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tv   Squawk on the Street  CNBC  March 10, 2014 9:00am-12:01pm EDT

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we'll get there. mac. i miss you when you're gone, when you come back, you're all over me. in my face. look how he does that. seven, six, five, four, got it. >> does it. >> join us tomorrow. thanks. "squawk on the street" is next. ♪ born on the bayou born on the bayou♪ good monday morning, welcome to "squawk on the street." i'm carl quintanilla with kelly evans at the new york stock exchange. cramer live on an oil rig in the gulf of mexico off to louisiana coast, faber's on assignment. jim, how's the bayou? >> beautiful down here. i'm on a rig, built in 1985, working for energy 21. probably find oil today for you. >> we cannot wait to hear more today, jim. unbelievable. >> thank you. >> hard hat shot alone. >> you like, of course?
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>> people heard louisiana and throughout it had something to do with true detective. >> where the initial scene was filmed yesterday. grizzly, on a former plantation, cool looking. >> can't wait for more, jim. good morning to you. futures off a touch as bull market officially turned five years old over the weekend. a light week for economic data's ahead but plenty of corporate news, including mcdonald's sales. nikkei down 1% as japan revised q4 gdp lower. oil, flat week but up more than 4% for the year. asian marks, down big so far this morning. sell-off comes after a slew of economic data including a bad reading on export. if things are so bad overseas, why aren't we seeing an impact in the u.s.? mcdonald's same-store sales numbers falling last month. the retailer blaming severe winter weather. numbers weren't all bad. we'll tell you some bright spots
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in a moment. a twist in the battle between ebay and carl icahn, after the company rejected his nominee's to ebay's board. icahn doesn't take rejection well. we'll bring you his response in a couple of minutes. jim cramer on the case when it comes to energy revolution. tonight jim will have a special show from the gulf, a region symbolic of how the domestic energy boom has brought u.s. manufacturing back to life and a powerful force in getting america back to work. set it up, jim. what can we expect today? >> well, for us, what we're trying to do is get a handle on how many jobs are being created, how this is part of the energy revolution. most of the revolution we hear about is onshore. we're offshore. we are on top of an old exxon field that was bought by energy 21 using new horizontal technology, to be able to bring this field back to life, carl. kelly, all very exciting. it's at the heart of what is happening in the manufacturing
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revolution in this country. really exciting. i renaissance. >> jim, i thought i read about how the oil rig count is at a high here in the u.s. lately. amid all of the tensions that we've seen with russia, the ukraine, more people than ever looking at our energy policy and saying, what more can we do to increase output for some of the parts of the world? >> well, i think not that far from here it's going to be the first export plant, this is -- an lng plant, by shineer energy, symbol lng. this is largely oil. a natural gas feel another -- it's hard to tell how far we are out, a couple miles out. most of what we're pumping is oil, goes through pipes, right to the refinery in texas. this is gasoline about an hour from now. >> wow. >> only takes an hour? incredible. >> amazing. jim -- >> that's how much -- we're
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offshore one hour. that's how i look at it. >> right. >> got it. >> jim, what -- in terms of tickers, what are the names you're mentioning the most today, in light of what you're doing? >> absolutely. it's energy 21 and that's exii, a terrific little company that is just literally doing work over fields using technology from halliburton, hearing from them. new corpses a company able to capture natural gas here, to make iron pellets cheaply for new core steal. we'll speak to governor jindal, creating public/private partnerships. u.s. and international companies have come down to this level. the price for natural gas for a lot of countries overseas three times what it is here. so it's a major advantage, kelly and carl, to be able to move manufacturing here versus every other country on earth except maybe in the middle east. >> jim can you give us a pview f
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when the governor's talking about energy policy, he's in a state that wants to increase output. other states are a little bit more sanguine about it some reeveners, big refiner states, your home state in fact. what kind of political hurdles do you think there are? >> well, i think it's case by case. remember, there's a process that is federal and state. we're on a -- this is -- this is land that the federal government regulates -- well, a platform that the federal government regulates seriously, particularly post-mccondo, the inspectors are tougher. obviously, there was a moratorium governor jindal was against that. it's starting to come back. right about recount, offshore and onshore. these properties work for one reason, oil is so high. you would not want to drill at these properties if oil were substantially lower. that's about natural gas. one of the reasons the recount's coming back up, natural gas went up in price, it's still well below what is the average world
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price. but it certainly advantageous for american manufacture glrz jarring to see the $5 figure not long ago. more to come. meantime, as we said, rough session for stocks in asia. shanghai composite down 2.9. chinese exports down 18.1% in february. japan's economy grew below the initial estimates of 1%. export data in china, lunar new year, skews the data to a large degree, but that's not what bulls want to see. >> no, what's interesting there's so much going on with export data. combine january, february, it it smooths it out. the year before there were issues with regard to marking up the value of the exports, wasn't as high. maybe it looks okay. but guess what? take a look at copper and iron ore and tell me what matters.
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so here ace country that's two-thirds, half the size of the u.s. economy. it's much smaller and had more credit growth. that credit growth is slowing. seeing currency declining. china's growth rate either has to slow or credit growth has to accelerate and most prefer to see the former but that raises interesting questions for the economy. >> copper, jim, down more than 1%. lower earlier this morning. you know, we got a light economic dal ccalendar here in state. does that leave us vulnerable to other news. >> i was surprised copper -- what i found interesting was that europe in the old days, when you were exports down, europe takes 25% of chine these export. italian production figures were high. look, if you have europe strong, you have united states strong, i
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am never, ever going to -- i'm heartened by the fact that europe is not taking it on the chn becau chin because china's down so much. >> look at what's happening with the euro. so strong, people talking about that currency going to like 1.40, maybe higher. can europe afford that? even though things look okay now, are we setting that region up for trouble in the months ahead? >> well, look, i think that europe, it's still coming out like we did. when you come out of their great recession you get good numbers initially. obviously they've got to be worried about the currencies. this is a good reason to raise numbers. so many companies hurt by the euro. a lot of other currencies very weak, it would be trif errific see our companies' numbers high into mcdonald's out with same-store sale figures for
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february. global comps down .3. u.s. doesn't 1.4, hurt by challenging industry dynamics and severe winter weather. asia pacific middle east saw 2.6 drop. nice bounce thanks to the uk. first consecutive global comp decline in 11 years. is this the beginning of a new, difficult chapter for this company? >> well, i know you know them better than anyone, because remember chipotle had 9% plus comp store sales. you have to wonder whether organic and natural doesn't have the z zeitgeist of our country. i'm worried about a secular decline. mcdonald's food is being viewed by younger people too much of the old food chain that people
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feel is corrupted. we're familiar with perhaps unusual weather patterns here. but you know to see the weakness there, i don't think a lot of people were talking about weather at issue. do you think tastes are changing globally for mcdonald's? >> the a huge issue. when you speak with chipotle people -- that's -- when you speak to them, what they are saying is there is a coming revoltion. a vegetarian dish. now, when i think of mcdonald's, i think of burgers, we don't -- people pefeel like where are th from? they have done great work to reinvent themselves but it doesn't seem like they've caught up with times. >> reports out today, testing out new breakfast pastries. even if you reinvented breakfast altogether, talking about a moving the needle a fifth of what you need to move overall,
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right? high margin business, but got to get people in for burgers, that's what that business is all about. >> yeah. look at starbucks, when they came in with plus seven comp. starbucks has a tremendous number of food offerings. seems blessed by the notion of natural and organic. this is something that costco -- you spent a lot of time at costco -- it's not a fad, it's what people want. one of the reasons costco had tough numbers but it's expensive. chipotle is two to three types what you pay at mcdonald's and yet, people still are willing to pay, because it's perceived as being better for you. >> we'll see. chipotle, i don't think they pay the yield that mcdonald's does, but that's a conversation for down the road. finally, i want to get -- >> it is -- i was going to say, carl, it's true that mcdonald's does go down on the numbers because of the yield. new chapter in the carl
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icahn/ebay saga, ebay rejected icahn's bid for two board seat mds t the billionaire investor says john donohoe cost investors are $4 billion by selling skr ining premature. the $4 billion is actually true. >> i know that david faber talked about -- a little bit how there was a change in intellectual property that came with ebay -- not with ebay, that got with skype when microsoft made the acquisition. it's not going away. a lot of people who when you look at numbers believe these two companies, these companies do not belong under the same roof. this is, i think, ongoing and ever time icahn squawks you see the stock ticks up. icahn creates value by being involved in a situation. >> what's interesting about the latest round the extent to which
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carl icahn is focusing on the $4 billion figure going back to 2008, what happened with skype and marc andreessen's involvement. you see prior examples to point to mismanagement. i wonder if dwelling on the past, which he does for 2/3, 3/4 of the latest thing that he's written before he gets into the case for spinning out paypal, is that a mistake? >> i just think it doesn't resonate. what people want is to try to figure out exactly whether you get 70, 75 if you split it off. we want to see paypal comps versus visa and mastercard. we want to know what the ebay web services is worth versus amazon. whether the growth market value of the general merchandise is going higher. we want fundamentals and breakup analysis. i don't know if we care about mud. the mud i see trying to get the
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oil out of the ground is more valuable than the mud he's slinging. >> how did you work out? picked up heavy rebar. >> drove me crazy. i got up at 3:30, i wanted to be able to do something, all i saw was true detective territory. i figured maybe not jog on my own, you never know what you'll come up with in the bayou. >> how do people stay fit when they're on those rigs? >> well, i don't know. maybe there's a place for calisthenics. two weeks on, two weeks off. oh, there they go. they get in baskets and you tend to throw up a lot. keeps your weight down. >> jim, that's a heck of a live shot. more to come this hour. also, when we come back, latest on a search for the missing malaysian jetliner. target has to submit documents to the government today. we'll talk to the ceo of martha
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stewart living. more "squawk on the street" live from post nine and the middle of the louisiana gulf in just a moment.
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welcome. massive air and see search for malaysian flight 370 entering
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the third day. the flight with 239 people on board went missing a few hours on its trip from kuala lumpur to beijing. euni eunice une joins us with the latest. >> reporter: kelly, families and friends are staying at hotel behind me, and the latest from here is that some of them are expected to be leaving tonight for malaysia where they'll be taken to the location of the aircraft when and if it is found. the vast majority of the people here have said that they are very nervous and reluctant to go to malaysia because they haven't been very confident at all with the way the airline handled the situation. they say they felt they weren't getting proper updates and worry about what happens on the other end of the flight. they said they're concerned they don't know the language in malaysia and don't know their way around. what was interesting today was that the relatives' anger towards the airline also was
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matched by their anger towards the chinese government. this disaster is coinciding with the national people's congress, a big yearly gathering of the nation's leaders. well, the relatives here have been complaining the statements of empathy that have been coming out from the leadership have not matched the action on the ground here. they have been complaining that officials haven't been coming here to express condolences and finally when some officials did come today, they were met by kret simple, a lot of the relatives were saying their response was too slow. since then, the government has made some stronger statements urging malaysia to step up efforts in the search and rescue operation as well as the investigation. the chinese said they've dispatched a working group to assist families there. and they also said that the chinese police have also dispatched a team in order to aid the investigation into the people and the identities of the
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people who were carrying the stolen european passports. one other point was that the chinese government did confirm today that no chinese passports had been stolen. back to you. >> thank you for that, eunice yoon joining us. it's cramer's mad dash as we count down to the opening bell live from the oil rig in the louisiana gulf. open down about 30. more "squawk on the street" straight ahead. ♪ for tapping into a wealth of experience. ♪ for access to one of the top wealth management firms in the country. ♪ for a team of financial professionals who provide customized solutions. for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit to find out more.
