Skip to main content

tv   Squawk on the Street  CNBC  March 18, 2016 9:00am-11:01am EDT

9:00 am
years and years. >> buying columbia pipeline group. not really controversial. >> if it wasn't, it would be built already. >> consider the source. they will be buying them. >> that does it for today. right now time for "squawk on the street." ♪ >> the yale fight song as the upsets begin. good friday morning, welcome to "squawk on the street." i'm carl quintanilla, with david faber, jim cramer. stocks back to break even for the year, on track for a fifth week of gains. david has starwood news. we'll look at tiffany and adobe and more. europe is green but will be more mixed for the week. plenty of fed chatter. three officials set to speak, oil hanging on to the low 40s for the first time since
9:01 am
december. the road map begins with the markets climbing back. dow and s&p back for the year. oil with a 4 handle. >> the bidding war for starwood. the hotel change taking a higher offer from chinese anbang. now marriott has five days to respond. >> as twitter hits an anniversary, jack dorsey says where the company goes from here. >> the bidding war in process for starwood. the company that had reached a deal to be acquired by marriott some time ago for 0.9 shares of marriott and 2 bucks per share, and a spin of this time rental business. that's what i'm thinking of, right? this morning as we reported first and has been confirmed by the company, anbang, the insurance company from china, along with chris flowers and primavera, large equity firm in
9:02 am
china have agreed to purchase starwood for $78 in cash this is $2 above the previous bid they made to buy the company, and a bid that has been accepted by starwood. before starwood can sign that definitive agreement which has been fully financed, the deal, important, of course, when you talk about the chinese to assuage any concerns investors may have, before they sign it, they turn to marriott and say, okay, the clock has begun. you have five days under our merger agreement in which to respond with an offer that we believe would be superior to the current offer from anbang. otherwise we walk and we sign with them and you get your $400 million breakup fee. sources have told me based on conversations the two sides have had over the last few days, there is a belief that marriott will counter bid here. the question is what can marriott did to meet the chinese and the chinese may not be done. they may have the ability to go even higher.
9:03 am
marriott is expected, if it does try to counter bid, as seems likely, to add cash to the overall mix. but the deal will include a great deal of stock. and they have suffered because perhaps they didn't market it well enough or communicate well enough, but the stock has not fared particularly well since the deal. if they had, maybe the chinese wouldn't have come calling. >> this stock did fall to 60. a lot of it was people said, listen, one plus one is equals like 1 3/4, they were -- they did the sliver of the time share, which nobody -- timeshare values went down. we had a downturn in actual hotel numbers. i think hotels are undervalued. which is why i think anbang is coming in. $80.64. you know what that number stands for? >> what. >> that's where van pashen was fired. >> $80.64.
9:04 am
do you think they can get it to where fritz was running the company? >> given the value of the timeshare business around $5.70, the current bid is worth in excess of that. >> that is true. when i had the two ceos on, the tempora temporary and the ceo, i said how great will this deal be? they said great. i said flesh it out for me. >> so, part of it -- if they don't come to a level, even if it's accepted, they can't get a shareholder vote. a lot of shareholders here are short-term in nature. they're not as interested in the pro forma, the company that will remain as a result of the merger, even though many may argue that the efficiencies brought to bear would be beneficial to both sets of share holders. they'll have to lean on that and get the board to believe them unless somehow they're able to
9:05 am
compete by adding a lot of cash to the deal, which just seems somewhat unlikely, but we'll see. >> but is starwood the majority owner? >> that's why they need to do cash and not stock. >> air b & b is doing incredibly well. their biggest problem is they don't have enough inventory. i don't think hotels are nearly as threatened. i think that anbang is basically saying, listen, air b & b has reduced the value of all hotels. wyndham is a great chain. but i think they're undervalued. this group got undervalued because of air b & b, which is a legitimate unicorn that can make fortunes. i think the chinese are not as intimidated by air b & b as a lot of american investors are. we're seeing the shadow.
9:06 am
>> wynn is back to 90. that's the macau story. >> i'm sorry, wyndham -- steve wynn, macau numbers, again, clearly bottom. are they allowing junkets? are they back to junkets. >> i don't know. >> the chinese government, which is anbang, by the way. it's not like the united states. anbang is a state-owned enterprise. they want this because the chinese government is trying to build business away from china. >> anbang has been aggressive here. whether it's the waldorf wald waldorf astoria, or whatever, but there is sentiment that marriott will come back with something in excess of 78 and then put the pressure on anbang
9:07 am
to prespond to that. we'll see. the clock is ticking. they got until the 28th. >> i always remember when the board let go of fritz and thought they would bring out more value. they brought out nothing. fritz, here's your hat, what's your hurry? guy built it. >> i think a lot of ceos you don't like to see leave. thinking of allergan. >> david piatt built a great team. i'm marveling at the hedge funds. that heart thing, i'm glad that's over with. get your numbers better. >> you did a piece on "mad" the other night. the tinman strategy. >> the tinman group. when a guy has a heart transplant, that's not like, hey, i have a problem with my finger. right now i have a skin
9:08 am
infection here. not really infection. that's valeant. don't they have a toe fungus thing -- >> jublia. >> jublia. how much has that gone down? >> not much yet. stock market has not opened yet. all of healthcare was going down yesterday. everything else was going up. >> it's primary season. in arizona, they will blast these pharma companies in the arizona primary. whipping boys. eli lilly, i'm not so sure about that alzheimer's drug. >> did you make a move on lilly? i had to. if you go back to the analyst presentation, i thought they would reverse. nobody seems to be able to
9:09 am
reverse black. >> stocks are positive for the year after that long climb back. oil at 40. highest close for the dow and the s&p since the end of december. s&p break even is 2043. almost 2044. manufacturing data has been good. low vix. dovish fed, easing dollar. what else can go right or wrong? >> "usa today" had a list of stocks up for the year. for the most part companies doing quite poorly. caterpillar. the market -- industrials bottomed. dover reported -- pre-announced on monday. the stock went down a dollar. it's up five. emerson, which broke out yesterday. i don't know if you saw emerson. the rally. what did emerson did? they put out a release the night before the rally. up three. they said they felt the forecast was orders too be down minus 5 to minus 6, they changed that to
9:10 am
minus 4 to 6, and it was up. >> look at caterpillar yesterday, it was up. >> caterpillar never got guided for the first quarter. it was not really right that people cut that was just the analysts saying it. here we have caterpillar rolling numbers for machines in latin america, down bad. people short caterpillar, that's what you do your hedge fund managers say the world is falling apart, short caterpillar. >> the world is not falling apart. >> look at oil. look at freeport. that was the poster boy. remember when you were worried about freeport? >> i'm not not worried about freepo freeport. >> you were so worried. >> i was. i would put my head down on the pillow, oh, freeportment. >> short interest back to '09 highs. is this the time to reset if you have a short, bearish view? >> i think if you're -- there's a rolling bear market that's now
9:11 am
in pharma. that money comes out of pharma, what's left of it. >> when will it come out? the point i made earlier, last year was a terrible year for hedge funds. we all know that. this year, now that we're back to flat on the broader markets, hedge funds are still down without a doubt. and so many of them own so much healthcare. >> they own biotech. >> we talk about valeant. did you see endo? these things trade together. >> or celgene. >> celgene. that's a bear market that has taken a toll. i wonder what the hedge funds will look like this year versus they are down. it's ugly. >> they shorted adobe, sales force, linkedin, how stupid was that, that adobe conference call. a thing of beauty.
