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tv   Squawk Alley  CNBC  March 21, 2017 11:00am-12:01pm EDT

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the most, s&p off by 1%. tech giants, apple, facebook, netflix, holding on to some gains, netflix just turning negative now. they hit fresh inter-day highs earlier today. that's a look at big cap technology stocks. we will paulk talk more about it with the crew. back over to you guys. >> it is 8:00 a.m. in cupertino, "squawk alley" is live. [ music playing ] good tuesday morning, welcome to ""squawk alley"" we are here at
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post-9:00, joining us walter isaac sand and watching markets closely this morning the president's teflon rally slipping a bit as the dow is down triple digits. s&p back to swae 60 after hitting an earlier high t. nasdaq is down 40 points, speak of the nasdaq, it is a busy morning for apple, stock continues to hit record highs day after day making four new announcements, including new colors for the iphone 7, a new version of the 9.7 inch ipad, and the journal says soft bank is scrapping its plan $100 million investment to create an iphone rival a. lot to encompass, the stock has been on a tear the last few days. >> it has, apple is one of those stocks i feel people love to hate these days, it's the biggest company in the world, everybody likes to latch on to this idea apple is in decline,
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look, now it's at all time high, oh, remember samsung, they have a lot to approve with this phone announcement. the red iphone is interesting, it's been there since apple first jumped into the pool with a red hot ipod nano. i don't know that it in and of itself turns the needle. it's a higher level product. they've sort of managed to make this charity product also a premium product at the same time and mid-cycle. that's interesting for them. these are all sort of mid-cycle updates to keep the ecosystem happy later this year. >> so, gene, what's the biggest take away money perspective when it comes from ap until. >> from a revenue perspective, it's surprisingly probably that red iphone. >> that moan won't move the needle very much t. ipad is 8% of revenue, it will be down 13% this year. it truly doesn't matter, i think from an announcement standpoint
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this clipped product. they are getting into scriptors and auto transcripting. i think that's an indication, that really caught my attention. >> and, walter, i wonder, you've got a good prospective on the overall sweep of apple and the different areas it has been through where steve jobs is sort of trying to point the company as he stepped back just before he died, what do you think of the way apple has tackled social media? has it done a tun, this clip product is going to be more relevant or social or augmented reality? what do you think? >> i know they would love to get into augmented reality. obviously, clips is great for making short videos. we seen with snapchat how people love that. apple doesn't have an underlying social network that it can use to capitalize on this, it will
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be interesting to see if they try wubs again. one quick story, i love the launch of the product red has done as they said a moment ago, it's been more than a decade since they've done that, in my book on steve jobs bono tells some wonderful stories about the fact that steve's first job was corporate philanthropy. but they had done a deal earlier be i that wonderful song, they created an ipod black with a red track wheel just for u2 and bono and bono then did an ad and wanted it red. he said i don't want the word "am" in parentheses.
