tv Squawk on the Street CNBC January 16, 2018 9:00am-11:00am EST
i did. anyway >> that's a rarity, sam. >> that's a rarity, sam. >> that says something >> thank you. >> stay warm >> join us tomorrow, right now it is time for the all evil all the time with jim cramer "squawk on the street. ♪ >> good tuesday morning, i am carl quintanna with jim cramer we watch banker earnings and autoand bitcoin. japan is at a 26 year-high the dow at 26,000 watch, future soaring stocks, their stronging
sto stocks of their 16 years >> and one of the world's largest digital currency markets. ge trouble shares the mark as the company takes a 6 at&t 2 billion charge after reviewing the portfolio. it feels 12 days ago the dow passed 20,000. we could see 26 k at the open. their best start of the year since 2003 it is actually seven trading sessions, jim, a thousand point. >> yeah, there were some really good quarters on friday kind of confirming things. it is very positive and almost every single line item wells fargo is surprisingly positive and pnc is pretty good. blackrock was the most amazing it had a gigantic amount of money coming in and they talked about deaccumulation when it occurred and obviously, no time soon talked about the idea of
longevity and the need to be able to save and how money comes into equity. the most important call so far >> really, blackrock >> yeah. >> you saw the piece today on social responsibility and larry fink and not unimportant also. >> no. i think it was a very good article by our colleague what i like most about him is there is a tremendous amount of money coming in and almost nothing coming in. nothing. that's one of the reasons along with the share shrinkage, 2 billion shares of wells fargo. imagine what they could buy last year and what can they buy when they're at the cloud 2 billion of jp morgan we are going to hear more and more about it and still nobody's talking about big buy backs. what happens when they start doing that so i see a lot of ammo >> animalysts revising their earnings, the ratio of positive
and negative rarely do we go into the quarter where earning estimates are rising >> yeah. >> it is going to be very important. citi is able to reduce the tax rate dramatically over the course of the next three years they can go down to 221 and when you do that, the earnings just really fluff i find that's going to be another thing the flow of earnings is going to allow more buy backs and dividends and citi can raise dividends and they can continue to buy back 7% of their stocks and maybe they'll get to 3 billion shares one day down. is stock shortage among the big financials bank of america, i bet you, they may clean for everybody. >> why do you think that >> that's the largest. that's basically without having to put out any more people to
work, you have a much bigger earning element and they can continue to shrink the number of shares you end up with this, i don't want to say never in these stories, those are largely decemb domestic when did we start hearing companies talk about 122 euro? or what can apple earn when they don't need to borrow over seas what can apple announce when the dollar goes this way >> why is the dollar and the ten year action, a non-ratification of what equities are telling us. >> everybody has to raise rates across the world one of the things that's happening, emerging markets, they can buy our stuff another untold story, how about this, larry fink, tells us, first time in 30 years, japan's
shelling growth. remember they are the second largest economy. we used to think what they're going to do next maybe we should start putting japan in the equation. >> yes, you hear it and as well as plans and the whole synchronized >> i got that memo i have been using it >> tjapan is even growing and that's what you hear consistently it is not growing much but it is in the greens. >> i think we all got used to the idea that your number every year is going to go down fink says it is the greatest term since 2011. i think you are going to surpass that they have not started the real tightening yet >> what do you say to people who go, it is a great morning. i am going to sell into the strength >> i am never selling some because the interest rates are actually not going the right direction, they're going lower today, the dollar is weaker. we have to average that with
mlk. it is just an incredibly hard to get back in. boeing and a lot of price increases today. if you look at boeing prices, really, if you look at the trajectory since july and august, there is not been a couple of days where we get a couple of points off there is a caterpillar and a couple of days off if you sell, be aware that there is other people that's so desperate to get in. they're foing going to take your selling. we also have some bad news out of the big cap stock >> we'll get to. >> it is down on the premarket the dow component is taking $6.2 billion charge following this comprehensive review of its legacy reensuring business, contributions of the $6.2 billion will be made. jim, big question of other companies with big legacy of
life and health obligations. >> yeah, i look, i know that the way to get rid of it is off flow it to someone. long-term care has been a problem forman y manual life they stop exposure in 2006 the way these policies work is they all have an assumption mortality, it is usually in the '70s go back to fink's call people in the '80s it is open ended i think ge feels confident but you can forget the idea that ge, they're capital division is not going to dividend anything >> nothing >> i think you brought this up some time ago. >> my father had to go all over these people because no one wants to pay >> my first interview of flannery, they have not reviewed it the expectations of dividends
would stop on capitals is not lost on investors. >> the good news is they think they can maintain that out of the rest of the ge i think power is the new black hole i feel better of the long-term care no one's really been able to get their arms around it sickly, that's because of mortality and the ability for state regulators, wait a minute, you are not covered enough i do feel better that they're not going to have to suspend their actual dividends of shareholders >> right >> lets be clear about that. almost all of it was dispersed but goes to the capital and to the parent the parents will be able to maintain the cut dividends >> well, not enough, they're saying fine, what do you think of the idea of oil and gas that's going up, could you
change it? >> david faber, cnbc participant. what do you think of the idea about that now >> it cannot hurt. $70 oil cannot be hurting us now. >> it does help them >> now the stock has had a good move this year as we know. >> that's reversing today. although down 2.5% stocks was up 2% this year >> it is amazing a lot of it is the broad space aerospa aerospace. i am getting confidence that we'll see a shift in volume and service stream, that's good provided if they booked the service stream using gap and not ge power, they have to start using gas and not and not ge power, they have to start using gas and not s and no
ge power, they have to start using gas and not ge if they actually report regular earnings, you are going to see the turbulent. i think that'll be lucky i if -- what are you going to do with that? >> i don't know. maybe there is a shortage in other places >> there maybe >> bus ticket. >> it does appear that labor is not an issue right now, if they can move, they can find another job. >> larger issue. the journal brings it up today, the market of the trade world of china. journal did do a significant piece on it today and sort of take a look at it and what it would mean when you talk about all these bubble businesses. >> and financial money grant was killed and now there is pressure with at&t to cut ties. >> these stuff is happening. >> they're closing china mobiles. >> the larger issue is will they get into it and what china's
approach will be it could be as simple as those kinds of things and targeting congressional districts until it maximize pain on particular members of congress. >> trump has the ability to not go with the recommendations of commerce department on 232 which is national defense. he can hold that up in return for the chinese cutting off, north korean aid that would not shock me. north korea is the wildcard here there are probably 20,000 workers. new core obviously is the best example. the company cut their earnings three straight time and yet the stocks keep going harder they're in washington and wisconsin. >> when you talk about risks to this incredible bull market that we started the year with, you have to list a significant trade war with china >> and also the number two and number three >> yeah. >> it is very big because, it
affects everyone from proctor. >> you and i spend some time on qualcomm i will. in terms of their new fiscal year, overtime a lot of that is china. >> absolutely. >> and you think of china and their growth and what will happen if we got involved in a significant trade world of that country. cut those numbers, man >> everybody has to cut numbers, that would be further, more money in darden and less money being darden and pure domestic it is a really good interest until you mention selling. i think if someone wanted to sell with the idea that the president says immediately, we'll go with wilbur ross and we'll put in 232 because we don't want our tank made by faulty chinese steel which would be the trojan horse of america
>> yeah. >> car brings up a while way now. you see the trouble that erickson is having >> lets not forget about nafta lets see what happens with general motors they have to have nafta to stay especially the pay is going to get progressively weaker >> a lot more to come on that front. wall street is gearing up for a big rally to start this week we'll watch for the dow of 26 k when the opening bell rings in about 17 minutes we'll get research on proctor and qualcomm and more when "squawk street" comes back alpa in the trends, driving specific sectors
of out performance. where a rising middle class powers a booming auto industry. a leap into the digital era
draws youthful populations to mobile banking and e-commerce. trade and travel surge between emerging markets. everyday our 1,100 investment professionals around the world search out opportunities for alpha. partner with pgim, the global investment management businesses of prudential.