9:12 am
>> time for some fresh highs on adobe. >> let's not forget what adobe did during that hideous week of tableau software. the stock was flying. santana was -- santana, did you see the numbers for adobe, up 44%, 175 movies from the sundance film festival used. that stock dropped like a stone off tableau. that stock fell -- tableau data went from 81 to 41, at the same time adobe went from 89 to 72. gave up the year gain and now it's back to a new high. tableau software is never cloud. larry ellison, you're cloud. i want larry to like me. >> are you really concerned about that? larry ellison. yeah. you can't go to hawaii if he doesn't like you. isn't he turning it into a
9:13 am
nature preserve? >> yeah, one of those islands. >> i went to a place he owned. >> that was in lenai. >> i didn't know he owned that. that's pretty good. that's like owns queens in brooklyn. good buy. >> we all wish we owned a piece of hawaii. when we come back, jack dorsey taking his pitch to the "today" show to talk twitter. we'll tell you what he told matt lauer, and a number of things to get to. a lot of digital media revenue. look at the premarket. dow is up 11. going for six straight.
9:14 am
9:15 am
9:16 am
twitter ceo jack dorsey marking the ten-year anniversary of twitter with an appearance on the "today" show. listen to how he answered when asked what the biggest change in twitter was. >> i think how people use the service. it is the easiest way to see what's happening in the world right now. live. it breaks news for so many people. a lot of people just use it to
9:17 am
see what's breaking and what's new in the world. >> matt lauer asked about whether twitter is dying, would the company be around in five years. take a listen. we'll be here on the 20th. on the 30th. it's a fundamental service. we have a lot of heart in the company, a lot of purpose. we understand what we are and what we stand for. we just see this amazing usage globally. >> lauer even asked about the stock which bottomed out at 13.91 in february. >> i think jack's right. they understand who they are. it's just that the -- no new people seem to want it. when i say "no" there's not a lot of on-boarding. it's not like netflix. you call netflix customer service, we were talking about that, call amazon, they'll help you. i've been after jack to do this
9:18 am
forever, get customer service, have concierge service. the big problem with twitter is it's frightening. it's frightening to figure out. if you actually have followers like i do. 3:30 this morning there's a guy who is like, listen, cramer, let me tell you what i think of you. come on. >> you said some of them might still be drunk. >> i said i get up at 3:30. these guys are obviously drunk tweeting. there's a guy drunk tweeting. >> was st. patrick's day. >> is there a name for that? dreeting or something, drunk tweeting? >> i have a concierge service with twitter which is necessary given the fact that certain actions, police actions, so to speak. people have to recognize there's a problem with twitter fundamentally, older people are not sure how to get on it. younger people are intimidated by it, they don't have customer
9:19 am
service. >> they don't help the people who can create content -- they're not helping. >> these guys are super guys. we know these guys. >> facebook is on you. >> you do facebook. i had 25,000 people watch my facebook live piece. facebook is in your face immediately talking about how to monetize what to do. it's like perry scope. down perry periscope. >> not to mention it's almost like you're own apiu, all the metrics about who you have reached. twitter is trying to do that. >> lester holt is doing facebook live. facebook is easier and friendlier. they have to like you. you have to like them. the people -- i send either cozy kittens to people who hate me. i got up this morning, i had to block the first ten people.
9:20 am
>> it's not worth it. it's just not worth it. >> i candidly -- >> you stayed with it. >> marc benioff, t had an import issue that i retweeted. i said listen, how dare you -- i thought you were a stock guy. you can't fight an anti-gay law. i'm a stock guy, i can't care about gay and lesbians? you're allowed to feel. >> dorsey said he never blocked anyone. >> i know. he never said he hasn't muted anyone. >> i was always civil. i was always civil. >> we don't doubt that at all. we'll get cramer's mad dash, count down to the hoping bell. one more look at the premarket. a lot more "squawk on the street" this friday. serena williams. hi watson. you are a fierce competitor. i've heard that. i have analysed your biggest matches.
9:21 am
oh really? when down a point, you serve an ace 5.8 times more than other top players. you sound like a coach. i am not. but i can customize training programs based on biomarker data. watson, that's pretty impressive. you might say i am the serena williams of cloud-based cognitive systems. nah, i wouldn't go that far. 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.
9:22 am
theno one surface...out there. no one speed... no one way of driving on each and every road. but there is one car that can conquer them all. the mercedes-benz c-class. five driving modes let you customize the steering, shift points, and suspension to fit the mood you're in... and the road you're on. the 2016 c-class. lease the c300 for $399 a month at your local mercedes-benz dealer.
9:23 am
. we made it to friday. the mad dash time. >> we did make it to friday. >> it's not over yet. >> no. just beginning. >> seven minutes before the opening bill. >> we have time to talk about transcanada? >> please, let's do. >> the papers ask why did they do this? keystone was dead a long time ago. this is about, thank you rbn about this, their main asset, transcanada, a huge gas pipeline from alberta to the eastern part of the u.s. that's what transcanada's big money thing has been. the marcellus and utica, all the natural gas from pennsylvania to ohio has made it so you don't
9:24 am
need to ship natural gas from canada. transcanada had to buy columbia to protect itself, because they don't have anything cooking anymore since that big pipe is gone. this is about marcellus and utca. the other big business transcanada has, they ship natural gas to mexico. mexico used to be a giant producer of natural gas and oil. now they have such a shortage -- canadians are sending it to them. this natural gas market is so he in flux, it's on fire. this is all natural gas related. it's not keystone, it's not oil. it's not heavy sands, it's about an alberta pipe we don't need anymore. >> has the marcellus and utica coming into play affected other pipeli pipelines? pipelines not being used as much. >> it had to be reversed. all those texas and louisiana pipelines going up to the
9:25 am
northeast, they're worthless. they have to reverse them to send the gas to cheniere in order to send it to brazil which has an incredible shortage because the hydroelectric power is one more thing not working in brazil because of the drought. it's a seven year biblical problem in brazil. >> not to mention the political problems. >> it's almost as crazy as u.s. presidential politics. >> almost. >> all right. we have the opening bell. five minutes away.
9:26 am
hey how's it going, hotcakes? hotcakes. this place has hotcakes. so why aren't they selling like hotcakes? with comcast business internet and wifi pro, they could be. just add a customized message to your wifi pro splash page and you'll reach your customers where their eyes are already - on their devices. order up. it's more than just wifi, it can help grow your business. you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business.
9:27 am
9:28 am
you're watching cnbc "squawk on the street," live from the financial capital of the word. the opening bell in 90 seconds. nine days left in q1. the dow is 1800 points above its low for the quarter and it's on the cusp of its biggest quarterly comeback from a deficit since the '30s. 1933.
9:29 am
>> wow, that's amazing. 1937 is the year i was worried about when the fed got tight. we almost went back into a bad depression. we must stop talking about when january is bad so goes the year. can we end it now? when january goes bad, so goes the great buying opportunity. look at tech, what an opportunity. look at verizon. was verizon that hard? have you seen your bill? >> i have. >> how bad? >> $185. >> really? >> includes a few people on there. >> these are annuity streams. caterpillar. walmart had an unbelievable quarter. they're not even doing well. i wanted to banish forever, in this notion as january goes so goes -- more people got out of the market at the low of january. no good. >> what do you say to those who argue the market is behaving like we're at a high water mark
9:30 am
now? >> i say look at eli lilly and pfizer and tell me that. tell me that about bank of america, $800 million buyback just to offset -- tell me that how much is the financials in the drugs? a huge part of the s&p. they're in bear market. tell me about that at biomarin and gilead, all right? micron. >> yes. torry burch ringing the bell here, celebrating women's history month. at the nasdaq, st. baldrick's foundati foundation celebrating its 16th anniversary. have some retail to get to. whether it's tiffany or aeropostale today. >> what is that guy doing? i don't know. tiffany is interesting. they cut numbers, cut numbers, then they did the number which
9:31 am
is exactly what happens when you lit -- if you keep guiding down, eventually do you it. what happens in some of these situations is that they stick by the negatives. they still say it's the strong dollar hurting them. europe was amazing. i think europe is a comeback story. >> the s&p is now up 0.3% for the year. there it is. >> it was down so much. >> what were we down at our lows? 8%, 9%? >> dow down 11%. >> the other day i said something positive about ibm. people looked at me like i had two heads. >> ibm has come back in other times. >> because you knew the dollar would be down 4%? >> interesting, by the way, tiffany didn't even give you the actual -- they said here -- they didn't give you the real number numbers. >> q1 earnings down 15 to 20.
