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tv   Squawk on the Street  CNBC  January 17, 2020 9:00am-11:00am EST

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moynihan, david solomon and many, many more. a huge week for us great time to check in with lots of leaders in business we want to make sure you join us we're ready for the cold >> i have some great outfits, not for nothing, all planned out monday, tuesday, wednesday. >> fashion show. time for "squawk on the street." ♪ what's your favorite, color, baby ♪ ♪ good friday morning. welcome to strm t"squawk on the street." i'm carl quintanilla, with david faber, and tepper and druckenmiller blessed the market's momentum, helping us look past a host of downgrades, weak reports outs of transports. housing starts the best monthly print in over a decade, and ten-year 1a3 road map the resilient rally, stocks set for another higher
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open, wall street looks to close out a record-setting week. peacock joins the streaming wars, how comcast's forthcoming platform looks to separate itself from the streaming flock. joining the four comma club, alphabet more than $1 trillion all together more than 17% of the s&p 500. stocks looking to hit new record highs upbeat news on the economy as housing starts rise in december to their highest level since '06 up 16.the and just to put that into perspective we are looking for an increase of 0.4 amazing, and of course the commentary from tepper and druckenmiller over the past half hour has done a lot. >> it's fed in the same direction. we'll pick apart if weather was a factor in the housing starts and the rest but that is when the equity futures took another leg higher when the numbers were reported comes after we got other good housing data it's become very hard to decide
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that the headlines are going to get in the way of a market that's been on this autopilot higher the guys like david tepper and stan druckenmiller know better than than to get in the way of a market that seems to be working and refreshed every day by really strong credit markets and people feeling a little bit too cautious coming into the year. we're going to reach a limit to this on every metric, the indexes are very stretched, and sentiment is getting a little bit overexcited, but it's been very, very hard to pluck out that point to say okay, it's done enough in the short term. >> headed into earnings season, of course, there was a never-ending of chorus people come on our air, earnings are important, we have to justify the multiples. we've only gotten the financials what is your sense >> people are essentially saying this reminds me of the last three quarters or so where expectations are super low every company will come out and beat by a lot.
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the reactions won't necessarily fit. >> no. >> i think it's enough to keep that story line intact to say that we are an improving trend and not otherwise. by the way, we're talking about the top five, you know, nasdaq stocks driving things. it's not about earnings. it's not about this quarter's earnings it's about many, many years old' worth of earnings that the market is betting will continue to come through. so it's a short term/long-term the banks didn't hurt in terms of earnings picture. they're not leading the way. >> no, but nothing that occurred there is going to stop anybody's belief in the momentum of the overall market or the ability to continue to pay these prices >> we're in the virtual circle point of this rally where it's like everything seems to be working, and you know, it's hard to decide when it's going to overshoot. now, you got some transport needs. >> i was going to say -- >> that are not working. >> csx volume down seven, another challenging year ksu low single digit growth in 2020 expediters, q4 activity weakened
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dramatically how long do we look past weak december data, at least in transports, weak q4 data >> it's a good question, how long i do think that the trade agreement, whatever the merits and the substance were, it gave people permission to say now we can bet on a ma to re turn you have to start to see the ma to cro turn in terms of the industrial and freight part of the economy. the subindexes of the transports were trying to do better, trying to pull away and we'll see if this sets them back. >> fascinol, ppg, none of them, again, the industrials sort of, i don't want to call them bellwethers but reflections not looking as good. >> they're not and you might have an investor say exactly why you buy apple and alphabet here and i think it all fits the same story, because if you're not talking about a recession, if you're not talking about an inverted yield curve, if you're not talking about rates going
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too high to compromise valuations and not talking about credit stress, what's your catalyst right now, the context is the upside catalyst. stuff's working, and look, we're getting to a point, it looks like january 2018, we're half way to that gain we had in 2018 in terms of year-to-date on the s&p and it got too much at a certain point and it didn't take a lot in terms of news flow to set it back. >> on the other hand, maybe some of the weaknesses this boeing noise which we'll get to more, incremental news on ba today there was china data overnight. euni eunice yoon in beijing >> china grew at its slowest pace since 1990 pu picked up at the end of the year. it came in at 6.1%, q4 at 6% because of the trade war and weaker private consumption the december data has been raising hopes the economy here could be bottoming out
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the industrial production new blew past expectations, manufacturing investment came in at 3.1%, this was much stronger than the past four months, and that led several research houses to raise their estimates for 2020 socgen and fitch upped estimates to 5.9% growth oxford at 6% with an improved outlook. chinese leaders have political reasons why they want to see the economy growing around 6% mainly because they promised the public here that they're going to double the gdp and incomes from 2010 to 2020 so the statistics bureau today said beijing would ensure economic growth, stays within a "reasonable range" and roll out support measures if necessary. the trade deal is expected to help stabilize growth. the research firm capital economics believes that the tariff relief and reduced tensions will lift gdp by as much as 0.3% fitch sees a bump of 0.2%, so that impact might not be as much as people had hoped, but it
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seems to suggest that a lot of the problems of the economy lie elsewhere. zed said they're concerned consumer spending could be a wildcard, worried consumer also hold back because of anxiety over the slowdown. david? >> eunice, thank you eunice yoon reporting for us live from beijing. back to report news. late yesterday comcast, our parent company, unveiling details regarding peacock, its nbc universal's entry into the so-called streaming wars the free version of the service is going to launch july 15th, consists of 7,500 hours of programming. it is ad supported, meaning there will be advertisements the premium service will launch in mid-april on a limited basis. it will have a $4.99 a month cost, that is with commercials as well, it will be $9.99 if you don't want any ads, in both cases subscribers have access to
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about 15,000 hours and it will increase over time of programming. yesterday, at an event that showcased peacock, nbc universal chairman steve burke spoke about how the company views the ability to capitalize on streaming. >> we think there's a clear opportunity to create a streaming platform that we own and operate, that give people what they want, when they want it, but allow us to monetize we also think we're uniquely positioned to take advantage of this opportunity and play a leadership role in the on demand streaming world. >> the company has positioned itself, guys, in what they believe is a white space, a different area than of course the key competition between netflix and disney plus and the coming hbo max and amazon, and others, and not competing against youtube, or facebook, where they have user generated content, youtube to a lesser extent pluto but this idea of high premium content, ad
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supported and really when you talk to executives, and i did get a chance to talk to steve burke and brian roberts, the ceo of comcast, prior to the meeting yesterday, in many ways they viewed the real competitor here as youtube >> yes >> so much time is spent on youtu youtube, so much of it is spent they say with nbc universal content, think "snl" or "the tonight show" cut up in parts they're not getting monetization from and love the opportunity to bring back that content and actually monetize, not to mention obviously a very broad portfolio of entertainment, including a bunch of new shows as well, and the ones that you see right there, some of the old favorites from years gone by that will give them the opportunity they believe to sort of benefit in a way, also pointing to hulu, where it's the ad supported part of that service that actually is the most profitable and getting as much as $10 in advertising i
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think it's per sub, so those are the numbers they're looking at is where they see the opportunity. >> yes, i mean, obviously, competing with youtube for eyeball hours and the ad dollars that come with it, and it is a different equation from the pure streamers like netflix, where it's about well, we've got to constantly have this impression of newness and abundance, just to get people to pay the monthly subscription fee, as opposed to we need them to really latch on in large numbers to what we put out there, and so i do think it's fascinating, plus the live piece of it i guess >> there is a live aspect to it, which is different also i thought it was impressive in terms of the user experience and they've gone a bit about it differently as well. you're going to have live and sports, but it's not as though i don't believe they're going to be streaming cnbc service. >> yes >> they're going to be cureating toorlds the b towards the bigger story of the
