Skip to main content

tv   Squawk Box  CNBC  January 29, 2021 6:00am-9:00am EST

6:00 am
good morning, everybody. welcome to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. and let's take a look at the u.s. equity futures as we crash into this friday we have seen the market kind of exhibit a lot of volatility this week, as you probably know wednesday was the biggest loss that we'd seen for the markets in about three months. thursday, yesterday, we made up some of that ground. dow was up by 1%, so was the s&p 500, nasdaq up by a half percent, this morning we are giving back much of the gains. the dow futures are indicated down by 240 points s&p futures down by 35, and the nasdaq is off by 155 points, at least in the premarket activity and if these losses that we're seeing right now in the futures were to hold through the session today, you would be looking at both the dow and the s&p 500 down for the year to date, down for january.
6:01 am
not the case with the nasdaq just yet it would be holding on to some gains. we'll continue to keep an eye on this that wild week for gamestop continues as well. as joe mentioned, that stock is up sharply that doesn't describe the moves we're seeing that stock is up by almost 100%, almost doubling its price this morning, a gain of $187, back to $381, and here's a run down of what you may have missed if you weren't locked on cnbc since yesterday morning. 24 hours, a lot can happen in fact, at this time yesterday, gamestop was trading at around $500 per share it plunged just before the opening bell as word was that robinhood was restricting trading and opening the session solidly in the red the stock closed down, it rocketed back higher in the after hours trading as robinhood
6:02 am
said it would resume limited trading. after the losses from yesterday, the steep losses that it saw during the day, though, gamestop shares up 40 0% for the week. again, this is one that you can't blink or you're going to miss something, andrew. >> it has been a wild ride, and the ride continues i want to bring you some of the breaking news that's takes place with robinhood that took place overnight. the biggest news, the company is now raising a billion dollars from a previous investors, venture capital investors to try to shore up its balance sheet ahead of trading today in addition to that, he's now drawn on about $500 million in credit lines from the likes of j.p. morgan, and goldman sachs, along with several other banks all of this in an attempt to be able to allow investors to buy shares in companies like robinhood, which of course were hit, or not robinhood, gamestop,
6:03 am
which have been hit so badly yesterday in part because robinhood's investors were prevented from buying those shares we want to focus on this decision to suspend the trading on some of those heavily shorted stocks including gamestop, amc, blackberry, andnokia the free trading platform said the decision they said was a risk management one meant to protect what they said were investors and the markets. robinhood also raised margin requirements for certain securities the company's ceo, vlad tenev speaking out in an interview last night i asked him how concerned customers should be about the robustness of the system >> well, to be clear, this was the system working we have the ability to restrict buying in symbols for unprecedented market conditions such as this, and to be clear, we didn't shut down the system we shut down buying for these 13
6:04 am
stocks, for these 13 security, but customers that held positions could still sell, and customers still could buy and sell the thousands of other securities on the robinhood platform >> but when you look at the precipitous fall, for example, of gamestop today, do you think that robinhood bears any responsibility for that? >> i can't comment on, you know, price action of securities and probably would be inappropriate for me to do that. and also, i should note, robinhood wasn't the only firm to restrict buying in securities, other brokerages have been restricting the buying and trading of these types of securities all week. and even today of course we get the lion's share of the attention since we've been the cognitive for retail investing in america, but
6:05 am
other people are dealing with t these challenges as well. >> of course the big question is did robinhood suffer a liquidity crisis or was it on the verge of one, and that raising questions about why it needed to draw on those bank credit lines, and why it needed to raise that money. the company saying overnight that the reason for raising that money was to instill confidence as a demonstration that the company has staying power, but i asked vlad, you know, what customers and other investors should be thinking when they see this happening when they can't access or have the ability in certain cases to buy certain stocks on their platform >> robinhood has financial requirements including s.e.c. net capital obligations and clearinghouse deposits some of these riequirements fluctuate based on volatility in the markets. basically with a lot of
6:06 am
concentrated activity in some of these stocks, we need to deposit more money at our clearinghouses to allow for that activity to continue by drawing on our credit license, which we all the time as part of normal day-to-day operations, we get more capital that we can deposit with the clearinghouses and that will allow us to enable ideally more investing with fewer restrictions >> to put this in simple terms, what happened yesterday was robinhood was unable to meet the deposit requirements that it was anticipating for those shares in certain symbols by the clearinghouses so for every time that you want to go buy something, they have to actually make a deposit first, and the anticipation was that they were not going to be able to do that. and before having a liquidity crisis, they were trying to prevent one, which raises all
6:07 am
sorts of questions i asked one of them, which was effectively, how concerned he is that some folks are staying i'm going to stick in this to the end. we have talked a lot about this that some of these investors aren't just trying to stick it to the man but ultimately they may be sticking it to themselves >> ultimately, we're a self-directed platform, and we are in favor of access, so we think that customers should have that access. we should also give them the tools and education they need to be informed market participants and so we have been investing a lot in our robinhood learn portal, and ultimately, we don't provide advice we are a self-directed brokerage platform, and we understand people might want to make investments for various reasons, and we're supportive and stand with our customers in providing that access. >> some investors look at the
6:08 am
idea of an accredited investor, a wealthy investor, the professionals as having a leg up, that the system is really rigged in their favor. do you think that's true >> anytime there's limits to participation, you know, that prevents certain people that might be interested in doing things from doing them, i'm not going to say that those limits are unmotivated. there's reasons that these limits were put in place by regulators in the first place, and robin hood is committed to en engaging in that conversation. we believe we have a valuable insight from serving this customer base, but i'm also not going to go ahead and blanket say that, you know, regulations are not motivated because there are very very reasonable motivations for some of these
6:09 am
things >> it was fascinating to listen to some of his comments as we all grapple with what's happening and not just with these shares, but also with robinhood itself, big questions about whether robinhood investors, kleiclients, if you l are going to stay with robin hood, questions about the robustness of the system, and clearly, the company trying to not only protect itself yesterday, protect itself perhaps more than investors themselves, so they would have been injured too had they not been able to make the deposits in the process, and we'll see what the announcement of a billion dollar investment does and whether it does instill more confidence this is a platform that's gone down before, by the way, you know, earlier this year they struggled with -- they struggled with the issue of it being a robust platform, and i think it does raise lots of questions for the company, and also more broadly for the industry if some
6:10 am
of these systems can't handle the kinds of trading that's taking place. >> that was going to be my question, andrew is this a situation of growing pains for robinhood like we saw earlier when the trading platform couldn't handle the amount of volume that came on or is this just a business model that doesn't work when you are offering free trades to anybody, you can do that when times are easy and times are good. anytime there's going to be any stress in the system, are they going to be able to handle it. the whole idea of was this a liquidity crisis, they're trying to say they were trying to prevent the liquidity crisis, but they basically did face a liquidity crisis they had to stop trading, draw down their credit lines and get a billion dollars of additional input from other investors that's the definition of a liquidity crisis they came through it at this point, but they hit a liquidity crisis yesterday >> i think there's two issues here one is i do think there's a business model issue to some
6:11 am
degree you know, a95% of the time, it' all going to work. 5% or maybe less, it's going to get complicated and this is one of those type of situations. but i think it's also -- >> it's not okay mission critical systems. >> this was not happening atr at fidelity. you can argue it was not happening at fidelity to make these trades there's a unique confluence of where all the trading was, but ting there's going to be a big question about regulators and the like about what kind of capital requirements systems like this need, and perhaps the models unto themselves need to be changed in terms of what the requirements are. >> this may be the last time they have to worry about everyone trading on their site that might be an issue, too, if guys like dave portman have their way. i just, the general has a great piece today on all of this, the lead editorial there are a lot of old fashioned
6:12 am
people around that think that, you know, that stocks are valued based on earnings or revenue growth or whatever, and then there's a whole new breed that know exactly how to -- maybe it's not a new breed maybe it's been going on with the hedge funds for a while, gaming the system, that's all true, but the biggest concern, we have talked about it again, and again. what happens when all the shorts are covered, and gamestop is still at $500 a share, and there's all of these people that are allowing gamestop at $500 a share. it's not really about a company that has a chain of video game retail stores. it's not and i just -- what happens when everybody looks around and says, whoa, i got all of these shares of gamestop at $500 a share. >> look, you can say the same thing with amc, and maybe even more to that extent because this was a company that -- if you look at the -- right
6:13 am
you could. if you look at the volume on amc, the volume on an average basis is generally around 22 million shares well, on wednesday, they had 1.2 billion shares that's the volume you were looking at in this stock that's why there's so much pressure on robinhood. you're offering free trades. anytime you're offering something free, there's a cost that comes with it with facebook or twitter, it's your privacy, you're selling on these things with this it's your ability to say, yeah, you are going to be able to trade. we'll offer this free, but offering the buffet and an army of 800 pound gorillas showed up. you couldn't handle it this is all until the terms of service. this is what happens, but look, that's not okay when you're a retail investor thinking what you're going to be doing
6:14 am
this is the way they laid out the game a lot of retail investors didn't understand this. this is a mission critical when your money is locked up, that's a lot different than when you can't access twitter or facebook >> that's the important part i mean, that's the issue, these platforms need to be able to support this kind of activity. interestingly, i have now looked through the terms of service for all of these services whether the biggest, oldest, most traditional players in the world or young start ups like robinhood, they're all the same. they actually don't what they call guarantee up time, which is actually interesting as somebody who has covered this industry for a very long time, i never considered the idea that these services didn't guarantee that they were going to be quote unquote up, but they never guaranteed they would be quote unquote up. >> that's not different than what you have seen on wall street in the past if you went back to 2008, 2009, in the financial crisis, there were all kinds of traders, not
6:15 am
retail traders alone, there were all kinds of institutions that couldn't get their trades through. this is what happens when the system gets gummed up and has serious problems joe, you talked about it yourself, in the '80s, when you weren't answering your phone, he's under the desk. >> he's not here i'm the cleaning person. we haven't seen him all day long >> you can't process the path, seeing this on this huge democratic level. >> andrew, this is a boring end to what the scuttlebutt was yesterday that a cabal of the evil hedge fund guys all talked to one another, and called their associate vlad who said -- they were mentioning names of guys that i don't think had anything to do with that, they all called up and said protect our buddies, close down the trading here, and it turns out to be that they were broke not broke, but it turns out that they were having liquidity problems, and it wasn't nearly as sort of -- did you see all of
6:16 am
those, sorkin? >> we're going to show you -- >> whistleblowers that were saying i know for a fact this hedge fund guy called up and he said you got to do this for us, if you want to keep -- none of that was true -- >> we're going to show you more of the interview where we directly ask him about the role of citadel citadel of course clears the trades for -- >> without mentioning any names. >> for robinhood, and on the other side, as you know, has backed mer vin capital which lot money on the trade the conspiratorial view was citadel told them you got to cut this out there was other folks on twitter and the like, and i don't want to report this directly in this way, but suggesting that citadel knew they were going to shut down, and therefore were front running or front trading we talk about that with him, and we're going to show you more of that in just a little bit. we should also tell you there's more of the interview on cnbc
6:17 am
pro right now as well. so we're going to continue talking about this story and what the future of robinhood is, and whether the customers stay i think that is clearly the biggest question interestingly, guys, and this is the part that it's almost counter intuitive. after the system went down, if you remember, earlier this year at robinhood, there was a question we all asked, would customers stay, would they go, customers not only stayed, they almost doubled the number of people they signed up. so it will be very eninterestin to see what happens next. >> it was new people that didn't get burned last time i'm stuck by when you pushed him on it, the system not working and things, because of those rumors that were going around yesterday, because of the conspiracy theories, i can't believe he wasn't a little more open to the idea that, no, it didn't have anything to do with that it had to do with we're broke. he's more afraid of saying we were broke than saying there was
6:18 am
a conspiracy theory and the hedge funds were directing us. i would almost think you would want to say, clear me of the conspiracy theory, we were broke, there was a bigger concern about being broke that he was trying to get away from that. >> in any situation -- >> do the reddit people now cut robinhood some slack because they weren't trying to pull the rug out from underneath, you know, their reddit heroes, whatever we're calling them, the davids. >> probably not if you lost money yesterday anyway, you don't care why. >> if they did it just, you can't buy, but everyone else in the hedge fund industry can sell that was a bad picture they were painting for the little guy, and if that wasn't what happened, if it was just geez, this business model, we charge no commissions, how do we stay in business if it was just that, maybe people don't believe en masse.