9:32 am
street down 6. comps were weak everywhere except japan. >> i know. the fact is they told you comps will be weak everywhere except japan. this time it is exactly what they said. the company is a bad forecaster. >> i got an e-mail from twitter telling me to go back to the basics with twitter 101. are they listening or is that -- >> twitter? >> i got that, too. >> did you just get that? >> i got that. >> they need to learn from you, car carl. >> something you said, are the caterpillars ahead of themselves? you need to stay oil stay above 40. copper stay in bull mode. all of these commodities must stay in bull mode and the dollar must keep going down. the super freaking weak dollar is what we're calling. >> s&p multiples now, 15,500 on a you to ward 12-month. >> i can handle that. >> you can? are you sure? you're grimacing while you're
9:33 am
trying to handle that. >> a lot of the s&p -- consumer package stocks are selling at 15, 25 times earnings. >> what's the earning growth? >> okay. i'll play. i'll play that game. if the dollar has peaked and is going down, you will have for many companies high single digit double digit earnings. >> fundstat says every percent change in the dollar is 30 billion in sales. >> take that. >> that's a lot. >> take that. that will change -- we'll end up thinking the pe is 15 1/2. >> and energy may make money now that oil is back at 42.22. wti up another 1 plus percent. >> getting active in terms of research, takes exxon to a sell. exxon is one of the best performers in the dow. chevron doing so well. now, the stocks are doing well. are the companies doing well? if you look at all these stocks that are a dollar or below that have good assets, you might be
9:34 am
able to pick -- >> i would assume if you overlay the s&p and wti, they would look similar. is this sustainable this rise? >> i think this is the equilibrium price. >> what has changed that we moved up 9 bucks in a short amount of time? >> pick up in demand. >> we did? >> little pick up in demand which did matter. little pick up in gasoline demand. not great. other countries just dropped off the face of the earth. we'll be 900,000 barrels a day short from where we are now until next year because we have had a very big decline. 900,000. it's finally happening. we were up year over year. natural gas, more production now than ever. you may want to own natural gas. it's a disaster. 1.90, not oil. oil is coming down. then we -- we have to deal with iran. iran, everyone thought would come on big. they haven't. they say they want to. >> they want to nigeria has been
9:35 am
offline. we talked about brazil. venezuela. >> there it is. >> no one has the statistics for venezuela. that's a big country. . >> it is. >> top five. no stats out of venezuela anymore. how did this happen. >> they pump a lot of the sweet stuff. >> we replaced that bakken in venezuela. bakken, not a lot coming out of there. crude by rail is down gigantic. you look at crude by rail, you can tell how much our production has dropped. dropping very fast. that's helping. >> you talked about financials and the low rate. >> horrible. >> but now we get some additional buybacks. jp adding 1.8. b.a.c. higher today. >> yeah. b.a.c., that's -- my travel trust owns that. wish we didn't, because i don't know, they have to wait to buyback. jpmorgan, maybe they're having a better trading quarter than
9:36 am
goldman or morgan stanley all the way down. trading nil. ipos nil. >> fixed income painful for a time. >> yes. >> yeah. not a lot. >> numbers have to come down for almost every bank. banks and drugs. did you see some of these drug companies yesterday? >> yes. >> eli lilly giving up everything, it's like a multi-year deline. only j & j stays up there. piper says it's time to buy pfizer over j & j. give me a break. >> jim a, allergan, not down today, up a bit. but so far below the highs. since it did the pfizer deal. >> now looking, brent saunders, holds your ears, the pfizer allergan deal looks like the marriott/starwood deal. >> i don't think there's an overbill for allergan. >> i meant in terms of how du--
9:37 am
>> i think allergan goes to 3. >> marriott and starwood. starwood, stock trading above the $78 deal it agreed to to be acquired by the chinese insurer, anbang and partners. it agreed to the $78 all cash deal which is financed and include a new share of the timeshare business they're spinning. agreed to it but has not signed it. it has not signed the deal because it has to give marriott five business days which will take it to march 28th, according to the press release. not sure why. march 28th for marriott to respond. as i reported earlier and will state again. people familiar with the situation tell me marriott has indicated it's considering and focused on a counterbid to maintain its deal to acquire starwood. how it will go about doing that is unclear. in a press release, marriott acknowledged these changes and only simply said it is
9:38 am
considering alternatives at this point. again what i'm telling you is that it's very much trying to figure out a counter bid. but we talked earlier in the show about how they would go about doing that, how they could get to a point that would be superior to anbang's current 78 bucks per share in cash. should be an interesting few days or weeks here. >> so they really were stealing starwood. >> it appears that way. yeah. >> the board of starwood said here, take it. we're done with this. we have to move on. do something else. they stole starwood. >> they didn't. >> no, they can't get it now. you know what else is back in terms of bull mode? aerospace. remember when boeing had that accounting issue and the stock dropped to 119? a lot of companies have been quiet i will telling people orders are back. travel seems to be back. these are all the rotating bull into aerospace again. look at boeing. look at boeing. it came back. honeywell breaking out here.
9:39 am
united technologies never gave up. >> ge back to flat on the year. and on the cover of business week. >> moving to boston. >> it's a digital company. >> they were very close to moving to new york. >> really? >> but listen up, it was taxes. taxes. >> to brooklyn? >> taxes kept upper management from saying, no can't do it. can't move to new york. >> what do you make of united technologies trading above where honeywell was? >> i don't know. i think utx will always have a bit of a premium in it. these two companies have visited each other so many times, inevitably it seems like it will happen again. beyond that, it's curious. unless businesses tun dramaticall dramatically. >> my travel trust owns lockheed
9:40 am
martin. greg hayes sold sakorsky as an oil play. these companies, honeywell and united technologies, they do a lot of business in china, in europe. that's why i say this s&p is not as expensive. if you reverse the dollar f that dollar starts going down, honeywell's numbers, they'll be selling at 14 times, 15 times, but 12 times earnings. this dollar is -- if it keeps getting hit, you will be buying united technologies 12 times earning earnings. >> when i was talking wti earlier, my data set is for the may contract which will be higher than april. for some reason my data sets changed to may. >> four weeks ago the 2023 futures contract with the at 25. some of these airlines said we won't hedge. >> yeah.