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day. when you go to it you'll have the ability to look down into a news part of it, that gives you information on the bigger stories of the day the olympics will be available on the service, but don't expect the nfl or anything like that. however, who knows where things will go over time as this continues, this platform continues to evolve. >> yes, also there's the affiliate relationships you got to remember. if you'reable to see fallon before it airs on television, that's bending the model in ways we have not seen before. >> that's right and you will be, 8:00 is when it's going to be available, eastern time on the service, so yet another reason they hope that they are able to bring what they believe will be as many as 30 million to 35 million subscribers by 2024. remember the idea is to be break even by 2024, roughly five years, by the end of five years after the service is launched. we've already discussed and they reiterated $2 billion in spend over the next couple of years, programming, marketing, technology, obviously being the
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key part of that, and some new, there will be some new programs there as well, but the idea is not to spend anywhere near, not to get in wars in terms of content with the likes of a netflix spending $17 billion or amazon or warner, and we will continue to have content produced at nbc universal that finds its way into other platforms still. >> yes interesting, a lot of fun with the peacock theme. >> yes >> in the marketing. >> a lot >> and jokes that you can finally watch "law & order" 24/7, never been possible. >> yes when we come back, shares of microsoft surged more than 300% since innadella became ceo six years ago. take a look at the pre-market here, downgrades of ibm, southwest, marriott, ebay, morgan stanley, twitter, we'll get to all of that when we return
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all right, we got the housing starts number. let's get industrial production with rick santelli hey, rick. >> yes, a minus sign unfortunately, down 0.3 for industrial production for december so that completes the year, not necessarily a great year there was seven negative month over month changes, only five positive for the 12 months of 2019, and if we look at utilization rates, 77.0, exactly as expected. 77.0 fits in nicely with last
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month, of course, sequentially it was upgraded to 77.4 but these are pretty good numbers. the lowest number october at 76.6 we've seen rates move up considerably, considering how tight the ranges have been, carl, and a lot of that of course happened after more positive data this morning and what's going on globally david, back to you >> rick, thank you, rick santelli in. in his nearly six years as ceo, satya nadella transformed microsoft, a trillion-dollar behemoth focused very much so on the cloud, but a new part of the company's strategy for the future involves a goal to be carbon negative by 2030. last night on "mad money" nadella expressed to jim cramer about cloi mat change and having it a potential impact overall on the world economy. >> the science i think at this point is very clear. if the temperatures rise, i think the impact it's going to
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have, on the economy we enjoy or the capitalist system we all enjoy i think will fundamentally be in jeopardy if the planet, which is the resource, the factor of production that fueled all of our capitalist society is in danger. to me that's the existential priority >> it's been quite a week, beginning with the announcement of a fundamental reshaping of finance. now some people took it as talk from black rock and ceo larry fink i think it was significant in terms of their letter to the ceos, how they're focused on companies far beyond the metrics of earnings per share and revenues but including in a significant way their impact and sustainability goals and then seeing companies like microsoft come out with very specific
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plans to become carbon negative by 2030 and this is more interesting in some ways, we move all the carbon they put in the atmosphere since 1975. >> remediate the whole thing >> by 2050, which will involve a lot of new technologies they were talking about, some of which exist, others of which are not fully developed. a forestation and reforestation, soil carbon sequestration, bio energy with carbon capture and storage and direct air capture. >> right i don't know >> direct air capture? pull the carbon out of the air >> it's crazy. there's sort of an amazing tiering of motivations for a lot of this, it would seem one take it on face value, a principle stand, the right thing to do. two, dollars are moving in this direction in terms of both younger customers wanting to buy products from companies that reflect these principles, and also just institutional investors doing it, and you know, i think also there's an
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employee service aspect to this. you're competing for talent. it seems everything you hear, people under the age of 30 or whatever want to work for a place they believe is doing the right thing. >> t puts that business roundtable shift in what the corporate mission is in general into sharper relief with every incremental move pepsi, blackhock, microsoft, the airbnb news that chesky has given to sorkin. companies are thinking in different ways >> i think this is really, i mentioned it last year of course, because it did feel like really you're starting to see the assets accrete to these kinds of strategies, so where the money is going to be invested, and the companies are responding the investors are responding obviously in terms of blackrock, and the companies themselves, but they're talking about a 15 metric ton fee that they're going to put in place immediately on all scope of one and two emissions, scope three travel emissions, so everybody in the company is going to be think being their own carbon
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footprint but for a company like microsoft, it's also about all their vendors and how they'll be evaluating them and how those vendors go about delivering the service they do and perhaps a much better way in terms of efficiency and lack of carbon footprint. this is having an impact, when it must be said our government, of course, is not taking the lead in any way, shape or form in terms of trying to combat climate change >> we're aware the market is giving microsoft all kinds of credit to do whatever it wants to do because stock is working >> interesting to hear nadella tell jim ballmer gave the go ahead to the cloud stocks aiming for another historic day look at the futures here, a reminder, you can always catch us live on the go, on the cnbc app, stick around for more "squawk on the street," as we count down to the opening bell in nine minutes.
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we are just about seven minutes before the opening bell. we bring in kenny polcari. good morning we've been looking at this relentless rally it's orderly not given a chance for people to buy dips and pull-backs. the only question, has it stretched a little bit too far or can you bet it keeps rolling? >> listen, i thought it stretched a little bit too far two weeks ago, right i've actually been expecting i thought 3,300 would be where we hit resistance, tried it a couple of times and yesterday we blasted through and landed solidly on the other side.
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this morning the markets are up again, global markets are up china came up with a decent report 6.1 is the slowest in 27 years or whatever, the fact is, it is growing at 6.1 in the middle of what was this ongoing trade war crisis that was going to bring the global economy to a halt it's done nothing like that, and so now we've got trade 1.0, we have china growing, robust u.s. economic data, great earnings so far, and so the sky's the limit. >> so in other words, a lot of this stuff we were worried about seems like we didn't need to be worried about it right now, we're almost up 3% year-to-date for the s&p 500 most of the strategists out there were saying we're probably only good for a 5% or 8% full year and we're only two weeks in what does that mean for the dynamic, people trying to chase it or upgrade where they think this market could go and how do you treat the first pullback, when tever it comes? >> i'm in the camp i thought this year, if we got a 10.
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to 12% return all in, i thought that would probably be about where we are and you're right. we're already up 3%, not even done with january yet. we still got another week and a half to go before the month is over, but i think you have to, it depends on who you are. you're the long-term investor, you got to stick with your plan, whether it's consistent investing, monthly, quarterly, however you do it, you should stick with that plan and eliminate the noise around you look, when you just asked me, we were all concerned about all these issues going forward, but in fact, we were concerned all of 2019, and the market just kept going higher and higher and higher it never really pulled back and doesn't feel like necessarily today it wants to pull back either that being said, when the market does pull back i think there's still plenty of demand but depending on the speed it's algo driven, the buy side will back off a little bit, let the sell side come in, the market should shake the branches to see where
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everybody stands i think the market is in a very good place >> all right, be in a good place if we shook out a little bit kenny, thanks a lot. good to see you. >> yes, you as well. >> shake out does not look like it's going to happen at the open we're looking for some record highs, opening bell say few minutes away don't go anywhere.
