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tv   Worldwide Exchange  CNBC  April 23, 2021 5:00am-6:00am EDT

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it is 5:00 a.m. on pennsylvania avenue in washington, d.c. here is the top five at 5:00 the tax man cometh president biden planning to rollout tax hikes. potentially doubling capital gains tax. markets nervous and watching we cut through the noise what it means for you and stocks with historical data keeping the pause in place or rolling it back out soon. a member of the cdc committee on vaccines is here to talk j&j. chip crunch.
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intel in the red following the latest results as the new ceo warning of a long semiconductor shortage. and insider buying is back the top five stocks buying up. this week shows there may be something about a train car that's magic that's a hint. it's friday, april 23rd. this is "worldwide exchange" here on cnbc ♪ good morning, good afternoon, good evening. welcome wherever in the world you are watching i'm brian sullivan thank you very much for joining us let's get to it. to the markets and your money. after declines of what we call the april surprise yesterday afternoon. reports the president is set to propose more tax hikes including a potentially record
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high capital gains rate of over 43% for those making more than $1 million per year. that would be a doubling of tax rates. keep in mind, capital gains rates have never been that high, even in the go-go '70s dow down 321 futures are turning around investors have had time to digest the tax idea and hit the sell button. wall street is nervous and we are starting to get commentary as people have had time to think. ubs out with a capital gains hike of the level could cut s&p 500 valuations by up to 7% any hike would impact high growth stocks. technology stocks. keep in mind we learn from eamon javers yesterday
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technology stocks are the biggest money lobbyists in washington, d.c. we meththought it was around seo 230. we know another reason why they are throwing tens of millions at lobbying firms and folks in congress technology names could be hit hardest by any change in capital gains. futures are slightly in the green. stocks end the week in asia mixed. japan is coming dudown they lost ground chinese markets were higher. in europe, all major averages are down, but not down by much let's jump into it on this friday that is your top story the president's reported plan to raise capital gains taxes on those with incomes over $1 million. bertha coombs has more on the proposal and what we know and what we don't.
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bertha >> reporter: brian, the white house's apparent plan to raise taxes on millionaires is part of the plan to overall the u.s. economy. according to outlets, president biden will seek an increase in the tax on capital gains to as high as nearly 40% from the current 20% for those americans earning morning more than $1 mi. the plan will be released some time next week in a joint address to congress. the move by the president is expected to go to funding his upcoming american families plan which is expected to have a price tag of $1 trillion that measure would aim to help u.s. workers learn new skills, expand subsidies for child care and make community college tuition free-for-all it would be spreparate from the$ trillion funding package the proposal would make good on
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president biden's campaign promise to require america's healthy households to contribute more as a percentage of the income the capitals gains tax is important to wall street since it dictates how big a chunk it collects for those earning at least $1 million in new york or california, rates on capital gains could climb above 50% when coupled with state capital gain taxes. according to the tax policy center based on the biden campaign platplatform, this wou raise $370 billion over a decade brian. >> about $37 billion a year, i guess. not a huge sum of money. >> that would be the money >> you wonder. you talked about it at the end the tax ideas in new york.
