key product,
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period. we know that. that is why some people questioned at&t's move on directv and whether that would be something that would last lock term. let's turn to gopro. more lows. down in the premarket posting a quarterly operating loss. stock's down 85% over the past six months. what can be said about gopro that hasn't been said? >> gopro what a fad. sometimes fads take over the market. everyone liked gopro. people said wait a second. if we see everybody using it and like the product, fine. the last generation wasn't that good. the market got saturated.
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we know from best buy things aren't that good. gopro peaked as a fad. it didn't develop the ecosystem people thought could be developed. >> ranking member cummings has been making headlines. blood money, here's the chairman jason chaffetz of utah introducing the panel. >> we appreciate the participation of both hearings. you will be excused at 10:30 as
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previously agreed upon. she will remembbe replaced by m keith flanagan. mr. howard shiller valeant pharmaceuticals international. appreciate you being here. nancy red slaf, and mr. martin shkreli. all witnesses are to be sworn before you testify. if you would rise and raise your right hand. do you column emisolemnly swear the truestimony you are about t be give will be the truth and
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nothing but the truth. your statement will be limited to five minutes. >> thank you, mr. chairman. i'm mark merit, president and ceo. >> martin shkreli, if he gives my statement will come last. we'll take a break here. look at the futures. we haven't gotten to a lot of names. ralph lauren, dunkin and kohl's. here at td ameritrade, they work hard. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade.
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>>. >> the scene is familiar. you might think this harkens back to the hearings of tobacco executives or bank ceos. this time it's pharma's turn as the head of valeant, shkreli and others are testifying. >> we'll keep watching and bringing anything interesting to you. it's time for a mad dash from jim cramer. whether on the west coast or east, he's ready to dash. what have we got this morning? >> one of the things i have to counsel people, don't buy a stuck for a takeover bid or if there is restructuring. that's how i feel about kohl's which did not give you a kiss. significantly lower than planned gross margins.
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major miss. really difficult footwear and furniture businesses. this stock was up $7 on the thinking they've got real estate demonetized. the business itself is not good. this was a shocker. i am just blown away by how bad kohl's was this morning. >> you know this company well. you watched it closely. i can remember you being very favorable on it not that long ago. >> when it got down to almost a 4% yield, i thought it made a lot of sense. the stock then spikes. i should have told people sell the spike. i didn't think it was as bad as it was doing. people feel at a certain point lower gasoline should help. this plus ralph lauren tells you lower gasoline still not a factor. it is spotty in retail.
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kohl's had the stock not run to $50, i think they wouldn't feel as compelled to do a preannouncement. this is back to where people are going to say again something's going on. wait for the fundamentals to turn before we start thinking things are going to be terrific in terms of restructuring. there was a time when you and i were on a panel and we heard macy's was worth more than it was selling, but the stock was at $70. that may be true that there is good real estate value, but in the end, it matters what you sell and whether you're selling it. footwear and furniture can take any company down. i mention that because macy's has similar overlap in terms of what they sell. >> you mentioned rl. $227 does beat $2.13. revenue misses their guide for the full year. revenue down 3 instead of up 3. margins quarter they see down
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4.50 percentage points. blaming inventory, forex. this name did not do well last year. >> no. this is one where you have to talk a little bit about shakespeare and caesar. they've got the stars against them. they have a new ceo. earlier we had sally smith on in "squawk" and everyone thought buffalo wild wings would be bad. stock ended up bouncing. i think the ralph lauren core franchise is worth a lot. some guys have just reaffirmed their forecast. the other day calvin klein reaffirmed forecast. what's selling and not selling is case by case. it's intimidating to pickry tail stocks case by case. how is walmart doing? stock is up ten points. are they doing well? we don't know. when we don't know, you tend to
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draw negative conclusion here. given the fact we are seeing more negatives than positives in this group. >> certainly lb. comp's up six. a special dividend. that's down 4%. >> that's insane. he's still america's greatest retailer. that was a perfect quarter. yes all retail is going to be down. when it settles down, take a look at them. they had a calendar shift on victoria's secret which is good. this is not a traditional power play. lesley wexler defeated the bears over and over again. this comes down. you think retail comes back. reach for l brands first. they may be the best mall retailer in the country. >> costco, january comps flat. u.s. up one. even they are going to get dragged down this morning. >> my charitable trust owns
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costco forever. the initial reaction always to take the thing down. wait three days, five days and people come in and buy it. i feel the same way about lowe's. take my breath away they bought that canadian business. >> there's the opening bell. s&p at the bottom of your screen. one of the big mac row stories is the dollar sell-off. goldman reducing their expectations. now seeing only three hikes. that's on the high side. fully priced, the market sees no hikes in '16. >> i like the set-up here. you have oil up, the dollar down. year over year you will see the
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dollar is roughly flat. the strong dollar hurt us in europe. that talk is going to start dying down we don't want to see retail as badly as this. that's a focus. there are things positive here that are going to be overlooked. we are in a very bearish state of the market. the weaker dollar is telling. where the money is flowing out of the highest growth into some stocks like the cable area, like the entertainment area, very interesting. entertainment is starting to be bifurcated. we are spending more time on facebook and video games. look at that take-two interactive number. 60 million new grand theft auto. that's incredible. that's the greatest franchise out there. maybe time warner should buy them. time warner is not interested. i do think the video games, and time warner's video game business all on fire. ea was not that good. people are playing games,
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watching facebook. maybe we got too negative about that whole darn group. >> i don't know. cord cutting is going to keep happening. >> are you doing that thing i can't see? >> i miss you. i miss having you next to me to do that to. i'm giving you my look. sorry. >> my wife caught the show last week and said, you know what? that david's got great hair. >> i love her. thank you, lisa. i appreciate that. >> she loves you. she loves h your hair. >> there's been little for the banking sector. money has been moving out of the banks. they are up a little bit. creeping up a tiny bit. today the lead story in "the new york times" strangely in a way, right column, is about huge banking losses to come. a lot of the focus is on china. and brazil.