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they put product in parentheses and red you will never see it, because steve jobs didn't want it the word "apple" in that parentheses. >> that is pricely color, alter, only you can deliver. >> well, bofo tells the story. i have it in the being from bono. >> the legacy lives on. >> walter, bloomberg is making a lot of this augmented reality push and the idea that they're in this to wint, putting together big teams, thinking of things like specticals i guess for lack of a better word, how serious do you take snit. >> i thought google glass might works. i got a pair. i watched snap trying to get into the business, snapchat with maybe its own eye grasses that take pictures. apple is a company that knows how to execute well. it will be interesting to see if two things they can do with this
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notion of video added, augmented reality, whatever they want to go in next. one is create a piece of hardware for augustmented reality, secondly to somehow or another attach it to a social network. >> do you think this clips ad is heading more in the direction of ilife for social, apple sort of trying to build apps that enhance the social experience and improve the platform or is this something they are trying to do as a part of their services strategy, where they might charge or make revenue some other way? ba us the iad didn't work, other efforts social seem to have fallen somewhat flat? >> yeah, this is if you really dig into this clips, it's more a non-except tier to snapchat when i originally thought because they don't have a network, it's sharing wit your friends, can you upload it to instagram and twitter, for example, so i think
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that piece of it is pretty set in stone, they are still learning how they can. longer term, you hit it on the head the significant of augmented reality for apple is having a place in the table of computing, which is shipped to ar. secondly, it's building their services business. so they want app developers to create these wicked great experiences that they can take 30% from. that's the longer-term possible significance of what you are seeing in clips today. >> the other apple store tim cook today is in china, he is visiting a start-up big-sharing company, clearly, he is focused on building good will and relationship in that country. it's a key growth market for apple at a time when this new administration is talking tough around china and potentially looking at trade barriers, you wonder where all of this leaves apple and its future in that country. >> you can tell i am sitting here right in front of the
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capitol, president trump just came by. this notion of are we going to get into a trade war with china? it's been overshadowed by so much else this week, all the huge news coming out of here. but i think the important thing is how our nation is going to bailed good relationship with china in terms of trade, but a fair one and that's going to affect apple immensely. >> worth noting, also, just apple invested in dee dee the ride sharing company. opa ininvestored in dee dee. >> speaking of news, by the way, we are watching the markets, 136. walter mentioned news out of washington. the white house is laying out new restrictions, devices bigger than a smartphone are banned in cabins from ten different airports and eight majority muslim countries in the middle east and africa, ipad, kindle, laptops and cameras must be
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stored in checked baggage, the uk implementing similar storage as well. we try id to check in with congress people today privileged to be in hearings. they have no problem with this. we wonder what that means. >> it means that the intelligence agencies have something that they know, it's a shame that right now our intelligence agencies have been belittled and demeaned, you know, we have to rely on them. this is the department of homeland security doing this. they obviously have actionable intelligence that says on these middle east airlines coming from certain middle east airports, there have been attempts to do things like take laptops or ipads and convert them into something that's dangerous. i think we should just assume our intelligence officials within they do something like this know what they are doing. because the evidence they have is pretty solid. >> security expert, gene, tend
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to look at this sort of move scent chicago i'm no expert in this area. but it's only these certain airports that the restriction is out of. apparently, you can still kaer a smartphone but not these items. i wonder, when we, as citizens, don't necessarily have the information to make a judgment, do these moves make us safer or do they make us think we are safer? how are the people to judge? >> i have a slightly different view than walter. i think this is more around the theater of safety and i think that this is more consistent with, you know, showing a good hand. if something horrible happens and you have done this you are covered. and i think at the end of the day, i'm like you not an expert in how these things are put together, but it would seem as to me if it's in the belly of the plane, there is also a risk with that. and so, from a novice perspective, it feels more like
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security theater to me. >> hmm, is there any roam for the technology companies to weigh in, get involved, help out in anyway, gene? >> i be et that there is. and i think that one of the challenges they have with some of these people who are doing this is that they take kind of the framework of these machines, these computers and rip them out. maybe there is. i hope there is, i should probably say, but i just don't. >> we'll obviously stay on top of it, guy, along with the market action today, walter, gene, it's good to have you, see you next time. >> thank you. we got to check in on the markets here. they are continuing to lose steam for stocks. stocks are down now the dow is down 122.5 points f. we close lower, it will be the first triple digit to climb for the end of january the biggest drags on the dow are caterpillar, goldman sachsened be and boeing. the banks are getting hit.
