tv Squawk Alley CNBC March 17, 2015 11:00am-12:01pm EDT
correlations with other assets classes. oil dropping below 43s a barrel. it's now just above that. and, of course, the dollar, which is actually weakening ahead of the fed meeting and the announcement tomorrow. >> yep. fomc front and center waiting for janet yellen the statement and news conference tomorrow, of course. in the meantime let's send it over to "squawk alley" where it is tuesday. >> thanks, guys. it is 8:00 a.m. at pinterest headquarters in san francisco, california, 11:00 a.m. here on wall street and "squawk alley" is live. ♪ ♪ happy st. patrick's day.
joining us this morning, kevin o'leary chairman of the o'leary funds and investor on "shark tank" joins us. jon fortt back from time off and kayla tausche at post nine. let's begin with the markets as good as yesterday was, today is basically the opposite image. the dow down about 140 points. haven't been able to put two strong days together all month long. comes one day after all the major averages finished up about 1%. keeping our eye on oil down over 1% again today. actually broke $43 earlier in the morning. kevin, cramer's point this morning is that this is why the market is so tiring for so many people, especially going into a fed meeting where there's a lot we don't know, it's hard to put together a string of sustainable gains. >> so true. we're waiting for them to find out if the fed is going to pull the word patience out of the market and have us worried about rate hikes. i'm fascinated by the move in oil which is, i think, going to get to $35 pretty soon. and, you know, we've really
never talked about the impact that's going to have on the rest of the economy outside of the energy sector. this is going to have a profound lift of a lot of input costs. you've got to be bullish, carl, on the fact that most companies would rather have $35 oil and perpetuity than $100 oil and yet we sit and fret and worry it pulls down the averages. listen, if i had to invest in a economy a $35 oil forever i would be a happy camper. >> you've been saying this a very long time. your $35 call has been out there. you said this before on this program. you've also said, that you would not be buying equities of companies in the space right now at the very least, you would be buying some distressed debt. are you there yet? >> no, i'm not. we have not seen grown men weeping in the energy sector. we've seen bold-faced ceos come out and say they have great balance sheet and not to worry and they don't care with where oils goes. i don't believe any of that. what's going to happen on the june and those that have
leverage we will see a shift to the downside. it's too early for me to get in. i think the crying hasn't started. when i finally see a big five ceo in the energy sector come on with tears in his eyes i will be buying his debt. >> kevin, we've been talking about this volatility an up day, down day, being just the signature of what this year will look like as the fed moves to raise rates, whether that's in june or now the likely scenario in september off perhaps even not this year at all, but there's more linguistics around this. how do you prepare for a period of sustained volatility even as you're overall bullish on the economy. >> i've lifted my cash waegts. that's the number one thing. i'm about 38% cash now because i want to start moving some of my dollars, my u.s. dollars, into euros, and asian currencies. i feel we've had a fantastic run, so my next step in terms of dealing with the volatility is to go to lower p/e environments. i like europe, i like asia. i'm going to allocate myself 50%
domestic large cap divide dividend payers, 25% european in euros, unhedged, and i'm also going to buy the asian market as well for 25%. and then i'm going to weight this whole thing out because whether it's oil or the volatility we're seeing waiting to see the fed move on rates i would rather have a global franchise now as opposed to just the north american. we've had such a great run. i want to throw the europeans a bone and china has come off nicely it's time to reinvest there. >> really? you think -- i mean, they're talking about offloading more steel, people are worried about dumping, we got just -- isn't china just a central bank jawboning story right now, kevin? >> you can find infrastructure companies operating in asia, carl, that pay dvds and issue debt. i love infrastructure stories. i like anything that's large cap that pays me cash flow. that's how i protect myself against whether the numbers are real or not in china.