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it's broadly speaking about the loans made that are not going to be paid back. what that's going to mean in terms of trying to recapitalize some of these banks. not in our country. our banks have been suffering. that number from credit suisse or ubs, farm banks, but had been terrible. when is sentiment going to change on that group? hard to imagine when you see a ten-year yield below 1.9%. >> i've got john stump on tonight for wells fargo. a charitable trust holder. peter revis wrote that story in "the new york times." they used the term trillions in bad loans. trillion always gets your attention. the u.s. is so strong you would think they couldn't be taken down by what people are focused on, the deutsche bank preferreds. deutsche bank has just been a black hole here. you need that company to come out and say good things. credit suisse numbers were
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hideous. bank of america is now so far below its book value we almost think how is that possible? lloyd blank telling a good story, this group is so hated that it takes your breath away. if there is not going to be a fed rate hike, it's another reason to cut numbers. when you see oil up $1, it's going from banks to oils. i think the sell-off in banks is overdone. >> right. a number of these banks are trading below tangible book value. how long can that sustain itself or do you reconsider the group for the longer hall? i don't know. i do know, you look down 2% bank of america. 22% citigroup and on and on from there. morgan stanley down 23% this year. >> barclays today says 40% of banks it tracks are trading below tangible book. that's only happened three times
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in the past 30 years. >> treasury, federal reserve should say buyback your stock. it seems every time they get a dollar in it's worth 80 cents. that's wrong. i don't fight sentiment. sentiment is powerful. fed has to say, moynihan, you can give your dividend anything you want. our banks are strong. unless they can buy back stock and give you big dividends, they are going to be a source of funds for people who want to move into gold and move into the industrials.
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>> our parent company up 7% from yesterday and squarely in the green for year is comcast. charter on the brink of second quarter concluding its deal. earlier talking media. all those stocks are up. if you did not get that job, he is due a payment of roughly $88 million in cash and stock. that has been a frustration among shareholders of viacom.
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>> a new ipo. >> did you say ipo? there's an ipo? >> what is it? >> it's that or a fire drill. we'll see. comcast, back above the 200 day. takes you back to december 10th. >> in terms of profitable growth, comcast has it. i think a lot of people felt this was going to be the quarter where you see a big drop. instead you saw an increase in many different lines. i think comcast is doing some things in a salesforce.com way. and a customs relationship management way. it can take share now that it can't buy any other company. nbc is doing well. cramer, come on.
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you're owned by nbc. do i impress anybody as being owned by nbc other than perhaps my wife? maybe? >> maybe when gronk is on the show. >> he's huge. he said he would beat me up if i didn't ask the right questions. i only have to run faster than you. >> if gronk is coming, i don't no. he's going to eat one of us. >> he's a gentle giant. >> jim, you have yem -- you have yum on the show tonight. >> yum is about to split up. this stock is down today. some companies are doing really good things. nobody cares right now. i think the value they are going to split up when you see china and china is coming back to the
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consumer, you are going to regret you sold this stock here. people don't want to hear that. the restaurant group is nastier. they are bringing out value. we speak to the new ceo tonight. he is very smart. that is a buy. that stock is a buy. when you use the term buy, the's frightening, but that's a buy. >> dunkin down almost a point contrast with 9%. >> this is a share take. gronk represents dunkin. that was a bad quarter. dunkin is losing share. people have to understand the coffee business is about through put. how you get your coffee quickly. howard schultz solved that.
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>> they are going to have thrive-through windows. it's a game changer. mcdonald's is another place to go through this wall of hurt. >> what rang behind us was givening of trading for a spin-off from grace. gcp applied technologies. we knew that. not an initial public offering but beginning of trading for a spin-off. >> you need ipo to get earnings. >> we've been waiting for shkreli to make a statement.
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here he is. take a listen. >> on the advice of council, i will not be giving an opening statement. >> what do you say to that pregnant woman who might have aids, no income? she needs deraprim to survive what do you say to her? >> on the advice of counsel, i invoke the fifth amendment and respectfully decline to answer your question. >> you were quoted as saying on fox 5 in new york, you were quoted as saying, if you raise prices and you don't take that cash and put it back into research, i think it's despicable. you should not be in the drug business. we take all our cash, all our extra profit and spend it on research forethese patients for other patient whose have terrible life-ending diseases.
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did you say that? >> on advice of counsel, i invoke the fifth amendment privilege and respectfully decline to answer your question. >> do you think you've done anything wrong? >> on the advice of counsel, i invoke my fifth amendment privilege against self-incrimination and respectfully decline to answer your question. >> i'd like to yield time to congressman gowdy of south carolina. >> thank you, mr. chairman. is it pronounced shkreli? >> yes, sir. >> see, you can answer some questions. that didn't incriminate you. you want to make sure you understand you are welcome to answer questions and not all your answers are going to subject you to incrimination. you understand that, don't you? >> i intend to follow the advice of my counsel, not yours. >> i just want to make sure you are getting the right advice. you do know that not every disclosure could be subject to
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the fifth amendment assertion. only those that you reasonably believe could be used in a criminal prosecution or could lead to other evidence. >> i intend to use the advice of my counsel, not yours. >> do you also understand that you con waive your fifth amendment right? you gave an interview to a television station in new york where, if i understood you correctly, you couldn't wait to come educate the members of congress on drug pricing, and this would be a great opportunity to do it. do you understand you can waive your fifth amendment right? >> i invoke my fifth amendment right against self-incrimination. >> he's been willing to answer at least one question this morning. that didn't subject him to incrimination. i don't think he's under
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indictment for the subject matter of this hearing. the fifth amendment actually doesn't apply to answers that expose you to incrimination. even if 2 it didn't apply, he's welcome to waive it. i listened to his interview. you didn't have to be prodded to talk during that interview. he doesn't have to be prodded to tweet a whole lot or show us his life on that little webcam he's got. this is a great opportunity if you want to educate members of congress on drug prices or talk about the fictitious case against you or woo tang clan, is that the name of the album, the name of the group? >> on the advice of counsel i invoke the fifth amendment against self incrimination. >> i am stunned that a
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conversation about an album he purchased could possibly subject him to incrimination. >> the gentleman is correct. i understand mr. shkreli is under indictment, but it is not the intention to ask him questions about that topic. >> so if i understand it correctly, we are not going to ask him questions that are going to be on the subject matter of his pending criminal charges and if we were to get close to one in a gray area, he is welcome to assert his fifth amendment privilege there, and if we stay away from the subject matter of his indictment, he is, some could argue has a legal obligation to answer under casgar versus the united states and has the right to do so as he did in the television interview and does frequently on social media. >> correct. >> may i be recognized for a moment? >> no.
