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tv   Squawk on the Street  CNBC  March 31, 2014 9:00am-12:01pm EDT

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why do you drive on a parkway and -- thank you, neel. i'm going to use that, tallest smurf. >> good luck with the campaign. great to see you. >> that does it for us today. join us tomorrow. time for "squawk on the street" ♪ batter, batter, batter swing swing, batter, batter♪ >> good monday morning. happy opening day for major league baseball. welcome to "squawk on the street." i'm carl quintanilla. jim cramer, david faber at the new york stock exchange. we're going to close out the first quarter, as the dow and nasdaq could potentially end a four-quarter win streak, though futures are up. news about the market, including michael lewis on "60 minutes" talking about high frequency trading. chicago pmi today, jobs number on friday, of course. and the euro got smacked as
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consumer inflation missed estimates. europe, you can see, is in the green. the question everybody's talking about today, is the stock market rigged? we'll go behind the explosive headline, bring you some answers. plus, it is the final trading day of the first quarter. so far this year, one exchange has performed a lot worse than the others. i bet you know which one it is. and things keep looking worse for general motors, ahead of ceo's mary barra's testimony on capitol hill this week. why did it take federal regulators and gm over a decade to order the recall? we'll try to get answers. first up, a comment causing a lot of buzz today. best selling author michael lewis with harsh words about the stock market last night on "60 minutes" take a listen. the stock market's rigged. the united states stock market, the most iconic market in global capitalism is rigged by whom. >> a combination the stock exchanges, the big wall street banks and high frequency
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traders. >> big, important words for a mainstream audience last night in america. our audience is a little bit different but turning to us and saying, okay, what does the financial network of the country have to say about that? >> short-term, i don't want to use the word "rigged," but short termed, there's a lot of people who are able to get ahead of others in an order and take advantage of their speed. if that is rigging, then it is true. >> has been true for a long time? >> well, i like michael -- i like his books. i think that they explain a lot of things that people didn't understand before. but we've sat here for a long time. i was on the -- at cnbc headquarters when the flash crash occurred and it was a high frequency traders that caused that and we railed against them, and exposed them over and over. i had maybe 100 shows devoted to it on "mad money" saying it's wrong, saying basically it is
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rigged without using the word "rigged." it's interesting it got on "60 minutes with a powerful author, and people are shocked. >> as you point out, something we've talked about many times here, right from the floor of the new york stock exchange. effective way to sell books new york doubt, for an author, who you say, extraordinarily popular, franchise unlike any others when it comes to business books. >> to be fair, one of the best storytellers in american journalism. >> the books are good. the books are good. >> without a doubt. when it comes to high frequency trading, you've spoke been it many times, we have, bob pisani has done a great deal of work himself, there is and there are many critics, leon cooperman, marvin schwartz. >> mark cuban. >> right. >> who have spoken about it many times who want to see something and say it is, it is hurting integrity of the markets. >> it is. but the exchanges stand behind it because they need sources of revenue. s.e.c., behind the scenes, they
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don't care about it. they don't care. it's just not important. maybe this can change things. they introduced a fellow, new exchange coming that looks like it's harder to rig, so to speak. but there is nothing new here. it has been allowed. there has been front running, it's electronic front running. one of the great moments in interview steve kroft said, isn't that illegal? michael said, no, it's legal front running. how can that be? isn't it crazy? your government has blessed. your government thinks it's good. it's your government. it's government as good as you're going to get and they don't care. >> talking milliseconds but it can add up to a few cents here and there over time. >> which sort of makes -- begs for comparisons about the kinds of spreads that marketmakers took 20, 30, 40 years ago. >> right. here's the -- let me give you the high frequency -- first, we provide -- i'm going to be one
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of then -- you don't know what you're talking about, always starts like that. if you did work, michael lewis, you would know it's not true. you haven't done any work. but if you did work, you would discover we provide a lot of liquidity. liquidity is good, if you look at old days there wasn't enough liquidity. we're the good guys. you're not an informed joker and it's ashame how stupid you are, but you'll sell a lot of beaks and when it's over, it will go back to the way it was, and we're the good guys. >> we create a deeper market than otherwise would be the case. >> right. and then you go on. it goes on from there. and they win. there's a lot of them. look around. i was going to take a picture of a guy today, we're all algos, we're able to front run. step back for a second. you're an individual and thinking about buying microsoft today, it is not going to impact you. you're not being ripped off on
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your 100 shares. i'm just saying, don't run your life as if the market is rigged for you. but, there will be more people who leave the casino again. >> or people who choose not to participate, the same who may not have for larger reasons, the market went down for a long time and previously been hurt. >> marginal excuse, not to invest. maybe, it is michael lewis, maybe the s.e.c. does more than trot out a commissioner to make a speech. >> they'll have hearings. they'll have hearings. >> they've done that before. >> and you'll see a parade of people who will say that the s.e.c. doesn't know what it's talking about. i want -- i'm waiting for the smear campaign of michael lewis. i think it goes like this, he ought to stick with football, that blindside was a very good book. you know what, he never advanced at solomon brothers. the reason he wrote the book, he was not able to pass stanley. and the big aha, that was money. >> moneyball. >> ought to stick with baseball.
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or stick with today's opening day. >> today's opening day. the phillies and the mets haven't lost yet. >> no. >> you think michael lewis talks about that? no. you think he talks about desean jackson? no. michael lewis should talk about thing his knows about and not high frequency trading because he knows nothing. did i do good? a good imitation of what they do? >> yes. >> if we ever -- if we attacked them, oh, we're all so stupid. we went to college to get stupid. who said that? >> you sound like you speak from experience. >> the godfather. i've tried for years to defrock these guys and you can't because they just -- there's just -- they have a lot of divisions. they have many divisions, meaning military divisions. when you go up against them, they will flatten you. michael lewis has "60 minutes" franchise, he has a book, they will not lay a hand on him but it doesn't matter.
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nothing will happen because they're more powerful than he is. >> let's start a discussion on the markets themselves. entering the final trade daegu of the first quarter. s&p trying to stay in positive territory for the period. up a half of a percent. the dow is 1.5% declined from q1. but it's been the nasdaq, of course, that's dragged into negative territory after its worst week since october 2012, it's been hurt by biotechs and momentum stocks or high multiple stocks with high growth rates. talking of course about the netflix, teslas, facebooks of the world. that's been the story for the last couple of weeks. and i have said a number of times, certainly last week, the damage has been far greater than you might see on the surface. certainly to the people that i speak to, running levered portfolios, who are running hedge funds and the like, interested to see what the numbers look like when we come out of the first quarter, given the last two weeks have been horrendous if you're long. >> eight new deals coming this
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week. eight deals next week. a lot of them, again, in the cloud in biotech, becausing new competition. i don't -- i was going through the number of companies that were $25 million companies, that are now billion dollar companies in biotech. one blew up this morning, didn't meet the end points on alzheimer's. there's such a plethora of stocks that people just keep selling the good ones to buy the hot ones to get the pop. when the pops stop and deals stop, you'll see money flow back to these other. in the meantime, we have broken charts. gilead the poster boy, everybody said the pill would be great. bristol-myers, well financed, and you end up with like, i've seen numbers on gilead, this is how a stock goes down, i've seen $7 earning estimates for $2015 and $4 estimates. right now the $4 estimate is in charge, get back to $ estimate the stock is cheap.
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>> with that being said, the stock down less than 9% this year, how long? it had incredible 2013. maybe some not just quite justified. make momentum, excitement, all about a little -- >> saying we're back to earth? it's just that earth feels painful, unless you're coming down in an elon musk, able to land fire on ground rocketship. >> yeah. it's like, i was hitting the golf ball great on the moon and it's a little bit harder now. yeah, yeah, i see what you mean. general motors feeling more heat as ceo mary barra gets ready to testify on capitol hill this week, facing lawmakers over the faulty ignition switches which have been linked to at least 12 deaths. gm rejected a proposed fix for the problem in '05 because it would have taken too long and been too costly. lawmakers say federal regulators twice declined to open formal probes into complaints about the
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cars. it's on the cover of the new york times. it's the lead story in the business section of "usa today" as gm hot seat gets hotter. and "the washington post," the lead is the part costs less than $10 wholesale. the fix takes less than an hour. why did it take so long? story's going away, zero. >> look, the only way -- i'm being facetious -- only way to get it, recall the car -- >> they're working on it. recall numbers go up. the number, the sheer size -- 800,000. >> it's -- it's -- it's shocking. how difficult does this make -- you have a new ceo to begin with, i can't imagine this doesn't make it much more difficult in terms of navigating. and you've got a lot of hedge funds in there value stock, they love it pension costs you, know, they can cite a litany of reasons to continue to own it. i know you, charitable trust --
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>> it's an inexpensive stock. >> why not push the sell button and buy it back when -- >> it's -- not allowed to trade like that. restrictions. that would have been the thing to do. because -- the risk is just endless here that someone's going to stop buying a gm car. the headline, what point do you feel like, you know what? i can't afford to buy a gm car. i think gm makes great cars. i think this going to pass. but when you pick up the paper every single day and it's gm, at a certain point, the -- you know, they have to cut price on cars, the usual. other guys take advantage of it. >> meantime, mulally's pay up 11% to 23 million after one of their best years last year, in a very long time. >> stock's done nothing because of europe. but if europe turns, europe inflation low and europe sales getting better, nice deflection point for ford. >> it's all about europe. >> they've -- they just didn't
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get ahead of it. who didn't get ahead of it? europe was -- no one saw europe coming. i don't know. maybe some companies saw the decline to the extent, i don't know any american companies that said, europe's about to crash. >> you still have to be there. so -- >> you can't -- >> you have -- >> you have so soldier through, ford has and lost a lot of money. >> what does a zombie apocalypse have to do with tesla? words from elon musk and what he's talking about. futures, nice start to the week setting up, implied open up 85. more "squawk on the street" live from post 9 in a moment. oment. with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings 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.
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tesla striking a key agreement with new york state. automaker allowed to continue operating five existing retail locations in new york. additional locations will be covered under the state's dealership franchise laws. reiterating comments made to cnbc in may, tesla ceo elon musk talked on "60 minutes" last night about wanting to build solar powered charging stations for his companies' electric cars. take a listen. >> you can drive for free forever on pure sunlight, that's the message we're trying to convoy. even if there's a zombie
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apocalypse, the grid breaks down, able to charge the car. >> a zombie apocalypse war ranty? >> yeah. >> story "60 minutes" loves. >> i didn't know about the war ranty. i'm raising price target numbers. >> see the warranties. >> if the shorts watch this, i mean, they have to -- you had to take away their ties, shoelaces, i mean, this was -- i want to go buy a rocket from this man, i want to adopt five of the seven children. i want to spend more time with him. i want to charge my fingers. i want to put -- i want to put water on my fingers and charge them because it's solar. i mean, you loved him and his cars and his rockets, after you saw. >> more than bezos and the drones the other week with -- >> right before the big monday, right? >> yeah. >> i mean i don't know. musk is, i think that -- i'm in
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awe of the guy. i'm not -- no sarcasm there. the guy did risk everything. but the upshot of the piece was if you're short the stock, it's just not going to come in as soon as you think. agree? >> i suppose. >> i mean -- >> i don't know that that audience and the audience that would be short the stock are in any way -- >> let's do publicity. gm hot seat gets hotter. rather buy a gm than from a man trying to decide whether to put -- to be the first man on the sun, where it's very hot? >> apparently it's very, very hot on the sun. >> ever see richard pryor's imitation of first man on the sun? >> no. >> one of the great. >> they do seem to be managing that last mile distribution chain. >> yes. >> got the deal in ohio. now this compromise with new york. better than trying to fight 50 dealer network around the country. >> yeah. if -- they want to buy one, everybody knows buy. you can go online, buy it, have
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enough publicity. government says it's the best. i mean, anyone who doesn't think it's the best? but it was interesting, it was, a moment where they showed you the problem with the battery, that the battery is to try to get a new battery, but he's going to spend $5 billion to get a new battery. but that was -- that's actually a mention of something that could -- that is a problem with the tesla. >> waiting to see which state they choose for that factory. >> yes. >> a big decision. >> when we come back, cramer's mad dash. count down to the opening bell. take one more look at futures and the premarket. final day of q1. more "squawk on the street" straight ahead. i know what you're thinking... transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done.