cash doesn't lie. when i get my check every quarter from a dividend i can see the balance sheet isn't increasing its debt i'm happy. whatever the chinese are sail saying about their gdp growth advertised at 7, even at 6 it's twice what we've got. you may want to question their numbers. it the doesn't matter if you bought a cash flow company running a toll road company sending you a check, i'm going to invest there. >> we're getting a good look at apple's master plan for television. apple is in talks with programmers to offer a bundle of tv networks as soon as this fall. the service would have about 25 channels including abc, cbs and fox and available on devices like the apple tv. right now the talks do not involve nbc universal because of a dispute between apple and our parent company comcast. comcast is also the parent company of cnbc. kevin, what do you make of this after so many promises about a refresh on apple tv? is this finally it? >> well, i think it is, carl, but let me ask you a question
this way, as an investor. i'm a comcast investor pays a dividend, i'm an apple investor, pays a dividend. does this information change my inrestment thesis about either of these companies? the answer is no. who provides me the content whether it's part of my cable bill or whether it's part of my apple monthly charge in their ecosphere of the things they provide me, it doesn't really change much. i live in boston, a place on moral borrow street. i can't change the pipe that comes into my house. it's comcast. i will be paying those guys, whoever delivers me house of cards, whatever content i want to see. i'm not sure that all of this maneuvering over the top as it's called really changes the cash flow investment theory around who delivers what matters the most in this environment, the pipe. who delivers me the broadband or the broadband pire weirless? who is it? that's somebody i want to own. who delivers me the content. let the fights begin. i don't care. >> here's the part i can't figure out, right. what we've got is the idea of an
over-the-top service not a managed service, meaning there's no kind of bit of bandwidth set aside to make sure these channels look great because hey, people don't want that. net neutrality, everybody wants net neutrality. we're going to get some kind of a spinning dial sometimes when you want to view tv unless you're paying for the fastest broadband you can at home and even then, if you're trying to watch this on the go through a wireless connection, more spinning dial. i mean do people really want to pay 30 or 40 bucks a month for that or has apple figured something out we don't understand yet, i wonder sp. >> i don't think they've figured out anything new in terms of having to get high-speed internet access. they're going to provide the content. my concern about all these over-the-top announcements using the internet to stream television, there's going to be tremendous consumer confusion here. if i want to watch cnbc and i also want time delivered "house of cards" who do i get that from? do i keep my, you know, netflix subscription or do i keep my
cable provider for live television? it's confusing right now for everybody watching these moves until it becomes really easy to understand and one charge a month from somebody, i think this is just going to be a real headache to figure out. frankly, you know, getting high-speed internet is going to be demand much everybody and i don't agree with net neutrality. i hope this gets litigated until the cows come home. i want a user pay system. use more data and all bits created equal you pay more. that's what made america great. there's nothing wrong with the internet. >> you talk about the confusion having to toggle between services. people are having issue going between netflix and amazon prime, for instance, but this idea of a skinny bundle web services aside, the idea we're sort of whittling down the larger bundle as it is now, do you think that's a step in the right direction? >> i don't know any consumers that want that, kayla. no one has ever said to me, i wish i could only have two channels instead of 100. so, you know, we're creating solutions wheres there's no
problems. >> 30 instead of 300? >> whose top 30? if you give the 550 opportunities to actually click which ones they want, do you think people really want that or just give me a sports package so i can see every game on sunday? i mean, i think there's going to be a tremendous amount of confusion about doing this. these are politically motivated initiatives. nothing to do with consumers as far as i'm concerned. i don't know anybody that's saying, give me less. right now i have 550 channels. i'm paying one fee for it. i think that's a good service. i don't agree with all of this. i want the market to decide. >> good cans it will. but we'll see what happens over time. finally, kevin, pinterest has announced it raised $367 million in new round of funding, values at $11 billion, more than doubles the previouses vus valuation of $5 billion in less than a year. according to the journal only five vc backed companies are valued higher than pin tryst, uber, xiaomi and snapchat. cramer's point a lot has to go
right for these guys over time? >> this is insane. it's absolutely insane. i would never put a dime into a deal like that. totally illiquid at an insane valuation. this is going to end badly tore sure. one of these deals will go public going down 50% leaving anybody that put such a crazy valuation on it while private is going to get slaughtered. i don't know who and when but it's coming to a theater near you. i've been at this movie before back in the late '90s and it ended very badly. at least then you had liquidity. you could buy yahoo! $240 and sell it the next day. you can't do this here. people are going to get screwed. >> kevin, what i like about pinterest, though, is all the numbers that i see demographically suggest it's appealing to a segment of the population tilting toward women, tilting younger, tilting toward middle america so many other start-ups are not paying attention to. yes, i mean i agree with you. a lot of the highly valued companies are probably going to go under and be a huge
disappointment but probably a kiple that will surprise to the upside and given that pinterest is operating kind of a rarefied position, isn't it possible that it's worth this? >> oh, i love the service. all of my "shark tank" companies that are involved in clothing use the service and it's been successful for them. it's what am i paying for it? what multiple on a private basis am i paying for it? in my p/e investments i want to buy at five so seven times cash flow. these are hundreds of cash flows. >> valued at $15 billion before its ipo and had very little revenue. that would have been a great deal get in on? >> and it was. but i'm saying it's really a game of musical chairs. you don't know when this bubble pops and it is a bubble. it's an illiquid bubble. these private placements, i get offered these things through all kinds of traders and dealers packaging these things up and say are you nuts? i'm not going to give you money that is liquid and park it here and you tell me when it's going to go public. it's not pragmatic.
