tv Squawk Alley CNBC March 13, 2019 11:00am-12:00pm EDT
♪ good wednesday morning welcome to "squawk alley." i'm carl quintanilla with morgan brennan and jon fortt. the market's having a pretty good day dow's up 128 we'll start with apple shares higher again today, up 5% this week along despite some regulatory headwinds this morning as elizabeth warren calls for the breakup of the company's app store, spotify filing a complaint with the eu today, saying that apple is engaging in anti-competitive business practices with its so-called app store tax. da davidson's jon fortt is here to talk about what the stock's done over ten weeks. 40 bucks in essentially that
time what do you think's going on >> i think the story for apple has been, what does life look like after the iphone. in a couple of weeks, we have the new event for apple where they're going to talk about their streaming video service. and the good news for investors is they're starting to see that there's more to apple than the iphone and i think what they're doing in content is a great example. i'm not overly concerned about elizabeth warren's calls to break up any of the big tech companies. but, yeah, i think you're starting to see life after apple, i'm sorry, after the iphone and it's encouraging. >> are you a fan of this theory that basically all profit growth over the next several years comes from services and wearables, as opposed to -- >> well, sure. i'm of the belief that they're going to, at some point, move on from the iphone, which was 60% of their sales in their last fiscal year. services is certainly one component. i really like what they're doing in health care and it will be interesting to see what their ultimate content play is here >> mike, it seems to me like apple has moved up 28% since that january 3rd low off the
warning on no news >> pretty much >> if you hated them that day, then why don't you hate them today? so what does that say about either the turnaround in the sentiment or, i don't know >> i think it's an extreme version of what's gone on with the broader market so, obviously, you know, apple is high, it was higher than the market back last summer and its low was lower in terms of the dramatic moves so i do think you had this purge of investors who basically had been complacent in september and got desperate in december and january. and then what happened, we had an underowned stock that all of a sudden looked very cheap again, based on just steady state earnings and i do think right now trade had been, okay, probably the downgrades to iphone volumes and to earnings estimates, maybe they've ceased and they're stabilized right now i don't think the stock is that much cheaper today than it was a year ago as of a year ago it was -- the stock was 1% lower. and earnings estimates for this fiscal year and next fiscal year are down 9% and 11%.
essentially, people have kind of come to terms with that. and i think also, you look at that chart and you say, there's room for people to rebuild positions in here, rebuild exposure to the stock, before you even start talking about getting back to the old highs above 220. >> tom win realize senator warren's calls to break up apple among other tech companies may seem a little unlikely to happen, at least at this stage of the game. but apple is still dealing with this case in front of the supreme court, which involves the app store. so is that a real risk here for investors? >> the reason i think it's not a risk is basically google and android. so if apple were truly the only store in town when it comes to buying apps, i think that would be more of a problem but android is the largest mobile operating system. there's a lot of smartphones that are sold that aren't theirs and i would add to your points on apple what's happened since they've preannounced is that we're seeing they're not alone as far as slowing smartphone sales and they weren't the only ones to experience challenges in china in the december quarter. >> so, tom, i wonder, because i
connect the elizabeth warren breakup calls, because she specifically cited the app store with what daniel ector's put out from spotify, specifically saying, it's unfair that apple on the one hand is charging us this 30% to be in the app store, and then they're depressing our ability to compete with them in terms of profit. directly versus apple music. in europe, in the eu, that argument has a whole different and arguably better legal basis than it does in the u.s. so given that the argument on apple now is about services, why isn't there more of a risk calculation around how this shakes out because netflix, arguably, is doing much the same thing, putting pressure on apple. >> so i would argue that netflix and amazon are two really good examples of how to get around apple's tax. you think about, for example, you want to buy content to watch on amazon via apple's app, you essentially have to go straight to amazon and you have to
circumvent apple so i do think that the app store is still an important means for downloads and for customer signups for services like spotify, but i do think amazon's a great example of companies that have found ways to get around apple's tax >> talking about what we may hear on the 25th, that will be big news but also, springtime is when they start to talk about returns to shareholders. >> sure. >> i wonder if you think strategically, they make changes to that plan >> i don't know if they're necessarily going to bow to this scrutiny of buybacks i wouldn't think so. i mean, apple is so extraordinary, it's kind of such an exception in so many ways in terms of the absolute volume of cash that the company has and their stated intention of getting to a zero net cash position and it's not as if they've crimped on r&d and capital spending you can actually look at their financials over the last several years and they've actually done -- there's enough to go around for everything, i guess is the point so in terms of capital return, i would be surprised if they had a radical new message on that.