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all right. we've got eight minutes until the opening bell. mad dash for monday opening day for the mets, snow on the ground. >> phillies, we've written them off. papers are so negative it's scary. two stocks written off by the marketplace and web bush is the beginning of the resurrection of lululemon right now, upgrading to -- from hold to buy. why? because you know what? things are going to get better. that's the thesis. but they're saying it's a draw. i think there's a lot of growth managers that want to own lululemon, restoration hardware did well. lulu was a great stock to own. it probably does bounce. i don't have a thesis beyond a quick bounce. >> you don't? not a long term? numbers? >> competitive. there's a lot of competition in
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the space. new ceo. i liked christine day. you've got to wait to see how the ceo does. it's too early. here's one imintrigued of. panera, hold to buy. a panera 2.0, a skunk works within panera, developing a new kind of panera doing fabulously. ron shake is totally bankable. one of my favorite ceos. i think this comes back. i think panera is a turnaround psh same-store react sellration. >> line management issues? we've heard about it. >> you've seen the line? >> it's a high-class problem. people walk away. >> howard schultz will tell you, it's such a problem you can't make numbers. i like panera, i want to buy it. >> that's what they're working on? >> exactly. also have a better -- it's easier, easier menu.
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very good. >> tokyo. >> legacy of -- >> you get emotional by panera. >> i think -- those of us going to panera know a decline in quality. i think this is going to pick up. >> opening bell, of course, not too long from now. former major league all-stars at big board to kick off the baseball season. john franco, great reliever for the mets, bernie williams, great center fielder for the yankees. >> who from the mets? >> john franco. >> not bad. brooklyn boy. >> holy cow. so cool. l.
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when my son was born, i remember, you know, picking him up and holding him against me. it wasn't just about me anymore. i had to quit.
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♪ ♪ [ tires screech ] chewley's finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. get the most extensive charting wherever you are with the mobile trader app from td ameritrade. you're watching cnbc "squawk on the street." live from the financial capital of the world. opening bell stoet ring in 2 1/2 minutes. busy day. jobs number coming up friday. opening day for major league baseball. the final four is set. masters is a week from now. we're in a good time of year. >> yeah. this is -- it's funny, i was thinking the same thing. i've got obviously the 76ers are the tanksters. >> hey, didn't beat the record.
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>> right. but i'm looking at ice hockey. this is always the period where there's some team you like, some team you're going to root for. if you don't like anything going on now, you should leave america because this is -- there's some team playing right now or in the news or trying to get ahead for the draft in football. i love this period. >> coming off a crazy week. like of netflix and facebook, high momentum names, down 11%, 12% in the past five sessions. you said last week, micron would be one to watch. >> yes. micron, a lot of defense of micron today. micron, when you look at the prices, some of the chips, they seem to be down. a lot of this is their new supply coming on. there's new supply, micron's not done going down, and that's one to watch. it does report this week. not a lot of companies report this week. waiting for chinese stimulus but didn't see any chinese stimulus. >> i thought of you sun night. >> i don't know.
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you mentioned that on friday. >> i thought chinese stimulus. >> where are the deals? >> it's a quiet news morning, frankly, in a lot of ways, in terms of corporate news. j.&ja deal of some size. >> carlisle. >> looked like news but it's not. >> interesting, seem to be a pace, merger, acquisition activity and announcements slowed dramatically since the ukraine crisis. we'll see. that wouldn't seem to be enough to derail something. also a market that's more volatile, down. but we'll see if it ig it nigre. these things take time. a monday without significant activity. >> ipos continue unabated. there's some bigger this week. but i want to keep track of that. remember, some ipos failed on friday. and on thursday. ipos starting to fail. >> king was -- underwriter of king will tell you, i've had a
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chance to speak to them since, that they price that thing, way over it they could have priced it higher and the market disappeared from them the next day, in a way they perhaps not anticipated. >> i think -- there's a look at the opening bell. pretty nice open taking shape. good breadth at open big board, major league baseball, anheuser-busch, former mlb all-stars, james franco, bernie williams, jeff nelson, celebrating beginning of the regular season. trying to make opening day a national holiday. a concerted effort to make that happen. we'll talk about that in a few minutes. nasdaq, paylocity, celebrating its recent ipo. >> cloud-based. again, be careful. a lot of cloud-based companies coming public, that's putting
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pressure on others. but we just had a cessation in the window these stocks would spring back. >> ones already out there have that haven't come public would see more buying? >> yes. if you had the seasoned players would come back, if there was a day where you didn't have to sell for paylocity. >> would you sell it for -- >> to get in on the deal. the deal gave you a big pop, helps performance. >> i know. i understand. >> time-honored. >> right. >> you've got to take down your waiting and just to do that? just -- >> not a lot of new money coming in. i think, after michael lewis' comments, you'll get even less coming in. >> that's not going to happen. >> some argue, even if that is true, that it delays any frothy period where you would get where retail came in in a big way, all right, long term it's bullish. >> i get that. >> yeah. >> true. >> we are seeing bioteches bounce. one of the disturbing qualities
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of the market, that you hit upon last week, all of the bioteches are bouncing. so all-clear, and then by midday sellers come back and just materialize and they just chip, chip, chip, chip, chip. maybe today be will different. that's been the discouraging thing. wow. >> david is right. from a corporate standpoint, not a lot of heavy news. one of the few tidbits out of disney. "frozen" the highest-grossing animated film of all time. >> unbelievable. >> not adjusted for inflation. takes the mantel from the "toy story" film. >> that's a billion plus. >> made an acquisition youtube videos, watch that, that's going to be hugely successful. continuing to do quiet, little things. stock has come down a lot that may be an opportunity. >> as hard a time we give them for the john carters of the world, give them props for that.
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>> make up for -- >> a franchise will keep on giving. >> i want to see "frozen" 2 through 7. >> six is a breakout. >> geez. >> we will be watching them in our households, i'm sure for years and years. >> and grand children. when they do "frozen 63" which i think is already in the works. >> to your point a franchise that perhaps could last decades. >> and talking about the company that owns "star wars" franchise, in addition to so many others, talking about ones that have lasted through 30, 40 years almost at this point. >> the great thing that you're going to see from disney, they're not going to do any more john carters. they don't need to. they have so many different franchises they can do iterations for, people keep coming back. >> disney's best performing dow component here, up more than 1.5%. >> makes sense. >> we have at&t, just to reauthorization, a new authorization of a repurchase,
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300 million shares, that's 6%. but this is just the reauthorization of the ongoing share repurchases, the companies had, it's done 300 million share repurchase approved by the board 2010. july 2012, march 2013, it's completed prepurchase, funded 2012 authorization. you have a new one. there's a look at at&t, up almost 1%. frankly that stock has been moving up nicely lately. >> yes. >> you had a lot of guys, long verizon, short at&t, and having to cover because of the bloodshed taking place in hedgy land. >> underneath, so much bubbling. and it just -- people at home, it's like, hey, dow's doing okay. s&p. no, guys are being killed because stocks that are going up are stocks that they're not in intel. intel's been left for dead. they're not in oracle. oracle had a bad quarter. that's not what they're in.
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and the short -- >> short thesis in at&t can they continue to maintain the dividend with the cash flow that they currently have and with the cap x demands that they have? of course they say absolutely, but that's been an issue. and then there's the continued conversation amongst the shareholder base what will they do? will they try to make a play for vodafone once they can? will they stay here in the states and focus again, given the cfo and ceo's comments recently on europe, would seem to bring them back to the states. does that mean they try to make something happen to dish? we'll see. none of it means any of it's going to happen. >> comcast parent company of our network, finally getting a little up. >> a move up today. comcast up because in an interview that the cfo did with another news organization, thanks, they indicated a willingness to go another 2.5 billion in the share repurchase
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for the year that will follow the close of the time warner cable deal. time warner had $2.5 billion buyback in place. time warner cable, you don't continue that once you're in the midst of getting acquired. but it would be 5.5 billion in the year following the deal which would be significant, very significant. that's being cheered. of course that stock has been coming down, affecting overall value of the deal. last week friday, solicit votes against it. probably shouldn't have got ain't lot of attention. but it's interesting they're still out there. >> i know that's one of the things that disney does when they announced the big acquisitions, they up their shares. >> right. at the time, comcast said we'll buy back 10 billion, we'll add 10 billion, that's over time, not immediately. this is an all-stock deal that comcast is doing. many believe, given the lack of leverage on the balance sheet, if not all cash, certainly a lot
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of crash, would have been offsetting that or using cash in part to buy back share is what they chose to do. >> nice column by jim stewart over the weekend about roberts and his transformation of the company, xfinity. >> there was a moment roberts said if we just stayed a cable company we'd be dead. but that was -- talk about what certain acquisitions you see people doing in some of these companies, well, that was a very telling comment, they could not just be a cable company. >> he has a long-term vision that he's able to pursue in part, because again, family-controlled companies. that's always helpful. >> a big issue. >> and you -- believe me, time warner cable, they're thinking about the next deal. how many years down the road that may be, i know it. being viewed as a technology company and competing with likes of dole and apple and those kind of companies. >> david carr interesting, cnbc didn't even comment. >> about murdoch.
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>> i'm outraged. let's go do bob. >> where was the outrage? >> i forgot to be outraged. next time i intend to be outraged. >> not that david carr would have seen anyway. >> oh, man! >> dow's up 119. let's get to bob pisani on the floor. >> guys, nice start here, last trading day of the quarter here. all ten sectors looked like they were up, and yet for the quarter, it's been pretty tough for stock overall. bonds are winning. first quarter stocks versus bonds. i look at this simply. vand guard total bond market versus vanguard total stock market. bond market's winning. the big market leaders we had in earlier part have become lug ards now. consumer discretionary in health care, technology in march, they were the leaders. but in the month of march, that group has become a laggard now. put up consumer discretionaries down 3.5. health care down 2.6%.
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technology down 0.6%. the question here is whether than going to continue going into the quarter. sell-off in the big growth, big momentum names. the pan door rao pandoras, netf see growth in second and third quarter that's going to make a difference. people start selling growth names they paid a lot of money for, those names, pandoras and buy more value oriented names and maybe, folks, that's why we're seeing a big move up in march in the consumer names. so put up kroger, pepsi, campbell's, a full screen, we've had a great run in consumer oriented names in last three, four weeks, kroger, pepsi, campbell's. maybe the economy's picking up, pay up for the value names. let's me talk about michael lewis for a minute. we'll discuss this at 10:15 eastern time. bottom line here is on this whole thing if you're long-term buy somewhere trying to buy
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stock, there may be a high frequency trader trying to scalp a. ny from you. i don't like that idea. are they liquidity providers? well if they're on the bid and offer, they are, even if it's a vanishing liquidity, all liquidity is vanishing, even guys here, all of the market makes not high frequency traders, liquidity is fleeting. let's work on principles that govern trading. two i always talk about, one is information should be available to participants at the same time. i think everybody should work unthat principle. second principle, regulators need tools to investigate whether there's abuses out there. the government doesn't have them. they've got a system for the first time where they can look at market abuses, but it's not adequate. there is a consolidated -- >> sorry about that. we are definitely talking about michael lewis down here, big time. all right. what's going on with the treasury marks? yields moving higher. moving higher aggressively?