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you are not allowed to. under house rules, you have not been sworn in. >> i understand. >> you are not recognized. you will be seated. the gentleman from south carolina is correct. we were trying to provide an opportunity to have a candid discussion about issues related to drug pricing. we now recognize mr. cummings. >> thank you very much. mr. chairman, let me state for the record i completely support your decision to bring mr. shkreli to make sure that he asserted his fifth amendment right before this committee. normally democrats in our committee have accepted the assertions of a witness' attorney that his or her client is going to take the fifth, but in this case, mr. shkreli made a number of public comments himself raising legitimate
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questions about his intentions. honestly, i did not know whether he was even going to show up today, so it's nice to see you, but now that he has invoked his constitutional rights, of course, i will respect his decision. to mr. shkreli, since i have you in front of me, after trying to get you in front of this committee for so long, let me say this. i want to ask you to -- no, i want to plead with you to use any remaining influence you have over your former company to press them to lower the price of these drugs. you can look away, if you like, but i wish you could see the faces of people no matter what people who cannot get the drugs
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if they need them. by the way, it's the taxpayer, somebody is paying for these drugs. it's the taxpayers that end up paying for some of them. and those are our constituents. peoples' lives are at stake because of the price increases you impose and the access problems that have been created. you are in a unique position. you really are, sir. rightly or wrongly, you've been viewed as the so-called bad boy of pharma. you have a spotlight and you have a platform. you can use that to come clean, right or wrong and become one of the most effective patient advocates in the country and one that can make a big difference in so many people's lives. i know you're smiling, but i'm very serious, sir.
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the way i see it, you can go down in history as the poster boy for greedy drug company executives or you can change the system. yeah, you. you detailed knowledge about drug companies and the system we have today, and i truly believe, i truly believe -- are you listening? >> yes. >> thank you. >> i truly believe you could become a force of tremendous good. of course, you can ignore this if you like, but all i ask is you reflect on it. no, i don't ask, mr. shkreli, i beg, that you reflect on it. there are so many people that could use your help. may god bless you.
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>> it is your intention to decline all answers to all questions? >> yes. >> given the witness indicated he has not intended to answer any questions, i ask the committee excuse the witness from the table without objection, so ordered. we'll pause for a moment as mr. shkreli is escorted out. >> leaders from both sides, including trey gowdy and elijah cummings. maybe the most headlines came from shiller when they talked about pricing, but willingness to invest in r&d and capex. we have made mistakes. we are listening, we are
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changing. >> you can have my answer now congressman invoking fictional characters similar to what he said. i think the disgracefulness here is going to resonate. this bad boy already impacted the stocks. i think that the valeant statements will actually be viewed as positive. >> see if anybody can put a microphone to shkreli as he is making his way through the hallway. take a quick listen.
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everybody move to the side, please. >> go down the hall or go outside.
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i'm going to make a brief statement on behalf of mr. shkreli. mr. shkreli is not going to answer any questions. i may ask one or two questions depending on the question. my name is ben brathman, mr. shkreli's attorney. on my left is my partner. let me say this was frustrating morning for us because i think mr. shkreli would like nothing more than to answer the committee's questions. i think he would have very good answers. he has agreed because of the pending indictment in the eastern district of new york to follow my advice and not answer any questions and invoke his fifth amendment privilege. i think that was the appropriate advice under the circumstances. the gentleman on the committee who discussed the fifth
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amendment, with all due respect, had no idea what he was talking about given the state of the law as i understand it to be. mr. shkreli has a perfect right to invoke his fifth amendment and to be ridiculed for it is unfair and inappropriate. i would also tell you mr. shkreli did not intend to show any disrespect for any members of the committee, listened intently. some of what you saw was nervous energy by an individual who very much would like to explain what happened, but has agreed to listen to his lawyer who has been around this block i think several hundred times over the last 40 years. it's a frustrating morning because many of the things that were said in this hearing are simply just not accurate. the substance will be addressed
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in testimony later this morning. but not for the pending indictment in federal court, mr. shkreli himself would address these issues. a lot of the statements attributed to him and noted by the committee were made before he retained new counsel. priority is to resolve favorably the criminal case in the eastern district and turing through people will address these issues, but not in this hostile forum. i appreciate mr. cummings' remarks. he is right. mr. shkreli is a brilliant scientist whose devotion to saving lives is extraordinary in my judgment. at the age of 32 he has already developed several drugs and is in the process of developing several more that will save the lives of people who suffer from illnesses most of the major
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pharmaceutical companies have ignored. we told them he was going to invoke. they insisted he come down anyway. out of respect for the committee we came. we are about to leave. if you have one or two questions i think are appropriate, i'll try to respond. i don't want 500 questions shouted at me at the same time. i think it's unfair that touring have been singled out. when it's ultimately disclosed, everyone will recognize mr. shkreli is not a villain, not a bad boy. at the end of this story, he's a hero. >> does your client have any regrets about having raised the price that high given how this generated? >> i think the only regrets he
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has is in the unfair treatment he has received and some of the things he may have said in response that maybe were not well thought out. he's 32 years old. he's not a lawyer. he's a scientist. he was angry at times. some of the things he said may have sounded bad and they have fueled this inquiry. on balance at the end of this story, mr. shkreli will be, in my view, cleared of the criminal charges that have nothing to do with daraprim. you will see he has saved many, many lives by his brilliance. thank you very much. >> there is nobody who cannot afford the drug who has not received the drug. thank you very much.