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we saw the fall in treasury the buying of treasury, pushing yields lower, where does that hit? it hits the banks the hardest. you start to see the market turn around, it was the worst performing groups, the financial the cyclical groups that led the trump rally a now getting let in today's trade. >> not just about today. this is four days down for the dow. >> that would be the longest losing streak since a five-day skid at the end of january. so it's the continuation of the trend we have seen over the last two days. >> though the nasdaq had up. we had a record high this morning. >> minimal gains to the upside. >> when we come back, two top executives say good-bye to the ride hailing service. we will talk to the uber investor. then more on the electronics travel ban. then we will talk to gordon bethune. the dow is down 126. you always pay
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>> i thought the rate increases made sense. i think which have time to increase. >> the increase at the nih, new companies, amount of that research. >> to get down into the low 20s and have an international system competitive to let companies bring home their cash without consequence, that would be competitive and actually drive capital to the united
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>> we are continuing to monitor this market sell-off for you. the dow opened higher as much as 64 points in the green. >> that has evaporated and turned south, those losses picking up steam throughout the morning their the dow is right now down 150 points t. biggest loser on thetow is gold man sax,
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caterpillar and jp morgan. some of the financials getting slammed on the pack of lower yields and a weaker dollar. the industrials getting hit as well. "squawk alley" will be right back after this short break. a basketball cos $14. what'seam spirit worth (cheers) what's it worth to talk to your mom? 12k3w4r6r7b8g9s.
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>> so all through the morning, bob is on the floor with more. >> we haven't seen this in a while, a 200 point swing the dow is up positively up about 40 points. let me show you what they're talking about t. weakness in the dollar is a bit of an issue, normally that would be good the dollar is near the lowest level for the year index the ten-year treasury yield. so loads for the month there, 2.43 now essentially a. lot of people are saying on the u.s. side, we got carryover from the fomc meeting putting pressure on the dollar, ecb, there is talk about shifting to tightening, maybe you could see understandable movement in the
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dollar on that, take a look at the sectors, banks again the weak link, obviously on the lower yields here the industrial materials, you call the reflation trade, the defensive tone is consumer staples still on the upside. big banks, it's the regionals getting hit the most. 3% if declines, keycorp, the bank kbe, etf for that has been sliding. we are down about 5%. remember, we hit our historic highs march 1st the day after president trump gave his address to the congress here. on a fundamental note, just watch the autos here. they have been weak in the last three or four days. there has been weakness in used car prices in some of the reports, auto loan softness out there. santanderer bank, the weaknesses are popping up here. that's showing up today. overall i think what's going on is a little continuing question
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about the ability to get the trump agenda through. remember what's going on here, a very important vote on thursday in the house on the repeople of obamacare. they got to pull that off the markets got to continue to believe that that is going to happen and eventually they will get on the tax cuts on the agenda. the president has been talking about. that that is also playing into the mix in addition to the weakness in the dollar and decline in pond yields. right now the dow down 173 for the day, record lows today. >> thank you, bob. uber hitting some potholes, two presidents, president jeff jones from target and brian mcclenndocclendon, are these ex sign of more turmoil ahead? . an early uber investor joins us. >> great to be here, thanks for having me. >> when we last talked about uber, you said travis is going to be great in the future, we'll
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look back on this. >> yeah. it keeps getting worse. i mean, some would say that the note he put out on jeff jones' departure was a little bit graceless, jones, i mean, he didn't give the standard departure note saying it was great working here, he said, bake amy, this place wasn't lining up with my values at a time when uber is trying to turn this whole thing around. >> do you still think it's going to come up roses? >> yes, i do. it's been a rough year, a rough start. i think we both have cultural debt and we are paying the price for. that there are some fundamentally good things about the business. last week, we set a record for the number of rides and in the first ten weeks of 2017 versus 2016, we had more apps installed by drivers and by riders. so those are probably new data points for you. that's fundamentally great. that doesn't resolve some of the internal issues the culture issues, that's what we are working on. now i'm an outside investor, i
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don't have a role in the company. i don't have full information on every issue, but i can say i talk to travis regularly, i think he understands the gravity of the situation, it's not fun to have the world keling you, like you need to change, you need to work harder, you into ed to fix these problems, he's not quitting. he is doubling down, he is getting help and working hard, bill gurley is on the case, ariana huffinger is on the case with rework, as stake holders, saying this is an important company for cities for transportation, we need to help travis and put the people around him to get him there. >> this isn't new, though, it's not as if this is the first time out of nowhere, hey, travis, maybe you have a little cultural issue in the way you deal with people, with employees, why now all of a sudden is it like a need a number two, maybe i need to change something, so it's been a couple years now that these -- >> yeah.