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the opening bell is brought to you by nuveen, a leader in income, alternatives and responsible investing. you're watching krn "squawk on the street" live from the financial capital of the world, the opening bell in less than a minute it's been a busy week, but we're not slowing down on this friday, obviously. commentary out of druckenmiller and tepper, futures along with housing starts we will get to the downgrades which really have not appeared to be a factor at least for sentiment at the open, but they do involve some broad names, largely at least in the case of the ibm downgrade on the notion that i.t. budgets remain stretched. [ cheers and applause >> that was the one kind of macro take away from some of the downgrades today we'll see how that filters through if at all, just an
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excuse to downgrade ibm. >> the opening bell and s&p 500, at the big world it's phoenix tree holdings, and apartment rental service provider in china celebrating an ipo we'll talk to the executive chairman on "squawk alley. an audio entertainment platform in china [ bell ringing ] so on this ibm downgrade it's morgan stanley, they go to equal weight their point is i.t. budgets are under pressure, especially in hardware, because they argue companies are still digesting the excess capacity they brought in after tax cuts, after repatriation, after asset depreciation, and essentially a share loss story they argue in ibm's case >> in particular, type of hardware, too. it does seem as if this is exactly where ibm would be impacted you see the stock opening up, down about 1% right now. obviously not been one of the leaders -- if this isn't characteristic of a lot of the
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upgrades and downgrades going on now, i think it's a lot of people trying to reckon with valuation levels, where we've gotten to and decide to double down or take money off the table. this is interesting, though, because software has been the comeback story within tech as well as semis this year. the rest of it seems to get left out. 5g replenishment type story. >> ibm one of the big names we'll get next week, along with the netflixs of the world, airlines, our parent comcast, p&g. for the time, ibm is the big laggard on the dow along with unh. the other someoone is airlines. we're waiting for a bunch of airline news regarding boeing, story on our website from leslie joseph, street trying to come to terms what additional write-downs may be the line out of b of a, we are increasingly fielding concerns from investors the likelihood the max never returns to service. >> i mean, i think that's always been the real kind of shadow over this whole story, basically
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a lost generation for boeing don't know that yet. i don't think you can say that but airlines patience being tried, them figuring out their capacity situation at this point in the cycle all of it fits together. it's a little bit of pressure on that area, and it's, again, all the more reason why investment dollars seem to feel like it's just less difficult to buy the obvious stuff, and i don't think that can go forever, but the obvious stuff being the nasdaq 100, which is dominated by four or five names. >> it is stunning, though, to look at those four or five names or at least a few of them. we have three companies now that are above $1 trillion in market cap, apple obviously the leader. alphabet and microsoft i mean, apple's market cap is now a trillion plus more than an exxonmobil >> yes >> above, in fact i can remember a time when exxonmobil was the most highly valued company, certainly amongst the top two. >> '08 definitely the top >> the numbers are extraordinary. this move up in alphabet
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approaching 10%, mike, just this year it lagged a bit last year. >> the dollar values are alarming, and i mean obviously you get a little bit of a sticker shock. i think it makes sense to anchor it somewhere, so these companies the top three companies, let's call them, the top three trillion-dollar companies, about 3.7 trillion in aggregate market value. this year they'll have 140 to 150 billion in net income. it's 25 times earnings for this block of $3 trillion is that insane does it make sense >> what is the blended growth rate, too? >> double digits alphabet insanely still grows close to 20% at its size now if you go back, so microsoft is twice the market cap it was at the peak in '99 so $600 billion back then, about $1.2 trillion now. >> it's making way more. >> four times more
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it's twice the size making four times the money. when do we tip into crazy from just aggressive and complacent i don't know what that point is. so that to me sets the scene for where we are >> will you send me a memo >> i'll put it on the calendar >> just keep it quiet. >> of course but yeah, so when to get off the horse in david tepper terms. >> right, exactly. >> by the way, tepper, as a credit guy, you know, used to be mostly a credit guy. if you're staring at high yield bonds in aggregate yielding 5%, i don't know if i have something to worry about until that gets disturbed. >> listen, so much of it comes back to rates and where we are and where you get a return i mean it's fairly simple. >> druckenmiller has been notably bearish in past years, 2015 he irvish issued a warningt the future he pins hopes on the idea trump gets reelected. >> right druckenmiller, too, to his credit, he was bearish and not
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sure about policy, he said own disruptive tech. that goes back years, where he was barbelling things. but i think he's correct that this lag of the rally has coincided with the betting markets raising the probabilities of president trump getting reelected. the main factor can't say but it's part of the atmosphere driving this market without a doubt. >> don't want to toot our own horns too much, david, but comcast all-time high. it's been a while since we've been able to say that. >> it is, yes, and again, back to market values $215 billion plus, not that far away from verizon any longer, at least within sight, which is always an interesting comparison, but a positive reaction to the unveiling of the company's peacock streaming services, as we tried to say and of course they spent a lot of time the executives at the company saying yesterday trying to differentiate itself from so many of the services that are already out there, by having really what they expect will be the most popular part of the
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service, being free. 7,500 hours of programming there, but free five minutes of ad load an hour by the way which is low, certainly given our viewers know what typical advertising is in a given hour of television programming, and so that's their expectation and hope they believe there is a great deal of demand for digital advertising dollars. linda yakerino made a presentation yesterday as well and i i have heard numbers as high as they think they could sell 5 billion of digital ads. >> that's an interesting part, the idea what you're doing is creating digital ad inventory that didn't exist before in a quasi-linear tv way and so that's kind of an interesting element of it. actually it mirrors what happened in parts of the dot-comboom when newspapers were going online, we can't keep up with the inventory it didn't work for newspapers but it worked for the overall
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digital ad >> the question is how much of that will come from youtube, where shows are watched, where parts of shows are watched, and where frankly the monetization for the creator of that content, nbc universal, is not really being paid >> also, you can't discount the legacy notoriety and built in awareness of a name like hbo or comcast, because reports today that facebook is retrenching on some of the scripted shows it's very difficult to get these shows get consumers familiar with them, even despite the cost >> yes >> even the whole flap over oh netflix is losing "the office" and "friends," there may never be shows like that again, that many episodes, that much popular recognition, and here we have "law & order" trying to get in that league. >> every one of these has their tent pole. "law & order" the franchise for disney "the simpsons" 30-plus seasons
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>> yes, 30 >> and things of that nature >> really quick on the judy shelton among them, got this 20-year bond out of treasury to help finance ongoing deficits. this debate kashkari is tweet being how it's not qe, the c conspiracists and repo, when the fed decides to step back if they ever do, what is the market going to do then >> if the market's at a point where it's looking for a reason to say okay, we've done enough, then it matters. i do think you have to keep going back to the idea that this market was up 25% off the low, in october, when the repo stuff started. it's up 11% and we also got the trade stuff in there as well a lot of people want to connect a lot of the dots and i don't think -- if people think it
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matters, it matters but i don't think that there's a way to draw true liquidity pipeline from one into equities. >> your point though, people believe it is, so -- >> it doesn't hurt, but by the way, people believe the trade deal that all it did is remove a friction point that was imposed on the market. it didn't get you forward really in any material way in the horizon the markets typically care about >> a couple of the stocks we should mention, the gap we haven't mentioned the decision to no longer split the company interesting in that. a lot of shareholders were scratching their head for some time, shares of gps of the gap are up a bit no, actually not doing much right now. did that news comeout yesterda before the close >> no, i think it was after the close. >> it was, okay. i wasn't sure. wanted to make sure if there had been a reaction. i wanted to mention dave & buster's it's small, but kkr files for
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the 6.3% position, total purchase price there of that position given the market cap is about $77 million. but what's interesting along with the 16% increase in the stock price is that kkr does in the language of their 13d say they will certainly consider taking actions concerning any extraordinary corporate transactions including but not limited to a merger, reorganization, liquidation, sale or transfer of material amount of assets, change in the board of directors and management it reads like an activist 13d. called kkr because they don't engaming in activism they were maim fame us for never engaging in what they would call a hostile. i'll take it for what it is. stock is up a lot. >> interesting it's been challenging days for dave & buster's past couple of squarptquarters, hi, seema. >> japan and south korea closing at a 15-month high, europe at a