in terms of the streaming, sfits interesting, i think it's all about sentiment and how people choose to view the company it's an eye of the beholder situation. if that's another leg of this services story, okay, fine bing apple build these things so slowly, right? >> yeah. >> they kind of say, we think we have our plan, we're going to let it build over time we're not necessarily going to say we're grabbing for a lot of market share right away. >> they've never been a first strike player injust about anything, right, tom >> exactly and i also don't expect anything magical on buybacks, but i do think that buybacks is what's held up the stock -- >> they've been in the market, right? >> even when times are very tough. and what i wanted to point out is we think about "house of cards," "orange is the new black" for netflix, but really, their first original series was "lilaheimer. so expectations are low for apple. >> what i also found interesting is merrill's upgrade of the stock this week had an interesting chart in there which showed that it's actually -- the stock seems to correlate when total gross profitin dollar
terms starts to grow again, which they're predicting happens in the second half of this, as opposed to strictly earnings per share. yes, earnings per share holds up the stock, but in terms of when it starts to perform better, it's not the buyback story, it's when they're pulling more money in the door. >> that sounds like a chart for you for the telestrator on "closing bell. tom, going back to the point that mike just made and i think is a key one for investors is how should they be valuing the stock right now? yes, it might be trying to shift away from iphones and more and more into services, especially with the launch of these new potential streaming service platforms. on the 25th, should they be thinking about it as a consumer goods company or more of an internet software company as they move towards services >> i still think of them as a combination platter of hardware and software i like to think about apple as a free cash flow yield basis when it gets to that 10% free cash flow yield, it's the hold your nose and buy moment for apple.
i think the challenge look at p\e is you're going to see continued pressure there as they rotate away from the smartphone into some more services and into more opportunities so i tend to focus a lot on their cash flow. >> okay. >> we'll see what happens on the 25th, but we'll see before then. mike, tom, thank you guys. appreciate it. >> thank you and shares of boeing once again under pressure this morning as countries continue to ground boeing jets over safety concerns will the u.s. be next? you can see there the stock has been moving around quite a bit, but slightly higher this morning. former ntsb chairman chris hart will join us on the other side ayitusk.brea st wh issues facing our world,l what do you see? we see a billion more people breathing free. we see access to fresh food being the global norm, not the exception. we see homes staying cooler, without the planet getting warmer. at emerson, when issues become inspiration, focusing core strengths to create a better world
like never before store. the xfinity store is here. and it's simple, easy, awesome. welcome back boeing is again in focus this morning, coming off its worst two-day loss in nearly two years and losing nearly $27 billion in market value this stock, up a little bit higher today, but has been under pressure over these max 8 issues interesting, so many experts we've had on-air talking about this, in different places, about what should happen here. ray lahood, the former transportation secretary saying he doesn't -- he wouldn't feel safe flying on one of these planes but others, including bob crandle from american airlines, saying that he would and he'd send his kids on them, as well. our michelle caruso-cabrera joins us now with the latest on boeing contessa
>> john, canada's minister of transport is holding a news conference in ottawa right now to discuss the safety of the max 8 aircraft let's show you a picture of that we are expecting him to come out and reiterate what we heard from him yesterday, which is to say that canada is not grounding these planes air canada is one of only four airline s globally who have not grounded the aircraft. american, southwest, west jet, and canada air continue to fly the max 8, publicly standing behind its safety. the faa released a statement late yesterday saying, "thus far, our review shows no systemic performance issues and provides no basis to order grounding the aircraft if any issues affecting the continued air worthiness of the aircraft are identified, the faa will take immediate and appropriate action." late last night, the union representing 15,000 american airlines pilots said it remains confident in the max 8 and in their pilots' ability to fly it. boeing ceo dennis muilenburg