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the man♪ >> that's man right there, jim cramer, doing a mad dash from middle of the gulf of mexico. off the louisiana coast. an interesting day, jill, for boeing, not only the mystery behind that malaysia crash, but emergency landing of a dream liner in tokyo. reports of hairline cracks in 40 dreamliners still in production. what can we expect? >> well i think boeing has to be down again. down a percent and a half. boeing, what they're saying you don't need to worry about the deliveries. the deliveries control the earnings. now, this is -- we can call this problem plagued but every time there was an iteration before coverage there were always issues about with the boeing play. this is made by mitsubishi not by boeing. none that are out there are a victim of this. do i want to buy beauinuy boein?
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boeing working off the hangover being the best performer in the dow. i think you let it come in. i don't think there's a hurry to buy boeing. >> you're saying let it come in about a wider and wider number of names on the dow or s&p? >> i think that there are -- you have to be concerned, we heard a lot of stuff on "squawk" very good money managers saying the market's come too high. when you have bad news on a stock, it's more vulnerable. get a stock that's up gigantically like boeing, people say i'm going to ring the register. a lot of register ringing on stocks up big when we get bad news. we also have activists, the fmc split this morning, ebay. though stocks have been up, there's a lot of self-help, actives getting involved. if you don't have activists, self-help, your stock seem to be stalled here. we're up a lot, i know the s&p
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was hitting a high but i believe there's a lot of people saying, if i have a reason to sell, i'm going to take it. >> with that, jim, we'll come back to you in a moment.
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you're watching cnbc "squawk on the street." live from the financial capital of the world, opening bell set to ring in two minutes. a lot going on, not a big economic calendar, but we'll get glosser and evans today, treasury coming online. >> by the way, the back end of the week is one to watch. u.s. retail sales data thursday, ppi, so important, on friday. writing about the fed tweaking it's exit strategy. expectation inflation, that's the backdrop. >> fisher and confirmation hearings. >> also thursday. >>ed byy week if you're a fed watcher. richard fisher, on friday, made interesting comments about valuation last week, the market at eye popping levels in his view. >> so well-liked, i have to tell
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you. a favorite of art cashin and guys here. they like the way he talks, his view on the world. always pay attention to him. >> jim i don't know how you're monitoring analysts' moves there, but you are. you already got your eye on this move out of b of a on kb home. >> yeah. you don't see a buy to a sell. kb homes, a lot of california exposure, prices ran up so much there's a drop in sales. so, buy to a sell typically indicates this group has had it. now i have to tell you, the group's been okay, mortgage rates came back down, we have a nice move in terms of a number of mortgage originations. i say i don't want to be in home builders if i've got analysts shooting against them. there's a wells fargo downgrade, downgrade of all financials. we need this group to be high for we take out higher levels. >> yeah. one to watch. meantime, as we mentioned, bull market turned five years old yesterday. today, it's the anniversary of
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mark haines calling that bottom on the market. we just -- i tweeted the clip out. it's more amazing now when you watch. >> you've got to take a look at it five years ago today. >> we were up 180 when he said it. he said i think this is for real. >> right. erin saying, wait a minute, this is a big deal, people. >> unbelievable. once again, mark haines. >> mark haines was very much oriented toward whether there's too much downside pressure. used to call me, 9-1, when you have 9-1 sell to buy, make a move. we were off the charts sell going into that call a couple of days than influences the call heavily. >> there's the ball. look at s&p down here at big board, assurance, provider of specialty insurance projects and celebrating the return of the jesse owens international athlete trophy. >> talk athletics, it's whether
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phil jackson is coming to coach the knicks or not. >> well, check out the athletic brain on kelly. >> i saw true detective last night. >> that's a story, jim, this hbo go, crashing as people tried to watch the finale. does it move time warner at all? >> no. time warner loves to buy back stock with viacom and cbs, entertainment companies most aggressive standing underneath and include disney. there's a great article in the "new york times" about watching these documentaries. watching these -- the series, which i think are so well written, everybody knows that. but time warner's gained from that. time warner the biggest winner, that's a paid service. remember, gross margins guy n s gigantic. >> ubs takes price target on facebook to 90. they see pricing strength, in
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terms of ad pricing, lasting much longer than expected. the price paid per ad up 92% year-over-year. i don't know, you like the name. are you that aggressive? >> well, yes, actually, i think what happens is that 2016, 2017 stock looks cheap. i have to tell you, when we talk about people who say things are overvalued, what they're -- the subtext after you go through elon musk it's facebook. skeptics hated $19 billion bid. they hated how much money facebook's spending on whatsapp. facebook is extremely lucrative and move to mobile quickly. their whole business on fire. it's difficult to compare a company making money versus comparing a company that was having a lot of eyeballs, what we were looking at in 1999. >> jim, we can also talk about amazon in a second, especially interesting to compare it with
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what's happened in the past there. people saying that has a lot of runway. to stick with facebook for a minute, we're talking about a heavy advertising platform that appears to have momentum behind it. i wonder if the business is fundamentally profitable as ubs is arguing that it is, does matter if facebook spent $4 billion cash on whatsapp. >> great point. when you speak to companies that use facebook to advertiser talk about how the return on investment is terrific. they keep saying when we advertise on facebook we reap the right demographic. you start believing that this is going to start taking a lot of money away from other places where there's advertising. 660 billion market. i still think that google is much less expensive than facebook. but facebook has very aggressive momentum. google peeking at a conference, there's a bunch of conferences this week, no one's going to give you numbers but advertise
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on the net is still getting stronger. >> jim, big squeeze in some of the fuel cell names friday and today. plug, fcel, ballard. i wonder what you made of it on friday and whether or not this is -- can be sustained in any stretch. >> well, look, these are all companies that are -- that have tangential relationship with solar, you get one big contract from a walmart, people go crazy. when i look my twitter feed, all people want me to talk about is plug. that does worry me. you see that level of enthusiasm, tends not to be a bottom. but at the same time, if you can cordon it off, that's my thing, if you cordon it off. the more areas you add to that bubble the less conviction you have because obviously a lot of people are piling into a name that 4 they do not know or understand. >> jim you can't see it the chart for plug, looks like the chart for bitcoin at the height.
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i mean it's parabolic, frankly. >> a lot of pair ab bolic. there's raw enthusiasm. we don't want to see that. i've been spending a lot of time on companies that make cell phones to be more interesting that don't have a lot of earnings. another group people are piling in. these are bad signs. i'm not going to mince words. when you see something like plug and see something bad and you recognize thank heavens i'm on an oil rig 13 miles off the coast, nobody's able to get to me. try to get me you guy who are long plug, you'll never find me between the fog and 13 miles, i'm safe here. maybe this is the only place i'm safe. >> unless fuel celled power drones what happen about 3d printing names with "barron's" doing a takeout saying ddd could drop 80%. naming a couple of other related
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names tlep down, by the way, in early trading this morning. >> well, look, 3d systems, remember they lowered and they made the guidance after they lowered. stratus is probably i think the best business. this is a very easy group to take down because it was part of one of the great runs up. i'm always -- when you talk to technicians these are the most hideous stocks in the market. i think this area was so much in favor that they can fall further. again, these are real businesses. just overvalued. >> with that, jim, down 25 points. 1876 on the s&p. more with you in a moment. in the meantime, let's get to bob pisani on the floor. >> good morning. happy monday. and sort of a weak open right at open all ten sectors in the s&p were to the down side. weakest were industrials and materials names, because of what's go on globally. take a look at what happened in asia. china shanghai down 2.9% all night, major asian indices down.
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weak february export data, china has a trade deficit. i had to read it twice. deficit in china. that's how strange things have been getting. take a look at commodity stocks, big names, rio, vale, freeport mcmoran. copper down another 1.25%. it's not just copper. let me show you the other big base metals in the last while. you can see aluminum down 10%. zinc down 7%, this is in the last 12 months here. you can see in the etf, this is the dbb, a base metals etf, they own future contracts for copper, aluminum, zinc. that dbb is down 10% in the last year. a lot of activity in that recently. you can see that slow side to the downside. gainers and losers.
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fmc announcing plans to separate into two separate companies. alexion pharma to the upside. facebook. and edwards life sciences upgraded over at wells fargo. there are losers. boeing's here, that was that 777 in the malaysia flight. they are inspecting wings of undelivered 787s. ebay's down. they filed a preliminary proxy for their meeting. mcdonald's on the disappointing side. talking about the five-year anniversary of the bottom and remarkable call by mark haines. it's not the stock market is up 180% in the five years but what's not changed? that's beyond beeyields. bond yields are the same, 2.8%. 2.8% five years ago.
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we're 2.8% today. guys, what's changed? stocks up 180%, bond yields unchang unchanged? what changed is liquidity. a flood of liquidity out there and that's what the stock market has been reacting to by and large. i think earnings up modestly, but it's the title wave of liquidity that has made the difference between the stock and bond market. back to you. >> bob, thanks very much. on that note, out to the bond pits and talk to rick santelli at cme group in chicago. good morning, rick. >> what's changed, bob, everything's changed. $4 trillion balance sheet. where do we go? treasurely market wants to go lower in price, higher in yield but doing it at a snail's pace. i don't mean on the volume or participation, just distance travel. 2.79 unchanged from yesterday. now, let's look at the yield curve. we get good clues there. look at 2s versus 10s.
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but it is steepening a bit. unlike when you include the belly of the curve, which is the five-year. 5 to 10s, 5 to 30s, they're flattening, auger for a slow move or rise up, all things being equal. take a step back, look at year-to-date of tens i draw parallels with the dollar/yen. this is one issue that's calling for higher rates. traders are paying close to this correlation. if we want to continue to look at what's going on in europe and china, look no further than the stock market, whether germany's or china. euro versus the dollar. 28-month high against the greenback. something to contend with, pay close attention to future export/import numbers of the german economy. exports affected by the euro versus the dollar.
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>> rick santelli. more jim cramer from the gulf of mexico. later on, steve case will join us in austin with his view on the state of the economying activist investing and where we're headed. "squawk on the street," it's coming right back. it's a growing trend in business: do more with less with less energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations,
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breaking news. mostly telegraphed last week, filing for chapter 11 bankruptcy protection, sbarro. the latest chapter, kelly in showing how difficult it is for fast casual, for quick service in this case, but red lobster, quiznos, battles are multiple. >> point to what we're seeing across the restaurant retail space and saying it's weeding out weak links. sbarro's had the best pizza, struggling with costs. you have to have a different product. they're not liquidating.
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they're closing a bunch of locations. it doesn't mean the end of sbarro as you know it. >> jim has been alerting us for a while, overstored in retail and restaurants. more from the gulf. you spent part of the weekend interacting not just with rig workers but oil executives as well. >> yeah. we had jim brown, greatest title in the world, president of the western hemisphere, but for halliburton, not for the actual western hemisphere, and he's been talking about mature fileds. how to use american technology to do horizontal drilling which is energy 21 exxi is doing on this rig. finding oil where we thought we had run out of oil is one of halliburton's strengths, as is fracking. they do fracking in the future. one of the companies foremost in eagleford. the same formations you hear about that are making it so our continent is more energy independent.
