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tv   Squawk Alley  CNBC  February 26, 2018 11:00am-12:00pm EST

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good morning, it is 5:00 p.m. in barcelona where the mobile world congress is under way. it's 11:00 a.m. on wall street and "squawk alley" is live ♪ . good monday morning. welcome to "squawk alley." i'm carl kinquintanilla with moa brennan. jon fortt is live at the mobile world congress in barcelona. samsung unveiling the new smart phone at that event. a lot more coming up >> warren buffett sat down with becky quick to talk about apple
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to april done to taxes and the market becky joins us from omaha to wrap up in case you missed some of it. hey, beck. >> hey, carl good to see you again. i have a question for you. if there was one question that you think sent in more than any other in terms of question that's viewers get to pose to warren buffett, what is it >> one question that gets sent in to ask warren >> if you get one question, yeah, if you get one question, if you get one shot of asking warren a question, what do you think by far the most commonly asked question is? >> i have to believe it's a single stock kind of question, what stock do you wish you owned more of? >> bingo i knew you would know the answer you're right that is the number one question that gets asked time and time again. what is your favorite stock? what one stock should i be buying it's a question he hates we've come at this about 50 different ways, tried to get him to the answer the questions. it's such a common theme that
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shows up in the boxes. so we came at it different this time this time around we tried to get him talking about what his favorite stock might be. and we keyed it up -- i cued it up saying in 2009, you told people that if you had to put all your money in one stock that, stock would be wells fargo. let's fast forward to today, what would that one stock be warren buffett said, that stock is berkshire hathaway. i know, of course. because that is where he has all of his money he has 99.8% of his fortune tied up in shares of berkshire hathaway we didn't end it there we dug a little deeper >> if you look at our holdings, you would assume that we like them in the order in which they rank by dollar value holdings. but if you look at them in terms of recent purchases, you know, over the last year we bought more apple than anything else. >> can i take it and run with that as a headline apple is your favorite stock >> i haven't told you what i might have been buying the last week
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or month >> okay. he hasn't told us what he's been buying in the last week. let's take a look at the chart that shows you as of their most recent filings what the biggest holdings are and run down the line on. that now he mentioned wells fargo. that is number one they've been holding that for a very long time $29.3 billion in that. but there is apple at number two with $28.2 billion that they've accumulated. but then again that, is a relatively recent purchase he built up a large stake in that company rapidly you can extrapolate what you want from that bank of america, coca-cola, american express, round out the top five in terms of berkshire's htop holdings one stock you don't see on that list is amazon but that is not because he's not impressed by amazon's ceo jeff bezos. >> i've been a constant fan since he started and then the more i see of him,
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the more impressed i've been with what he's accomplished. but i've blown it in terms of making any money out of it >> so you're not invest right now? >> no. but i would never bet against it >> wouldn't bet against it in fact, in a case that we know of very publicly, he teamed up with jeff bezos and jamie dimon are trying to bring down health care costs for employees in ways that could be copied broadly across the nation and potentially bring down that rapid spiral of health care costs which are approaching 18% or just about 18% or just over that in terms of the gdp of the nation so that's another huge conversation we got into some of the specifics on what is happening there still very early days but buffet told us they are on a search for a ceo for that company or group whatever it's going to be. and that the things that
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happened there, he's very hopeful over the long haul they label find ways to bend that cost curve down. carl, i'll send it back to you >> becky, if you wrap a few things thoogt you talked to warren about here between not having really any compelling deals to where he can deploy that $100 plus billion in cash and amazon being too expensive right now and not really feeling that there are any other stocks that he feels are worth buying he won't just say, look, the kind of returns i demand to own a business in full are just not available in a market that's been in a bull market for nine years. does is that the general tone you took away from him >> i think so. but i think there's a big distinction there, mike. i think you're right in terms of finding a big business that he wants to buy that business in its entirety, he said that he struggled. he can't find anything that fits that valuation but that's because if he was buying the business as a whole, he'd be -- he'd have to pay a premium on top of what you're already seeing in terms of stock