spoke with president trump yesterday following the president's tweet about airplanes being too technologically advanced and cnbc has learned that boeing's ceo reiterated to the president that the max 8 is safe boeing's stock is up slightly this morning after an ugly couple of days let's take a look at the chart there. you can see, it's up a half a percentage point, so bouncing back a little bit. we got a slew of analysis this morning from different analysts who cover boeing and basically the consensus seems to be that there may be a short-term blip here, john but in the long-term, you've got more than 4,000 orders for this plane, only 300-and-something of some have been fulfilled and in the long-term, this is boeing's bread and butter. >> yeah, and the aftermath of a couple of human tragedies is a lot to sort out. contessa, thanks and for more on what comes next for the u.s. and boeing, we are joined now by former ntsb chairman, chris hart chris, first, thanks for being with us. >> thank you for having me >> second, contessa was just
talking about the boeing ceo talking to the president about that tweet yesterday, related to airplane technology. what's the impact of the president's tweet, suggesting that planes have gotten too technologically advanced well, actually, automation has a long history of improving safety, efficiency, productivity, throughput, all the positive aspects you would want automation has a long history of showing its ability to do that but that's automation done well. if automation isn't done well, it can be a problem. it can generate more harm than good if it isn't done well but aviation industry has shown a capability over the decades to do it well, in a number of ways. first, they bring pilots into the simulators during the development phase, so that the automation doesn't ever leave the factory without extensive human factors of experience. they know it's not just some designer saying, this would be a good idea, but it's actually pilots flying the simulator in the development stage.
the second thing is that once the automation is out there, then the pilots get frequent and recurring training on how to use the automation and last but not least, if all of that doesn't work, they have the -- the industry has a near-miss reporting system that's non-punitive so pilots can report problems they're encountering so there are several ways to help make sure that the automation is done well and the automation done well has been a big boost to the industry over the decades. >> so, chairman, tell me, you say that you agree that grou grounding the max 8 is not warranted at this point. former american airlines ceo bob crandle was just on with us a little earlier saying that bo boeing, the faa, airlines and pilots are the most qualified to make that call and right now in the u.s. they say they have faith in this aircraft what's at stake if the u.s. were to make the opposite call and ground this aircraft what would the damage be, in your view? >> well, the damage would obviously be that people -- that
would reduce the people that still have confidence in it. that would make them doubt whether that's the case. but in my view, grounding is appropriate for -- is not appropriate for this type of event. what grounding is appropriate for is for failures -- mechanical failures that disable the airline and disable it in a way that a pilot can't do anything about it in the moment. so, for example, if a wing comes off in flight, there's nothing a pilot can do about that. and since the manufacturing processes are so standardized, if one wing comes off in flight, then you don't know -- you can assume that other wings will come off in flight, too. so that's an event for grounding the airplane so in my professional career, the faa has grounded airplanes twice. first in 1979 when the dc10 departing chicago o'hare had a wing depart from the air and there's nothing a pilot can do about that in the moment the next one was much more recent in 2013 when a boeing was experiencing problems with its lithium ion batteries, which
means a fire on the plane. and there's not much pilots can do about that. the faa immediately grounded in both of those incidents as soon as they had a problem. that's what grounding is for grounding is not for this type of situation where there's an unfortunate, undesirable interaction between the pilot and the airplane because that's what most crashes are results of, undesirable interaction between the pilot and the airplane and if you ground it for that, you'd be grounding after almost every crash. so that is not an event for grounding. >> if there is a significant issue with trim, as some have theorized on the lion air crash, how is that different -- is that not a situation where the pilot has no control >> no, the pilot has complete control to stop the trim, out-of-trim condition. so that's why when the faa saw the lion air recordings and realized what happened, they immediately issued an airworthiness directive that says, you need to put information in the manual about what to do if this happens and i'm going to recommend that the airlines, if i were an airline, i would be looking at those additions to the flight