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>> all right. jim. >> tell me how your technology has advanced. what can you do now you couldn't do then. >> it's similar to what happened on land, jim. if you look at really the change in the reserve base, how we went from peak oil a few years ago to now a growing research base, that same thing is happening on land withen conventionals it's happening here in the gulf of mexico. both with the evolution of deep water plays as well as getting more oil out of the ground on the mature plays. >> carl? when you speak to him, what they talk about, social, mobile, cloud. might as well be talking to all have ipads, all in the field, communicating with each other, trying to cut the price of how much it takes to get a barrel of oil out of the ground, halliburton is probably the foremost schlumberger, they probably duke it out a lot. a lot of halliburton people out in the gulf. we're 13 miles out.
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you can't get this stuff without using halliburton. they bought back 7% of the company last year. the stock's undervalued. >> more tonight an "mad" with halliburton and jim brown. when we come back, oil rig edition of stop trading with jim. "squawk on the street" will be right back. salesperson #1: the real deal's the passat tdi clean diesel gets up to 795 highway miles per tank. salesperson #2: actually, we're throwing in a $1,000 fuel reward card. we've never done that. that's why there's never been a better time to buy a passat tdi clean diesel. husband: so it's like two deals in one?
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comcastnbcuniversal. we don't know how he does it, but he's going to do stop trading from the oil rig. jim, take it away. jim, jim can you hear me? >> guys, look, a couple of -- what i think are interesting situations. carl icahn wants to break up ebay. fmc broken up this morning, that's important. >> yes. they're calling it one more member of the breakup parade. >> well, i guess we -- we made it almost through the whole hour
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without serious audio issues. fmc one to watch. i think he was going to mention cliff's natural. >> there are parallels between what's happening with fmc, rebound there, what could potentially be the case, if carl icahn gets his way with the company like ebay. amid the activity, just want to look at csd, guggenheim spin-off etf, a lot of attention for outperforming the markets since the bottom. down a tenth of a percent but that's the way to play the space if you believe in unlocking value. >> fmc, single-best performer on the s&p, up 7%. a quick break. hopefully talk to jim on the other side. are you still sleeping? just wanted to check and make sure that we were on schedule.
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because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) ranked highest in investor satisfaction with self-directed services by j.d. power and associates. roll the animation again. stock trading with jim on the rig. jim, i don't know if you want to finish your thought on fmc. >> i thought fmc's doing what's write about shareholder. fmc technologies, that's a lot of technology underneath this rig, one of the companies that works with the plumbing, to be able to get the oil. cliff's is important. activists trying to bring up value in iron oret ore company.
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we'll talk to new corp. we're seeing a plant that they've made trying to make better iron pellets and you'll see thatting taking advantage of the natural gas revolution, cheaper to do the pellets here than in brazil. governor jindal from louisiana made that plant come here by making certain incentives. speaking to energy 21, exxi, a company able to make this welcome back alive, it's an old exxon well and halliburton, instrument in the energy revolution. >> no one has been evangelizing, jim, on this topic, or more effective than you have. sounds like an amazing show. i can't wait to see video of you on the chopper, on the rig, doing things that we can't do live. >> well, look, it's very exciting here. the gulf of mexico is the biggest producer of oil. we talk about eagle general
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motors ford, utica, the action is still very much here. it's just not getting publicity. >> my favorite, people are tweeting, jim, about the hard hat, obviously, we are visual medium. they say it reminds them of the crazy glue guy when he glues his hat to the steel beam. >> you tell them safety never takes a vacation. >> what a show, right? the guy, only he can do this. >> even focusing on that sector, you know, you've seen firsthand what a boon it's been or the whole region. >> yeah. unemployment rate here is way, way low. look, most of these companies are looking to hire. halliburton, they want to hire people. they have too much work to do here. i've got to tell you, workers in other parts of the country looking for jobs, this is where the jobs are now. this is where you have to go. chemical industry, fertilizer, steel art industry, revitalized by the low cost of natural gas.
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>> thanks for a great hour. rolling with the punches. more jim cramer tonight "mad money" 6:00 p.m. eastern. we'll talk to the head of martha stewart living omnimedia about the target issues and documents they have to provide to congress today. you can separate runway ridiculousness... from fashion that flies off the shelves. and from national. because only national lets you choose any car in the aisle... and go. and only national is ranked highest in car rental customer satisfaction by j.d. power. (natalie) ooooh, i like your style. (vo) so do we, business pro. so do we. go national. go like a pro. became big business overnight? ♪ like, really big... then expanded? ♪ or their new product tanked? ♪
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road map begins overseas asian
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markets down sharply. why are we not seeing an impact here in the u.s.? the committee demanding answers from target about the data breach. did it know there was trouble before the doj warned it? we'll talk to retail veteran charles koppelman, how retailers deal now with this controversy. five years since the market bottomed but retail investors traumatized. more on that in a little bit. trouble in asia. poor data in china, sending the hang high market to five-year low. cnbc's chief international correspondent michelle caruso-cabrera back with more on that. >> the export date it. show you the bar chart which shows this unexpectedly large decline of 18% and when you compare it to what we've seen over the last several quarters, it's dramatic. steve liesman help me build this chart. steve liesman built this chart completely. look to the right, a dramatic
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decline. as you mentioned we saw a big fall in the change high market overnight as a result of this. big, big decline of more than 2%. why isn't the u.s. market acting, reacting more strongly to this? we want to add an asterisk to this export data because of the following. may of last year, the chinese government began a crackdown on what's known as overinvoicing. that means you're a company outside china, say build me 10,000 widgets but bill me more 20,000 instead because i need more capital into the country and china's capital controls prohibit me from doing so. so the one organization of the government figured this out, began a crackdown procedure, so that may be why this number year-over-year show a huge drop. by the way, overinvoicing happening in the reverse direction as well, wealthy chinese people try to get their money out of the country. there's the shanghai composite which fell as simon mentioned
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sharply overnight in multiyear low. residual effects. if indeed when you see export decline like that, worry about a slowdown in the chinese economy, you expect copper to be hit. so, in addition, so let's add another asterisk to what's happening here. beyond export data, on friday, remember, we told you about the first ever corporate bond default in china. not because chinese corporations always paid their bill on time, but there always had been bailouts when corporations had gotten in trouble in the past when it came to their debt. if the message from the government is bailouts aren't going to happen as often, you can expect less fewer financing deals and less debt. a lot of those deals, the collateral behind them, copper. so if you expect less deals, you expect less need for copper as a collateral, less purchases. it unclear whether or not we're seeing that immediately or people fear that's going to
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happen. but that's part of the big two-day decline in copper. >> one thing that investors are trying to figure out risks in the financial system in china. a big shadow in the shadow banking system and everybody's wondering whether the corporate default or om other carnage in the banking system could spiral into something serious. what's the latest on that concern? >> talking about beyond the geographic concerns of china, whether or not we would see a systemic affect across the world. we spent a lot of time trying to answer this question. there are two answers. the folks who aren't worried about it say, listen, china has trillions in reserves, they can paper over a problem very, very easily because they have money. they have a closed -- a closed capital account. in other words, they can shut down the walls and enclose their financial system very quickly. almost instantaneously. in theory, you don't necessarily have a big ripple effect. the bigger concern is, if you
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have a real slowdown, if they are popping a credit bubble, that is going to have implications around the world. >> we'll keep our eye on copper. the month it had in february, too, bear in mind. an important story. michelle caruso-cabrera. mcdonald's global sales for february down .3%. u.s. and asia saw sales declines last month. europe a bright spot. want more insight from jeff bernstein, senior restaurant analyst at barclays. it's good to see you, jeff. good morning. >> good morning to you. >> they mentioned challenging industry dynamics and mentioned winter weather. what was the overriding dynamic? >> definitely a competitive subsegment within quick service these days. mcdonald's is used to being on the better end of that, but over the past six months they've been losing share to their smaller, regional qsrs. everyone layers on the challenge, weather on top of
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that. >> from outperform, i'm guessing you see a way out of this box that they're in. what is it? >> well, a couple of things. one, european business, which is 40% of their global profits, you know, we see their trends getting better and the broader macro getting better. five straight mofrp months of positive comps. consider they have double number of units and each store double volume as a competitor, we expect they should be able to take back meaningful share in the u.s. business. >> that is going to require a large degree of cap x? they've spent a fair amount of money. >> we don't see incremental cap x above and beyond what they guided to for 2014. they've fallen short from a new product over the past year. they are keenly focused on turning that around this year. >> jeff, what happens as the u.s. economy in the wake of friday's employment report
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appeared to escape velocity and get a stronger economy? is that automatically good for the stock of mcdonald's or do you say, look, at some point this is a dividend play and if you have the yield on the ten-year rising, people might be tempted to sell to go back into fixed income and lock in their future cash streams from that area? >> yeah, it's a good question. i would think improving macro across the u.s. would be more positive than negative for mcdonald's. they would get back a whole lot of traffic they lost on that lower income consumer. they do get support from the best dividend yield in quick service and couple that with the lowest valuation in the restaurant industry now tends to lend a level of support for them here. >> comps get easier throughout the remainder of the year, i'm guessing? there they do, but easier compares haven't solved their problems so that's a challenge. >> what about higher wages? the president calling on raising the federal minimum wage.
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how much of that is a risk from mcdonald's profitability. >> it's a i risk for the industry. mcdonald's is a franchise. franchisees absorb the increase. on the nly. side, paying lower income more, those are the target customer, it should be net positive, might be more inclined to return to mcdonald's more regularly. >> jeff, and we'll what happened today. the yield is keeping it from declining further, as cramer suggested last hour. the search continues for the missing malaysian airlines plane that disappeared en route to kuala lumpur to beijing. our cnbc is live in kuala lumpur with us for the late of what can you tell us? >> reporter: so, day three is now closing to an end here. it's just past 10:00 in the evening.
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and the multinational naval force out in the gulf of thailand, south china sea, combing this vast expanse of water for any remnant of mh370 have so far turned up very little. the sole, compelling lead that the investigators had, traces of oil on the water two oil slicks, 15 kilometers long, the oil from the spills has been taken back and analyzed, and the results are negative. that means the oil cannot be traced back to mh370. and did not come from the plane. it's most lookly to have come from a ship. remember, there is a lot of oil and gas exploration, a lot of fishing trollers and other merchant vessels as well. most likely to have come from those elements as opposed to mh370. that's been ruled out.