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not quite. but almost. two-day chart of 5s. that's where the act is today. open the chart up, highest yields, going back to september. if we look at other end of the curve, the ten-year, two-day, you can see it's staircasing, 30 staircasing. here is where it gets strange. year to date chart of 30s. last week flirting with 350, which was hovering at the lowest yield levels since last summer. so the curve is where the action's at. open it up, see the 5s, 30s together you, can see what i mean. hovering at the flattest since '09. hard for traders to jump on board selling especially the long end. when it seems to be fighting, based on the flattening. switch gears. let's look at what's going on with the dollar/yen. one day chart, you can see this is popping up. but the best chart is this year-to-date of dollar/yen versus ten-year note yields. the flattening of the curve,
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associated with lower yields, may be ready to crack and go the other way. along with yield curve and michael lewis, we'll be gabbing down here all day. back to you. >> rick santelli at cme. baseball season is here. joining us this morning, bernie williams, former center fielder, jack morris, former starting pitcher, john franco and jeff nelson here to lobby, basically, for making opening day a national holiday. gentlemen, good morning. good to see you. >> good morning. >> serious about this, john? >> yes, we are. trying to get a national holiday. everybody plays hooky from work anyway. might as well have a nice day at ballpark. >> there's a petition, right. >> there was. >> i think you have the number of signatures, 100,000. >> that's in washington right now. >> jack, people have said, day after the super bowl need to be a holiday. why is this more important? >> more games in baseball. this opening. it's just -- it's festive day,
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really. it's a great day for baseball, opening day's always special. why not make it a holiday? >> bernie, you know, i can imagine this having happened a number of years ago perhaps, but these days, football seems to be the national pastime, i hate to say it and oom a big baseball fan, i grew up in queens, i'm a mets fan. but aren't you competing against a stronger sport out there? >> i don't know. i think that, you know, for more reasons than the sport, i think, you know, the beginning of the spring and that signifies great things of the beginning of the year. why not baseball? you know, it's just a lot of great things happening at the beginning of the year, spring, warm weather coming in. >> well, some years. >> well, yeah, some years. >> snow on the field. >> for the most part. i'm up for it. >> jeff, talk about the money this season. looking at large contracts for cabrera, ellsbury, have we crossed some line somewhere? >> after this we're going to start working out, we're coming back. >> coming back. >> comeback begins.
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>> this is what it takes to sign big guys and free agent look at yankees with ellsbury, beltran, mccann, tanaka, they had to spend money to get back to where they were and the world series. this is what it takes and that's the money's there for it, big tv contracts. so that's what is there, that's what it takes to sign big guys now. >> the mets didn't spend that much, did they? you're still involved with the organization. >> a lot of young pitching in the organization. they are relying on that. i'm sure next year or so, they'll spend money. if things get close this year, i'm sure sandy ellison will make a trade. >> keep omar. >> finally, jack, what it's like playing in weather like this? does it affect performance or not? >> it's a drastic change coming from florida or arizona to come into the northwest, northeast, upper midwest, playing in a cold climate.
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but everybody gets excited about this kind of day. if you don't -- you have to tolerate. you have to tolerate mother nature. she rules over all of us. you adjust, doing the best you can. >> would the markets be closed if you get your way? >> yes. >> sure. >> all right. >> guys, thanks so much for coming by. here's to a great season. >> thank you. >> rick, over to you. >> all right. hey, we have chicago. it's a march read. d disappointment. looking for 59.5. 55.9. a whisker under 56. last look, story solid 59.8. the weakest headline read since august of last year. of course, i'll continue to comb through the internals. suffice it to say, ten-year note yields hovering at a critical level, 2 3/4 and it isn't the first time. back to you. >> thanks very much, rick santelli. next, stop trading with jim. "squawk on the street" is right back after this. back after this.
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dow's hanging on to gains after the pmi number. >> mid america truck show last week, i think cummings is terrific. one that is lagging, is paccar. class a truck apz bull market. allison transmission doing well. alcoa confirmed this to me last week, this is one of the moments where you can buy stocks in this group and have a multimonth run, because trucks have been depressed. rebuilding at post-great recession. paccar is the only one that hasn't moved and i'd take the stock to 70 right here, right now. >> a couple of calls an this last week. >> i think this is -- this is -- look at cummings, it's behind. i like cummings' cmi very much
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but i like paccar very much and this is going places. >> how would you rank it in terms of favorites versus this and the rails? >> the rails have had a big run. you need coal to continue. union pacific kind of stuck here. i think csx is the cheapest. i would take csx up through 30. the truck bull market has been, let's say, this is what happens when you begin to get nonresidential construction going. obviously the stuff that you carry trucks is pure commerce because bigger stuff goes by train, that's why it's a great thing to ask. but i think the truck business is just ready to roll in this country. cummings, by the way, big chinese, that's also going to help. and i think that paccar is the one. i don't understand why it's not in 70 right now, it should be. >> tonight on "mad"? >> looking at i think an app for investor relations.
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why is this important? a lot of people want to know about companies on their hand-held, and it hasn't been that accessible. we'll talk about that. i'll reveal a name is that overguided people weep calling me on and i'll cover high frequency trading in a way that -- agrees with michael lewis. >> you do? come back to it despite the fact you've done it 100 times. >> i want to cover what people are nervous about. >> sure. >> i think people can say, listen, sure, it may be rigged, but please, it's rigged short term. take a longer-term view, you're not going to get hurt by it. it may hurt the hedge funds who trade in and out -- >> i was going to say, there's a school of thought this is cheating the richest of the richest of the rich in this country. >> exactly. go to steve liesman right now. >> yeah. >> let's go to steve liesman who has got news on janet yellen. >> janet yellen speaking now in chicago. fed's extraordinary commitment
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is still needed and will be for some time. she says the views on the need for fed commitment are widely shared on the fomc. the labor market slack shows a need for the fed to help. she gives five reasons why she thinks there is labor market slack that needs the fed's help. one is that a few people quit their job voluntarily. many working part time for economic reasons. wage gains small. many unemployed for six month or more. no doubt that the economy or the job market are back to normal health. recovery feels like a recession. she mentioned three individual workers in a very almost populous style here, guys, showing a pretty important break with how bernanke would have given a talk like this. inflation is below the fed's 2% target. the fed takes its inflation target seriously, a sign that it will be as concerned about
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inflation on the downside as on the upside. and tapering, she said, should not be seen as a lessening of the fed's commitment. gentlemen, if there's any doubt where janet yellen stood on the issue of labor slack and the fed's role, that should be dispelled by the speech, which is strong in terms of the fed e needing to respond to problems in the labor market. she doesn't agres six months or longer, which i the statement she made in the press conference but does suggest that she would be on board with keeping the extraordinary measure of the federal reserve in place for a long time. carl? >> steve, thank you. steve liesman, bringing us up to speed on what yellen is saying in chicago as we speak april lot of talk whether or not the six months was a rookie mistake or something else seems like it. also, a couple of good articles that i've been flummoxed how strong bonds are and interest rates going down. i know that there's -- rick will
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be saying, there's a lot of bond buy big the government. but, frankly, it did signal the economy had a big pause and i don't think that's the case. maybe friday we'll get the answer when we get the employment number, the single, most important thing that is happening particularly in the absence of news. >> no doubt the six-month comment was an inflection point for high multiple stocks and detailing the falls. >> that's what's been going on. >> that's why we're talking biotech, that why we're talk about netflixex and facebooks. we're seeing a bounce in tech names. >> can it last? >> whether amazon or facebook or google. >> gilead is up. >> gilead is even up. celg is up as well. >> also a new classic cholesterol drug, statins, may low bad cholesterol, having some impact on the group overall, some of the names. >> right. a lot of that is generic
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component, guys against it. you need to see celgene back to 145. if it's going to earn 7 bucks it's not selling at ten times earnings. >> tesla -- >> i speak the truth. >> i guess it was -- >> did you independent confirm that. >> i had to look, i thought -- tesla down? >> it's our last show of the quarter. as david said, we've been through highs and lows, yellen six months and for the quarter, s&p's up .5. nasdaq's down .5. is that how the rest of the year's going to go? >> if this is the churning that we're going to have, we need to see some m&a. we need to see the end of the supply coming in. then we can get back on track. i actually believe the earnings
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are going to be better. i think we'll be sitting here in two weeks discussing raising number. raising numbers companies, like i did with the trucking companies. underneath a lot of bubbling of good things in the industrial world. so i'm not -- i'm -- i'm sanguine. >> sanguine. >> sanguine. i'm sanguine, as i open my letter to see what school i got into. >> that time of year. >> a lot of disappointment. >> yes. >> won't be long before those earnings are coming out in earnest. >> i think they'll be fine. >> see you tonight. >> thank you. >> "mad money" 6:00 p.m. dow's up 147. s&p at 1872, just a stone's throw away from all-time closing high. and we'll get more on janet yellen's remarks when we come back.. and this will be your premium right here.
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breaking news. janet yellen has begun speaking eight conference in chicago. straight to steve liesman who has been monitoring at hq. >> making a statement a comment about the job market and talking
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about now much slack there is in the job market. a critical issue for the federal reserve, as yellen says, because it has to do with how long they're out there keeping policy low, keeping rates low, continuing with quantitative easing. if there's a lot of slack in the job market, then the fed can remain low for a long time. if there's not as much as they thought, you could have an inflationary pressure. some of the things she's saying, the fed's extraordinary commitment is still needed and will be for some time and those views are widely shared on the federal market committee. there's no doubt the economy and the job market are not back to normal health and labor market slack shows still room for the fed to help. that's what janet yellen is saying at this time. also as i said earlier, almost making like a political speech out there. here's the reasons why she says there's job slack. 7 million working part-time for economic reasons, few people quit jobs voluntarily, all sign of a job market that she says
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feels like a recession to many americans. carl, she mentions three workers individually, talk about their particular plight, and it's part of a promise, not to forget the people behind the statistics. very different style from former fed chairman ben bernanke, carl. >> referring to people as if like the president in the state of the union? >> very much so. three individuals and their plight in the job market, one unemployed for a long time and talks about the difficulty that people who have been unemployed for six months or more have getting back to the job market. it like a black mark on their resume. >> interesting, new style from the fed chairman. i wonder if we'll get clarity on the market moving comment from the last fed meeting, six-month comment, especially there was confusion of what her intention was. >> this is not that clarity, sarah, that you might be looking for, but in a sense it is, in the sense she comes forward and says if you had any doubt you
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thought i might be raising rates quickly i want to tell you what i think about the job market and how much slack there is out there and what the fed's role is. she says there's lot of slack, and there's a massive fed role in soaking up that slack. also makes a single comment about inflation where she says, let me get the exact language, inflation is still below the fed's 2% target and the fed, quote, takes its inflation goal seriously. what that means, inflation is too low. and so when it says it takes its goal seriously, 2% is a symmetric symmetrical concern. now that it's below 2%, i take that seriously. if you had any doubt, sarah, where janet yellen stood on the issue of labor slack, you should no longer have that doubt. >> steve liesman at hq. stocks are rallying. up 150 on the dow. s&p's up almost 16 points. let's bring in the executive
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vice president with bmo private. and harry clark, chairman, founder and ceo of clark capital management. good morning. >> good morning. >> jack, sounds like she's trying to make up for that six-month comment. is that how you read it? >> it is. keep in mind, they are taking inflation seriously. one thing to note, during this last round of qe, the trillion dollars a year of stimulus or bond buying, i should say, inflation expectations have fallen since that initial announcement through the program. so, i think that's -- for them it's a failed program. they want to move that to the sidelines and look at other means to try to goose inflation expectations at the very least. >> harry, what does it said about our expectations for friday, with consensus at 195? >> i think consensus is pretty good. the job market's looking better. i think janet yellen's great. but i'll remind you that she's now the 14th chairperson to take over the fed in its history and
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never has one been successful avoiding a correction. every fed chairperson holds a correction for six months for average. things look very good, the market's doing everything it can to be right the short-term move coming here and then we've got to see. midyear elections years tend it to be very week second and third quarter. average decline's 21%. things look good today, wait and see what happens midyear this year. >> speaking of catalysts, jack, your thoughts on the jobs number. how badly do we need a good job number for march, especially to prove the last few months of weakness, the setbacks in the economy, were due to temporary factors like the weather? >> yeah. sarah, it's enormous. i think we need to get back on that 200,000 track or better. the last three jobs reports have been at or significantly below
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the previous 12-month average. we need to get back above that 200,000 number to really demonstrate that as the weather warms up, economy will heat up. if not, the fed really, you know, unless they've got other crazy tool in their tool kit they're not telling us about really just have to sit on the sidelines and watch. >> speaking of sitting on the sidelines, guys, i wonder what's being said in your circles about the michael lewis interview on "60 minutes." we tossed it around here this morning, naturally it's a talker. but, harry, i mean, can you see any long-lasting effects on retail psychology because of this dynamic, whether you knew about it beforehand or not? >> carl, i think it's interesting to hear about that. we've always known about the trading there. i think the public doesn't care if someone makes an extra penny in a trade. professionals do, big traders do. no effect on public psychology
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whatsoever, carl. >> jack, what about you? you think long-term investor, as jim said, maybe not the biggest deal and you you should be in the stock market for the rest of the year? >> i think investors should be in the stock market. and you know, just another, you know, clip away at underpinnings and confidence in the system. you know, given high frequency trading accounts for 80% of volume these days, it is an enormous factor. and while they say that they're adding liquidity if they are electronically front running, what they're doing is always moving the same direction as the market. liquidity is generally absorbing market action, not selling into a selling market or buying into a buying market. that really isn't liquidity, it's volume. we need to take a closer look. it does cost investors retail and institutional and certainly the confidence in investing in the market. >> that may be true.