manual and i would say, i don't want any pilots to fly this plane until they have not only read the additions in the manual, but actually been in the simulator and flown to see what those additions in the manual are telling them so to me, that's the answer is, "a," to fix the automation, and boeing is working on that, as we speak. but "b," the airlines should increase the training to bring the pilots and the simulator before they fly that airplane again to make sure they understand exactly what to do in the case of a malfunction of the system >> so you would not be in favor of the faa grounding, but you might be okay with an airline, a specific carrier saying, we're going to wait until our pilots have additional training >> yes, i don't refer to that as a grounding. i would just say, make sure that the pilots are trained to what the faa required in the airworthiness directive be added to the flight manual >> chris, here's what i'm trying to figure out. the u.s. has long had this reputation as the top regulator in terms of safety when aviation is concerned i get that the bar is very high and there are very technical
reasons here in the u.s. why you would be grounding aircraft, but the fact that so many countries are breaking with that stance and taking the opposite approach and now you have the ceo of ethiopian airlines saying that they're looking to deliver those black boxes to europe rather than the u.s., is this, at least from an optics perspective, doing damage to the u.s. >> no, i think in quite the contrary, the faa has a long-standing tradition, and the two groundings i mentioned are examples of that and has a long-standing tradition of going where the data tells them to go. that's what happened in those two groundings the data told them they needed to put those planes on the ground, because you don't want another engine coming off and you don't want another battery fire in the airplane so the faa has a long-standing tradition of going where the data tells them and that's what they're doing today and what they did when they mentioned the airworthiness directive in november, saying, we need to add information to the flight training manuals so the pilots are very well aware of how to
handle the situation if it arises >> all right an important expert perspective. chris hart, former ntsb chairman thank you. >> well, let me add one more thing. it's important you mentioned in the introduction, it's important to note that the pilots who have -- who are the experts in this and they certainly have as much at stake as anybody, as they say the pilots are the first to arrive at the scene of the crash, they are not calling for grounding. so that speaks volumes that they are not calling for grounding. plus the fact that this airplane has thousands and thousands of event-free hours so i think there are lots of reasons why grounding is not appropriate for this type of situation. >> good point. individual pilot spends a lot more time with that plane in the air than any passenger >> precisely >> thank you >> precisely >> chris hart. >> thank you sticking with boeing, i sat down exclusively with the u.s. army secretary mark esper yesterday for a wide-ranging conversation on defense spending, the military's view on artificial intelligence, and a whole lot more, including his thoughts on boeing, which is a
top contractor to the defense department take a listen. >> we closely track the systems that boeing builds for us and there are some very capable systems. that's been my focus it's something i look at every month. i look at the metrics for all of our major combat systems and our platforms, which boeing builds many and they're very successful platforms. we have challenges here and there, of course, but i focus on the programs that the army is running. >> so very much staying in his lane, in terms of what he's focused on, where programs are concerned, where a company like boeing is concerned. i think what folks at the department of defense would tell you is that there are times even when they have aircraft crashes that are fatal, for xample, where they even bring in a regulator like the ntsb to help investigate it also, for a service like the army, this is something that's very personal. they did have an army captain that was aboard that plane and i think there were potential some other military folks that also
lost their lives in that crash so it is being watched very carefully and very closely, but in terms of what it means for a business perspective from the pentagon, there is not one, at least at this point in time. all right. well, as we head to break, take a look at the best-performing dow stocks so far in today's session. united health, united technologies, nike, visa, and intel. we've got a lot more "squawk alley" straight ahead. don't go anywhere. so servicenow put your workflows in the cloud, huh? mm-hm. your employees must love you. thank you. ah, you could say that. so how are things with you guys? great. thank you. thank you, sir. lunch next week? terrific. say hi to the team. will do. call my office, i will. -sounds good. alrighty. servicenow. works for you.