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hope quite frankly here is fast fading. having said that, this operation -- it's and classified as a search and rescue operation, not disaster recovery by the authorities -- is still continuing. and will continue until debris, wreckage, any remnant of mh370 is found. and this is really essential. the investigators need to reconstruct this aircraft to determine exactly what happened through forensic analysis. many aviation experts that we've been talking to on air at cnbc asia throughout the day have been drawing a parallel to mh 370 and air france 447, the flight that went down in 2009 across the atlantic. in that case, back into 2009 the small pieces of debris found about a week after the accident, and the larger pieces, larger debris field found two years later that implies that this is
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very likely to be a very long, drawn-out, painstaking process, and obviously needless to say a painful one for those families, friends and relatives who had families a families and loved ones on that flight. the search continues. back to you. >> thank you for that. what is a very difficult story. for more on the developing story, want to bring in peter goals at the national transportation safety board who joins us from washington. peter, good morning to you. >> good morning. >> you heard sje talk about the possible parallels between this and air france. do they ring true to you? >> absolutely. there's two things that we know. first is that the ocean is vast. it's very difficult to find something as small as an aircraft. secondly, the radar data was very sketchy. so they don't know where to start. they announced earlier today
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that they were going to look at some land territory in vietnam to see if the plane actually reached land. they have no idea where the plane is. it's going to take weeks, if not months, to begin to narrow this search down. >> you know, in this country, peter, so used to watching the ntsb launch their go team, have substantive pressers within 48 hours. i mean, they're calling this an unprecedented mystery. would you go that far? >> i'm not sure it's unprecedented at all. we've had an increasing amount of transoceanic service. we know open ocean water searches are very difficult. there are technologies available that could track airplanes in these kind of dark spaces so that we would not have to have these long periods of agonizing search. you know, one thing commercial aviation can't stand is a
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vacuum. neither the manufacturer nor the customers can stand having a mystery about a major work horse aircraft like 777. they've got to get to the bottom of it and they've got to do it quickly. >> the other thing the industry doesn't like is additional cost. where do you stand on the technology, possibility you can continuously live stream critical data from planes while in flight to a satellite and then to the ground rather than having to retro actively look for a black box somewhere at the bottom of the sea? do we need to raise the bar here and demand greater investment from commercial airlines? >> absolutely. there are two technologies. one is live stream, the other is deployable flight data recorder that, if a plane goes into the ocean, the black boxes deploy, bow to the surface and pingers start activating immediately. either one of those
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technologies, one cheaper than the other, need to be employed, particularly with the vast amount of transoceanic service that the carriers are handling right now. we can't allow this to go on. >> peter, obviously the investigators there and the investigators we're sending want to keep all of their cards close to the vest. but how do you think they are manage the question of terror within closed walls? >> well, i think they're doing as deep a background check as they can on the two individuals who used false passports to see if there are any connects back to terror. malaysian airlines takes a hid for not using interpol database, as most other carriers do on every flight. >> malaysia had their hands slapped on that one. that's an important issue down the road. thank you for your time.
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today is deadline day for target to submit documents to the oversight committee when they first knew it wassinging hacked. ceo of martha stewart living, charles koppelman will weigh in next on what retailers and target should do now. no two people have the same financial goals. pnc investments works with you to understand yours and helps plan for your retirement. talk to a pnc investments financial advisor today. ♪ so our business can be on at&t's network for $175 a month? yup. all 5 of you for $175. our clients need a lot of attention. there's unlimited talk and text. we're working deals all day. you get 10 gigabytes of data to share.
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welcome back to "squawk on the street." broader stock market may be in the red but one stock that keeps pushing higher is facebook. the social networking giant hit a fresh record high of 71.99 earlier today. shares are helped along by ubs boosting its price target to 90 from 72. facebook, remember, already up 31%. simon, so far in 2014. >> thank you. it's deadline day for target to submit internal documents to the republican-led house oversight committee on the security breach. according to a letter sent to the retail giant by daryl issa,
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quote, anecdotal evidence supporting the possibility that target executives knew about the hacking onslaught before the department of justice officially warned them on december 12th. here to weigh in, charles koppelman, former chairman and ceo of martha stewart living and current ceo of cak entertainment which handles brand management for artists like jennifer lopez and adam levine. >> good morning. >> it's a very important moment for the target executive team because they have ran the whole show so far on the basis that they've responded, accurately and timely, at every moment since the breach on the belief that if they show that to be true, people will forgive them the initial data breach. >> i think it is important for those executives. but i also think that this a target-centric issue. yes, they have an issue, target has an issue. but i don't think that it's an issue that's going to spread across retail in general.
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>> why do you say that? >> well i think that once the target issue happened, other retailers are looking into their systems. i think the big technology companies are going to benefit from this. i think they're all going to be ahead of the curve. >> from outside, you know far more about this industry than any of us three sitting around the table, from the outside it looks as if they're behind. last week we got the first executive to quick target, beth jacob, chief information officer. it would appear, from the cv, she's not a technology person, came in as a junior buyer. retailers are not focused on the glee of complexity. >> they are now. that's my point. my point is they're bringing in the big tech companies to long at their systems, make sure this doesn't happen in their environment. this is a target issue, i think the other retailers are dealing with it and have been dealing with it since the target issue came about. >> over the weekend i was on
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sites buying stuff and they're asking me if i'd like to store my credit card details with them what planet are they on? a, they want me to store it with them and they could have it leaked? why do that? >> there's no indication that would make it more unsafe. >> i know -- you know i think what target has done is made us f more aware. i got a call from a credit card company from a guy wanting to verify a purchase and a guy asked me what's my number. i said, whoa, i don't think so. >> shopping online, they say would you like to store your credit card details what do you do? >> no way, i don't do it. before this, we might have done it. this has made us more aware of what's going on. >> so, if you don't see cybersecurity or security threats as the dominant issue right now if you say this was a wake-up call, what is? because there are is a laundry list of problems the retailers
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are facing now. >> i think that first of all, i think the weather is going to come and go, and i think you're going to see retail start to benefit from warmer weather. it's funny because restaurant's empty, they blame the weather, not the chef. i think in this instance with retail, this was the weather. i think that those retailers that have great offering and have terrific brands and decent environment are going to work. online, clearly, growing in leaps and bounds. and most of the good retailers are spending money on building their online service. they are also, which is interesting, looking at the consumer who is now shopping mobile, not really on the computer, on tablets, they're buying stuff and wanting to go to the store to pick it up, great for retail. it's kind of like a not amazon but come pick up your stuff at retail, they'll save on cost, they'll get into the retail
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environment by doing that. i think those are the things that are going to be beneficial for retail. like everything else, sounds simple but if you have a good product, good environment, you're going to win. >> a lot of the floor space is just not necessary now, right? these stores are going to have to get either gone or a lot smaller. >> well, they'll either be small or, gone, or have other brands that they now can put into their environment, or other categories that they can put into their environment. >> one last thought on the cybersecurity aspect. why would retailers want to keep that in house? why don't you like payroll, subcontracted all out to adp or the equivalent, they can take the liability, they can deal with it? hey if we've got a problem, it's yours to sort out? >> there was -- not to talk about a rival network, but 60 minutes had a great show about data storage. every time you look at taking your data and giving it to someone else to handle, you're opening up another pandora's
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box. i think, you know, if you can handle it yourself, that's great. i think the tech companies can help them do that. but at the end of the day, if there's one massive data storage place, we'll have difficulties with them, of course. >> times are changing fast, it would appear. thank you for coming in. >> my pleasure. >> ceo of cak. >> talk about the latest in the ebay icahn drama. ebay rejected the bid saying both nominees are unqualified, urging shareholders to vote against them in ebay's next annual meeting. icahn, who has been pushing ebay to spin off paypal, says john donohoe cost shareholders $4 billion by selling skype prematurely. saga continues. boy, ebay digging in its heels rejecting board positions. >> would have been a shocker if it would have been the
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alternative. >> if you had trouble watching the highly anticipated "true detective" this weekend you're not alone. fans stuck on pause after streaming struggled to keep up after surge of users log on at same time. the squawk on the tweet. your turn to play detective. what was the real reason for the outage? tweet us, we'll get your responses later on in the morning. sarra's given us her review, not good. >> so much mystery, so good, i wanted everything figured out and i thought, kind of wasn't. >> a tough judge. you are tough. >> on the other side, i saw the rest of "house of cards," fantastic. >> i've watched it all. but i'm -- you're recommending the other one last week and i was ready to -- it's a golden age of scriptured comment. >> quite a ride to the upside
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since the stock market lows of 2009. you could have more than doubled your money if you bought at the bottom. even with gains, is the retail investor traumatized? of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. but when we start worrying about tomorrow, we miss out on the things that matter today. ♪ at axa, we offer advice and help you break down your insurance goals into small, manageable steps. because when you plan for tomorrow, it helps you live for today. can we help you take a small step? for advice, retirement, and life insurance,
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at a company that's bringing media and technology together. next is every second of nbcuniversal's coverage 0f the 2014 olympic winter games. it's connecting over one million low-income americans to broadband internet at home. it's a place named one america's most veteran friendly employers. next is information and entertainment in ways you never thought possible. welcome to what's next. comcastnbcuniversal. south by southwest full swing in austin, texas. tech news from big, unexpected sources. josh lipton, live in austin, texas with more. hope you have a photo of you and this big tech guru, josh. >> reporter: we do. wearable technology, certainly one of hot topics here at south by southwest.
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panels, discussions, competitions. i did speak to, no doubt, the biggest fan of wearable technology, here at south by southwest, who spoke to me about his use of fit bit. >> my goal is 10,000 steps. when i'm stepping, i can see my feet stepping. gets me back into great athlete mode. if i do a lot of stuff during the day, let me look, 4,000 steps, it's almost 12:00, i got work to do, forces me to get on the treadmill. >> reporter: now, remember, shaq is a fan of all things tech. en early investor in google. owner with the sacramento kings, incorporate a lot of technology into the games. i asked what the technology coming up that has him the most excited. here what happens he had to say. >> i'm anxious to see this new iwatch coming out. i'm seeing pictures, i'm seeing how they look. i'm anxious to see it. ipod, telephone, text messages,
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tweet, hearing stories of when it's coming out, we don't know. i'm just -- anything that's new and cool, i want to see it. >> reporter: so, tim cook and the gang in cupertino, hope you're listening. shaq is waiting for his iwatch. >> i think you should lose the blaser and embrace the hipster crowd in austin, texas, for the next shot. >> you got it. the cool thing about shaq, by the way, very, very easy going guy, very generous with his time. we'll have more with shaq later in the day on street signs. back to you. >> josh lipton, from austin south by southwest tech conference. five years since the market began its current bull run. there have been plenty of stories about how corporate mercury bounds since the bottom. how has the average investor fared? jane, what did you find? >> reporter: well, five years ago today, on this show, mark
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haines called it. >> however, i'm going to step out on a limb here -- >> this is, hold on, we've been waiting for this. >> i think we're at a bottom, i do. >> reporter: five years later on wall street and plain street, people remember how scared they were. >> the whole thing is, is that nobody knew where the bottom was. >> we were pretty close to a collapse of the financial system, you saw t.e.d. spreads going up to almost 5%, incredible. >> i started looking at the quarterly reports and i stopped look thiing at them. >> i had some lehman, that obviously went sour. >> terrible time for the country. >> it sucked. >> it sucked. >> every job people -- you go to work, people get laid off left and right, that was the worst part, the stock market affected people's jobs. not just people's portfolio. >> and that is key. when you lose your job, lose your house, like a lot of people out west, out where i live did,
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it's hard to invest in a bull market which followed. five years after the bottom, 55% of investors feel they are better prepared for retirement than before the collapse. 42% say they have since increased their contributions to their company retirement planned or 401(k)s and same numbers say they've increased emergency fund. i would point out, 42% is less than half, simon, guys. >> jane wells. jane, by the way, i heard you're not happy with me with my "true detective" comments. >> reporter: wait, switch gears. >> you're wrong. >> reporter: you say a lot of mystery remains? i felt every question pretty much was answered last night there they didn't answer the question about the daughters, why the daughters were -- >> easy, easy, easy. no, no, no no. >> he's about to get into it.