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guys, we haven't talked to many people who believe it needs to be addressed or not, that it will be addressed by exchanges or regulators or both. >> i believe it will be addressed at some point about the effect, as jack said, 80% of volume that is kind of trading, not much you can do about it. a lot of that happening. i think the public will forget about this in a few days, not a big effect on public psychology. the public still way out in the market, carl. won't knock on the market until later this year until a correction. a correction this year may give public confidence to start buying. they have not done it yet. >> a lot to talk about today. thanks so much, jack, harry. see you soon. >> thank you. have a good day. up 144. over to dominic chu. >> amge in, new class of cholesterol drugs to lower bad
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cholesterol by 66%. study presented over the weekend in washington, d.c. those shares up, again, 3% on this news, it could be beginning of a new class of cholesterol drugs. back over to you. so, stock market is rigged, says michael lewis, in his new book "flash boys." high frequency trading back in. is criticism fair? we'll talk more when "squawk on the street" comes back. reet" co. weekdays are for rising to the challenge. they're the days to take care of business. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next.
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the stock market is rigged, that's the thesis of the new book by michael lewis called "flash boys." lewis got the "60 minutes" treatment last night. listen to how strongly he's stating this argument the stock market's rigged. the united states stock market, the most iconic market in global capitalism is rigged. >> by whom? >> by a combination of the stock exchanges, the big wall street banks, and high frequency traders. >> here we are on the floor of the new york stock exchange. ben, albert, and bob. obviously, these comments resonated. we've been talking about it for a while. >> years and years. a big megaphone to get attention for it. look, we've got concerns about high frequency trading. i'd like to see changes. but rigged? >> overstatement. >> for sure an overstatement. definitely high frequency traders that would like to charge you a penny for your liquidity and the right to buy
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stock. >> it was a powerful image to show how fast they can get it and how fast the price can disappear. >> the fastest one into the crowd the successful trade. years ago on the floor of the new york stock exchange you used to pay to have location of the booth to have direct sight into the ibm crowd or philip morris. what he's describing and calling rigged, he honed his skills as a hawker on bourbon street in new orleans where he's from, to get your attention to sell a book. that's just a pure play on -- >> what i'm concerned about is the psychological impact. we want more public confidence in the markets. i'm not happy if a high frequency trader wants to scalp a penny at apple, you're paying 535.01. i'm not happy about that, but it isn't a disaster. you're buying 100 shares at 535.01, you're paying a dollar more. >> how do regulators get at it?
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they've been looking at it for a while. nothing has been done. >> again the question, what if anything should be done? we should work under general principles. first one, information should be available to everybody at the same time. >> transparency. >> some instances where that hasn't happened. i'm glad to see some corrections are being made. the government ought to figure out whether people engaging in abusive and manipulative practices dhoerng hathey don't technology now. it would give them the information to try to figure out. >> claiming there's front running going on. >> and there is in a sense. but the front running he's talking about is not 50% of the daily trading volume. high frequency trading involves a great deal. they're capturing rebates because they're paid for order flow of the exchangeans front running he's talking about is somebody in the market who is reading somebody else's order and the only movement for that, the reason to buy the stock, because there is no another
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buyer, there need to be ruled against, so to speak. but that's a small percentage, if you will, in terms of 50%. it's still front running. >> it's legal. the things he was describing, using fiber-optic lines, to get faster to exchanges, perfectly legal. >> but not trading -- but not trading on information on an order existing in the market. before the exchanges became electronic and owned by membership, and owned by shareholders, that was frowned upon. we stopped it. >> we've got to go. obviously, it's a hot topic of discussion. virtue ipo perspective, another topic. >> trader talk. check out my trader talk. >> check this out. michael lewis on "power lunch" tomorrow. you will not want to miss that interview. >> we have breaking news on bill ackman. let's get to scott wapner at hq. >> bill ackman's boosting his stakes in both fannie and
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freddie. and the comment stock, i've learned, i've had a conversation with him, you know that there's this johnson and crapo plan on capitol hill that would wind down fannie and freddie. the likelihood of that happening is decreasing, at least in his hind. that's why he's increased stakes in fannie and freddie from a cop bijed 9.8% to more than 11% of each of these businesses, which is quite interesting, just given what's going on down on capitol hill. that conversation has heated up in weeks about future of both fannie and freddie. again, senators johnson and crapo want to wind down the entities. bill ackman had been in the names, as well as other hedge fund managers. increasing his bet that the likelihood of that happening has decreased, just a bit. we'll keel an eye on fannie and freddie today. >> what's interesting about this decision by ackman is, it's the
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comment. bruce ber cowits, they have taken significant positions in preferred, also litigating. but he's chosen a risky approach it would seem, with the decision to invest significantly in the common stock as oppose odd to those preferred as berkowits as they cot b combat the government on the u.s. treasury. >> those in the preferred, david, obviously, litigating and trying to make their bet on the fact that if they were wound down or however the future of fannie and freddie were sorted out, that they would be compensated in some respects first. it's the common shareholders who are potentially stand to lose everything if those entities were wound down. look, i don't very to tell you, he's a gun slinger. he's making a bet here that the likelihood is decreasing. there are those on capitol hill who would say that there's not a lot of support to get this done.
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that being the johnson and crapo plan. maybe ackman is betting on that side, maybe he's had conversations on capitol hill. >> crapo is retiring. we'll see how much -- how long legs it has when he does leave. that's another story go people rolled their eyes when ackman invested in general growth, a bankrupt company, incredible win for him. >> david, these investments, as they have been for many big investors, have been incredible investments up to this point. it's the unknown down the road that leaves innuendo to the vast amounts of money -- >> the comment could be worthless, a key point to be aware of. >> thanks, scott. scott wapner. a major name in casinos and resorts severely undervalued says the next guest. saying there's major room to run. we'll see.
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next guest's hedge fund has been betting big on las vegas sands and in a new note, there's
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50% potential upside. jonathan litt, nice to have you here. >> thank you for having me. >> a longtime analyst, for many, many years in the area. you've taken on activism as well. i'd love to start, the whole idea, you manage money now, why put out notes anymore, why advertise in a sense your long position? some people have a problem with that. >> sure. the discipline of writing is enormous. you can't make stuff up. you've got to get it right. but really the way to focus on writing is friendly activism. the way with las vegas sands or cali ways to get the message across that we think there's another way to look at a stock and where there's a lot of value to be realized. >> no activism here. >> which one? >> lbs. >> lbs, it's friendly, right?
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sheldon adelson isn't going to do anything he doesn't want to do. but to the extent to highlight a way for a lot of value to be unlocked and encourage them to look at it it's a value that we can bring to the table. >> so what is the way that you're encouraging them to looking at highlighting value. >> 18 months ago we got into th bucks a share. we look at this as real estate. we thought it was worth 85 bucks, malls, lodging, two areas we've done forever, and the casino floors. you break each piece out, 85 a share, and the thought process was, if the operations don't come back, how do you underlock it? spin out the malls and spin out the lodging. >> easy to say those things. i can remember investors in sears, for example, saying similar things about potential inherent value in the real estate, none of which has been realized. why would that be the case here? >> i think there's so much value and sheldon is economically driven that if he saw this as a
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way to get to 85 bucks, he would seriously consider it. most recently, we've heard from management that they're contemplating a spinout of the retail business, which is 12 billion business, the most productive mall portfolio in the world, bar none. and anyone who invests in real estate has to own the stock and overweight it if they do. >> your take on what happened last week, and you've got a couple of nice days here bouncing, but what happens next? >> i think there's a big rotation going on out of growth names and into value name. we're not in this name as growth investor or value investor. we see a tremendous amount of real estate value and the growth is enormous. they're going to grow ebida 80% this year. there's no new supply. to invest in china, where there's no supply competing with you, it's incredible. one of the most incredible stories i've seen in my career. >> a question on reits. you've been a longtime investor in them. worried about the prospect of
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higher interest rates hurting that sector? >> rates have gone up and down many times over past 25 years i've been in it. typically a rising rate environment is favorable to investing in reit until the end of the tightening cycle. think '98, '06. we'll be fine. pick your spots. some stocks you'll get hit, some stocks you'll do well. >> activist front, commonwealth, not a name you're involved in, but certainly a battle that has been won by activists, consent solicitation. real value in cwh? >> i think sam zell's taking it over. i think that from where the stock started to where it is today, a tremendous amount of value has been unlocked. and a fantastic job. under zell's leadership he sees something in suburban office where he can capitalize on it and really drive value.
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not dissimilar to what we see today in a name we ran today, there's a lot of value that could be unlocked. >> ysucceeded in bre. coming up, partying like it's 1999. jon steinberg, president of buzzfeed and the other b word, website troubles for obamacare. deadline is today. we'll discuss on "squawk on the street." street." my name is jenny, and i quit smoking with chantix.
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before chantix, i tried to quit probably about five times. it was different than the other times i tried to quit. [ male announcer ] along with support, chantix varenicline is proven to help people quit smoking. it's a non-nicotine pill. chantix reduced my urge to smoke. that helped me quit smoking. [ male announcer ] some people had changes in behavior, thinking, or mood, hostility, agitation, depressed mood, and suicidal thoughts or actions while taking or after stopping chantix. if you notice any of these, stop chantix, and call your doctor right away. tell your doctor about any history of mental-health problems, which could get worse while taking chantix. don't take chantix if you've had a serious allergic or skin reaction to it. if you develop these, stop chantix and see your doctor right away, as some can be life-threatening. tell your doctor if you have a history of heart or blood-vessel problems or if you develop new or worse symptoms. get medical help right away if you have symptoms of a heart attack or stroke. use caution when driving or operating machinery. common side effects include nausea, trouble sleeping, and unusual dreams. my quit date was my son's birthday, and that was my gift for him and me. [ male announcer ] ask your doctor if chantix is right for you.
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dom chu. >> 14 points upside for the s&p. good day for the momentum stocks check out priceline, amazon, netflix, facebook, names we've been hitting on going lower, yes, they are having a break from the action. up a percent or so for all of the names, again to the upside. momentum names, at least today, to the upside for right now. >> thanks so much. on the momentum names a slew of tech companies with big valuations, buyouts at sky high multiples, is tech partying like 1999? jon joins us at post 9.
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good morning. >> good morning. >> big piece in "the times," looking at king specifically. >> yep. >> i wouldn't argue with rigorous analysis but it's getting attention. >> there's an ipo with characters walking around dressed in fruit suits for a company that had highly concentrated revenue. new york sometimes puts the strawberry on the cover, partying like 1999. king does 2.6 billion in revenue, 30% profit margins. it's a bit of a stretch and aschtick, i think. >> what degree is this true, this echo of the dotcom. >> if you look at stocks on a one-year basis, they're massively up. indexes, massively up. there's a modest correction on expensive stocks but real companies with real revenues. hard to argue it's a bubble. >> one of the examples, which resonated, air b&b, valuation of $10 billion, for man the entire hyatt hotel chain with no hotel. >> love the venture round. preferences on the investment.