6:19 am
>> if you lost money yesterday, you're probably mad no matter what. >> look, the interesting thing, if you for whatever reason didn't sell yesterday, and the stock opens up at $500 today, you could have gone to sleep yesterday and been happy, so it's hard to know where this all heads, but this story is not going anywhere. >> novavax had results about a covid vaccine. we have talked about this a lot. i think microsoft reported, and apple reported i think even tesla reported. we got an interesting elon musk piece coming up in the next block too, but we'll tell you about novavax. we've got a lot coming up. talk about other investing targets from reddit groups, including a cryptocurrency that was founded as a joke that soared 800% in 24 hours. that happened too. later, two big earnings interviews, eli lilly ceo david
6:20 am
ricks will join us around 6:45 eastern after that company reports, and chevron ceo pmichae wirth will join us in the 7 can ho -- 7:00 hour. "squawk box" will be right back. . "squawk box" will be right back. . "squawk box" will be right back. r "squawk box" will be right back. . "squawk box" will be right back. . "squawk box" will be right back. 0 hour "squawk box" will be right back. 0 hour "squawk box" will be right back. hour "squawk box" will be right back. flexshares etfs are built with advanced modeling. to fill portfolio gaps and target specific goals. strengthening client confidence in you. before investing consider the fund's investment objectives,
6:21 am
risks, charges and expenses. go to for a prospectus containing this information. read it carefully.
6:22 am
. a tweet by elon musk sending
6:23 am
another stock soaring, the tesla ceo tweeted a photo of his firm's new sedan, the plaid model s, and suggested it would be able to run several video games, including cyber punk. then musk tweeted that the aesthetics of fiber punk are incredible the tweets sending stock of the game maker sharply higher. the german listed shares of cd project jumped more than 12% in yesterday's session. i probably would have put this story first. but who am i musk also sending bitcoin soaring, and the reason i would have put it first is because look where it is on his cover page for his twitter account that was not there before. #bitcoin right there and he also, he added that, #bitcoin to his twitter bio. and sent out a cryptic tweet, which i don't think it's that cryptic, in retrospect, it was
6:24 am
inevitable maybe it is cryptic, i'm not going to ascribe any motivation to what he means by that, but i can come up with a few bitcoin in the space of 30 minutes went from, as you can see, the low 30 thousands to above 37,000 something also i was thinking about but i also forgot. i already forgot there we are did you see that, andrew that happened this morning, it seemed like. >> i did. >> i know what i was going to say, and then elon is so clever, remember the movie "get shorty." >> yeah. >> is that not, suddenly i'm thinking, wow, they made a film about this with chilly palmer and john travolta and everything else is that not an appropriate term for what's happening here, get shorty, and they are >> when i think of get shorty, and all of our conversations about mini advans, that's what
6:25 am
think about. >> the rolls royce of minivans, the olds mobile. might have been the worst of all the minivans, but they're all bad, becky >> see, you can be cool with a minivan. you can be cool with a minivan. >> i drive a minivan, but i'm not proud of it. >> that was the joke, you cannot be cool. danny devito thought you could you cannot anyway >> let's continue talking about some of the stocks that have been hyped on reddit, and what it means after the retail brokerages, limited trading on heavily short names. robinhood said it would allow limited bias of gamestop, a many, c and others we're going to see what that means and how it's going to play out. check out the rise in dodge coin, a digital county started as a joke in 2018. rose as much as 800%, and joining us right now to talk about all of this is anthony pop
6:26 am
lee pop -- pompliano good morning to you, i want to start with the robinhood news, what it means to the markets and whether you think robinhood is going to survive on the other side of this. >> good morning to all of you. i think basically what we're watching is another marketing campaign last year we watched elected officials run a marketing campaign around the basement of the dollar today and yesterday what we watched was a marketing campaign for the decentralized financial system, and regardless of kind of why certain events happened yesterday, i think it further, kind of the thought process, the little guy has the deck stacked against him, and so you're probably going to see people doing some irrational things they're going to be buying stocks they don't care if they make money or lose money. they're trying to make a statement. over a long period of time, i think the true impact is we're going to have a great exit, and people are going to realize no
6:27 am
matter how hard they try, how loud they are on social media, they don't have a voice, and the system is stacked against them, and they are going to exit the system, and eventually go find a home in a decentralized digital financial system where there's no one person or group that controls these protocols there's nobody who can kind of stack the deck against them. and so i think that's really what we're watching here is just kind of an acceleration of this trend. you see it with musk and a bunch of people. >> so anthony, just speak to this because you do understand this generation of traders in a way that few do. just on the issue of robinhood itself because of the number of questions there are about that company today, they've now raised a billion dollars they have also drawn down about $500 million in credit lines, do customers stay with them do they flee >> yeah, i think that it's got two competing forces, right. there's a lot of people who are really upset i saw that there were hundreds
6:28 am
of thousands of negative reviews left in the apple or google stores people are pissed off, for sure. at the same time, i don't know if they have that many options of where to go today there's a couple of other companies competing with them. robinhood has top of mind share, and so one other argument is that kind of the streisand effect happens, the more user acquisition they get we have seen in the past they gain users in situations where they had some negative press, so i don't think we know for sure, canine of in the short-term. over a long period of time, i think this is detrimental to somebody's brand and people will go elsewhere and look for other options. >> so anthony, it's joe, and i know you think deeply about these things and i was thinking about it because yesterday i was hearing bitcoin and gamestop, and you know, look what happened with bitcoin, i keep hearing that it's the same thing, and i just think it's totally different and i think the fed is related
6:29 am
i think the fed is related in both of them but one of them is sort of a symptom of a debasement of the currency, and a bubble the other one is kind of maybe a symptom but also a solution or at least that's what proponents think, it's a solution to what we're seeing, but i don't think those are -- should they be in the same basket of discussions >> yeah, the only similarity that i think is really important to call out is retail investors, especially this young generation it's very easy to scoff at them. it's very easy to say, hey, they don't know what they're doing. they're irrational, making dumb decisions over money, but when you zoom out over the last two or three years, what we have seen is retail investors have been cult like around a couple of key innovations and investment strategies, and they have been right, and so retail was right about bitcoin, right, the market has just kind of leveed this decisive victories for the people who believed in bitcoin and the future price performance of the asset
6:30 am
retail was right about tesla there was lots of people on wall street shorting it, making what seemed to be rational arguments as to why the company couldn't survive or wouldn't thrive we were wrong, retail was right, and i think gamestop is another example where some retail investors, they found an exploitation in the market they figured out a place where wall street had made a mistake there's two things to take away from the game stop, and some of these other things one is that the young estrogen ration u -- young generation understands the future, if you talk to a young kid, they will tell you of course digital currency is going to be the future of course electric vehicles are going to be the future the other thing is retail serves as this check on wall street, right, whenever we get kind of the intellectual olympics going on, where people are financially engineering results, what retail can come in, they can come in and actually provide some common sense. they can say you're literally
6:31 am
shorting a stock almost to death. actually, you're overexposed to risk, and therefore we're going to punish you. >> that's what you mean about wall street making a mistake that they were vulnerable with the amount of shorts on gamestop are you saying it was a mistake to say that gamestop was valued at a billion dollars versus $40 billion? do you think gamestop -- do you think thaft was the mistake that wall street didn't realize that gamestop was actually valued at $40 billion because of its stellar business prospects in the future >> i'm not saying that i claim to know what the value of gamestop is. >> do you think it's 40 billion, 30 billion, 20 billion, 10 billion? you know all about bitcoin. >> i can tell you what i think bitcoin is worth i'm not sure about gamestop. >> if you can value bitcoin, you ought to be able to value gamestop anyway, that was a rhetorical
6:32 am
question the mistake you're talking about is that they got totally -- their whole flank was so exposed on the amount they shorted that's your point. >> yeah, and i think not only did they get kind of caught there, and exposed but also they have missed a couple of key trends if you really think about it, there is millions of random people on the internet for the last decade that have outperformed hedge funds by buying bitcoin and holding it. what you're seeing is this democktization of a financial system because there's been a reduction in friction when it comes to information, communication and access to markets, and i think that's healthy, that's good, we want as many people in the market as possible there's 45% of americans with no investable assets. we need to change that, but i think we've got to give retail much more credit than they have been getting over the last couple of years. >> anthony, thanks you're a renaissance man you're a renaissance man covering all of these different
6:33 am
things and how do you say it, andrew, doja coin? this is a seinfeld episode, the bizarre world at times >> it's based on this internet meme of dogs, these breed of dogs that are out there. >> i would like that >> i don't know. >> but it's not reown. it's up 800% hmm. eli lilly, from the sublime to the mundane. eli lilly just reporting the drug maker earned an adjusted $2.75 a share for the 4th quarter, beating the consensus of 2.35. revenue above analyst forecasts. helped by strong sales of diabetes drugs, the launch of the antibody treatment, and we're going to talk about eli's
6:34 am
quarter, with ceo david ricks. that's come ing up in a minute caterpillar out as well. and looks like caterpillar came in with earnings that were quite a bit better than expected this is of course the heavy equipment maker, reporting adjusted quarterly earnings of $2.12 a share. the street was looking for $1.49. it came in at 11.24, versus the 11.25 that the street was anticipating just running through some of these number very quickly, this was down, you know, the sales and revenue was down 15% t, but again, in line with what the street was anticipating for all of this. trying very quickly to see the comments from the ceo. well positioned for the future we think we'll emerge from the pandemic with stronger company shares are up about 2 1/2%, and that's a big deal when it's not being driven by reddit when we come back, lady gaga wants you to feel comfortable in billions that are equipped with
6:35 am
industrial air filatn sts.trio we'll explain what we're talking about right after this this is what community looks like. ♪♪ caring for each other, ♪♪ protecting each other. ♪♪ and as the covid vaccine rolls out, we'll be ready to administer it. ♪♪ some see a grilled cheese sandwich and ask, “why?” i see a new kitchen with a grill and ask, “why not?” i really need to start adding “less to cart” and “more to savings.” sitting on this couch so long made me want to make some changes... starting with this couch. yeah, i need a house with a different view. and this is the bank that will help you do it all. because at u.s. bank, our people are dedicated to turning your new inspiration into your next pursuit.
6:36 am
6:37 am
6:38 am
in the midst of this pandemic, we are all wishing we could get back to normal, and some celebrities are working to boost everyone's confidence in public indoor spaces for when it's safe to actually gather again. the international well building institute has collaborated with a former u.s. surgeon general and hundreds of virologists, architectures and public health officials to roll out a health safety seal for major venues like yankee stadium, and recruited celebrities like j. lo, michael b. jordan, robert de niro, and lady gaga: she explains why confidence in safe spaces is crucial for an american recovery? >> i really hope that the safety
6:39 am
being put on windows and doors of buildings will help inspire people to feel safe to go out into the world again, and like i said, rebuild that community spirit once we start to rebuild that community spirit, we can rebuild ourselves. >> that conversation with lady gaga can only be found on our podcast, squawk pod. you can find that on apple podcasts, spotify, stitcher or wherever you listen to podcast, and don't forget to subscribe to squawk pod 2, you'll get the best takes and analysis from the tv show, plus a little extra like lady gaga andrew >> very cool i'll be listening. when we come back, a lot more this morning a big lineup still to come we're going to bring you interviews with the ceos of eli lilly and chevron. that's first on nbc, and much more of robinhood's crisis, existential crisis to some degree we'll talk about what it all means. futures well off the lows of the session after a bieaing rngs beat by caterpillar.