trading in the company south carolina is the third largest. >> remember china, white collar is capital crime so if they do put a real ban on it, i try youo go around it and hedge funds that have taken it down and have not been selling. i am waiting to hear hedge funds going on and listen, we bought it at 4,000. i think it takes the financial sellers to break this. >> by financial seller you mean? >> this is that spike up, it is a classic blow off and now you have something that's going to try to stabilize, if you speak negatively about bitcoin, you're attacked, i don't care >> not so much anymore it is almost 40% from the high
>> well, i think bitcoin maniacs were still reeling from, warren buffet says wished we had a five year put i am sure that these other countries have, look, if you are trying to get gold and you have gold in 1937 in europe and trying to get out. it does not matter you probably can including diamonds you will buy diamonds and gold if you are trying to get out of china, you think the china is shrinking. also, the huge and proliferations of different kinds of cryptocurrencies. the bad is derivriving out the . it is speaking negatively about
dialectic. >> stocks are up 12% in the new year >> bemo, talking about effective ad response for their business >> yeah, i like their story. i did a lot of work on amazon web services over the weekend. some of the people who are in amazon felt that the idea that i have been able to put azure and google cloud, amazon is going to get more share it istrue that google cloud ha more mind share. it is amazon web services, its advertises and make it so that amazon can read some of these price targets. >> our own parent comcast
choosing the preferred cloud bingo this morning i want to get to phil lebeau this morning with mathe ceo of chrysler >> you said earlier that i live in the zoo and i know what it is like to reconfigure and rebuild a vehicle and a brand, what stands out about this cherokee >> this car is, it was the original offspring of the fiat, chrysler, it is built on that platform we built it and we decided that
the importance of wrangler, this is the first reincarnation of chrysler >> you made the decision last week to announce that you're going to be moving ramp production back to the united states from mexico because of nafta. is that an indication that you think nafta is torn up or dramatically offered >> i think it is unlikely and i am not close enough, it is unlikely of some tweaking into that agreement something will happen. >> i am not sure it will impact cars from mexico, otherwise, we need to understand one thing the heavy duty trucks was moved, at least of chrysler's case was moved to mexico in 2008. 90% of what's produced gets sold in the united states
repatriation, we have to correct it in 2008 and we have done it now. we are working in an environment that's a lot more beneficial, that's much more probusiness than it is been for a long time. that reform is going to compensate some of the costs and building the car here as opposed to building it in mexico we feel comfortable that we have found the economic framework to get it done >> one last question, how much of buothat is going to hit the production here because some production is going to remain in mexico and canada. >> it is impossible for me to tell because i think some of the components stuff is moved in mexico and in gragrained in the jurisdiction and it is going to
be hard to move back there is a limit to economics that can be produced in this country. i hope that administrations understand this. it had nothing to do with assembly and we are bringing back jobs back to michigan we got to be careful if we don't try to over reach in the re-negotiations. >> sergio marchionne, joining us live here. here you go, jim, a statement that you heard many times, hawks get slaughtered. >> phil is unbelievable in all this can i point out one quick question i want to get to the number that i am hearing, 17 millions. it is gone >> yep >> this is a very big issue which is that when you have this peak auto, you get ford stuck and gm stuck, every time they go
up sellers come in. if we can get a non-peak auto d auto and a strong statement of trucks, these stocks can have multiple expansions. they are the least expensive stock. gm at 56 if that is expensive then what do you want? what do we have to get >> it is been a lot of headlines out of the show, and talking evs and gm with some guidance today. we'll get cramer's mad dash and we'll count down to the opening bell after a short break "squawk in the street "will continue in a moment "will continue in a moment will continue in a moment [ police sirens ] cameras.
on a tuesday, you got to remember, it is a short week here we want to talk a little merck on your mad dash >> this is first line long cancer study, it is very important and positive results on phase three positive for merck but also an analog of what keeps happening what can propel the dow now? we had so much good news the company have not done anything and boom, this is a very, very important drug. remember everyone is in a race to try to solve non small cell of lung cancer, this is very good news. you will not hear from merck that this is what you must take. i think this is very good news
>> yeah, we don't want to over look that of these important advances in terms of cancer therapies. >> right, especially of what was talked about last week at the jp morgan conference, they pretty much laid out everything because it was a good interview with meg and the ceo, this is out of nowhere and i think it is going to propel the stock in the next level that's been really stalled out. >> you mention ed some of these dow components and the price target raised from boeing of 305 to 380 today >> their age factor is incredibly strong. the gtf engine, you cannot make it fast enough the oldest turn around is rather remarkable depreciation is not going to help very much
>> the price target moves our materials. it is not moving 20 bucks, they're moving 50 bucks or 60 bucks. >> i think they'll find the next boeing >> will boeing be the next boeing >> look when you have a pipe that you cannot make fast enough, what does it tell you? it tells you are in the driver seat there is the big tax cut, unbelieverabu unbelievable amount of money that's going to make 400 or $500 reduction. unh, a domestic kpcompany in taxes. >> a company that large of $201 billion of revenues that's a significant amount of growth >> unh, this is breathtaking it is a $220 billion company
that matters this is not small cap. this is huge another area is doing quite well >> i know how they do it, being apart of the umr network >> they're not helping >> he's not speaking >> you are not speaking to the right people >> david, don't cover anything provided that you, you know, set yourself up on fire like a buddhist monk in vietnam which is what's going to take. >> dow, 25,000 on the back of all of these component moves that we have been talking about. >> how about the semican you think the -- conductor and texas instrument is on a positive note. these are stocks that's been stalled for maybe close to 72
hours. >> oh my lord, 72 hours? >> yes, that's true. >> there is been no trading. >> it is time. >> at the big board this morning, tf at the nasdaq, a global competition to reward and created entrepreneurs started nonprofits, when we hit 25 k on the fourth, president joked about 30 k saying that is our next target, is it is that a legitimate target? >> yes, i think it is. you need a couple of stocks to blow out, you need ibm and apple to blow it out and united technologies and certainly a possibility. there is nothing industrial in there that's good. will the president raise the target at 30,000 that's been the story.