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the investors get money out. it's not a real $10 billion. investors get money out if the liquidity event, it's liquidation preference. it's not real $10 billion. >> notable about kirng modestly it was priced. it did terribly in the aftermarket and underwriters told me, we could have gone higher, we didn't expect it to evaporate the next day. this company does a lot of ebida, it may not -- perhaps it is a within-product company but it may not be. >> it's like facebook. facebook was in 20s, everybody said a terrible company they don't make hmoney. crush is the same thing. if you took out candy crush, other five games do 125 million in bookings per quarter. candy crush is the problem, it's a massive outlier. a whole entire mean that candy
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crush is a terrible company. >> industry growth will not support the number of players trying to get in or already in, right. >> that's a danger. cloud there will be washout. >> yes. the other issue with these things, there's a lot of cloning. we talked about cloud storage last week, there's a commodity there's any new game today, 2048, block game, cloned 50 times, take players away from candy crush. you're right, so many cloud users and game players. >> to move along for the broader market, one of the distinctions that was made, and this is what we've been seeing, the dow, the major components of the s&p 500, the big companies, not getting dragged into this valuation craziness. and that's different than 2000 where you saw price to earnings multiples in the 50s and 60s. >> yes. i will say there's an interest rate issue going on. the interest rate comments from a couple of weeks back by yellen affected this and everybody's afraid if you're able to earn any return on your money, investors will not be desperate for any growth in the tech
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stocks and that may take down multiples. names are up because the broader market's up. people feel like she's not going to take up rates soon so i need to be the names. >> some invest in the public companies that allot of the growth is taking place during the venture phase and one those become public, they're becoming public later in their lives you're dealing with declining growth rates as opposed to accelerating. >> that's right. when you talk to bankers and hedge fund investors so many want private funds to get into because they can lock in being in a company at 1 billion before price at 1.2, 1.3 billion. spreads are narrow. dangerous for the venture investors because of market conditions change a bit, they're effectively in a public stock and they might be subject to a lockup of 180 days because they're in a private round. >> speaking of public stocks and market structure, what are your friends saying about michael lewis today? >> i haven't talked to any of my friends. i watched it with my wife, i
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thought, is this news? everybody has known that fiber-optics in proximity to exchanges have always been an influence of being able to trade. i'm surprised at such a big story. i want to read the book but i feel like it will be boring because it's one topic that i already know. >> is it enough for someone like michael lewis to weigh in to effect change? we can talk about it here until we're blue in the face. >> it's a question how media influences. the fact of the strawberry on the cover, michael lewis saying it's rigged, it's not rigged, it's if you paid, unfair advantages in trading. >> the effect of meredith whitney on "60 minutes" with the muni bond market, led to youb flows in market when the pros were saying this is incorrect. >> look at amazon and drones, everybody knew that everybody united states excited about droe drones. "60 minutes," i tell you, for a show that gets to a very older demographic, it's moving everything these days. >> it's still the news show, so
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to speak, for the nation in many ways and has great influence. mark cuban's on "the half," talking about market structure. would that weigh on your decision to take buzzfeed public. >> i don't know who was talking about the fact that it's a penny here, there. unless you're a high frequency trader, being front run in high frequency trading doesn't impact you. and if anything, the jobs act has been transformative. high quality companies, low quality companies but the government's done a good job of allowing subbillion dollar revenue company to do the work without being in the public life. >> jon, see you soon. >> coming up, how china fooled the world. next guest's premise. rick santelli in chicago with that next. "squawk on the street."aw on the" aflac.
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welcome back to "squawk on the street." check out the biotech company, surging on the news the he mow feela drug approved the stock up 3% on fda approval for hemophilia type fee. back over to you. >> specific catalyst there on that drugmaker. but biotech has certainly been one that everybody's watching right now. the momentum trade has run up sharply and in the last few weeks come down. there's the nasdaq. that's where wie've seen the buk in the quarter. we're seeing outsides move, some wondering if there's a rotation going on from the high flyers, nasdaq, biotech, into some of the more quality names. that's just one of the discussions here on the floor today. coming up, two bankers quitting their job to start a retail business. unearthing a hidden market.
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the deadline has arrived, kind of, to sign up for health care under the affordable care
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act. must start before tonight. bertha coombs back at hq. everyone's watching the website. >> they are watching the website. people start the process today in the three dozen states on the site, they will have until next week to finish up and choose a plan. they had an excuse, forgetting that extension, because the plan went down for regular maintenance and then took a while to come up. it was down for about four hours until 8:00 a.m. eastern time. but overall, the site has been working well, health department officials say they've seen record numbers of people coming to the federal site with more than 2 million visitors over the weekend. by last week the president announced the administration had reached the milestone of 6 million people total, having signed up for coverage. that's the revised target number from the cbo following the botched debut. the white house made a full-court press with the president front center on shows like "funny or die," "the ellen
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show," make a push for young people under 35. the outreach, so pervasive, fodder for "saturday night live" this weekend. >> speed is going to eat this up. >> hey, i don't know, mike. this seems to be -- >> three, two, one. >> it's -- >> with the federal site working well, analysts think that push really is what's making the difference. >> i think that that reached a very important target group we've been focused on, young invincibles, younger, healthy adults, tend to be procrastinators, watching late night tv, on social media, certainly a big part of the push over last several week has been aimed aat them. everybody wants to get them into the pool. >> insurers getting a healthy release of the end release critical on the exchanges. shares that have the most
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exposure are mostly higher. the next big challenge, of course, making sure that these enrollees pay up and in some states like california, they have a couple of weeks to complete their applications and get their payments in. but, converting them to people who pay up is the next big challenge. >> yep, going to be a question mark. bertha coombs, thanks very much. today's squawk breakthrough. it has created what is arguably the first online destination for fashion jewelry. and in the process, made it possible for customers to purchase accessories. they've just seen on the runway or in the magazine at guilt free price points. bobble bar, partnership with nordstrom. co-founders of bobble bar. here they are at post 9. welcome. >> thanks for having us. >> congrats on this relationship that you have with nordstrom. tell us how you found within in
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a crowded retail space this niche nobody was conquering. >> we were avid consumers of the product and felt a lot of people were innovating on different ways to mark the product and reach the consumer but people weren't innovating on how to source the product in real-time based in data on the marketplace. a big part, collect data and analytics on the customer what they're searching for, buying and converting on, and leveraging the supply chain to deliver what they want in real-time. >> take the data and go directly to manufacturers? >> we design in-house and work with factories, all over the world. a full in-house design and fashion team that designs the product based on information that we're seeing in the marketplace. >> how leveraged are you to, say, what silver has done in the past few weeks? >> you know, we sell fashion jewelry, so it's materials, not gemstones, not diamond, not
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platinum. we're a little bit protected against those trends. >> right. >> you raised $6 million. >> yes, to from excel partners. >> planning on raising more. what's the next step businesswise? >> we'll raise more capital. we worked hard to build a capital efficient business. having strong partnerships with nor nordstrom's helps us. >> something about nordstrom that attracted you to them? >> we think highly about the brand. they're at the top. when they're always putting customer first and always thinking about innovative experiences that will engage to their customers, they saw a great opportunity in the fashion jewelry space, and we met their team last summer and it's a immediate click. excited to come up with concepts for the jewelry customer and rays the bauble bar brand. >> you're a website, primary driver of revenue but you're not a believe that brick and mortar is dead and you're very much in
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that as well. >> i think there's a difference between third party retailers that sell other brands and website that's building their own brand. for us we think of it as we're building our own brand from scratch. in order to do that successfully, you have to have multiple touch points for customers. >> how important is it for the customer to touch and feel? i would any fairly important when it comes to jewelry, regardless whether costume or high end. >> it's important for all products, right? that's why you see trends for show rooming and people wanting to touch and feel off-line. for us it's having multiple touch points. whether us offering free shipping and return or putting our product in 35 nordstrom jewelers overnight, we're coming to a store near you, come by, pick up the product, buy some while there. >> people said tiffany needs to be less of boyfriend occasion shopping experience and more of everyday pop in get yourself
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something nice right. >> what percentage of your customers are guys versus girls? men versus women? >> we see guys shop our site so much. they see their girlfriends, sisters, moms, get bauble bar packages to their door and they interact with our site to pick up perfect product. that's what's great about off-line, it's a high touch experience for them. we spent a lot of time training nordstrom's store staff and excited to share the bauble bar brand. >> hard to manage inventory for stuff that doesn't sell? >> we have a fast fashion business model. we're introducing new product four times a week. a wonderful way to make sure we're keeping it fresh and fun and don't have to take large positions on styles we're unsure of. >> thank you. co-founders of bauble bar. a tip there for you, carl and david, when it comes to shopping for women. >> right after the show. i tell you that. when we come back, henry
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blodgett, guest host for 11:00 "squawk on the street," will talk about michael lewis, tech bubbles and the dow, up 125. ♪ [ male announcer ] when fixed income experts... ♪ with equity experts... ♪ ...who work with regional experts... ♪ ...who work with portfolio management experts, that's when expertise happens. mfs. because there is no expertise without collaboration.
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welcome back to "squawk on the street." welcome back, robert. >> great to talk to you. >> all right. listen. while you were working on a documentary really about china, how china fooled the world, a couple of things ended up on the editing floor that are today a little bit more interesting. can you explain? >> well, i thought they were quite interesting at the time, they just didn't quite fit into my basic story of the documentary, which is the extent to which china has borrowed way too much and having tremendous -- or will have tremendous difficulty managing its debt over the coming months and years. but one of the people we spoke to it was your former treasury secretary hank paulson. and he volunteered some extraordinary recollections from
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a time of the 2008 banking crisis. and in particular he was talking about the concerns they had about propping up fannie mae and freddie mac. and one of the stories he told us on camera was that he was talking to one of the very significance in the chinese government who disclosed to him that the russians had been in touch with the chinese with a proposal that the chinese and the russians should heavily sell the debt of -- to mortgage agencies in order to embarrass the u.s. government. look like a sort of guerilla tactic to cause, you know, your economy, the world's biggest economy, some embarrassment. >> let me stop you right there, robert. because you nailed it in stopping there. so basically he was under the impression that russia would like to push china into poisoning their position well
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taking a bigger loss with a notion to move it from trading into kind of debt warfare. was he totally serious? i mean, there was a lot of bluster -- >> let's be clear. there's no doubt in my mind he completely believed the chinese were in earnest about all of this in the sense that the chinese were in earnest that the russians had talked to them about it. yeah, i mean, he absolutely took it at face value. this wasn't his idea of a joke. he talked about it to illustrate quite how what was at stake in those hairy days. >> robert, let me interrupt you now because we're getting close to the end. >> go. >> on the record when he was talking about the topic of china he also said some things along the lines of, you know, trying to quell some of the nervousness. don't worry, the political theater you see behind the scenes, forget about that, i will make things happen to help your position along. i found that a bit disturbing as well. your final thoughts in the last
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20 seconds about how he viewed himself versus politics. >> well, i mean, he was somebody as you know who always felt there was a deal to be done. and i guess the great question for all of us these days given there are all these former goldman sachs people all in positions of power everywhere is the goldman sachs deal mentality the best way to run the economy or not? >> robert, that's a perfect place to end. thank you very much for taking the time. back to carl and the "squawk on the street" crew. thank you, sir. >> rick, thanks so much. let's get a market flash. sheila. >> -- nasdaq we are showing nice gains on the last day of trading quarter. in fact, the nasdaq composite 100 up by more than 1% if we can hang onto these gains we are finally talking about a positive quarter for the nasdaq though the month of march will still be posting declines. one of the big reasons we are seeing a bounceback is because of the biotechs. the biotech index is back up 2%
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today. remember, this is a sector that has been battered over the several couple of weeks. two to talk about, biogen and amgen seeing positive results from its cholesterol drug. momentum stocks, a trade everyone has been talking about is momentum trade. we've seen high flying stocks come back down to earth, today we are seeing mixed action, facebook higher, green mountain coffee and tesla lower. perhaps investors are getting more conscious about what stocks they're picking. and microsoft old tech is winning. that's one of the big winners of the quarter that stock hitting a near 14-year high today. we haven't seen these levels since july 2000. back to you. >> sheila, thanks so much. an update on what's going on over at the nasdaq. and the dow too, sarah, up 120. >> not a bad wi to end out the quarter. i'm here with peter costa,
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empire executions down here on the floor. last day of the quarter. looks like we're going to end on a positive note. how does this set us up for what's going forward? >> as far as setting us up for the second quarter, i think we're probably going to see a much better market in the second quarter. i think we're going to start seeing better numbers come in, better than we've already seen. >> on the economic front? >> on the economic front. you always worry about a little geopolitical issues with the ukraine and russians, but right now i think the investors aren't even thinking about that. i think they're trying to set themselves up. earning season starts next week. >> the jobs number is going to be very important. >> i think it's going tor very important. normally i usually look to the downside or lowest end of it. i'm looking to the much higher side. i think we're going to be very pleasantly surprised going into friday after we get the numbers i think it's going to be well over 200,000. possibly as much as 300,000. >> that's the prevailing sentiment right now? positive? >> i think a lot of people are starting to look at that weather-related stuff is past us now. >> but the fed, it's still out
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there. and the prospect of -- >> we already know what they're doing. it's not like there's any surprises. even if they cut, you know, another $10 billion from qe-3, it's really not going to make much difference. the economy's starting to do better. lastly, the most important thing is that where else are you going to put your money? treasuries still aren't paying anything. stocks are still, you know, a little risky. put a little risk on, make a little money. >> heard that argument before. peter, good to get the color from you on the floor of empire solutions. with that, carl, back to you. >> interesting discussion with the jobs number and whether or not the market's rigged and yellen basically saying the unemployment picture continues to see a lot of slack, a dovish message after her testimony a couple weeks ago. 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. >> now, michael lewis has a "60
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minutes" franchise. they will not lay a glove on him. but it doesn't matter. when all is said and done, nothing will happen because they're more powerful than he is. >> here's a look at the bell. >> it's a great day for baseball. opening day's always special. why not make it a holiday? >> we need to get back above that 200,000 number to really demonstrate that as the weather warms up the economy will heat up. >> they're contemplating a spinout of the retail business, which is a $12 billionish business. the most productive mall portfolio in the world bar none. and anybody who invests in real estate is going to have to own this stock and overweight it if they do it. it is 11:00 a.m. on the east coast, 8:00 a.m. out west. here's what we're watching this morning, stocks in rally mode hanging onto a 120-point gain.