6:40 am
we'll talk about that next i made a business out of my passion. i mean, who doesn't love obsessing over network security? all our techs are pros. they know exactly which parking lots have the strongest signal. i just don't have the bandwidth for more business. seriously, i don't have the bandwidth. glitchy video calls with regional offices? yeah, that's my thing. with at&t business, you do the things you love. our people and network will help do the things you don't. let's take care of business. at&t.
6:41 am
6:42 am
we are smack in the middle of earnings season we've got lots of numbers that are hitting today and all week actually joining us to break down some of this morning's earnings reports, we are joined by stephanie link,
6:43 am
chief investment strategist at high tower, and a cnbc contributor. getting some of the numbers that came through here. lily or caterpillar, which one interests you a little more. >> well, good morning, caterpillar i own. i was bracing for a really challenged number especially on margin line because they were seeing price competition in china, a higher incentive comp throughout the quarter the adjusted operating margin of 11/8 is a good number. it's a number they guided to at their analyst day a couple of years ago. i actually think that this number is kind of a sigh of relief, if you will. we're in like the third or fourth inning in terms of the cycle, so you don't want to get off just yet, but there are puts and takes and you have to kind of be patient, if you will inventories, though, becky are at historic lows tha that's going to be nice fuel for the company going forward, and
6:44 am
mining capx is on the rise it's a good quarter. let's see what they say about earnings 550 to 750 is the guide. let's see where day come in at i think some people are at $8 a share for the year that's going to have to come down i'm pretty encouraged with the numbers today. >> you know, in terms of that number, 212 is the adjusted earnings versus the 149 the street was anticipating but the company itself points out that, you know, part of that is because of $0.07 from excludeing, restructuring expenses, and .31 and $0.25 beating better for operational performance. that's probably key for you as an investor. >> absolutely. this cfo is fairly new he's done a great job at managing expectations and on execution. by the way, i think they have done a great job on their balance sheet. operating free cash flow for the year of 6.3 billion, and liquidity at 9.4 billion this company has righted the ship, if you will.
6:45 am
now we just need the macro to get better, and i think we will see the macro get better throughout the 2021 time frame >> all right let's also bring in james mcdonald, founder and ceo of hercules investments and a cnbc contributor. running through, i'm going to ask you about eli lilly, a stronger number there, coming out with better than anticipated results. market doesn't always reward that but what do you think of lilly's shares >> it's not all together surprising eli lilly is one of these companies that has, you know, their fingers on the pulse of what's happening in the economy. we have seen quite a bit of pickup in optimism, quite a bit of pickup in economic recovery across the board eli lilly is one of these companies you really want to have your hands around in times of crisis because they have a great position to capture market share when other upstart companies are weaker i'm not surprised about the beat, solid holding. >> stephanie, just in terms of
6:46 am
the mind share, we have been pretty distracted by what's been happening with gamestop and a lot of other stocks that reddit chat boards have gone after with these things what does that mean for you when you were looking at earnings is this still just a fundamental story, keep your head down, and watch these company's earnings coming in, and don't get distracted by huge fluctuations e elsewhere or do you think that could catch up with stocks that aren't related at this point >> it's been a wild couple of weeks. i have never seen moves like these in some of the reddit stocks for sure. i try to put it to the side. i try to focus on fundamentals because i believe that matters very much, and earnings are coming in better than expected, and we are going to get more fiscal and vaccines were making progress, and distribution were making progress. so all of these things are more important to me than these crazy moves in certain stocks. however, the one thing i am watching, becky, very closely,
6:47 am
is contagion, right, and the degrossing that we saw earlier this week, and so that to me is something. let's watch that, and let's see today if that happens again. and remember, earlier this week, the ten-year fell below 1% that was concerning too. so let's watch that as well. so a lot to focus on trying to focus on fundamentals, not ignoring the bigger picture, though >> stephanie, james, i want to thank you both for being here. sorry, james, sorry we didn't have more time with you, we had a little technical trouble at the top but we'll have you back soon. >> thanks, becky. >> thanks, becky you're welcome, stephanie, from becky. coming up much more on eli lilly's report we're going to hear from ceo david ricks. that's coming up next first on cnbc what a ride! i invested in invesco qqq a fund that invests in the innovators of the nasdaq-100 like you become an agent of innovation with invesco qqq t-mobile knows the new year brings big news!
6:48 am
that's why we're bringing out our best deal on the new iphone 12 with 5g. like you right now, get the iphone 12 on us on every single plan. switch now and save 20% on your bill versus the other guys. and that's not an introductory rate, that's the best value in wireless. that's right. the iphone 12 on us. on america's 5g leader in coverage. and save 20% per month. share big moments and big savings at t-mobile. hey, dad! hey, son! no dad, it's a video call. you got to move the phone in front of you it's a mirror, dad. you know? alright, okay. how's that? is that how you hold a mirror? [ding] power e*trade gives you an award-winning mobile app with powerful, easy-to-use tools and interactive charts to give you an edge, 24/7 support when you need it the most and $0 commissions for online u.s. listed stocks. don't get mad. get e*trade and start trading today. ♪♪
6:49 am
this is what community looks like. ♪♪ caring for each other, ♪♪ protecting each other. ♪♪ and as the covid vaccine rolls out, we'll be ready to administer it. ♪♪ you packed a record 1.1 trillion transistors into this chip i invested in invesco qqq a fund that invests in the innovators of the nasdaq 100 like you become an agent of innovation with invesco qqq
6:50 am
6:51 am
drug maker eli lilly out with the fourth quarter results. joining us to break down the numbers, david rich. chairman and ceo of eli lilly. good to see you again. we all talk about covid, and i think even in your results that this is -- that's where we want to focus not only was the antibody therapy really useful in treating the disease, but it also -- that's a pretty large number that we're talking about in terms of sales for a quarter, is it not, for a relatively new drug for eli lilly out of 7.4 billion, talking about 871 million for the antibody therapy >> that's right, joe good to see you. thanks for having me on. we had a strong quarter and as you're pointing out part of that was driven by the new antibody most of those are government
6:52 am
purchases. we got niece this not to drive q4 earnings but to make a difference in the pandemic we're pleased with the number. we're pleased doctors and therapists are findingsuccess with the antibody therapy. this drug can help prevent acquiring the disease in nursing homes when one resident is infected, we know the tragedy that's been happening. a few days ago we announced new compelling results from a much larger study that showed 70% reduction in hospitalization and death. >> and that was in combination with beratasitnib? is that another antibody >> that's also a lilly drug which we -- one strategy is to repurpose and it's used for
6:53 am
reantibodies we tested two antibodies together i'm sure you might ask about, resistant strains. one of the strategies to have these medicines work against resistant strains is to combine them you're attacking the virus in two different sides, as it were. that was the combination data that showed that dramatic reduction in hospital station and death. that's a lilly combination antibody. >> with a bamlinivibid you purchased by the u.s. government almost 1.5 million doses. 1 million delivered at this point. we've heard that the -- i mean, we all know about how difficult it is to get the jabs out and the vaccines there is also some issues
6:54 am
logistically with this is that eased? are people that can benefit from the antibody treatment from lilly, are they able to get it now in a much easier fashion >> it's improving, joe in december the government came out and said they estimated about 20% of what they had shipped had been used. we've probably doubled that number or a little bit better since. we estimate well over 100,000 people have benefitted and that's important because we can make the drug, but if it doesn't get in people's arm, it's not going to help. it's a different kind of problem than the vaccination but share some characteristics i think the main point is hospitals and health care regions need to do things differently to put this antibody to work. we have to find at-risk people early right after their diagnosis. the best practice for many systems that have used a lot of this, they actually flagged the chart and a nurse calls you when you have a positive test if you fit in that over 65 or high risk
6:55 am
group. they encourage you to go to a specific address and get the antibody then we need nurses and staff to run the center and do the infusions. it takes an hour or two. we're working to reduce that it's worth it. in our studies 2% of the people in the at-risk group died without the antibody and zero with the antibody. and 70% reduction in prevalence of going to the hospital it's worth a couple of hours if you're a high-risk person to ask for lilly or the regeneron antibodies trying to do the same thing here. >> always tough to -- i would think, to manage through patent expir expirations, et cetera i'm looking at your best selling drugs now and i don't see any of the drugs from ten years ago. >> that's right. >> so it's amazing how that works. >> it is amazing i want to talk about that because 2020 was a year we set some goals back in 2015.
6:56 am
you may remember when the company earlier in the last decade was really struggling with patent expirations. we bet on innovation and we said we'll launch 20 new drugs for drugs. we set financial goals we hit or beat every single one of those goals at the end of the five-year period which just ended in 2020. a lot has happened in between. we're very proud of that now we're looking ahead. investors want to know what else you've got that's how they are, right in the last 60 days we've had several exciting new pipeline announcements, one in a type of lymphoma for cancer. one for diabetes, a drug called trepezitide. it had almost half the patients at the high dose basically become undiabetic in the study get the a1c below 5.7 and those
6:57 am
kind of readouts give us a lot of promise for another great decade ahead >> i'm going to work on these. dona mama b. you have them all. trezepitide. >> wow you work on these at night >> i practice in the mirror. >> your kids yeah all right. david ricks, thank you. >> thanks, joe >> those are great numbers on the covid stuff. really amazing, and very helpful in addition to what we're hoping for with the having seen, we have these things. david ricks, thank you becky? >> it's like the muppets show. mononoman. the liquidity problems and the capital rates. we'll show you wt e hathceo said about the reddit army straight ahead.
6:58 am
6:59 am
7:00 am
good morning and welcome back to "squawk box" here on cnbc i'm joe kernen along with andrew ross sorkin, becky quick u.s. futures have improved we were down 350 points at one time
7:01 am
down 151 on the dow. down 25 or so on the s&p 500 and 136 points now on the nasdaq becky? >> let's get you caught up on some headlines this morning as well wework is exploring a possible combination with the special purpose acquisition company. wework tells cnbc that it's had some interest from several spacs as well as from private investors.