9:41 am
>> maybe they should have. i don't know. continental, time to get rid of that guy, right? he's been in for 6 1/2 weeks? i'm being facetious. i keep thinking about herb kelleher sitting there saying, it's a miracle, they're profitable companies. the other day lufthansa came out with weak numbers, which surprised me. >> herb was the interview of the week. >> was. >> couple other things, constellation brands, before c. you know i think the world of modello and corona. let's get to bob pisani on the floor and see what's moving. >> toasting the markets right now. 2048 on the s&p. in positive territory for the year joining the dow. a lot of exchanges have been doing well globally throughout the week. the weak dollar is helping. i want to point out what's
9:42 am
happening in china. this is the sixth day in a row that chinese markets are on the upside. shanghai, shenzhen did better. talks on loosening the curves on margin trading it was stricter. they will open that up. look at the week to date here. china the shanghai, up 5.2%. i highlighted russia and south africa here and what the weak dollar has helped a lot of these commodity heavy exchanges. germany and the s&p up roughly the same amount. in the u.s. on the morning, we see industrials lagging a bit. financials, tech, energy up nicely. healthcare lagging a bit. that's been true all week. we had new lows in healthcare yesterday. lexion and lilly at a new low. you guys were talking about
9:43 am
industrials breaking out. we had a couple of 52-week highs in industrials yesterday. illinois tool works was at a 52-week high. seeing an expansion of new highs. and some of them are not just consumer names, which is the only sector in the new high group. another 52-week high for illinois tool works. as for tiffany, it's up despite the fact that the q1 body language, which you might call it, was a bit on the weak side here. they did beat on the bottom line here. and, again, they are pushing earnings growth out to the second half of the year. if you look at the sales numbers, they don't look that great. u.s., these are comp store sales, down 8%. asia pacific down 8%. japan up 10%. they cited the tourism business. europe, weaker than expected. overall, these numbers not out of line with what anybody was talking about. maybe europe was weaker. i think that was good news overall. it wasn't worse than expected.
9:44 am
i did talk to retail metrics this morning about how this first quarter, this is beginning february, the retailers report february to april, is looking in terms of earnings. it's extremely choppy. this is retail metrics numbers. retail overall, they follow 120 companies, so far they're tracking down 1.1% compared to the same period last year. home improvement, the home depots, lowe's, continues do great. numbers looking terrific for them. luxury is okay. the discounters, ross stores, walmarts down about 8%. home furnishings, they're having a tougher time. very, very choppy and uneven numbers. i would highlight fedex the other day went out of their way to say there's a full scale e-commerce revolution going on with people ordering dramatically more through their individual services. for retailer, the s&p is on a
9:45 am
round trip for january through this part of the year. but the xrt has a much bigger comeback. these are the retailers since the bottom. that was also on february 11th. finally, just watch today. as i mentioned we are at 2045. that's now in positive territory for the s&p 500. this is a quadruple witching expiration. we will have an s&p rebalancing as we always do for additions and deletions to the s&p 500. a lot of volume at the close. the game, guys do it without changing the price. dow up 64 points. back to you. >> thank you very much, bob pisani. we keep our eye on oil's continued strength. jackie is at nymex this morning. good morning. >> we are seeing strength heading into the weekend here. what you're seeing in terms of pricing is monday's expiration of the april contract, so everybody is focusing on may. april over $40 a barrel. may over $42 a barrel. these are key levels.
9:46 am
as we head into expiration, that's a time period where you see more volatility. it makes sense we're seeing moves to the upside. i have three more reasons for you. the first is the april meetings in doha of some producers to implement this freeze we have been talking about. equity strength will help oil prices a bit. that dollar index, as jim mentioned, under 95. that's a key piece of the commodity story and oil also. a significant bounce over this key level, but people out there are telling me don't get too excited about the move we've made here. a lot of this is a momentum-based move there could still be down side. maybe a lot of this is hype until we see an actual implementation of some policies that the producers are talking about that will shift supply and demand. it's that actual evidence that we need. when you do get the parties together, that's one piece of the story. look how much effort it took to get that cohesive potential
9:47 am
meeting together. now they have to come together and cooperate do something, which is another piece of the story. so, don't read into the headlines necessarily, definitely in terms of momentum now we are heading to the upside. back to you. >> thank you very much. when we come back, more on adobe results. the ceo will join us later for an exclusive interview. dow up 66. the future belongs to the fast. and to help you accelerate, we've created a new company. one totally focused on what's next for your business. accelerating innovation. accelerating next. hewlett packard enterprise.
9:48 am
9:49 am
every auto insurance policy has a number. but not every insurance company understands the life behind it. ♪ those who have served our nation have earned the very best service in return. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life.
9:50 am
apple's spring event is monday in cupertino unveiling the latest products at the campus. expectations are for a smaller iphone, maybe a smaller version of the ipad pro and it comes ahead of apple and the fbi making their case in court on tuesday. some think they could roll out some os that could be intentionally unhackable. >> i can't get people saying this is bad for apple and the stock down. tech is making a comeback.
9:51 am
>> you remain -- >> don't trade apple. all those analysts wanted you out of 93. they should have gotten you out of valeant at 93, not apple. >> 93 would have been a good price. >> hillary got you out at 46. trump started disliking it -- >> we'll get stop trading with jim in a moment dow up 71 points. (neighbor) yeah, so we're just bringing your son home. he really loves our wireless directv receiver. (dad) he should know better. we're settlers. we settle for cable. but let us repay you for your troubles. fresh milk for the journey home? (neighbor) we live right there. (dad) salted meats? (neighbor) no thank you. (dad) hats then! (vo) don't be a settler, get a $100 reward card when you switch to directv.
9:52 am
9:53 am
these are the hands that build the machines, the machines that sort, stack and seal. these are the hands that keep private information private. these are the hands of pitney bowes, the craftsmen of commerce. these are the hands that dig for opportunity, identify patterns, and uncover risk. these are the hands of pitney bowes, the craftsmen of commerce. when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. great, that's what i said. so your business can get back to business. sounds like my ride's ready.
9:54 am
don't get stuck on hold. reach an expert fast. comcast business. built for business. time for cramer and stop trading. >> the brilliant cfo at home depot talked about an increase in child and household formation. children's place, the hottest retail stake this week. an amazing quarter. would you look at that? brian cornell yesterday from target said childrens is hot. >> pillow fort? >> those are big. >> those look incredible. >> i'm going to the nova game, there's a big target in brooklyn. 36 times turnover on paper towels and toilet paper. just keep turning it over. >> that's a lot. i think children's place is not
9:55 am
done going higher. another guy we don't talk about because we keep talking about mike pearson. >> for good reason. what's on "mad" tonight? >> game plan, and i'm revealing a spinoff, thank you dave kostin, which is fabulous. is dave here today? >> i don't think so. >> is jim stewart here? >> i don't know. >> adobe unbelievable. you have to ask about the movies, the sundance movies done on adobe. >> yes. >> that 54 trillion pieces of data on adobe. one of the most exciting companies that nobody talks about. adobe, oracle, sales force, workday, all blowout numbers and all we did was take a cue from linkedin and tableau. >> which has not recovered as much as some think. >> because it's not a cloud play. it's a digital analysis play. ibm has more cloud than tableau, okay, watson?
9:56 am
>> yes, sir. >> is your bracket busted? >> candidly this time we did not get a "mad money." i would have had yale. >> would have. >> sure would have. right, sure. >> just like i had them when r harvard beat them 27-27. >> you like them against duke? >> i like nova. big snowstorm on sunday, but i think nova will go further. i also like st. joe and temple. where every one of my relatives i went to. temple, only one comes out. two go in, one comes out. >> great time of year. see you tonight. >> absolutely. when we return, a look at technicals of this market as we climb back to break even for the year. ahead of the apple event and that product unveil on monday, re/code's kara swisher.
9:57 am
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. 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.