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we'll continue this. >> reporter: i think -- 0 all right. well i -- i wouldn't be the first time i'm not right. >> i like i'll debate you, your wrong. >> off air. >> thank you very much. down in the markets, down 85 points in the wake of that fifth year anniversary on friday. so where do we go from here? let's bring in the manager director at wells fargo and bill stone strategist with pnc asset management group. welcome, good morning. >> good morning. >> it seems to me that we've actually reached a very important moment in the markets that happens to coincide with the fifth an versery. that was the nonfarms payroll figure that came through friday, and the debate seems to have changed correct me if i'm wrong, away from the benefits of super loose monetary policy toward the cost and exit strategy when
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rates are going it right, when qe gets pulled back and hundreds of trillions of debt through the system. bill, where are you now? the dangers of the central banks pulling back? >> i think we had a pause in that. i think you're right in a lot of respects with that. a pause in that because we had some of the, say, a lot of it being bad weather slowing down momentum so you really saw, let's use the exact examples, ten year treasury up to 3% to start 2014, getting all the way down to 2.6. even, last monday 2.6%. now up near 2.8. i think you're right it has turned the payrolls number tells you, most everyone, including us, thinks it's a done deal, the fed continues to taper at the next meeting. i guess i am always worried about the end implications, but that being said, i think you have to keep an eye on, you know, how much velocity there is in money. there isn't that much yet.
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so i think -- i don't think we're at a point where you have to think that there's really some sort of boogie man right around the corner but i would say we're definitely positioned for higher rates going forward. >> brian, there's a lot of cushion about yesterday's bank of international settlements quarterly report. it's academic but it's got a lot of people talking, specifically the warning that comes out on forward guidance that says to the central banks, look usyou'r in with your forward guidance. people either have to recalibrate and therefore markets could fall, or alternatively, you're so worried about the markets falling you stay with rates lower for long somewhere build up far too much debt if you haven't got that so far. would you agree with that warning, brian? >> you know, simon, i think the big point here that is you have seen more transparency with central banks and i can see where they're coming from on that point. look where we are versus last year. we're were at 190 on the ten-year before the tapering
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became part of our ven knacklar. estimate that, remember, markets are forward looking, they are going to adjust no matter how much transparency's going to come in to play. look at reaction, we saw tapering at the end of last year. the market rallied on that news because we overcompensated thinking it was going to be worse than expected i think there is an expectation versus reality game played in 2014. your in that if the news is too good, it's bad news just from the future of the:stimulus that you're going to see coming down pike. >> bill, you mentioned the fact that rates have gone higher. focus in on the fact according to the bis and calculations $100 trillion of debt through the financial system around the world, a massive explosion of what's been cheap debt. what happens to that massive pile of debt as prices fall on it and people begin to take losses, bill? what is the implication of that?
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>> yeah i think you know, two things. on the other side i think of all of debt and some people think of the worry on that side of having debt. we have a lot of assets last week we got consumer net worth at an all-tie here in the u.s. investors, what to them when they show up having losses? it's a woiry in the financial crisis you saw large flowed into fixed income. that is a worry. offsetting thing to fixed income, again setting aside defaults i guess, maybe that's not really a great thing to set aside, but thinking about it, just in terms of, say, rates going up and that's why the prices might fall on bonds, they do have fixed maturities in the end, so that does limit some amount of the losses just from kind of interest rate rises. >> brian, taking out monitor policy, looking at u.s. equity
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market what point do stocks become too richly priced? where are valuations now versus historical standards to you? >> i think, first, the fact that you have a five-year anniversary. valuations are not where they were when the s&p was trading at 666 five years ago. valuations are reasonable relative to standards. this is probably not as smooth a ride in 2014 as we had in 2013, which by all shapes, intent and purposes a nice upside with any major pullback not taking place. looking out to the year, last year's success is a little bit of a headwind for us in this year. we continue to like urs markets on a relative basis to international and emerging and a stacked rank perspective but concede we'll buy on pullbacks. looking to rebalance now, you
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have seen outsized gained in capital markets and getting back to the bench market, that specific pie chart that you're allocated to, the key way to navigate these waters right now. >> it has been one hell of a run. guys, thank you. have a great week. right now, dow's down almost triple digits. a quick market flash here. dominic chu's at hq. >> share of industrial chemicals company fmc leading the way higher in the s&p 500. it's going to plan to split itself up into two separate publicly traded companied one focus on agriculture health care and nutrition, the other on minerals. split will help both companies pursue their own strategies. investors like it, up 5%, 6%. can't believe it's not gmo? yes, smart balance no longer using again ngenetically modifi products. later on, former founder, ceo of
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aol, steve case will join us from south by southwest. "squawk on the street" will be right back.
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smart balance, boulder brands going gmo-free, the latest company to do so. focus on expanding gluten-free products. steven hughes, ceo of bolder brands. thanks for joining us. for those of us who know smart balance, we know it's a healthy product to begin with. how much did you to change ingredients and sourcing to go gmo-free. >> well, going gmo-free is really a big deal. we basically had to go back and contract for the seeds and nongmo, we're converting 20 million pounds of oils from gmo
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to nongmo oil. significant investment and commitment. >> the question is, why? fda says it's safe. scientific consensus, it doesn't do any harm to have gmos. most of our food has gmos, 90% of corn and wheat, why do this? >> the debate on whether or not it's safe or not continues. 60 countries around the world require labeling gmos. what we've seen over the last couple of years the consumer is starting to ask, you know, why are all of these gmos in my food? like now, 92% of all consumers like to see gmos labeled. it's a big issue from a consumer standpoint. we think the consumer's looking for transparency, pure and simple ingredients. the debate about good or bad will be for some other folks and other times. we really think consumers are looking for this transparency in labeling. >> we've asked other businesses
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who have made this move what it does to pricing, sourcing. can you get as much as you need for the price that you want? if you have to raise prices, can you. >> what we've decided to do is, basically maintain our pricing. there are other things we can do in our marketing mix and such to maintain our margins. but it's important for the consumer to have a fair head-to-head comparison. the oil's 15% more expensive but there are other things we have in the pnl to keep this as a margin neutral play and give the consumer a parity price. >> is the supply different from the nongmo market? >> ts t. has to be isolated, you have to have separate silos, seeds. when you get it to the plant you have to have devoted tanks and lines to keep it 100% segregated. it's quite an undertaking. >> given the fact that is it quite an undertaking, are you planning to do it for other
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products, mayos, oils? this is just the start. >> well, we basically now the spreads that we're converting. we are converting the peanut better as well. working on the other products, mayo and cooking oil. i'd expect in the next 12, 24 months smart balance will be 100% nongmo there you say you're tapping into a trend here, trend is going gmo-free, we saw general mills do it with cheerio and tapped into the gluten-free trend. how 0 you know? how are you betting it's not just a trend, that it's a fad? say the atkins diet, how do you make sure it's a permanent switch in consumers' diet? >> we did a lot of investigation. but reality is, we changed the wheat. we changed the wheat so it was more glutenous in characteristics, gluten is glue in latin. we have created a wheat that makes bread cheaper, faster,
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easier to make but it's hard to digest. there's a real cause and effect here. this is a very inflammatory ingredient. i don't think there's any question this is a trend. i think that as you look now about 10 to 15% of the population is leaning into a gluten-free or gluten-reduced die tdiet. in the next five years, if it's not -- i think gluten full categories, they are either convert or go away. >> what does this tell us about the state of the consumer and preferences where that fits with the regulator? because in europe, for many, many years genetically modified foods were banned and there's a certain erosion on that but always soon from the poll significan politicians something down they wanted to do. why does it come back from the beginning, consumers have to work and pressure you to a small
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group of consumers who have to work back to what they're going to buy and what they won't buy? >> it's one of those interesting phenomenas. we've had several major initiatives in labeling at the state level. prop 37 of california, proposition i 225 in washington state, you saw coke and pepsi teamed up with monsanto and dupont to spend a tremendous amount of money to block measures from passing. and consumer started to ask, wait a minute, if pepsi and coke are teaming up with monsanto and dupont, what the heck is in my food? what has happened is the consumer didn't realize 20 25 years ago when we converted to gmo crops and now realizing they're in everything and that's a major issue. one that will be a major issue in the food industry over the next five years. >> we've seen elevated price of
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grains, ukraine crisis, the weather, higher prices of dairy. you expect those to be passed on to the consumer soon. >> we think in the next 12 months we feel good about positions in the next 12 months and don't expect additional issue. we've been dealing with an issue on egg whites which is interesting when mcdonald's and subways have gone to healthier options with egg whites it's driven the price up. we've been dealing with that. overall near term, we're in pretty good shape. >> thanks for joining us. good to see you. steven hughes, ceo of boulder brands. >> the online storage company box is on the cusp of a multibillion dollar ipo. we'll talk to the ceo live south by southwest about going public, why he thinks old school tech giants like microsoft simply don't have the dna in his words, to survive.
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at a company that's bringing media and technology together. next is every second of nbcuniversal's coverage 0f the 2014 olympic winter games. it's connecting over one million low-income americans to broadband internet at home. it's a place named one america's most veteran friendly employers. next is information and entertainment in ways you never thought possible. welcome to what's next. comcastnbcuniversal. dow's down triple digits although it's not the worst day of the month yet. on march 3rd we were down 153. of course the bears are saying the day is still young.
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even on the s&p we're back below 1870. and we'll keep our eye on this after obviously boeing a big part of the dow's decline today. moody's downgrades chicago's credit rating one notch putting it only three notches above junk. let's get to rick santelli in chicago. hey, rick. >> hi, carl. yes, this is a big topic considering i'm standing in the epicenter of chicago, i'd like to welcome moody's jack door, thanks, jack, for taking the time. >> my pleasure, rick. >> listen, as carl pointed out, you folks have chicago -- at least some of chicago's debt, we'll go over that in a minute, three notches above junk, s&p at a-plus, put out a report but didn't lower, doesn't have negative outlook. and there are about six levels above junk. so tell us what exactly you did at the end of last week and tell us why it's in your opinion a little bit higher rating than your counterpart. >> sure. well, we lowered our general obligation rating on chicago's
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debt to baa 1 from a3. and really the reason for that, rick, is -- >> what number do you peg on it? i get different numbers. i don't mean to interrupt, but what number do you peg? >> we adjust these figures basically to put everything on an apples-to-apples comparison by using a common discount rate. so the number that we have in terms of chicago's unfunded pension liability is $32 billion. and that is eight times its operating revenue. now, that compares to an average for the municipalities that we rate of about one time. so a very distinct outliar from most of the entities we rate. >> all right. it's still not junk, and whether it's s&p or moody's, the reasons seem clear, they have a vibrant tax base to draw from. but in the end you underscore the problem they're either going to need to cut spending or raise
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revenues. what does that mean in english? raise taxes like essentially property taxes or deal with the underfunded pension liabilities. in your report you basically say they really don't seem to have the stomach for it. can you comment on that notion? >> well, you're right. chicago does have a vibrant economy. it's broad and diverse. the third largest city in the nation. very large tax base. so there are a lot of different levers that chicago can pull, which is good news. but this pension liability's grown so outsized that really something will need to happen. and they do have options. and we're certainly not here to tell anybody what to do, but revenue raising flexibility is one of the things that they do have as a home rule entity within the state of illinois. that means they can raise property and sales taxes with only the approval of the mayor and city council. now, the administration is also trying to obtain some form of reforms for their pension plans.
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>> jack, listen. >> yes? >> we're going to have to stop right there on reform. i'm going to ask you back in several weeks. i want to deal with that. but as your report points out, even with the revenue generating paper that's out there on the tax side they don't segregate the funds in a way that anybody would find comfort in. so there's a lot of lingering issues as collections have to rise in 2016 and chicago has to prepare for it. thanks for taking the time today, jack. "squawk on the street" gang back to you. >> rick santelli, thanks for bringing us that interview on chicago. it's tweet time. if you had trouble watching the hotly anticipated true detective finale, you are not alone. fans were stuck on pause after the streaming service struggled to keep up on our surge of users logging in at the same time. it's your turn to play detective. what was the real reason for the outage? tweet us, get create. . we'll air answers later in the show. weekdays are for rising to the challenge.