7:02 am
another ipo delay comes from roblox roblox had been hoping to go public next month. andrew >> thanks, becky meantime, robinhood in the cross hairs this morning drawing on a bank credit line and now raising more than $1 billion in new capital from existing investors. platform will start allowing limited buying in the securities that had been restricted yesterday. gamestop stock at this hour is up and it is up all over again let's show you where things stand. it's now trading at $373 a share. that's up 92% from where it was amc, nokia, blackberry all up again on the assumption that perhaps some of the robinhood customers are going to be back online and they may be buying. we'll see whether that happens i spoke to robinhood's ceo about
7:03 am
the motivation behind the short squeeze and some of the investors that publicly said as long as they can hurt the hedge funds and hurt the system, that is a benefit to them they don't care if they lose money themselves it's a very different thesis than most investors use to approach investing >> i mean, there's a lot of investors out there. this whole phenomenon of these, you know, internet stocks has transformed in the past week, right? it has taken this sort of anti-establishment flavor in some pockets so i understand the frustrations that people might have with, you know, short selling or these different -- these different firms. we think that there is a bottled up -- there's a lot of bottled up energy because a lot of these
7:04 am
customers felt like they were left out of the recovery from the 2008 financial crisis. there was the whole occupy wall street movement in the early part of the last decade so i understand the frustrations and what robinhood can do is continue to provide access, continue to uphold our mission make sure we offer the best possible service and do right by our customers. >> and i asked vlad specifically though whether he and robinhood are supportive of what this reddit army is trying to do. >> we stand with individual investors. our brand is individual investors, and our company, the name of the company since the very beginning, we've been for individual investors having access to the markets. and that's why we pioneered commission free investing with no account minimums and led the
7:05 am
industry to adopt that model so absolutely. and i've been saying this on your show day in and day out when i've been here, we believe that the more people have access to the markets, the better off they will be in the long run we also support education and giving them the right tools and information so that they can make informed investing decisions. >> what do you tell the customers who look at what happened today and say, you didn't help us, you actually helped them? you helped -- this wasn't about helping the little guy, this was about helping the big guy. they're the beneficiaries in this. >> well, our number one responsibility is of course to our customers. i understand that people might be upset that they were unable to buy these securities on robinhood today. we'd like to reenable them as soon as possible, as soon as we can allow for it through our operational procedures we stand with you. from the very beginning we have
7:06 am
been in favor of access and, you know, i know how clorox and lie s lysol felt at the beginning of the pandemic, when they couldn't provide enough hand sanitizer and wipes. these are unprecedented times and everyone is trying to do the best they can to navigate them that is doubly true for robinhood. >> still, nonetheless, a lot of angry customers out there that are upset that their access effectively, at least to being able to buy some of those securities, was cut off and now big questions about the future of the company and whether, in fact, those customers stay with robin hood also questions about capital and liquidity in the moments when you have customers rushing to buy on margin for particular
7:07 am
securities and gathering on line to do it yesterday we talked to alexis ohanian who believes this is a transformational moment. people are gathering online in various chat rooms and potentially claiming targets i asked vlad if he agrees with this approach and whether this is a transformational moment >> i mean, it certainly has surprised me that this has been happening. i don't think people could have expected the scale to which social media and finance would intersect. i think a lot of it has to do with the pandemic as well. people are at home and, you know, we're glued to our devices because we seek connection with the outside world so i think that we're only going to see
7:08 am
more individuals interested in investing and more individuals interested in connecting with each other so it's easy to connect the dots looking backwards. i don't know if anyone has reliable predictions about what the future holds here. >> what do you expect regulators to do? >> we're -- our team, as i'm sure other brokers are as well, has been in constant communication with our various regulators and agencies, and we're having a conversation and in our conversations in principle what we believe we can do is represent the retail investor and the individual investor and make sure that in everything that we do, that that customer is respected and heard. >> do you see this episode as having any impact on a
7:09 am
perspective ipo this year? >> i can't really comment other than to say that robinhood is well capitalized and we have a great opportunity ahead of us. >> when we did that interview, they were in the process, and i didn't know it, of capitalizing. they are better capitalized this morning than they were yesterday. one note about that capital raise. the venture capital investors are the ones that reupped, raising $1 billion interestingly they have been guaranteed a discount in terms of how the valuation has been set about a 30% discount they will have to raise shares
7:10 am
if they pursue this. big question whether the capital investors are trying to protect their investment, whether they are really confident, whether it's throwing good money after bad. a lot of questions here but also questions about these clearinghouses and the deposit requirements part of the conundrum in this case was that there's a model that requires certain deposits to be made, not just a model, they can actually call up and say, look, we need you to send more money we're changing the rules right now. >> yeah. >> to some degree that is possibly what happened yet as well. >> andrew, correct me if i'm wrong, but i think robinhood does not require a separate application for people to trade on margin, right i think it's a little looser
7:11 am
than some of the other platforms. maybe i'm wrong on that. then i guess my other question, you spoke with him before this capital raise yesterday, but now they got another 1.5, $1.6 billion and other credit lines money from jpmorgan, goldman sachs. with that money they're saying they'll let people do some trading in some of these names. >> right. >> or some buying. some purchasing in some of these names but i guess that leaves open the question that they're going to shut it down again if they feel like it's getting too far, if their capital is getting stretched too thin, is that right? >> there's no question i put that question to him which is to say, what would prevent this from happening again? clearly at the time we spoke they had drawn down those capital lines. i was up until, i don't know, midnight, 12:30 last night trying to report this story out. i would say around midnight is when the capital raise -- the full billion dollars had been
7:12 am
confirmed. by 8:00 they had raised $500 million in capital i think they were waiting for confirmation from some of the other venture capital firms whether they were going to commit to this money it should put them in a better position today to some degree it is a sign of confidence but it's obviously something you only do in a crisis, and clearly they were in one yesterday. the question is, again, i think right now the immediate question for this company is whether the customers stay or go that's the question. do they -- >> i was going to say, the idea -- they have so many problems they're dealing with. the idea, your customers, are they going to stick around, are they going to flee then the regulators. the idea those were not the biggest problem they were facing is a little telling of the situation here your first question is -- your first issue is liquidity you have to make sure you have enough then you have to worry if your customers will stick around or the regulators will stick with
7:13 am
you. >> joe raised it, people thought they shut people down because they thought they were trying to protect them. >> right. >> they thought by protecting the customer you were protecting the hedge fund and the big guy there was another view that an sec regulator called them to shut it down that didn't happen then there was the speculation about whether citadel and other firms that were around this and worked clearly in partnership with roob bins -- robinhood, whether they were putting pressure on robinhood. they said, no. it in fact was to some degree and i'm always sort of loathe to use the word a liquidity crisis. the question was, was it a crisis or were they trying to prevent one. we'll have more ofthat
7:14 am
interview. >> andrew, do youfeel like you talked -- did he in the interest of disclosure and everything else, did you talk enough about the liquidity problems last night? why they were obviously involved in the capitol riot. >> we did. we should probably -- maybe we can talk to the producers during the commercial break to get more of the tape. when we were live last night often "fast money" we talked specifically about the liquidity issue and i asked him directly whether this was a liquidity crisis we asked him twice he specifically tried to push back on it again, i think to some degree you could argue it was a semantics problem. did they have a crisis or trying to prevent a crisis. in either case, they were close. maybe we can show that in a little bit as well we have additional tape to show you that we plan to bring you in the next hour, including his
7:15 am
response to dave portnoy which is fascinating unto itself because there was a lot going onion line not just with dave portnoy going after robinhood but going after steve cohen. i don't know if you saw that battle because steve cohen was supporting mervin capital and gabe plotkin there's a big plot and conspiracy theory to all of this >> portnoy is not slowing down i saw him tweeting showing that vlad was following portnoy saying, i'm still coming for you. now you can watch me do it let's get you caught up on some stocks to watch. eli lilly beating top and bottom also some strong sales in diabetes drugs we heard from the ceo just a little bit ago that stock up by 1.8%. then caterpillar reporting a stronger than expected bottom line it says it is well positioned for the future and will emerge
7:16 am
from the pandemic as a stronger company. that stock up by 1.4%. in the meantime, take a look at the futures on this friday friday of a very volatile week a lot of ups and a whole lot of downs. this morning a whole lot of downs. dow future down by 144 points. s&p off by 144 and nasdaq off by 120. "squawk box" will be right back. e a better finance system than we do. workday. how do they make better decisions faster? workday. got to do something. workday! i think i got something. work... hey, rob, you're on mute. hello. [all] hey... there he is. workday, the finance, hr, and planning system for a changing world. ♪ch-ch-changes♪
7:17 am
want to save hundreds on your wireless bill?
7:18 am
with xfinity mobile you can. for a changing world. how about saving hundreds on the new samsung galaxy s21 ultra 5g? you can do that too. all on the most reliable network. sure thing! and with fast nationwide 5g included at no extra cost. we've got you covered. so join the carrier rated #1 in customer satisfaction. and get a new samsung galaxy starting at $17 a month. learn more at or visit your local xfinity store today.
7:19 am
welcome back to "squawk box. elon musk sending bitcoin soaring. look at this he added #bitcoin to his twitter bio he sent out a cryptic tweet saying in retrospect it was inevitable take a look at where bitcoin stands right now literally off of one word on a twitter feed it's now at 36,774 up 12.5% talk about somebody who can move markets, and we've seen it with gamestop when he tweeted out gamestock. we saw it when he tweeted out the 420. by the way, i wondered how you feel, joe, and becky, we talked about chamath, elon, the roles they can play and whether we think they have a responsibility in this and whether there should be regulations about this? i don't know
7:20 am
>> a lot of the -- >> there's a free speech element to this. >> there is. there is it's weird a lot of the really flush wall street types that have done really well sort of seemed like they were the first to run to the defense of the reddit mob. wow, they're coming for me i better pretend i'm with them to some extent that was the impression i got. billionaire hedgeies are the ones in the cross hair i'm with you i'm totally with you guys. did you notice that? >> there were a couple out there. >> chamath >> easy place to be. >> chamath i'm with ya. not only am i with ya, i'm buying some gme too. he doesn't need to. >> right
7:21 am
then selling the position before -- >> right you have professionals -- you have professional -- this might have started as a genuine protest, but like every protest when the looters arrive, the people that coopped this, they are riding the momentum and taking advantage of them if you look at the big hedge funds and other investors, they were major winners and not just the little guys. they were the big guys i think that will come out. >> they could end up being the non-bag holders. the ones that are in the -- you know, that generated all of the animosity could end up benefitting from all of this in a perverse way. >> there were big institutional investors on the amc -- we have to get to the guest. in amc when they, you know, brought out the new liquidity on that, there were investors who thought they were going to be sitting on a bankrupt company who were able to make themselves
7:22 am
whole with some of those things. it's not just little guys winning at the behest of the little guys. there are big guys winning probably at the behest of the little ones. >> when you hear eat the rich, you hear i'm not one of them building a bigger wall, nicer jet. robinhood allowing people to buy. bank credit lines are raising more than $1 billion in new capital. joining us is tom sossnoff you were bought from british firm ig trade. tom, good to see you did you have an understanding of what was happening yesterday beyond the conspiracy theories
7:23 am
were you thinking, wow, there's liquidity problems at robinhood causing them >> thanks, by the way. i would say the whole industry had their hands full yesterday so it wasn't like we were following robinhood that closely. i would say no we had our hands full like every other brokerage firm with a massive amount of buy in, email messaging and things like that i don't think we follow robinhood that closely, no. >> have we crossed the rubicon it's here to stay? >> we were kind of at the forefront going back 20 years of this whole engagement of the retail investor and empowering retail investors it's kind of been our mission for two decades. it took a lot of help. it was the robinhoods of the world and firms like that that bought it to the forefront i think, yeah, it is here to stay what you saw the latz couple of
7:24 am
days it was a defining moment i do think it's transformational i do think it's here to stay >> the people that are talking about it that are the rebels, do they eventually become part of this system, do you think? >> they are the system they are the future of the system. >> is that okay? will capitalism survive? will they eventually not be so -- are they angry about the -- >> no. >> -- way that wall street's been conducting business for the last 20 years and not want to be part of that club or is this all part of the democratization where finally they embrace the way that wall street does raise capital for a company? >> i think they're angry because they werioned for so long. take yesterday and throw it in the garr fwaj.
7:25 am
instead of people turning to finance, they're finally starting to lurn and figure out, hey, this is really cool we have an entire generation which is not only going to support capitalism and growth in the free markets the protests all the market is going to benefit. this will be a massive move and you'll see a perfect storm of gamestop or something like that. you won't find a company that is in a situation where it can create a disastrous panic to the up side. i think in general the move of getting young, not necessarily
7:26 am
kids but millennials engaged in finance is transformational for sure >> hey, tom. we've been talking about this conversation that i had with vlad last night all morning. we talked about trying to find this clip about this liquidity issue itself i want to play it to you right now and just get your reaction to somebody who's in the business, who understands the dynamic at play. >> sure. go ahead >> there was no liquidity problem, and to be clear, this was done preemptively so we did this proactively and thousands of other securities remained tradeable on the platform. customers that held these positions were able to sell them and we're doing what we can to allow buying and to remove these restrictions in the morning. >> i listened -- >> do you look at this as a liquidity crisis >> i listened to this interview.
