Transcripts For CNBC Squawk Box 20150116

About 8 billion to banks at discounted rates. The goal is to allow the firms to relend the money to small businesses. Its been more than 24 hours since swiss Central Banks shocked the financial world. It abandoned its cap on the euro an were still learning about the fall out. Regulators around the world are looking for information about what happened and how some retail brokerages entered insolvency. It says the volatility left it with a negative equity balance and its trying to sure up its capital. Lets take a look at whats happening with the u. S. Equity futures this morning. The dow was down by triple digits yesterday. The dow was indicated down by 42 points. S p few turs down by 6 and the nasdaq down by over 28 points. Of course as weve seen what happens in these early hours is no indication of what would happen by the market close. No indication of what would happen by the market open. So true. A lot of volatility out there. It is. Corporate news this morning, heres our early stocks that were watching. The first one intel posting better than expected earnings and revenue. Revenue guidance came in slightly light. Well talk to the tech giant ceo at 8 40 eastern time. Id like to buy a vowel. Schlumberger is cutting 9,000 jobs. Theyre working on dealing with costs as it deals with oil prices. Revenues fell short. The eu is outlining its tax case against amazon today. Part of an investigation launched three months ago. Their tax arrangements may violate eu law and give the company an illegal advantage over competitors and what was having is they were allowed to operate throughout all of europe on almost a tax free basis. Youll see the eu cracking down on more of this. They have been looking at ireland and other places thinking this may not stand. Its not what the eu is all about. Also this morning ree gal entertainment deciding against the sale of its company. The company hired Morgan Stanley to look for a deal and they didnt come up with one. Also pharma firm depomed is acquireing a deal. The futures down 41. Theres been volatility and people arent just talking about the futures markets. We heard it yesterday the usage of the term new normal to talk about all different markets. Currency markets, oil markets, commodities markets, treasuries bonds, sovereign debt everything seems to be in a state of flux here and how it plays out will definitely effect whether we have that 8 to 10 gain in the markets this year which i dont know i think that was a little too crowded. Maybe it ends up like that. It was the first unanimous. The first week of january, first week wasnt great. Didnt work that way last year. January may not be great. I started thinking about just this ive been on this kick for awhile but just the European Union. Not the euro zone. They have the euro but the European Union itself. You have been on this kick for years now. I have been but so the swiss kept the franc. They tied it to the euro. Most places just took the euro. So they dont even have a chance to let this happen. They dont have a chance to back out and watch the stock market lose 100 million. If everybody backed out what would happen . No how many different economies over there are like switzerland. Different situation and economy and you can see the stress of it using that currency. What about portugal and spain and all of these places. Dont have the political tie in so you cant say these things are going to be uniform. But how do we know that by using the euro that these other currency situations arent stressed . To keep that swiss franc with that relationship euro and look what happened. It moved 30 . How can greece and germany have the same currency. In this case the central bank made the decision to do what its doing. These other countries, government has to do it and its much more comply katd. Covers up some inherent differences between these economies. Huge differences. People say you have 50 states over there and you all use the dollar. Its not the same thing. We have a federal government that sets federal laws. That apply to everyone. But anyway after its all said and done lets sue how europe setting itself up andrew. Setting itself up. There it is. Ive had people trying to photo bomb us this morning. Really . Just now. I was just waving at them thats all. I dont trust people Walking Around at 4 00 in the morning usually. They have coffee cups. Probably stole them. 40 ouncers back there. Heres the asian markets. Shanghai up the hang seng and nikkei both down. I dont know where oil is this morning. Its up a little bit. 47. Really going out on a limb. It should start to stabilize a little but it could go lower or rebound or stay where it is. But there it is at 47. Check out the ten year. Were seeing things that arent supposed to happen. The 30 year was an all time low. It was 2. 4 . All time low. Reflect what is we have seen in japan and germany and what is this indicating . With are we looking at a global deflationary environment. Deflationary spiral. Maybe there are some future risks in the Global Economy. Theres the euro now, 115. Howly cow. The swiss removed the cap and the euro goes down anyway which is weird and it went down really the u. S. Dollar went down significantly. But thats because were looking at the Swiss National banks move being something that indicates they think the ecb is going to react next week. And now people are saying if the ecb doesnt act everyone already has the trades on for it to act and that could cause a mess but in acting it caused a mess yesterday so theres not a lot of good choices for the officials consider the unelected bureaucrats in brussels which is another thing that theyre making these decisions. They are. Whats draghi . Hes italian. Yeah. Former Goldman Sachs man. Mit ph. D. As well. Lets look at gold which you figure sooner or later people are going to say i want something that i know is you can at least make jewelry out of this. 1258 now. Lets get back to this. The Swiss National banks currency move is the story of the week catching the Global Markets off guard yesterday and imf chief Christine Lagarde sat down to dismiss the idea that a currency war might be brewing but to also say she had no idea it was coming. There was talk about a currency war back three years ago. We are not hearing those words anymore. Not that music. And i would certainly hope that we do not have currency wars and that countries and their Central Banks in particular refrain from competitive devaluation. Thats her hope but you obviously cant control what the individual countries are going to do and what else could she say. Looks like a currency war is right ahead of us here. We believe in the strong dollar. What they say matters about whether its selffulfilling so i dont know how much stock you can put in that. How has the swiss move upped the ante for the decision nec week . Lets speak with germanyjeremy. Is it true that you think if they were not to act that it could foil the markets. Well clearly the markets are royaled by the events of the ecb. If they dont step up to Market Expectations we would see further degrees of elevated volatility and why the investors have been seeking the safety of bonds because of the extreme volatility in the equity markets and currencies and the question is will the ecb disappoint or provide enough liquidity to keep the euro lower. So what are the ripple effects we have just in terms of the European Union do you think . We were making the point that theres a lot of countries that didnt have the choice and didnt keep their own currency and didnt have the choice to say this has gotten too hard. Thats why we have some of the economies stuck in neutral. Well they have been under pressure over the course of recent years but you could argue that the euro is already up from the levels and highs in early 2014 and overtime that will provide a loosening of monetary conditions but they probably need to see more and thats the reason why the euro is effectively talked down by the ecb and thats why the policy of expanding the Balance Sheet is aim at cheapening up the currency to boost economic conditions. Of course in the context of switzerland theyre not a European Union member. They are a sovereign state. They did take that conscious decision to peg their currency against the euro which resolves themselves from independent Monetary Policy and thats been the inherent problem. They have been holding this line particularly over recent weeks and now we have seen the consequences of that and of course the valuation loss for the swiss is Fairly Extreme and more than double the profit the snb managed to create last year. What do you think does germany deserve a euro thats this cheap right now in the same basic currency as greece . Thats the point were making. How can that ever work . Well of course that comes back to the fundamental question about tying countries together within one single Currency Union and having different fiscal states and different political elements but having said that i think the euro will be germany is getting a net benefit from the cheapening up in the euro. From the peripheral nations if you look to the aggregate value of euro dollar and foreign affair value theyre probably not too far away from it but if you looked at each individual nation it would be lower than for germany. Germany could with stand the euro up to 145 or 155. Germany of course will be the economy of the euro zone that will get the greatest net benefit and thats continued to be the driver of growth as far as the euro zone is concerned. Without that they look much sicker and that would be much more damaging for the Global Economy which the euro zone is still an integral part. It is you know were deep in the weeds now and usually your currency wont go up 30 when you cut Interest Rates again too. None of it makes sense, does it . Yes they cut Interest Rates. Theyre moving rates further negative to try to stem the rise of currency but it underlines the fact hah the swiss are holding back the strength of the currency for a long period. Back in 2011 euroswiss got down to near a parody. We got back to more or less where we were when the peg was imposed. Its more of a realistic evaluation. Its like 10 to 12 of gdp. I think the fed is going to lose its nerve here. Lets say they go up in june or april. Were going up. Best economy in the world and europe is going to qe. Whats the fair value for the euro . 