i don't know what he will take it to. what is he using for the estimate >> i don't know what his number is, it is just big >> does he think the earnings go up it is a big league >> total stock market skacap, te russell 3,000. hit 30 trillions last week, under the president is up 6.5 trillion of that 30. >> look at it. he has changed the environment whether it is sam zell talking about it this morning on a conference call. they're trying hard to be non political through there is deregulation teheme running through this lets not forget, as much as the president wants it and deserves it, looking around the world, i mean around the world, it is a global synchronized bull market and not just global synchronized
economy. that helps him and i am sure he's not focused on other countries but it does help him, definitely >> um, guys, i want to take a look at shares down 5% on friday, we had a news organization of a wrap report of cbs and viacom getting together. i know the situation pretty well and i think it is worth weighing into help inform people. when we reported on november 6th. the murdoch considering selling much of the empire he put together over the last 30 years of disney which he did announcing a month and a half after we reported it, family control of immediate companies found themselves rethinking everything not just families but the management teams and among those, certainly
national amusements control cbs and viacom sherry is the prevailing voice there. the idea that you want to put the two companies together again. previously, there is been a tap made but evaluations is difficult. any sort of significant premiums for viacom what is likely at this point that you may see shari redstone pushing this as a result of what we have seen in terms of disney and fox and the fa ct that scal is something people need no banks have been hired or special committee have been formed or adviser any kind or
offer have been made and that continues to be problematic, perhaps you could not get the resistance of cbs in terms of its chairman and ceo wanting to push for certain right in a deal but, that does not mean that it is not without its impediments, you will still need a special committee to say hey, this is viacom shareholders. quite a few things it may hold it back. studio being one of them though it does contributes to325
million bucks and none tthelesst is significant go through the list that's out there, they have to. if murdoch's willing to do it, everybody got to be thinking about it >> i am so glad you mentioned murdoch's name now fox is going to be hired and at&t, these are not a family you uniquely reported on the idea that there are, this is an industry almost like real estate where there are these powerful families if the powerful families, if for one, you give up control >> in this case, they would be bringing two companies together reoccurring the idea that they would create value there and then there is the possibility that it could be sold at some point. verizon probably has interests in cbs if it can get it done >> and how much, is there
strength to it >> he had control shareholders want it. we are not down that road yet which is why i did not report anything >> the stories that i want to go over, you're a journalist, the stories were this is going to happen >> well, listen, i think the likelihood increase, there isn doubt. i was waiting for an actual offerorother or a special committee will be formed >> this is not black hawk. >> they're the gift card company, right when you walk into the store, what was going on people were stealing those gift cards and stealing them in you steal home depot gift cards and that was hurting black hawk, its stock comes down and well, a bid? >> 4525 cash deal and you can
see it >> lie i can thi like that compc but they were victims of thefts and i always felt they did a great job. i think it is a rather amazing business that they have so much space in every place with those gift cards and they were stolen. >> interesting >> why don't they put them under a lock and key >> you mean like a gillette blade? >> there is federal reserve gold bars and the gillette razor. >> cbs is putting over the counter stuff under lock and kean keys >> are you serious >> yeah. >> it enables them to sell their competitors more easier. >> cbs is going to use air brushing for the models. >> yeah, that's right.
>> trying to establish some more realistic norms for human appearance >> now you are talking now that's an issue. maybe larry fink feels that's an issue they're looking for. >> this morning, he missed the part, he should basically rubber stamp whatever shareholders voted for. >> there you go when you look at the number and the amount of access the city has under management the power that blackrock could bring to bear is enormous, it does bring up a lot of different questions. > >> yes >> in terms of what their role is and what a corporation role should be and whether or not if you believe bwhat freedman had o say. >> david, were you picky of research coverage and trying to create value the goldman was the banker for proctor? >> yes >> well, it is interesting,
goldman, they're no longer saying sell proctor. may i say it is rather amazing i love the fact that even though proctor was a sale, the chinese won't prevail it, why? he's the banker, he has nothing to do with research. i salute goldman's report this week >> they had a sell on it and the nasty fight that was finally resolved >> yes, the kind of banker that i like and goldman is the kind of research firm that i like there was no cross pollination here and i congratulate them >> they did say no more materials downside even though they acknowledged some of the cost savings. >> i am not being facetious. >> we never mentioned the names of bankers so i am not going to to >> oh shoot. it happens >> record highs across the
board, s&p 500 at 2800 and dow is the 26,000 and by far at the fastest span lets get to bob pisani >> we are running out of hats here 4-1 advancing of declining stocks and it was strolling right across the board you can get the sense for the pra spread that's part of the banks and healthcare and consumer discretionary and general. 4-1 advancing to the climbing stock is a strong opening. >> they continue and a lot of people talked about a point of a dollar weakness, we are at a three-year low that helps u.s. stocks over seas cycle is strong. real money is going to europe and emerging markets we had a nice update, japan and
hong kong and germany and spain, this is been going on for months look since the beginning of the year, the s&p 500 is up 4% the rest of the mark is keeping up with it we got a new historic high and hang seng over in hong kong and shanghai in korea is up strongly and spain and germany, all at least in line with the u.s. and in some cases, out performing. it is global this rally. the united states, the earnings number keeps ongoing up. since december 20th, it was the day of the tax cut passed. we had $146 on the s & p today we have $150, so estimates have risen 2.5% in the last three weeks. that th that's a huge number and it is going to keep coming up as we go in you cannot quantify it there is been a huge inflow int
the united states. that's real money flows that we are seeing the key is the number is going to go up here. larry fink sent the letter out saying companies should be more socially responsible the problem is not much people are doing it >> this is the biggest one that's out there its only got a billion dollars in it, one billion dollars for social responsible the biggest one, maybe it is the year of free sg. i don't know one note on bitcoin, the big issue is china remember all the money in the mining operations, 70% of it is chinese minors if they shut out over the counter lending and movement, these binders have no place to sell the bitcoin, that could be a major problem and that's the main issue why bitcoin is down
tonight. >> thank you bob pisani. i want to get to qualcomm this morning. again that $70 a share bid is currently, well, being sought by broadcom this morning in a letter and call and substantially increases the amount of information it wants to deliver to its shareholders and allowing them to understand why they should resist this $70 current bid from qualcomm get this, 675 to 750 that's the number they're using for fiscal year '19. that number did not include what they claim of being enormous benefits from the company from its leadership and providing 5-g
services as those begin to roll out by the telecommunication worldwide. this is a fiscal year 19 number. if you put a mobile to that, they say 19 times. even with the expected increase that'll come from broadcom they'll get nowhere near it. that number is being paid by apple and other licensing. when you back it out, you still have a number before licensing resolution of $5.25. they do value the resolutions of those various disputes which they believe will all take place prior to any close they could imagine for a qualcomm and broadcom deal. adding a buck 50 to $2.25. remember that also is in doubt because stock prices is far above the 110 number that they're willing to pay the tender is they'll have to
increase, and the question is how much they'll have to wait for chinese approval before getting down to the bits there they raised the prospect of using the money, you know what, we'll buy back shares and that'll also bring increase numbers as much as a buck 50 or call it $500 million to the company. so there is the number that you get, there is the multiples they're talking about in terms of overall they're establishing a new 1 billion cost reduction program that's on top of what is already and then they go through some of the same things we have been talking about saying dramatically under value, qualcomm, that's the broadcom bit. the regulatory bit is at least 18 months. it is not clear who would buy these companies that may have to be sold? could it be chinese competitors?