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potentially impact and increase in income tax. >> consider now you only get the 20% rate if you hold a stock for more than a year and you are not churning if you are churning, you are paying effective income tax on capital gains. it really impacts the highest earners and they don't get that sense of a savings on longer-term investments. >> sure. it wouldn't be equity. it would be owning a business and variety of things. it might be subject to the capital gains tax as well. maybe more than a doubling it's a big number. if you are a realtor in florida or texas, bertha, or tennessee, a no-tax state, you are licking your chops bertha coombs, see you in a few minutes. let's talk more about the tax plan and get one big and
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rare single stock pick from your next guest dan brewer is the chief investment officer of palisades investments. your job is to grow your clients' wealth over time. stock markets can go up. even when capital gains rates go up what do you make of the proposal >> you know, brian, i was thinking about that. we take a very long-term approach to investing. wez h we have a lot of clients who pay substantial taxes. if you pick the right company and focus on companies that have certain characteristics, it really doesn't matter what they change the tax rate to if you pick the right companies, you don't have to turn them over
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very much. >> we have a chart up. i don't know if you can see it it is a little complicated and little wonky it is courtesy of etf trends it is the pink section which is over 30% the white is the s&p return by year dan, what it shows, without people looking at it at 5:00 and people saying what the heck is that it looks like my ekg if capital gains go up, markets can go up. what we look at is the lump in the middle the 1970s. the markets did absolutely nothing overall. the dow up ended up 1% it is sustainable. at a certain number, it discourages investment
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is that breaking the donkey's back number? >> this is the number that breaks the donkey's back still unsure equally important, it is a significant number when you look at it on a global basis. it puts us at a disadvantage from a capital standpoint. that's what i'm concerned with, with the initial proposal. where with we're starting and where we're going to end up, i have a feeling it will be a different place when coming to this topic when you raise capital gains by so much, there is less capital for reinvestment in other areas. >> dan, while we have you on, you don't rollout single stock picks. you are doing it for us and we appreciate it. you are the guy that breaks out a pick every couple of years you are breaking one out for us
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now. dhr. a meini ge in a way. what do you like about it? >> this stock, as you know, brian, we talk about small cap stocks will potter, who runs our equity strategy, this is his top holding in that strategy he has probably forgotten more about danaher. this company compounded wealth over an enormous period of time. it generates a lot of cash flow. it focuses on high return on invested capital really, it is a management team that has done extraordinary things with a portfolio approach to the businesses that they are in really, that's a very rare combination of a management team that looks at individual silos of opportunity within the business, but step back and look
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at the businesses as a portfolio as well. looking in two dpeimensions. i remember visiting danaher in the '80s they spun off several other publicly traded companies along the way. it has been an extraordinary wealth builder to our earlier conversations, if you can find companies like this, you can be extremely tax efficient by owning them you don't have to jump in and out of them. >> we like it. dan veru, palisades capital management dhr. a pleasure to get you on this friday, dan. see you soon >> thanks, brian you're very welcome. folks, we have a lot more to do on this busy friday. up next, your big money movers
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why one big toymaker is having trouble keeping toys on the shelf. crypto come down continues hundreds of billions wiped from the market bitcoin's latest slide we'll show you the latest prices. former press secretary and now tony fratto is here to tell you if president biden's policies could happen or is this just an opening bid? dow futures are up 50. we're back after this.
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welcome back time for a check on today's big money moevers all about chips and barbie and seltzer. intel is raising the company outlook for the year on booming demand for pcs data center chips is a big one intel's second quarter forecast is shy of estimates. all of this as intel spends heavily to get pack on track to catch up with faster semi conductors intel's ceo addressing that on "mad money" with jim >> the hole that we're in over the last several years is not as big as the one we had back in the 2005 timeframe the assets we have now in our process and product and packaging or software is much stronger boy, we are out to compete
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we will be aggressive. >> now gelsinger told jim the chip shortage which disrupted cars and electronics could go on for at least two more years. wow. stock number two mattel reporting a 50% rise in first quarter sales as american parents armed with stimulus checks and savings bought barbie and hot wheels trying to keep their kids quiet when they did not go to school and mom and dad worked from home stock number three, boston beer crushing first quarter expectation. that had more to do with hard seltzer and twisted tea. sam adams and dog fishhead beer
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saw declines. on deck, when will the j&j vaccine come back to america or will it ever an important conversation with a member of the cdc committee meeting today on just that we're back after this.