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dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next. as we said dow's down about 106 points. boeing is a large mart of that. it was down 2% earlier this morning on some reports they had found some hairline cracks in some of the 787s still on the
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production line, but clearly doesn't mask the overall weakness. >> that we're seeing, yeah. >> off of a pretty good week last week. >> losing some momentum here. traders pointing to global concerns. obviously the china trade disappointed. but recently the german dax, that stock market has been a big underperformer. down 1% right now. as matt points out, there's a lot of leverage in that system. >> it's the automotives that are low. the miners are down and uk builders suffered quite badly. suddenly lurching to the downside. we've moved our clocks and europe hasn't. >> and it will be that way for three weeks. >> yes. because we are an international community coordinated. >> simon, thanks. if you're just joining us this morning, here's what you missed earlier on. welcome to "squawk on the street," here's what's happened so far. >> car companies, this is a great reason to be raising
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numbers. so many of our companies have been hurt by the euro, a lot of other currencies that have been very weak. it will be our companies numbers go higher. try to get me, you guys. you'll never find me between the fog and 13 miles, i'm safe here. >> i think you're going to see retail benefit from warmer weather. it's all funny because restaurants empty and blame the weather, not the chef. i think in this instance with retail this really was the weather. >> i think there was an expectation versus reality game that's going to be played here in 2014. and right now i think you're definitely in that kind of if the news is too good, it's bad news just from the future of amount of stimulus that you're going to see coming down the pike. welcome back to "squawk on the street," at post nine. markets lower, close to the lows of the day in fact. losses accelerating in the past few minutes.
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some of the export data out of china was weak. a revision of the downside on japan's gdp. and some corporate-specific news of dow comments like boeing adding to weakness as well. it's 11:00 a.m. on the east coast, 8:00 a.m. out west. some stories we're watching this morning, just call it itunes stock. apples itunes music festival kicks off at south by southwest this week featuring cold play, sound garden. the man in charge will give us a preview. >> and a battle between e-bay and carl icahn continues after the company rejected his nominees to the board. aol co-founder has that. and he'll give us his take on e-bay and icahn. fox is a cloud storage and collaboration company and also could be the hottest ipo of the year. >> and share of facebook rallying this morning hitting new all-time highs. stay tuned. we'll tell you why. joining us john steinberg,
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buzzfeed coo and cnbc contributor and our own jon fortt. hopefully it was a good weekend. let's start with amazon. an analyst from bernstein out with a note this morning has the headline, "amazon, why it is still inexpensive." this is where amazon stands, shares up about 35% over the last year. we have valuation arguments about this stock all the time, jon. >> yeah. it's a very well-done paper. basically the way he lines it out is first party sales, their retail, marketplace business and cloud business, amazon web services. they get to a price of 464 to 558 put it back above the dropoff was in the past month or so. it's compelling. the question is do these multiples hold out? on a relative basis, yes, it's cheap. but is the whole market high or low? >> jon. >> i find this a really hard one to buy. the reason why i think cloud from amazon is at risk from microsoft, not going to take his eye off of that ball. he understands cloud, also google jumping into this game.
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margins are going to be under pressure there. there's a question whether or not amazon's going to raise the price on prime. if they do, maybe they can get margin there, but we know thai pushing into the grocery business. that's a low margin business. they'll have to invest there. >> on jon's point on the amazon web service, i think that's the most interesting part of the paper. he lays out $11 billion sales 2014, puts a four times multiple, gets you to a $40 billion enterprise value. salesforce is a seven x, the question is should it have higher or lower multiple. >> salesforce is a different business. they're selling software on top of infrastructure. amazon is largely selling infrastructure and keeps dropping prices. >> bm ware the seven times multiple too. >> goldman's david goszman has a kick starter where he talks about clients beginning to ask him is the party winding down. his point is stocks valued like that tend to leave the party first. >> yep. i don't think they're overvalued at all.
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i think we were talking before the break about david kar's piece over the weekend about how much great content there's on over demand, how much the world has changed years ago when there wasn't even content you wanted to watch. we're entering a new era where all the service and content we want is available on demand. >> i think it remains to be seen how amazon is going to leverage its size in these areas to turn it really into margins. netflix has done better at this than amazon has. they got to spend a lot of money on content either buying it or creating it. and then when do they make a profit? you got to expect as an investor every once in a while it always happens wall street starts saying show me the money. >> yeah. >> will amazon be able to show it? meantime another day, another bitcoin kahater going public. bitcoin isn't a currency, it is by the way a ponzi game and conduit for criminal and illegal activities and it isn't safe given hacking of it. mark cuban usa today says it has
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no shot as a digital currency. i would say more but i don't want sarah to hit me. >> there are just as many high profile lovers of bitcoin as well. and nouriel has been a hater of many things, not just bitcoin. >> so has cuban. >> the arguments are fine, both ways -- >> the question is do you want to be on the side of the future or the side of the past? everything new that comes out gets hit. the web is stupid, facebook is stupid, uber is stupid, which side do you want ton e to be on? >> i've come to the point to belief bitcoin is an amazing innovation when it comes to international transactions. it's got a huge amount of potential there. but i can't draw the line between that and it being a great investment. that's what -- i mean, even mark andreessen who has written extensively and convincingly on the topic has not written anything to convince me if i were to put $1,000 into bitcoin today it would be a good investment. >> i think the best defenses is not that it's a currency but
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it's ann enkripgs device. >> bitcoin bugs are like gold bugs. you are investing into something. a lot of people think currency is not a safe place to put your money, it's not proven itself yet. it's something used to buy things. >> value is dictated by perception. look at gold for instance, whether it's a currency or not, the price of it it's not -- you can't use gold. >> until you can make a wedding ring out of bitcoin, right? >> my wedding ring will be made out of bitcoins. >> actually, that's true. also, it was a true nightmare for fans of hbo series "true detective" last night. last night's show, the season finale, online traffic was so high it crashed. the cable network's hbo go website, hbo sent out a tweet saying due to overwhelmingly popular demand we've been made aware of an issue affecting some users. please try again soon. one of my favorite tweets is from a fan saying hbo go is a
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flat circle. >> you only use hbo go in two cases. you have to have cable. you have to have a cable box, so either your person in your household's using the tv and you're using your ipad, or your password borrowing. this thing last night had to be driven by password borrowing. this is the greatest secret marketing campaign, generational marketing campaign of all time. >> that's okay. >> i know. pluckers get the next generation through this thing basically. >> or you're not at home. >> a lot of travelers last night. >> right. people are moving around all the time. i mean, this is why netflix paid comcast, right? our parent company, you know, disclaimer, disclaimer, disclaimer, but when you get huge spikes in traffic like this and relying on third parties to deliver that and they don't necessarily have all of the rights worked out, you run into trouble. this looks like that kind of trouble. >> there was also recent news mbo go would be allowed to be streamed on playstation. i mean, there are consoles,
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there are set top boxes. >> i agree with jon. there's no doubt that they need to work out their traffic passing agreements to be able to not have this happen again. the root cause there's not a lot of people at home with cable boxes or that many travelers. i think this password thing is much big e bigger than anyone conceives it is. >> did you watch it? >> i watched the first 25 minutes and didn't get into it. >> remember a couple eves ago when netflix had an outage, nobody remembers that. >> no. it's like whatsapp. people are not going to not watch true detective, it's working out the kinks in the early days. >> there's an increasing forgetfulness. you forget the first time, but keeps happening and you start remembering. >> it brings us to this morning's squawk on the street. your turn to play true detective, what was the real reason for the outage? tweet us and we'll get some of your answers a little later on. meantime the annual south by
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southwest festival is in full kickoff mode in austin, texas. and for the first time ever apple will actually be having a big presence at the event with the itunes music festival. our own josh lipton is live in austin. didn't take off a blazer for the hoodie. tell us more about apple's role in south by southwest, josh. >> yeah, sarah, listen, this could be the hottest ticket at south by southwest this year. apple bringing its itunes festival to the u.s. for the first time. the free festival is going to run for five nights beginning march 11th. acts include cold play, which will play on tuesday. sound garden on thursday. country fans can check out willie nelson on saturday. i caught up with eddie cue, apple's man in charge of itunes, who says it's the popularity of itunes that makes this festival possible. >> the success of itunes has allowed us to do something like this. so that's the beauty of it. we love that itunes has been so successful that artists are excited about participating in
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this. and they realize that, you know, we really care about music and care about, you know, their craft. and this gives them a real opportunity to do something special. >> now, the company's services and software business, which includes itunes, did $16 billion in sales last year. it's about 9% of total revenue. remember, big tech all won a piece of the live streaming music business. google streamed its first music awards on youtube last fall. fans can watch the shows for free with the official app on their iphone, ipad or ipod touch. they can also watch it in the store or right in the living rooms with apple tv. the artists aren't paid to play, but cue says they still benefit from the performances. >> i think certainly getting exposure. some of them get to release their albums and play for the first time in a worldwide stage. one of the beauties, again, because of the streaming capabilities that we do is it lets you really launch this in a
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worldwide basis. and so that's great. >> apple's certainly pulling out all the stops. we'll have to wait and see whether this becomes an annual event here in the u.s. guys, back to you. >> well, it certainly is an interesting move, josh lipton, good to see you again. south by southwest in austin, texas. jon steinberg, curious about your take apple moving in from europe to the united states. >> well, for this festival thing they basically have to get the streaming business up and going, right? itunes radio has not been a huge success. spotify and pandora have not seen a huge impact. putting it in a separate app is weird to me. it's very apple-type thing to do. >> i think it's too soon to say itunes radio hasn't been a huge success. just by looking at the effects on competitors. i think we have to see how many subscriptions sign-ups they've got, what their ad revenue is coming from it. i talked to josh lipton, i think it was great he got this interview with eddie cue. we have to see what the impact is on apple tv and some of the
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other strategic areas. >> $16 billion, that's an s&p 500 company right there. it's unbelievable. >> yeah, but people want to move away from purchasing. the verdict is clearly in now that people want streaming and why they wouldn't build this into the core app and core experience is a bit odd. >> either way, hot ticket, cold play, pit bull, willie nelson. >> they need the exposure, right? i don't know where he's coming from with that. >> right. up next on "squawk on the street," the war of words continue between e-bay and carl icahn, this morning after the company rejected his nominees to e-bay's board. so for people on public boards of companies, how do you deal with activist investors like carl icahn. steve case has been on the board of a lot of companies in silicon valley over the course of his career. we'll get his take on icahn and e-bay in just a moment. but first, rick santelli, what are you watching today? >> well, i'll tell you what i'm watching. i'm watching the u.s., germany, japan and china. we're going to look at all the major data of late. carl's been talking about, we've all been talking about it, what does it mean?
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we could look at the equity levels, we could look at foreign exchange cross trades, but in the end fundamentals will reign supreme. all at the bottom of the hour. predicting the future is a pretty difficult thing to do. but, manufacturing in the united states means advanced technology. we learned that technology allows us to be craft oriented. no one's losing their job. there's no beer robot that has suddenly chased them out.
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some continued weakness in stocks today. take a look at materials, one of the worst performing sectors on the s&p.