9:58 am
9:59 am
with extraordinary offersmance saon the visionary ls, the generously appointed es and the new, eight-passenger lx. ♪ this is the pursuit of perfection. - 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. . good friday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, simon hobbs and david
10:00 am
faber at post nine of the new york stock exchange. market trying to build the slightest bit of cushion to the upside. dow up almost 100 points. s&p 2048, about four, five points above the way we started. >> here's our road map to finish off the week here on cnbc. a hotel bidding war, starwood taking a higher offer from china's anbang. marriott has five days to respond. plus, apple gearing up for its product event on monday. what should investors be expecting now? president obama set to make the first visit to cuba by a sitting president in 90 years this weekend. find out how big business is involved in a changing cuba. we start with the markets. the dow is up 95 points building on gains. dow going positive for the first time this year yesterday. we have michael santoli here at the top of the hour, our chief markets commentator to explain more on the technicals. how much momentum we have in this rally. >> looking at the dow jones
10:01 am
industrial average, after this huge rally, there it is. >> there's the dow. >> let's look at this rally here. that's the one we're enjoying now. that's about 11.5%. it looks similar to this one that happened late september into early november. the key here, this is about 12%, same here, 11.6%. and the question is are we in for something like this again? it looks as if this distance above the 50-day average means the markets are overbought, getting ahead of itself a bit and do we have the ability to get out of this range? this is a box we lived in for months last year. we're dealing with a much wider range now. a lot of people, even bullish folks want to see this curl down a bit and have this catch up. maybe it's a better entry point, just to see if it's as fragile as here. this was november and december, choppy, we lost all that. >> interesting fundamentally.
10:02 am
december we got that first interest rate increase from the federal reserve in almost a decade. here we are again higher by this idea that they won't raise rates so quickly here. >> exactly. that is creating the sense of comfort out there, that maybe the fed is not going to be hostile to this move what is interesting is the difference in sentiment. i would perceive right here, when we were about the top out in early november, i think everybody was essentially saying, look, we have a year-end rally ahead of us. seasonals are in our favor. santa claus is not far away. we never got that rally. over here, i think there's still some measured skepticism about this move. yes, in the short-term we have to pull back. the big question is can all these things work together and not have this rally completely evaporate? >> let's look at the s&p. the dow had more strength maybe because of the weakening dollar. a lot of multinationals what does this one look like? >> the dow actually went to a lower -- this went to a lower low. we actually had a worse
10:03 am
experience in january and february this year with the s&p than we did with the dow. the very conservative stocks in the dow are helping it out. it's really the same story. this is about an 8% gap between where the s&p is right now and where that 50-day average is. that, some people are saying, shows you it's running hot. it doesn't mean it has to fail here, but you need the real buyers coming in, have that pullback, see how the market gets. >> in terms of fundamental catalysts coming forward? >> you have to hope on earnings. a lot of times we've gotten rallies when you had fear evaporate quickly. then you say what's been fixed? evaluations haven't been fixed necessarily. the yen is still rallying. >> yes. >> that usually isn't great for risk assets. a lot of these things have to be sorted out. >> it is all one trade. you have this weakening dollar providing relief. you have the price of oil above 40, which we can do a technical chart on that.
10:04 am
emerging markets are rallying. even the chinese currency has been rallying. >> exactly all the same trade. if you're bullish -- if you're discovering the bull case on stocks right now, you have to look at oil where it is now and how far it's come, 32% in a month. if you wouldn't buy oil here, i'm not sure you want to get too aggressive. >> copper is aggressive as well. >> without a doubt. >> michael, thank you. our chief markets commentator, mike santoli. >> we are now positive again for the s&p 500 for the year. we're at 2,048. you'll remember -- i will tell you any way -- december 31 we closed at 2,043.94. the dow went positive yesterday and indeed the s&p has now done that as well. let's get some analysis on where we are with the markets. we have the oppenheimer funds chief investment officer and art hogan the chief market strategy. art, the volumes here are really light.
10:05 am
yesterday and the day before, i think the lightest volumes of the day. leading to the "journal" to ask if no one trades, is it really a rally? how would you answer that? >> simon, i think it was monday and tuesday in front of the fed meeting we had the two slowest days of the year. you're correct. that question always amuses me, if you want to sell the s&p 500, you can sell it for where it's trading. if you think we're overdone here, overbought, that's the price you will get. we would love to see more volume, but on weeks like this when we're wait and see what will the fed do, what kind of surprises do we get in the stateme statement, will they be more dovish, volumes are lower. now we will get into a trading pattern where we focus on fundament fundamentals, not just oil and the fed. when you talk about volumes in general, they have been off a bit for the last two months, not just the last week. >> i think the broader -- you
10:06 am
make reference to it, just to l highlight it, the concern people had is the lack of conviction in the market. and so many big volume investors are confused as to what is going on that the narrative for many of them is not clear to it the point you're making. have we kind of resolved that? >> not at all. i think that's a good thing. on a counter intuitive basis. if you have that much confusion after you get back a 12% draw down on the s&p 500, i think you would like to see as much social security pitch about the path forward as we have seen now. you want as much negativity in the market as we continue to have to have a clear path forward. we have gotten on a multiple basis, a place that's rich, 17 times this year, 15 times next year, you don't want there to be an overwhelming shift in investor sentiment. we're still as negative overall in terms of market participants
10:07 am
about how this market will go that usually is a good sign. >> interesting. christian, would you agree with that? >> i think so. if you look at retail investors, they're not participating, they're withdrawing money. the market is climbing a wall of worry, as the cliche goes. what is different now than it was in october or september was the fact that the fed is finally recognizing the implications of its policy on a global basis. that's very, very different than where we were in october last year. at that time they were talking about tightening policy. we have a lot more to go on that front as a result. >> let me ask you this. can we throw up a weekly chart -- i know the dollar shifted, but where we are on the s&p 500?
10:08 am
despite the fed has questions about rate rises, we're up 0.25% for the week overall. would you have expected more? >> the markets have been recovering since the middle of february. we can't just look at one week to come to that conclusion. >> so don't believe the fed. >> the markets have never believed the fed. even today the markets are assigning a lower probable through tightening. our contention is at the end of the day, the thing that impacted the market the most on oil, on currency, equities, on credit, really has been all the about the fed. they're all correlated. and as that fades, markets will rally on a correlated basis. >> a lot of people say, art, that's why the financials have been hit so hard this year. they're one of the few sectors in the s&p down year to date. today having a strong day. best sector in the s&p. jpmorgan leading the dow. how important is the bank trade to rallies overall and whether whether it can continue?
10:09 am
>> that's a great question. i think that's how you want to think about this. the banks have been straddled with zero net interest margins, or very little net interest margins. on top of regulatory pressures and incorporating the fines they pay on a monthly basis as not being one-time events. we get some relief from that, but we started out the year thinking this would be a great year for financials, and as the year has wore on, we see that the path of interest rates moving higher is going to be a little more gradual. probably exit the year with a 1% fed funds rate. not the 1 3/8 anticipated. the fed will suffer for that but the financials on a multiple basis are much cheaper than any other sector in the s&p, except healthcare. my guess is if you look at these monster banks, large financial institutions trading at a percentage of their book value, it will probably be a compelling time to be thinking financials are a much better bargain than
10:10 am
utilities or certainly the other non-s&p 500 sectors. >> i want to change the subject and talk about the bricks and where we are at the moment. take people to brazil. clashes in congress, clashes in the street after president l rouseff tries to get immunity for one of her cabinet members. this is at the same time that the president of south africa may find he's without a job by the end of the weekend as well as his own administration is engulfed in crisis and we hope we know what's going on in china what happened to that picture of the bricks that the qualified, intelligent people paraded into front of investors? i think thinking about bricks as
10:11 am
a monolithic group is wrong. bricks have different countries and different drivers. what is happening in brazil has nothing to do with what's happening in india. >> but they were our growth. they were the great optimism for the future, were they not? they told us to peg our money to that. >> i think emerging markets in general are still growing at a much more rapid clip than the developed markets. that's going to be the case for a long time. trajectory of growth has gone down, however they're growing and they will continue to grow. i think what's happening in the markets is different than what's happening in the underlying economies. a lot of these economies are going through a transition period. that adjustment period is not easy. china is probably best example of that. >> i guess the dollar gave them respite this week.