there is about an hour left of trading left in european markets ahead of another important brexit vote this afternoo afternoon. wi willem marx is in london with the latest on brexit >> theresa may has not opened this afternoon's debate ahead of a vote tonight because she's lost her voice her chancellor did issue some
spring forecasts, some spending priorities earlier today and those were very much predicated on the idea that three would be a deal between the uk and the european union however, he had some words of warning in case the uk does depart without an agreement. >> leaving with no deal would mean significant disruption in the short and medium term and a smaller, less-prosperous economy in the long-term than if we leave with a deal. higher unemployment, lower wages, higher prices in the shops. that is not what the bridge people voted for in june 2016. >> reporter: now, the jooueurop have made it very clear they've stepped up their no-deal planning ahead of march 29th the uk indicates that is the date the uk will leave the eu as of right now but tonight could bring an opportunity for mps to try to change that. they'll have a chance to vote on whether they like the idea of
leaving without an agreement the vast majority who have spoken publicly about this have said they do not there are a couple of amendments being offered alongside the main vote one tries to make that deal a little bit more cast iron and one talks about a managed no deal, asking the europeans to give a stance to the agreement when it comes to things like trade. that has not been very well received in the past by those no brussels and doesn't seem to pass later on this evening >> all right, willem, thanks deal or no deal, serious business now let's get over to sue herrera with a news update >> hello, john hello, everyone. here's what's happening at this hour rescuers in nigeria are racing against the clock to save children trapped in a collapsed three-story building in the city of lagos at least eight children have believed to have been killed in that accident. sales of cell phones in china plunged 20% from a year earlier. the week-long chinese new year holiday typically means weak sales, but analysts are also blaming the country's slowing
economy. a native of alaska has won the 2019 iditarod. peter kaiser and his dogsled finished the grueling and cold 1,000-mile journey in just under ten days, snagging the $50,000 prize and a new pickup truck good for him and the power of mother nature was caught on cell phone video by a person in new mexico. that twister touched down last night. and there's a lot of bad weather in the midwest so we'll keep an eye on that for you. that is the news update this hour back downtown to you guys. carl >> sue, thank you very much. when we come back, sallie krawcheck will sit down with us after the break. in the meantime, major averages having a very good day. dow's up almost 200. s&p on pace for the best close since november 7 nasdaq on pace for the best close since october 9th.
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stocks have been on a tear, as you know, so far this year. the s&p is off to its best two-month start in nearly 30 years. our dom chu is back at hq with more on what's driving this upswing. hey, dom >> carl, we have the s&p 500 if it can stay above a gain of 12%, we will be on pace for the best q1 performance for the large cap index since the start of 1998, as well you mentioned the two-month span, this is a good quarter, as well during that quarter, the s&p gained nearly 14%, by the way. but it's not the only part of the market that's moving up at a breakneck pace after getting, of course, beating down during the final weeks and months of 2018
if you look at the nasdaq composite, it's up around 15% so far this year, as well, meaning that it is on pace to have the best quarter to start a year since 2012, when the nasdaq gained around nearly 19% if we drill down into a couple of key industry groups to keep an eye on, you've got biotechnology. it has been hot recently the biotech etf, ibb, that ticker there is up around 17%. meaning it is gearing up for its best quarter since the start of the year since 2012, as well, when it gained around 18% for that q1. and computer chip stocks, also something to watch they're on a tear, the ticker smh is up around 19% on a quarter-to-date basis. so if things stay the way they are right now, it will be the best q1 since the inception of the fund back in the year 2000 something else to focus on is the current level in the s&p 500. we've seen the stalling out here over the course of the last few weeks. so it will be a key hurdle if
stocks are to resume that run and try to reclaim record highs. but still, what's driving a lot of the action, carl, is that move off those christmas eve lows we'll see if the staying power is there to a great start to the year so far in 2019. back over to you >> all right, dom. interesting chart work there meanwhile, a report out of bank of america and merrill lynch predicts it will take another two centuries to close the gender financial wealth gap between men and women. our next guest says that in addition to facing inequality and pay, women are also lagging behind when it comes to investing. sallie krawcheck is the cofounder and ceo of elevest, good to see you. >> good to be here >> you point to a couple of studies in the last week show how the wage gap is affecting the way women make investing decisions, right >> yeah, yeah. well, look we saw some headlines last week, the wage gap is slowly closing that's not slowly closing. that's, you know, that's like