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>> this is either a remarkable turn or just a political circus. shkreli clearly excused from the hearing and braufman blaming it on nervous energy at one point. he tried to address the hearing, which was not allowed and told by the chairman to sit down. he was not recognized. jim, i see new the chair. not sure if we can turn to you. can we learn anything from this? >> left out was the description of him as dr. schweitzer. when we hear about nobel-winning scientists -- my breath was taken away. brafman -- my breath is taken away. that was just shameful.
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we can say whatever we want. we can say that was ill-advised, suboptimal, but that was shameful. >> mr. was schweitzer? >> how about we with invoke that name? clara barton. >> it was a lot of theater. testimony is taking place from mr. shiller, valeant, drug prices which will continue to be an important issue on the campaign on both sides. actually, i think some of the news we have gotten in terms of valeant and increase in price they have taken over the last two years is significant, as you watch mr. shiller there testifying. we'll see what the outsome is on that front. from the great theater we saw, this is the most salient for investors. >> schiller is building the case
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for medicare negotiation, not unlike what the veterans administration does. if i were bernie sanders or hillary clinton, i think this would be thefocus. only the government is powerful enough to negotiate the prices down. voluntary reduction of prices will not be enough. this is bad, bad, bad because it makes it too much, too easy for the democrats in particular to be able to say drug companies are villains. hillary comes back and tweets and it starts again. >> a lot of the times we get a house hearing, especially on the house side. it is theater, political theater, as david puts it so aptly. in this case, i think you agree, the outrage is real. so how much of this hearing is
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warranted? >> geez, i think this is what people think is wrong in america. it's one of the most -- remember when we used to hate the bank executives? now it's the drug guys. most of the drug executives ideal with, they would be equally as offended as the average person on the street for what they just saw. a lot of drug companies are trying to do the right thing but spend a fortune developing drugs. fda makes it tough and they are stuck with having to charge a lot. this conversation right now is being repeated all over the country. that will be the lead story of the news which is when they take the fifth, when they take the fifth in front of congress, whether it be a banker, whether it be a gangster, whether it be a drug company member, that just is too juicy for the regular news media to avoid. >> as you said, the optics of his behavior, his looking away from the law makers, the smirk, it almost seemed like a father
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dressing down his kid for getting in trouble. that will add power to the political narrative, whether that's deserved or not. >> there are fictional characters we've seen in major movies that have come before congress and showed respect. they are fiction. godfather is fiction. mike corlione is fiction, but there was more respect shown. >> and it is business. >> and remember, he is under indictment in the eastern district and faces a long prison sentence if convicted of fraud he's been charged with. >> sometimes you've got to break away from the traditional, that was interesting testimony. it's almost fictional. it's hard to believe it was factual. >> you don't get trey gowdy and elijah cummings agreed on a whole lot. they came in fairly from the same direction, that's for sure. >> it is congress.
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these are elected officials. they are elected by the people of the united states. they demand some respect from people. you ma i think whatever you want, but they demand some respect. you should not be smirking at them or laughing at them. they are elected people who run this country. you may not like them, but you do not do that. >> does today's hearing, this is a stretch, but does it affect the way people should be trading the group? >> the major pharmaceutical, ian reed should come out and say i am appalled, we need lilly, bristol-meyers, merck, come out from wherever they are and immediately disown this and do it on our network. call in, be on the 11:00, the 12:00, the 1:00, come out and disown this behavior. this is going to hurt your
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industry very much. >> that may be the next chapter here. the degree to which other companies say, and this happened to some degree, that he does not represent us. that's what you want the industry to say and make clear. >> are they on the phone to you? are they calling our executive producers? you cannot let this stand. you cannot. you can't let it stand. it's inconceivable to me. particularly in an election year. >> remarkable as we watch this tape here from a few moments ago. shkreli making his way through the halls of congress with ben brafman trying to hold a small legal consultation in the face of a live video feed. i just don't see that too often, david. >> i don't think the founding fathers envisioned that when they came up with the bill of rights. i remember taking the common law a class. i don't think jefferson and madison would have been into that. >> he is taking all the punches.
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it's not as though the industry has not been complicit raising prices significantly on certain drugs. we know that. there's been a lot of debate. you and i talked a great deal about gilead and hep-c. 12 weeks you get a cure so the price is high. then you conceivably are cutting off years of treatment that would cost the health care system a great deal. there is a debate to be had here. >> that's why these executives -- i'm in favor of the drug industry. they've done remarkable things. these people have to talk about how much it costs to have a drug and how much they are saving lives. i'm not saying i feel for anybody who is a rich ceo in a drug company. the drug company should not be tarred like this. there are some actors that were worse. valeant was not like the other drug companies. they should post what they've done. this is not what they're like.
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>> we've got different numbers how much was from price and how much was volume. >> when you raise your right hand and testify, please, guys, some of these drug companies have done such great things. it's painful. they deserve a chance. they are going to be tarred with this. a lot have to spend billions to get a drug on the market that saves lives. they should be applauded. it's difficult to applaud after what you just saw. >> yeah. we kept you over a little bit here. six minutes past the hour what's on "mad" tonight? >> hard for me to think of it after what i just heard. i've got some good guys. i've got clorox, john stumph, greg creed, we'll go over the break-up with china. i'm sorry. you are not supposed to be as emotional as i was.