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. >> and you know, when you look at the fundamental also of the business, it's growing so well, it's such a valuable service. that's so loved, despite all these issue, it is still a loved and cherished and important service in the world. up with out of ten millennials say they are either not buying a car or they sold their car to replace it with uber, right st drivers love this service, they can use it whenever they need to make money. i think they need to fix certain things now to get to the next circuit of scale. they need to talk about the culture with drivers, how to make the drivers feel they are more a part of this incredible success? >> right. >> there will be a lot of things that come out in the coming weeks an months that will make people say, wow the drivers are really cherished at this company. >> does it mean being less aggressive, not blowing into a new city and lighting up the room with a takeover mentality? >> yeah, that might be a fair way to say it, carl, is that when you're starting out and people are trying to stop you from entering a city and there
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are incumbents who maybe own medallions, maybe don't want you there, because you are compressing the margin on the business and are you putting another viable option out there that moves people away from your service, yes, there have been many people who tried to stop uber, now cities want uber, they want ride sharing, maybe we have to change our tact, that rests with the ceo. that's travis' big journey to become that next level leader. i have known him for almost 20 years. i have faith in him. >> other investors? >> as we have seen, some investors came out and said, they're very frustrated t. way i look at it, i joined a team. he's my friends, i have to come out and help him and support him to solve these problems. it's not an easy thing to, do they will tell you, oh my god, i'm incredibly frustrated. i'm extremely satisfied with 90% at uber.
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5% will work. the team to help travis get those pieces aligned and we're going to do it in 2017, guaranteed it. >> markets, nasdaq is down just over 1% right now. you take a look at the stock, tech stocks in general that are leading the decline. trujillo dumped.5. amd, which has been a darling down 3%. square down almost 3. what do you think is going on here? is it something more broadly concerning or is it just one day to you so far? >> yeah the companies you mentioned, almost all of those companies have great products that are loved and strong revenue. it's been very hard to become a public company. we know that. the filter happy birthday very fine to get public. i'm not worried about. that we obviously had a tremendous run-up because of trumps wanting to put a lot of money into the system. maybe people say, hey the run-up has been enough. maybe this has been too fast of a run-up. with the putin premium of who knows what is going to happen after this, you know, explosive
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stuff yesterday. i'm no expert on conspiracy theories, this looks very weird. >> everybody is an expert on the conspiracy theory. >> we need to find out what the heck is going on with the election, let the fbi and doj do their job. it doesn't help to see the president live tweeting a congressional hearing. this is a level of insanity that has never existed in politics. >> but the market held up yesterday despite all that. >> maybe this is more about the sticks coming out on health care. >> sure. >> maybe carrots or selling the vote, who knows? >> that's one of the things that people look at the market today and they're trying to understand what's happening. we don't -- we've never seen this plaque swan event where a reality tv star has become president with no experience and putin has had this amount of impact on an election and health care is being built up and rinned out at the same time and the amount of stimulus is poured in. fundamentally we have a massive rally in our lifetime that now
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is being threatened to be ripped out. >> does that sound like a risk? given some of the stocks that i mentioned that are down, they're either pretty small caps or they have had big runs. i mean, on the other hand, apple and facebook holding up relatively well in this market. now i mean the narrative doesn't completely hold up, but -- >> yeah the way i look at it. facebook, amazon, netflix, google. these companies are going to be here ten years from now. disney, if you own those type of stocks, i think you will be fine. some of these newer names, you want to put those in the whiskey name of your portfolio, keep those smaller, they could 10x, 5x. you really, this feels very uncertain to me. >> putting those opinions aside what do you see for tech valuation versus the broader market? >> well, these companies are very strong in printing money, the thing that makes me nervous
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is if internationally we roll back our ability to do commerce in other places, that is truly terrifying for tech stocks the majority is occurring a off the continent. if we can't do commerce in asia, europe, you know, south america the way which have been doing it for the past decade, what happens to google and all this money and investments they've spent internationalizing? facebook? all the money internationalizing, apple and the ecosystem. >> repatriateing $60 billion in cash. >> we got to get that money now, because those other countries will create such a tense environment. they're going to take it. we already seen that with the eu saying maybe we will give you a retroactive bill. i think those other countries will come up with clever ways to say it's there's. we need to get that money here so we can buy -- >> the other consolation is other governments don't move faster than ours. >> they see a window of opportunity to, you know, stake a claim.