>> how in the world is the u.s. company is going to approve the sale qualcomm, it is highly uncertain that you would get the regulatory go ahead at any time frame if at all for this enormous deal in this industry by the way, when it comes to china, their product revenue they see growing, very quickly, that's why i brought it up earlier in our conversation about a potential trade world with china look at what they have at stake here look how important chinese is to qualcomm having disputes a couple of years back very important jim, that's where we are standing right now they' the qualcomm deal is valued about ten times of what we see again of our fiscal year 19, non gap, an estimate they say
they're highly confident ein >> it is time for candidate trump, he's got to walk away i am surprised how weak it is. his stock would go to 300. he's doing something detrimental to the stock this is highly unusual if hoch tan walks away, it is 100. qualcomm is a national treasur and they'll be able to do this they adodon't want to go down to this path. this is exposure to broadcom in a way that, almost -- i don't want to say self defeating something presenting broadcom. if tan walks away now saying i like qualcomm very much.
it is time to walk away and there would be no harm and foul. it will be a terrific move i know he's not dpoigoing to do that he knows semis and i know stocks >> having the gun to the head, the broadcom gun to the head has reversed years of qualcomm being complacent, basically lazy >> qualcomm they spend a lot of time talking to the media. i would say hey it ididiot why don't you take the gun away from my head that's what qualcomm have to do, they have to walk away we did our absolutely best, now we are going to go through something else and their stocks go up. how do you want to hurt your stock? >> very interesting. >> do you want to hurt your stock? >> unclear, certainly unexpected that hock tan would do of what you just advised rick, lets get to you, rick
santelli, you are short on time, we went long here. gi take it away. >> everything else on the basiss down two, almost three basis points if you look at tens minus boones, you can see that the difference, the spread, subtracting boon yields is getting smaller. i'm going to show you three yield curves all of them are the flattest basically since october of 2007. you have 30s minus 5s just under 50 30s minus 10s just under 30. you have 10s minus 2s just a little over 50 it's pretty much at the short end of every day that two-year yield keeps creeping up. the long end looks at this big day, 26,000. this is amazing.
there was talk that bitcoin would hit 24, 25, 26 no, it's the dow jones industrial average, a much easier lift. not. i think it's incredible. we need to pay attention but the markets aren't we looked at yields. they're going lower. let's look at the dollar versus the dollar index it's basically at the lowest level since christmas of 2014. you see a six-year chart there though because it looks like it has room now let's flip it around and look at a six-year chart of the euro versus dollar, also the best since christmas of 2014 it looks like it has room. these seem counter intuitive but well established trends just as well david, jim, carl, back to you. >> rick santelli, we'll see you in a bit s&p is 2806 as the dow crosses x prchr the first time viapoaing 11 keep an eye on that. we're back in a moment
what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty stands with you™
trading sessions since then. obviously the fastest 1,000-point pace on record as the dow is setting new records ofts i own s&p up 2806. more "squawk on the street" continues in just a moment compl? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade upeace of mind.s we had a power outage for five days total. we lost a lot of food. we actually filed a claim with usaa to replace that spoiled food. and we really appreciated that. we're the webber family and we are usaa members for life.
they're not investing in commodities or fixed income. what people areally putting their money into is what they hope to get out of life. but helping them get there requires a real refusal to settle for average. because when you approach investing with a tireless desire to beat the status quo, something wonderful can happen. those people might just get what they wanted out of life. or maybe even more.
jim, are you watching lowes? >> a lot of reason to buy lowes. multiple price earnings. home depot is 26 good piece what a stock, what a horse, what a retailer >> jim, we'll see you tonight on "mad money." we continue to watch this rally as the do you is up early. don't go away. as a business owner, you need to comply with countless regulations and laws to keep your workers safe and happy. but if things go wrong and an employee takes action against you, legal fees to defend yourself can be huge, even if you're not at fault. employment practice liability insurance helps cover these costs. trusted choice independent insurance agents represent multiple insurance companies
where can investors seek pin an uncertain world? pgim sees alpha in real assets. like agriculture to feed the world. and energy to fuel its growth. real estate such as e-commerce warehouses. and private debt to finance transportation and infrastructure. building blocks of strategies to pursue consistent returns over time from over one hundred fifty billion dollars in real assets.