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record high looking at the stock 600 up about 1%, all of this following's china's gdp holding to a 6% level, another sign of stabilization. home builders at this hour after a blow-away housing starts number the home builders have been outperforming the s&p over the past year. earnings will take in focus among some other home builders csx and earnings, the railroads operator revenue decreased 8% year over year in the fourth quarter driven by a double digit decline in coal exports. the coal industry has been under pressure in the face of lower costs, natural gas and concerns over emissions and that's pushed a lot of utilities to retire coal plants and seek cheaper renewable alternatives csx said it took industrial activity a while to cool off and will take a while to heat back up the stock is down right now. finally we've got an ipo on the
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floor today. phoenix tree holding, one of china's largest co-living platforms, rents and subleases apartments, downsized ipo at $13.50 a fair, well below the range of 14.50 to 16.50 and offering 9.6 million shares from the original 10.6 million shares chinese issuers had a tough year we'll see what happens now a trade truce at least for the moment do dow currently up 17, back to you. >> thank you let's head over to the bond pits and check in with rick santelli at the cme group in chicago. >> good morning, david you know, there is is a lot of issues that seem to bug investors lately of course the level of stocks is not one of them, but the level of rates is. why haven't rates followed stocks more closely? many times rates correlate with stocks rates go up when things are good and stock market goes up this time not so much. but it's really sparking to the data today look at the two-day chart of
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two-year note yields we had spectacular data on housing, 13-year best in terms of housing starts, and it popped up, right up to yesterday's highs basically, right up to unchanged, 157 it's now 156 it's down one on the week, it's down one on the day, because it closed at both at 157. now as you move to the longer end, which is really more economically driven, short end's more hampered by where the fed is with regard to policy, you see the ten-year not only challenge yesterday, it popped straight through it's now at 183, up 2 on the day, up 1 on the week and it is getting a nice bounce off of it, you see on the next chart the early december six-week lows on a closing basis, the day before yesterday. finally, the dollar index. like treasuries, yesterday's close and the weekly close last friday are about the same, so dollar index is up a smidge on the day, and a smidge on the week mike, back to you. >> rick, thank you very much and when we return, comcast
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shares hitting a new record high we'll get wall street's perspective on our parent's launch of peacock and what it means for the screaming landscape. strpt st "squawk on the street" will be right back new york state is building for the future of your business. with a nation-leading $150 billion commitment to infrastructure, we're creating state of the art, 21st century transportation hubs, constructing new bridges, bringing high-speed internet to every corner of the state, and committing to low-cost clean energy. with infrastructure built for the future, the companies of tomorrow can thrive here today. see your future at esd.ny.gov.
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shares of comcast hitting all-time high this is morning. the company revealing new can he tails about the forth coming streaming problem we are calling peacock. yesterday the service will launch by the way comcast subscribers april 15th, nationwide not until the middle of july. there will be a free ad supported option and two premium pricing tiers. here is nbc universal's ceo jeff shell about the company's streaming content investment >> i'm pretty confident when you provide all of this content with our proven ability to market and launch new products with symphony and what i think is a really smart strategy of taking light advertising and bundling to create this unbelievable experience free for consumers. this is going to be a very
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successful product and is going to be one of the key elements of growth for nbc universal going forward. >> let's get reaction from the street, many of whom were in attendance yesterday rosenblatt securities bernie mctiernan and greg williams. what did you think in terms of them trying to carve out this idea they're not competing necessarily with all the current streamers but in a different area, given the ad support and free nature of the service >> that's certainly the case we walked away more supportive of the service than walking in peacock premium 24 million subscribers in the u.s. will have access to the service for free, another 16 million with charter coming on board and there's a high floor for the service, only $2.5 billion of opex commitment for 2024 that compares to disney plus at 4.5 billion and netflix 17 billion, next year going to who knows how high a lower ceiling as well.
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doesn't seem like it's global in nature, only 30 to 35 million subscribers by 2024. >> gregory give me your perspective from the financial side bernie mentioned some of the metrics there, 30 to 35 million subs is what they're hoping for within four to five years getting to break even. is that something that makes sense to you are you concerned at all about the spend? >> sure, i think that the break even is very doable. 30 to 35 million subscribers is doable it's free. it's about monetizing the advertising higher than say hulu does, because they said it's only five minutes of advertising so they'll need to do good targeted advertising in order to get a higher cpm as far as the financials and overall picture, they said that in december already, $2 billion investment breaking in 2024. not a lot of things that move the stock necessarily in the next few days. a lot of that information is already well-known >> bernie, a big question with a
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lot of the new entries, how much of it is a zero sum game how much of the new business is really just going to be trying to cover for what's being lost on a traditional side? for comcast, how does that shape through the model >> that's the biggest question with media companies media compn extend your reach and you want to go direct to consumer how much are you going to cannibalize the existing part of the business for the cable side of the house they only make a 30% margin on video so really broad band share gains is still a great story for the company going forward. >> greg, on that point, i mean, we're looking at new highs in comcast. i believe you have a hold on the stock. peacock is an important initiative, going to be taking some money, but what is your overall take right now in terms of where the company is in terms of the value the market is ascribing to it? >> last year the company performed in line with the s&p 500. we expect a similar performance in 2020. this first half of the year. peacock is really not going to be that -- as of yesterday we
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know that what we're going to get with peacock so now they're focusing on the other investments. investors are worried a little about sky, looking at the mobile, eventually going into and of course the healthy broadband market in the u.s. and comcast's ability to take advantage of that, which we're bullish on but these are the focuses now and peacock is now sort of i don't want to say -- we can move it aside and focus on sky and mobile >> bernie, what are you going to be looking for in terms of penetration of the service once it gets going? are metrics going to become important here >> yeah, and so a key question coming out of this is are we already at peak number of subscribers getting peacock premium for free because we know video subscribers will keep going down and broadband only going up but what will the attach rate be of flex boxes right now you only get the service for free if you are a comcast video customer or cox video customer and you have the flex service with broadband only with services like roku out
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there how will they make sure flex is an important part of the broadband only household >> taken all together, does it do anything to mute netflix' domestic subscribership? where does it play >> that is a great question. i think the biggest impact will be on pricing power. with disney plus coming in at a lower price than expected, apple tv plus, peacock for free, 24 maybe going to 40 million customers over time, that next big price increase could be a long ways off for netflix at least domestic >> are you in the school netflix needs some ad supported lower price product? >> i think it is going to be tough because it would be admitting defeat >> a u-turn no doubt >> exactly we have a neutral rating on the stock, $265 price. we expect revenue growth to substantially decelerate from 29% growth last year to 23% going to high teens and because of that we're putting a 4 1/2 times revenue multiple in 2021 revenue to get to a 265 target >> no doubt it is a different market place this year than even a year ago in terms of who is out there for netflix. >> one of the secret sauces for
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netflix was their distribution and now that ip streaming direct to consumer is now it is content that matters the most. >> bernie, greg, thanks to you both >> thank you >> be sure to check out our podcast and listen to the opening bell hour of "squawk on the street" wherever you get them dow up 32 and the s&p 33.22, less than 600 points from dow 30 k. when we started our business we were paying an arm and a leg for postage. i remember setting up shipstation. one or two clicks and everything was up and running.
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let's look at the nasdaq 100's best performer since the beginning of the year. tesla at the top of the list with a 21% gain. over 12 months 46% over six months 100% gain on tesla. "squawk on the street" is back in a minute. at fidelity, online u.s. stocks and etfs are commission-free.