60 cents . I wouldnt necessarily think its going to go that far. I know. Monetary policy divergence is coming. There might be concerns at the federal reserve. May hold back in terms of timing but i think were going low. I dont think well get anything like the sort of extremes weve seen historically in terms of the euro dollar but were heading back toward the 110, 112 era. It might be preemptive because we remember that the legacy will start to have some impact over time. Okay. All right jeremy. Just the more you think about it. We appreciate it. But the best layed plans of mice and men. All the Central Banks around the world are printing money. Inflations coming. That was perfect. Why . Im not going to say the exact on o sit but instead of an inflationary spiral its a deflationary spiral. And no one predicted that. We wouldnt go below 2 . Are we going to go below 1 on the ten year. I would say anything can happen at any moment. Ive been shocked over the last 15 months where our yields have gone. We have been watching the stock market. Good news is its friday. Bad news is its a rough week for the bulls. Stocks are riding a losing streak. Joining us to talk about this is david, chief Market Strategist at amerprize financial. Thank you for being here. I asked for a 30 year. If you look at the 30 year its 2. 4 yesterday and today its below that at 2. 37 . If you look at that yield, germany, japan, any of these yields is telling us that bad things is happening now. Is this different this time around . What do you think . We like to call this great and final global unwind. What were seeing before our very eyes over the last four to six weeks is finally lets give up and come to reality that growth is not coming from em or europe. Its coming from the u. S. And thats why we had this massive rerating of commodities while people are coming to grip with europe is in trouble. Em is taking out their capacity and the u. S. Is the place to be. Ill be in europe next week and it will be interesting to see if european investors will be less reticent to come into the u. S. Because from our perspective they have been reluctant buyers of the market rally in the u. S. The currency issue is going to be strengthening that wonderment but in terms of the move in yields this is an overreaction on a near term basis. Youre not going. Im going to be in zurich. No way somebody would spring for that for you. Right. But what are you doing in zurich . Its a great time to see clients. After the move yesterday. Were going to be in all the major cities and especially in switzerland because of where they had issues and the institutional private money ft. When we think of Howell America is doing versus the rest of the world you may have the impulse to say go usa but its a global world at this point. You have to wonder when all the problems around the globe catch up with us. Absolutely. A lot have investors as well so they have to Pay Attention to whats going on but to get back to your question about yields talking about the ecb probably doing quantitative easing and one of the members of the Council Last Night was talking about how it has to be sizable in order to have an impact. It seems as though the dollar is going to get stronger and yields will go lower. Two weeks into the new year and were rethinking our expectation that yields should be going higher. Does this put the fed on hold at this point . I cant imagine them doing anything in april and have doubts about june. I would guess yes. My expectation was that they would raise rates in june. Just to continue the process of normalization. But if this was june right now of course they wouldnt do it. That was my question yesterdayful theyre still saying its dated. We want you all to know its data dependent. Does that tell us anything . Does that mean its data dependent on u. S. Data coming in thats strong or does data like zero percent in europe does that count as data to them . They acted so far as if it doesnt matter to them. Were going to take data from overseas. They havent raised rates. They focused on the inflation rate here and the jobs situation. But they talk about it in the room. They do look at the world mark market. Theres a transition mechanism. But clearly if things are slowing internationally and ceos are seeing that and the impact on their businesses this will be all about wages. The fed is going to pull the trigger when you start to see wage increases so Corporate America will change their behavior and start spending money if things are slowing down globally. We remain in a reactive marketplace and the behavior has to change to allow Corporate America to feel better about whats happening with their businesses. If things continue to slow theyre not going to hire and wages arent going to go up and the fed is going to be on hold longer than people think. On hold longer than people think meaning you don think its happening this year or not in june . You know estimates are like everyone else. In june have to take the other side of the coin saying we think its going to be pushed out especially how the year is beginning. We could see a behavioral change and data could say things are really decoupling. The opposite of what happened in 08 and the fed would do something. Although some of these measures they dont have to lookout side the u. S. Questioned we had ppi that dropped by 30 basis point which is is the biggest drop weve seen in three years. That comes after a decline of of. 2. What do we have to see for them to change their forecast . How many weeks does the situation have to be this dire . Better or worse . I know you have your own view and the firm has a view that you can change the firms view in a day but does a day change the world. No, i dont think. This is an unwind. Things get worse toward the end. Especially with having weakness coming into friday thats typically not good for markets but good for market turns so we need to see how businesses react to what Global Growth is saying. Fun fact so we know what the eu is right . Theres 28 countries in the eu the ones that you think of the u. K. And portugal and all of those but the European Economic area the eea, includes all the eu countries but also iceland and norway and it allows those people to be part of the eu single market. Right. Switzerland is neither a part of the eu or a part of the eea but it is able to be part of the eus single market. Its a trading partner. But its so jury rigged over there. The way they have this put together. And the euro zone is different than the eu. Half these countries they still have their own poll. Was it pegged. I dont think so but i didnt know that the swiss franc was pegged until yesterday. Theyve been doing it since 2011. A couple still has the kroner and one of them doesnt. And theyre over there wondering why we vn grown any here. I wonder why . We have a good system here. Everyone should adopt the dollar and actually let and link our economy to every other economy. No. Theyre maying music. I feel bad. Thank you for coming in. When we come back joe is going to continue the education for all of us im learning. Im learning. Also David Winters is now firing back at barry diller at comments he made and a coke board member. He did it on squawk box yesterday. A war of words. Well bring it to you next but first heres a look back at this day in history. Ive been called a control freak. I like to think of myself as more of a control. Enthusiast. Mmm, a perfect 177degrees. And thats why this road warrior rents from national. I can bypass the counter and go straight to my car. And i dont have to talk to any humans, unless i want to. And i dont. And national lets me choose any car in the aisle. Control. Its so, whats the word . Sexy. Go national. Go like a pro. Can you talk about the cocacola board . We know that the company has been under assault from David Winters. Please. What happened. Hes just another blow hard. That was iac chairman and cocacola board member on the program yesterday. And David Winters, the activist investor is firing back but before we get to his new statement lets listen to the rest of dillers comments on all of this. What happened is cocacola had a Compensation Plan that had been in place for a very long time. They had to renew the plan. The rules said that they had to say that x number of shares would be given over a four year period right . Cocacola had no intention of giving it over a four year period. Over at least 10 and maybe a 20 year period but if you took the four year period and you didnt read underfeethneath it you would have said coke was giving away all its stuff to its employees and diluting shareholders. It should be been better explained and coke learned a lesson. Hes saying