i don't believe in investing this way. others do. nothing wrong with that. i'm value yield. value yield. that's it. >> you're describing a situation where the investor is in the driver's seat. we're in an environment right now where the start-up founders and ceos are turning down term sheets that are arriving in their inbox that are giving them valuations higher than they would even give themselves. what's your advice to some of the founders and executives on not getting too ahead of themselves? how do you turn down money that appears to be free? >> no, no. if you're sitting as one of these ceos, i totally agree with you. you take as much of this cash as these bozos are willing to give you. take it all. because you're never going to get this chance again. these valuations are saying to them, and the terms are insane, but if they're being offered to you, you have a duty as a fiduciary for your shareholders to suck it in like a hoover, inhale this cash it's the right thing to do, but it wouldn't be mine, not a dime of my dough is
going in any of that stuff. that is going to end very, very badly. >> kevin, don't go anywhere. we will come back to you in a moment. when we come back after a commercial break, uber's ceo travis cowneck in hot water overseas. he may want to stay away from south korea. rack space has a completely different take on the cloud, something making a ton of money for its investors. the ceo will join us live in a cnbc exclusivend. at future is now when it comes to mobile payments. creator of google wallet is with us to break down what you need to know as we go to break, a look at the markets, dow down 16 is 1 and back in a moment.
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welcome back. kevin o'leary with us. talk about uber "the korea times" have reported some uber employees have been detained by police for violating the country's transport law. the report says authorities plan to summon travis kalanick if he does not comply a warrant could be issued for his arrest. kalanick was indicted in december on charges of running an illegal taxi business. uber did issue a statement to us saying uber is fully cooperated with the police during the course of their investigation and we will continue to do so as the party is referred to the prosecution for recrew. uber does not believe the employees in korea have engaged in me a any misconduct or illegal behavior and believes the prosecutors will come to a similar conclusion. we can talk about that or their
valuation, a multiple of pinterests if you don't like pinterest why would you like uber? >> i love the service. i would never make this investment. this is crazy also. uber is not actually a proprietary service. it's got the largest scale currently globally and that has value, but there will be lots of competition from all kinds of people over the years to come. i think the valuation is insane there too. but the service, for example, here, where i am in miami today, you can't get the full, you can only get uber x, uber xl, their own problems with the local government here. all this means regarding the korean deal, less executives going for holidays in south korea. that's all. but everybody invests in uber knows there will be litigation until the cows come home. it's built into the business model. >> litigation when you run into regulatory issues in the u.s., means cease and desist orders or lawsuits, but when we're talking about expanding overseas, where government regimes are different, how does a company get over some of these road
blocks? >> the reason they're going to get over it is these governments are going to change very quickly over time, they will be elected every five to seven years, the people in korea have fallen in love with the service model. it doesn't mean that uber will be the only service provider in south korea providing the service. but they're the first to actually get scale. i assume as everybody else seems to, that country by country, municipality by municipality will accept this business model by some provider. it may be uber, may be somebody else. but the people want it. who cares what the politicians think. >> yeah. kevin, i think what you might be missing is that scale really does matter in this business. remember a few months ago uber went through the rough patch with the bad headlines, some activities they were engaged in that they shouldn't have been and i said, oh, well i've downloaded the lyft app and did a couple times i've opened it up, tried to book a ride and they just didn't have anything in the area where i was. uber has the scale where they