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s&p back to 187. a lot of discussion on the question is the stock market rigged? we've got some answers on that, at least we hope we do. plus, are companies like facebook, google and twitter way overvalued? we'll talk about who's making that claim and why. and a major supreme court case could have implications for many of the top tech companies. joining us this hour, henry blodget, founder and ceo of "business insider." great to have you back. good morning to you. markets are doing well here. nice open which you are probably familiar with have been selling off of late in the middle of the morning. not so much today. hanging onto some gains. s&p just about .5% away from an all-time closing high at 1872. henry, you've been consistent saying stocks are overvalued, that a crash is possible, maybe not likely but possible. where's your head right now? >> same. the long-term view all of the long-term valuation indicators that for a century have been very predictive over ten years,
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not over this week, next week, this year, next year, but over ten-year returns are basically saying we should be looking at very low returns over the next -- >> is this a shiller p/e? >> shiller p/e is one of them. i know a lot of attention has been focused on that. people trying to debunk it. but you can look at gdp-to-revenue, many other measures. each one you can come at it and say it doesn't account for this, it could be different this time. it could be different this time. that's clear. back in the 1990s i was in the camp saying it could be different this time. so far i got burned, carl. now i'm in the it's not different this time camp. >> we've asked shiller about his p/e for instance, and he says, yeah, it's elevated. but that doesn't mean it can't elevate further. >> that is a fact. but to put it in perspective, it is higher than it has been at all but three points in the last century. the 2000 bubble in 1999, 1966 piece and 1929 piece. so i just wouldn't think i am so assured that i'm going to be
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fined because of that. >> right. now, you haven't said what a catalyst might be. you haven't said when a correction or a crash could come. have you been anymore specific on that lately? >> i think it will be around profit margins at some point. we have record high profit margins. every time this has happened in the past where we've been this extended one way or the other, there's been a very sharp reversion to the mean. no one sees it coming, but it's sharp and violent taking the stock market down. again, lots of good reasons why, hey, margins might just keep going up. but we are in record territory. never stayed here before. that's my concern. >> it's funny, we just had that conversation with a trader on the floor. one of his arguments is where else are you going to go? rates don't look threatening. yellen was dovish yet again today. what is the natural alternative to stocks, if anything? >> well, important point. i own stocks, i'm not selling because the alternatives are terrible too. bonds, we get into an inflationary environment you're going to get killed. there's nothing there. at least you do have dividends
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with stocks. and the good news is even if you believe that nothing is changed over the next ten years we still have a positive return for stocks. so if you're in there for the long-term, i think you still got to be there. what i just hope people keep in mind is the likely return they're going to get is not 20% a year or 15% a year. >> you haven't been afraid to at least raise the idea of a crash. meaning stocks fall 30%, right? >> or more. >> a very compressed period of time? >> absolutely possible. and going back to 2007, 1999, people don't see these things. and you say, oh, you're irresponsible to even talk about that. come on. stocks are very volatile. that's why people usually have a diversified portfolio. if profits do break, they don't usually just sort of stay there and hum along. they usually go like that. if that happens you're going to see a big drawdown. >> you mentioned your history with previous cycles. and people are trying to draw comparisons today to 2000 given the valuations of companies that are being sold, given m&a
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activity. do you see anything wrong with those? >> we are nowhere near where we were in 1999/2000. for those of us who lived through that bubble, this is an insult to that bubble. joe and others have drawn perspective, you look at scamore, you're looking at a business plan. now you've got big valuations on some companies, but a lot of these companies still have very good fundamentals. it's not anywhere near as wild, but that doesn't mean you can't have a sharp correction. we've seen that in tech last few weeks. people change their mind, get worried, valuations go down fast. >> speaking of markets, we want to get to the story everyone is talking about today and that is whether the stock market is rigged so to speak. michael lewis making that claim in his new book "flash boys" which focuses on high frequency trading. he spoke to "60 minutes" last night. here's what he said. >> who are the victims? >> everybody who has an investment in the stock market. they're able to front run your
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order. >> what do you mean front run? >> they're able to identify your desire to buy shares in microsoft. and buy them in front of you. and sell them back to you at a higher price. >> a lot of outrage today. not just because of what he's saying, which of course you would argue is morally wrong, but there's nothing new about it, people have been talking about it and it hasn't been fixed. what's your thinking on this? >> i think that because he's identified something very specific, which is effectively riskless trading at your expense, shoud look into it, figure out if it's the best way to go. i think the concept of the stock market being rigged is crazy. it is much less rigged now, if this is rigging, than it always used to be where you were a broker getting a big commission on the share. the big problem, carl, is that people who are trading casually, once in a while, often have no appreciation for how difficult it is to compete against
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professional investors who have extraordinary resources, experience, information at their fingerti fingertips. folks have to lose in the stock market for others to win. and you're effectively walking on the field and trying to compete with the new york yankees. that's the problem. and that is never talked about in this discussion. >> are you saying this is a problem but it effects a limited pool of players and mom and pops shoul not worry? >> this affects everybody. in fact, if we're losing a little bit of money in a big hedge fund trading billions of dollars a year going to lose a lot more money than somebody trading a hundred shares here and there. but i think the big issue is we always try to talk about this level playing field, should be just as easy for everybody at home. it never will be. and the reason it never will be is that it's incredibly difficult. and folks with 20 years of experience, mba, huge research departments spending $50 million a year talking to executives, everything else, they can't do it. so the idea that you can do it
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at home just because it's safe and fair, that's the delusion that people have to get past. >> doesn't sound like you think the exchange wills have a change of heart or banks or regulators for that matter. this is going to be with us forever. >> i think we should look at this. and merit's a good regulatory investigation is it harmful, the argument is it creates more liquidity, which can be helpful. it's the same thing floor traders used to do, specialists creating liquidity. there was an argument that was a positive force. we should look at that and evaluate it. but i don't think in fm sense individuals are losing. >> so what degree does lewis himself change the dynamic if at all? >> i think he brings attention to it in and woerful way. he's a great story teller. i'm excited to read the book. but if folks are worried about it being rigged, it's actually less rigged now than ilt used to be. >> certainly the topic of discussion. mark cuban will talk about it in the next hour and michael lewis will be on "power lunch" with a lot more on the new book that
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begins 1:00 p.m. eastern time. that is tomorrow. by the way, we mentioned mark cuban, he's going to talk to scott wapner coming up at noon as well. when we come back, are facebook, google and twitter overvalued? baron is making that case. and there's a supreme court case you might want to have your eye on because it has a lot of implications for a lot of big tech companies and software developers. more on that in just a minute. switchgrass in argentina, d 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. with investment information, risks, fees and expenses peace of mind is important when so we provide it services you bucan rely on.
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dow hanging onto a triple-digit gain. look at i.t. today, it is the top performing sector on the market. at least on the s&p. let's get to dominic chu for more on that. >> very good day for the tech sector led by micron, one of the best performers in the s&p 500. it's also about microsoft, a big gainer as well. upgraded to outperform on friday by rbc capital markets. oracle as well upgraded by canter fitzgerald on friday. top five, harris corporation on an upgrade and autodesk about 2% to 6% to the upside. the bulls like seeing when tech and of course financials help lead the way higher. back to you. >> that's been one of the names to watch, dom, thanks a lot. time for this morning's squawk feed. henry blodget still with us and our own jon fortt joining us here at post nine as well. good morning, jon. >> good morning, carl. >> barons trashing tech companies like facebook, google and twitter saying there's not
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enough ad dollars to support them all. brings us to the question are we in the middle of the bubble? >> i don't think it's so much about that. when you think about what facebook has been investing in lately, whatsapp, that's not an ad play. there's only so much room to play with advertising. google too. nest not an app play. neither some of the android stuff they're doing in cars. but this is a bit of a game of musical chairs, i think. we all remember that game as kids. there's not enough chairs for everybody. that's why they're competing so hard for talent. that's why they're trying to move into some of these ancillary areas. so i think overall this is right, but it doesn't necessarily mean that all of these companies are a bad bet. maybe one or two of them. >> henry, we're talking about -- this is your house, man. this is your church, right? >> again, knowing how different it is than 1999, google is trading at 30 times trailing earnings, not revenue, earnings. even facebook's 100 time
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earnings, not revenue. it's very different. i think the three of them are different. google, you go out a couple of years assuming they capture some growth, it's 15 to 20 times earnings. that's starting to be a reasonable multiple. doesn't mean the stock can't come down, but it's reasonable. facebook and twitter very different. much more speculative. in my opinion still much too much excitement about facebook and twitter. >> really? even facebook? the discovery of mobile, right? some of the longer term plays that they're making on things that aren't assured. >> the growth of mobile has been spectacular. they pulled a rabbit out of the hat after the ipo stock went from 18 to almost 80 as a result of that. now it's pulling back. but this is a product cycle. and it all comes down to how much of the mobile worldwide they have rolled out. they were getting zero. then they sold all this revenue in. somewhere they're going to fill up mobile and they better have something else left. >> you've got to admit facebook has a couple things nobody else has. their scale is incredible. and the personalization holy
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grail people searching around for even in the late '90s nobody was quite able to nail, facebook has the ingredients for that like no one else does. how far they're able to take it is the question? >> facebook is incredibly profitable, they're investing, they're being bold, whatsapp, oculus, that's great and to be commended. at some point it's going to trade at 15 to 20 times earnings. right now on the 2015 number even if they beat their number, still looking at 30. so that starts to worry me. >> i just remember being skeptical about apple's valuation back when they were making ipods, so it's all about the ingredients. >> absolutely. but what is that product? if people start to get cautious, i think that valuation. >> let's move to the supreme court case has a lot of major implications across the world of tech. today the court is hearing arguments in a landmark patent infringement case that could restrict the types of software and computer programs that are eligible for patent protection back in 1980 a couple thousand patents a year, now we're up to
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40,000 patents, jon. the question is where's the line? >> it's funny. all these companies are saying all of their patents are terrible. all mine are okay though. ibm likes to tout the number of patents that its engineers come up with every year. then on the other hand you've got nathan mirvold on the other side a lot of companies call him a patent control. he's very much into collecting companies, individuals, who have patents that he can use in court to try to extract money. it's not clear to me that whatever the supreme court says is going to have that much impact on the big tech companies that have the resources to take these cases to court. you've got so many different kinds of patents. design patents where apple versus samsung, apple's arguing this particular design of the ipad is patentable. i'm not sure the supreme court's going to say anything that's going to address an innovative product like that and the claim of a johnny ive that no one had come up with this before so this
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rectangular with rounded edges should be protected. >> henry, if you're a developer, you're watching closely. >> listen, this is ridiculous. occasionally we change rules in pro sports and add video replay. the patent system was not designed for software and design. the fact you can patent an idea, i thought of it before you did, i didn't do anything with it but i wrote down the idea and put it in a box and you have a good chance of winning and making me cough up later, that is ridiculous. patents were designed for you've got to spend ten years testing a drug. that costs a lot of money. you need protection. >> don't you want to preserve people's right to their idea and the money that follows it? >> no. the idea is not execution. >> what about xerox park, if you have the graphical user interface in the basement somewhere, it's an amazing invention, steve jobs comes down and sees there's value there. shouldn't that be recognized? >> absolutely not. if xerox wants to develop it, think of it first, get it into the marketplace and make it great for consumers and keep
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ma making it better. you don't need to be protected for that because you had somebody thinking and had an idea. we've got to revise the system. >> it's true. some of these companies that buy tens of thousands at once, it's like a blue whale -- >> there's a line somewhere. >> there's going to be a hard line to draw. finally, the king is back, at least a little bit. shares of candy crush maker king digital are rallying today. of course, we remember the horrible i think you could only say it was a horrible day down 16% on day one. now news on the heels of that that king is hiring 165 new jobs representing about 25% of its workforce. >> looking at the numbers prior to the ipo it was shocking to me that anybody wanted to buy it. they're already rolling over. it's a single product. we've seen what happens with hot games in the past. people get bored and they tank. so those earnings are going to go away on that game. so the question is can they have others anecdote i called around
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to a couple institutions before the deal, what are people seeing in this? i couldn't find an institution that was buying it. i'm afraid it got sold to people not looking at it that way. >> i think it's too binary, it's either worth or a terrible company. >> sure. >> i think it might be worth $4 billion market cap or 5, not seven. they've got one hit game, a couple other really strong games. they do have a pipeline for how they develop these things. let's see whether they can develop that farm team into a real pro hit make. >> franchise. >> 100% right. there's absolutely a price at which it makes sense, but earnings for candy crush in particular are problematic. >> yeah. that's the same thing i was saying is we don't know what the steady state of candy crush is so it's hard to value the company. you can't look at how much money they made last year. that half a billion off candy crush because next year it's not -- >> any steady state of candy crush is the steady state of farmville. people get bored.