partner with pgim. the global investment management businesses of prudential. ♪ good tuesday morning welcome back to "squawk on the street." i'm carl with david, michelle is with us. sarah is off dow 26,000, story of the morning as we sit a full percent above friday's close our road map begins with the dow soaring past another record, breaking a milestone, 26k for the first time ever. s&p and nasdaq also hit fresh record highs what if anything can derail this rally. >> ge is taking a $6.2 billion
charge we'll have details ahead. plus bitcoin hitting a six-week low we'll tell you what has the crypto currencies falling. dow surging past that record, breaking 26,000 for the first time 12 days, seven trading sessions after hitting 25 s&p and the nasdaq also hit record highs this morning. obviously people look at percentage versus points it is easier to move 1,000 points on a percentage basis doesn't make it any less dramatic. >> no. and it really feels like this meltup that we've been talking about. we asked what if anything is going to stop this when you look at commodities, oil for example hitting a multi-year high, copper hitting a multi-year high, maybe in the past you would have worried those would have derailed the rally because they're higher input costs, but in this case they are confirming a lot of people's belief that there's strength not just in the u.s. economy but the global economy as well. >> we should point out the index everybody cares about, the s&p,
is up almost 5% this year. the dow is a price rated index when boeing is a part of that and is already a $300-plus stock, you can imagine how much it's gone up this year the numbers are enormous for boeing already it is going to have a significant contribution to the overall index. >> some analysts are already getting close to their 2018 year-end targets what do you do if you hit them, say, we're going to fall from here and stick with it or do you up it? >> your question year-to-date boeing up almost 17%. >> i looked at that number, i couldn't believe it. i wanted to make sure it was right. >> just crossed 300 a few days today and today it's 380 a lot of these price target moves are implying 25, 26% upside for the next 12 months. >> when you start to -- remember a lot of analysts had not talked
about tax reform yet because they wanted to see what the final number was going to be, what was in, what was out. so now when you start to look at -- let's talk about earnings. wi wi willford frost joins us. >> citity just beat on assessments for their fully adjusted eps however, they're one-off write down did lead to a full year loss when ununadjusted their effective guidance was 25%, falling to 24% by 2020. jpmorgan and wells fargo were lower at 19% but citi was expected to come in higher this still marks a significant fall from above 30% for last
year like jpmorgan they had a one-off trading loss for citi this melt a $130 million loss for equities trading. this dragged equity trading down 23%. fixed income was down 18%. investment banking was strong, over 10%, and expense management was good interest martin was a little soft but loan growth was strong. shares up nicely today, dragging the sector higher. >> thank you for that. for more on the banks, maybe talk some bitcoin as well, we're joined by dick cavasovich. good morning. >> good morning. >> big debate about whether today's action affects momentum strategies at play or if we are
still in the process of trying to price in tax reform, and if that's true, what price implies a full pricing in of that legislation? where is your view this morning? >> i think there's still room to run if you will, particularly in financial. i think financials are going to outperform the market because they have a lot of tail winwindn their favor, including the tax reform but financials are -- first of all, their pe ratios are less so there's room there they tend to be high taxpayers and as already mentioned previously in the low 30%. now we're talking not only 21% but in the case of wells fargo and jpmorgan it's 19%. with that tax reduction you're going to see dividends which the yields of financials are usually higher than the market dividends are going to go up and
so are stock buybacks. that's a positive. interest rates i believe will continue to increase that's a slight negative to most of the industries in the market, but it actually helps banks. they gain because of higher interest rates finally, the administration seems committed to eregulation and committed to simplifying, reducing and in some cases repealing. and since financials are one of the highest regulated industry, they're going to gain a lot from that if the economy grows at 3%, that's also good so there's a lot of positive tailwinds for financials and the market and i think the market will continue to increase, but at some stage there's going to be a correction, that's for sure. >> i do want to get to that. top of the "times" this morning is about republicans and the most significant attempt to loosen rules imposed in the wake of the '08 financial crises. the regulatory part of all the good things you just put together, is it fully recognized
right now or not >> i don't think anything is fully recognized because there's still a lot of uncertainty, but the momentum is there. i think the most important thing is they know that the administration is committed. it's pretty obvious. so if they keep moving it along and don't do too many stupid things, i think that there's still room to run. >> dick, it's michelle here. that story that carl pointed out, they highlight that in fact some moderate democrats actually want to go along with rolling back parts of dodd-frank, specifically regulations on banks of under $250 billion. does that mean that you should be investing in different parts of the financial sector based on that potential rollback? >> there's no question that there's a greater degree of -- that smaller banks need to have
reduced regulations. i think that area, the regional banks and smaller banks, will certainly get more regulatory relief than large banks, and also because they're primarily domestic businesses, they'll gain the most from the tax reductions so i think that area you can bet on how much really is getting reduced for larger banks, democrats probably aren't too much in favor of that. >> probably not. president trump keeps complaining that mainstream media does not cover how well the economy is doing, how well the stock market is doing. do you think it's obvious to the american public even if general news isn't mentioning it all that much? >> they just have to look at their 401(k)s. whatever media you look at, they still have to mention what's going on in the stock market i think joe lunch box does know
that it's improving. they may not be seeing it yet in their paychecks but soon that will happen as well. >> dick, you talked about at some point there will be a correction when you evaluate the reasons that could bring one, what is in the lead is it something geopolitical, interest rates competing for dollars? name one >> i think it's making big mistakes like trade, and that snowballs into geopolitical areas. you can't separate economics from other geopolitical issues if you start getting the world where everyone is trying to make their country the best and instead of free trade, something like that could snowball of course, any kind of a war or any other issue, missiles, et cetera, but i think it's making
unforced errors that are the greatest risk that we have >> although, an erosion of trade relations would have to be pretty dramatic to have a material effect on overall gdp, wouldn't it? >> yes, but it could snowball. everyone is going to play who's chicken here, who's going to give up and who isn't. i just don't think politically in a country they can look like they're losing to the united states it's unforced errors that don't make any sense but it's tough to say you caved in to the united states mexico has an election coming in, just as one example. >> an extreme leftist there leads in the polls and could make things difficult for the united states when it comes to trade. what do you think of bitcoin mania right now? is it mania? >> yes, it is. i think it's a pyramid scheme. it makes no sense. i'm just surprised that it isn't
even lower. >> you're in the jamie diamond school or his previous school. he's shifted positions lately. >> i never called it a fraud because everyone knows what's going on there's no fraudulent things going on it's just a pyramid scheme you're betting that somebody's going to buy it. some people have been right. the fundamentals make no sense >> finally, do you think the trading volumes or the flows into crypto overall, do you think they have an effect on equity prices here or around the world? are traders substituting attention? >> no. i don't think it will have any effect >> dick, good to talk to you we hope you'll come back as we begin to make our way through earnings season. former wells chairman and ceo, thanks so much. early this morning we heard from ge in terms of providing an update on its insurance review in a $6.2 billion after tax gap