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good friday morning. welcome back to "squawk on the street." on this busy friday, we weigh all kinds of things. a bunch of downgrades on stocks. some great eco data continues. a commentary from the likes of david tepper, dow 29,348 now almost half way between 29 and 30 k >> our road map this morning starts with more market records for wall street with the dow, the s&p, and the nasdaq continuing a strong start to 2020 >> plus, enter the peacock
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what comcast's new streaming service means for the already crowded field. >> and the tesla trade we'll speak to an early investor and former board member of the company about whether that stock can continue this amazing run. >> housing starts a barn burner this morning, industrial construction not so much we're about to get consumer sentiment numbers. >> absolutely. consumer sentiment on our january preliminary comes in at 99.1 now, that is a bit light on expectations only by 0.1 or 0.2 sequentially it follows what we were expecting, which was 99.3 but it is a preliminary read now, 99.1 isn't too bad the month before our 99.3 was 96.8 let's get into other issues i find interesting one year inflation at 2.5, that's expected inflation. last month it was 2.3. and the 2.3 was interesting because that was the second lowest read going all the way back to march of 2009.
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the five to ten-year inflation outlook moved up as well from 2.2 to 2.5 so they really have firmd up and finally our november read on jolts a big disappointment 6.8 million well below expectations it really breaks a string of very super solid above 7 million numbers so job openings and labor turnover is a bit of a disappointment but there was a positive revision to last month from 7.26 million to 7.36 carl back to you. >> thank you very much markets continue the record run then with the dow, s&p, and nasdaq all hitting fresh record highs. earlier cnbc got exclusive comments from the hedge fund billionaire david tepper betting on the bull market to continue he says we have been long and continue that way. those statements were echoed saying, i revealed a very bullish posture intermediate
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term since october when powell guaranteed he would not rescind the insurance cuts joining us to talk about all of that our guests. guys, happy friday good to see you. data has been, you know, a little mixed when you throw in some of the transports but sentiment is not so which wins out? >> i think sentiment wins out. and so really all investors, what we're looking for this year is some stablization and economic activity off of a very weak period we had last summer and policy that continues to be supportive and that's what the markets are applauding this environment of relatively modest growth but stabilizing easy policy accommodations and no real inflation is a good backdrop for risk assets, it was last year, and continues into this year. >> when we're looking at the -- all the horse riding that was being done this morning, when we were out in squawk box there was a lot of i like riding this horse. i'm going to keep riding on the horse and not get off for a
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while until it's slowing down. the work horse is the american consumer are you at all disappointed by what is coming in? greg, maybe you'd want to weigh in what is coming in on the job openings and labor turnover report or for that matter that you've got some consumer sentiment that looks slightly disappointing? >> yeah. i don't think the data has been weak enough yet to derail this bull market but i do think it is worth looking back to the first quarter of 2018 where we saw a very similar situation in the market, that the market had an extremely strong january and then we had a very volatile shop sell-off in february i agree that the data thus far this year has probably been supported for the markets but valuations are very elevated after a very strong performance last year. >> you know what i think is important to note, though, is that over the last few years we've dealt with some policy uncertainty and we've dealt with some policy tightening that has been disruptive to markets my view is that we're an environment of better policy certainty so federal reserve
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clearly. we're not necessarily all the way there on trade but the market doesn't care about good or bad cares about better or worse. incremental improvements there so i don't know if we need to line this up with prior years. prior years we dealt with policy shots and i think this is going to be a year of relatively modest growth but improving policy that should continue to be supportive. >> so is a policy shock now a balance sheet in contraction >> well, a policy shock, you know, it was really, let's call it more of a mistake so the federal reserve tightening conditions inverted the yield curve, right and brought inflation expectations down meaningfully so it's not me saying it's a mistake. it's the bond market saying it's a policy mistake and so the federal reserve had to back that off every time we've had corrections in markets in this cycle, whether it was 2015 or 2018, it was because of tighter policy and a flattening yield curve and so the message in that is in a world of 2% gdp growth just
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don't do any harm. and so long as we don't do any harm these markets tend to go higher you're right the trend is our friend. >> you know, greg, it's interesting because you actually think we're moving from a late cycle trend back to a mid cycle trend. this gives momentum to all of those who would be persistently pollyanna-ish? >> i certainly agree the fed potentially being on hold if the data comes in a little bit better than we'd expect it, a lot of it is stable growth environment, one that can be constructive for risk assets i think with valuations so elevated it does leave the markets vulnerable to shocks it's not clear what those shocks are going to be but, clearly, we're in an election year and the democratic primary is on the door step now, super tuesday, at the start of march these are catalyst ts that could be potentially significant >> is that why we're seeing defensive doing so well? >> yeah. i think the defensive rallying has been kind of an interesting leg of the last bull market and one that's not going to be
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sustainable in a risk on environment. i think if equities continue to make new highs i don't think the more bond sensitive sectors such as the staples, utilities, can continue to out perform. >> where are the opportunities right now? >> i think in this -- in an environment where growth is going to be modest and policy is going to be supportive, you should expect rates to remain low. you should expect growth cyclicals to out perform the more value oriented cyclicals and if policy continues to be supportive in the united states, then that leads to a more stable currency and some opportunity in nondollar assets, which is why you're starting to see some activity around emerging markets and asian equities and so i think the opportunities continue to be in u.s. growth and in the emerging economies. >> u.s. over other parts of the world? because we've heard from a couple jpm today, sees u.s. slowing to one seven even as the globe holds two five, right? they're saying the era of u.s. exceptionalism has come to an
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end. >> let's make sure we know what we're talking about. are we talking about economic activity or out performance? in this type of a world where the global economy is relatively slow you'll look for companies that can generate true, top line revenue growth irrespective of where they're headquartered and that has primarily been the united states because we've been a strong dollar environment. in a more stable environment you can start to look to those companies outside the united states that are generating true revenue growth some of them are in china. some of them are in europe i don't think the u.s. growth companies lose their leadership. i just think that leadership broadens to include some of the nondollar asset companies. >> greg, in terms of, we've been through this re-evaluation process the last couple months as we really cleared the deck on trade, so is 20 now the ceiling? where is that window where are we right now >> i don't think you really see a ceiling in terms of valuations that's one of the things that makes time in the market so difficult. so i think where the data continues to be there is no
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reason multiples can't continue to expand. but i do think whenever we do hit some potential piece of turbulence where it is political, a deterioration in the data, the higher the valuations go the more volatile the market could be and the sharper correction you could see. the. >> we stay irrationally bullish until peak positioning and peak liquidity inside a spike and beyond yields and 4% to 8% equity correction. do you see anything wrong with that game plan >> no. you know, this idea these cycles will end with euphoria, i don't think we're there on euphoria. talk about peak positioning. we've actually for ten years been in an outflows environment from equities over ten years in aggregate. a lot of money going into bonds. if you look at the gallup poll something like 57% of american households own equities in any form down from two-thirds in 2007 and so that's why you hear a very unloved environment and from what i hear more americans played the lottery last year than invested in equities.