can actually perform pretty well. i haven't had bad experiences with the service so i've started using it again, i plan to use it again tonight. i think that's the issue a lot of people might be overlooking here. i was in spain in barcelona for mobile world congress they don't have uber. their taxi service has a booking service. i waited five minutes for any taxi to say they were going to pick me up at the hotel. they wouldn't. i had to hail one. with uber that doesn't happen. >> it's true. their service -- it's true. that service is great. but you can't tell me others can't in each city. this is a local service. i don't care, john, that it doesn't work for you in spain as long as it's working for me in south beach. whoever can deliver me a car faster and i expect over the years ahead i'll have an app that says, which is the closest car from any company to pick me up at the hotel i'm at and take me down to -- >> it doesn't work for me in new jersey some of these other services and so i develop a
habit of no matter where i am going to uber first. it's kind of like they were little search operations pre-google but once using google you're not going to go for a local. >> to that point the ceo of lyft, uber's top competitor on closing bell and talked about competition, kevin. here's what he had to say. take a listen. >> the two companies are extremely competitive and i think it pushes us to both be better. ultimately, you know, i think uber is a good car service but lyft is going after a much bigger problem in trying to, you know, to make life without a car possible and reinvent the way people get around cities and if uber wants to step into that and help, you know, push progress in that direction we welcome it? so jon, are you saying that uber subassumes lyft over time? >> i think that is the risk. i don't know what the lyft ceo is talking about saying they're tackling a bigger problem. uber is tackling the same problem not just making life without a car possible, it also package deliveries. they're very much in the same
space. >> kevin, i was going to give you a final comment but we'll wrap it up there. good to see you. thanks for lighting ups the phone lines again. happy st. patrick's day. >> thank you. >> kevin o'leary joinings us from miami. we'll talk to you later. up next yahoo! is making one of its first big moves into the streaming content wars this morning. but can the launch of a new show do anything to help that stock? more on that story when "squawk alley" comes back.
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another instant of one of the cult favorites brought back by groundswell of support from its favorites, but certainly interesting to see and to see the support for this. >> we'll see if they can make this into a bit of a hit for them. i think the bar is actually sort of low because there's nothing else i would be going to yahoo! to watch. i mean they just don't have in terms of what they're streaming anything i want to see. not like they have a basket of shows you're wanting to see and wondering is this going to bump that up? i'm not watching anything on yahoo!. i might check out "community". >> marissa mayer hopes it going to change. >> i don't watch katie but there's no streaming show that i'm going to yahoo! to watch. i might see a clip here or there but not sitting down 30 minutes watching something on yahoo! >> "community" wasn't obtained for free. a bar for yahoo! investors. we will see next quarter, what if any, repercussions on the bottom line. >> they have to hope that pays
off. >> while the traditional path to growth has been building out infrastructure, our next guest says the key to success might be a throwback to managed services. taylor rhodes the president and ceo of rackspace and joins us here on "squawk alley." taylor, thanks for being here. so in the cloud right now intense price competition, satya nadella at microsoft say only a few companies have the resources to build out global infrastructure. you think you can compete on service that rackspace became known for. how do you do it at this point? >> right now what's happening is that the lower infrastructure prices, which is really the hallmark of the cloud, making infrastructure ubiquitous. any software engineer with a credit card can write new apps and software and creates a ton of complexity too for business decision makers to keep up with which technology they will productize. for us it brings us back to our
hallmark simplifying that for customers, managing the apps in a cloud and making them work and create value. that's what we've been famous for. we have historically taken other great technologies and wrapped them and delivered fanatical support. we see this creating a new opportunity for us. >> what i hear from ceos and cios that i talk to, is that the cloud is actually more complicated than it looks because if you know how to config it you can get huge savings. if you don't, you can break the bank and spend more than you otherwise should. how do you put a value on that? because obviously i guess you want to say hey, our people can make the cloud work for you, better than you would be able to make it work for yourself, just go out and buy some raw compute cycles from amazon. >> the dream of the cloud it would solve all over problems. it's cheap, ubiquitouubiquitous using it. the market is moving from early adoption stage into mainstream and with that comes wisdom. it's not as simple as it seems. one flavor of public cloud isn't a fit for every application out