charge, but more importantly, headlines coming out just moments ago from a conference call related to that corporate development perhaps taking precedence over it john flannery who took over as ceo a number of months back said on the call that the company was, quote, reevaluating its strategy and structure and at least exploring the potential to separate its major divisions into separately tradeed units. of course there has always been talk about whether or not ge would consider doing such a thing. there has also been a lot of conversation around the idea in the last year that it would not necessarily add value and might even detract from it given the financial impediments the company has been facing in various businesses, particularly power. on the call again he did say we'll examine, quote, the best structure or structures for our
businesses and there's expected to be an update on that in the spring i hope to have more for people as well. i want to make a call of calls and unfortunately i missed a call calls that might have given me a little more insight. >> you do have a day job sitting here on the set. >> i do but they they do text and call i didn't return one. >> do i see -- as i see these headlines crossing, when you talk about separating into major businesses, it reads like three major businesses, power, aviation, health care, three separate companies >> yeah. that's what you're talking about. oil and gas of course already is separate with baker hughes now, that is a ge company. they control more than 60-plus percent of it. but that's the three that are there. ge capital is gone, although today's announcement and the reason for this call was related to ge capital or at least what is left of it and its funding contributions to ge which will
be suspended in terms of any dividend paid by ge capital as it deals with the outcome of a comprehensive review and reserve testing for their runoff insurance portfolio. >> long-term care is the issue. >> that's right. they needed to reserve for and will do so over the coming years. >> which i found interesting because years ago i looked at whether or not i should get a long-term care insurance policy. the reason i decided not to is because there's almost nothing in the contract that guarantees that anybody will ever do anything for you like they can raise the price whenever they want they can reduce -- there was so little insurance to the insurance part that i stayed away from it so it suggests to me, can't they raise the prices or -- >> i think part of it is simply people are needing more care and living longer. >> right and they don't want to up the charges as much as would be
needed to cover those costs. >> yeah. and so that nongap charge is $6.2 billion for the fourth quarter of this year and then they're talking about roughly statutory reserve contributions of $15 billion over the next 7 years. but the more important news this morning is again this idea that they will examine separately traded units for their businesses including as you just said power, aviation and health care >> one final headline. did you see this it's always bad when the ceo says we do not believe the issues rise to the level of securities law violations. clearly they got asked about just how bad it was with the insurance division. >> and how much they were sharing or not sharing or should have been in terms of disclosure i'm going to make a couple calls and we'll see if we have more to add on this story. at any other time it would have been an enormous story it still is. that break-up has been under way and there's been a lot of
questions as to whether or not you would be able to create any sort of shareholder value from a break-up at this point, but we'll see. >> varying the financial guidance at the low end, 105 to 110. when we come back. the ceo of fiat chrysler why he says consumers could pay the price if nafta unravels. ralstcn plain why bioi unve [ click, keyboard clacking ] [ click, keyboard clacking ] [ keyboard clacking ] [ click, keyboard clacking ] ♪ good questions lead to good answers. our advisors can help you find both. talk to one today and see why we're bullish on the future. yours.
talk to one today and see why we're bullish on the future. stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and.
the north american free trade agreement taking center stage at the detroit auto show phil lebeau is there and joins us with more. a lot of executives we talked with said we expect there's going to be some alteration to nafta. they don't expect it to be completely torn up but they don't expect it to remain as it currently exists why is this important? look at production of vehicles sold in the united states, where they're made just over half are made in the united states. 21% come from facilities in canada and in mexico if nafta is altered, you can bet that those vehicles will likely become more expensive. who will pay the price fiat chrysler ceo was very blunt about assessing the future listen to what he had to say
well, we don't have that sound but executives we talked with all made the point of saying that ultimately the price would have to be passed along to the consumer in some fashion whether or not that's a few hundred dollars, $1500 it depends. you can bet that in the auto industry they're trying to figure out how they can adjust to this and truly how much of an impact alterations to nafta will have in terms of consumer demand and ultimately sales >> phil, it's important to point out here the degree of sensitivity among the big auto makers, just where fiat chrysler fits when it comes to international trade. >> right and for sergio marcion, that was one of the thoughts that they had in deciding to move production from mexico back to the united states. remember they announced that late last week
what he said is, look, we think that the benefit from the changes in tax reform comes down to about $1 billion essentially to their bottom line that difference in the tax structure allows them to move production back to the united states to offset the increased costs because it is more expensive in some ways to manufacture in the united states than it would be to keep that production facility in mexico. for him that's at the heart of their discussions in terms of nafta and where they manufacture their vehicles >> one last point, phil. a lot of headlines are coming out of the auto show g.m.'s guidance today and then ford's commitment to evs who said that tesla gets all the attention on evs but pretty soon it's going to be everybody and his brother? >> everybody and their brother are already investing. yes, it's a point of frustration for executives not only here in detroit but with almost every auto maker around the world that
tesla gets as much attention as it gets because they believe that they're making massive investments that will ultimately pay off. that's a separate debate about whether or not the media is too fixated on tesla in regards to general motors, they're going to be putting $1 billion into autonomous drive vehicles this year the question has come up and it came up today when we were talking with the executives, when will that pay off, when is there profitability? is it 2020, 2022 at this point they do believe there's a path to profitability. the question is when will they pay off. >> phil lebeau at the auto show in detroit thank you. walmart is preparing to cut over 1,000 corporate jobs. courtney reagan is live from the annual nrf retail expo with more good morning, courtney >> hi there, carl. the national retail federation's
annual show looks a little more like ces for retail but it was a traditional retail walmart and has been the highlight the ceo spoke with matt shay on stage just days after announcing the wage increase, further benefits, the one-time bonus, but also those 63 sam's stores closures and the reports of thousands of layoffs mcmillan brought up the importance of employees to the company's success throughout that discussion with matt shay even as technology advances. >> as we make investments in technology and learn how to put our intelligence to work at walmart or how to automate certain things that we do in a different way, we want our people to go through that with us to help contribute ideas and be part of that process. to achieve that, we have to put them first and support them. >> mcmillan also said that tax reform will spur economic
growth he thinks the economy and the consumer are both in a good place but did warn about getting a little too comfortable you heard him mention artificial intelligence that is the focus of this event. you can see here, this is sap's robot pepper, powered by artificial intelligence, being used by a german wine store to help consumers select wine based on their preferences also sort of help them find the actual wine bottles in the store. perhaps we'll see more of these in the future. not so far at walmart but that's what all of these folks here are trying to convince retailers that they need back over to you guys. >> all right, court. a lot more from the expo this morning. when we come back, the crypto coaster bitcoin tumbling to a six-week low. we'll tell you what's spooking investors. take a look at stocks, slightly below session highs, up 244 on the dow, almost 17 on the s&p. more "squawk on the street"
the redesigned gla suv. at a price that'll make you feel like you've gotten away with something. the 2018 gla. lease the gla250 for $349 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing. (daniel jacob) for every hour that you're idling in your car, you're sending about half a gallon of gasoline up in the air. that amounts to about 10 pounds of carbon dioxide every week. (malo hutson) growth is good, but when it starts impacting our quality of air and quality of life, that's a problem. so forward-thinking cities like sacramento are investing in streets that are smarter and greener.