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your odds on the lottery are 1 in 200 million your odds that the market hits a new high since 1957 is once every 16 days. so i believe we're in a secular bull market. secular bull markets last historically around 14 to 18 years. what we're quibbling about o were last summer was the cyclical are we heading into a recession? recessions can happen in a long-term secular market i don't believe we're heading into a recession then we get down to is this economy decelerating and we want to get defensive or is it stabilizing and we want to own the growth oriented cyclicals and think about nondollar assets with the latter i believe we're stabilizing. policy is supportive should be good for equities. >> a lot to talk about obviously regarding supportive policy and the future, guys have a great weekend see you soon >> thank you >> u.s. home building in a surprise surge to a 13-year high in december suggesting the housing market recovery is back on track amid low mortgage rates. let's get to diana olick i said it's a surprise but it
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was a stunner. >> reporter: yeah. it was huge numbers for home construction to end 2019 december housing starts jumped nearly 17% for the month and we're about 41% higher annually, the highest level since december, 2006 break it down by type. single family up 11% for the month to the highest level since june, 2007 multi family also surged 32% for the month, which is surprising given that we're already expecting to see big deliveries of finished apartments this year that just means builders were bullish on rental demand in the second half of last year now, going regionally starts were strongest in the midwest and south. single family was weaker in the west and northeast i don't see whetheather playinga huge factor since these are seasonally adjusted. builder confidence is around the highest in 20 years likely due to low mortgage rates which came down last summer as well a strong buyer demand and tight supply of existing homes for sale building permits which are an indicator of future construction were down for the month both
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single and multi family. single family was almost 11% higher compared with december of last year but multi family was 3% lower annually. in general, though, single family builders are finally getting into that entry level product, seeing very strong demand for more affordable homes. we saw a big jump in mortgage applications to buy a home last week and a huge jump in the applications to buy a newly built home builders ended the year without a lot of backlog and so we are likely to see strong starts in the coming months, given all this demand. back to you guys >> diana, we spent a lot of time talking last year about the fact that there was such a demand for these entry level homes and yet the builders couldn't make it work financially because the materials cost too much and the labor costs too much is that moderating somewhat? >> labor costs are not moderating that is a big problem still. but material costs are coming down a little bit but mostly you're seeing the builders go a little bit further out you were seeing a lot of demand in the big cities and in the
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close-in suburbs builders are now going a little further out again trying to get the cheaper land but also building more bulk and also very entry level, that is no particular specialties in the home you're taking away the granite, taking away some of the special perks we were seeing in homes back in 2016 and 2017. just basic level entry homes and they're able to sell those now and are actually really starting to ramp up production on those >> all right diana, thank you very much well, still to come right here phoenix tree holdings you may have seen it making a debut here at the new york stock exchange we'll speak with the executive chair later on "jasquawk alley." here's a reminder.
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click, call or visit a store today. cnbc's parent nbc universal unveiling its streaming service with access for comcast subscribers on april 15th. nationwide launch will be the middle of july julia boorstin has a look and how it fits into the streaming landscape as well. julia? >> well, david, comcast shares up about 1% right now hitting an
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all-time high this morning on the unveiling of peacock, which is looking to be a new version of broadcast tv for the internet age. rather than competing with netflix. now, peacock free will have 7500 hours of content new and old shows, series and films, some live news and sports it will have fewer ads than tv, less than five minutes an hour the premium tier with twice as much content will be available to anyone for $5 a month with ads. comcast and cox customers get peacock premium for free an extra $5 a month makes the service ads free >> we think there is a clear opportunity to create a streaming platform that we own and operate to give people what they want when they want it but allow us to monetize we also think we're uniquely positioned to take advantage of this opportunity and play a leadership role in the on demand streaming world. >> nbc universal forecasts between 30,000,035 million active peacock accounts by 2024.
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they have not announced their international roll out plan yet. that is less than hbo max's forecast at 50 million global subscribers and disney plus's of at least 60 million global subs by that same year. now, to put those numbers in context, netflix has over 860 million global subscribers but web bush's dan ives says we believe given the massive content library, sports properties, and distribution content that the numbers are conservative rosenblatt calls the advertising innovation a win-win for consumers and advertisers. while analysts are largely bullish guben heim points out it could have a negative impact on the tv subscriptions back over to you >> which keeps declining of course and the question is just what's the rate going to be each year, julia. you know, it is interesting the inclusion of news and sports here i was trying to get a little more information on it it's not as though you'll be
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able to get msnbc fully streaming or cnbc. they're going to cureate but at least help people who have an interest in things beyond entertainment get a taste as well >> absolutely. i think it is really interesting they will curate it. not like a live feed of cnbc but some live content. i think that is one of the factors that really makes this totally different than you would get from a netflix or even from a hulu, because the idea that they could have some live news coverage especially in the leadup to the presidential election when people are so interested in news and you look at the fact that they'll have some live coverage as well of the olympics, that's going to be a real factor. >> julia, thank you. julia boorstin joining us now, wells fargo analyst, she covers of course comcast jennifer fritzsche
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what is your overall take in terms of what you thought about the presentation and the impact it is going to have in terms of overall and streaming and specific to nbc universal? >> thanks for having me, david i thought they showed up and they showed up and showed why they will be a relevant player here i think that they did a very good job at articulating how this ad supported premium content is as they called it kind of a white space for the streaming world. and they certainly have the content catalogued to compete effectively. >> and what do you make of the targets? i mean, in terms of both subscribers, it does appear it is going to be a domestic service for at least the time being. are they being realistic in terms of who they can reach and are they being realistic in terms of the pool they're seeking given there be only five minutes of ad per hour >> yes i think both i heard the prior speaker say this, i think kind of the buzz
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coming out of that conference from both is that the guidance they offered was extremely conservative especially the revenue number i mean, to put it in perspective the 2024 outlook they gave for revenue from peacock is 2% of their total revenue. 30 to 35 million customers given how many eyeballs and customer relationships and touch points they have i think is extremely do-able. >> given their focus on advertising here, do you think that this is an attractive platform for advertisers >> yes i do i thought that, you know, versus some other streaming kind of coming out parties we've seen here, i thought comcast did a very effective job of kind of connecting the dots and the math around the advertising opportunities. i think with the targeted ad of five minutes per hour, you know, you're going to have a captive audience and i think that they alluded to this, that will offer a premium pricing from these advertisers and, certainly, they
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announced a very blue chip name of initial sponsors and my sense is there were more incoming calls to get those sponsorships than outgoing ones made by comcast. >> jennifer, you point out our parent company's chair of ad sales pointing to a study that said 80% of people will choose a tv service with advertising for a lower price. so i guess the question is why isn't that done more often >> good question i think that's the opportunity that comcast sees as again this white space area to target now, of course, hulu does have advertising and people are paying for that. but i think this is -- this target, the time amount of advertising can't be emphasized enough, because it's small five minutes in an hour. it's not -- i think in that case advertisers don't see that the consumer will think of advertising as an irritant for lack of a better word. and i think that's the
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opportunity they have seen >> yeah. i would add to that by the way in speaking of brian roberts and steve burke yesterday prior to the presentation, they were amazed that nobody else had moved into that space so to speak, that white space at least they feel that they've identified, jennifer, over the last 18 months to two years that they've been trying to figure out exactly what to do they were relieved that they sort of feel like it's still available to them right now in terms of what they can do there. do you believe, though, overall, that it will help to erode the existing subscriber base amongst comcast or nbc cable network customers? >> i mean, that is the needle they have to thread. but i think what comcast has effectively done is kind of have more touch points for that customer base that they have and i think peacock will be yet another example of that. so i think, you know, for the people who have not cut the cord
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and that's still a fairly large number, they will also get the service for free and it could be almost an add on to those services i think they said this where the world is going, streaming, and that train has left the station and they have a role here especially from the content they already own the challenge they had before this is a lot of the content that they own was being monetized and profited by other streaming services, so this corrects that. >> yeah, right on third party platform. youtube of course which they seem to be particularly focused on as opposed to the likes of a netflix. jennifer, thank you. appreciate your time >> thank you >> jennifer fritzsche. the top performing stock this year but can tesla continue its drive higher (janine) ghostbusters!... of course i'd love to take an informal poll. i used to be a little cranky.