10:12 am
>> absolutely. >> thank you both. have a great weekend. shares of starwood are up this morning on news that anbang, the chinese insurer along with its partners including primavera, large private equity firm in china have reached a deal to acquire starwood for $78 per share in cash. starwood's board met at 6:00 a.m. this morning, began deliberations on it. but the deal has not been signed by starwood. why? well, because it has to give its current merger partner, marriott, five business days in which it has to respond under their merger agreement with a higher offer or an offer that would be deemed superior to the $78 a share in cash that is currently on the table and has been accepted by starwood? sources close to the situation say marriott is expected to make a counter bid, but the question remains what it can actually do. its current bid is 0.9 shares
10:13 am
plus $2 per share in cash. marriott stock traded down for some time after they made the deal, and it opened the door to this high other bid from anbang which we heard about earlier in the week or late last week of $76, moving up to $78 to get that definitive agreement with starwood. marriott, simon, is in a difficult position. they would be expected to increase the offer largely with cash or perhaps add more cash and less stock overall in terms of the mix. it does seem unclear if they can get to an economic level that brings an equal to if not exceeding $78 per share in cash. it will be interesting to see what they try to come up with here as they try to compete. >> interesting that the marriott stock would rise. short interest after the deal, 223%. bear in mind, all lodging stocks are under pressure, because of where they are in the cycle.
10:14 am
just coming back to the figures, david. it's $78 in cash, $3.76 for the time share spinoff. >> actually 5.76. >> which takes you to 85.62. if you look at a chart of starwood going back to last year, it's about 83.76. >> 5.67 is what they're valuing it -- >> which takes you to 83.76. the high of starwood last june was 85 the combined offer takes you to back to where starwood was when they were trying to sell the business in the summer of last year. to the point that you're making what can marriott do with the brands that the chinese can't? >> they haven't made a great case to the shareholders of starwood and marriott that would allow marriott to have a higher price right now. marriott needs to make that case and has not done a great job of it perhaps, or at least --
10:15 am
>> it didn't need to, did it? there were not so many buyers at the time. >> they always needed to. if you looked at the background of the merger. there were plenty of potential buyers. the hyatt was close to a deal. the chinese were hanging around, never put in a normal offer. marriott should have known they needed to do the best to get the stock up they did not do that. they will suffer the consequences and now have the opportunity to compete for a higher bid to trump the 78 from anbang. if they do that, they will be deemed superior to anbang. >> will they bid for the splpla? the intercontinental? the question is how far the chinese will go here. when we come back, apple
10:16 am
gearing up for its loop you in event on monday where it will unveil new products. will there be one more thing? we'll talk about what to expect and how you play it when "squawk on the street" continues. its sleek design... is mold-breaking. its intelligent drive systems... paradigm-shifting. its technology-filled cabin...jaw-dropping. its performance...breathtaking. its self-parking...and self-braking...show-stopping. the all-new glc. mercedes-benz resets the bar for the luxury suv. starting at $38,950.
10:17 am
man 1: i came as fast as i man 2: this isn't public yet. man 1: what isn't? man 2: we've been attacked. man 1: the network? man 2: shhhh. man 1: when did this happen? man 2: over the last six months. man 1: how did we miss it? man 2: we caught it, just not in time. man 1: who? how? man 2: not sure, probably off-shore, foreign, pros. man 1: what did they get?
10:18 am
man 2: what didn't they get. man 1: i need to call mike... man 2: don't use your phone. it's not just security, it's defense. bae systems. in just few days, apple will take a break from the encryption headlines and hold its loop you in event in cupertino. was can we expect? jon fortt has more from post
10:19 am
nine. >> as you know, the iphone drives a lot of apple's results. you look at the stock over the past year, there's been a bit of a slump on concerns that iphone growth has not been doing well. so, in this event, expect to see apple working on its core. don't expect a new high-end iphone but talk about this iphone se, which will look exactly like the iphone 5s with upgraded internals. the camera on the back will be more like the 6s, and the motion processor that picks up on things, near-field communication, and continuing along with touch i.d. to move along with apple pay. why is apple doing this? growth. this should hit perhaps around the $450 price point. the high-end iphone 6s is $650. it's a smaller screen, perhaps
10:20 am
some lower end components that allow apple to get there. the manufacturing process is very well known because apple has been doing this for a couple years now. given that, they should be able to take advantage of growth areas like india, which tim cook has been highlighting on recent earnings calls, and china. not sure yet whether apple will be planning on continuing to update this se phone mid year. if so, it could out apple's cycle if they launch the high-end around the holiday season and a midrange growth market phone more in the spring. but this looks like apple managing the iphone a little bit differently. i wonder what they'll do with the ipod touch now? this is getting closer into that range. it also has wide area wireless. this could be more of an ipod replacement as well as a way to grow in emerging markets. >> we'll be talking about this a lot on monday. jon, stick around. shares of apple flat today, but
10:21 am
investors should be optimistic after monday's product announcement. that's the big question. joining us is pacific crest securities research analyst andy hargreaves. good morning to you. >> good morning. >> we had the street bring down iphone numbers, how are we supposed to think about the sigh co cycle going into monday? >> not too differently than before, relatively soft cycle compared to the last one. sort of in between replacements. so, you know, we had a massive cycle on the 6, a bit of a down year, probably a return to growth next year. >> what do you think the headlines are for monday? >> ho-hum as expected is what i expect most of the responses to be. i think we probably know most of what's coming. i would be surprised if we saw any huge meaningful movers. >> andy, you say who-hum, from the -- you know, from the flashy
10:22 am
perspective, certainly it is. we've seen this design before for years. from an investor perspective, you look at that number, the percentage of iphone install base which has not upgraded to the 6 or 6s. i wonder is part of it perhaps because some people are fine with the smaller phone? or because there's some price sensitivity if apple is figuring out how to hit a lower price, still with good margins and convert more of that install base that has not upgraded to the latest technology. might that not be good news force investors? >> i don't think so. that number has always been misleading. it's based on the total user base in the world, which includes a lot of people who buy used iphones and probably will never buy a new iphone, at least not any time soon. the se is very much a stock replacement for the 5s. i expect it to be priced the same and do very, very similar
10:23 am
volum volume. >> just for those catching up on the back here. they'll come out with a small iphone similar to the 5s on the argument now that the replacements -- people keep their phones for two years. the 5s is a bit old. let's have a small iphone again, no real bells and whistles, people upgrade to that as opposed to going toapple fan, b it? >> it's a preemptive strike, but i think the strategy is more based around the next cycle. the next would be the 7, 6 at the low end. but that wouldn't leave much differentiation between the product. when you launch the 7, the low-end phone is still a four-inch phone.