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when you have a lawyer defending a client like that and actors that raised prices -- the's like when mr. welch said in front of congress, in front of joe mccarthy, decency, where is decency? in this case i thought there was no decency. they came close to saying that today, jim. see you tonight. "mad money" 6:00 p.m. eastern time as jim continues to report on an amazing week out of one market in san francisco. welcome to "squawk on the street." i'm carl quintanilla, sara eisen, david faber. simon hobbs. we are following the drug pricing hearing at the house oversight committee. meg tirrell is live outside the hearing. take a listen to trey gowdy of south carolina. >> is it pronounced shkreli? >> yes, sir. >> see there you can answer some questions.
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that one didn't incriminate you. i just want to make sure you understand, you are welcome to answer questions and not all your answers are going to subject you to incrimination. you understand that, don't you? >> i intend to follow the advice of my counsel, not yours. >> i just want to make sure you're getting the right advice. you do know not every disclosure can be subject to the fifth amendment assertion. only those that you reasonably believe could be used in a criminal prosecution or lead to other evidence. >> i intend to use the advice of my counsel, not yours. >> do you also understand that you can waive your fifth amendment right? you gave an interview to a television station in new york where, if i understood you correctly, you couldn't wait to come educate the members of congress on drug pricing and this would be a great
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opportunity to do it. you understand you can waive your fifth amendment right? >> on the advice of counsel, i invoke the fifth amendment privilege and respectfully decline to answer your question. >> mr. chairman. i'm vexed. he's been willing to answer at least one question this morning. that one didn't subject him to incrimination. i don't think he's under indictment for the subject matter of this hearing, so the fifth amendment actually doesn't apply to answers that are not reasonably calculated to expose you to incrimination. even if it did apply, he's welcome to waive it. i listened to his interview. he didn't have to be prodded to talk during that interview. he doesn't have to be prodded to tweet a whole lot or to show us his life on that little webcam he's got. this is a great opportunity if you want to educate the members of congress about drug pricing or what you call the fictitious
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or even talk about the woo tang album? >> meg tirrell has been in the middle of this in washington, d.c. >> good morning. as you pointed out, that was some theater in that. that long pause before he declined to answer whether it was the woo clan tang album. representative gowdy walked behind us here. we weren't able to grab him. answering that key question people have been wondering, how do you pronounce martin shkreli's last name. we did get an answer. the interim ceo of valeant was testifying. it was a different tone we heard from howard schiller. it was modest and humble saying
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they are going to change their practices and we'll see what comes from valeant. a very different tone being struck between valeant and turing at this hearing. >> chaffetz said these will be aimed at the agency and fda. what is important in that q&a? >> a lot of questions is how these drug price increases can happen. they are targeting too slow of an approval process for generic drugs at the fda. a backlog of thousands of drugs waiting there. market forces should be able to work when there is a spike like this. when the fda takes a long time to approve a generic drug, that doesn't allow competitors to provide competition to lower prices. those are the questions we thought we would hear to the fda. jana had to leave 10:30 for another hearing. we'll see what kinds of questions they ask the fda. the chief commercial officer from turing is testifying.
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>> many people would have watched bernie sanders powerfully make the case at the democratic forum for a new system for drug pricing and health insurance in this country, effectively medicare, he puts in taxes of hundreds of dollars that would benefit an average family by thousands of dollars. that has to do with the reneegs with the drug companies at large. the united states going in perhaps as one. he makes a point. prices for drugs in this country or the health care system are way in excess of what british people or french people or german people pay. a lot of that has to do with the way it's set up and pricing people like shkreli can get away with it. he becomes a poster child for that, for the critics. this is the footage that will be in many of those reports and documentaries about the state of the health care system in this country. i wonder how the ceos you talk to all the time are preparing for that debate if it becomes
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more front, more center than it is at the moment. >> they all had different tactics. they are trying to differentiate themselves from martin shkreli and the valeants of the world. jpmorg jpmorgan, they all had different responses. biogen saying we raised drug prices, but we put that back into r&d. this is the way drug companies are addressing that. going to a single payer system like europe would lead to less research and development. even donald trump joining the forces saying medicare should negotiate drug prices. >> as far as how widespread this is in the industry, shkreli said himself he hasn't been the only one that's done it. surveys found it's gone on across the industry depending on the medicine, the company.
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everybody is doing this, raising pric prices astronomically. >> the astronomical price increases are not something we see across the industry. most companies take single-digit price increases, maybe multiple times a year. over time that does lead to an increase in the cost of their drugs. a couple of companies do take these astronomical 5,000% price increases. >> thanks for joining us inside the hearing on drug prices where martin shkreli has been excused. can sell-offs like this, like we've seen predict recessions? a question a lot of folks are asking. we are seeing a nice rally. dow up 74 points. we want to look at that question and find out how investors can be prepared.