diller is contradicting whats in the statement. Winters says its troubling that mr. Diller who has been on the coke board for 13 years and is a member of its Corporate Governance committee doesnt understand what it said. Thats not what he said because i had another Hedge Fund Manager that said the same thing. Barry said it wasnt explained properly and they should have been more clear about that. They should have explained it. Where he said he didnt read underneath that i think he meant didnt understand that that didnt mean it was an obligation that you didnt have to hand it out for four years. We have reached out to barry diller. I had another Hedge Fund Manager that reached out to me. Barry said coke didnt communicate it properly. He said that was their mistake. There we have it. War of words. Intel posting better than expected earnings revenue. Raising red flags for investors. Chris is a Senior Analyst and lets talk about some of the red flags. Is there a red flag for you or is it all green . It was fairly stable relative to what they said back the november analyst day. If you look at the december quarter, data center came in ahead of what we thought. Pc came in a little bit less. The First Quarter guidance on the top line was light of where people thought but they maintain what they said at the november analyst day so not a lot of changes against what we heard in november. I have not heard you say the word mobile or tablet. Where does intel really stand in that world right now . Well if you go back more than a year ago before the new ceo came in intel had really missed the tablet market entirely. What they had done under the new ceo is to make a push into that market. The problem was the products werent quite ready yet. So what they have been doing is subsidizing the market for that because it costs more to put an intel chip into a tablet than competing chips. They were successful in the market share this year. The problem is it cost them a lot of money to do so and the jury is still out whether they have a Sustainable Business in that market where they have to compete on that. Were they late not game and given whats happened to apples market share in the tablet world in that sales on tablets have decreased what does that say longterm about the entire tablet market and where intel fits in it . You can make an argument that the tablet market hasnt changed much in the last couple of years in terms of the feature set and such. The ipad air and air 2 isnt that different. Thats why weve seen the market plateau a little bit and it was a benefit to the pc market. They went upper forming better and part of that is the fact hah the tablet market plateaued a little bit. For ten years literally it traded between the mid teens and 25 right . Right. And weird that microsoft same chart and suddenly both of them in the last year have broken out, intel got up to 38. Microsoft did too. Is this new . Is this going to continue . Is the new floor for intel 30 . And will it go higher . Yeah and i think, you know some of the fears of a very rapid decline on the pc market were in stock a year or two years ago havent played out yet. One of the real important things for this year people should watch is windows 10. Are you gambling that windows 10 is going to work given that the last two versions have not hit it out of the ballpark the way people wanted. Probably kept you worse than windows 8 at this point. It wasnt well conceived by consumers. How much of a gamble is intel really on microsoft. With intels position and tablets now is to be exposed to all the different computing echo systems but in windows they have their biggest advantage. For you to use it thats where they get the premium pricing. Its really important for windows to gain acceptance. So what would you say . Buy it or not . I still dont know. Youre talking in circles. Buy it or not. Im a real neutral on the stock at this point. I think you cant be too negative. Chris we have to leave it there. We appreciate your perspective this morning. Wait for windows 10. Also a quick programming note you do not want to miss the intel ceo joining us at 8 40 eastern time. Coming up waiting for Quarterly Results from dow component Goldman Sachs. Dow component. I tripped over that before. Plus those that dont learn from history are doomed to repeat it and a new book out this week on the real cause of the financial crisis is warning that were about to witness just that. The scary scenario from a major player in washington. Thats coming next. You just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. Because youre not you youre a whole airline. And its not a ticket youre upgrading its your entire operations, from domestic to international. Which means you need help from a whole team of advisors. From workforce strategies to Tech Solutions and a thousand other things. So you call pwc. The right people to get the extraordinary done. Ameriprise asked people a simple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry but you worry. What happens when your paychecks stop . Because everyone has retirement questions. Ameriprise created the exclusive confident retirement approach. To get the real answers you need. Start building your confident retirement today. Hi guys from all of us here. I just wanted to welcome you to the neighborhood. Joe knows this already because i see him on the sidewalks all the time but a lot of your best foods and hats are along 6th avenue. Well bring over a plate of cookies or a casserole at some point but its nice to have you here. Hes got some time still, right . He didnt have to bring over the casserole right away. No no. But you know what im happy for that welcome. But that is nice. The scarf recommendation is a good one. I got a rolex out there. You know those are, in switzerland theyre much more expensive. Hough did you pay for it. 10. Its unbelievable. Very nice. Theres a lot of great things in this city and we are live from new york city and i like the cars going by barry. Yeah what does barry know about tv. Yeah. He sells stuff on qvc. Isnt that what hes famous for . The movies. Theres a couple of other things hes done along the way. Were wrapping up week two in our new home. Getting to know other nbc friends in our neighborhood including brian williams. What we should have done was a look back. I do. I think we should have had barry diller, we should have said this is the first week. Theres still two hours and 20 minutes left. He would have to cut that. Why dont we cut it end of the month. We have big shows and it gets even bigger as we get back. But then it would be a squawk box sort of thing. Were global. We are. Futures at this hour i had no idea they were down 40 before. Now theyre flat. Dows up. Thats why i said nothing would surprise me with the way the futures are trading and at this point i dont know whether they trade off crude or whether they trade off the ten year or whether they trade off whether cyprus is considering something with its. We have a new book well talk about out this week and its generating a lot of buzz saying whatever you think happened during the financial crisis is probably wrong. Its called hidden in plain sight and he was on the Financial Crisis Inquiry Commission and is now sounding the alarm on why the nightmare of 2008 could happen again. Good morning to you. Good morning. Congratulations on the book. Lets just walk through the main premise. What is it we all missed in your mind thats so different than the narrative that you think is developed. The story that the American People have heard and has been told since the financial crisis is that it was caused by greed and risk taking on wall street. But in fact the numbers show that it was caused by the u. S. Governments housing policy. In 2008 when the financial crisis began more than half of all mortgages in the United States were sub prime or otherwise weak and three quarters of those were on the books of Government Agencies and that can mean one thing and that is the government created the demand for the mortgages and they caused the financial crisis. Why are you convinced its going to happen all over again. Im not convinced itself going to happen again. What the book says is unless we change our housing policies it will in a period of time happen again because the housing policies that created all of these low quality mortgages, risky mortgages is still in force in just the last week the government has done several things that show that they are still following the same policies. Peter, ive been reading all of our editorials in the wall street journal all along and have watched in horror as history was totally revised through the prism of a Mainstream Media sort of way of characterizing it to where its now just dogma and accept it and i said many times you look at the way we tried to get Home Ownership up to 70 and you look at the way the government greased the skids for lowering underwriting scandals to help people that probably shouldnt have owned houses in the first place and how ironic it is that dod frank is named after chris dodd and barney frank. Barney frank said ill not worried about fannie and freddie and then chris dodd who was a friend of angelo right . I suppose so. That i dont know. Its not in the book but the fact is right . Got one of the sweetheart deals from country wide. But the question heres what people tell me. B even steve says youre totally wrong about this stuff. He says that fannie and freddie only accounted for a small percentage of the sub prime that it was created by the private sector completely. Thats why we