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>> all right. jason, thanks, for joining us on post-nine. >> thanks for having me, i appreciate it. >> good to have you on this coast. 163, close to the bottom of the hour. let's get to sue herrera for a news update. sue. >> good morning, everyone. here's what's happening at this hour, north korea slamming secretary of state rex tillerson's recent visit to asia, saying it has the capability to fully respond to any war the u.s. wants. during his visit, tillerson said all "options action" are on the table, including the use of military force, in dealing with pyongyang. syrian forces launching a counterattack against rebel fighters in damascus if response to a rebel assault earlier in the day. it was the second attempt by the rebels in three days to penetrate damascus defenses. martin mcguiness the former irish republican army leader turned peace maker has died. he recently stepped down as deputy minister of the northern ireland regional government, which was formed after the ira
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ended its violent campaign. he was 66-years-old. some of the wealthiest new yorkers, including billionaire investor george soros are asking the state to raise their taxes, 80 people in all wrote to law maker and governor andrew cuomo saying they and other top earners can afford to pay more. that's the news at this hour, i'll send it down to you, sarah. >> thank you. normally at this time, we would be wrapping up the european closely, but during the daylight savings time, market in europe will be closing about one hour from now to check on european stocks, they have also turned south as we have been seeing in this market here in the u.s., spain is the exception there, but the german dax is down three-quarters of a percent, the stocks earlier reached the highest will elf in more than one year the euro has been surging against the u.s. dollar the weakness on the site cited as a turning point for our market. the dow and s&p having the worst
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drop since october. the worst drop of the year right now. >> a dollar is close to flat for the year so far, as sarah said, the worst day for stocks in 2017. back in a minute. [ music playing ]
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. stocks now in the red as we have been telling you after a strong start, the dow the down 185 t. nasdaq hit a record high earlier this morning, then gave it up. it is now down a full percent. joining us on set dr. john
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rutledge chief officer and adviser to president reagan and george w. bush. welcome. >> thank you. >> so do you see this as a washington-induced sell-off or pause in the bullish action? >> i do. i do. and i think if it turns out, this was the top of the trump rally, it won't shock me. i think that we've had -- >> it won't shock you? >> no, not at all. we've got pretty good fundament apples the economy is okay, earning is good, pricing power is return, et cetera, we also have a tax bill put in 3rd place after health care, after trade, i think the tax bill is at risk and this stuff going on with the hearings is really undermining the belief in it. who ut the tax bill, you've got a huge difference in the earnings of the companies and the rates are going up. so x multiples of everything are going down and market multiples are too high right now. >> you have been critical of the
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president at large since he came into office, right? >> yeah, he's not my pal. that's right. >> does that color your view or do you actually believe the tax bill is at risk? >> well, i don't think, i don't think it colors my view on that issue, but, of course, i think everybody's words with a grain of salt. so take mine with a grain of salt, too. i do think that out of the tax bill the corporate tax cut the repatriatiation, lower marginal tax rates, i have been working in three, four republican presidents on lower tax rates. solarry kudlow and i have very similar views on that issue. >> larry is saying, that should have come first the whole time. >> they got the order. >> how do you say it's stalled? house speaker ryan saying he got the votes, he didn't lay it out, he says he built momentum t. president was on capitol hill. >> when will this vote happen? >> thursday, they're looking for a house bill for health care. >> when will the tax be ill?