7:27 am
it was done quite well i understand where vlad's coming from with it i think that it was more of a regulatory crisis than it was a liquidity crisis, meaning that i do believe that they had pressure from regulators that probably came in and said, listen, we just want to make sure you have enough net capital to support everything that's going on here. i think that they -- if you're asking me, and i don't know because it's like guessing the coach of the chicago bears what you think about the green bay packers quarterback, but i think that if you're looking at the situation, i would say they probably panicked a little bit and you don't ever want to shut down trading, but i don't know if it had to do with risk. i don't know anything about their technology it's hard for me to say. i think it was a little bit of maybe a panic but we'll see. i'm not sure. >> is there a business model issue? meaning this was an important point that becky and joe were raising earlier. is this a business model issue in terms of growing pains, as a startup not having enough of a
7:28 am
capital base or something else that's inherent to the model >> you know, sometimes when firms like robinhood go self-clearing, you take on a little bit -- you obviously go for higher -- it means you can internalize your revenue so it means there's more money that drops the bottom line. in the process of doing that you get into a space, the clearing side, which is not generally your expertise and it's something you generally get paid for other than what you're able to internalize it's part of the growing pains that they're experiencing from going self-clearing. >> and do you think that their customers -- i mean, this is the big question this morning. >> yes. >> are reading about this, seeing what's happened yesterday, are they saying, i am going to another platform? or do you think they stay and that it even grows given that we saw -- i mean, almost in an odd contrarian way back earlier this year when their system went down, people thought people would leave. they didn't leave, they actually stayed and it's almost doubled,
7:29 am
i think. >> there is -- i would argue that they're obviously going to lose a lot of the customers that just got really pissed off yesterday because they couldn't access the platform and get out of trades and that thing, but generally speaking this is kind of -- this is the elon musk moment where he threw the ball against the car and broke the window and it wasn't supposed to happen but yet because of that millions and hundreds of millions of people watched the video. i think it's kind of the same thing. i don't think this is going to hurt robinhood i think they're going to have issues when it comes to people questioning, they have to be careful about their ipo and things like that if you're asking if it's going to hurt robinhood and turn people off from using the platform, i don't think so >> all right, tom. i just -- we're going to have mr. wonderful on a little bit later. he thinks it's all great, too. if everybody loses a lot of money, that's fine everybody's got to learn
7:30 am
you've got to learn about loss i wonder who gets left holding the bag. hopefully it's not a lot of people that can't afford to lose it because people are going to be long gamestop at $500 a share theoretically. what's going to happen we have seen this movie before, right? >> i couldn't agree with you more, and it's unfortunate that "the game" stop unwind is going to be ugly, but in the end we really have to think about it in the end. in the end introducing an entire generation of let's say 20, 30, or 40 million people to finance when they're in their early 20s. let's just say they make a little, they lose a little, whatever it is, i think the benefits far outweigh, you know, the -- whatever happens or whatever the unwind looks like of the specific gamestop situation. >> tom, thanks. >> thanks so much, guys. >> you're welcome.
7:31 am
>> beck? >> okay. thank you, guys. when we come back, we're taking a look at the chevron earnings, trying to get ahold of that. it looks like a loss of $3.51 a share, but that does include some charges charges of $120 million associated with noble energy also foreign currency effects decreasing by $534 billion i haven't done the math to be able to get through where that gets you on an adjusted basis. the street was looking for a gain of 7 cents. revenue a little light 22.5 billion versus $26.2 billion. that stock is down by about .8 of a percent we have chevron ceo michael wirth joining us right after this break we'll run through the rest of the numbers, get a better look at it and talk with michael when we come back time now for today's aflac trivia question. in what year did the nike swoosh
7:32 am
become the company's official logo the sw wn bcsqwkanerhecn "ua box" continues go aflac!!! what the heck, troy - that's not your kid! the aflac duck is just covering for sophie. same way he got me money to help cover her hospital bill when my health insurance didn't pay for all of it. but this isn't fair! that's exactly what i said! but then i learned health insurance isn't even supposed to cover everything. wait...for real? for real real. luckily i had aflac. aflac!!! get help with expenses health insurance doesn't cover. go aflac! !mm-hm! get to know us at
7:33 am
♪♪ this is what community looks like. ♪♪ caring for each other, ♪♪ protecting each other. ♪♪ and as the covid vaccine rolls out, we'll be ready to administer it. ♪♪
7:34 am
now the answer to today's aflac trivia question.
7:35 am
in what year did the nike swoosh become the company's official logo the answer, 1971 carolyn davidson, a student at portland state university during the time phil knight taught there, created the logo. sales are down from last quarter but we are hoping things will pick up by q3. yeah...uh... doug? sorry about that. umm... you alright? [sigh] [ding] never settle with power e*trade.
7:36 am
it has powerful, easy-to-use tools to help you find opportunities, 24/7 support when you need answers plus some of the lowest options and futures contract prices around. don't get mad. get e*trade and start trading today.
7:37 am
welcome back to "squawk box" this morning the reddit rebellion putting a squeeze on traditional capitalism joining us for a look at
7:38 am
challenges ahead, "new york times" foreign affairs columnist tom friedman made in the u.s.a., socialism for the rich, capitalism for the rest thank you, tom, for joining us in very many ways i think your column speaks to what we've seen happen in the markets this week and what this reddit army in fact believes and what they're fighting against. >> well, you know, andrew, i see the whole thing as like i'm watching a giant "national geographic" nature film. this is how i would actually explain it to a young person who's trying to understand what happened, i mean like a 5-year-old first there were these people called lions they're long sellers, and they noticed the wildebeast that seemed to be hobbling, it was called gme stock, and they ate it the stock was worth $63, went down to 4.
7:39 am
then along came the high even nas, they're called short sellers. they fed off the carcass of gme and these high even nasr magic cal. they made it grow 50% larger than it was. then along came a group called short squeezers, whole new group, and they were vultures who ate the hyenas basically and the reasonly smart vul turs ate and flew away when the stock was $500 the dumb ones are going to stick around and keep eating and in the end the lions will come along and eat them and the stock will eventually go back to 4 or $5 it's the circle of life. acunamatada, aby. >> i'm saving this clip. you've explained it in a way that my 4-year-old would understand and i think you've done a brilliant job at that what do you think it says though, tom, about this moment that we're in?
7:40 am
because it speaks to in some ways about issues that are far broader than the stock market unto itself. clearly the folks who are playing in this and trading in this are not necessarily doing it for traditional investment reasons. >> yeah. well, what you see here, andrew, is a phenomenon we've seen everywhere back in 1999 i wrote a book, alexis and the olive tree. in that book i started identifying two things one is i defined cyber space as a realm where we're all connected but no one's in charge, okay and i said that in this cyber space you can create electronic and you can get super empowered individuals and small groups super empowered angry man who back in 1999 i identified as a guy named osama bin laden. this is democratizing everything you and i know that the news
7:41 am
business got democratized by this thing so with this thing anyone now can be a paparazzi, a filmmaker, a publisher or a newspaper and the whole news business got democratized used to be "the new york times," now there's buzz feed, medium, everything else. so what we're seeing here is the democratization of finance suddenly now with the thing -- with robinhood and these other -- and these tools, anyone now can be a short squeezer. a year ago only carl icahn could be a short squeezer against bill ackman now we've seen the democratization of short squeezing. the bigger question, andrew, is what happened when cyber space first emerged back in the '90s avnet scape went public, we looked at and said, well, you know, it's kind of a cute place. there's a guy named jeff bezos,
7:42 am
he can sell books and not pay sales tax. that was the biggest issue what's happened in cyber space is it's developed its own currency called bitcoin. it's developed its own transmission information system that are encrypted called telegram, it's developed its own news sources and these are all -- and many of them outside the scope of government. so look around the world you guys have been reporting this you've got sort of three models out there. the chinese said, oh, no, no, no, no, no we are not going to allow an independent space where you can have your own currency, your own encrypted telecommunications and news system. what happened in china in january when they went after alibaba was very important the chinese basically said we would rather have alibaba be a second rate global company and under our control than alibaba be a first rate global company and out of our control, okay so china basically said there
7:43 am
ain't going to be no cyber space. russia's the other extreme, you have putin he has a foot in both spaces, cyber and the terrestrial world. in america now because we do everything sort of lassez-faire, we kind of let it all happen and then we try to regulate it afterwards to try to find some hybrid balance, and i think that's the process we're in now around news with facebook and twitter and now our markets. that's basically what i see happening. >> so, tom, though, but if you were a regulator, a policy maker in this country, what is the right answer are you trying regulate this new area which can be used both to create the arab spring and gamestop and as you've talked about terrorism and other things, good and bad, or are you trying to regulate the system or break up the system unto itself, which is what some of these people want in the first place >> that's a really good question
7:44 am
because what you learn about these things is that they have huge up sides and huge down sides. the challenge of governance is to get the best and cover the worst. these things can easily be manipulated. there's something incredibly efficient about what the reddit investors did. they taught me something i didn't know, andrew, maybe you did. i'll ask you did you know that shorts could actually short 50% more of a company than the stock even existed? now what possible economic and social good can come from that so i think they've -- in some ways they're making the market more efficient here. i didn't know you could do that. if there's no regulation against that, there sure as hell should
7:45 am
be at the same time there is a real danger in roman at this sizing them or themselves only in the sense markets are driven by greed and fear, greed and fear, greed and fear at the center of this thing the reddit investors are really smart. they remind me of hackers that cyber companies hire because they're so good and they hire them to test hack other companies if there are any holes there. >> right. >> in the end, i think there will be a hybrid synthesis here. that's what you find government has to let this sort of play out and see how it all ends, but they exposed something important that i didn't know >> tom, we want to thank you you've made us all smarter i am going to save that time we will see you very soon. appreciate it. joe? coming up, chevron ceo
7:46 am
michael wirth. as we head to break, check out the shares of honeywell. honeywell ceo live on "squawk box" next tuesday. stay tuned we'll be right back.
7:47 am
♪ you can go your own way ♪ it's time you make the rules. so join the 2 million people who have switched to xfinity mobile. you can choose from the latest phones or bring your own device and choose the amount of data that's right for you to save even more. and you'll get nationwide 5g at no extra cost. all on the most reliable network. so choose a data option that's right for you.
7:48 am
get nationwide 5g included and save up to $300 a year on the network rated #1 in customer satisfaction. it's your wireless. your rules. only with xfinity mobile. welcome back, everybody. chevron out with results revenue was below forecast t.