there. hybrid options working with multi tenet public cloutsdss is what most of the market will want. technology is complex and changes rapidly. what is strategic differentiating from my business, the next skill seth i should hire and buy from a specialists a service? we want to step in and say we have economies of expertise and the skills of the cloud buy a service from us, we will give you a trust worthy guarantee on the other side and get back to writing code and shipping product that makes you kettive. >> that's the pitch you've been giving to partners recently. that seems to be the new strategy for the company. tinder has gotten a lot of press. what sort of -- what sort of product do you give some of these partners and how long does it take for them to see results? >> you know, so for tinder they are running complex data bases in the cloud. a scarce skill seth, requires hybrid infrastructure options to do well. tinder was struggling to make that work themselves and they were finding that the trade was a bad one, taking software
engineers who should be writing code to make tinder more competitive and launch the next component of their offer trying to make data bases work. that's not core. trust rackspace and buy that as a service and what they get is that opportunity cost back and that hard cost back of actually working on things that are differentiating for them. and we've heard a lot of talk this is a new strategy for us. it's our old strategy. we've always existed to make computing simple and powerful for business and we talk about economies of expertise. when we can staffs those types of skills at scale and offer them as a variable cost service to our customers that's a better proposition then them trying to find those, keep them certified happy and engaged. we can do that better as a specialist. >> one last quick question. you said in may you'll give more information about how you will do this. will we learn at that point whether you're actually going to be selling service on top of amazon on top of a azur? >> for us this may be a consistent model putting
fanatical support on other clouds. we're feeling a pull from the market and give an update in may and come back and launch this thing and talk about it here. >> taylor rhodes, ceo of rackspace, thanks for joining us. >> we told you about apple's big plans for television this hour. our next guest says the move is only the beginningp we'll tell you why and what it means for the stock when "squawk alley" comes right back. can the right treatmentsease? for you is out there. the problem is some of it's in this lab. some of it is in her head. some of it's in this new journal. and the rest of it is in your personal medical history. ibm watson can not only read this data, but understand it. it's trained by doctors. and it's always learning. it can help find hidden correlations and help your doctor recommend treatment options for you.
house republicans unveiled their $3.8 trillion budget plan for next year it calls for big cuts in social programs but boosts defense spending. democrats have already attacked that proposal. u.s. housing starts fell to their lowest level in a year last month. the commerce department says new home construction in february fell 17%. but an analysts say the harsh weather is partly to blame. super mario going mobile. nintendo teaming up with on-line gaming firm dana to develop smartphone games. the deal includes the two companies holding stakes in each other and will focus on building apps for smart devices. the service could launch this fall. and let the march madness begin. the tournament kicks off today with two play-in games and did you know that indianapolis is home to the nation's largest bracket? it's 267 feet wide, 165 feet tall and that is about the size of nine basketball courts. and that is the cnbc news update this hour. let's get back to "squawk alley."
thank you, sue. we told you about apple's plans for a new streaming tv service at the top of the hour and this new product will have a huge impact on the cable bundle and cable companies going forward. julia boorstin is live in austin to explain. julia? >> hey, kayla. that's right. if you're a content company this is good news. you have more buyers. if you're a cable company it's not such good news because you have more competition. the product that apple has in the works will be another competitor to traditional cable tv but that does not necessarily mean that it's a bundle killer as apple will be selling a bundle of its own. apple is planning to sell the service as soon as this fall joining a host of tv streaming options including dish's sling tv and sony's streaming tv service playstation view. now remember that these internet services will still need a broadband connection to the home which would benefit those providers like comcast and verizon.