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market prices. now i push back at that too. i thought that maybe he was making a call. the stock market was overvalued here that is not what he's saying he's saying if you're an investor and looking alt businesses right now, you can still buy pieces of those businesses in other words, stock in those businesses at very reasonable prices maybe not very reasonable. burt decent prices still to be buying and in fact he made the point that berkshire hathaway is a net buyer of securities in the open market over the beginning of this year from january 1st to now. and that's even with the idea that they sold $3.3 billion in stock back to philip 66. now again, not because he's getting out of philip 66 but because they were going over that threshold of 10% where he likes to stay in companies so they sold back $3.3 billion and even with that, they've been a net buyer of stocks, meaning, they spent at least $3.5 billion on stocks over the beginning of the year >> yeah, that's an important distinction. we learned so much today from
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you guys we're always grateful. great show once again. becky quick joining us from omaha. >> thanks, carl. let's bring in david -- >> i knew you would know that question >> a long time berkshire share holder is joining us kevin delaney is the co-founder of courts guys is there a difference between buffet sitting on a bunch of cash because he's hunting for elephants and investors wondering what to do with cash and whose choice is to buy equities >> yeah. i mean, you know, buffet has been -- he's very careful when he is giving advice about the stock market but what i thought was very interesting, perhaps more interesting than some of the parts of the chairman's letter, becky's interview with buffet this morning, again, he chooses words very carefully when he talked about maybe raising the metric to buy back
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berkshire's shares himself, he mentioned maybe 1.2, 1.27 price to book up from 1.2 that, is my big question his previous metric was so creative, so cheap, it's almost like free money. but as this cash is just ballooning, i would not be surprised if the annual meeting that we get an evolving figure from mr. buffet and outside of other investments if the markets are still really high he can't buy any private businesses, i wouldn't be surprised if that metric for berkshire's shareholders goes higher and i think to give him more leeway that if he doesn't have any other opportunities and we're sitting at 120, $130 billion in cash, then he's going to start hoovering up some of the berkshire shares and i hope that's the case. i would really applaud that. >> quickly to follow up on that,
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david. we're still a long way away from that level of cheapness though in terms of where berkshire is trading right now, right we're above 1.5. >> right right. i think also when we factor in the big gain from the tax cut bill that he mentioned, you know, the $29 billion increase in book value, and also one thing that he didn't talk about was in the letter this new tax bill is going to increase the earning power of the overall conglomerate now is that $3 billion $4 billion the point being is that if berkshire's stock is flat just for a couple more quarters, we may be getting closer to an area that maybe he does start to pull the trigger. again, it's, you know, that previous metric is so cheap. it really -- he hasn't been able to pull the trigger. so again, if he doesn't have
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cash, keep it there. but when you're talking 120, $150 billion in cash, i think that metric needs to move. if we get a little bit of a down turn in the stock market, of course, we haven't had much of that in the last nine years, he'll get his opportunity. but you're right it's not there right now as 2018 clicks along, we may get there. >> kevin, taking a look at shares of apple right now, they're 1.5%, one of the top performers buffet saying he's ee -- emassing what do you think about his opinions >> i think he's really relatively late to investing in apple. it seems like he's made a good profit on it in the interview he said he's buying around $105 a share shares are now around $180 so it's been a good financial investment what is interesting to hear buffet talk about apple is that he thinks about it as a consumer company. so he thinks about it like a
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brand like coca-cola i think that's actually not a bad way to look at apple they are like buffet himself, like representative of the consumer market. they're probably somewhat sensitive. we haven't seen this to the up and downs of the economy as they reach the scale and depend on consumers around the world >> he might be a little bit ahead of the market in that. he probably thinks that's how it should be viewed more. yet here we are every couple of years. wondering if it's going to be a blockbuster upgrade cycle for the iphone or not. >> i think history shows with consumer products that there is some moment of time where incumbents have an advantage you know, you look at the internet and you look at aol and msn and yahoo and other brands and shown there is some staying value, the iphone in the latest quarter represented 70% of apple's revenue. and, you know, we've seen with samsung last year where they had the problem with their batteries exploding, there is some risk there. 70% of apple's value is a global