7:49 am
came in at $25.25 billion. street was at 26.2 not a huge miss there. joining us now is michael wirth, chevron's ceo. michael, thanks for being with us this morning. >> acuna matada, becky. >> acuna matada. this caps what was a really rough year, not just for chevron but for all of the oil companies because of a huge decline in demand for oil with the shutdowns around the globe, with people not flying, people not traveling. where do you think things stand right now? >> well, i think we've emerged from 2020 even better. the fourth quarter was a steady quarter and we began to see things turn. we finished our integration of noble energy and structurally reduced capital and operating costs. we've seen the global economy begin to turn even as we still face the pandemic. we are built for profitable growth into the recovery
7:50 am
we've executed bottom of cycle m&a when others couldn't, we've restructured our business, we've still got the strongest balance sheet in the industry. there's nobody asking questions about our dividend, either now or into the future so in our business capital discipline and cost discipline always matter. of course we're prepared for a lower carbon energyfuture. we're investing to reduce the carbon emissions and the intensity in our own business. we're investing in renewables and in technologies that hold the promise to scale and contribute a bigger way in the future so we're coming through a very difficult period of time and markets are still healing and there are still challenges out there, but i'm very optimistic about the future for chevron >> you took some pretty significant actions this year to try and maintain that dividend
7:51 am
and keep things safe there you laid off about 15% of the work force and cap ex spending declined you're expecting to spend 14 to $15 billion a year between now and 2025 versus the 22 billion you had looked at earlier before all of these crises sort of hit. is that enough do you think you're at the point now where you can kind of see the future, you can see where oil prices are going to be and say with certainty that that was enough to get you through from here on out? >> actually, before the pandemic we were preparing for what's generally described as a lower for longer energy market from a pricing standpoint, so the restructuring of our organization and some of the downsizing was actually something that was underway before the pandemic and part o our long-term view of what it would take to compete in energy markets. our portfolio has some really unique attributes versus many
7:52 am
others we have a number of long lived legacy assets it will produce for many decades to come with relatively modest ongoing capital investment to maintain them then we have a very significant and attractive short cycle of the permian basin in argentina, canada and colorado. we were able to bring capital spending down when markets weren't calling for energy in the near term. markets were very well supplied. we have the capability to bring that back up when the fundamentals of the market start to tighten and indicate that that investment is needed to keep markets well supplied our cost structure, our capital flexibility and our portfolio all are prepared for the future. we believe we can compete in any environment and be very successful in any environment. >> that environment has gotten a
7:53 am
lot trickier, mike, just in terms of all of the things we've seen i know s&p just recently put you and a lot of the other big oil companies on credit watch for a potential downgrade because of all of the concerns about climate change we've heard the biden administration saying they're going to be switching out their fleet and looking for ev and cars in the future you just heard larry fink's letter calling for companies to really address climate change and issues that go with it there are investors steering clear of oil companies at this point. how do you handle all of these things how do you deal with it? >> those are part of the evolution of the energy system which has really been evolving for 150 years from when the world relied on wood and biomass to coal and then oil and gas and nuclear and now we have renewables and on the horizon hydrogen and other things. this confluence of events
7:54 am
oftentimes feels newsworthy and new but it's a continuation of things we've experienced for a long time. we engage with s&p and understand their point of view as i mentioned, our balance sheet is still the strongest in our industry aa credit and believe we're well prepared to deal with the challenges of the future larry is -- blackrock is one of our largest shareholders we regularly engage with them and understand the points he articulated in his letter when he talks about companies being disciplined in capital allocation, a clearly articulated strategy, strong purpose. being able to deal with the issues of compliance in a paris net zero world and diversity and inclusion, which he talks about in his letter this year. these are all things that we care deeply about, that we act on and that we continually look to improve so the issues that you identify
7:55 am
are part of our world. they have been and we work very hard on these things every day our strategy is a very simple one. in four words, higher returns and lower carbon and it really addresses all of those issues that you talked about. it's up to execute and to evolve and meet the needs of all these various stakeholders, which is what we've been doing and we intend to continue to do >> hey, mike, there are a lot of different views about the production of fossil fuels and how they'll be impacted over the next decade or so. i was surprised in december to see bp saying they expect fossil fuel will drop by 40% by the year 2030. you've got a different view, don't you? >> that 40% reduction is actually what they've signaled for their own production out into the future, and they have identified a number of different
7:56 am
scenarios for what the world could look like. i think they said one of those scenarios could be the demand has already peaked, but that's not necessarily their primary scenario certainly it's not our primary scenario if you look at any reasonable forecast out into the future, it acknowledges the fact that energy is the life blood of the economy. oil and gas today represent more than 50% of global energy demand and as that system grows into the future, the population of the planet goes from 7.5 to 9 billion people, we get a larger middle class affordable, reliable energy will be important in the short term for the economic recovery post the pandemic and longer term to lift people out of poverty today's energy system serves the needs today and will evolve into the future we need to supply the demand that exists today and be prepared for the demand into the
7:57 am
future which will both grow and then evolve in terms of the mix and we'll invest to meet both of those. different companies in our industry are taking different strategies to do that and over time i think we'll see what the right mix is for each individual company and it wouldn't be surprising if given the assets and skills and capabilities of each company that those choices are different. >> mike, good to see you this morning. thank you for joining us on what i know is a busy morning >> you're welcome, becky good to see you. >> take care andrew >> thanks, becky. we've got another big hour ahead. kevin o'leary is going to join us and massachusetts secretary of state william galvin to talk about the craze and the rallying xtound robinhood ne patrick mchenry and will
7:58 am
join us and jay farner this you? hmm... no, mine had green lights. whatever your business is facing. let's workflow it. maybe i should workflow my swing... servicenow. dana-farber cancer institute discovered the pd-l1 pathway. pd-l1. they changed how the world fights cancer. blocking the pd-l1 protein, lets the immune system attack, attack, attack cancer. pd-l1 transformed, revolutionized, immunotherapy. pd-l1 saved my life. saved my life. saved my life. what we do here at dana-faber, changes lives everywhere. everywhere. everywhere. everywhere. everywhere.
7:59 am
my retirement plan with voya keeps me moving forward.
8:00 am
they guide me with achievable steps that give me confidence. this is my granddaughter... she's cute like her grandpa. voya doesn't just help me get to retirement... ...they're with me all the way through it. voya. be confident to and through retirement. here we go with gamestop prices spiking as two online
8:01 am
brokerages are removing trading restrictions robinhood ceo speaks out and on heavy criticism from a popular online voice david portnoy has been online and said all sorts of relatively nasty things about you and about robinhood. one of the things that he has raised is the idea that citadel pressured you to do this is that true the answer to that question and much more of that interview with the head of robinhood as the final hour of "squawk box" begins right now. good morning and welcome to "squawk box" here on cnbc.
8:02 am
i'm joe kernen along with becky quick and andrew ross sorkin we have thankfully, thankfully some breaking news right away and it's not about robinhood and gamestop it's about johnson & johnson meg, tell us save us. >> reporter: these are the one-shot vaccine results we have been waiting for from j&j from the phase 3 trial. in the united states they showed 72% efficacy against moderate to severe covid-19 with just one dose of this vaccine now overall worldwide they ran this trial across three continents and including in south africa where they had a lot of that new variant. overall the efficacy 66%, brought down by the presence of that variant, especially in south africa importantly the vaccine showed 85% efficacy in preventing severe disease complete protection they say against hospitalization and death 28 days after getting that shot you get one shot, four weeks
8:03 am
later that protection against being put in the hospital or dying from covid experts tell me that is what you look for in a vaccine. they ran this trial in multiple countries so did pick up that b1351 variant we've been hearing about from south africa and two cases picked up in the u.s in the u.s., 72% latin america, 66% south africa, 57%. now j&j tells me they plan to file for emergency use authorization with the fda next week this is a one-shot vaccine they'll be packaging it in a five dose vile it can be stored in the fridge for three months an easy shot to put into the supply chain 72% efficacy in the u.s. really interesting data because of all of the new variants j&j down there, 3.6%
8:04 am
folks i'm talking about focus on severe disease and the fact that you can prevent severe disease hospitalization with one shot. >> if you did a one-shot analysis of pfizer and moderna, you'd be 50%, right, meg you need to take all of that into account i'm not telling people what to do with the stock obviously, but it's nuanced and there's pros and cons to the j&j versus the pfizer and moderna >> reporter: there absolutely are. we know with pfizer and moderna, two shots, two, three, four weeks apart and with pfizer particularly you have to keep it ultracold. moderna's has to be kept quite cold as well those are tricky j&j is running trials of two shots in different countries around the world they'll have those data as well, but the ability to roll out a one shot vaccine for three
8:05 am
months, the questions are about supply we don't know exactly how much j&j will have immediately. we heard from them approaching 10,000 doses in february they wouldn't confirm that they said they'll meet their supply commitments which are 100 million doses to the u.s. through the end of june. being able to keep you out of the hospital and protect you from the severe effects of the disease, that's what vaccine experts say is important for vaccines. >> meg, let's try and compare this j&j has been running the trials under different circumstances. that was before you saw the other strings. i don't know how to match that up to efficacy levels like you would be looking at the 57% or whatever it was, the efficacy
8:06 am
for this j&j vaccine in south africa what did they say, it was six fold fewer -- what was the -- for moderna? >> yeah, the titers were six fold lower. >> what does that mean in terms of efficacy? how can we match that up >> we don't know exactly so we don't know exactly what level of antibodies you need to provide protection to have that correlate, we don't know people are trying to do that but without actually testing the mrna vaccines against the b1351 variant, we just don't know. we might get them fairly soon and be able to try to make those calculations and that is probably going to be how new versions of vaccines are evaluated just because we wond be able to find them once we have that information, we'll be able to make decisions how to get the new vaccines
8:07 am
going. talking with j&j, they've already started looking at new potential vaccine constructs in case they needed to before they saw these results. what we might be seeing from all of these companies is potentially multi-valent vaccines vaccines that protect against multiple vaccines. we have that for the flu shot and could have it here this virus mutates especially when we give it the opportunity to when we don't bring case numbers down. >> with the flu, i look for the quad shot that has the four different strains so you can get the most protection out of it. just in terms what have this means for the fda, originally before we had anybody across the finish line, we were told 50 to 60% effectiveness is what they would be looking for that would be enough to say, okay, that's about as effective or maybe more effective. it seems like these numbers would potentially get the fda to go ahead and grant emergency use
8:08 am
authorization, right >> reporter: yeah. we'll have to hear from the regulators, obviously. there is an nih briefing going on now with dr. fauci and nih director dr. collins so we'll get to hear how they are thinking about the utility of this vaccine the bar was 50% originally before we knew how well they worked the mrna came in at 94, 95% effective. those trials were run three to four months ago where 75% against rare disease, including against south africa, i should say. that was not diminished by the south african variant. that's a big deal. >> the hospitalization and severe disease was not reduced even by the different variants >> that's right. that's pretty remarkable 85% overall worldwide pro protection >> that's good >> yeah, it is, thanks for
8:09 am
helping me clarify it. >> thank you good to see you this morning, especially with great news like that >> reporter: thank you meantime, robinhood has now confirmed to cnbc that it restricted trading in cryptocurrencies as the price of bitcoin rose sharply earlier users said robinhood halted instant deposits meaning they could only buy digital currencies with funds deposited in their accounts. new deposits can take five days to clear robinhood said it made that move due to extraordinary market conditions bitcoin is looking to site outage problems itself bitcoin has risen dramatically after elon musk placed a #bitcoin in his bioon twitter leading to a mini frenzy that took place overnight as we're watching these frenzies
8:10 am
take place within social media and then on these apps and online brokerage accounts, it raises questions whether the system unto itself can handle it. >> anyone tweeting elon greater than ray dalio said some stuff yesterday and bitcoin was like -- >> but ray was a little more reticent >> i know. elon says it and it's like a spacex rocket taking off dalio says it and people are like, really, ray? five years late. anyway, let's get to the stock story dominating investors' attention all this week. the surge in the shares of gamestop and moves yesterday by retail brokerages like robin hood are planning to ease trading curves today
8:11 am
this comes after robinhood said it was raising more than $1 billion from existing investors. it drew at least $500 million on a line of credit from a group of banks in order to meet lending requirements from its central clearinghouse. in an interview with andrew ross sorkin last night vlad tenev said they had stopped allowing users to buy shares in gamestop and 12 other stops to protect the firm and protect our customers. that move sparked outrage like those in the wall street, that's reddit form. did they protect customers or unfairly denied them the right to choose how they deploy their own money at a critical moment we know it wasn't just about that, tvs about protecting the firm william galvin is massachusetts
8:12 am
secretary of state and kevin o'leary, oshares etf, libertarian and says if they lose all their money, they need to learn that's not the first time you've said something so callous and unfeeling, o'leary we'll get to that in a second. let's start with secretary galvin is there something that needs to be done based on the events of the past couple of weeks >> absolutely. no question about it the whole issue is not an individual company or issue, it's about the honesty of the marketplace, reliability of the marketplace and the danger. >> dewayne: effective and dishonest marketplace has. the one thing everyone in this discussion can agree, there is no reality to these trades and issues we're speaking about. not based on anything other than
8:13 am
specu speculation. clearly when the market is engaging in that type of conduct, that is not good. i think it's a broader question though i think the whole issue of shorting is the question clearly shorting is going to go on and we need to have shorting as a defense in the marketplace, but there should be some restrictions on shorting maybe it's on the up tick. there needs to be a review by the national regulator on shorting in the marketplace. having said that, in the short run, no pun intended, it is extremely important to get control of the marketplace back again. i voiced my concern the other day about the effect on unsophisticated investors. obviously some of those who think they're sophisticated took offense to that. i'm concerned about the marketplace though and i'm concerned about the spillover effect which weakens the overall
8:14 am
situation. this is not a good time to be playing the games. the national regulator needs to get involved and promptly. in addition to that, i think as i suggested previously, if we didn't trade in these types of issues at all, this particular one was gamestop for a period of time, i think that would have an effect i'm not just talking about people across the board. there needs to be a review this is extremely dangerous to the marketplace and dangerous to our economy. >> what do you think, kevin? >> i don't agree with any of that. >> didn't think you would. >> no, but i think you have to hear the other side of this, phil at the end of the day there are very powerful forces at play that are good. let me take a shot at it the definition of the market is speculation. when you buy and stay long in a stock you're speculating the profits you hope are going to come finally appear. you take that risk the best thing we could do for this market is leave it a loin
8:15 am
and just fine. a lot of hedge funds will think a second time before they go short stock which is great here's the point i think everybody is missing four or five years ago we had 100 million americans with nothing set aside for their retirements. we still do. that's where we have the educational systems, they taught them nothing about investing and then along comes a platform like robinhood and all of a sudden kids in their 20s and 30s that would never get touched by money center bank or an online broke because they're not a profitable account, they only have a few hundred dollars to invest, vlad and his team create this
8:16 am
platform and now have millions, millions of people learning about the ways of the market and the market, even for sophisticated -- >> learning by losing though they're learning by losing they're not educating them nkts every investor loses everyone loses in the market so you're going to protect me from losing money. are you kidding? speculation isthe definition o the market. >> i don't care. >> the bottom line is when you put money in harm's way in the market, you risk it. that will always be the way after both you and i are gone. >> that is truement. >> the more regulation you put on it, the more you hurt it. because to some a millisecond is an investment, others ten years. you shouldn't have the right to define it. let the market do that if we want viable capital markets, you have to let the market be the market just shine transparency on it. don't try and make rules that have all kind of second consequences. >> there is no transparency. there is no transparency here.