can hang this all on the private sector. Thats one of the arguments thats made but what people do not say is fannie and freddie were the biggest buyers of the sub prime loans. Up to 30 and 40 for years. This is very important because they created this sub prime market because they were customers for it. And why . What was in the pools that they were buying the pools of more kbaj mortgages they were buying complied with the requirements. They didnt create them but they bought them. They bought them. What do i say . They didnt have to create them . They bought them so they couldnt have been created if there wasnt a secondary market for them. The government through fannie and freddie bought these mortgages from wall street. The reason there was such a market is because they were customers for 30 or 40 every year. Why did they want the mortgages . Because these complied with the Affordable Housing goals. So i want to bring us to where we are now because one of the other pieces going on now is that you dont believe that dodd frank addresses any of the real issues. You think frankly youd like to roll back or youre not bothered by the things being rolled back. All the sub prime loans and if we want to believe that fannie and freddie were responsible for carey wrought creating a market like that, whether you look at the Consumer Protection bureau or other pieces of the legislation that are supposed to avoid people being able to take out some of these mortgages using phony applications and the like. As long as the government creates the kind of market it created when 1992 and 2008 when the crash occurs as long as that happens the Consumer Financial Protection Agency is not going to protect us. Its not going to protect consumers. Even barney frank said it was a big mistake for luring low income people into these mortgages. The commission you were on didnt come to this conclusion and had guys on it and others. Right. But they are the enablers of the whole new narrative that still has the banks on their heels as we saw six years later. Theyre still not making any money or as much money as they were able to. Thats right and i descented from the report of that commission. All right. We have to run for some reason. Thank you. Still to come this morning why elon musk is afraid of the machines. Plus jim chanos unveils his investment ideas and intel ceo joins us to talk about the companys earnings and prospects for the future. Stick around. Squawk box will be right back. The new banking rewards program that rewards our customers, every day. Youll get things like rewards bonuses on credit cards. Extra interest on a savings account. Preferred pricing on merrill edge online trades and more. 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Nice to see. Weve got a little bit of news for you this morning. Elon musk is donating 10 million to protect us from artificial intelligence. The research of Life Institute is working to make sure a. I. Benefits humanity. But also warned that it potentially be more dangerous than nukes. Youve always worried about the rise of the machine. Stephen hawking has said the same thing. It is a genre. I have some of the books. Its a Science Fiction genre. Have you seen the movie where johnny depp takes over the world. And locks them out as he sees it. How theyre taking him out of commission. You know, you watch its kind of people got sad watching that as he goes through his childhood almost. Im sorry dave. Im afraid i cant do that. You saw what he did out there . Theres one guy still out there turning and turning. Hes probably near pluto by now. And they say theres three things. They could be nice to us. They could be ambivalent and not really care one way or another. Or they could be hostile says we dont need people deciding what we do. We can do it ourselves. They have to eat, make waste, do all this stuff is that is unnecessary. Were finished with them. Theres a movie coming out with hugh jackman. Have you seen this . Its a cute little robot. Does he get mean . People think hes mean. Its very close to chucky. It is. Jim chanos coming up right after the break. Hes our guest host for the morning. Were back in a moment. You just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. Because youre not you youre a whole airline. And its not a ticket youre upgrading its your entire operations, from domestic to international. Which means you need help from a whole team of advisors. From workforce strategies to Tech Solutions and a thousand other things. So you call pwc. The right people to get the extraordinary done. A legendary short seller on the markets. China and the health of the pc. Jim chanos is our guest host. Well ask him how his short on Energy Companies are looking now. Earnings alert. Dow component Goldman Sachs set to report. Well bring you the numbers and the instant market reaction. And a reality tv star launching a brand of marijuana that supposedly wont give you the munchies. Get a lot of haagendazs ice cream bars. Chocolate, got to have chocolate, man. The second hour of squawk box begins right now. Live from new York Business never sleeps, this is squawk box. Good morning, again, everybody. Welcome back to squawk box here on cnbc first in business worldwide. Im becky quick along with joe kernen and andrew ross sorkin. Earnings and data that could move the markets. At 7 30 were expecting quarterly numbers from Goldman Sachs. Then from 8 30 we get the governments latest inflation numbers. Well get the Consumer Price index. Remember that came after the ppi yesterday that showed a much bigger decline than had been anticipated. Also at 10 00 a. M. Latest read on consumer sentiment. And the u. S. Equity futures at this hour weve been bouncing once again this morning. An hour ago we were down about 40 point ossen the dow. Right now dow indicated down about 7 points. S p futures down by just about a point. And the nasdaq down close to 20 points. Also take a look at currencies. A day after the surprise move by the swiss scrapping the floor between the swiss franc and the euro that tie that was trying to keep it. It didnt work well. This morning the euro versus the dollar 1. 1586. Thats something people are paying a lot of attention to. Among the stories were watching today, shrum ber jay is cutting 9,000 jobs. Company working on controlling costs as it deals with plunging oil prices. Quarterly earnings beating the street by a nickel. Also to tell you this morning about this big case in the eu revolving around amazon. The eu outlining its case today against amazon. The ecommerce tax arrangements in luxembourg may violate the eu law and give an illegal advantage over kemcompetitors. Also german chancellor Angela Merkel snubbing vladimir putin. Saying theres no chance the russian president will be invited to the g7 summer in june. She says russias moves were a violation of common values. Thats big news. Because merkel had been his defender to this point. Well she wants him probably dpp you see this picture of him there . Its the oil. Its probably the oil. Our guest host this morning, legendary short seller looks a lot better than that with his shirt off by the way. Jim chanos. And we no longer call him mr. Shorty. He has complained. Were not going to do that anymore. I never complained but welcome to the neighborhood. Thank you. Hes the man behind the enron scandal, did we forget about your first one . Baldwin united. The cincinnati company. What was his name morly thompson. Who was the lawyer that represented him too . I dont remember. Anyway i could come up with to name a few. More recent le hes made big calls here on squawk box. Chinas slowing economy and big threats to big oil. Hes the founder and president of the Worlds Largest Short Selling Hedge Fund kynik o rks s. S s. Its an interesting story what that name is. Obviously its greek. I cant remember what it was from. The they were the cynics. The cynics outside of athens. It didnt have the negative connotation as it does in english. You have for six years youve been like why am i a short seller with the markets. It hasnt been right. I think are you looking out at the ocean and seeing a ship headed your way that says your ship is coming in with the way these markets are starting to act . Arent there some doesnt this portend some big short selling opportunities . This weirdness were seeing . When you called us the largest short selling fund and firm. And, you know, thats damning with feign praise. Its tough. Its been tough for five years. And who knows. Were not market timers. We try to do our best with companies and industries. And then every once in awhile pick a shot at something bigger than that. Like china. But i mean as weve been saying for about a year now to clients, the rirvegs are certainly rising and have been rises. People come on to justify all kinds of things. We point to where the market was, for example, in the dotcom era and say it can get there. And maybe im okay. But comparing markets to alltime euphoric tops as a rationale for investing risk always worries me. What about pointing out the inflation adjusted the s p isnt where it was years ago. Same thing. Thats comparing it to a blowoff top. Why wouldnt you want to compare it to something near bottom . If all you want to be is short, why didnt you put all your money in the short euro a year and a half ago . Because i wasnt smart enough to think of that. Were not currency traders. You look at the income statement Balance Sheet to decide whats happening. Yeah. Hopefully. So even to talk about you as a top down or a macro guy, its certainly better when