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consumer brand samsung perhaps shows you can actually rebound from that sort of con taatastrophe but that is a lot of eggs in a single consumer product. >> i'm wondering, david, i want to preface this by saying that buffet looks great he's as energetic as ever. the guy is 87. it's amazing his capacity to retain and express knowledge at this age he did say a couple times during the show this morning that he's trying to curtail his travel i don't know what that means i wonder, is there any -- how does the stock react once we get a better picture over time that his involvement will drop? >> well, again, i would agree with those statements. i hope i'm half as energetic as he seems to be when i'm 67 much less 87. but certainly i think what's going to be key when we finally get to that point where he announces that he's stepping down, it's going to matter where the valuation is if the stock is 1.6 or 1.7 times
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book that, is a very different reaction if it's trading as cheap as 1.3 or 1.4. but that said, i think that there are going to be some shareholders that say, hey, at the capital allocation level, he is irreplaceable and we're moving on. hopefully they'll have a lot of cash on hand to buy the shares if there is an overreaction to the down side. >> fascinating morning with the oracle kevin, david, thanks guys g to see you. >> great >> we were just talking about the smart phone business samsung unveiling the brand new smart phone at the mobile world congress jon fortt is there with more hey, jon >> yeah, i'm here with the s-9 and it's important to put this in historical perspective, guys. samsung launching a phone at mobile world congress. it was something we kind of took for granted. but it's important to note this is the first new premium phone that samsung is launching at mobile world congress in
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barcelona sti barcelona since that battery gate thing you with were talking about. there was concern that samsung left the door open for others to eat its lunch, take share. that really didn't happen. so the s-9 is here cameras are the battle ground. again, it's available on march 16th at $720 and $890 for the higher end one for the s-9 plus. and the premium tier at this point for apple and samsung in particular they're the only ones that can sell really expensive phones in volume it has become really important because there is no more growth overall in the smart phone market the way these guys are using these phones appears to be to get higher margin, to get more revenue from the same number of units or even a little fewer and beyond that, the two of them are also trying to use a push to other arenas look back at the past year, there were actually more cars added to wireless networks than there were phones for the first
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time so watch apple and samsung using their installed bases to expand into smart speakers, watches, cars and we have car play and, of course, samsung with harmon cardon that has new card systems. that is the new battleground and all of those things are enabled and super charged by 5-g networks we expect to see tend of this year and really start to ramp in 2019 and 2020. back to you. >> jon, when you throw that stat out there about more cars getting plugged in than smart phones, it is eye popping when you stop to think about it, especially given the fact that we've been having this discussion about buffet he massing a bigger stake in apple. given that fact, what are some of the other product launch that's you're keeping an eye out for in spain this week are they also smart phones or it is other types of devices? >> well, it's always interesting to see what competitors like lg, like nokia are doing
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nokia launched $1,000 phone. but if you look at the market share, these things are a blip and don't even really show up competition wis versus the likes of samsung it's more what carmakers like daimler are trying to do in the arena of technology and connectivity even though more cars are connecting now than phones, it's not as if everybody is demanding the connection it's more about enabling things like autonomous driving. 5-g is really going to drive forward. there have to be services, pieces of software that people find must haves and that is what the industry is searching for now. >> got it. and i want to ask you so many more questions about 5g. i think we'll be talking to you a few more times in this hour. thank you, jon fortt we'll see you shortly. great stuff so far still ahead, much more from jon in barcelona his interview with a man that runs a $100 vision fund.
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and a former facebook insidelininsider, how he thinks they can fix the fake news problem and backlash against the nra is falling why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum -- just to help you improve your skills. boom! that's lesson one. education to take your trading to the next level. only with td ameritrade. at holiday inn express, we can't guarantee that you'll be able to contain yourself at our breakfast bar. morning, egg white omelet. sup lady bacon! fruit, there it is! but we can guarantee that you'll get the best price when you book with us. holiday inn express. be the readiest.
