tv Squawk on the Street CNBC April 24, 2015 9:00am-9:29am EDT
we are keeping an eye on the nasdaq which is building on the record close yesterday. the intraday high 5132. we'll see if we can get close to that. comcast, time warner and more. jim stewart joins us today. your thoughts on our company, our parent and the fact they are walking away from this. >> i think it's an amazing ruling out of the government. i think the flip side of that because they don't compete in any relevant markets, i don't think it's going to hurt comcast. they weren't going to gain in my view any huge competitive advantage. scale, yes. they'll be okay i think. from a broader policy perspective, it's very bizarre you have companies that are not
actually competing and are now being blocked. it may be unique to this net neutrality issue and area of communications, very sensitive area. you want a lot of content. if it's not, this is a serious challenge. >> the public interest part of this as it relates to the fcc as opposed to doj seemed to loom larger. the idea of a hearing. there it was all about the market power in broadband, which has only grown significantly in the last 14 months as its importance to consumers. >> right. this has become a big issue politically. from an economics perspective, it's not nearly so clear cut. public policy has not traditionally focused on the relationship of a supplier to a purchaser, which you have here. comcast could use its greater power to get better prices from say a netflix or charge netflix. it then has the ability to pass at least some of those savings on to consumers. economists would say that's good for consumers. why do we care how much money netflix is making as long as
they are in position to still produce content? >> i wonder when the stories are told it's not about net neutrality and the strict definitions the fcc is adopting and perhaps a threat to comcast unless it said okay to that and basically said it wouldn't appeal through the courts they wouldn't approve the deal. i wonder if that's not the central pivot for everything going on there. brian roberts wouldn't speculate about that today. >> i think net neutrality is the cloud over this whole deal. coupled with that is the idea at some level big is bad. why take chances for this. it's not like comcast had grown through innovation. they were going out and buying a big chunk of market share. i can see that argument. regulate the net and broadband.
>> now they can challenge that. >> the net neutrality. yes, it will. that is more of a losing argument than the merger deal. >> how much do you think the perception of customer service when it comes to the cable company. was this really done -- the public comments came out of emotion, frustration. >> absolutely. >> i think it's a very emotional thing. people don't like the cable companies. they were a moon opfully. they didn't treat customers very well. i've never been all that happy with the cable company. i don't know anybody who was. you look at polls. people hate the cable companies. >> roberts referenced that. >> i think it's a little late. perceptions already hardened
there. when people said let's stop comcast, yes. stop them. >> you write tomorrow about negative yields in europe. how easy it would be to get paid to take a loan. >> can you believe this? i don't think people made enough out of this. there are people willing to pay us to borrow. talk about never thinking the nasdaq wouldn't hit a new high. i never thought somebody would pay me to take out a loan. can i get on this gravy train? there are mortgage borrowers in europe getting negative rates. i tried to get it. one way is to get a mortgage in europe. all the doors were shut there. they caught on there. they clamped that down. that is not a viable way. another way more interesting way would be to do a swap borrow here in the united states in u.s. dollars. swap the loan into a euro or better swiss franc doe nominated loan.
they don't want to do it unless you have a $10 million. if you are buying an apartment in new york $10 million isn't so much. i'm not in the market for $10 million loans chls in theory if you have a bank willing to do it you could do that and if you could, if the transaction costs aren't too high you could do it. you are changing a dollar loan for a euro loan. i decided this is one of those things if it sounds too good to be true it probably is. this morning mylan as we reported a couple of days ago would be the case made a or said it was about to commence a formal offer to acquire perrigo. you may recall some time back mylan made a proposal to acquire
perrigo. then the price was $205 a share in cash and stock. they did not detail the composition of that. they did say it would be worth $205. that was when mylan stock price was far lower than it currently is. why? since then teva decided to bid $82 a share. the commencement of this formal offer seems to actually be lower than the original offer. if you assume the unaffected stock price of mylan. for teva's part they have stock prices $55, $81 before rumors began about the possibility of teva coming after the company. if you assume $60 and you do the new ratio of 2.2 times mylan shares plus $60 a share in cash you get a price below or right around the $205 they offered
originally. they are probably going to reject it. on the other side of this we have teva which continues its pursuit of mylan despite the fact mylan has a particularly corporate structure as a result of its incorporation in the netherlands called a foundation which will give four trustees the opportunity to call for 50% of the voting rights making it invulnerable to a takeover. where all this ends i cannot tell you. mylan chose not to raise its offer for perrigo moving to that formal offer. you see mylan shares are up because people think teva is in a better position to buy them. i argue it will be extraordinarily difficult for
teva to prevail here. shares are note moving for the same reason because the unaffected stock price of mylan, they were to do a 30-day pricing period as they got close to a deal would be a lesser number than the current stock price. >>. >> when we come back what's keeping the spring housing market from taking off? it could be the home inventory shortage is a lot worse than it looks. >> take a look at a live shot of a line forming outside a boutique in los angeles. it's called maxfield, one of the few locations in the world where you can walk into a store and purchase an apple watch without having preordered online.