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we continue to be in the midst of a spark sell-off with a falling dollar. the u.s. dollar is now down over 3% this week. most of the move yesterday, the third biggest one-day drop in five years. what side effect of which was to send oil up 8%. to regain a more than 400 point
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rally in the dow. brian jacobson from wells fargo and bart melley. bart, if the dollar continues to fall, what happens to oil prices here? >> i think on the margins, that should help oil prices up. there are several reasons for that. outside the u.s. i think ones that are losing money now will be deeper in the hole. >> if you think the price of oil is going to fall, don't you then get perhaps big waves of short covering? could this not be the start of something much bigger if you think the direction is turning and that's the judgment you make? >> we do think that direction is turning. we think once we get some evidence that shale producers
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are indeed reducing output sharply and other nonconventionals are doing the same, we believe opec will come to some sort of agreement and once we have a decent idea of this happening, we think there could be a very robust short covering rally. we see outsized short positions right now. if the market turns with its expectations, there could be quite a drift moving up and a lower dollar would encourage that. >> as far as you're concerned from a stock market perspective, we know the reasons why the dollar is falling that we discussed them often times on the show and the channel overall. just as a sheer market dynamic, if the price of the dollar continues to fall, presumably you change the story about the value of overseas earnings for big companies in addition to what might happen with energy. if the dollar keeps falling, can
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the markets stabilize and rise from here? >> that's an excellent question. i think that depends upon why the dollar keeps falling. if it's because it's been a crowded trade to go long the dollar and people are taking that trade off, it can provide a floor for the market. if the dollar is falling because people are no longer confident that the u.s. economy is growing robustly, that makes it more suspect as to how much of a floor there can be here with a weaker dollar. it has these counterforces where the weaker dollar should help. large-cap growth stocks have revenues tied outside the united states and will help with that repatriation. for other parts of the market, i don't think a falling dollar will have a sustainable support for the markets here. >> i want to break into the conversation, get back to martin shkreli. he wouldn't talk to congress, but he tweeted, it is hard to accept that these imbeciles
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represent the people in our government. pretty disrespectful there. >> i guess it's a free speech country. >> he was perfectly in his rights to invoke the fifth amendment, he didn't have to answer the questions because he is facing indictment in new york, but he has been on twitter. some of the members of the congress alluded to in this hearing he's been doing interviews and tweeting and has his webcam. it didn't take long for him to leave congress and start tweeting -- this is only going to rile up some of those members. >> i think ordinary people would be riled up to read that. you don't have to be in congress to feel there is a sense of outrage at the disrespect. >> bart, let's talk to you about this oil move we are seeing and some of the opec rumors. sometimes it feels like when there is talk of production
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cuts, whether it's inside or outside of opec, that triggers a short covering rally in oil. do you believe any of these rumors and speculation? >> certainly there is something going on where people are having discussions. earlier there was communication from iran ofrgss supporting these statements. yesterday the department of energy inventory numbers were quite bearish yet the market looked through it and rallied fairly aggressively. part of the reason was we were acting on news from ecuador that there is some sort of an agreement being discussed. for now all it is is idle chatter until we have a concrete
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agreement and evidence that production is on the decline or has a good chance to do so. we are going to continue to be rangebound here. there is still down side risk. we have a nice base around 30 wti. we are not going to have a big move higher for a sustainable period unless there is evidence and this isn't idle chatter but a plan that is verifiable. >> one last comment from you. we are on the eve of the employment report, the labor market is tightening. that leads many to understand why the federal reserve is raising rates. tomorrow comes an interesting day where we get back to that discussion about how rapidly the fed will raise rates. overnight goldman suggested maybe they won't do it in march, but this market is underestimating the degree to which they will move forward. where are you as a house on this? how do those arguments leave us on the stock market? >> with all the volatility and
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some of the economic data, i feel maybe i should plead the fifth here as far as giving a forecast for what the fed might do. i think we'll probably see the fed only hike two times. mainly because even though you have those saying the fed should plow ahead despite the data, i think others will urge caution when it comes to hiking rates and we'll probably see only two hikes total for this calendar year. >> does that mean that it's a pent-up rally to come? as that realization comes through from the central bank to everybody else or nobody thinks they'll hike this year. most people don't think they'll hike this year. >> there could be a slight rally as far as uncertainty of resolving itself. when janet yellen goes in front of congress next week, she might give a little bump to the market. any of those rallies will have to see if people are continuing with this mindset of what slows
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the rallies as well as buying on the dips. >> thank you both very much. all this volatility in the markets is leading us to this question. do bear markets always lead to recessions? steve liesman crunched the numbers and has answers to that. how investors can prepare for our recession if we are facing one. >> you know that quip everybody has that the stock market has predicted nine out of last five recessions? actually it comes from paul samuelson writing in "newsweek" in 1966. 55% if you were shooting baskets from the field. remember that number. we said let's look at all the bear markets that have happened in the post war period, each one denoted by a law. one is white and one is red. did a bear market start at least 12 months before recession?
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the answer is of the past 13 markets, seven led to recessions here in 1973. most recently, ones you'll all be familiar with before 2000 and one 2007 here. what you find is that number, 13 or 7 is the same as paul samuelson's quip of 9-5 which is another 53% is the number. it tells you about the flip of a coin. that is better than a random walk which is about 1-5 chance of a recession in any given year. you can know which of the bear markets get a clue might lead to the average bear market length 362 days. one that does not lead to recession is much shorter, 192 days. one that does is longer, 508 days. it gives you with a 253 day lead
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time before the recession or one declared. which will lead to an obvious question which is does the bear market itself help cause the recession? there are some economist hots believe more and more. 2007 gave you the least warning. the bottom line is people will pay very close attention to bear markets. the way the fed and other economists think about this is there's a lot of market volatility. it may or may not be reflected in that severe economic volatility. >> thank you, steve liesman. sumner redstone stepping down from his executive role at
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cbs. what happens to viacom? david faber will have details on that next.