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the first survivor of alzheimer's disease is out there. and the alzheimer's association is going to make it happen. but we won't get there without you. join the fight with the alzheimer's association. the johnson & johnson covid vaccine remains off the market
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in the united states for the most part after a few cases of blood clots in a few people who received the dose. cdc advisory committee is set to meet today to discuss whether to recommend putting it back on the market this as other countries like germany accept the j&j vaccine and giving it out to their citizens let's bring in dr. wilbur chen dr. chen, it is good to have you on it is important to have you on do you anticipate we will see the j&j jvaccine given out in american arms? >> brian, yes. i think there is a willingness for us to use the vaccine. we did need to make an important pause to look at the safety information to consider the risks, but certainly there is a
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huge amount of evidence that benefits which outweighs the risk we will come up with a set of recommendations that everybody will be happy with >> how do you assess the risk, dr. chen i admit it you go through the numbers we don't know the denominator. the number of people and number of people with blood clots, you are literally talking about a lightning strike-type odds event of getting some tlhrombosis from getting the j&j shot >> we will get a better number today. last week, it was hastily put together information because we only learned about the events over the past 48 hours now we had the pause, we have been able to be more thoughtful and gather that information. actually, we will have a better denominator. we know that, according to the
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cdc's counting of vaccine doses, there are about 7.9 million j&j vaccines administered. now we will be able to get take good case count. it may not be perfect, but we don't need to have perfect to have actionable information. >> because, doctor, i don't need to to tell you, the criticism about it there is an extremely -- by the way, 275 people a day die of blood clots. that is from the american blood association. there are people who say we had 6 or 7 or 10 or 100. you are putting tens of thousands of people at risk of covid and a negative jousoutcoms well how does the medical community evaluate
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there is no such thing as zero risk >> that's right sdp >> how do we balance that out? >> let me give you perspective when we first launched the pfizer vaccine and the moderna shortly thereafter, we had the first events within hours. that caused a lot of concern fear, dismay, what have you. i think for us to communicate that risk out to the public and into the medical community is an important part of us being able to react and understand the risks versus the benefit i think that i totally agree with you the risk is very, very minor until we were able to fully consider that information, we could not contextualize that to the medical community and the public as well we will have more confident numbers today. that also engenders more
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confidence we paused for ten days hopefully that will not be harmful in the long run. we, of course, want to engender there is some confidence in the system for collecting safety information. >> overall, doctor, have we or are we close to reaching peak vaccine in many areas? we are in new jersey where i am. supply is out stripping demand in new york city, 25% of the population is only vaccinated fully. that blows my mind new york city got devastated i don't know what is going on there. do you think it is peak vaccination in areas already >> i think that what you are talking about is that there is a fixed amount of supply that is, you know, right now, the third vaccine is being taken off temporarily. it would be great to have that third vaccine return back to the
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supply our ability todeliver vaccines is also, you know, weighed against the huge amount of vaccine hesitancy. some people who are unable to access vaccines. again, that makes it difficult for us to eventually get those shots in arms. i think that is what you are dealing with as well >> yeah. we have to overcome that somehow. certainly they were looking at the covid vaccinations the vaccination program is still doing 3 million shots in arms per day. dr. wilbur chen. thank you for coming on. good luck in the meeting today i appreciate it, sir >> thank you very much, brian. all right. you're very welcome. take care. still on deck. just how much might your taxes, cnbc viewer, go up under president biden? you don't just have to be a millionaire. how many will it impact?
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we'll call him mr. tax robert frank crunching the numbers. didn't sleep stayed up. burning the midnight oil he will join us about just that next the first survivor of alzheimer's disease is out there.
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up the pressure on tesla over the auto pilot system that follows the latest deadly accident involving one of the cars. insider buying makes triumphant return with the top five stock buys. the executive choosing to snap up shares before making his exit a train pun. it is relevant to the name we'll bring it to you on this friday, april 23rd this is "worldwide exchange. ♪ ♪ ♪ people all over the world ♪ ♪ join in ♪ >> not just a train pun. a syntax reference choo-choo-choosing i'm brian sullivan thanks for joining us. let's get to the markets and your money after the declines of the april
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surprise, reports yesterday afternoon coming out the president may be set to propose more tax hikes a record high capital gains of 40% of those making more than $1 million a year that would be a doubling of the tax rate t the capital gains rates have never been that high even in the dismal 1970s when only thing good was rock music stocks fell across the board the dow down a bit futures are higher dow futures are up 60. had that instant reaction. i'll so sell panic button. 321 decline in the market ain't what it used to be at 30,000 you have to check the crypto it is not just any tax proposal.