for the media companies, this is all good news as there is another buyer for content. traditionally new entries into the space always pay more so that means that apple along with sling tv and sony are likely paying more than their traditional cable rivals. now as for the reports that there's bad blood between comcast and apple, my sources tell me that's not true. but it is possible that apple is waiting to negotiate its deal with nbc universal and comcast until it has all of its other deals worked out. why? because the terms of comcast acquisition of nbc universal cnbc's parent company, state that of all nbc's competitors are participating in an internet tv service then nbc universal could be compelled to participate as well. >> getting interesting. thank you for that. julia boorstin today in usap. bring in cantor fitzgerald managing director brian white. >> good to see you, carl. >> what do you think apple's end game is here no. >> i think this is a stepping
stone. you know, we originally saw sling tv come out in january. i think that was a big deal. last week hbo now from apple. you're seeing an unbundling of cable networks and i think what you're going to see going forward is apple actually get into the market. so apple likes to do the software or services in the hardware and now that networks are unbundling it's a big opportunity for them. >> this might not be as good a deal as it looks like, though, right? talk about unbundling. everybody wants it but sony is out there with view, dish, now apple. you're going to pay a lot of money for all these little channels. espn separately, hbo separately, not cheap. you're talking about 25 channels for 30, 40 bucks a month and want extra fast broadband to be able to see those without the spinning dial, right? >> it's a good point. i just -- when i buy content i want to actually buy something that i want. and the problem with cable is i'm paying 150, $200 for, you
know, probably watch three channels. >> are you paying that for just the tv or the tv, the broadband and phone? >> tv, broadband and cuts the phone. >> going to be paying for the brewed band might be paying more. >> i just went be with the broadband 50 bucks a month and you put netflix over that, apple tv, and i got sling tv. and so it's much cheaper. i'm getting the channels i want. a few i don't. i've narrowed it down and that's what apple is trying to do. it's really, you know, the democratization of tv and that's what apple is going to do here. >> we saw apple cutting the price of the tv product to 69 bucks from $99. mark gurman of nine to five mac says it feels like apple is trying to make room for something. when do you think we'll get the new product? >> it's tough to say. apple could do a couple things here. this would be launched as a streaming service on the $69 hockey puck apple tv. they could have something else, a little more incremental in the works. but ultimately all of these
things, sling tv, hbo now, today's news story, to me, paints the picture of we're going to get that full-blown apple tv that has actually been in the supply chain for five years and, you know, apple hasn't launched it for obvious reasons. they couldn't negotiate the content and now the big networks are saying, i don't need the cable networks and that's a game changer. >> what does all this mean for shares? every new category or product the line not moving the needle is the first knee jerk. why would this move the needle if at all? >> when we ultimately look at what this market, you know, in terms of the tv market itself is 250 million units a year, if they got 4s% share, you're talking 15 to 20 million in revenue and that's about 50 to 70 cents in eps just a 4% market share. they have 800 million itune users and charge 30 to 40 bucks that's another big for the streaming service. you can start to see this is a huge market. the tv market just to talk about tv forget about streaming is
$100 billion in revenue per year. apple would probably charge 3 to 4 times that. it would probably be 300 to $400 billion opportunity, couldn't address it all. those are numbers we should think about a and those are very, very big numbers. >> but shorter term 12 months still at 160. >> we have $160 price target great upside from here i think. >> we'll see what happens over time. >> great, thanks, carl. >> let's get a check on the markets right now. dow is down 169 points. 1,807. to think yesterday we were close to the 18,000 mark yet again. the nasdaq down by about a third of a percent. s&p down 14 points. we did get soft data in the housing market this morning. carl continuing that trend of not being able to stay up for two days in a row here in the month of march. >> yeah. when we come back, it is the end of an era at microsoft. what big name product could be going away forever. rick santelli what are you watching on this tuesday? >> remember when we were all filled with notions of tina,
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on foreign imports with the launch of the country's largest petrochemical operations. when emerson takes up the challenge, it's never been done before simply becomes consider it solved. emerson. dentist appointment when my teeth are ready? ♪ can it tell the doctor how long you have to wear this thing? ♪ can it tell the flight attendant to please not wake me this time? ♪ the answer is yes, it can. so, the question your customers are really asking is, can your business deliver? coming up top of the hour is the fed losing patience? and if so how are stocks likely to react? we'll ask our all-star panel.