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welcome back, i'm bertha coombs at the nymex. we are waiting the number from the energy information agency on the withdrawal of natural gas inventories. we haven't seen it here. little bit delayed. down 152 billion cubic feet. that's slightly more than the expectation had been. natural gas had been under pressure this morning, as i turn around, pardon me here. still lower. as expected, it's the midwest where we saw bigger withdrawal. the forecast for balmy temperatures is keeping the lid on natural gas. the east coast is the bigger market. now to sue herera at the news desk. secretary of state john
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kerry is joining diplomats in london to pledge billions of dollars to syrians affected by war. that will go to economic and educational projects to millions. the bbc is reporting a u.n. panel will rule julian assange's 3 1/2 year stay amounts town lawful detention. the opinion is not legally binding. britain maintains assange jumped bail to flee to the embassy. he faces extradition to sweden over rape allegations. >> it is ethical to test a new fertility technique from the embryos of three people, dad, mom and egg donor. it could be used to prevent mothers passing on rare diseases to the embryo. playboy has the first issue without fully nude photos to hit
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the stand. it is an effort to reach a new generation of readers. it still contains plenty of provocative photos. there you have it. that's the cnbc news update. david, down to you. >> thanks, sue herera. viacom's board of directors is meeting as we speak, yes right now. yesterday cbs announced redstone resigned his position there and has been taken over by lesley moonves. viacom is a bit more of a contentious fight or debate about mr. dauman and whether or not he as ceo of viacom will step up to the chairman role. that is a highly likely outcome expected to be announced in the near term once the board concluded its discussions. it is something that is opposed by shari redstone, the daughter
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of mr. redstone, vice chair of viacom and cbs. she in a statement yesterday came out and said she did not believe it was appropriate for a person who is a trustee of her father's estate to be made the chairman of either viacom or cbs. she said i had been potentially somebody who my father would have wanted as nonexecutive chairman, but i don't believe it is right for me to be in that role or anyone else who is a trustee or involved in his affairs to be involved. philippe dauman is quite involved in those affairs and is a trustee with six other people. the key part of that is being 80% ownership of national amusements.
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mr. redstone's ability to communicate has been impaired to a great extent, through voice and even through writing. actually from a 1979 fire, his ability to write has been for many years impaired. that inability to communicate seems to be one reason why it was time for him to step down as chairman. shari redstone, his daughter, has been, i'm told, very much involved in his care and his communication, if you will, at this point. key question, is this a power play she is trying to make to gain control on the trust where she serves as a trustee along with mr. dauman and five others? and/or prevent him from becoming chairman? we'll see how it plays out. it does appear the board of viacom is prepared to elevate mr. dauman to the chairman role. this battle is going to
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continue, it would seem, for some time. >> not as simple as saying it's about conflict of interest or we need fresh blood at the top. it's more complicated than that. >> she says they need independent voice at the top of viacom as chairman. others say she sees this as opportunity with the weakness of viacom, incredible compensation they paid to mr. dauman, this is an opportunity for her to assert herself as her father's health declines. >> the investors like the whiff of change. up 5%. >> mr. redstone still controlling shareholder. >> activist interest? >> there has been some, but more on a governance level. you have somebody unable to communicate still as executive chairman. it is a reasonable question to ask how long that should continue. the idea of consolidation taking place and/or cbs or viacom being
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part of it is premature. >> we'll see what comes out of the meeting. it was a contentious hearing in congress. martin shkreli making a quick appearance, pleading the fifth and already taking to twitter. let's bring back meg tirrell outside this hearing in washington, d.c. boy, has this been something to watch. >> it's been a very colorful morning here. representative elijah cummings calling the money raised by raising the price of these drugs blood money, comparing turing to a ponzi scheme for raising the price of this to fund new r&d on drugs they say they will raise the price on later. that eliciting quite the expression from martin shkreli. >> in all my time in congress, i served on four committees, been here 28 years, i've seen hundreds of witnesses and some very heated confrontations. i have never seen an individual
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act with such arrogance as mr. shkreli a while ago, such childish, smart alecy smirks and turning away from ranking member cummings to pose for pictures while ranking member was speaking. it was totally ridiculous. i can tell you this, his lawyer better advise him a little bit because a jury would love to convict somebody if he acts that same way while on trial. >> martin shkreli's lawyer ben brafman saying these were nervous ticks. shkreli already taking to twitter in response to this morning tweeting "hard to accept that these imbeciles represent the people in our government." i had prior council produce a memo on facial expressions during congressional testimony if anyone wants to see it.
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interesting precedence." maybe we'll find out. >> i'm surprised his lawyers are letting him tweet. the story going into today was ben brafman his lawyer was going to keep him quiet, no more interviews. in fact, brafman made a big statement about that. how is he allowed to tweet? >> it's unclear. it's something we'll ask his lawyers and see his twitter account become quieter. so far, he's still out there. >> maybe can't help himself. >> this cuts to the problem people have. this guy was in charge of a drug company. he raised the price of his drug from $13.50 to $750. because the system allows him to be in charge of life-saving treatments, he hiked the drugs. that is what people will have difficulty with. this childish smirking is the guy who had the power to do it and successfully did it. that's what people will be irked for.
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>> that's true. what he is on trial in federal courts has nothing to do with the price of raising drugs. interesting the congressman says he has to work on his respectfulness. that will play on how the jury perceives him in trial. >> valeant presumably giving evidence. let's have a check where we are with the markets. we have a strong rebound on the lows. the dollar is falling. for many people, that's quite important. still ahead, has apple's focus on new things like smart watches and cars made their core apps suffer? walt moss berg says yes and will explain.
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many of the frontier markets have been tanking this year. we discuss trading nation.cnbc.com. check it out.