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they are getting hit as well on this program a couple of days ago, scott miner said bitcoin could correct by 50% it is down big not just on that call, but bitcoin down 8% to $48,000. it is down ethereum down. litecoin, that's down. i won't show you dogecoin. that is all up to joe kernen those are big declines on this friday so those are your macro markets. let's get micro. after a phi few weeks away, your favorite segment is back the list of the biggest buys something to know ahead of time. we have seen a lot of selection
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selling by board members much more selling than buying. people will sell for a lot of reasons. normally they buy for one. they think the stock is going to go up. really pay attention to these names. as always, we are counting you down five to one here we go stock number five. app lovin. ticker app director buying in at the ipo. snapping up 2 $288,000 stock number four. bed rks, bath & beyond. the ceo stepping up for the purchase buying 4$489,000 and the next stock tu simple holding.
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a board member joining a couple of other insiders and buying $735,000 of tsp. and the two biggest? number two is new residential. ceo stepping up to make the buy in the secondary stock offering. the first in 2019. another secondary didn't time it well he is stepping in buying $1 million of the stock and making all of the train puns most insider buying this week. train carmaker greenbrier companies. the ceo stepping up and snapping up $2.2 million worth of gbx his second buy since announcing his upcoming retirement. big buy there by the outgoing ceo. those are the top five this week applovin
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bed, b , bath & beyond and tu sl and new residential and greenbrier. and big tax hike proposal by president biden. set to raise capital gains of 40% of those making more than $1 million. the majority in america make less than that and won't care. how much could the president raise from this? there are not many in the tax bracket. we think there are millionaires everywhere there's not. according to irs data, here is the percentage of income tax filers with incomes over $1 million broken down by group 242,000 households up to $2 million, 98,000 up to $5 million, 142,000. and over $10 million, the super
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successful, just 22,122. add that together and it is about 2% of all tax filing households certainly we would like to be in the groups, but is it enough to gen generate meaningful revenue. robert franks. robert, we want to show you the numbers. we always go after the rich. i get it a lot of our audience is in that group. it's a small, but successful group. they can afford more how much do we think this might really raise >> you know, the thing about capital gains is it is discreti discretionary. you can shift that amount of money. that is why what we see is important. a capital gains of 43% would be the biggest increase the highest rate in u.s. history
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and the highest in the entire world. biden's proposal of top rate of 39.6% plus the obama surcharge of 3.8% would be the first time capital is taxed at a higher rate than labor. it would only apply to those with capital gains income of more than $1 million a year. since the wealthy 5% includes the group you showed, that group owns 85% of the stocks any selling in advance of increase could put pressure on the markets as we saw a little bit yesterday. in 1986 under reagan tax overall, it increased from 20% to 28% over the sales of stocks and assets they surged 60% in the months before the tax hike. we could see some market decline in the short-term with that selling pressure, but a lot of studies find little correlation
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with the broader market direction and capital gains increases over the medium and longer term. it is not like an increase in the capital gains will lead to lower markets over the longer term the combination of state and federal rates is a record high especially in the top tax states in california, a wealthy tech founder, you pay combined 56.7% rate new jersey is 54%. new york city, brian, new york state passing an increase. the top combined capital gains is 58.2% with wall street in new york city, that is why the market shuddered yesterday. this is the tax that affects investors and markets more than any other.
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>> a lot to unpack robert, first off, back to the markets. guys, we have a graphic. i like to throw it back up a chart that shows the top end of marginal capital gains and s&p. it comes courtesy of etf trends. thank you. it is busy the s&p 500 return is in white the capital gains is the rate. the market is absorb higher rates. that's true. in the '90s, it went up. this chart shows the lump in the middle lump in the throat of investors. that's the top rate in the '70s. we know the '70s was horrible for everything but movies and music. it is not a question, robert, of raising it you know the politicians will get out and say the markets will deal with it stop whining, rich people.
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it is how much they pay. not a raise, but raise to where? >> yeah. it is a great point. you introduced the segment with revenue. that is important with capital gains. as that chart also suggests when you can shift and again capital gains is your decision to sell an asset which is not like income where people get income on a regular bases that is out of their control capital gains in 1986 and 2012 was a big increase in 1986, a 60% increase in capital gains realization prior to that increase that was only from 20% to 28%. now we are going from 23.8% to 43%. so, that sale rush before the increase, if it happened, it has to pass congress, would be massive. it is tough to look at history and say it won't impact markets.