the solution was right under our feet. asphalt. or to be more precise, intelligent asphalt. by embedding sensors into the pavement, as well as installing cameras on traffic lights, we will be able to analyze the flow of traffic. then that data runs across our network, and we use it to optimize the timing of lights, so that travel times are shorter. who knew asphalt could help save the environment? ♪
bitcoin getting hammered this morning >> michelle, bitcoin and other crypto currencies plunging due to increasing levels of concerns around scrutiny from regulators in china and south korea, two of the world's largest bitcoin markets. china's central bank vice governor is said to be calling for a wider ban on trading this comes as south korea reiterated its intention to clamp down on this new market. the finance minister saying the government is seriously reviewing digital currencies and banning trade is a live option that news hasn't gone over well with citizens. over 200,000 south korea residents have signed a petition request the government to reassess this rule in a petition they say, you may think you are protecting the public but we citizens think that the government is stealing our dream. now, it's not just asia that's trying to crack down on crypto currencies france's economy minister
announcing the creation of a task force that will develop crypto currency regulations. one of the objectives, to prevent the misuse of this technology for tax evasion bitcoin now trading below $12,000, down about 40% from its recent highs carl >> thanks. today's rally pushing the markets higher for our spotlight today, we're looking at how the fast start to this year might be signaling an overshoot phase. >> overshoot doesn't necessarily mean unsustainable but it means that the velocity of the market has picked up. we've all seen that. the number of very large daily moves has picked up. the metabolism of the market coming into 2018 seems like it's operating at a higher level. there's many things that are behind this by the way, inflows, retail inflows, sixth highest ever we've been talking about that. then it's the kind of stocks that are leading if you look at those stocks that are riskier, more cyclical,
those are high beta stocks the s&p high beta etf has opened up a huge lead it's about five percentage points higher in the last six months than the low volatility etf. basically the 100 jumpiest stocks against the calmest stocks the jumpy stocks are up almost 7% year-to-date. that's two weeks the others are flat. this is telling you that risk appetites are higher it's not so much a sector move financials are the biggest sector but it's boring insurance companies and low volatility funds and charles schwab and the banks and those guys in the high beta fund. >> it's an echo of the momentum index for example? >> to some degree. high beta means when the market
moves one point, does this guy move more than one or less. >> what about it suggests the possibility of an overshoot? is it the very nature of those stocks that therefore leads you to that conclusion >> to some degree. appetites picking up, the public enthusiasm for the markets my phrase overshoot is really about this period of about a bull market where stock prices start to accelerate a little faster than even the fundamentals investors are starting to extrapolate good economic news and good behavior of the market itself well into the future. i would argue we were in an overshoot from 1997 to 2000. it doesn't mean that it's all over it's not a sugar rush, but it's a phase of the market that has a little bit of a different character to it. >> to the degree you correct an overshoot, what does that mean 5, 10, 20? >> it's also from what level do you start correcting it. i think one thing you can say is if there's any validity to this
concept, the gains that are put in in this overshoot phase maybe don't survive the ultimate bear market at all. when you get a bear market, it brought you back to mid 1997 levels you hit them again in 2008 i'm not saying we're headed there but it's much more about if the fundamentals can kind of stay as strong as the market, then you have time and room. i wouldn't want to put a number on it. i do think we're going to get that down 5% this year and more because the volatility index is up again today. >> market isgoing straight up but the traders are telling you that you have to brace for a wider swing in both directions perhaps as the year goes on. >> yeah. >> we didn't quite get to 11 on the vix but awfully close. thanks, mike let's get over to sue and get a news update. >> good morning, carl, thank you. here's what's happening at this hour steve bannon arriving for his testimony before the house
intelligence committee the testimony comes one week after bannon, in the michael wolff book "fire and fury", accused donald trump junior, jared kushner and paul manafort of treason for meeting with a group of russians. nhk has deeply apologized for sending a warning that north korea has fired a missile. this comes after hawaii accidentally sent a message saying north korea had sent a missile to hawaii. in santiago, pope francis begging for forgiveness from what he calls the irreparable damage done to children who had been sexually assaulted by priests. the scandal has cast a shadow over his visit to chile. talk about cold. the temperature dropped to minus 65 degrees in russia on monday which is abnormal for that region which is used to really cold winters schools were closed and people were warned to stay inside
looks very cold. that's the news update this hour michelle, back downtown to you >> sounds awful. okay thank you, sue we're a little over an hour into the trading session look at where we stapd rignd rit now. dow has bolted past 26,000 the s&p 500 doing quite well, higher by 14 points at 2800 on the nose nasdaq at 7,311. "squawk on the street" will be right back after this.
conference call related to charges the company was taking related to insurance liabilities and long-term care going well beyond that in a conversation with analysts this morning and taking about onion going body of work involving his continued review of the company and the issues that its dealing with and saying that as he looks at it and continues to evolve his thinking, he thinks there could be different structures that can achieve the objectives they're seeking, and they will be examined. don't know i would categorize it as an examination of options it's the kind of thing that could result in many perm yu tagss including separately traded assets really in any one of our units if that's what made sense. that's certainly captured a number of people's attention this morning and after some brief conversations with people close to ge, this very well could be the moment in which its ceo has said we are going to break this company up into three
constituent parts at this point being health care, aviation and power. which of them to be spun first, who knows. baker hughes already is a public company of course which ge controls but which is essentially separated to a large extent but there is a review ongoing. the outcome could be known as soon as the spring i'm told, guys, and in fact we could see an announcement as soon as this spring that ge will pursue a separation of its businesses now, many of the analysts out there are certainly looking at some of the parts totals and trying to figure out, well, on a multiple that would be accorded aviation if it was separate, a multiple that would be accorded the very difficult power segment right now and/or health care, what do you end up with and is it a price that's above the current number at ge more importantly, i think you've got elements on the board of directors who certainly would make an argument about focus and better capital allocation. any number of other new directors who are coming on and
have come on as well, so there are cases to be made for a splitup. mr. flannery not saying that he's made that decision but he is certainly opening the door to ge no longer being the company we know it as. >> so the stock has come off the lows of the session as you've been talking and yet still is down why do you think the stock isn't reacting as much perhaps >> i think there was a time when you might have made an argument that some of the parts number was far above the inherent value of the company it's a bit harder to do. it may still be above. there are a lot of technical issues the company would have to go through between even an announcement of this type and then the actual separation, but i don't know, michelle i don't know what that is on behalf of the analysts who follow the company right now i think people are just trying to digest this this morning in terms of understanding what it may mean but what i can tell you is, based on reporting at this point, it does seem to be pointing them down a road that
seems, according to my sources, to be likely to end in a potential split. >> anybody you talk to give you probability? >> no. likely i think is the strongest word. >> higher than 50% >> yeah. >> got it. >> we'll watch ge, as michelle said, off the lows of the session. market rally is under way although we've lost some ground as the transport have gone negative the market is off to the best yearly start since 2003. brian jacobson and brian velski, is your thesis modified? >> stocks continue to move higher and if you take a look at the daily action, we've only posted one negative day that was down ten basis points. clearly some of the points heading into this hit are very valid with respect to we're seeing inflows not only from the retail side but remember asset
allocation from an institutional side is focusing more toward equities i think the thing that most people are missing in terms of reallocation is a lot of people left north american equities at the end of 2016 and went to europe and emerging markets as some people kind of talked about that as being the trump trade in emerging markets and europe kind of playing catchup but now those assets have been underperforming and now they're going to come back to the u.s. so i think that we're heading into a period kind of like 1995-96, big cap stocks led by fundamentals, high quality cash flow, earnings-driven, sales driven, good old-fashioned stock picking. i like to call it the reemergence of old-fashioned stock picking and it's working. >> brian jacobson, do you agree that we have had a lot of global macro strategists saying favor europe. >> i hope that brian is absolutely correct as far as the focus on the stock picking because working for a more
active managed shop, that would certainly be good for us and active management hasn't really performed all that well in a lot of this market rally since basically 2009 i think we're entering into that period we've been suggesting to clients that they should look outside of the united states for opportunities mainly on evaluation basis but as you know, evaluations are a terrible market tool but a lot of our clients are looking to position portfolios for multiple years if not decades. a lot of the institutional investors that brian was talking about there. i still there there's a long-term opportunity emerging in europe. where we go for this year, i think there's a good opportunity here in the united states. i tend to favor more of the small and mid-cap companies mainly those that have better earnings visibility. i think that's what a lot of people are really going to be looking for in this time where they think that maybe we're due for a correction, where do you find shelter it's oftentimes where you get the best visibility.