the whole macro thing is going to hell for you. Were stock pickers. And we came across our stock panders. Pickers, joe. We came across china because of our work in the Mining Sector in 09. So it really depends on what were seeing in the companies out there and thats where we think we hopefully can get an edge. Its really tough to do it to predict markets or currencies. Although you did tell us that energy was a problem. Youve been short energy for how long now . A couple of years. A couple of years. We had an interesting analyst who looked at china who called for a decline in oil prices less than a year ago. Maybe seven or eight months ago. Saw that drop coming and saw it because of the decline in demand in china. Why did you think energy was short . Well basically due to the structure of what happens happening in north america. The fracking and shale revolution was propelling us to be the largest oil producer. And in a way that i thought was uneconomic and still is uneconomic for the drillers. But it was going to be enough supply to really disrupt the markets, more importantly the big oil companies. The exxons world dutches. Theyre finding their Business Model challenge because the days of finding easy cheap oil is over. Now you have to drill in the middle of the ocean. You have to deal with mr. Putin or into the arctic. So on one end of the oil business, youve had these massive multiyear projects that were really expensive. Then on the other hand you had this explosion in supply in relatively cheap energy in north america. And on top of it you just added a ton of debt. Because of take your pick. Fed policy or whatever. And so that was a witchs brew that i think was really we talked i think a little bit before i got on set was sort of surprising that prices stayed up as long as they did. Its in the multinational. The ones that may go bankrupt are who . This energy spot is a place you have to look at each individual company. Each has its own acreage, Balance Sheet. So you can overlay pricing and your assumptions on pricing but then you have to look at your cash flow statements and where they are. The most problematic are the big National Oil Companies. So it wasnt a call on oil going from 100 to 45. It was a call on economics changing. But it was a call on the companies. And the fact that the shale explosion was on the margin. But offsetting that you said its getting more expensive to do that anyways. You werent thinking that oil was going under 50. I thought the companies were by and large and still think theyre uneconomic. It wasnt a call on oil going below 50. No. The Business Model has changed. Exactly. So what happens . Youve been short two years. Have you doubled down on this . Are you trying to reap some of the profits . Its interesting because youve seen the National Oil Companies like where we had a good position really unwind quickly. But yet the publicly traded integrated oil companies, the exxons chevrons they havent gone down much at all, for example. Right. A lot of people said these are buying opportunities. I just think people are underestimating how much the cash flow is going to be cut at those companies. What weve seen with large companies, they havent really guided yet. If you went into the back end or the eagle fort or whatever the drillers have already come clean with their lenders and the credit market and said weve got some issues. Were going to cut. You havent heard anything from the big guys yet. Although yesterday the front page of the Financial Times talked about billions of dollars of projects that were being dropped as a result of the decline. They havent said were not going to make 7 this year were going to make 4. Thats what hasnt happened yet. What do you tell people . You say, you know, if you had been short the entire market youd be down 40 . But with me youre down only 20 . Actually that would be a good sale joe. You can always hedge your makt exposure. There are people that want to be noncorrelated with Financial Assets and need to use you. Is that enough . Will they say im happy with what you did because you only lost 10 instead of 30 . Almost all our clients do with the long side. Your caterpillar call looks like its right on the cusp of something happening, doesnt it . Well caterpillar is a company that lets pop it on the screen if we can. Even further. Go back two or three years, i guess a two or threeyear chart would be the one. There look at that. So if that breaks through, what is your objective on that do you think . Again, we dont have price objectives on our stocks. I think that the company is in three areas, two of which are highly troubled. One is the construction excuse me. The Construction Industry is not, but the mining and the Energy Businesses are increasingly challenged. Last year at this time it was just the mining business. And people said well at least energy is going to be positive for them. I think we can take that off the table now too. Part of the numbers being way too high. And management not coming to grips with it. I dont think theyre going to earn the amount people think theyre going to make. What about other energyrelated companies . Now that you see that its 45 oil or 46 oil, theres stress elsewhere. I mentioned ge a couple times. They went full force into oil. And theyre on a low. Yeah. Were going to sort of figure it out as time goes on. Companies come clean and say my gosh we had an Energy Exposure we didnt think he had. Or theres some connection and that will play itself out. I mean its pretty rare you see a commodity this important to the Global Economy that suddenly drops 50 . Although we hear about the positive implications for this. You think this is going to be a place where you look for your blowups. Yeah. I think that its going to be interesting. Because if you looked at what Companies Like fedex and Dunkin Donuts in the Fourth Quarter, were not seeing it yet. Were not seeing the pass through in small purchase ticketing. Maybe its a little bit better. Consumers are somewhat rational i think, that they will say this is a windfall but im not going to change my permanent spending habits completely. Because gas prices might go up. Although they do buy big cars and trucks. We are americans. Look. It certainly is a positive. You cant think on balance for our economy. Its a net net positive. The problem is the unexpected shocks, the credit issues the sort of transfer mechanisms. That i dont think anybody knows yet. Was ugly implied before americans in that comment you just made . Ugly americans . No, not at all, joe. All right. So were allowed to buy those . Its within our right to buy the horrific cars and own guns and things like that . Absolutely. Im all for it. Big Second Amendment supporter here. Good. Because im watching you. Thanks, jim. Well have much more from you going to be here for the rest of the show. You know what they drive over there too. If theres ever an accident no one is surviving in the little cars they drive over there. Its bad news if you hit a truck. A guy saying whats that . Was that a squirrel . Anyway. When we come back stock picks in the tech sector. In the 7 30 half hour we expect results from Goldman Sachs. And why tesla missed china problems. Squawk box will be right back. What makes it an suv is what you can get into it. [container door closing] what makes it an nx is what you can get out of it. Introducing the firstever lexus nx turbo and hybrid. Once you go beyond utility theres no going back. Welcome back, everybody. The squawk platinum portfolio is online. You can go to cnbc. Com to check the pros picks realtime. Paul meeks joins us this morning. Thanks for joining us this morning. Always a pleasure. Lets talk about your picks. First up apple. Some people say thats a tough one to get into based on the momentum one direction or another. Why do you like the stock right now . I think in the last couple of months the stock has shown some stability here at this price handle. I also think that the company is very cheaply valued. I calculate remember the company is still generating cash flow but right now they have about 20. 40 net cash. I put a ten multiple on that stock. Thats where we are now. I think the stock should deserve at least a market multiple. What is happening, i believe, that the iphone ramp particularly the big form factor would continue to be very nice. What a lot of people dont realize is this company has had had a problem sustaining its gross margin. I think well see stability if not an increase in gross margin. The other thing thats interesting is as we go to the larger form factor were going to put more and more memory on that. And thats also more profitable to apple and to the component vendors. For these reasons i think if i take apple, i continue to see a strong ramp. Im not even thinking about apple watch yet. Thats going to be an incremental upside. I get a stock price about 154. Stocks now about 106. Okay. So lets talk about delta. Is this a play on oil prices being lower . Yeah. Ive listened to the dialogue this morning. Delta is one of the airlines that hedges the commodity. At least somewhat. But even with the hedges this year, theyre going to save about 1. 