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the tax bill has been pushed back to late in the year, infrastructure spending is at zero. it's going nowhere. that's the next year issue. so the tax bill being in third place put nit jeopardy the hearings, the russia story put it in jeopardy f. there is anyone out there worrying about impeachment and people in the white house having legal problems, that reduces the probability to get these bills through, so i think that's an important issue. and trade in the same way. >> so what's an investor to do, john? you point out the dow has been on this run up 16.2% since the election. it's too expensive or risky. but there are other markets around the world. is there some other region that's likely to step in and pittsburgh up the slack? is china and pacific rim going to do better in this environment? >> china does better because we've opened up a big vacuum for them internationally. the g-20 is basically the g-19
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now the u.s. backed out of the free trade component. china is driving an effort to consolidate asia. the built road initiative is huge. china and russia will open a high speed railway that will bring factory goods from china to russia in three days. >> so is it back to the bricks then? >> i think that, yes, i think. so to me, where are the opportunities to invest? there are niche real estate market, where the yields are 3r9s unlevered and 12 or more levered and inflation has not been priced at all into those. i think inflation story is just now coming on as a real story. >> that means rates rise fast ever, which is why you are seeing the banks get hit so far i think. >> on the flipside, john, if the u.s. does enforce more protectionist barriers, as you' emto predict. as you call at this time rhetoric. doesn't that hurt emerging markets 18 more? doesn't that hurt foreign economies worse than the u.s.?
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we're open commitment not as open as some of those other export economies? >> yes, if i were to bet on china, my bet is a medium, longer term bet. not because of the trade story, trade today is not conducted on ships, it's not cars. it is stuff on optical fiber. and there is no way to stop optical fiber bits from coming in and out. that's immigration, folks, it comes in overnight and it goes home the next morning, nobody measures it. so this measure is not going to have very big impact. but it's very, viewed very negatively around the world. >> john rutledge, thank you for joining us today. >> my pleasure. >> he has been rerisking for the next few weeks from now. stock russian in the red, having a worst day, dow seeing the biggest drop since october 11th of last year. today was 100 days we have not seen the s&p close down a percent. will we break that streak? first, rick santelli, what are
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you keeping your eye on today? >> i am watching all markets, you are absolutely right, equities being key. what we will talk about is one market that is bucking the trend today. tune in after the break. y nicol.
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>> scott walker coming up today only the halftime report, walk's drama hits wall street as the president's proposed agenda called into question by congress, the industrials are taking the brunt of it this hour. plus, bernstein's annual analyst
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joins us exclusively on that stock, it hits new highs a. stunning reversal rich 14field on facebook. we are talking about his call, one on disney, carl, we'll see you soon. >> that was an interesting call, see you soon. >> scott wapner. let's check in whether the santelli exchange, rick. >> thanks, carl. this will be an exciting day to have the exchange. the dollar index really exciting in particular. we'll get to that in a second. trying to buying the markets since the big november surges where we saw the dollar rates and the equity markets fuel a big rally, well, maybe we could also try i to let the markets be telling us, whispering to us, when it's going to end. you might be south americai
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smurking if you have pre conceived notions, you won't make money. you never stop learning, but there are certain clues, you just have to be open to them. i think the dollar index may, indeed, be a clue. let's put up some charts, shall we? let's put up a 20 year chart with the dow index, intuitivety, we say when rates go up the dollar should go up. there are plenty of times on the chart where that occurs. there is inverse correlations on this chart as well, particularly the period around the crisis, a little before, a little after, around 2008 to 2012, you could see rates went up. dollar index went down. vice-versa, so for the most part, that relationship brings in a lot of other channels like the federal reserve and of course what other countries are doing to their currency, but the second chart over 20 years, ha ready to mistake on this one. this is the dow jones industrial
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average for 20 years, certainly there are some periods where it isn't perfect, for the most part, an unfortunate to many of those countries that want to weaken their currency, maybe we're just different being the reserve currency, with you weak currencies aren't necessarily the best thing for stockmarkets. this chart clearly shows we had some nice rundz to the upside when the dollar goes up this dollar index, what's notable is how we stopped several times on unchanged on the year, that was the first clue, the big bottom after we traded up to 103 or thereabouts, 9951 on the last day of january. >> that is in the cross-hairs today. why is it important? because at some point, we will look at the equities, i'll look at the dow, in particular, and say there will be a pivot there that will be the new benchmark baseline of future in trying to understand the trump administration progress. will that number be 21,000? it could be. if we start to trade below this