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in light of the extreme market volatility, warren buffett has advice on what investors should do now. here's what he told our becky quick this morning >> the stock market relative to the long term bond market, if people have three choices pretty
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much if they're going to be in marketable securities. they can own reasonably long term bonds this he can own equities or they can keep it in short term cash he quif lentz. if you had to choose between buying long term bonds or equities, i would choose equities in a minute that doesn't mean i think the stock market is going to go up or anything else but if i were to own a 30-year government bond or own equity for 30 years, i think equity is a little -- considerably outperformed that 30 year bond over the 30 years. >> joining us with some insight on that and a lot more, professor of finance at nyu's stern school of business professor, good to have you back >> it's good to be back. >> what did you make of buffet's comments not that they're owl of school for what he said historically but the way he framed it this time >> i think true to buffet, i think he's boiled it down to basics if you're not a market timer, the answer to that question is a
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no-brainer if you have a long time horizon, of course you should invest in stocks in account fa, it was a bit of a copout to give a three year time horizon or three month horizon or three day and if you're not a market timer, you'll pick stocks or bids because that is the essence of not trying to time markets. >> what about within the market? i know that you've taken a look and a stab at, for example, some of the leading tech companies. it's very note worthy, i think, that before this market correction and after the market correction, the very large powerful top companies in tech have led the way amazon's been a little bit of a white whale for you. what does that tell new terms of the market's message about the enduring value potentially of these businesses right now >> i think the pricing these companies for global domination. and in a sense, who can blame
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them i think that these companies if you look at them on a year to year basis, they seem to get stronger as they get larger. unlike prior businesses whereas you got larger, got more difficult to get larger. these companies seem to find it easier to get larger as they get larger and i think the market is building it in >> so do you actually see these based on your own personal investment thesis as value plays given the growth there >> i think of the four big players apple, alphabet, facebook, and amazon apple is the best value play and in that sense, i agree with buffet it is a cash machine i never seen a company generate as much cash as apple has over the last six or seven years. that said though, this is what makes it different from a coca-cola. apple has to reinvent itself every two years. that's the problem of being an iphone company which is what apple has become is coca-cola never had to reinvent itself. it's a trickier play than coca-cola even though it's an incredible cash machine. >> but then you have cover "the
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new york times" magazine over the weekend where in the case of google you're so large that you are arguably inhibiting competition or squelching competitors at an early age. how much is our system equipped to tolerate that >> i think the problem is unlike prior episodes where competition is suppressed, consumers are benefiting from the competition being suppressed so it's going to be much more difficult to bring in anti-trust laws against these companies because consumers don't seem to mind >> but would the antitrust laws potentially be rewritten or interpreted differently within the courtsystem? i mean we're seeing that sort of -- i realize their laws are different. we're seeing that play out in terms of a potential precedent in europe right now. >> it's happening. but at the same time, i think europe is the worst example to follow here. because they're still following the old rule book which is there is competition, you know, we have to induce competition even
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if it hurts the consumers. i think that in a sense we got to rethink what we mean by monopoly power as we look at the companies. they're in a sense redefining what they do with that monopoly power. >> but somebody who was looking to make a case that in fact maybe they should be restrained in some way, maybe could take your quote that as they get bigger they find it easier to get still bigger i mean isn't that perhaps a difference between these massive tech platforms and prior types of business? >> i think the test is whether we're going to use market share as our basis for monopoly power. that is historically how we looked at market -- you know, if you get a high market share, you're going to get pricing power and then you're going price the competitors out of the market and push up prices. but you haven't seen the pushing up prices part of this business yet. maybe when that comes you'll see a push back against these companies. we haven't seen that yet >> we're looking at bullet stuff, bullet points about what you believe is important in the markets. and we are going to hear from
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the fed chair tomorrow on the hill how do central bank balance sheets, low rates over time now deficit spending, how are they coloring your view on valuation? >> i think we're heading -- we're heading back to a more normal period of time. i think the last ten years in a sense were an aberration inflation had gone close to zero real growth was low. interest rates were 2% i think we're going to revert back to a more -- what i think is a more normal time period of, you know, you're going see inflation and growth you're going to see rates go up. it's not a question of whether, it's a question of when. and the real test for markets is how they adjust to 3.5% bond rates whether they come. because they will come >> and when goldman issues a note over the weekend like they did stress testing 4.5% yield and saying stocks would fall by 20 to 25% zshgs th, does that me >> i never read what goldman sachs says in a sense, why worry about what