7 billion on their costst. If the commodity ends up staying down, they wont hedge up. In the meantime i dont think delta is your fathers 1970s 1980s style airline. The company last year had a 20 return on investing capital. And this is even when no pun intended they had some head winds with overcapacity in asia problems with the economy in europe being in the doldrums. But business in the u. S. Is so strong and theyve been running so efficiently that i think this stock over time should not get the very low pe cyclical multiple. But get one like a quality Industrial Company like a honeywell. Management premium too. Yeah. I think Richard Anderson and his team are tough. Its not richard. But he is good. Very good. One of the things they do is interest. Its been a boom and bust with burning cash. Last year they generated 3 billion in Free Cash Flow. And you may not want to hear this if youre a flier, but as a shareholder you do sometimes they buy the latest aircraft from airbus and boeing and sometimes they buy somebody elses aircraft. Thats been used. Theyre very very savvy with capital expenditures. But you can check you can measure stress. You can see how many miles it has on it. Are you worried about that . Dont tell him that. Hes going to switzerland next week. Can you also buy a refinery . I thought it was a great move when they did. Very controversial. And when oil comes back and jim may think it never does but they typically have an advantage whether they wait a second. You told us when oil stays low theyre going to save 3 billion. Playing it either way. Yes. I agree. But if oil comes back you know you do have this refinery that in the past during more normalized times they had about a dime gallon advantage. Very quickly. Warner. You like this because of whats happening with auto sales . The problem is almost 50 of its business is europe. Of course thats a troubled region. However, regardless of where the commodity goes over time. Borgwarner is in two businesses. Drive trains and engines. One of the things they do where there are turbo chargers is over time we have to have because its mandated by the regulators, better mileage per gallon on vehicles and also lower emissions. And right now the light car fleet, about 35 miles per hour. In about a decade from now you have to get up to about 55. And this will happen. Regardless of what happens with oil in the next couple of years. And so this is a company that has a manufacturing advantage, design advantage, components are often sole sourced both on the engine and drive train side. And its meeting those two themes that are happening. If you like it or not on both increasing the fuel efficiency and improving the thats it . Its a sexton. Whats the sexton fund . Whats that . Sexton is an article instrument. Oh, god. Okay, fine. Did we know that when we booked this guy . Yes, we did. Borgwarner, im waiting for the racy stuff. Forget it. Paul thank you very joining us. Thanks. I like it. Im long apple. I think its great. Now you can go online to cnbc pro on cnbc. Com to track the picks realtime and read analysis. Platinum portfolio will be back at 8 15 a. M. I cant wait to talk tesla with you, chanos. We were talking that on the commercial breaks. We were. Thatll be a tease. Got some interesting thoughts. You do. And were going to harken back. Coming up marijuana that wont give you the munchies. Then why smoke it . Thats a concept behind a strain of pot being launched by a reality tv star. I guess if you dont want to get fat. But youve got to admit, that stuff tastes im told it tastes pretty good. And later, why tesla is struggling in china. Well get jim chanos to weigh in on that. Take a deeeeep breath in. And. Exhale. Aflac and a gentle wavelike motion. Ahhhahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just four days. Ahh four days . Yep. See why speed matters, at aflac. Com. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. You just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. Because youre not you youre a whole airline. And its not a ticket youre upgrading its your entire operations, from domestic to international. Which means you need help from a whole team of advisors. From workforce strategies to Tech Solutions and a thousand other things. So you call pwc. The right people to get the extraordinary done. Okay. When we come back Goldman Sachs is now set to report in just a couple of minutes. And of course reaction from an analyst. Squawk box returns in just a moment. Financial noise financial noise financial noise welcome back to squawk box this morning. Making headlines, new numbers out today say capitalists had the highest total since 2000. I dont know if that means were getting near a top. Also a court is cutting the max amount of money bp has to pay for the gulf of mexico oil disaster by a million dollars. And apple and google will be paid 415 million to settle a lawsuit by tech workers. Employees accuse the firms of conspireing to avoid poaching each others employees. And you might remember, steve jobs and eric schmidt had those sequence of emails that went back and forth. Not the most attractive. Some unattractive facts, as they say, in those emails. A new product from the former real housewife of new york who created the skinny girl line of alcohol. Bethenny frankel is now launching marijuana that wont give smokers the munchies. How do they know . Is it a gmo . I want to say this woman is brilliant. She can come up with a skinny girl vodka. Then she knows how to how would you come up with a marijuana that doesnt give you the munchies . You have to take something out of the strain right . You have tho know what the hell you were doing which i dont think she does. What i imagine happens in one of these instances is theres an investor somewhere who comes up with this idea and she is all right associated with the skinny girl thing. I get that. The way weve been breeding things for hundreds of years the long way. Now we got a short way to do it. But everyone whos politically correct think youre going to die if you use anything genetically modified. I changed my opinion on this. Part of the problem is theyre changing the strains so you can stray a plant with much more pesticide and the plant will survive. But that doesnt tell you what its doing, the pesticides. Thats what concerns me. You can create plants that dont need pesticides. Thats not what theyre doing. I dont know. I want to be short young brands if this happens. Taco bells in trouble. Exactly. Shes got pot ware. Dont get hungry. Music doesnt sound better and you feel exactly like you felt before you smoked it. That doesnt help. No. All you get is the cancer. Yeah. Lets talk about intel. Weve been watching shares of the company this morning. First quarter guidance fell short. The Company Expects First Quarter sales to come in at 13. 7 billion. That was only about 80 million below expectations but did put pressure on the stock yesterday. Well be talking to intel ceo brian krzanich. Thats coming up today at 8 40 eastern time. Called for the death of the pc. Hes been short hp for a long time. You still think in that same mindset . Were still in the same mindset. We see continued pressure on the pc pakers. You see the rise of companies in china that are now muscling into this area. Both on the pc side smartphone side and tablet side. And increasingly there are Companies Like hewlettpackard that really resorted to Financial Engineering to make their forecasts. And we just dont see that changing. Ibm even more so. Ibms worked out. Yes. And having said that i mean i agreed with your guest before. I mean were long apple, for example. Because youre getting apple at a lower multiple than hewlettpackard or some of the others and yet its growing, innovating, throwing off tons of cash. They sold everything. Services company. Services. I wouldnt put ibm we have been short ipm but wouldnt put it in the pc. What do you think about intel . Were short intel. Wait a second. Youre short intel . Is this a new effort . I dont tell you all my short positions all the time becky. Sorry. Weve been short intel probably better part of this year. Six months. What was the catalyst for that . Same idea. I think joe mentioned earlier this morning the stock has been between 15 and 25 forever. And its got the same challenges. Im going to be curious to hear what the ceo says about the Balance Sheet and some other issues we saw on the Balance Sheet last night. One thing that intel has done is kind of decimate the competition. Amd used to be a viable competitor and many would say today its not. I think thats right. Theyve missed mobile by and large. And the problem is the 60 Gross Margins. In a world increasingly where the chip power is at much lower Gross Margins. Say what you want about amd, but other chip manufacturers are manufacturing at Gross Margins much less than that. And its weird when you talk about how they get that. It has to do with plans. Its a capital intensive business. You see that with them. Jim goldmans out. We were looking for 7. 6 in revenue. 7. 69 is exactly where the revenue number came in. The stock right now cant tell where its going to trade. Looks like its down about a percent. Yeah. The revenue numbers above. If that is a clean bottom line number that would also be above as well. People look at other things obviously. Investment banking revenue, 1. 4 billion. Equity revenue 1. 93. So in the total, 2. 17 billion on 7. 69. They reduced total assets in the period by 55 billion during 2014. I wonder what that means. Because their Investment Committee thinks were good in 2015. Right. There have been questions, people were wondering just about commodities trading and the trading desk overall. And im just looking now to see how theyre doing. But there are comments from Lloyd Blankfein who says theyre pleased with it through the year. Pick up momentum for the Global Economy. That will improve the opportunity set for 2015. That stock is trading lower though. They made 17 for the year. Trading at 176. See, i can quickly figure that out. Ten times earnings. Have i got that math right jim . I think thats pretty much spot on joe. You know my favorite topic . Compensation benefits. Operating expenses have not changed. Essentially unchanged in 2013. Same on the compensation. The ratio of Compensation Benefits to net revenue for 2013, 36. 