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we have never seen a rate increase this high or rate nearly this high >> it is just the latest in the string ofrobert. most people are not millionaires it seems like every proposal is tax the rich let them do their fair share that is fine except when you tack on all this stuff. we know people are not paying the marginal rate. the effective tax rate in middle class income i love the middle class. 3.5% believe it or not. you can make a lot of deductions the cap on state and local tax deductions that was crushing for blue states what i find odd is this is targeted at blue state people. that's the point you are going after your voters? >> that's why the push to repeal is going to be tough on the one hand, you say you want to tax the wealthy to pay
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for it and on the other hand, you say you want to give them a billion dollar tax windfall by repealing s.a.l.t. this is going to drive that migration from high tax states to low tax states as much or more as s.a.l.t. you start to put the rates together and remember, capital gains. a lot of people just report that capital gains once a lot of people in that top .1% get that because they sell the business one year and they will move to texas or florida before they sell their business and report that income that will drive the migration and the revenues won't be as high because people will front load before the increase we always see capital gains collections go down in the years after that >> or like with the rbi yesterday. collect legal taxes owed which
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is upwards of $500 billion a year due to the irs. they simply don't collect. that will pay for the school and kids plans robert franks, thank you very much let's talk about this and a guy who may be in the bracket. if this could happen or high reaching opening bid in an effort to negotiate down tony fratto. tony, to robert's point, you are champing at the bit just to get on your new company will be known as palm beach strategies incorporated you are set to announce your move from the corporate headquarters from d.c. -- i'm kidding -- kind of you are a bus obusiness owner you may get crushed? >> actually, we have an office
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in new york now. sully, i live in new york now. you know, we see that 60% hit potential is really significant. you think maybe i should move to texas before this goes into effect we going to talk about portfolio investment and markets your chart is awesome. the thing we don't notice and doesn't show up on the chart those are allmature companies. this is an incredible infrastructure for investing in early stage companies. angel and investor and p.e. and others the equity value of the companies investing is something like zero. when i started my business, it was zero it is worth tens of millions of dollars now if i sell it i'll hit at nearly 60% as robert said founders of the businesses get crushed. we say why do we have a long-term capital gains rate we want to drive that
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investment have we done that in the united states there is no place in the world like this where we get whacky ideas and innovative ideas financed by risk capital you want risk capital. this is dangerous to say, look, we will not kill the golden goose. we'll milk it for a while. >> tony, this is a hugely important point you are making the politicians will get up in front of the camera and say the rich people need to do their fair share they pay a low are tax rate than their secretary. that is inaccurate we are talking about effective rates. they use marginal. that said, there is a difference between the hedge fund bro in greenwich making $20 million a year by pushing stocks around on a screen there are guys like you, and many others like you, immigrants and borrow money from family and quit jobs and take huge debts to
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risk building their slice of the american dream no guarantee of success. no guarantee of income maybe years without paying themselves an income in the hope they build a business that they can some day sell or pass on to their kids or make a living. that is what american business is your point is these kind of rates are not just do your fair share. it is discouraging that person from leaving maybe a good job to no income and taking a risk for their family to build something better for their kids. >> look, you know, i say that myself we're a small business we did that. i worked for 12 years. my first office was starbucks. free wifi and coffee you build all of that equity because that's what you want to do you want to grow something and take a chance on it. you can fail i tell you as an owner, every single day you know your equity
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can go to zero every single day that can happen it doesn't happen like that when you have a job you want people out taking chances. i think back to 1998 you and i are old enough to remember this well i remember google coming along and the two immigrants who, you know, were going to give us another search engine. what idiot invests in another search engine? we had 20 at the time. people invested in that and believed in it and it takes off into a global company. we want more of that we should value it and not call people names for taking those risks. >> yeah. it is well said. we often talk about millionaires and billionaires we don't talk how they got to that level the millions of people, by the way, who probably failed along that way tony fratto, thank you
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hamilton play strategies for now. good luck to the pirates they need it thank you, tony. let's get -- tony's from pittsburgh if you don't know the other top stories outside of the tax policy proposals bertha coombs. tell us something else going on for this friday. >> reporter: we're still going to talk about washington democratic senators richard blum e blumenthal trying to take action against tesla. the lawmakers are sending a letter to the nhsta and asking the agency to determine the exact cause of the crash to better inform future legislation around driverless systems. china's central bank is