8:17 am
>> it's more transparent today -- you can't say that what happened over the last 48 hours, the last two trading sessions wasn't driven by transparency. we've never had millions of people saying there's a hedge fund that's short. let's go get them. >> i have a problem with the statement being made. >> i think it's fine. >> with transparency you have to have some certainty. there is no certainty. wild speculation based on nothing. that is not an honest marketplace. >> i'm sorry, but you're going to have to live with speculation. >> speculation i can live with based on rationality rational speculation is one thing. dishonesty is not. >> how do you know that gamestop executives aren't going to take advantage of this situation and build a brand and make a pivot just like netflix did when they were shipping out cds in the mail you don't know you have no idea either do i. >> they haven't even raised any
8:18 am
capital on it. if they were going to be doing that, why wouldn't they be raising capital now to try to do that they're not. >> well, maybe they will we don't know. that's the market. >> we don't know. >> if they can raise capital at these prices, they should. >> what i do know is many people investing in this have absolutely no reason why they're getting in it. they feel it's a train they don't want to miss >> secretary galvin, you might like this, kevin back in 1982 when apple came out, are you familiar with this, secretary galvin, massachusetts didn't want anyone buying? they wouldn't let anyone buy the shares of apple because they were way too speculative >> that was before my time i'm not sure i would have voted on it. >> is it -- when things go absolutely bonkers and a nanny state or whatever you want to call it gets involved.
8:19 am
>> it's not a nanny state. >> you can't protect everyone. >> we have a reputation of protecting investors we believe in honesty. that's what we want. yes, we want transparency. when you're enticing people who have very little idea what they're doing to invest in things with no rational basis, that is not good >> who deciding what's rational? >> bill, you have every rate -- >> a politician, that's why we have the securities and exchange commission. >> you have every right to voice your concerns. >> and i am. >> along with the hundreds of millions of other people who are on social media voicing theirs too. >> that's fair. >> let the collective decide that is the definition of the market the beautiful thing we call the market where people raise money.
8:20 am
>> kevin, wlet me just ask you this though. if this goes wrong, and i think it's almost impossible to think that it won't, the quote unquote speculators never blame themselves they don't and i imagine you will also find on top of this some levels of fraud, people taking advantage of people throughout this process. the question is do you believe the american public is quote, unquote, responsible enough and is willing to demonstrably accept the losses and this goes to the social safety net and everything else. if people start filing bankr bankruptcy the lesson is trying to protect the little guy now they're saying don't protect the little guy, by protecting the little guy you're protecting him against the big guy.
8:21 am
it's a unique dynamic. it's hard to understand what the right answer is. i think the answer is you are supposed to protect the little guy in the end from losses that they can't afford. do you think that's not fair >> no. i think what's more important is that they educate, that they learn. that they learn the ways of investing that they're going to need later in life i hate the ppp loans, i hate the bailouts the only people i want to protect now with the capital we're printing are people that are unemployed while our economy shifts and turns into the digital bohemoth i don't want to support airlines or i don't care if gamestop goes bankrupt >> what happens with the kids who are taking this stimulus checks, putting it on margin and could eventually be filing for
8:22 am
bankruptcy >> oh, no, andrew, they're learning how to be investors they're learning about the risk of the market. oh, no, that's a horrible thing. we forgot to educate them in high school. let them learn in the real world which is better. i support vlad i support robinhood. i think it's fantastic leave them alone it's a great thing that's happening here. >> obviously i disagree. i think you're putting the marketplace at risk. i think by introducing this wild type of speculation you're putting our economy at risk. i hope it happens quickly. >> secretary galvin, we'll end on that note thank you for making your points >> thank you >> kevin o'leary, you need to be more strident about things so wishy-washy all of the time you have to tell us what you really, really feel next time. can you do that? you're free to do it it's cable. >> absolutely, joe you know i love doing it. >> god, we love having you, too.
8:23 am
i put everyone in secretary galvin's seat and stick you on the other side and i know we're going to have a good conversation that's what we're looking for. it's cable thanks, guys. got a money dispute? kevin wants to hear all sides and help you determine the best way. tell him your story. another note, don't miss the former chairman of t.d. ameritrade, joe moglia right here on "squawk box" monday morning at 8 a.m coastal carolina, even got good at football and basketball i don't know what he did he runs companies. he runs college ncaa sports teams. coa coastal carolina. >> you can call it the moglia effect >> yes unbelievable >> guys, i want to get back to
8:24 am
the news on the efficacy of johnson & johnson's covid-19 vaccine. this is pretty important the market is putting this down. they don't like the efficacy numbers. it was 72% effective in the united states. 66% efficacy worldwide they are testing in areas like south africa, latin america where you're seeing other strains. those strains weren't there when you had moderna and pfizer out doing their testing. dr. scott gottleib was tweeting about this and i think this is important because dr. gottleib on the board of pfizer but in is what it sayings. it sends in three highly effective vaccines this has sustained immune protection over time, perhaps from a robust early induction of memory immune cells. the protection was strong and
8:25 am
durable. it was highly effective. the milieu of disease is more complex. even in the u.s. trials done today are running into more mutated cases. make no mistake, this is an important and wonderful development. i think this is huge news because there are so many people who thought, okay, what are we going to do when it gets down to will you take a shot that's less effe effective. i'm not going to qualify for moderna or pfizer's shot i would get that shot even with 72% effectiveness or efficacy, even if it was lower than that, because the idea that it's preventing severe disease and keeping you from the hospital, that sounds like a good deal if it's a question between getting this one now or not knowing when i'm going to
8:26 am
qualify for an appointment for the others, i'm going to get it. time matters this is one shot, not two shots that have to be spaced out over three weeks. you're talking about six weeks before you get the effectiveness. i would take it because we're at that point in this pandemic right now. >> it's an unbelievable situation, becky unbelievable situation, becky. people are going to try to figure out which ones they want to take. i imagine there's bits of races for different ones but it's a positive no question it's a positive for humanity hopefully. meantime on the other side of this break, more with my interview of the ceo of robinhood including heavy criticism from dave portnoy of bar stool sports reaction in washington to the drama as well. top republican on the house
8:27 am
financer advises committee joins us robin ro robinhood talking about bitcoin. it was up on the back of a comment by the comment by elon musk by adding bitcoin was he talking about the run up of the price we'll talk about it when we return than we do. workday. how do they make better decisions faster? workday. got to do something. workday! i think i got something. work... hey, rob, you're on mute. hello. [all] hey... there he is. workday, the finance, hr, and planning system for a changing world. ♪ch-ch-changes♪
8:28 am
♪♪ this is what community looks like. ♪♪ caring for each other, ♪♪ protecting each other. ♪♪ and as the covid vaccine rolls out, we'll be ready to administer it. ♪♪
8:29 am
8:30 am
still to come this morning, two big interviews you don't want to miss rocket company ceo jay farner and congressman patrick mchenry on washington's flourishing interest on the retail trading plfos. ay tuned, everybody. you're watching "squawk box" and this is cnbc investments, key portfolio events, all in one place. because when it's decision time, you need decision tech. only from fidelity. you need decision tech. labradoodles, cronuts, skorts. (it's a skirt... and shorts) the world loves a hybrid. so do businesses. so, today they're going hybrid with ibm.
8:31 am
a hybrid cloud approach lets them use watson ai to modernize without rebuilding, and bring all their partners and customers together in one place. that's why businesses from retail to banking are going with a smarter hybrid cloud using the tools, platform and expertise of ibm.