8 prths . Total staff increased 3 in 2014. For the fixed income currency commodities, thats the unit i referred to before. That was 29 down from the quarter a year ago. A lot of e the trading desks had trouble with this because Interest Rates moved the way nobody was expecting. And so thats something that has affected just about all of the big banks with trading operations. It says i was wondering whether they were squaring their positions. It says the asset reaction was part of a initiative to reduce activities with lower returns. Not necessarily to get out of i guess positions that they were worried about. Well what deal must have happened for net revenues and underwriting, 37 lower. What transaction must have taken place . Why would you ask me that when youre mr. Dealbook . Im just asking. It wouldnt have been an alibaba transaction. Facebook was the year before. Youre talking about 13 . There were more ipos in e the past year. Could be credit underwriting. Could be bonds. Its not stocks. Doesnt necessarily mean stocks. All right. Jim, thank you. Well have much more with jim chanos through the show. Whats coming up andrew . China is a crucial market for automakers. Phil lebeau will join us to talk about the auto sales market. And well get jims view on that and also his take on tesla when we return in a moment. So whats going on today . News alert message email calendar update most of us admit to being overwhelmed by information at work. Thats why ibm created verse. It uses powerful analytics to uncover hidden patterns in your email, calendars and social feeds. It continuously learns how you work. And helps you prioritize the people and projects you need to focus on. Theres a new way to work and its made with ibm. Out of 42 vehicles. Based on 6 different criteria. Why did a panel of 11 automotive experts. Name the Volkswagen Golf motor trends 2015 car of the year . Well give you four good reasons the allnew Volkswagen Golf starting at 17,995. Theres an Award Winning golf for everyone. Gms sales growth in china are boosting its profit forecast. Meanwhile teslas china sales were unexpectedly weak. Phil lebeau is here to take us in those numbers. One other piece of china auto news getting a lot of attention here in the United States is the fact that volvo has said it will be selling in the United States a vehicle thats made in china. Remember volvo is now joined by the gili corporation which is a chinese auto manufacturer. It will sell the s60 sedan some time later this year in e the United States. Volvo calls it an upscale sedan. They believe it will do well here. It is the first china built vehicle to be sold in the u. S. When we talked with the ceo of volvo earlier this woo ekeek, he down played any concerns people might have regarding a vehicle built in china. They are made in belgium or luxembourg. But i think thats something our customers dont have to care about. They will deliver exactly the quality our customers expect. All right. Lets talk about gm. Its sales last year in china up 12 . Outpacing the market. They sold more than 3. 5 million vehicles in that country. By the way, that is 35 of gms global sales. So in other words were one out of more than one out of every three vehicles that General Motors sold in the world last year was in china. Its the number one market for gm and their key to profitability Going Forward. Theyre building five plants in china. And speaking of sales in china for a company and how critical theyre going to be in the future, take a look at tesla. Tesla started selling vehicles in china last year. And the expectation is that tesla will do very well there. Because it has a couple of things going in its favor. One, its a luxury vehicle. Thats going to be the number one luxury market. And china is increasingly moving towards wanting auto manufacturers to sell electric vehicles. However, q4 sales declined. They say its because of customer confusion over recharging. But elon musk says its a shortterm issue. And by the way, when we talked with musk about this in detroit, he pointed out that even though they are going to be weaker than expected in china in the Fourth Quarter, they will offset that weakness with stronger sales in u. S. And europe. Thank you for that and thank you bfor teeing up our next conversation. Were going to turn to jim chanos and get his thoughts on tesla which is less upbeat than the news we just heard. How bad is it . First of all, i mean whats your problem . This problem in china was foreshadowed by the fact i believe tesla lost the tent of its china operations earlier in the year 2014. So that may be a glimpse that not all was going swimmingly for them in china. They have a bigger problem and its not unique to tesla in china. And that is they are a very high end product. I mean the car doesnt have all the rebates that it gets here. And so its 100,000 plus. This is still the economy where the average per capita income is about 1 8 of what ours is. But you have a larger problem with tesla. Let me finish that point. The real problem is an awful lot of people who can afford a tesla right now in china have some bigger problems on their hands. That with where did they get the money and whos looking over their shoulder . And the high end market in china right now is very soft. Weve heard that. Absolutely. All kinds of things that have been under pressure because of the crackdown. Absolutely. Luxury watches, all that. Your larger argument is its a story stock and the story doesnt hold. Heres the problem i have with tesla and a lot of Companies Like tesla in this market place. And joe can remember back to some of the stories. But here is a company that is valued on the basis of its 20. 25 earnings. Projections. The ceo and analysts confidently make, were going to be making millions of cars in 20whatever. But cant tell you about the next quarter. It was three days ago we had the guy on. Remember . And i forgot what year was that . He did 2020. Wasnt he doing 2020 . So he was on and i said for real, and so you just buy this no matter what. We couldnt predict the sales in china. Right. But i said at 196, he said absolutely. Were you saying absolutely buy it at 300 . Yes. And i dont know for nothing about tesla. All i can tell you after doing this so long when you get you know as much as everybody else, by the way. When you get viewers that if you even if your eyebrow twitches when you talk about tesla, they are all over you. The blackberryians again. The cirrusians. And most of them all go back down. Well, those stocks that you mentioned theyre not tesla. They dont have a beautiful what we call story stocks. And that is a stretch to compare tesla to. But im just saying the response to people if if you say that not all trees grow to the sky, if you imply that. Ive never been screamed at like that. But you make the argument theres nothing proprietary about tesla. Design assembly is. But keep in mind that the guts of this product is made by panasonic. The battery. Yeah. You buy panasonic any time on the tokyo stock exchange. If you believe the future is electric cars and batteries and joe and i can argue and i happen to agree with him, wheres the electricity come from in. When you look at apple, they assembled the guts of their machine. But the software is there. The applians have stayed long. But also the power of tesla is tesla. The people no its the battery. Its a battery pack from panasonic. But the design and the fine. Yeah. And thats great but its a manufacturing company. Its an auto company. Its not a change the world company. And just to clarify, you are short the company . I am a potential purchaser lets leave it at that. Of the vehicle or the stock . The stock. You guys think about that for a second. A purchaser means cover your shorts. Okay. Is that what youre saying . Im a potential purchaser of the stock. It sounds like he shorted the stock. Okay. Sounds like you are short. Were going to consider you short. And you might get out. Okay. Is that okay . If we run a headline at the bottom that says breaking news chanos shorts tesla. I would say chanos is a potential purchaser. There you have it. Jim chanos thank you. Were going to continue this conversation after the break. After we figure out how were going to think of how were going to headline that one. There were some biotech ones too. But the prestechians. When we come back today, were also going to take a closer look at Goldman Sachs numbers. Well break down numbers after this. Theres a look at the stock. It is trading down about 1. 4 . Stick around. Squawk box will be right back. You want i fix this mess . A mess . I dont think whats that . Snapshot from progressive. Plug it in and you can save on Car Insurance based on your good driving. You sell to me . No, its free. You want to try . I try this if you try. Not this. Okay. Da Goldman Sachs posting better than expecting Fourth Quarter earnings. Joining us on the line is marty mosby. I hope we can show a chart of goldman to see where its trading. Because if you say goldman beat expectations, years ago that meant that the expectation was 260 and they earned 8. Is it beating it by 4 cents actually beating it for goldman . Because the stock is down. Its still a beat. But when youre looking at it, the revenues came in weaker than expected. Thats what the stock is reacting to here. The consensus revenue was smaller because it was in line or basically above wasnt it . Right. But we were expecting they could still and i think the behind the scenes the markets still thought they could be around 8 billion and what they ended up was down around 7. 