is alibaba ready to bounce? the stock got an upgrade. the analyst who made that call. plus apple shaking up the streaming wars. why the fight for your living room got a whole lot more interesting coming up in about 15 minutes. we'll see you then. >> all right. we'll do. thanks, scott. in case you missed it microsoft is dropping internet explorer. the company confirming it will use a new name for its upcoming browser code name project spartan. internet explorer will exist on its own and some versions of windows 10 but project sparren to tan will have its own name and the primary way windows 10 users will get on-line. mixed feelings. >> it will still exist as stand alone, won't be the default. >> yeah. but i mean this is the browser that you love to hate or in my case i hate it to hate it. popped up as a default even when you wanted firefox or chrome. >> cramer had metaphors using
the brand name al po which is a different story. the cme group with the dow down 173, check in with rick. >> hey, rick. >> hi, carl. today's one of those unusual days as of late anyway where the euro is up and the stock market is down. but remember, what is today? it's the first day of a two-day fed meeting. what is it about the if fed that everybody is contemplating? potentially the removal of a word in the statement. it's more complicated than that, obviously. it's about removal of accommodation and stimulus that's been in place since the crisis of 2008. which led us to some very interesting ways to describe market behavior over the last eight years. one of the ways is tina. there is no alternative. brilliant way to describe what levels of the relationship that still may or may not exist between the fundamentals of the u.s. economy and the price of stocks. the reason tina became such a big fad especially on our
channel because it made perfect sense. if central bankers are going to make riskies investments basically your only choice and push you into trades that they believe will ultimately benefit the u.s. economy, well all roads led to equities. that's not to say that many companies don't deserve their stock valuations, but in the end, we understand there's a lot of froth here. otherwise we wouldn't see the likes of japan and the eurozone see their mark markets move in same upward direction even though the backbone of their economies have questionable foundations underneath it. central bankers are now in for a penny, in for a pound. and what's happened is, tina, now met dino and they will have a wedding. who's dino? dino, dollar is new oasis. dino. and why is this such a cousin or a akin to the whole concept of
fundamentals versus fast and easy money? well, think about it this way. most of the dollar's appreciation in my opinion was the weakness and potential manipulation in a legal sense, of course, by the european central bank. now many would say well, it's an indirect relationship. and i understand that. we all understand and if you look at the german economy, you look at their surpluses, realize they're an export economy. it's easy to see where this is going. so the point of today is, the reason the dollar is taking a pause has become once again we have another playing field that is dominated by the central banking activity versus the economic activity but there is a price to pay. what is that price? economies that aren't doing what they're supposed to do, aren't creating productivity, it's more about pushing paper around than it is about pushing products around. jon fortt, back to you. >> thanks, rick. all right, up next when it comes to mobile payments the future is
now. the creator of google wallet will help break it down in a minute. "squawk alley" will be right back. it in people.out the worst but the m-class scans for danger... ...corrects for lane drifting... ...and if necessary, it will even brake all by itself. it is a luxury suv engineered to get you there and back safely. for tomorrow is another fight. the 2015 m-class. see your authorized dealer for exceptional offers through mercedes-benz financial services.
get live tv whenever you want. the xfinity tv go app. now with live tv on the go. enjoy over wifi or on verizon wireless 4g lte. plus enjoy special savings when you purchase any new verizon wireless smartphone or tablet from comcast. visit comcast.com/wireless to learn more. stocks have been positive on st. patrick's day almost every year since the year 2000, but not today. dow down 170 giving back a lot of the gains from yesterday that's almost a one-point decline. on tuesdays we see walt moss ber
of re/code but today he's in china. he spoke with xiaomi's president about mobile wallets. re/code reporting a handful of institutions have partnered with xiaomi to provide mobile bank accounts. phone users in china will be able to transfer money from their bank to their mobile wallets and earn interest rates of above 3%. alibaba's pay unit provides a similar service. hope to hear from walt service. >> good luck seeing 3% service on any checking account. from the apple watch hitting shelves to the news that xiaomi could be releasing an interest bearing mobile transactions are gaining traction among users. osama bedier the creator of google wallet and former paypal executive and now the ceo of point, a smart payment terminal. treat to have you at post nine. >> thanks for having me. >> let's start with the wallets. we've seen almost every company decide they need to find a way to provide a way for customers to store their money on their device. how can so many companies do it
differently? >> well, you know, when it comes to moving money around that's the anchor of kumg mers, right. and everybody knows that to be able to bring in this new chapter of mobile commerce you have to be able to do the wallet thing well. a lot of guys trying. >> google is trying to figure out a new strategy for the wa wall wallet, amazon and paypal fighting over the same turf here. where do you see those companies shaking out in that fight? >> the advantage right now goes to operating systems for mobile phones. they have the identity, allow you to log into the apps and the phone itself. >> saying google. >> well, google and apple, right now the advantage to google and apple. >> and apple pay, that was the last time we had you on our show to talk about the advent of apple pay. the company saying last week, 700,000 merchants carry it. that's about half of the locations or about a third of the locations that carry plastic. is that progress? >> it's progress. it's still going to take some time. i think it's still a couple