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for more on that dom chu is back at hq. >> iron ore and coal company cliffs natural resources down around 5% helped lower after being initiated new sell rating at axium capital. this is locked in a battle over trying to win the control of the particular board of directors. also down freept mcmo ran and alcoa. fmc is a big gainer as it plans to split into two companies. worth noting the biggest gainer and biggest loser are in that material sector. focused especially on weaker data economically out of china. >> well, dom, speaking of activist invest tofrs, e-bay has rejected carl icahn's bids saying both are unqualified. icahn who's been pushing e-bay to spin-off paypal says e-bay ceo john don hoe has cost his
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shareholders $4 billion. what do you do when a company is under siege in a boardroom? joining us from south by southwest conference steve case, co-founder of aol now chairman of the case foundation and revolution. steve, you've sat on a number of boards and some of your companies, you've invested in livering social. does carl icahn have it wrong when it comes to corporate governance in silicon valley? >> perhaps. i think every situation's a little bit different. i think e-bay's a terrific company, doing quite well and has an interesting portfolio business. they did decide to focus on a couple things, e-bay marketplace and paypal, so they choes to spin-off skype. i think it probably was the right move. ended up being sold down the way for a higher price which created some of the swirl. but i think e-bay's a great company with a great ceo. and sometimes i understand carl's strategy of trying to light a fire under a company and force some change. it will all have to play itself
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out. >> steve, e-bay put a response out to carl's tweet again today. they say "john donaho has delivered astounding results for e-bay shareholders since he became ceo and go onto say carl icahn made another unsubstantiated attack and utterly discredited by the facts. makes you wonder what happens when an immovable force meets an irresistible one. silicon valley culture versus this lion of old style activism. who wins? >> yeah, well, it will have to play out. i haven't looked at all the details because i've been focused here on the next generation of start-ups and hopefully will be the next titans five, ten, 15 years from now. that's the main thing. but we saw some of this actually with carl when he was kind of going after time warner a decade ago, trying to force some changes after kind of a while backed off. each situation's little bit different. but it's not just the battle of the titans that you're covering, it's also what's happening here
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at south by with a lot of great entrepreneurs and great ideas that ultimately will create the next generation of companies that will power our economy and great jobs to make sure we remain the most innovative entrepreneurial nation. 30,000 people here focused on start-ups. >> steve, i'm wondering what you think is happening here. it feels a little different to me. on one hand you have activists going after say juniper, microsoft, some big enterprise companies that some would argue have gotten stuck in the mud a bit. and then you've got icahn going after apple and now e-bay, companies that have been enormously successful over the past few years and maybe their growth has topped out. this smells a little different to me from an activist strategy standpoint. does it to you? >> well, i think it's a sign that the technology in this industry is coming of age. companies maybe 10, 20, even 30 years ago were just ideas are now big companies and some cases fortune 500 companies. so the shareholder activists targeting larger companies are
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now not sfriez e surprisingly also including in their reach some technology companies. so that's sort of what's new here. >> but from the standpoint of these aren't companies that have very obviously stumbled. it seems like in the past, you know, activists would go after companies that have obviously had an issue like dell for instance was clearly having some issues. apple and e-bay, i mean, it seems like he's arguing well they could do better. >> yeah. well, i guess everybody could do better, but they've done pretty well. i think even with the case of apple part of the debate was they've done so well, they have so much cash, how much of that cash gets returned to the shareholders as a dividend? so these are strong companies that are growing rapidly, even though they've gotten scale now, they're executing quite well both in core businesses and new initiatives. i think that should be applauded because as companies get larger, it is hard to continue to innovate. you've got more scale, more bureaucracy, and there are a lot of companies that have gotten scale that continue to be quite innovative. and it's impressive to watch. >> steve, i want to ask you
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about the buzz from austin. you're there at south by southwest. you're very much in the middle of the start-up scene out there. what do you think about the whatsapp acquisition? obviously the largest in history, $19 billion, now that everyone's gotten over sticker shock, what is the impact on that start-up seen? >> i think it obviously excites people when a company didn't exist five or six years ago and has 50 or 60 employees and sold for a huge value. i think that gets people's attention. but i think it makes sense for offensive and defensive reasons for facebook. the number is a big number, but also the facebook market cap is $170 billion, $180 billion. so basically they're saying we'll give up 10% of our company to own this asset to make sure we own it and somebody else doesn't own it. i think that makes sense. but more broudly here it's not so much focused on what's happened in the past, the focus here really is on the future and a lot of focus on mobile, continues to grow, wearables, the internet of things and the
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rise of the refs. it's no longer just about silicon valley. it's now easier and cheaper to start companies, so people are creating companies all over the place. and that's i think the next wave of entrepreneur. i think there will be more venture capital invested east of the mississippi than in silicon valley. so it's really a sign a lot's changed over the last few years. that will continue to grow as a phenomenon as crowd funding, which is now legal -- makes it easier for the start-ups, any sector in the economy to get capital started. i think it's a very bright future for entrepreneurship in america. >> we have to stop using the valley as tech start-ups. >> well, i think talking about the valley as an idea is fine. the idea of silicon valley is an idea and place. the idea is now developing all over the country indeed all over the world. >> steve, it's great to talk to you. have fun down there. >> thank you. see you later. >> steve case joining us from
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austin today at south by southwest. meantime, phil lebeau had breaking news this morning on gm. hey, phil. >> hey, carl. general motors has announced it is hired tony volucas the head of the jetter block law firm in washington, d.c., he will oversee the company's recall investigation. remember, it is reviewing its processes handling the 1.6 million vehicles recalled because of a faulty ignition key. he will be working in counsel with gm's general council, michael milliken, tony was the examiner for the lehman bankruptcy case. he's been brought in to oversee the company's internal investigation in to how it handled this recall of 1.6 million vehicles. back to you. >> thanks, phil, for the latest on that recall. when we come back, this company could be headed for the most anticipated ipo of the year with revenue projected at more than $200 million. box ceo aaron levie will join us later on this hour.
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dow down not quite triple digits, 86 at this point.
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it has been three days since a malaysia airlines flight went missing, and authorities are still trying to piece together exactly what happened. nbc is live in kuala lumpur with the very latest. hi, kir. >> hey, carl. yeah, all day they have been talking about debris that they have seen, even at one point a life raft, an oil spill. but on closer inspection officials have come into this very crowded room full of journalists and had to say, look, we've looked closely and it is not the aircraft. hate to say we are still mystified. now tonight here because it is almost midnight here now, they are talking about several large fragments spotted off of
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vietnam. and they say that they are going to look at what those might be. but at the same time they say that those might well be just the kind of leftovers of fishermen working in that area. so complete mystery as to what happened to this plane as a coalition of countries scour the ocean, ships and aircraft from around the world are gathering here to try to carefully, if you like, search through the ocean to see where exactly this plane may have gone down, if it did. because it simply has vanished. carl. >> this gives you a sense as to how large that search zone must be for those rescuers and nrvegt investigators. keir, thank you so much. in the meantime dow off the lows, down about 66. let's get to bob pisani and see what's moving. >> hey, carl. surprisingly weak trade numbers out of china is the main story today. that's not only impacting our
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market, it's really impacting the global markets particularly countries with a strong commodity exposure. here in the states the mining stocks have been weak since the opening here. big mining company, big iron ore companies, iron ore prices are down as well. freeport mcmoran, most down about 10% from where they were even a year ago. this is not a story for today. this has been ongoing for a while. steel stocks also have had a tough time today, even companies based in the united states have been weak, like u.s. steel today. elsewhere, multi-industry companies, companies that sell in the united states, outside the united states and across many different industries, all are weak today. so your textron, parker, regal, all leading industrials downright now. these are all affecting companies and countries that are heavily dependent on
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commodities. brazil is notably, some big brazilian names are down, australia, south african weak as well as china. housing stocks separate issue now under a little pressure today. bank of america downgraded a couple of names including kb home today. so they're notably on the weak side. on the strength some usual moves in the alternative energy area, ballard power having an unusually well day today. of course growing demand for clean battery technology, but not a lot of particular news there. finally, i want to close even though germany has another hour almost before it closes, it is just off of the lows from the day. and i would note here we are down almost 3% in the last two days in germany. that's a fairly significant move. and i think that also tied to the concerns about potential global slowdown. carl, back to you. >> i'll pick it up, bob. seems to be some global concerns out there playing out in u.s. markets. coming up on the show, cloud
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storage company box, it's private now but could soon be the hottest ipo of the year. box ceo aaron levie will join us a little later in the hour. and check out shares of facebook. brand new high, just unbelievable, pushing $72. we'll tell you why when "squawk on the street" returns. ♪ [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the aerospace industry in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. sorry to interrupt, i just want to say, i combined home and auto with state farm, saved 760 bucks. love this guy. okay, does it bother anybody else
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let's talk about asia now. chinese markets fell to their lowest levels in five years largely thanks to some weak economic data over the weekend.
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cnbc's chief international correspondent michelle caruso-cabrera is back at hq with more on that story for us. michelle, whether it will trickle over and affect u.s. stocks. >> yeah. let's show everybody graphic form what you were hinting at. one-week of the shanghai composite, you can see the real falloff on the right hand side. and we show you longer term one as well. reaching multi-year lows, what is the cause immediately? the export data. a decline, a whopping decline of 18%. you can see it there, more than 18%. you can see it there to the right. we're going to put a little asterisk next to this number. there was likely a decline in exports, however, add on top of that a belief, a widespread belief among analysts and economists that within the last year there's been a real crackdown on something called ov overinvoicing. in other words, in china for example you might want to buy something from china, you're a customer say i want to buy 10,000 widgets but bill me for 20,000 widgets. why would you do that? because you want to get capital
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into china and want to do it a roundabout way. chinese citizens are widely believed to be doing it in the opposite direction as well. so this number looks bad. it probably is maybe not as bad as some folks think. bob pisani did a great job of highlighting the ripple effects that we're seeing in the u.s. markets and commodity countries, et cetera. let's scroll down a little more into copper because that's gotten hit very hard for two days in a row now. you can see here here's the decline today. but also look at what happened on friday. that's in addition to the fact that besides the data that we just told you about with export data, remember on friday we told you about this corporate bond that defaulted? it's widely believed now that the chinese government's going to allow more corporate bonds to default than they did in the past. the way it was done frequently is copper used as collateral. if there's going to be less financing, you need less copper for collateral. one of the reasons why it's believed copper is getting hit particularly hard today. back to you. >> michelle, thank you for that. michelle caruso-cabrera walking
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us through some china news. let's get to rick santelli in chicago, get the santelli exchange for a monday. >> hi, carl. let's build right on what michelle caruso-cabrera was talking about, china. now, we all realize that if you just look at the equity levels, it doesn't give you everything you need to know. but it is interesting. china's down about 5.5% on their equities. and as michelle was talking about there's a lot of issues here. their gdp and the kind of 7.7 area might be enviable, but the rate of change has been all to the downside. so the extra cylinders china used to kick in, they're not going to be able to kick in as much. so it isn't about whether on the surface it looks like a good number to those who live in other parts of the world, it's looking at it from a world perspective of total output. now, if we look at japan, japan's in the news. we talked about it last week on the santelli exchange, whether it was the revision on gdp that made it look a little spongy, or the notion that consumer spending isn't keeping up.
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while all of the stimulus is going on, they continue to lose ground. the nikkei's down a whisker more than 7%. and with all of that going on in japan, a big tax hike is just around the corner. let's look at the u.s. for a minute. we all know that we saw that big 4% -- 4.1% to be exact, gdp was revised lower down to 2.4. and many of us believed that, yes, there are weather issues but there was a general slowing in the back half of 2013. stay with me here. let's look at germany. germany in the news. the dax is down a little bit over 3.25% on the year. if we look at what's going on in germany, look no farther than the euro with the 139 handle. this is an export economy. and all of a sudden all these super conservative german finance ministers are actually talking about doing a qe in europe to the tune of .7% to 1% of outstanding issuance. these are big issues to contend with.