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level or close below it, it will be interesting to see. after it started to weaken, i noticed rates went down, equities went down. back to carl. >> we take it seriously. >> good on the dollar. very food. >> rick santelli. a i recall stocks one of the sectors being dragged lower. joining us on the phone is chairman and ceo gordon bethune, cnbc contributor, gone, always good to talk to you. >> good morning, airlines are having trouble, airlines, specifically, i wonder if you think there is something within the sector at work or is this larger concerns about? >> it could be anything, washington valuation and so forth? >> i think it's a larger concern, because, fundamentally they're doing well, they're making the right adjustments and you know i see some stability and growth in years ahead. >> i wonder, the degree to which they have been trading in concert with oil versus opposing oil. where are we in that puzzle
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right now? >> you would think they would track closely that you have gone the other way. but as oil stabilizes, you know, that's a better outlook, because it's more into the 50s dollar area, which is a sweet spot for them to really make some money. but the market hasn't always reflected that. >> gordon, all day, we have been trying to make sense of this new rule that foreign car years got for travelers, coming into the u.s. from certain middle east and north african countries on car years, particularly affected, do you think there is a sympathy trade here with u.s. car years as to the disruption of travel or does it give u.s. car years actually a leg up to try to get to that business that those other ones may lose? >> it applies to all of them. in other words, any air carrier coming from those airports, whether it's u.s. air carrier or one of the middle east carriers, that i have to comply with that
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rule. so it's not just u.s. air carriers, it's people coming from those i think seven airports. and it looks to me to be a catastrophe how big a de52 is that you could make that would blow up on an airline, for some reason, i don't want to criticize them, they know a lot more that they've decided temporarily at least to restrict how big an electronic device you can bring on an airplane from those seven airports, regardless of what air carrier you are. they've allowed ifines, so obviously, that's so small. >> gordon, i know you don't want to criticize. none of us does, because we know these are officials charged with public safety. but how important. is it for the airlines and for passengers at some point to understand why the rules are in place that are in place? >> well, i think the one and i've seen an overall mitigation of some of the hypervent lakes
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that occurred right after 9/11. we are all suspect. and we've really streamlined. i have a couple administrators that have done a lot. so if you are from tsa the pre check and all kind of other enhance ps where people are left hassled than the day before, i think they are trying as best they can to let rational rules, that's why they let ipads the pilot has an ipad. why couldn't have you an ipad? they are being more rational. there is something concerning them now i think about people from those airports, i don't know what gc intelligence they have. they seem to be making a small adjustment that affects the least amount of people to address a specific threat. they're not making it broad band all world wide on airplanes. kind of like they used to do that in the past. i'm glad they don't do that anymore. >> is it clear to you why a
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larger device is safer in the belly of the plane as opposed to the cabin? >> it's not clear, obviously, you could have remote activation, but it depends, you know the damage you could do on the say the side panel, remember the underwear underwear bomber, who was -- so, it's hard to say just how much damage it could do, dependent upon where it would be placed on the airplane itself. but the real threat was, in the past, to break into the cockpit and use the airplane as a guided missile. that's been solved. so now they're down to, you know, making the sure no catastrophic explosion s occur n air that cause people concern. >> gordon, good to talk to you, as always. gordon bethune. >> as always. you guys have a good morning. >> and we are staying on top of this morning's sell-off. financials taking a hit. bank of america, among the biggest losers down almost 5%. we'll be right back. at fidely, tres a nust 5. we cut p otr t givenvestomoreal
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welcome back to "squawk alley." financials and bank-related etfs are traded much more higher than average today. you take a look at the kre, attracts regionals, off by about 4%, on pace for its worst day since late june of last year. look at pnc financial, sun trust, m&t bank, all down by 3% or so. all the components in this fund are negative, as well.