alexandria hamilt alexander hamilton say it would close in our time. it's not moving. it's not moving and that's really discouraging saying that all of the research that says putting more money in the hands of women is good for everybody, good for the economy, good for the markets, good for everybody. >> why why isn't it closing faster? that's the part i don't get. we're definitely talking about it more and folks like you are taking very concerted steps to try to change it so why is it still so low slslow >> i guess if you don't have to pay somebody that you don't have to pay them, you don't pay them more than you have to pay it there are very few ceos, marc benioff at salesforce is one of them, who says, we'll go right on through, look at our company, look where there are gender pay gaps and closing the freaking things you don't have much transparency, and without much transparency think about it, as a woman, how much do you go and ask for as a raise that you don't have transparency that you're making less than the guys are
with lack of transparency and the desire for profits, this thing, it just isn't closing >> sallie, it seems like this hasn't yet been framed as a societal problem in a way that everybody is onboard, looking for solutions. when i look through twitter, social media, the conversations around it, there's still whataboutism arguments about, well, maybe women aren't making "x" amount because of this, maybe they just have different investing stiles do you see us getting to a different point as far as framing this issue >> yeah, i don't know about framing. look, again, the research has been there for forever, that this is a good thing diversity at senior leadership is a good thing. you know, diversity throughout companies is a good thing. we're seeing it. i'm -- the pacs evaluate global leadership fund of which i'm partial owner shows that companies that have more women in senior leadership outperform those that don't those that have more women onboards outperform those that don't. and yet, it's not enough the prospect of gosh, we can
have better returns, lower risk, make more money is not enough to really break through the way we've been socialized, that men are ceos, men are business leaders and of course, you know, people are sort of more comfortable working with themselves that's why, you know, i founded elevest to build a company from the ground up that is diverse and takes advantage of that cognitive diversity. and at the same time says, if it's going to take 200-plus years to close this gender pay gap, then let's close the gender investing gap, which is costing the women who are watching this hundreds of thousands somewhere around millions of dollars over the course of their lives. let's solve a different problem and build a company the right way through elevest. >> that's a great poisonent i was stunned by this ubs study. 23% of women take charge of long-term financial planning decisions at home. less than a quarter? >> yeah, i know. and that again starts in
childhood. there's research that tells us that parents speak to their children differently about money. for the little boys, it's about making money, building wealth, for the little girls, it's about, be careful, save. we get older, women's magazines talk to us about financial planning as being difficult and hard to do and they give us advice like, don't buy the latte. i mean, how many times on your tv show have you guys talked to each other about, like don't buy the latte? like, never. then we get into modern television and carrie bradshaw and "sex and the city" who's a very accomplished women buys too many pairs of shoes and can't afford her apartment so as women we receive this message that long-term financial planning is hard to do, investing is not for us. and let's look at ourselves on wall street. the majority of the employees on the trading floors and money managers are men the industry symbol is a bull. it's a phallic symbol. so we women receive the message, this is not for us
>> sallie, i can't help but think that there's a business opportunity here and this is the part i don't understand in terms of why wall street isn't seizing on. if women are more prone to cash or they're underinvested, that's more than half of the population that banks, fund managers, et cetera could be tapping into for future growth. >> yeah. that's exactly right and many of them have. and they all rolled out mark marketimarke marketing programs in fact, i remember marketing programs for this niche market the issue is not that women aren't being marketed to the issue that we are addressing at elevest we were the first once to say, okay, marketing has to be right, but so does the product, right the technology has to be sophisticated, the finance has to be sophisticated. really innovation is not typically along one dimension, it's along several dimensions. and so we said the same thing. we said, gosh, women control $7, $8 trillion of investable assets they're not investing as much as men do rather than marketing to them and telling them they have to
change, why don't we build a product for them and i'm happy to tell you that elevest is one of the fastest of the digital first investment advisers out of the chute to grow to a quarter of a billion of assets under management because we've hit that sweet spot >> well, i'm thinking of the fearless girl statue outside this very building where we are, sallie, so maybe things will change at a faster pace every time >> well, yeah, you know, we need more than publicity stunts we need a -- it is not a surprise that an industry that is not particularly diverse does not have many women, is not doing a great job for women. so statues are fantastic you know, really serving this client is even better. >> yeah, no, you've got to go to the hr department for that sallie, good stuff we'll talk some markets next time see you next time. sallie krawcheck >> thanks, guys. still to come, the anniversary of microsoft's ipo 33 years later but first, rick santelli, what are you watching today >> well, when i look over to
this side, i see equities. looks great. look over on this side, i see treasury rates not so great a real tale of two markets that's what we're going to tal ouafr e break. -driverless cars... -all ground personnel... ...or trips to mars. $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade.