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joining us now is tesla investor, former company board member, steve wesley great to see you today >> good to see you >> as it stands now, 20% of tesla's shares are trading short. do you think that this $500 share price is unsustainable >> well, look. only time will tell. but i have a hunch tesla is going to continue to do well here's why first, they're growing it to 20% a year while most auto companies are shrinking. second, the firm has 18.9% gross margins, higher than most other auto companies in the world. third, moving international very quickly in europe, already the number one selling car gas or electric in the netherlands, norway, switzerland, number three in the uk. they've moved into china very quickly. they're expanding the product line if tesla has had cylinders you'd have to say they're hitting on a lot of them. there is a bigger picture here
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it was said by the head of volkswagen he said, look. all the others are being valued as auto companies. tesla is being valued as a technology company they're on track to do $30 billion this year, 3x multiple if it's a tech company, that's a bargain. >> so part of the drive definitely is this performance in china and the opening of the shanghai factory and, of course, we all saw elon musk's jubilation there is the dancing premature when you consider the facs somethinge neighborhood of 400 plus electric vehicle manufacturers coming online? >> i don't think so. here's why first, china is the biggest auto market in the world. there's a huge demand there. second, china has extremely acute pollution problems i believe the demand for electric vehicles is going to be huge don't forget, the tesla model
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"s" which was the primary vehicle they're selling here has a miles per gallon equivalent of 123 miles per gallon what's not to like about that? i spent a lot of time in china and we've done business there. the chinese consumer has traditionally, historically been very brand conscious they love apples they love the high end brand names. tesla, like it or not, is the dominant brand in the electric car business i think they'll sell very well there. i think it is going to be the must have vehicle in the country for those who can afford it. >> to the point you made earlier, steve, about being a technology company, what are your expectations when it comes to autonomous driving? the idea of robot taxi fleets available and tesla being the leader it is funny i hear different things about their data capture because they do have so much data available given the cars that are on the road but it's unclear to me how much they're actually keeping to help a.i. and to help improve and continue
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to sort of fuel what would be autonomous >> look, you put your finger on the key issue of the age one, part of the reason so many auto companies may be in trouble is we're moving toward a world where more people are doing ride hailing. my kids who are 18 and 20 don't need to buy a car. they're happy to do ride hailing. the question is how quickly does it become autonomous mr. musk has done something some people say is rash others say it's brilliant. we'll see. but he's moved quickly to put cars with increased autonomous driving features on the road i believe they have captured that data. it's ultimately in the auto industry going to be about who has the most data, will be able to produce the most, safous autonomous vehicles. with the cost of light r coming down i think you'll see autonomous vehicles on the road in the next four to five years far sooner than anybody thought. if tesla ends up leading that
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race $500 could look like a bargain. >> four to five years autonomous you know, again, the value here though that the market is ascribing to the company just based on auto sales, you are a believer it is going to be about a lot of other revenue sources i assume autonomous being one of them perhaps battery technology another that justifies this current market value of roughly let's call it $90 billion? >> it's all the things i've said simply put they are growing faster than virtually any other auto company in the world. they're going to more markets, more quickly they're now coming out with a full line of vehicles. we all love to laugh at the cyber truck because it looks a little crazy but they've already taken 250,000 orders some of that obviously has the power of the brand i would step back a little bit and this comes directly from what the head of v.w. said i think it is a speech everybody should read. we're in an extraordinary age where there are two issues that kind of linger above everything
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else, rise above everything else one, people have concerns about global warming two, everything we deal with from our homes to our cars are becoming digitized tesla has put a vehicle on the street, 123 miles per gallon, equivalent range the most digitized car in the world. the first car company to really realize people wanted more from a car. it may end up being the most powerful digital mobile device in our life. we all think that's the phone today and it certainly is. in the future will it become the car? if so, tesla may have the full position if so, tesla may have the pole position >> also if we can put a plow on the cyber truck it might be very useful in our driveways as well. steve, thanks for joining us i appreciate your perspective. >> happy to be here. let's get a news update now. sue herera has that back at hq >> good morning, david good morning, everyone here's what's happening at this hour ayatolla coc
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ayatolla is delivering a friday sermon in iran for the first time since 2012 as the country grapples with the fall out from the public anger of the accidental shootdown of a ukrainian plane. he lashed out at western countries dismissing american leaders as clowns. 11 u.s. soldiers were injured at a missile attack in iraq last week and were treated for symptoms of concussion but initially the u.s. said there were no casualties swedish activist greta thunberg joining hundreds of people in a climate march in switzerland. she delivered a defiant message to global leaders. >> to the world leaders and those in power, i would like to say that you haven't seen anything yet you have not seen the last of us we can assure you that >> you are up to date. that's the news update this hour i'll send it back downtown to you. >> all right, sue.
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thanks for that. when we come back the bernie sanders economy. what the presidential hopeful's policies could mean for your wallet "squawk on the street" returns t mutes a new reuters poll shs
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bernie sanders climbing in popularity now tied with joe biden among registered voters. robert frank joins us now with more on senator sanders' proposed plans and what they could mean for the economy we spent a lot of time on elizabeth warren perhaps not as much on mr. sanders. certainly looking forward to hearing about this, robert >> david, the numbers are even bigger bernie sanders' plan for health care, the green new deal, and jobs would more than double total federal spending sanders has not released the total cost of his plans but a new estimate by the former treasury secretary larry summers finds the plans would cost over $60 trillion over the next decade more than the total spending of
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52 trillion. it would be two and a half times bigger than fdr's new deal and federal spending as a share of gdp would grow by 20%. that would be the largest since world war ii now, you compare that to senator elizabeth warren's plan. that would increase spending by 12% of gdp buttigieg by 2%. and biden by 1%. sanders' big ticket item is of course the medicare for all plan that would cost around $30 trillion over the next decade. his green new deal adds another $16 trillion add to that his jobs for all plan that would give every american who wants a federal judge a job. that adds another $7.5 trillion. on top of that you've got the plans to cancel all student debt universal preschool. and universal child care all of which expected to bring it up to that $60 trillion number now, sanders has proposed about $20 trillion in new taxes that would be on the wealthy, wall street, corporations unclear, though, how he would
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raise the remaining $40 trillion no comment from the sanders campaign on the total costs of the taxes and plans. guys >> those are some big numbers, robert >> yeah. very big >> very, very large. okay thank you. robert frank with us to weigh in on the sanders' plan as well as other news this week such as the u.s./china trade deal, i got another question as well on the comey stuff, jim, i want to hear from you it is jim stewart, "new york times" pulitzer prize winning columnist, author of "deep state" and first we always refer -- you spent a lot of time reporting on taxes and plans what do you think when you hear something like that? >> well, i will say the sanders plans are bold i mean, they are so far from the status quo they are very far out there.