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why am i bringing it all up? because stabilization, all the talk we've heard is fine, but look at the lofty levels of today versus five years ago and ask two questions. yes, it's up. but two, is it going to lose its momentum? what's going to give us the next tailwind? that's the question. back to you. >> maybe it would be qe from europe, rick. thanks for bringing that up. interesting point, as always, rick santelli down in chicago. meantime, on the broader markets facebook is hitting new highs today going above $72 and making up about 31% for the year. the tech giant also announced it will be resurrecting its app 8 conference, you may remember open graph and facebook time line coming out of these previous conferences. our own jon fortt joins us with more. so maybe big block buster facebook announcements? >> maybe not in the way we expect. ticker also announced in the last, i think this is really important for investors to watch. just over six weeks out.
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the way they put this out is supposed to tamp down expectations for blockbuster consumer announcements. the head of parse, which is a mobile cloud company they bought about a year ago, is talking about this at south by southwest. tried to say, well, maybe zuckerberg won't make a big splashing up himself. but look, mobile is big right now, specifically figuring out how to get the facebook ecosystem on mobile going. and i think that probably means revenue generating potential also. so that's what investors really need to pay attention to especially given the way twitter and others are trying to gain traction here, facebook is big though. they're making the money. if they can get some blockbuster developer type of announcements, the kinds that don't make headlines but important down the road, that will be key. >> and it brings to mind the ubs price target increase today goes to $90 largely on the notion that advertising pricing stays strong, right? that is the kind of thing that would feed that dynamic.
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>> it would. and they've got challenges from upstarts like pinterest and twitter that are starting to figure out maybe how to monetize. facebook's overall growth probably doesn't have the head room it used to, which is why they're expanding to a whatsapp type of situation. but if they can get more developers building mobile apps, lench their platform and make money off of that also, kind of like amazon does with its third party network, there's potential. >> and monetize instagram they're working towards as well. watching facebook, jon fortt, thanks for that. up next, this could be the hottest ipo in 2014, box ceo aaron levie joins us to talk about the future of his company, plans to go public and much more. an important programming note here, tomorrow on "squawk on the street" david faber's interview with masayoshi son, the chairman and ceo of softbank, the parent company of sprint. hear what he has to say about the mobile phone wars in the united states and much more. that is tomorrow morning here on "squawk on the street." you make a great team.
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on the who the best and worst performance might be over the next five years. plus we're looking for oil with "mad money"'s jim cramer. we'll head to the bayou straight ahead on the half. >> looks good in that hard hat too, scott, thank you so much. >> yes, he does. technology companies and entrepreneurs gathering in austin, texas, this week as part of south by southwest. our next guest offers customer service ranging from simple cloud storage to all inclusive workplace platforms, parking lot ners include google and among others. aaron levie joins us this morning from austin. aaron, good to have you. good morning. >> thank you very much. >> i can't think of a sweeter space to be in at south by southwest than the one you're in. what are you seeing down there so far that is the interesting? >> one is sort of a lot of nerds and hollywood people are getting together. so this is, i think, right behind me nicholas cage is about to go on in an hour or so.
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a lot of interesting interaction happening. >> yeah. i understand the line for lina dunham is out the door. that's a subject for another day. walk me through where you are in terms of growth. a lot of people are curious to know whether your revenue growth is going to be a linear, gradual event or more stair step, more case function. >> well, unfortunately i can't talk too much about revenue growth, but as you can imagine we're very, very focused on getting to every business in the world with our software. so we want to change how all companies work with their information. and we're going to be growing as aggressively as we can to make that possible. >> hey, aaron, jon fortt here. good to see you. a tweet that you sent out on the 30th of january caught my attention. normally you have no shortage of snark when it comes to the tech titans and how lumbering they can be, but when satia was --
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you said he's a strong pick, gets the cloud and has a solid vision for the future. is that a problem for box? >> not necessarily. so he's actually really a part of the next generation way of how software's going to be developed and how companies are buying technology. and we actually see that microsoft has a major opportunity to come more open with their technologies than ever before, which is actually a very good thing for us. it sort of used to be in the past microsoft viewed the world through a redman lens where they had to control all the software and technology deployed in an enterprise. and satya has brought a different level of openness within that company. so we think our ability and our chance of working with in a complimentary way with microsoft is increasing dramatically under satya's leadership. at least in that scenario it's a
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very positive thing. >> it's interesting you say that in terms of the partnership. i know, aaron, you're also partnered with google, but you think about cloud storage for enterprise. to me it seems like a very competitive environment with google drive, drop box, microsoft. how do you deal with some of those formidable competitors? >> yeah. so we have very healthy competition in the market. i think our unique differentiation is we're probably the only company that has a focus on the end user and consumer from a delight and user experience standpoint that can also deliver their technology into large enterprises. we work with eli lily, proctor and gamble, e-bay, snyder electric as the solution to use to share files in their organization. the ability to both work with large regulated companies at scale but to deliver an end user experience that is comparable or even exceeds some of those consumer applications, we think
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that's very, very differentiated and unparalleled in the market. >> aaron, i know you can't talk specifically about an ipo, although that's what everybody wants to know about. i'm curious, you know, mark cuban was one of your first, if not the first, big investor. there's a conference room named for him at your headquarters. he's not been a fan historically of the public markets. and i wonder if that's colored your view about just going public as a notion? >> so we actually -- so mark cuban we bought out quite some time ago, but he's obviously been close to the company. you know, back then. and we certainly actually agree with many of his views on some of the markets and whatnot. i think that the key is to build a very substantive product and company and have a very, very long-term view on the market and what we're trying to build. and i think that's going to be something that we've always had and we'll carry on into the
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future. so we're just focused on the long-term. and want to make sure that we can bring our software to every company in the world. >> aaron, speaking of nerds getting together with hollywood, you made an announcement about doing services -- cloud services for hollywood, ashton kutcher's involved somehow. tell me, what is it that you add in this deal that you've done that's going to make your relationship with hollywood maybe better than others and maybe bring some margins with it? >> so actually interestingly ashton is nerdier than you think. i don't want to ruin his brand right now on television, but he really gets the tech space. so we decided to partner up last year when we raised a round of funding. and box is actually used in many of the media companies in hollywood. so sony music, wasserman media group, netflix, a bunch of companies i can't mention also use box to manage all their content and digital information.
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so as more and more collaboration happens in the cloud, as you need to be able to get to data from any kind of device, we want to power all new experiences in that industry and many others. so we brought on ashton and serious investors that are going to help us do that in an accelerated way in the media space. >> aaron, it's great to have you. please come back. say hi to nicholas cage. we'll see you later on. >> we will. thank you. >> aaron levie joining us from south by southwest, nerds and hollywood getting together. >> that's a good combination. >> as succinct as you can get. >> up next, target facing a mandatory deadline to submit documents related to that massive breach of customer data. the chief technology editor at mcafee will be joining us to tell us what we can expect in a moment. yup. all 5 of you for $. our clients need a lot of attention. there's unlimited talk and text. we're working deals all day. you get 10 gigabytes of data to share.
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and goldie helps children with developmental disabilities, while suzie works with people in the hospital. you can be a hero, too. give it, or any mattress discounters. mattress discounters good deed dogs: helping dogs help people. target is facing a deadline today to submit documents to the house oversight and government affairs committee on its recent security breach. latest quarterly reports out this morning highlighting the ease of stoling credit card numbers and other consumer personal data online. here joining us is mcafee's chief technology officer, mike fay. thanks for joining us today, mike. in light of these target revelations, what have you learned, you at mcafee and at the industry, about how prepared or unprepared target was for the security breach? >> well, specifically how
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prepared target was is hard to state, but retailers in general, i think, took this as a wakeup call. they saw essentially an off-the-shelf piece of malware modified for a target, and i think a lot assume if they don't have a standard point of sale system, they are safe. i think target showed them all that's not the case. >> so what have you seen? have you seen a growing number of merchants in the wake of the target revelations coming to you and spending more and getting more better equipped to deal with this sort of thing? >> yes. we've seen a massive spike in conversations with retailers around how to protect their point of sale. you know, we've had solutions for years now that would protect against these types of attacks. but the uptake recently has been quite strong in the implementation of those defenses. >> mike, where do you think -- i mean, in terms of the technology, what makes the difference? because everything we know about
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what happened at target was an ongoing sort of cultural battle between guys who wanted -- who had the store as their number one interest and others who had credit as their number one interest? >> i think what we're learning is, you know, the customer data has to be the interest. the competing groups that often originate inside different -- companies have to be held accountable to the protection of customer data. and if you follow that path of how do i best protect customer data, it's not that confusing on what you need to do to take care of your customers. >> you know, we know mcafee is owned by intel, it's one of the household names in the sector. but increasingly there's a lot of excitement around these newer, younger, cyber security firms. we talked to the ceo of fire eye last week on the show. how do you compete with those young, energetic momentum companies getting out in front of the some of the new viruses and new threats? >> well, i think at the end of the day it's all healthy, right? the diversified solutions
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available to the buyers' healthy. but it all has to work in an environment. it has to be manageable and it has to be deployable. take a look at the target attack, that was defendable by technology that's been around. it didn't require a new silver bullet. what it required was a cost effective way of deployment. so we look at competing with some of these younger companies, we balance the two. we innovate and make sure we provide better protection, but we also make sure we do it in a way that large corporations can actually ingest and use it. and that's worked out fairly well for us despite the media attention of some of these younger companies. >> all right. well, thanks for joining us with some color from the industry. interesting to say that you see you've actually seen a pickup in terms of companies spending money on this kind of software. the cto of mcafee. if you had some trouble watching the hotly anticipated finale of "true detective" on hbo go this weekend, you're not alone. fans of the series were stuck on pause after streaming struggled to keep up under a surge of
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users logging on at the same time. so play detective. what was the real reason for the outage? tweet us #squawkstreet, your answers next.
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pay my bill. phone: your account is already paid in full. oh, well in that case, back to vacation mode. ♪boots and pants and boots and pants♪ ♪and boots and pants and boots and pants♪ ♪and boots and pants... voice-enabled bill pay. just a tap away on the geico app. ♪ huh, 15 minutes could save you 15% or more on car insurance. yup, everybody knows that. well, did you know that some owls aren't that wise. don't forget about i'm having brunch with meagan tomorrow. who? seriously, you met her like three times. who? geico.
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for tapping into a wealth of experience. ♪ for access to one of the top wealth management firms in the country. ♪ for a team of financial professionals who provide customized solutions. for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit to find out more. what was the real reason for
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that "true detective" outage? mark writes mass i have amounts of beer cans and cigarette smoke. mark had enough all right, all right, all right. and #chucknorris. happy birthday today to him. >> wow. >> wapner has a great show coming up. i think cooperman's on, right? >> he is. and i just found out as well, carl, that carl icahn is going to be calling in as well, at like 12:45 as well. >> hello. >> there's a lot of back and forth between e-bay and him today too, so we got chock full of everything today. you have a great rest of the day. >> see you later. welcome to the halftime show. also let you know that edward snowden is going to be giving his first interview to an audience at the south by southwest festival via video conference from russia. we'll bring you the latest headlines and news as they develop and you can watch the interview in its entirety on our website, that of course is so check that out. stay tuned to us. find out exactly what's in our game plan today. bottoms up


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