continue plus, our call of the day sends roku reeling but what is jim laben that'thalg with his position. and the odell beckham shocker. we'll talk some markets and do it at noon we're just about 15 or so away we'll see you then there's a lot to talk about on that one, scott i can't wait see you at the top of the hour meanwhile, the fda outlining further restrictions on ecigarettes and their sales this hour in an effort to curb teen vaping >> the fda is proposing tough new rules on ecigarettes in order to combat that growing popularity of vape products with young people with weeks to go, scott gottlieb says the epidemic rise in ecigarette use has prompted escalating actions at the fda. until now, ecigarettes had a regulatory grace period until
2022 under the proposed rules, the deadline for flavored ecigarette makers to submit pre-market applications is being moved up a year to august 2021. sales of ecigarettes will be limited to online brick and mortar retailers which use age verification to make sure that these products are not being sold to minors and in store, ecigarettes must be physically walled off from other tobacco products this is something that the industry wonders about and finally, the agency's rules would crack down on flavored ecigarette products in particular, which tend to appeal to minors, which commissioner gottlieb says in some cases could result in some of those products in longer being able to be sold. the products do not apply to menthol, mint, and tobacco flavors that the fda has already approved for conventional cigarettes, but flavored cigars would not be grandfathered gottlieb has been doing the driving on the ecigarette initiative, but alex azar this morning expressed support for what he called a comprehensive
balanced approach to close the on-ramp for kids while prem preserving an off-ramp for adult smokers to ease off nicotine our colleague, angelica la vito talked to some of the industry folks who are expressing some concerns they do like the balanced approach they, too, believe that there should be restrictions for young people, but they worry about this walling off, morgan, that is required for ecigarette products and also, they say, also potentially leaving out some of these flavored products, which also appeal to adults who are trying to quit and use ecigarettes for that purpose >> bertha, major issue thank you for bringing us the latest bertha coombs. let's get over to the cme now and rick santelli for the santelli exchange. rick >> good morning, morgan. it is the debate raging across the country, if not the world. it's the tale of two markets for stock market, it's kind of the best of times. you know, we're roughly, if i
look at the dow, 4% from all-time highs i look at the worst of times and it all depends on what your position is. i never really look at up or down interest rates as good or bad, but it's not about me it's about investors in general. and they do, okay? if rates are a little too soft, there's always that red light that goes on thinking, uh, you know, maybe treasury rates are seeing some weakness in the economy i'm missing, maybe i need to guard my capital more. and that's even an international notion that involves strategy on how you break up your funds, which sectors you employ, how you deploy your capital. and of course, the other issue is how much of what is going on in stocks and interest rates is truly divining the underpinnings of the economy so i guess the real question is, what's changed well, look at a chart. it jumps out at you. this is a chart, generic chart, ten-year note yields on top of the s&p 500. you notice how they generally track, and they should, they're
going to ebb and flow and you're going to see some more daylight sometimes and get a little more correlation than others. but october, november, it all changed, okay? we see the stock market was clocked. we see the vix was skyrocketing, and we see interest rates basically fell to the tune of 65 basis points stocks recouped and here we sit in treasuries. consider, 3.25 double top or roughly at 260, we moved up a bit, but we'll keep it round numbers. 65 basis points compared to 3.25 that's basically 20% a thousand points on the dow is 4% something is wrong there now, if we look at the chart, we can glean quite simply, the biggest change that happened was the fed, moving from guns hot to monitoring data dependent, all the things they used to say that they really didn't do, they're doing them now but is it just that? or then do you pile in that mario draghi, japan, europe, they're not as convinced that they can normalize back into higher rates and smaller balance
sheets i think it's all of that and let's not forget, five basis points in bunds. pretty heart ard to get back to# 3.25 investors' trading strategies will push those rates back down and get an efficient frontier. at the end of the day, i'll make you a prediction if treasury yields don't close below 2.55 in the next couple of weeks and stocks say up here, it's probably the greatest sell signal in years. but if treasury go under 2.55 and trade there, it might be a good time to take some profits in stocks. >> equity investors, take note rick santelli, thank you for bringing us that chart up next, embracing big tech. after new york city's rejection of amazon, the mayor of austin is with us on why the city is welcoming apple's new $1 billion campus and the jobs that come with it. dow's up 178 points. eaeyafr e wk all" teth brk. the latest innovation from xfinity
it's a look what your wifi can do now store. a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. it's been an active 24 hours in commercial aviation you've seen governments ground the 737 max 8 and now it's canada's turn. the transport minister saying he is restricting commercial use of the boeing 73-8 and 9 jets from arriving, departing or flying over canadian airspace he says it's based on new information that they received in canada on wednesday no more specifications on that but obviously this will not be