>> yeah, and a lot of folks think they're also the greatest beneficiaries of the tax reform bill brian, what about you, dick was on earlier and pushing financials he knows them well and seems to think with deregulation and taxes and one of the areas that benefit when financials go up. do you like financials >> i don't know how much more clear we need to be. we love financials and think that there's a generational opportunity still to buy not only u.s. financials but north american financials in terms of the canadian banks as well we think that canadian banks are the most excellent stewards of capital in the world in terms of using that cash flow in their balance sheet to not only grow the company but continue on with respect to internally within the company. we think banks are a great place to be and we still think the majority of our clients not only on the retail side but the institutional side are way under weight financials. they're looking backward and not forward. you have massive amounts of dividend growth, cash flow
remains strong so as nim continues to expand and earnings growth continues to expand, we think we're going to see a buyout phase in the next three to five years within financials which would be very positive for not only the u.s. economy but the global economy. >> ties into the discussion we're having with ge this morning, guys. brian and brian, thanks so much for your time. we'll talk to you soon bank earnings continue tomorrow. as we go to break, look at shares of disney, the company announcing that facebook sheryl sandberg and twitter's john dorsey will not seek re-election and are standing down due to growing conflicts of interest as disney's media landscape changes. more "squawk on the street" continues in a moment. ♪
let's get to rick santelli with the santelli exchange >> thanks, michelle. i'd like to welcome my guest in a much warmer environment. ira harris, thanks for taking the time. >> thanks, rick. great to be with you. >> the markets are always like a dance, so let's look at it like a dance. what i really want to concentrate on is who's leading. as i look up at the board, i see the euro, it's been on fire. it's been on fire for a while. the dollar has a central bank and a stock market that should auger much more for the other direction. who's leading and why in the fx trade? >> well, we really don't know. of course it's been the central banks and now last week the narrative was, the ecb is hawkish which i find kind of crazy because if you go back to december 14th, forget what the minutes said last week, when draghi had his press conference on december 14th, he was so
dovish that impact the euro dropped over 1%. of course we know about the japanese -- you and i have talked about this. in fact that was december 29th what's going on with the boj, they're not buying as much muchs the jbgs because they don't need to buy that much the fact they may be buying less is nonsense. so that is the music that is driving this right now it's still the central banks that are running this whole game right now. >> all right so when i look at what's going on in the german curve, the high credit curve of europe that used as the benchmark, you know, the shots had some moments especially last week where it was selling off. looked like it wanted to make a push towards 50 or lower seems to have taken a hiatus the question is simple i see what's going on with german rates but i see that spain and italy, their rates seem to be going down what exactly is that transaction telling you? selling german, buying the
southern economies long ends >> yeah, i don't think that people who do that it's a good thing it's the ecb buying and especially last week was the classic case we know the ecb is supposed to be buying 30 billion a month of still a large scale asset purchases. last week they bought $10 billion euros because the first week was holiday week. so last week they bought more than would be typically the case so they're at $12 billion. they have $18 billion left to buy for the month. that drives the long end lower, especially for italy and spain >> yra, we're just about out of time do you think that the southern economy's rates are going to keep going down for the next several months, yes or no or kind of maybe? what do you think? >> no. and it's going to -- and that's the italian election that's going to be so very important. but what we don't know is if the ecb -- how much they're buying of each one. that's the unknown that we just don't have an idea >> all right yra, we're out of time
the street." the dow soaring past that 26,000 mark for the first time ever this morning health care is the most performing sector s&p 500 trading up by nearly 1%. pharmaceutical giant merck is up by positive results and united health group is also a sector leader the second biggest point contributor to the dow and gain earlier this morning as well on better than expected earnings. so health care certainly a focus, guys. now back to you. >> all right dom, thank you one year into the trump presidency we're looking at how the energy sector performed >> good morning, carl. part of president trump's platform was an america firstenergy plan and he came out of the gates swinging when it came to policies that could further that goal. recall a flurry of executive orders, green lighting the keystone pipeline. goal, breed life back into energy still, the s & p sector is up.
but when you look at the rest of the sector, logging double digit gains in the range of 11% to 40%. energy was not the brightest spot when it comes to energy, the issue is oil prices. and price volatility hinges on so many factors. many of which are not in our control here in this country 2018 is getting off to a good start. oil prices are seeing strong support at $60 a barrel. a price point where many more energy companies are profitable. that should help earnings later this year. but there is still many ifs to that price stability if the shale producers don't overpump, if opec sticks to the promise cut, if demand trends remain strong, if the dollar index doesn't spike. it's a lot of ifs. having said that, any analyst feel energy is beaten down and in a market that feels overbought to some, big oil, shale plays, pipeline companies may be a place to find value in trump's second year. carl >> all right jackie, thank you very much for that when we return, we'll have a lot more on this record-breaking rally. down is up 168 "squawk alley" is coming up next [ click, keyboard clacking ]
good morning it is 8:00 a.m. at amazon headquarters in seattle. 11:00 a.m. on wall street. and "squawk alley" is live ♪ club going up on a tuesday ♪ ♪ got your girl in the club going up on a tuesday ♪ ♪ got your girl in the club going up on a tuesday ♪ >> good tuesday morning. welcome to "squawk alley." we're at post nine at the new york stock exchange. milestone day on wall street the dow hits 26,000. we were up 283 at session high we have give