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apart from that, it is the philosophy of this i think is really a very profound difference between him and the other democrats and certainly trump. take the free trade. he is totally hostile to free trade. he wants to use tariffs and other protectionist measures but his goal is purely protectionist, to support american workers and american industries it is not to use it as a weapon to increase free trade which is what trump has sometimes said he is trying to do like with china. he is very pro worker but has no interest in the american consumer put aside the taxes. the cost of the protectionist plan in terms of higher prices is something i don't think people focused on at all and he certainly has no interest in share holders. he really wants to soak corporations i sort of wondered, okay he puts in all these protectionist policies maybe corporate, american corporate profits go up. but then he wants to take all
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that money and hand it over either to the federal budget or redistribute it to the workers and the corporations it strikes me as a very 1930s view of the world where it was much more worker, owner, labor, capitalist it's like it doesn't seem to take into account like the small businesses, entrepreneurs, startup. i mean, the economy is so much more diverse and dynamic and the classic kind of laborer pool is much smaller it seems to be getting traction. >> why do you think that kind of plan is so appealing he'd now be in the lead among potential democratic voters? >> i think the rhetoric is resonating he says there is too much inequality the rich are too rich. a lot of people agree with that. i honestly can't believe they really focused on the details of how you take that rhetoric and translate it into policies that would significantly change that. by the way, i think the jury is
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certainly out on whether this would help i mean, other countries have gone down this path mostly in developed europe and looked at the future and backed off from it they're like they are backing away from the wealth tax, from state ownership, you know, the means of production. he is doubling down on that. i think many voters have just not gotten down into the details. >> sanders has been sanders for years. >> yes >> i wonder if you think we got republicans in the white house running trillion dollar deficits if that has cleared some runway for him to be even further out on pole arty at least of policy. >> i think that's correct. i mean, republicans have given up the balanced budget argument and oddly enough now the democrats are saying trump is blowing up the deficit there is a sort of prevailing sense that deficits don't matter i haven't heard sanders quite say that yet but when he starts getting pressed about where do you come up with the extra 40 trillion i expect we will hear something, oh, well, it's clear
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we have the borrowing power. we're investing in the future. i will say another spending thing he is big on and hasn't gotten much attention similar to trump though trump hasn't done anything with it is infrastructure he has been calling for a trillion dollar investments in infrastructure which i actually think is a prudent use of government spending. >> yeah. i mean, we have our national debt what, about 23 trillion right now. somewhere in there we're adding to it very quickly. >> we are. but this would be a scale that is so unprecedented. >> yes >> i just can't believe voters have really focused on this very much and i am kind of surprised democratic rivals haven't been hammering him more people tend to lump him and elizabeth warren together in this stuff but they are philosophically very different compared to sanders, warren is a red blooded capitalist >> that's what she says she is >> well, she knows she's got some pretty redistributionist policies going there, too
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they both jumped on the wealth tax but again, philosophically, sanders is way, way to the left and any candidate i've encountered in my lifetime >> is bloomberg making any headway with all of the millions he is spending on advertising? >> well, some, i think i don't see any surge in the polls but i think the bloomberg strategy has always been keep the awareness out there and when all of the chips fall, people are going to realize i'm kind of the only possible candidate who can beat trump and then they'll come around. i think he is playing a long-term game the spending is not aimed at the polls today or tomorrow but super tuesday, down the road, when we see more and i think, yes he is maintaining that awareness level with the money it's expensive look, he's got the money >> jim, i did want to come back because i mentioned some of the news of the day. it is not involving this at all but the justice department potentially investigating leaks from jim comey but there's a reference in the
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"new york times" to your book. >> right >> where you apparently did disclose some russian document >> that's right. >> what do you make of this seemingly out of nowhere investigation of comey and this document that they're talking about that you wrote about in your book? >> well, i did write about that document i'm kind of surprised it didn't get more attention at the time i'm hearing rumblings that it was, you know, the references in the book that got the justice department interested. i don't know if that's true or not. but i think it's very worrisome that at this juncture there seems to be this concerted effort to get comey on something. and i don't want to comment on, you know, where information came about for this particular document it remands a very heavily classified -- remains a very heavily classified document. the origins of it are still very classified but there's a lot of people who know that this document, knew about this document, knew the role it played i reported it in the book that andrew mccabe went and gave
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loretta lynch a briefing on this document there were a lot of people in the previous justice department who knew the existence of this when you start going at a leak, i will just say generally speaking as a reporter the top person in the agency is rarely, if ever, the source of this kind of information >> are they trying to weaponize the department of justice? >> absolutely. i think that pattern is now very, very clear how many times has comey been investigated over the memos, over the other supposed leaks? no prosecution now they have another one going on him they still have mccabe under investigation. who knows who else they're looking into there i do think it is a worrisome sign that, how politicized the justice department has become and how vindictive they are to try to go after the fbi who i still think, yes, they've made some mistakes here and there they're human beings but they did, you know, heroic service to the country they still are doing it. >> jim, thanks
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a story we'll keep an eye on as well of course given your reporting on it. jim stewart. as we go to break take a look at shares of gap today. erasing gains it did generate since the close of trade yesterday as they canceled plans to spin-off old navy as a separate company dow is up 63 points. i can. the two words whispered at the start of every race. every new job. and attempt to parallel park. (electrical current buzzing) each new draft of every novel. (typing clicks) the finishing touch on every masterpiece. (newborn cries) it is humanity's official two-word war cry. words that move us all forward. the same two words that capital group believes have the power to improve lives. and that, for over 85 years, have inspired us to help people achieve their financial goals. talk to your advisor or consultant for investment risks and information.
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market expert jeremy siegel has a warning for investors after the record rally resqwkn e reet" coming up. through the at&t network, edge-to-edge intelligence
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gives you the power to see every corner of your growing business. from using feedback to innovate... to introducing products faster... to managing website inventory... and network bandwidth. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence. welcome back to "squawk on the street." rick santelli here live on the floor of the cme group if it's earnings season it's rebecca corbin 2019 pretty good year. we're already up what, over 4% in the nasdaq and it's only january. the respondents seem to have done pretty well in 2019 highlight their top answers and highlight where they were a bit light.
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>> institutional global investors 1.2 trillion in equity assets feeling very good about not fourth quarter 2019. that's baked in. feeling really good about 2020 according to survey respondents 73% are expecting 2020 outlooks, guides fro guides from corporates to come in line to be better than 2019 results. if i look back, there was something big everybody was talking about, recession your respondents didn't put that at the top of the list at the top of the list was trade and just the u.s. in general and considering inflows in the u.s., they were correct. what about recession and all these issues moving into 2020? >> recession was pushed off the table. the majority of investors think that's 24 months out they have got their arms around slowing growth corporates have done an exceptional job managing expectations heading in, downshifting from the second quarter, third quarter, they have a job to be conservative coming into 2020 u.s. trade split investors were split on whether that would be resolved by u.s.
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presidential elections they got a boon. they have been in cost cutting mode that's going to be helpful to margins. talking about margins, investors are expecting rezil je resilien markets. there's nowhere else to place your money so we have money coming in to equities, we have corporations managing expectations. we have a tremendous amount of free cash flow, they're expecting big free cash flow that has to go somewhere it has to get reinvested, has to go to buybacks, m&a. >> ultimately it's going to it be a picker's market obviously your respondents are looking at various industries trying to handicap where the opportunities are. your final thoughts here is the
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elk sh election coming up and trump and the administration, are they figuring into to the respondents answers? >> 97% of investors do not think the hearings will lead to trump's dismissal. i will tell you the only thing that probably could bring these markets down is trump not getting re-elected >> who would have thought that a few years ago. thank you for joining me in chicago on this earnings season. david faber, back to you >> all right thank you. now time to send it over to jon fortt, another man who does not wear a tie every day i'm only fridays, jon. >> welcome to the club it's a little like the wework of residential apartment living in china. it's not profitable. it's fast growing and it just ipo'd here at the new york stock exchange we have the executive chairman coming up on "squawk alley." it easy and seamless.
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welcome back to "squawk on the street." we want to call your attention to technology and the s&p 500. one of the best performing sectors out there over the past year look at that out performance the gap between the s&p 500 technology sector and the s&p overall is 24 percentage points. a huge move. but not every single tech stock out there has been doing its
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fair share and participating check out these three stocks that have underperformed over the course of the past year. dxc is down 43% during that time span juniper networks down 12% in that span. f5 also down 11% as we talk, carl, about the tech stocks leading the way higher, some of them have lagged you wonder whether traders and investors at some point will look towards some of those underfunde underperformers to see if they will catch up to the broader market >> thanks. we do want to mention a quick programming note do not miss our sara eisen making her return to cnbc live from davos, switzerland. she'll be reporting from the ground with ceos of u.p.s., philip morris and micron we cannot wait to have sara back it will be another year where clarity of central banks will be a big forecuss
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>> sara who? >> sara eisen. >> just kidding. that would drive her crazy looking forward to her being back very much. all right. coming up on "squawk alley," a public debut at the nyse the executive chair of phoenix tree holdings will join us after the break. dow is up 41 our retirement plan with voya gives us confidence. so we can spend a bit today, knowing we're prepared for tomorrow. wow, do you think you overdid it maybe? overdid what? well planned, well invested, well protected. voya. be confident to and through retirement.
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. good morning it's 11:00 a.m. at comcast headquarters in philadelphia, it's 11:00 a.m. on wall street, "squawk alley" is live ♪ ♪ ♪ good friday morning. welcome to "squawk alley." i'm carl quintanilla more record highs today as the ru

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