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any investment bank says about the future of stock markets? the reality is they have no idea what is going to happen. the 4.5% t bond rates come because you have real growth at 3% i seriously doubt that stocks will think of that as bad news i think it depends on why rates go up to 4.5%. if it's primarily inflation that's causing it, of course that is bad for stocks but there are good reasons why rates go up and things that can actually benefit stocks. >> professor, great insight. great candor as always thank you for coming by. joining us to day. professor at nyu stern school of business and still to come, soft bank making a huge splash with multiple billion dollar investments in the u.s. start-ups including uber the man who runs that fund joining jon in barcelona and as we head to break, taking a look at the nasdaq. it has officially recovered all of its selloff losses of the past few weeks, 755 points in
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i'm courtney reagan, here is your update at this hour the supreme court dealing a setback to president trump requiring his administration to maintain protections he sought to end for the so-called dreamer immigrants the justices refusing to hear appeal of an earlier injunction that halted trump's move to end the program. in an exclusive nbc interview, ivanka trump believes her brother's denials of sexual misconduct she represented the united states for the closing ceremony at the winter games. >> i think it's an inappropriate question to ask a daughter if she believes the accusers of her father when he is affirmatively stated that there is no truth to it i believe my father. people paying respects to late reverend billy graham who is lying in repose at the billy graham library in north
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carolina he'll lie in repose at the capitol rotunda in washington on wednesday and thursday let's get back over to "squawk alley. >> courtney, thank you very much let's get back to hq and seema mody is there with the european close >> mike, european stocks mostly higher led by technology as we enter a week in which politics and central banks will take center stage in an address to the european parliament, ecb president mario draghi says they have yet to show signs of upward adjustment with politics, germany reacting to china's jili buying a 10% stake in daimler recollectors say the deal should not be used as a gateway to advance chinese policy interest. that stock down .2%. germany chancellor afrngela merl brought closer to a fourth year
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term the lowest level in a movement sticking with politics, italy's general election less than a week away. the polls show that it's unclear who will win the election. remzi leading the democratic party. he was the former prime minister and voters rejected changes to the constitution bett better lus xoeny is back and the youngest of all contenders is di maio the big topic of discussion is immigration and taxation ahead of that vote on sunday back to you. >> we'll be watching that all week thank you very much. when we come back, social media giants still in hot water for fake accounts and fake news. how can the issues be resolved former high level insiders at both facebook and google are with us next stay tuned at fidelity, trades are now just $4.95. we cut the price of trades to give investors even more value.
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delta and united airlines the latest to join in against the backlash against nra >> good morning, carl. thank you very much. the list of companies severs ties and partnerships with the nra continues to grow and has grown over the weekend behind us here is a list of the companies that used to have some kind of a deal, discount deal whatever with the nra. but no longer do first national bank of omaha was the first one to do that
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that was on thursday enterprise renta car and alamo national, they've done it. competitors avis, hertz, metlife, true car. delta and united over the weekend as well. these are the companies that have severed most of the deals were semiconductor my if you're an nra member, you get a couple percent off a flight to the nra annual meeting in dallas or a discount on a car rental company. the deals are ending but not every company is ending relationships with the nra there are a number of companies keeping the relationships. amazon and apple, i'll get to that in a second perhaps the biggest name on this list is fedex. of course, you have ka bellas, omni hotels and resorts. these are companies that have not responded or just chosen to not do something yet by the way, hotel planner, a booking site, the ceo will be a guest on "power lunch" at 1:45 eastern time he'll tell his side of the story. the nra is not taking all this lying down they fired back in a statement,
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the key part really is this, "some corporations have decided to punish nra membership in a shameful display of political and civic coward he is in time, those brands, the ones behind us, will be replaced by others who recognize that patriotism and determined commitment to constitutional freedoms are characteristics of a marketplace they very much want to serve. so one final note, guys. you see on this list here companies maintaining marketing relationships, amazon, okay? you have roku, apple this is not the -- these are not discounts or partnerships. rather, some people have called for those companies to end their hosting of nra tv. the tv side of the nra on their streaming services that's the latest, guys. i don't need to tell you, it's a second amendment issue when we talk about this maybe we're getting into first amendment issues as well >> brian, thank you for that i have a feeling we'll be talking about this more as the week unfolds