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working to take control of ant group's lending data according to the financial times the central bank wants ant to turnover the data to a state controlled credit scoring company run by former executives of the central bank. delta announced it agreed to buy 25 more airbus a 321planes the order brings back delta's purchase to 125 p5 planes from airbus they are expected to be delivered in the first half of next year. brian. >> bertha coombs, thank you very much. from airplanes to this it is not every day you get a live rocket launch this morning is special. it is happening. let's get a live look now at kennedy space center in florida. spacex launching the second only
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operational crew mission to international space station he this launch is critical as it reuses the falcon 9 rocket bringing spacex closer to one step closer to fully reusable orbital space flight it will dock at 5:09 a.m. eastern time tomorrow. >> liftoff >> "endeavour" launches again. three astronauts and two crew making their way to the international space station. the vehicle is pitching down range. on the first stage providing 1.79 million pounds of thrust. hearing good stages so far
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>> key plus 30 seconds into the second rotational crew mission on board dragon and falcon 9 falcon 9 >> wow that is some cool. spacex four crew members. three nations. headed to the international space station. reusable orbital space flight. that falcon rocket will touchdown on a barge in the ocean as the crew makes its way to the iss that is just cool to see and a reminder because we need it. we can still do really great things as a country and business people and human beings of all backgrounds, nationalities and whatever we can still do amazing things that is very cool.
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welcome back intel shares are under pressure this morning first quarter results beat forecast the company raised sales outlook for the year sales missed expectation and second quarter sales missed the forecast hard to sell something if you
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can't get it to the customers. stock is down 3% we are joined by joseph. joe, thanks for joining us >> brian, i believe in the long-term turn around. it will be a tricky year there are a lot of elements you have to navigate with the shortage of the pc market. that will be strong if n the fis quarter. i sect to havexpect to have a t upside >> you brought up a lot, joseph. i think i interviewed an intel ceo in 1998. they were on top of the world. intel inside that ding-ding in the
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commercial they were a beast. they screwed it up where did intel go wrong if you could say the biggest misstep? >> you know, i think they have a lot of manufacturing issues. that was a two-year setback. that makes everything look bad every product gets delayed not just the fact you are manufacturing late, but the product road map pushed back we will have to resolve that we have to get the products out on time. i think having a ceo with credibility with data center customers and credibility to hire the right engineers to get this turned around is a critical step it is a longer term issue. they have to work there way out of the hole. this company has a phenomenal history and a strong compass in you can execute in the market. they have seen the slippage the last couple of years
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i'm optimistic >> they had buyers based on the history. intel. it has to come back around the stock has come up the last couple years far less than most of the rivals, joseph that is the problem. leading to the peak 20 years ago. intel still hasn't gotten to the highs of 1999 or 2000 which sounds incredible. is gelsinger the guy to do it? he was on with jim cramer last night. he is optimistic can he run the business? >> i think he is really excited. this is his dream job. i think he is bringing a sense of enthusiasm back to the employees. i think intel has been a little bit demoralized the last couple years. he is bringing that enthusiasm back he is aiming at a wider scope. not just looking at the core
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businesses, but building new business i think investors have trepidation about that it will take time. there will be investment and i think it is very important you get the employees to be confident and enthusiasm built in to your point, he has to execute. he has a track record of doing that at intel and other companies that have a lot of credibility with the most important decision makers in data center and cloud. >> joseph, unfortunately, we have to wrap it up stock down a bit this morning. joseph moore of morgan stanley have a great day thank you. folks, wherever you may be, have a wonderful friday and great weekend as well. that does it for us on "worldwide exchange. if i'm not back on monday, alert the authorities. "squawk box" is next have a terrific day.
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good morning the tax plan rumor that shocked the markets. reports of a capital gains tax hike from the biden administration initially sent stocks sharply lower and recovered. we take you to washington for the latest. cryptocurrency in sell-off mode wiping out $2 billion in value from the crypto. intel under pressure the company sales stagnant despite the sky rocket market for chips. comments from the ceo pat gelsinger. it is friday, april 23rd, 2021 "squawk box" begins right now. ♪

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