positive news for boeing and will leave the united states as the sole agency that's allowing airspace use of the 737 max 8. >> the story and details continue to develop. shares of boeinghave turned slightly lower as we get those headlines right now so we'll keep watching that meantime, austin, texas, embasing big tech building what some are hoping will be a mini silicon valley apple investing $1 billion in a new campus making austin the largest population of apple employees outside of cupertino adding over 5,000 jobs to the city this while companies like amazon are investing in the city's available real estate so all of this in the aftermath of new york city pushing out amazon's proposed hq2 and joining us the mayor of austin, texas, steve adler fresh off hosting the annual south by southwest festival thanks for joining us today. >> morgan, thanks. >> at a time where other city,
new york city, san francisco, seattle to name a couple are questioning whether the rewards of being a tech hub balance out with some of the unintended consequences, why are you so sure they do >> well, i think that the discussion has to be about how you do these things. if these companies were coming in and exacerbating our problems with affordability and mobility then it would be a significant challenge but when we talk to companies that are interested in coming to austin, we lead with that our approach to the amazon hq competition was very different, i think, than most cities. we also didn't win but we laid out those challenges because we're not going to exacerbate those problems. we're focusing on companies that are going to do things to bring community benefits and help us that apple location, for example, the first real big tenant in an area of about 7,000 acres that we're trying to
develop as an alternate or additional downtown center going to give us contraflow on our urban rail line during peak hours so we're focusing on things that those companies might be able to bring to help us with our most significant challenges. >> it is a very hyper competitive environment between state answer cities to lure businesses and the jobs that come with them in when a city like new york basically doesn't want it and questions the deal they struck with which resulted in them pulling out, do you see that as maybe a loss for new york city but a gain for a city like austin? >> well, you know, our approach to that competition gave rise to those questions earlier in the process. i think that we were already having those discussions that later then happened in new york. we weren't going to enterinto any kind of an agreement or incentive program with amazon that would exacerbate those
challenges of affordability and mobility so when i wrote that initial letter to amazon that was required of all the packages my letter was not an offer of incentives but rather an invitation to engage in a conversation and what we might be able to do for affordability and mobility we couldn't otherwise do ultimately we made it through the next round and some people said we wouldn't because of the letter that i wrote. ultimately we obviously didn't win that competition amazon's continuing to increase their presence as they are in many cities. but their most recent announcement of a building again went in an area we're trying to develop a second downtown area in part to help us with the traffic situation that we have in our city. >> yeah, of course, mayor adler, all those tech companies coming in are luring some other sectors as well including the military the secretary of the army talked about army futures command down
there as well. >> that's right. >> thank you for joining us and talking about your plans for austin >> absolutely. thank you. keeping our eye on s&p 2816 here as boeing shares have gone into the red we'll pay attention to that. "squawk alley" is back in a minute ing for pork chops. you're searching for something more... ...red-blooded. right this way. you thirst for adrenaline, you hunger for raw power. well, you've come to the right place. the road is yours, dig in. your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech.
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all right. getting the way back, 33 years ago today microsoft went public exactly one day after oracle led by a 30-year-old bill gates raising $61 million in an ipo priced at $21 a share. a 1,000 investment that day would be worth almost 1.8 million now. so let's take a look at how microsoft's ipo in 1986 stacks up against hot ip oswell expected this year, say uber and lyft lyft reported 2.2 billion with 4500 employees when microsoft went public it reported 140 million in revenue the previous year and 998 employees. an inflation in adjustment but lyft has 15 times more revenue, four times the employees that's before we get to uber it reported 79 times microsoft's ipo revenue and 16 times the employees going public are a lot more mature and maybe less
upsize >> even when you adjust for inflation, you know, it's interesting. all this talk about breakups one of the companies that hasn't been minged by lawmakers putting those proposals out is microsoft. >> they've been through the wringer. >> boy, have they. >> the judge i'm scott wapner the faang stocks are finally rising again so is it a sign that this rally can roll on? it is 12 on. in is "the halftime report." >> announcer: alphabet and facebook, wake up. both are up big this month amazon also outperforming. are the stocks that led last year making a comeback plus, battleground 2800. as the s&p crosses this crucial line in the sand, new details and boeing's max problem what the airline is doing in washington and what it all means for the stock. and big kuehls