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>> and the key now will be managing their expenses, right? they are profitable, but managing expenses and hiring enough developers to make sure you do have a follow-on. >> yeah, but not too many. that's where zynga got into trouble trying to do the international expansion creating that overhead too quickly they drank their own kool-aid. >> you do have this spectacular new platform where you can roll out a game at zero cost, not to develop it but distribute it, can be on a billion phones in a week. so the earnings they put up shows the power of this, it's staggering. but there are a lot of developers, very whimsical, you don't know what catches fire. it's like investing in a movie studio at the peak when the movie is out there on opening weekend and then watching it go. that's tough. >> they don't need dozens of developers, they need the flappy bird back. >> that's right. final point, do you think the ipo window is crowded? >> i think that folks are now starting to take advantage. >> it's now or never. >> yes. i don't know that it's now or
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never, the big gain i think is alibaba. that's a huge stock. we saw what happened with facebook when there was enough stock that anybody who wanted it got some, down we go from there. i think that could be -- that could mark the end. >> that's going to be a life for a few months, jon. >> you know what i think, enterprise, the boring companies are about to have their hay heyday. >> when we come back after a period of greater calm, the greater l.a. area has seen a series of earthquakes as you know over the past couple weeks. does this mean the big one is coming sooner rather than later? we'll look at that. and rick santelli watching something else today. hey, rick. >> i'm watching the same thing everybody else is, the water cooler topic of the day, hft. i'm going to come at it from a tangent line a little different than everybody else's. a couple questions need to be asked. and i'm going to ask them bottom of the hour. of the hour.
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welcome back to "squawk on the street." check out shares of tempa pharmaceuticals. moving higher on news the supreme court has agreed to hear an appeal in their top selling drug. could introduce cheaper versions of this drug as soon as possibly may. that's up about 4% right now on this particular news. back to you. >> dom, thank you so much. let's get to the cme and check in with rick santelli. good morning, rick. >> good morning, carl. thank you. you know, sometimes when you have complicated issues, sometimes even simple issues, you need to ask basic questions because it's easy to get lost in the detail. so when it comes to high frequency trading, the conversations i've had which really have nothing to do with the michael lewis last night
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directly, motive. motive, motive -- without motive nothing else makes sense. so let's package this from a different vantage point. are regulators stupid when it comes to high frequency trade? well, i think that there was a time where they were a bit slow to the party. but i don't think it's stupidity or ignorance or not paying attention. so let's wipe that off. so the question i'm asking is, why do they let it continue? i mean, it's a pretty simple question. i mean, do you really think that the regulators that could shut the spigot on this are in the dark and last night they had their epiphany? i don't think so. so if they let it keep going on, that means at least at this point in time in history that's what they want. now, why is it that anybody would want hft to be unchallenged or at least not challenge it now? my reason, this is just my reason, when i look at the stock market it's basically at
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historic highs. when i look at what the federal reserve is doing, it's mostly to put stocks on all-time highs. when i look at all the debt and all the programs that don't seem to be making a difference except for putting stocks on all-time highs, i see that you have this tower of power with regard to the stock market. and nobody wants to challenge or alter hft because it -- good to go that many days without having a loss. so my guess is when the stock market eventually deals with reality and pricing, which will come at a time when there's not a zero interest rate policy and we're long past qe, i think they'll address it. some of the crazy things i've heard, well, you know, this is just like the old days, it's an edge. no, no. in the old days a hedge meant you got a really good bidder offer and somebody hit you. these aren't edges. what high frequency trading is
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doing is putting the crumb in a box with a bow. there's no risk. there's no edge. used to be worse in the past. boy, that is the absolute worst excuse to do things that shouldn't be allowed to continue i've ever heard. back to you. >> rick, thanks so much. rick santelli in chicago this morning. we want to bring in art cashin, director of floor operations at ubs. we have had this conversation many times, art. >> yes, we have, going back to the flash crash and before. >> yes. but to what degree is he changing the conversation on the floor today if at all? >> no, i think there's a chatty fallout. i mean, it was an obvious effort to promote the book. so you want to say the most ear-catching phrase you can. and a rigged market is a prettier catching phrase. but many of the multidecade veterans like me around are not particularly fans of high frequency trading nor of the rebate system that's helped
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build them. in fact, well, you and i have had this discussion, i think that was primarily a reason for the flash crash is people began to send orders to venues that turned out to be vacant hoping that they would get a better rebate there. and, you know, i think some of the high frequency stuff is distorted. you hear numbers about them being 70% of the volume. that must mean they trip over each other because if, take mr. lewis' example, if i see you coming in as a buyer and i buy in front of you and then i sell back to you, which is my primary purpose, then i could only be 50% of the volume. so they must be doing something else to get more involved. >> people argue nothing's going to be done about it until there's something to be gained from it, and right now that doesn't exist, they argue. then they argue it will be used as a scapegoat if in fact the market does tumble hard. do you agree? >> well, again, it could cause some acceleration. let's go back to that flash crash.
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if people are rapidly sending things to venues that aren't very deep, you know, these fellas back here the marketmakers on the floor of the new york have a commitment to make a market. if you're a high frequency trader off the floor, you don't have that commitment. you're a fair weather trader. you're there when you want to be. and that produces air pockets. so, yes, they can contribute to some of the velocity on the downside, but it will remain controversial until people fully itemize exactly what the costs are and who is paying those costs. >> and is there anything to the argument that it's positive in some way or that it's liquidity not always there but it helps you move bigger blocks of stock more easily? >> well, that would be hard to see. i mean, if you follow mr. lewis' example as we just discussed, that's not adding a great deal of liquidity. it's adding volume, okay. i'm making the volume perhaps 50% larger by buying just before you do and then selling it back to you. but i'm not adding to the
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liquidity. i'm not making the offer any deeper. and i'm not making the bids any fuller. so it's hard to see, you know. they provide more volume but in some ways it's like static, it doesn't have a clear message to it. >> finally, art, quickly, is april going to be any kinder than march? >> april tends to be despite the poets, mr. elliot's contention is the kindest month to the stock market historically. so we'll see. particularly tomorrow has about a 70% up buyer. we'll cross our fingers and hope that lives up to it, unless the high frequency traders come in. >> art, thank you. art cashin here wearing his blind squirrel tie which i just tweeted and people adore. thank you, sir. >> thank you. >> marijuana still legal in colorado, but hemp is a whole other story. find out what the federal government is saying about growth and the production of hemp later on. dow's given up not quite half
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welcome back. markets closing around the uk and across continental europe on a day in which some new data did show eurozone inflation slowing to levels since not seen november '09. consumer prices up only .5 in march down from .7 in february. the results did add some pressure on the ecb to take some steps to combat the threat of deflation around the continent. central bank's policy meeting is coming up on thursday.
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here's a look at how the broader markets finished the first quarter, stock 600 outperformed the s&p. and among the big winners in europe swiss drug maker novartis ended trial after treatment showed good results. and ing anoubsed resume paying dividends in 2015. a 5.1 magnitude earthquake hit california late friday night, and more than 100 aftershocks have been felt in the area since then. now people are out west are wondering is this a preview of something bigger down the road? our jane wells is live in fullerton, california, with more. jane, good morning. >> reporter: hey, carl. this house behind me is red tagged and four others on this street are as well even though we are seeing people come out of them. one local resident -- we're not far from disneyland here, said friday night is like an e-ticket ride. if you look at surveillance video of how it looked friday night, there's been another home red tagged, at least one and a commercial building authorities are not letting people go back
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into. one local elementary school is closed for the day as they assess the damage. as you said there have been well over 100 aftershocks from that 5.1 quake. cal tech calls that a "normal pattern." it appears though that our quake drought in l.a. is over. here's the problem with this latest tembler. the fault runs under downtown l.a. and into hollywood, it's a heavily populated corridor. the same system caused the 1957 quake which you're seeing file tape of now. it's not the recent quake but the one from 1987. excuse me. that was a 5.9. wow, excuse me, guys. a 5.9 which killed eight people and caused over $350 million damage. that's in 1987 dollars. seismologists say a strong quake in this fault system is far more dangerous to los angeles than the so-called big one that if and when will eventually hit the san andreas fault.
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they're saying a 7.5 quake on this system would be far more fatal, would kill a lot more people, than an 8 and above on the san andreas fault which is way over that way, perhaps as many as ten times people, 18,000. as for the damage, carl, they're saying damage could be a quarter-trillion dollars. back to you. >> jane, you've been through a number of these. has this series of aftershocks felt more -- any different than the ones in the past in your experience? >> reporter: no, no. the strongest one was over a 4. usually the strongest one hits 24 hours after the earthquake. and that was the case in this case too. it's just that it's been such a long time that we've had a quake you could really feel with a series of aftershocks. in fact, this quake actually had a few 4 shocks which got people scared ahead of time. that it stirs up the old memories. it's been a long time since the people around here have had that
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feeling in their stomach that, oh, what's going on, what's going on. now it's happened a couple times in the last few weeks. >> with all that aside, jane, happy birthday. it's always good having you. see you soon. jane wells out west for us today. >> reporter: thank you. when we come back, hemp is illegal under federal law, but it has a ton of uses. ask woody harrellson, from fiberglass to cooking oil to clothes made around the world. now that pot is legal in colorado, growth and production are ramping up across the state. we'll tell you about some of the hemp's economic risks and rewards when squawk continues. e. with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings 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.