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welcome back to "squawk on the street." i would like to welcome our guest today. thanks for taking the time this durable goods morning, peter. >> thank you rick. >> you brought up that we had six negative months in a row of what we call core durable goods. many of us know it as ex-transportation. i had to go back to july of '09 through january the following year to find a longer run of seven minus essex transportation. how important is that component? >> it's a huge part of the u.s. economy. it helps to drive not just capital spending but eventual production which leads to eventual hiring and income growth. a key gear of the u.s. economy is out of whack. companies are more interested in not necessarily taking free cash flow to raise dividends and
buy back stocks they want to lever up and buy back stock and raise dividend. we have corporate debt at all-time record highs. anemic capex which is leading to zero productivity growth which is a huge drag on the u.s. economy. >> note the least to mention is the impact this march number may have we learn next week on our advanced look at gdp for the quarter, and behind us. many now have that number close to zero or negative. i believe it was the atlanta fed long before this data point hit was already there. firms are slow to downgrade. what is your thought on the upcoming gdp advance look? >> less than 1% is very likely. i think almost more importantly is the second quarter rebound that a lot of people are hoping for is not going to be anywhere close to what people experienced last year because of the weather impact last year which people use as an excuse this year. i don't think to the extent that certainly was last year. not only are we going to get a
weak first quarter, i'm not looking for much of a rebound in q-2. >> i wouldn't necessarily disagree with that. when you have negative interest rates, if you buy a t-bill you are going to get a bit less back than you gave. you would agree with that statement? >> of course. >> if you put aside limits of fdic insurance, for example, my question is why would anybody do that, just put it in a mattress or safety deposit box, right? the cash you get it all back don't you? >> right. i foresee ft. knox will hold other people's cash because they don't want to lose money in a bangor t-bill or any instrument providing negative interest rates. >> the reason i bring it up the internet and bloggers are going nuts this morning about some general rule changes that have been coming down in 2015 about what you are allowed to use the legal tender for in terms of cash paper. i know that in the cleveland area stories today pointing to
chase in march making it so they don't take cash in things like mortgage payments auto loans. restrictions putting cash potentially in safety deposit boxes. does any of this scare you or should we live in a paperless society? >> it's alarming. it's a free market. if people don't want to use a credit card they want to pay cash they should have that choice rather than it being dictated by a government or bank. >> thank you very much peter. simon hobbs, shaken not stirred, back to you. even in today's tight housing market nearly 3/4 of homes for sale are considered stale. in other words, they've been on the market for more than 30 days. why is that so bad? diana olick is live on the streets of d.c. with more. good morning. >> reporter: good morning, simon. i often stand in front of random houses to give my housing reports about the market in general. today, i want to talk about this house in a really coveted,
expensive d.c. neighborhood with great schools. it's been on the market since the end of february. even though inventory in this neighborhood is down 24% from a year ago and demand is very strong. it has been fully renovated, pristine inside. owned by a builder, in fact who is flipping it. so the question, why isn't it selling? the realtor said it was priced too high at $1.45 million. the bigger problem may be this. pretty much every potential buyer has the ability to find out every last detail about every house, every comp every block of every neighborhood and most buyers are suspicious and just trusting given everything we've seen in the housing market over the last decade. a house today is likely to go stale faster nn the past. that has a big consequence. >> if a house doesn't sell the first few weeks, sometimes it doesn't sell the first few months and really sits on the market. that means the inventory crisis everyone is talking about is
actually much worse than people realize. there is a small segment of real estate people are actually willing to buy. >> redfin estimates 70% of the homes listed today are, quote, stale. on for more than 30 days. in some markets like charlotte, it's worse. 95% of the market stale. even though we saw a slight bump up in inventory from february to march with realtors saying there are 2 million active listings the number of desirable viable homes may be far less. >> yikes. thank you. up next on the program, under siege from activist investors and with his predecessor resigning, the ceo of juniper will join us for an exclusive interview. rami rahhim reports juniper's make or break quarter. a wide-screen multimedia center, and a head-up display for enhanced driver focus. all inside a redesigned cabin of unrivaled style and comfort.