10:24 am
you have a lot of differentiation. >> when does the 7 get laufnche? >> we expect it in the same time frame, september this year. >> andy. we've had tim cook on the cover of time. he talked to the networks, how does the d.o.j. fight play as they unveil these products? >> now you're asking questions way above my head. i have no idea. yeah. that's a complicated question. a really important one. not just for apple but for the future of government access to our information. i don't know the answer. >> yeah. a lot of tech experts becoming legal experts and vice versa. >> yeah. >> we'll see what happened on monday. thank you very much. andy hargreaves. >> thank you very much for having me. coming up, a ruling involving summner redstone that could shed light on how the mogul lives and his mental
10:25 am
state. all the details when we come back. this just got interesting. why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away
10:26 am
for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis and a $200 savings card stop taking cialis and get medical help right away. you can fly across welcome town in minutes16, or across the globe in under an hour. whole communities are living on mars and solar satellites provide earth with unlimited clean power. in less than a century, boeing took the world from seaplanes to space planes, across the universe and beyond. and if you thought that was amazing, you just wait. ♪ that's like my grandma the kcooked, my mom cooked. i make a lot of banana bread because the baby likes bananas. (laughs) whatever home means to you, we'll help you find it. zillow.
10:27 am
it is the latest in the sumner redstone lawsuit. a hearing coming up in an hour
10:28 am
in los angeles that could reveal some more details about the mental state of mr. redstone. julia boorstin is at the courthouse in los angeles and joins us live. julia? >> david, that's right. the outcome could reveal some very private information about the media mogul who still controls both cbs and viacom. the motion filed -- a los angeles county superior court judge will hold a hearing on a motion to unseal court documents. the motion which was filed by the "l.a. times," hollywood reporter and variety last months asked that documents including doctor's reports, activity logs from redstone's house be opened to public view. this followses redstone's lawyer's request that the judge seals those documents to protect redstone's privacy. it's possible that the judge could grant -- hear the argument the today but choose not to make a ruling yet in the event that
10:29 am
the documents are unsealed, it's unclear how quickly they'll be made available to the public. since this was filed in november, there's been a number of changes at viacom and cbs, including redstone stepping down as chairman of both companies, replaced if i philippe dauman and les moonves. viacom extended thomas dooley's contract as coo, and last month dauman said he is looking for a strategic investor in viacom's studio, paramount. we'll see if we can learn more about the physical and mental health of sumner redstone who still owns a controlling stake in cbs and viacom. guys, back over to you. >> a lot coming up there in may. there may be a hearing on his capacity which could prove important as well in terms of the trust, if he was deemed not able to conduct his own affairs. >> juicy details.
10:30 am
straight ahead, tiffany shares are trying to climb back from some big losses earlier this year. will that q4 beat from this morning help? looks like it so far. the stock up almost 3%.
10:31 am
10:32 am
when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. great, that's what i said. so your business can get back to business. sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. good morning. i'm sue herera, here is your
10:33 am
cnbc news update. south korea confirms to nbc news that north korea successfully launched at least one ballistic missile early this morning. it is that country's latest act of defiance and comes one day after the u.s. announced a new round of sanctions. salesforce ceo marc benioff is threatening to move his country's operations and a planned conference out of georgia if the governor does not veto a bill. the so-called religious freedom bill was passed by georgia's legislature yesterday but opponents say it permits unjust discrimination against gay couples. scary moments for an american airlines flight traveling from new york to charlotte it had to make an emergency landing after being struck by lightning. and a viral video moment out of washington this morning. take a look at that. the nation's newest bald eagle was hatched on a live feed from the national arboretum.
10:34 am
the second hatchling is expected over the weekend. sarah, back to you. >> all caught on camera. >> i know. we can't wait for number two. >> sue herera, thank you. keeping our eye on tiffany's. beating estimates but warning that the strong dollar will impact consumer spending further this year. shares trading up nearly 3%. let's discuss what to do with this stock. wells fargo securities research analyst is here and the rbc managing director both join us. ike, the strength today despite the warning on profits and lower sal sales, is that an encouraging sign for the stock? >> no. the thing to keep in mind, two things in the retail space worry investors and the market. that's a lack of visibility and deceleration. in terms of lack of visibility, this is their fifth guide down in 12 months. they guided down after two
10:35 am
months. i don't think there's a lot of visibility there. in terms of deceleration, it's the worst u.s. comp in six years. honestly, i'm not impressed by the numbers. >> you do have a sell rating with a $70 price target. brian, you, interestingly, have a hold rating on tiffany but a lower price target than ike at 66. are you not as impressed as well? >> you have to remember that short interest in the stock is at the highest level in three years. there's a ton of negativity. i don't think anyone is surprised to hear about what's going on with tourism and the high end. the company is having an analyst meeting for the first time in several years on april 12th to sort of talk about some of their initiatives. with the stock trading at the low end of its three to five-year average multiple, we think the stock is fairly valued. >> we've been talking about dollar weakness being a tailwind for earnings. if that continues throughout the course of the year, isn't tiffany the poster child for that trade?
10:36 am
>> i think the problem now is just globally tourism, chinese consumer, where they're going, tragedies in europe, all the wealthy people in the u.s. tied to the financial market in an election year. so many headwinds you have to deal with it's hard to call the bottom. anyone who has tried to do that, it doesn't work. >> do people buy jewely li ry l they used to. >> up to 6, 9 months ago, i would have said yes. >> it's not structural in terms of taste? >> no, it's cyclical. but cyclical can be big. >> brian, they did manage to get better margins, which was one of the positive points here in this report is that just lower input costs or are they raising prices on consumers? can they continue do that? >> on average, their input costs on the metal side was down about 13% last year. so, you know, tiffany turned
10:37 am
inventory about 1, 1.1 times a year. there is still a tailwind coming into 2016 from lower commodity costs last year, and now diamond costs have fallen dramatically. that could turn out to be a cushion to earnings for 2017. but you're right. clearly if revenues are going to be down, it's going to be tough to get earnings growth or operating margin expansion. but you will see some cushion from the lower commodity costs. >> bottom line, ike, how much is and a half tiffany's control here? they can't control the stronger dollar. they can't control peak luxury spending and some macro challenges what can they be doing better? >> they haven't done anything wrong. though done a great job in terms of store selling techniques, managing the sga and working capital. when you talk about macro pressure this is all out of their hands. that's the scary part about it. >> i remember calls last year
10:38 am
from maybe you or some others saying they have to be a place where people just don't go to get an engagement ring or christmas gift. let's silver play larger. is that happening at all? >> it is hard to tell. again, when you talk about is it company-specific with tiffany, you have to say no. luke at the other european luxury brands, they're struggstruggl struggling as well. we thought 12 months ago we would be lapping tourism, but it's getting worse. >> brian, you agree with that? do you think there's nothing they can do to get consumers more excited? if you look at constant currency terms which takes out the impact, you still saw declines across the board. >> yeah. from our perspectives the sub-500 purchase area has gotten crowded. you talked about the engagement
10:39 am
business, but it's the self-purchase category. selli selling jewelry for retail brands has picked up. tiffany has to pick that up. >> thank you very much. when we come back, the tide is changing rapidly when it comes to cuba, from travel to business to banking. an announcement from western union about sending money to cuba when "squawk on the street" returns. mpany understands the life behind it. for those who've served and the families that have supported them, we offer our best service in return. usaa. we know what it means to serve. get an insurance quote and see why 92% of our members plan to stay for life.
10:40 am
10:41 am
10:42 am
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.