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coming up atd the top of the hour, it is the last trading day of the first quarter and we're wrapping it all up with our competition for trader of the year. find out who's leading and why -- and who has some serious catching up to do. and michael lewis making waves accusing the u.s. stock market of being rigged. so mark cuban, he's one of the most outspoken opponents of high frequency trading, he's going to join us live in a cnbc exclusive. all that straight ahead top of the hour. carl, see you in about 20. i cannot wait for that, scott, thanks a lot. you can grow it, but at your own risk. that's what state regulators in colorado warned applicants wanting to grow hemp. 21 of which were approved friday to farm the crop. the state adopted its first industrial hemp rules late last year, began registering producers this month. even though growing hemp is still considered illegal under federal law. so what are the economic opportunities and big risks
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here? juan karl carlton is deputy commissioner of colorado's department of agricultural and joins us today. >> great to be with you. >> let's talk about the differences between hemp and pot itself, thc levels. what do people need to know? why is it considered taboo to some degree? >> well, under federal law, particularly under the controlled substance act, there's no distinction made. they're considered one in the same. but the reality is industrial hemp has three-tenths of 1% of thc or less. thc of course is the intoxicating ingredient found in marijuana. marijuana tends to have 10% to 15% of thc. so there's a significant difference. in fact, industrial hemp has, you know, very, very little thc. >> how big do you think this could be in colorado? >> well, we think that there is substantial promise, you know,
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great potential. i know there have been studies that have identified about 25,000 products industrial hemp can be used for. you know, this runs the range from, you know, cosmetics and lotions and soap and clothing and pharmaceuticals and a variety of things. i think in 2012 the estimate was that retail sales of hemp-based products was somewhere between $450 million and $500 million. so there's certainly a lot of potential there. >> ron, focusing on pot for a minute. all the stories we get in new york is that legalization has been just great for the state. you have more tax revenue, better quality, any downsides people wondering around stoned all the time. should every state legalize pot immediately? >> well, you know, that's going to be up for every state to decide for themselves what they want to do with that. i mean, i think things for the most part in colorado have gone pretty smoothly. and there's certainly been some, you know, significant
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revenues -- tax revenues that have been brought in as a result. but i think, you know, we're still early in this. and i think we're going to have to see how things go. and like i said, every state is simply going to have to decide for itself how they want to proceed with that. >> i can't imagine being the agriculture chief -- or even the deputy in a state that just legalized pot. has it changed your life or the way you run your office? >> well, not really. i mean, what's changed is of course we don't have any regulatory authority over marijuana. so that's one thing. the regulatory authority giving to us was with industrial hemp. that's certainly taken a fair amount of time getting a regulatory structure up and running. and so, you know, but we're there. the program has begun. it began on march 1st when registrations began. and we'll have a registration period that will last until may 1st. so it's a two-month window. and, you know, things are
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hopping, things are happening. and we'll see how this ultimately ends up. >> talk about it from the farmers perspective. is it hard to grow? what's the season? and would i be likely to, if i had a field of -- say i had some beans, would i switch that into hemp? can that be done? >> well, those are all very good questions. and i think that over this first year or two or three we're going to learn a lot about how hemp is cultivated. the growing conditions, what's best, what seed varieties prosper in this climate. so there's a little bit of learning that's going to be taking place here early on. you know, as far as our farmers, you know, once they begin cultivating or once they start taking a look at industrial hemp, you know, it's going to be like any other crop. what are the commodity prices going to be? are the prices going to be such that it will entice them to move production away from soybeans or wheat or corn into hemp? that's just going to be a basic economic decision. i mean, you know, can they
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profitably grow industrial hemp? that's something we just don't know yet. there's not really a market in place for industrial hemp, so this is something that's going to have to develop over time. and there are other factors. you know, i mentioned that 25,000 products can be made with industrial hemp. it doesn't mean that they will be. you know, manufacturers and processors are going to be price sensitive. and, you know, they may use hemp and they may not. and that may affect the prices that farmers get. risk management strategies flt right now you can't get crop insurance. >> right. >> i think before somebody sinks thousands of dollars into the ground to cultivate industrial hemp, that's something they're going to have to think about. the question will be will there be risk management products available over time. >> right. i mean, you guys, that's what happens when you create an industry from scratch as you are apparently doing twice. that will take time. time will tell as they like to say, ron. thank you so much for your time. interesting economic story. ron carlton joining us from the
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colorado department of agriculture. when we come back, diet soda may be a lot more dangerous for you than you originally thought. we're going to go behind a controversial new study when we return. return. ameriprise asked people a simple question: in retirement, will you outlive your money? uhhh. no, that can't happen. that's the thing, you don't know how long it has to last. everyone has retirement questions. so ameriprise created the exclusive.. confident retirement approach. now you and your ameripise advisor can get the real answers you need. well, knowing gives you confidence. start building your confident retirement today. peace of mind is important when so we provide it services you bucan rely on. with centurylink as your trusted it partner, you'll experience reliable uptime for the network and services you depend on. multi-layered security solutions keep your information safe, and secure.
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you've heard about the dangers of diet sodas before, but new research says they now may be more dangerous than we originally thought. sarah is back at post nine with some details on that. lay it on us, sarah. >> more negative headlines.
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bottom line is diet is out. after years of growth diet drinks have become a drag on business at the beverage giants. the negative news like this weekend does not help. a new study out from the university of iowa finding that post menopause women who drink two or more a day were more likely to have a cardiovascular event. 50% of them more likely to die from a related disease. the beverage association disputes the facts saying there's no evidence of causation. clearly it's a debate, but it's not the first time that you've seen a study like this questioning the side effects of diet. so you've got the health concerns out there, and you've also got taste changes out there, especially among young people getting increasingly turned off by the taste of diet. and all of this is adding up. and it's hurting sales. you hear about the decline a lot in soda sales across north america. well, it turns out diet drink volumes are actually declining at a faster rate than regular
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soda. it's a trend that really played out last year. a long-time beverage analyst looked at a nine-month period of retail data up to last fall, numbers are staggering. coke soda volumes were down over 8%, diet dropped 5.9% over the period. pepsico, almost doubled. diet declines outpaced overall. according to the latest neilsen data, the slide continues for dollar sales. bottled water, liquid teas, that's what's becoming popular. in fact really fast growth, guys, in sparkling water sales. and also energy drinks are all the rage right now especially for young people. the industries on top of it, ceo of pepsico acknowledged people were falling out of love with the artificial sweeteners. called it a fundamental shift.
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on last earnings call talked about the drag of diet sales and blamed, in fact, the overall soda sales on the decline in diets. >> that's incredible. those are stunning numbers. if you're coke or pepsi, what do you do? >> innovate or die. you hear it in number of industries. analysts are optimistic this year on these beverage giants and on this innovation. pepsi for instance is selling pepsi next in france and in australia coke is selling coke life in argentina looking at sugar and stevia, mid-calorie drinks instead of the traditional sweeteners we're used to. dr pepper snapple also checking it out. it depends on how fast they can adapt to the changes, but because of the sales slide and increasingly recognizing this is a consumer shift, can they innovate fast enough in 2014 on the new drinks? >> can we also start to conclude pretty much everything we are sold by big food and big drink
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companies that purports to give us a free lunch, tastes great, no fat, no nothing, is in fact you know going to prove in 20 years to be horrible for us now that fat is good again, you can eat butter, don't have to eat all the fake things that were made to save us from those? >> yeah. i think you're hitting on a trend that you've seen with big food and big drink. and that is an increasing skepticism on the part of the consumers. look at gmos for instance. this movement against gmos when people don't know exactly what they are or how harmful. increasing skepticism. >> goes to a different sense in the ongoing fight in the breakfast wars, mcdonald's and taco bell at each other's floats for a while. today mcdonald's tweeted out in response to the waffle taco ad this saying imitation is the sincerest form of flattery. i mean, they used to not mention their rivals. now the gloves have come off to some degree. interesting marketing
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techniques. >> well, it's a $50 billion breakfast market. mcdonald's has to defend its turf. clearly getting challenge from taco bell. >> thanks, sara. straight ahead, big blue making a big bet on big data. we'll get some details on that after the break. after the break. these don't look clean. [ doorbell rings ] the johnsons! stall them. first word... uh...chicken? hi, cascade kitchen counselor. stop stalling and start shining with cascade platinum packs. over time, platinum fights cloudy residue 3x better than the competing gel. it's so powerful it even helps keep the dishwasher sparkling. avoid embarrassing moments... at least for your dishes. cascade. beyond clean and shine every time.
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welcome back. intel is making a $740 million bet on big data. jon fortt's here with more on their latest bet. jon, what do we have? >> they announced last week but a little more detail's come out an 18% stake value in $4 billion. think of cloudera they make this framework for the big data era, allows you to analyze, comb through data a lot more quickly, a lot of big companies, a lot of fortune using it. they compete with horton works, compete with emc's pivotal division. really important as we're getting all this data to be able to understand what it does. the scale of this though it's similar to the wind river systems acquisition that intel did five years ago. that was close to $900 million. but this is a lot of money for them to put into something. it's important for them because their server business is
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increasingly important as the pete sea flattens out and declines. big data gives people reason to use the line. but this shift toward enterprise we started to talk about a bit continues to happen. we have s-1 looking to raise a couple hundred million dollars. so lots of interesting activity. >> i hope their commitment is stronger than it was to television which lasted about five minutes, right? >> well, they've got real money on the line in this now. they talked a lot about television, but i don't recall them plunking down $740 million. >> yeah. that's good. we'll watch it. i know you like the space, jon. you keep talking about it more and more. jon fortt on intel and big data. if you watched "60 minutes" last night, there was the john lewis interview, but listen to elon musk. >> how did you figure you were going to start a car company and be successful at it? >> i didn't think tesla would be successful. i thought we would most likely fail. but i thought we could address
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the false perception that people had an electric car had to be ugly and slow and boring like a golf cart. >> but you didn't expect the company to be success? then why try? >> if something's important enough, you should try even if total outcome is failure. >> some said the implication of musk took place last night. henry, what do you think? >> he deserves it. look what he's done out of nothing. built tesla, spacex. >> with a little help. >> sure, with a lot of other people, but he is the prime force behind this. when you get into the tesla story and you realize how close that company was to failure, and the fact he put in pretty much every last penny he had, i mean, he went to the table and he bet it. so this idea, yes, other people helped. obviously huge company, amazing products. but he is a classic example of an entrepreneur and venture capitalist actually risking a lot in trying to do this thing is ultimately amazing. >> how about this morgan stanley note from a couple months ago said they're not a car company
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really going to run utilities and the grid, multitrillion dollar businesses around the world. >> i want to see if they're really teaming up with apple to do something in batteries here. some rumors have been there's clearly interest from both of them in battery technology. if we see that, then that puts all of this in a different context as far as where he can push things. >> anything is possible. pretty much bull market thinking. they like the company, they like the fact the stock is going up. they're finding ways to tell themselves stories that can justify even higher valuations. doesn't mean they're wrong. but the higher the price goes the more has to go right for tesla over time to justify it. and at some point one thing we can be pretty sure of is that tesla just like every other company is going to trade at 15 to 20 times -- >> you keep coming back to that. >> it actually has -- you've got to tell yourself a story where at some point tesla trades at that. unless you want to say tesla's going to be different forever. we can throw out all valuations. one good thing with this going
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back to the '90s, cisco, all these companies, people say, no, it's different, it's tech. they're all trading at 12 times earnings now. so it's actually happened. >> yes. >> this will happen to all of today's darlings too. >> the question is when. >> the question is when. and also can they get to that number? you've got to believe they can, or you should sell them. >> henry, good insight. thanks for sticking around for the hour today. henry blodget, our own jon fortt. wapner is up next, what a hour, cuban and a lot more. >> last trading day of the quarter, talk about the rally on the street today, snapback we're seeing as well and mark cuban will be coming up to talk about high frequency trading. you have a great rest of the day after a great few hours there down on wall street. welcome to "halftime report". today's game plan, fair markets, stock markets. >> the united states stock market, the most iconic market in global capitalism is rigged. >> do high frequency traders really have an edge over all of


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