say that they remain fully committed to getting that deal done as i pointed out many times, they may be fully committed but there are a great deal of weapons in the arsenal that mylan has to prevent them from being successful. not the least of which is the structure in netherlands. and mylan has yet it even respond to teva's offer. typically we would get some sort of response from mylan. remember it came out prior to the actual offer and said it wasn't interested. before teva even made it. shares of juniper networks are soaring are up on soaring earnings. juniper's new ceo after his predecessor was force to resign in november following a board review of his conduct with an unnamed client. joining us, the ceo of juniper networks. good morning to you.
it looks like the quarter was all about demand for the cloud, cable and the european telcos. >> you're right. we had a solid q 1 quarter. think that's a testament to the fact that we diversified our customer base a across a number of key verticals. including the cloud as well as government. and that helped offset some of the weakness in spending we're seeing across north american carrier customers. >> speak to that there was a lot of negativity about why in this country the telcos aren't investing. in your area of the market. why is that? they're spending all their money on spectrum? >> there is just it's just a matter of priority, if you will. there's certainly a lot of cap ex that's going into spectrum acquiring different assets in companies around the world. for that reason there was a bit of weakness but we expect it to be temporary. this is a cyclical industry at the end of the day. i think the team has done a fabulous job of diversifying the
customer base which helps offset the weak snz. >> the activist investors putting two independent members on the board. a lot of analysts are saying it's about the new products and whether they gain traction. you've been working with your potential clients on them i hear and that is significant moving forward. >> yeah you know q 1 was an exciting quarter for us, we announced in the past quarter the industry's fastest firewall which allows our customers to get ahead of threats without slowing down the networks. the industry's fastest switching platform. which allows them to develop and advance their cloud infrastructure. as well as the industry's fastest routing platform. so we've really done some incredible innovation just this past quarter that we're going to be introducing throughout this year. and that increases our ability to take consumer segment. >> will people push you to be acquired, do you think?
>> well there are a number of really exciting transformations that are happening in the industry. consolidation is one of them. it might continue. but in addition to that there's a transformation in architectural approach towards cloud-based service delivery architectures at the heart of that transformation is ip networking. juniper is squarely focused on ip networking innovation and this industry needs a company like juniper that can focus and innovate in that area. we're well-positioned for that transition. >> so as far as the landscape is at the moment. does that make you a takeover target do you think to fill in other people's blanks? >> i think we're, you know we need to be squarely focused on createing shareholder value through innovation through achieving scale with effective partnerships. we have great partnerships around the world that help us take our solutions and our innovations to market. and that's worked very well for us and i expect it to continue to work for us. >> good to see you, sir, rami
rahim, the ceo of juniper networks. let's send it over to john ford to find out what will be on "squawk alley." good morning, john. >> we're going to talk tech earnings, it wasn't just the top and bottom line numbers that mattered this time. we got insight into how key tech companies are actually doing in their subbusinesses and it is apple watch day. at least for some people. peemt who ordered ahead are getting theirs in the mail. we'll find out what the ecosystem is doing differently now. and jason calikanis, talking about the possibility of a tech bubble. innovation is top of mind. ...and takes the wheel right from your very hands... ...this isn't that car. the first and only car with direct adaptive steering. ♪