8:32 am
welcome back, everybody. we've been tracking the wild price moves in gamestop, amc, bed, bath and beyond and all of that activity is impacting shares of publicly traded brokers. mike santoli joins us with more
8:33 am
on that front. good morning nkts good morning, becky. it sent tremors throughout the market it made investors with the level of volatility. we lost that up trend. the s&p 500 is just under $37.50 that would be 375. you'll be playing with those levels it's repositioning working against macro sentiment. the bond market isn't showing stress that's a positive. let's look at the brokers because the retail brokers are serving massive, massive volumes. we're seeing the news having to raise a little bit of liquidity to back stop a lot of these trades what this shows you, interactive brokers, charles schwab and others have rolled a little bit. it's at cost people are paying zero commissions. there's a lot of friction and capital requirements it's not as if it's a disaster
8:34 am
ultimately it's good to have your customers doing good but in the short term it's a little bit tough. vern 2 financial, middleman handles trade for the firms has perced up. this is a tailwind for a company like that, guys. >> okay. mike, thank you for that just want to mention, we're seeing some comments crossing the wires from dr. fauci in regard to the j&j news this morning on this vaccine that appears to have a 72% efficacy demonstrated in the united states, however, and this is where things get a little bit more complicated, the stock is down because of what they're seeing in south africa and this is having some people nervous, including dr. fauci. we can see we are going to be challenged given what's happened in south africa with this new strain it's a wake-up call to be nimble
8:35 am
and to adjust as it will continue to evolve and mutate. he calls it a wake-up call and that, of course, weighing on johnson & johnson. i think there's going to be some questions about how investors think about this and how significant it may or may not be we'll continue to follow this story throughout the rest of the program. when we come back, we're going to talk to the ceo of rocket company. shares of his personal experience with a firm that's seen the fair share of stock shorting plus, housing in 2021 and aynd st tuned, you're watching "squawk box" on cnbc ♪ ♪ ♪
8:36 am
8:37 am
8:38 am
welcome back, everybody. in 2020 we saw the housing market grow despite the covid-19 pandemic actually, in some cases because of it. in fact, a nice chunk of that growth was because of the pandemic as people sought more space outside of cities. investors are wondering if the market growth will sustain in the new year joining us to talk about that is jay farner he's rocket companies ceo. it's the largest mortgage lender in the united states its stock has seen quite a bit of shorting. we're going to ask jay about that just in light of this week's huge moves of gamestop. why don't we start with the housing market how are things doing right now >> good morning, becky great question and, actually,
8:39 am
ties into the comment that was read before the break from dr. fauci about the concern over the vaccine and i think we're in this for the long haul that ties into the housing market there's less than i think about 2 months worth of inventory out there. demand for housing is tremendous the highest it's been in over 15 years. we imagine '21 is going to be a very, very strong year for housing. >> you know, there's been short supply and we've also had incredibly low interest rates. what do you see on the supply front changing potentially any of that? how have things happened with interest rates interest rates picked up before they fell back. >> rates are incredibly low and the payments are great a little bit of movement here or there hasn't affected people's desire to buy. i think you're going to continue to see technology play an important role in housing in 2021 opening up inventory, encouraging people we own for sale by
8:40 am
people will start selling their homes that way with that technology hopefully we'll get a larger amount of inventory and we'll see housing continue to grow with lower interest rates. >> jay, i always wonder what happens with this. you guys are the biggest right now. you've grown every single year, gotten bigger, bigger, bigger. i know your expectations or your goal for what you're looking for for market share is, what, 25% by the year 2030 >> yeah. we've said 25% look, our mission is to continue to grow on our platform. we've just announced our broker directory that we put on rocket we have 43,000 partners. we have thousands of insurance agents and real estate agents that are working to originate rocket mortgage or refer clients to rocket mortgage so, you know, our mission has been to grow that funnel and really any way a consumer wants to get a mortgage or refinance a purchase, we're here to assist
8:41 am
that's how we think about the future and how we're going to grow that market share and reach, whether it's 20, 25% or beyond it's really about becoming that tech and client experience platform that empowers anybody in america to get a mortgage or buy a house. >> what happens if the housing market turns down on a national level like it did back during the great recession or what happens if there are problems because interest rates rise pretty rapidly what would that mean for you >> well, that's why we've got to diversify our ability to reach clients, even in a down market you'll see somewhere close to $2 trillion of mortgages to take place between purchase and rephi, so with that reach, with our brand that we're investing a billion a year plus in including the super bowl square promotion we're doing right now, we've got the ability to grow market share. that's what we've demonstrated in the past. coming out of the great rece recession, that's exactly what we've done
8:42 am
although it can be a bit painful of course as we see interest rates rise or a shift in the housing market, usually what that means for us is our ability to grow and take market share because our competitors aren't quite as efficient as we are when it comes to acquiring clients and taking care of mortgages. the other thing, becky, of course is the additional businesses that we've added to our platform whether it's our rocket homes real estate business, rocket auto car business. personal loan business, rocket loans and we take care of them in other ways in addition to mortgage. >> jay, you don't have any specific news this morning and yet your stock right now is up by about 13% we've talked an awful lot about gamestop and the other companies that have seen reddit really boost their shares and go after the shorts in those stocks that are heavily shorted. you had a pretty significant short as of the end of the year, 30% or something
8:43 am
why is your stock up this morning? what do you think is happening with reddit? >> it's an interesting week. as we have come out with a newer public market, there's been a tendency for the shorts to show up i'll remind everybody between myself, dan gilbert son, we own 95% of rocket companies because we feel so strongly about our ability to grow. we've been growing for 35 years. we've shown consistent ability to grow and be profitable in any kind of market cycle i think the more we tell our story, the more we explain to folks the platform we're building you'll see our stock continue to do the right thing the other important component, you just pointed this out, we've got a lot of retail investors in our stock. it's one of those stocks that people understand. they get a mortgage. they know the experience they're familiar with rocket companies and quicken loans. i think what you're seeing is they're participating at a higher rate than other
8:44 am
companies. i think that bodes well for our stock. >> are you happy to see the retail traders chase out the shorts >> like i mentioned, i feel really strong -- i've been here 25 years i know all the things we're doing. i understand the power of the platform, the profit bability we're able to drive. my advice is this is a stock you might not want to be short in you might want to rethink your position we have a great track record and exciting things we're working on. >> jay, i want to thank you for your time today. always good to see you again, we'll keep a close eye on this and we hope to have you back soon. >> yeah. thank you so much. >> thank you joe? >> thanks, beck. coming up, the latest on dc's plans to look into markets and retail trading house financial services committee member patrick mchenry will join us live. stay tuned you're watching "squawk box" on cnbc
8:45 am
it's hard to hope, hard to cope with crisis. so we get to work. we mend, fighting for every person in every neighborhood; we, the coming of the common good. so dare to care, to be hope-sided. we're never divided, when we live to give, we always live united.
8:46 am
8:47 am
coming up when we return, robinhood ceo on yesterday's contentious decision to restrict gamestop trading plus his response to criticism from barstool sports's y.vid portno stay tuned "squawk box" returns right after this.
8:48 am
(vo) businesses are always making choices. here's a choice you don't have to make: the largest 5g network... award-winning customer satisfaction...
8:49 am
or insanely great value. now, with t-mobile for business, there's no compromise. network. support. value. choose. all. three. t-mobile for business. ready when you are.
8:50 am
box. robinhood ceo speaking out as we concluded wildly trading names like gamestop and amc in an interview last night, i asked, how concerned he is, and how concerned really customers should be about the robustness
8:51 am
of his own system right now. >> well, to be clear, this was the system working we have the ability to restrict buying in symbols for unprecedented market conditions, such as this and to be clear, we didn't shut down the system. we shut down buying for these 13 stocks, for these 13 securities but customers that held positions could still sell, and customers could still buy and sell the thousands of other securities on the robinhood platform >> but when you look at the precipitous fall, for example, of gamestop today, do you think that robinhood bears any responsibility for that? >> i can't comment on, you know, price action of securities and it probably would be inappropriate for me to do that, and also, i should note, robinhood wasn't the only firm
8:52 am
to restrict buying in securities, other brokerages have been restricting the buying and trading of these types of securities all week, and even today. of course, we get the lion share of the attention, since we've been the cognitive requirement for retail investing in america, but other people are dealing with these challenges as well. >> i think it's fair to say that the system in truth did not work, truly work, but maybe prevented a true liquidity crisis from taking place meantime, we're showing you images right now of barstool's founder and day trader dave portnoy, because he was blasting robinhood all day online yesterday and said that perhaps citadel partially was responsible and i asked vlad to respond to the accusation. >> completely false.
8:53 am
that's complete misinformation that did not happen. hopefully, i'm being clear about that nobody pressured us. we didn't do this at the direction of a market maker that we route orders to or any other financial market participant no, this was an internal operational risk management decision that the firm made so we could protect the firm and protect our customers. >> do you believe, though, that citadel knew that you were going to have to take these steps and effectively ran in front of it >> i can't really comment on, i don't think so, that seems another one of those misinformation and conspiracy theories certainly, we made decisions based on the financial requirements, includings.e.c. net capital obligations, and
8:54 am
clearinghouse deposits that brokers have to comply with, and robinhood was not the only broker that restricted buying of these securities this has been unprecedented activity, concentrated in a few names, and it's really, the first time that i've seen, where social media and financial services have intersected in this way. >> have you gotten calls from the s.e.c. >> i probably can't comment on specific conversations that we have had or are having, but our team is in constant communication with our regulators, and agencies, and working very, very hard to reopen trading in, to reopen buying in some of these securities, as soon as we possibly can >> you can see the full interview right now, on
8:55 am joe? >> thanks, andrew. for more on how congress plans to investigate the new world of retail investing that's emerged in the last few weeks, let's bring in north carolina congressman patrick mchenry, he's the ranking member of the house financial services committee. so what will you look at will you look at the ability to short 140% of the outstanding shares or will you look at the reddit mob, if you will, that decides to squeeze the shorts and act in a concerted way to drive the stock higher what's more important, congressman? >> well, i think first, we have to ensure that existing laws were adhered to, and then the second question is, what antiquated regulations or laws would need to be looked at that perhaps enhanced this event. and so in particular what i'm
8:56 am
thinking is the use of technology, the broad innovation, the democratization of capital that we've seen in our heavily-regulated industries, financial services, this broad desire of average every day investors to get access to more sophisticated, more interesting products and it appears to me that these investors were pretty sophisticated in their action. and so i want to look at those antiquated rules like the credit investors standard and other things along those lines to ensure that we are not cutting people out to access to additional marks and therefore leading them to activities like we've seen with gamestop and a few other tradeable securities >> you can always make the case that trying to drive a company out of business is untoward and nasty and shouldn't be done. i mean there are some people that think stocks get overvalued for whatever reason, and, you
8:57 am
know, obviously, there's a long side and a short side to everything i'm just wondering if the reddit, if the web site, if it went after a company the other way, let's say there's a company that all these guys decide, guys and gals decided that they didn't like, and they did a concerted short attack on a company, is that democratizing the markets, too would that be viewed the same way? they're sable to say these nasty hedge fund guys were trying to destroy a company and we're trying to make it viable or look at it the other way? >> a pump and dump market, in essence, you can see movement regardless of the direction, with existing laws about that. we have existing laws about that >> how do they apply to this, with the intersection of social media and chat rooms, and all acting in concert to do this
8:58 am
>> well, look, i mean it's like saying that the fax machine, the telephone, twitter, facebook, that we're going to ban these technologies, so that people can't have this type of communication. you can't put technology back in the box. innovation is here we have to embrace it. we have to broaden access to our markets, we have to broaden access to our financial products, we have to have the speed, the pace, of sellman and a number of things like that so we can meet the needs of average every day people what i'm seeing here is this larger case, which is average every day investors are cut off from the access that insiders like c-suite members of companies and hedge funds, private equity, naturally get and that credit investor standard has bifurcated our markets into a highly prosperous lot and then the rest. so let's fix that problem, so you can have these capital flows go to the best place the final thing i'll say here,
8:59 am
joe, is that people should not invest money that they can't afford to lose i think that's very, very important. buyer beware here. we're not sure how this thing ends but what we need to know, what we need to respect though, is that people are making decisions with our own money and as a government official, i shouldn't be telling them how to do that. >> all right congressman, i just wonder, bipartisan, what it's like, because your views are certainly different than some of the views i'm reading from the other side of the aisle, and as usual, being aware of what the two sides can agree on, but obviously, the market has to stay free and open, and we all want that congressman. thank you. >> absolutely. and everybody seeing what they want out of this thing, sadly. >> live free or die, patrick mchenry, right >> some other guy. proudly. >> your uncle maybe. >> hey, joe, i don't know if you're seeing this but talking about a sea change in the world
9:00 am
about shorting and what is going on with short seller, citron research just out saying they're discontinuing short selling research, citron will no longer publish short reports. we will focus on giving long side multiopportunities for individual investors, so talk about a change, there's one. >> and what will happen in 2021, we know, now that 2020 is over, it's going to be quiet. >> have a great weekend. see you both do it again next week. and make sure you join us. "squawk on the street" is next good friday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber and morgan brennan, cramer has the morning off. futures are off the lows but still weak as this final day of january happens. three big baskets of news. the reddit squeeze corporate news and j&j with vaccine data that dr. fauci calls a spectacular result our road map begins with the retail trading


info Stream Only

Uploaded by TV Archive on