10:43 am
welcome back to "squawk on the street." shares of ameri source rising after wall street said they would exercise warrants to buy $1.2 billion worth of the drug shares. this deal now increases the ownership stake to just shy of 15% in amerisourcebergen. the first family arrives in havana on sunday with a delegation of ceos for a three-day visit. the first to cuba by a sitting president, of course, in 90 years. a rare olive branch from the cuban government, its foreign minister said it will eliminate the 10% tax on u.s. dollars entering the island, but only after he's verified that its own institutions are really true to use dollars here in the u.s. as the white house promised on
10:44 am
tuesday when the obama administration relaxed travel restrictions to cuba. for the first in a wave of corporate announcements this weekend, western union now says it will allow people from outside u.s. borders to transfer money to people in cuba. joining us now, western union's president of the americas and the european union. welcome to the program what are you saying here? what's changing? >> what's changing today is that for the last 16 years we have been enabling consumers to enter locations of western union in the united states and send money to cuba in minutes. now what we are launching is we will be able to do that from across the globe. so, we will start to launch the countries in april across the globe to be able to send money in minutes to cuba. >> interestingly. as we see from this map, you already have retail locations across the island. that's not the issue. >> we have 490 locations in cuba
10:45 am
across 168 municipalities. i was able to go to cuba last year and it was beautiful to see in every little town a western union location that could get money. >> presumably, there are many cubans that live outside the country for obvious reasons, well in excess of 1 million, which is not bad for such a small island, have they in the past over that 60-year period been transferring money back? your competitors i guess had an advance on you there? >> yeah. in reality the other option that the consumers have today is the informal market. that's why it's so important to us to enter. because every time that we enter a new space, like all the countries in cuba now, we are sure that we will be able to source volume from this informal market and bring it to formal
10:46 am
market from formal channels like we are. this is what's going to happen. >> you obviously have a feel for the business aspects of how cuba fits with the rest of the world. what is the most important now? that the cubans have said, okay, we'll take the 10% tax off money going in or dollars going in or the fact that the obama administration has said they are more free to transact across the united states? what will have the greatest impact, do you think? >> i think the real impact here, and i know very well about the remittances that we send to cuba, a good part of the remittances that are sent are used to force entrepreneurship. for example, is that household that received the money and they open a small hairdresser, a small cafe, and they start to foster the economy with that. we have been seeing for 16 years that kind of change that is really expediting in the last year. now they're able to do that from
10:47 am
around the globe, i think that will expedite it even more. >> that's sort of the narrative. that's how it goes, this cash infusion will help the economy, support business. i'm wondering, based on the flows you have seen so far, how much of the cash goes towards starting business and how much goes to every-day items and paying off debt? buying household products? >> we don't have specific numbers on that. but i can tell you that more than any other country, we are seeing that in cuba it goes more representative share of remittances goes to foster those businesses. i've seen by myself. i went to places over there, talked to consumers, i saw consumers opening small businesses over there. i don't have the precise figure, but i can tell you this is more relevant in cuba than in other markets. >> you have studied it widely, wharton school, harvard business school, lozan in switzerland,
10:48 am
there's still many people upset with what the white house is doing here with attempting to normalize relations without, poli explicit approval from congress. how do you rationalize that? how should we think about those people that are still angry? >> it's hard for me to speculate about that. what i can tell you, i can tell you that i can see the change that remittances are doing in cuba. we are the market leader in the retail arenas. we're seeing that all around the globe. we know that immigration is good on the long-term. that's very clear for us with all our history. we can see that changes the countries. i think all of this is about change. it's about good change. >> okay.
10:49 am
are you going to cuba? looks like it's going to be quite a jamboree of ceos. are you going. >> i'm not going this time. i've been there in the last two years three times. i'm planning to go again this year. >> okay. good to meet you, sir. western union seeing cuba further opening up ahead of a big weekend for the obamas. an exclusive with the ceo of adobe. that stock up sharply after a first quarter beat. he'll join "squawk alley" live later on. we'll be right back with "squawk on the street" with the dow up 100 points.
10:50 am
the e-class has 11 intelligent driver-assist systems. it recognizes pedestrians and alerts you. warns you about incoming cross-traffic. cameras and radar detect dangers you don't. and it can even stop by itself. so in this crash test, one thing's missing: a crash. the 2016 e-class. now receive up to a $3,000 spring bonus on the e350 sport sedan.
10:51 am
hey how's it going, hotcakes? hotcakes. this place has hotcakes. so why aren't they selling like hotcakes? with comcast business internet and wifi pro, they could be. just add a customized message to your wifi pro splash page and you'll reach your customers where their eyes are already -
10:52 am
on their devices. order up. it's more than just wifi, it can help grow your business. you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business. as the first day of spring approaches, in utah the past 16 years this town has been remaking itself thanks to patient cooperative and careful reinvestment by the government, business and investors. mary thompson swroijoins us wit story. good morning, mary. >> good morning to you, sarah. railroads used to be the engine that drove their economy. an economy that had fallen into disrepair. that is until 16 years ago when the city embarked on a renaissance plan that is bringing businesses back and
10:53 am
bringing ogden back from the brink. >> in the shadow of the mountains one of the latest projects is unconstruction. >> this is a life style park. >> known as the business exchange, the home of the former stockyard will soon house some of the 30 outdoor recreation firms. the park is part of a decade's long plan to revive ogden which revives on incremental financing. schools and other taxing entities give up taxes derived from any increase in property values. the money then used from ill provements like widening roads and all with the aim of making the location better for business. >> if we're all focused on that goal, the school district benefits, the county benefits and we benefit. >> among the benefits an
10:54 am
unemployment rate of over 4% and a 20% increase in the median income since 2000. >> now it's also earned ogden a number of accolades including being named one of forbes best places for businesses and career. companies all seem to agree as all of them have operations here in ogden. back to you. >> thank you. now out with a great story as we head into the weekend. let's check on where we are with the markets. as we mentioned we have managed to go positive now for 2016 on the s&p 500. the level was 2043. dow achieved that yesterday. sarah will run you through what's happening. >> it's a lot of cross asset moves here. wti up almost to $42 barrel so continuing to build on the gains that we have seen. the dollar has been a big story this week. it's been absolutely crushed after the federal reserve.
10:55 am
whether that's driving commodities and emerging markets higher or not it's all coming together as one in trade according to mike santolli. the only other chart would be the dow transportation stocks that got hammered so hard against other major stocks. that could bode well overall. dow transports still in correction territory. if they could manage to rally themselves out of that, could be a signal from here. >> i'm trying to think of the central banks we've had come through. two of those went more dovish. the ecb and the fed. that's pushing us forward here. with a lot of people there for questioning what lies behind that and the conviction in the rally we have seen but it's powerful and erased the losses this year.
10:56 am
but a lot of the fundamental concerns at the beginning of the year are still around despite the fact that you had oil come back and china not as difficult and the data stronger here. >> they're communicating more and the currency stopped falling. it closed overnight at the highest point against the dollar all yearlong. so things are have stabilize in china and the other fundamental argument is that the u.s. economy is not in recession. are remember the times we were saying the probability is going up. the data is not backing that up and that market come back could be telling the story with the dow down 11% at the hoes. now up for the year. >> let's send it over to john forte with a look at what's coming up on squawk alley. last one of the week. >> that's right. speaking of come backs, we're expecting a couple of pieces of new hardware from am next week. i'll be there next week to bring you the news but could it be bigger than investors think? we will dive in. also mark zuckerberg taking a
10:57 am
jog through beijing. sounds nice, right? there's controversy attached to it. and adobe. we have the ceo on. the stock is up better than 5% on the strength of earnings. almost 10% for the week. it's testing it's all time highs. why and does this mean the enterprises turned around? all that and more coming up on squawk alley. stay connected. am i seeing double? no ma'am. our at&t 'buy one get one free' makes it easier for your staff to send appointment reminders to your customers... ...and share promotions on social media? you know it! now i'm seeing dollar signs. you should probably get your eyes checked. good one babe. optometry humor. right now get up to $650 in credits to help you switch to at&t.
10:58 am
10:59 am
11:00 am
>> it's 8:00 a.m. in san jose california. it's 11:00 a.m. on wall street and squawk alley is live. ♪ joining us is

72 Views

info Stream Only

Uploaded by TV Archive on