years away before everywhere accepts apple pay and xwoog wallet. it's definitely progress. i think about 300,000 locations about a year ago. there's definitely interest now. instead of hype. >> here's the piece i don't get. loyalty, okay. that's still the thing especially on any transactions bigger than a vending machine, that's going to get me to use any particular payment method. it's why i'm not, you know, tempted to go away from capital one any time soon. is that a piece that apple and google need to implement if they want to gain more leverage over say the credit card issuers and get me to go with them no matter what card i'm using? >> well, the reality is, it is a value add but you have to change people's behaviors when it comes to pay and you're not going to change it just for loyalty. not going to move them there just for loyalty. >> depends on how big the rewards are. >> think about how credit cards got started there wasn't loyalty in the beginning anyway. how do people start using plast snick a more convenient payment
method and the idea of getting access to credit i didn't have. definitely a value proposition. doesn't have to be loyalty. what apple has done is allowed you not to have to carry a bunch of cards around. >> more about -- i'm thinking about discover paid you back but am ex the card you didn't leave without. >> so convenience has always been really high. this is why even at addition to credit most debit transactions are done instead of checks on a card. >> if i'm a retailer what's my biggest resistance to apple pay do you think? what are they saying the most? >> the biggest retailers especially, they want more control. and they're a little worried all these loyalty programs don't necessarily create loyalty to them. they create loyalty to the bank or card but want a little more control, a little bit more ability to innovate on their own without having to beg others to help them out. >> not about the spread ors cost? >> that's a side effect. the lack of control, includes the inability to negotiate fees. >> some complain that they would have to change their terminals,
the terminals are expensive. by october they have to get new terminals to read chip cards anyway, a sense while we're at it let's accept this? >> there is among the ones that aren't as worried about control. the ones that are, mcx is there for a reason. and i think that is actually one of the best -- one of the best tactics that apple has taken. they rolled out apple pay knowing the terminals were about to change. that's the hardest part. how do you change 16 million terminals in the u.s.? you can't. so if you draft off of this change this chip and pin change coming all of the terminals will have nfc in three years. >> your company is all about the terminals. >> yes. >> vera phone has huge share in this market above 40%. why are people going with your terminal instead of the big guys? >> it's really back to the story of future phones versus smartphones. we didn't try to create just another terminal. while consumers have sirp computers in their pocket, and they're able to do magical things, this has become my
remote control for the world, the merchant has nothing more than a glorified calculator. all vera phone has done is added another slot. we created a smart terminal, one connected multipurpose. it's a computing device. it will allow merchants to have apps the same way consumers have and then the interaction between the merchant -- consumer phone and merchant device will create rich experiences like uber. >> speaking of apple before we go, the apple watch, do you think that's going to be a big innovation in payments? >> i think apple is becoming a luxury brand. i don't know about -- you have it all the time. will you pay with it? yes if they succeed in putting it in people's hands. it's a cool luxury device. >> osama, always good to see you. come back soon. the ceo of point. >> when we come back earnings season is not over. two major tech companies report after the bell tonight. more on oracle and adobe in a minute.
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has topped 1 million downloads. viewers are watching an average of 25 minutes of that exclusive gopro content during each of their viewing sessions. as a result, those shares up 4% on that bit of news. interesting news here out of gopro. not just a hardware company but trying to exert itself as a content company as well. back over to you. >> all right. thanks, dom. earnings season still not over. both adobe and/ oracle are reporting after the bell today. i think that currency is going to play an especially large role this time because oracle 40% of their business outside the u.s., 28% of adobe's business in amea alone and lagging effect of currency the longer you have the hedges on the less effective and the dollars has strengthened since last quarter, guidance for oracle going to be big because it's the end of their fiscal year. >> tim cook told cramer the best companies will figure out how to manage currency. maybe we're not there why yet. >> your business model mad are matters in this case.
two companies going for more predictable revenue and that hits you in a time like this. >> all stock. looking at a 10-year, 20-year chart has been stubbornly around the 200 day. very resilient in the face of what we know is a difficult environment. see what happens tonight. over to headquarters, scott wapner and the half. ♪ all right. guys, thanks. welcome to the halftime show. meet our starting lineup for today. josh brown the ceo of ritholtz wealth management. pete and jon najarian the co-founders of optionmonster. serrat is managing director at douglas c. lane and associates joe lavorna chief u.s. economist at deutsch bank and steve liesman our cnbc senior economics reporter. our game plan today, looks like this. alibaba bounce, as the chinese internet giant gets an upgrade is the stage set for a sto