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brian sullivan back at hq. sticking with social responsibility, big tech is under pressure for the role in spreading fake news and manipulating user behavior we're joined by two former insiders at companies taking center stage in this debate. facebook and google. a fellow from new america foundation and former facebook privacy and policy adviser and james williams is a former google strategist employee and time well spent co-founder james, i want to start with you. first of all, thank you both for joining us james, i want to start with you. certainly the news, the content consumed on many of these big tech companies platforms including the ones that you worked for coming under fire this idea of whether this news is variable, how to make it so you've been studying this as a doctoral candidate at oxford what can the tech companies do to address this issue and do so
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without completely upending the business model >> well, i think the thing we ought to demand is the upending of the business model. what we're seeing in this backlash, the pressure against the tech companies, is a realization of the way that the advertising industry has really tranformed into something unrecognizable in the collision with the infrastructures of digital technology and i think the key question i think that we have as a society right now that underlies a lot of this is what forms of psychological manipulation shall we consider acceptable as business models? i don't think it's productive to kind of keep playing whack a mole with fake news and objectional content. it was said in the 1960s, the medium is the message. if we keep focusing on the message and we don't fix the underlying problem with the medium which is incentives that companies have to put extreme content, to put polarizing content in front of us, i think
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we're going to be just in the same situation moving forward. >> are the companies doing enough to address this issue is there going to come a time where regulators have to step in >> well, i think that companies are doing whatever they can to try to respond to this extremely difficult situation that they found themselves in. i think we have to remember that there is a fund. al alignment in the interests of internet platforms like facebook and google and twitter and political communicators or advertisers more generally and when those types of advertisers are -- when they have nefarious intent, whether that's through spreading fake news or hate speech or other kinds of egregious content, these companies need to take a stand. and i think increasingly we're actually seeing that
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there are a couple of near term solutions i think or remedies rather that these companies can try to pursue. i think there are longer term ones as well which will require some more political will >> and james, over the weekend a senator said she believes in imposing finds do you think that is a good idea >> i think there are certainly a number of bandages question apply to acute problems in the near term like that. but again, i think that unless it's part of a broader strategy, a broader societal conversation about the nature and role of advertising in our lives and the way in which it, you know, shapes the character of these platforms, you know, to which we trust so much of our lives, you know, they now shape so much of what we think and do on a daily basis. i think without that broader conversation, again, i think that these kind of bandages, without the surgery, the
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bandages will not be of much ultimate use and you know, we use the term social media to talk about this stuff a lot. i try not to use that term at the end of the day these are not social media companies they're advertising companies with social side effects >> on that point, in terms of the advertising kind of motivation for obviously a lot of the content out there and what users are seeing, is there a chance that the risk here is not -- in addition to being potentially regulated, is that users just kind of tune out in general or believe that a lot of content is suspect and therefore they become less attractive to advertisers? it's almost as if when spam took over e-mail and nobody wanted to go to their e-mail anymore >> yeah. i think that we're actually seeing effects like that for example, on platforms like twitter. twitter is an amazing resource i consume all -- or much of my news through twitter but we're actually seeing a lot
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of movement away from some platforms because of this kind of thing i think that the companies more generally need to start understanding that they have a greater responsibility to their users. and i think we're actually starting to see that these are companies that are neither here nor there they cannot continue to claim that they're agnostic platforms with no responsibility to their users. but at the same time, they're not necessarily like tradition alameda o -- traditional media outlets. they're squarely in between. they have to maintain some commitment to free speech and the freedom to political expression but also to the users, to the safety and security of their users. >> well, it's definitely a very complex issue. thank you both for coming on thank you. >> thank you
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>> thank you as we go to break this morning, new fed chairman jerome powell will take his first turn testifying before congress tomorrow at 10:00 a.m. eastern time, of course, we'll have full coverage right here dow up 229 the nasdaq at the highs of the session recovered fully the correction of the first couple weeks of the month rick santelli, what are you watching >> you know, i'm watching interest rates has the ten year peaked? many are asking th qstn. 'ldiscuss it after the break. hi, i'm bob harper, and i recently had a heart attack. it changed my life. but i'm a survivor. after my heart attack, my doctor prescribed brilinta. it's for people who have been hospitalized for a heart attack. brilinta is taken with a low-dose aspirin. no more than 100 milligrams as it affects how well brilinta works. brilinta helps keep platelets from sticking together and forming a clot.