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look at the big banks like jpmorgan, wells fargo, citi, also lower. bank of america down by about 5%. that spyder bank etf also on track to hit a nine-month low. certainly, financials a big part of the focus. we'll have that and much or the market downturn here on "squawk alley." we'll be right back. ole wheelie. ole wheelie. wh do you mean? ts baby to get around the plt fl righ bowe technology ole wheelie. mo e mhine.ean? ts baby ye, it brings mae amou ofnfmat. soou doneethat. ll, makes. right into theuture. .bar. yore goikwards. future's a around us not justn yo littl tabletmyrid. medica options until you'rsiy-fe eligibity?u may thyocan t ofcher
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welcome back. stocks are in the red after a strong start, but we are off the lows. the dow's worst day since october. phil caparelli, asset allocation strategist at jpmorgan joins us now. phil, an earlier guest says he would not be surprised if we've seen the top of the trump rally. would you be surprised? >> we've gone 114 days without a 1% decline from the prior close in the s&p. that's not normal. that's not happened in over a decade. so, what occurred -- what's occurring now is not for us what's going to change the good news that we see. for the first time in six years, we are seeing a coordinated increase in fundamental data across europe, japan, emerging markets in the u.s., while, at the same time, positive earnings revisions in those four regions. we haven't seen. we've seen fits and starts, but for the first time in six years,
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that's important. >> still a lot of cash on the shri sidelines. you point out cash is at its highest level since 1980. you think that trumps some of the other concerns that are out there? >> i've said this a lot. that is the ultimate backstop, we think, for this market. i can't tell you how many people i've come into contact with who say, i've got to put money to work. this is something for us that's going to keep the market afloat in addition to the good news. i think what's occurring right now, i think there were some crowded trades in the long dollar position. i think there were crowded trades in the higher interest rate position. and we're going through some congestion. >> but do you have to rethink the fundamentals? there were a number of days where you thought, it doesn't look lake this is coming together. did something fundamentally change or has it taken a pause on positioning? >> sarah, on july 8th of last year is when we hit the low in interest rates. it wasn't november. interest rates jumped 50 basis points before the election. on november 2nd before the election, janet yellen said, you
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know, i think measures of inflation are starting to rise. that had nothing to do with the election. and we think that stuff is certainly still in place today. >> when you think about, though, event proximity, is any of this related to the vote on thursday? and a more broad question, how good is the market at counting votes? >> yeah, i think that there are certainly jitters in the market around political headlines, but it's really hard from an asset allocation perspective to trade political headlines. what i will say about what janet yellen did last week, just to kind of change the subject a little bit, she split the uprights. she took the window to go, and move interest rates in march. something that they weren't able to do in '15 and '16. and saying, i think we're only going to go three times this year. and emerging markets love that. that's one of our highest conviction trades right now, emerging markets and taking a little bit away from the headline risk here in the u.s. >> so, playbook near-term? >> yeah. >> what's it look like? >> playbook on the memory. this is the most bullish we've been on stocks, but at the same
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time, most bullish we've been on a collection of stocks. u.s., europe, and emerging markets. last time we were at the level of our stock allocation, it was mostly u.s. that was the playbook. right now the playbook is much more diverse and you're getting the lower correlations of global equity markets to created a really good opportunity for us right now. >> thanks, phil. see what the afternoon brings us. let's get over to headquarters and the half. welcome to "the halftime report." we begin with a market alert. the sudden sell-off for stocks. the first triple-digit loss for the dow in weeks. big moves in weeks. some signaling out that looming vote in thehouse on the health care plan and whether the president has the votes he needs. with us for the hour today, joe terranova, josh brown, josh leventhal, john najarian with us as well. 110 days since a 1% decline or worse for either the dow or the s&p.

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