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material trading about 3% to the up side. last year's losers are among the biggest gainers in today's trade reversal. freeport-mcmoran up over 20% as copper hits its highest levels in a month. alcoa down 50%. however up double digits today. newmont mining trading higher as gold hits a three-month high. materials are the third worst performing sector group, still in bear market territory down by 20% or more from their recent highs. reversal today. >> it was amazing to watch the short covering from australia through europe us to. let's get to rick santelli
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in chicago. thank you. peter, welcome. before we talk i want to read a couple of things. "we may well be entering a world where established macro economic relationships no longer hold with regularity we once thought." "this is by mario draghi. you underscored it in your writing today, "the risk of side effects would not stand in our way." i ask you, is that mario draghi's neville chamberlain's moment? >> yes. this is scorched earth policy to get this arbitrary level of inflation they refer to as 2%. this is monetary corporate bombing. he'll break anything just to get to 2% inflation because he can say we met our objective, regardless of everything they burn down around it. they create massive financial instability to create this
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illusion that 2% inflation is somehow a good thing. >> all right. in your own words, you use the phrase carpet bombing. mario draghi is regularly associated with the bazooka. is this central bank warfare? i mean this in the most serious way. >> central bankers should be in the background of our lives. they should be in the background of economies globally. they should not be front and center. humility is a very important thing in all aspects of life. particularly central banking. they have no humility. they feel like the world is on their shoulders. when he said all previous relationships need to be thrown out the window, central bankers have thrown them out the window. he wonders why that is. >> let's proceed down this road. i like this path we are taking. who exactly or what anti-pi in various countries, whether it's europe, japan or the u.s., what
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entity can rein in that type of behavior? is there one or are we relegated to let this thing run its course? >> unfortunately no politician will rein this. in it will be the market that has to rein them in. the bond market reins them in. it's going to be their success in generating higher inflation and a vault in the bond market that takes away what the central bankers wanted to do. imagine they created this construct of negative interest rates and just imagine what happens to global bond markets if they are successful in generating higher inflation? they set the tinder for carnage in global bond markets. >> i think it's successful in generating a whole lot less. in the last half minute quickly, productive absolutely dismal, in my opinion. i don't see any way around this. maybe they should get rid of the two pillars currently and make
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one pillar. maximize productivity. final thought. >> right. capital investment, savings, is what is needed. not massive regulation which just imagine the amount of compliance people that companies have to hire just to meet the regulations? they are certainly not productive but a cost. savings equals investment. i learned that in school. unfortunately, we destroyed the savings cultural and behavior of this country having rates at zero. >> more jobs that lead to less productivity makes the fed happy but doesn't make investors happy. peter, thank you for taking the time. thank you. when we come back, for 30 seconds of tv ad time during the super bowl, companies are paying as much as $5 million. is it worth it? we'll talk to the cmo of pepsi north america and frito lay.
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that's why i switched from u-verse to xfinity. now i can download my dvr recordings and take them anywhere. ready or not, here i come! (whispers) now hide-and-seek time can also be catch-up-on-my-shows time. here i come! can't find you anywhere! don't settle for u-verse. x1 from xfinity will change the way you experience tv. advertisers are gearing up for the super bowl this sunday. pepsico is sponsoring the halftime show. with us from their san francisco
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experience our chief marketing officer in mexico. and chief marketing officer. so good of you guys to be here. pepsi has done this a number of times released ads and sponsored the halftime show. what's going to be different about super bowl 50. >> one of the great things about pepsico is the depth of our portfolio and there's no bigger stage than the super bowl. what's big is how many brands are activated. mountain dew is back in the super bowl the first time in 15 year with mown at a due kick start which is a great new business for us. over $300 million. it's the combination of three awesome things. our spot is a funny take on the combination of three great things with a funny character that's a puppy, monkey and a baby. something that super bowl audiences know and love. >> does that mean you're spending more than you have in previous years? >> nfl is a huge partner of ours
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so we lean in with them all season long. it's a big investment and we're excited about the return we get for that investment. it's also in stores across the country where we have amazing super bowl themed displays. >> i know you don't talk about how much it costs. maybe you can give me a sense of how much it's going fibromyalgia television and how much toward digital which is becoming part of the add budget. >> i think for us what is interesting is we actually kick off our super bowl activation at the start of the nfl season. so it's five months leading to the game day which makes it all pay for itself. and the neat thing is, you know, this year as you can imagine or the last couple of years the tv ad is just one portion of it. a lot of conversation happening in the social and the digital space so i think between us, it's going to be on that space so that we can close the conversation and talk to the consumers that are actually
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talking about the halftime show are the advertisements that they see. >> i'll ask you this. i saw that one of the twitter promotions you're doing is giving away a winner of a contest on doritos. i'm curious why you saw twitter for this when facebook is dominating on social media. >> we're active on every social channel during this time. so you think about it the ad is just one portion of the experience. a lot of the conversation is happening in the social echo system. for us twitter makes sense because during a live event that's where most of the water cooler conversation happens. we want to ensure that we're talking to the consumer. >> a lot of curiosity and excitement around it. new york times does a nice job
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summing up what it's all about. ad dollars, recording sales, ticket sales, media buzz and sure unquantifiable tension. how would you describe the value and specifically for shareholders that see this spectacle and know it cost a lot of money? >> you know, i'll start with it's at its absolute best and there's no bigger stage in the world than the super bowl halftime show and how we integrate into it, it's so much more than a 30 second spot. it's about a 12. and consumers and viewers tuning in. we have a passion point for consumers that we get to relate to them for 12.5 minutes and it really helps our brand. >> are the rumors about bruno mars true?
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>> more about the celebration of super bowl 50 and with that it's really about the past, present and future of music. so we're excited. >> ceo at pepsi. >> well we're going to continue to follow the fall out of martin skhkreli's testimony. any fall out for the sector? we'll see. also gopro falling today. especially disappointing guidance for the quarter and for the year and then viacom shake up there on the board. who is going to be there? we'll dive into all that and more coming up on squawk alley. s solutions to enable global commerce that can help your company grow steadily and quickly. great job. (mandarin) ♪
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cnbc ear muffs autographed by all of us and you'll have one minute before the jobs report is released on friday. the comments are looking for a number around 185,000 jobs to be added during the month of january which would be a slow down. the question is will it come in below that? >> in the meantime let's send it to squawk alley. >> good morning. it is 8:00 a.m. in california and 11:00 a.m. on wall street and squawk alley is live. ♪

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