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coming up today, a stock surge depend one top technician is now saying about retesting the lows plus, the one stock warren buffett is buyingmore than any other. widely followed bank analyst mike mayo with us ahead of jp morgan investor meeting. and one of josh brown's top picks gets a big downgrade is he ready to sell out of a stock that is almost doubled in two years? we'll find out top of the hour mike, we'll see new about ten minutes. >> all right see you in a bit, scott. let's now get out to the cme group in chicago rick santelli has his santelli exchange >> everybody, of course, is trying to handy cap exactly what ten year note yields are going to do. and it seems like it's still seems like a forgone conclusion. we're going to be testing 3% but do keep in mind our high yield close for the cycle which goes to that last day of 2013 when we actually traded and closed above 3%, well, it was
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2.95%. it was only 3 1/2 sessions ago, wednesday. we had a 2.95% yield close we've come off since then. even though equities moved a bit higher and regained their sea legs, normally we tend to correlate in that direction at least from a textbook perspective. so trying to handicap the direction here as we've come off, many say it's going to be all about the next employment report it isn't this friday it's a week from this friday and i actually happen to agree with it. so let's look at the yield curve as a directional indicator viewing isolated ten year note rates with the context of how things change in the last employment report. so the blue line is the yield curve. tens minus twos. black line are ten year note yields what i find fascinating is the yield curve is flat ening dramatically actually. 77 it peaked we're trading around 65. but the reason it's important is it peaked but yet interest rates continued to go up so this was the 12th
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if you look at 2.95%, that is the 21st the best place to start is our employment report. so the employment report comes in right about there and you can see how it steepened the curve. and it gave us a bit of a jolt to rates but we continue on higher. the point of this is that when you look at tens to twos, in a simple way, what you're doing is balancing between the federal reserve's impact on rates and the economy and inflation, all of those issues. the fact that this turned so much leads me to think -- the next employment report, if we don't see major steepening, you could almost argue it was a bit of an anomaly. if that is the main cause for rates going up, we may have a longer time line for that pest of 3%. mike, back to you. >> rick, thank you very much still ahead, you heard about softbank's vision fund splashing multibillion dollar investmentes in companies like uber, we work and nviaid the head of that fund is coming up next.
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let's get to jon in barcelona where he talked with a ceo of softbank's vision fund. >> this is the 800 pound gorilla of tech investing now. he's the ceo he hasn't sat down and done a lot of broadcast at all. of course, the fund is known for having taken a huge stake in
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uber and has stakes in a couple of their global competitors. grab in southeast asia ola in india he was careful to say he's happy with the new ceo the way he's recruiting new front level, front line executives to the company and that he's not trying to tell him what to do take a listen. >> it's not up to the vision fund we are invested in both. it's up to the management to g figure out what they want to do and how to cooperate and we have made the introductions and they'll figure it out but is there any in europe, australia, u.s., middle east no >> he does appear to be holding out some hope that even though they compete uber and grab might cooperate, but not trying to push that. as you mentioned, carl, it's a $100 billion fund. they've invested about a third
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in 30 companies. he told us he's looking to invest in 70 to 100 total. he also talked about softbank's four point investment philosophy, as far as what they're investing in and why >> our capital station, we, when there's an inefficiency in the industry and there's a company that we find that's a market leader, and who can scale and compress the inefficiency and provide better value for the consumer, it will succeed by definition >> so four points. number one, find that inefficiency find a market leader make sure it can scale compress that inefficiency you can do all those things, maybe you've got money coming from softbank. back to you. >> they've got something to invest, jon m look forward to hearing more
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dow is hanging into some nice gains here up 221 after friday' big rally more "squawk alley" continues in a moment what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter.
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morgan stanley
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a tale of two tech
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companies. warren buffett sitting down with becky quick talking about his previous tech investments as well as his recent increased stake in apple >> i was wrong on at least i felt i was wrong on ibm. may have been wrong when i sold it, but certainly when i bought it i felt that apple has an extraordinary consumer franchise. apple's a different kind of business than ibm. they're both tech obviously in a major way and even have a joint venture, but i think i understand consumer behavior perhaps better than i do the tech business. wouldn't take much >> apple is now berkshire's second largest holding not far behind wells bought more of it this year than anything else. >> it's almost as if they've learned the lesson a lot have. it's easier to bet on the leader than the incumbent
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although ibm stock has not been terrible >> up 9% the most resent earnings gave investors hope he said he was wrong when buying now we'll see whether he was wrong to sell it so soon i guess. >> the other big story is buffett and airlines he had a checkered pass going back to the u.s. air days. talked about how the industry has changed. >> it's a business that's always subject to somebody doing something very dumb competitively. and they've done it a lot in past there was more chance of them doing it when there were seven of them than the big ones than four the industry was suicidely competitive for decades. they net lost money while they were growing like crazy in units and i was on the board of u.s. air so i saw how it all happe d happened
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it can turn into fierce competitive battles that wipe out earnings or it can be a business that is more decent but still subject to lot of competition. >> i covered u.s. air in the '90s and never thought buffett would have interest again. >> let's get to the judge and the half >> welcome i'm scott wapner our top trade, the correction and comeback stocks surging again rates dropping and why a well-known market watcher says we won't retest the february lows with us for the hour today, joe, josh, jim, pete. another move higher for stock, which have now recovered more than 78% of their correction losses. nasdaq is more than that got like 90% back. >> people use that sell off when they wanted to jump back in. where did that


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