7. Like a whit ter revenue number you mean. Exactly. Like while they were being conservative on estimates, the real expectations would come in better than you saw. What we had was Investment Banking weaker this quarter. It looks like some activity was pulled out with the uncertainty that stemmed towards the end of the year. Then when you also look at fixed income they dropped over 40 . Which the others dropped around 30 . So they had a weaker fixed income quarter than some of the others. What was the biggest miss . Im looking at the street account estimates right now. Nothing its like everything missed a little, it looks like. It is. But again, the two main things that we would look at as being weak this particular quarter was the underwriting that you did see with both equity and fixed income dropping off. Which in our mind probably is just some deals being pushed into the next quarter. This was a lower quarter versus others. And fixed income was weaker than what you would have seen across the street. Yeah. I see the ficc was 1. 22 which is 1. 61 estimate. Equities was above the estimate. 1. 93 versus 1. 69. Right. So equity execution on the brokers side was better this quarter. That was the one piece that actually came in a little bit stronger. So you know oils at under 50 and the 10year is under, you know the capitulation low from a couple of months back. And the euros at 1. 15 and europe looks like its going into a deflationary spiral. Hows the outlook for goldman . Gold man is a lot less dependent than the other cap banks. When you look at goldman estimates for this year from the original point they were were up 10 sop so when you look at the year, they did see strength coming through their businesses. Investment banking in particular was showing positive signs of momentum until this particular Fourth Quarter. And what you would expect is some of that positive will move over into 2015. And we would then at this price point not think that much of that is priced in. So again, they were one of only two large cap banks that increase their estimates through the year. Now going into 2015. Okay. So its you could see goldman as a u. S. Story and the u. S. Will still do at this point were still hanging our hat on that for 2015. Well once all those uncertainties you mentioned begin to kind of level out, banking activities will kick back in. So youll see a much clearer picture. Marty, thank you b. We appreciate your perspective this morning. When we come back tesla stock moving lower after jim chanos comments. And later we got the ceo of intel on the show. Were back in a moment. Push your enterprise and you can move the world. But to get from the old way to the new youll need the right it infrastructure. From a partner who knows how to make your enterprise more agile, borderless and secure. Hp helps business move on all the possibilities of today. 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At ally bank no branches equals great rates. Its a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. News makers come to squawk. Short seller jim chanos gives us his assessment of the markets, stock buybacks, and whether or not the eurozone can survive. Chip chat with intel. Watching it slide after down beat guidance. The ceo is here to defend in a squawk box exclusive. Plus Oil Prices May be good for consumers but terrible for inflation data. Well get the read on the cpi when the final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box, everyone. This is cnbc first in business worldwide. In studio with us this morning, jim chanos of kynikos associates. We have a lot to talk about with him. Plus who he wants to see in the super bowl. First andrew has some headlines. Lets tell you whats making news at this hour. Goldman sachs earnings just came across the tape. Shares at this point, take a look, see whats happening right there. You can see its up in the market just a bit. No its down. Is it now down . Always been down. Oh, right under there is the red. It was hard for me to see. I thought it was coming back. Blankfein saying it sees a continued evidence of a pickup in momentum for the Global Economy. Also intel posting better than expected earnings in revenue. But comes in slightly light. Well talk to the tech giant at 8 40. You may have questions for him, mr. Chanos. One or two. And the iea saying Oil Prices May have further to fall and rebounding not imminent. Less than 90 minutes away from the opening bell on wall street. Futures right now, the dow was down then briefly up and now its down 56 points or so. I had to be reminded Goldman Sachs is in the dow. Goldman down 2. Marty mosby was talking on why the stock was down. He was mentioning that a lot of the individual metrics were low. And there were whisper numbers for revenues that the company didnt hit. I feel like were in a macro world off of a sudden. Im not sure what to think about. Its earnings season and important. At any moment when a swiss bank can come along or paris or Something Like that its a world where it seems like theres a lot of things we cant anticipate. Last year it was all about buybacks and whether or not it truly benefits investors. The trend seems to be continuing early in 2015. But this is a 30, 40 as long as ive been doing this theres been buybacks. Our dominic chu has more. Probably depends on the situation, dom. It absolutely depends on the situation. Lets put up the numbers for you right here. People are still reporting their numbers. This is what we know through the first three quarters of last year. And that 12 months here. So if you go through september 30th of last year when we have full information for and go back 12 months Howard Silverblatt estimated that s p 500 companies bought back 550 billion worth of their own stock. Thats just in the year ended september 30th 2014. Now, if you look at who the biggest repurchasers of stock are in the s p 500, the names might not be that surprising. Lets look at the big ones over here. First of all, exxonmobil in that 12 months ended september 30th last year bought back about 16 billion of its own stock. Ibm, we talk about ibm often with regard to its share bought back 17 billion of its own stock. And far and away the buyer of its own stock apple. 50 billion worth of their own shares. And heres the interesting part. If you take a look at what happened with the s p 500, silverblatt estimates in the first three quarters of last year one out of every five s p 500 companies bought back at least 4 of their own shares in the open market. Giving them at least a 4 tail wind for their earnings per share numbers. Back over to you. Lets talk more about buybacks with our guest host jim chanos. Generally speaking not a fan. Youre not a fan. Youre not in the Warren Buffett camp that says buybacks can be a great thing. Buybacks individually can be a great thing. However, if everybody is doing it and that is really the case from the numbers were seeing if you think about it buybacks if youre a corporate ceo ofr cfo, you can buyback. If everybody is buying back their stock, theyre telling you theyre buying the stock market. Thats all theyre doing. Theyre hoping to get a return a stock market return. Corporate america has returns on capital double that. 15 to 20 pretax. By making the decision on the margin to buy back stock, theyre telling you a few things. Theyre telling you profits are not sustainable at these levels. Theyre happy to take 9 instead of in another chip plant. Would you be happier with a special dividend . First of all, theres also no free lunch. Keep in mind the Corporate Finance theory if you buy back stock and you goose your earnings because of the Interest Rate differential youre also a riskier company, right . Youre more levered. Youre not as safe with the cash on the Balance Sheet. And in many cases companies are borrowing like exxon is to do its buybacks. When companies are borrowing at these rates, we thought the rates wouldnt last for long but these are historical levels. That has been proven wrong if you look at where it is. Every situation is different. And apple has so much money and they cant they cant find right. And it was 49 billion versus ibm and thats still not i would say thats still not too much for apple to be buying back. Lets look at another example. Tech stocks that issue stock or doing buybacks to offset dilution of options. And we can ask our guest later about that. Theyre buying back a lot of stock, yet the share isnt going down as much as you would think. The most cynical thing is when the pressure for a corporate compensation shifted from cash to performance, a lot of ceos saw the way to do that was to get the stock price higher from slinking the float. That would be not. All theyre doing is engineering the price higher. But lowers the multiple. But if they put a statement in the proxy statement, the eps is their metric for getting paid. Like ibm is i would say the opposite of apple. Ibm revenues are below where they were four years ago. Theyre like at times when i borrowed money just to keep their earnings going. And you know youre short and others have been short for that reason. And ill tell you what the real travesty is beyond what you just said nap is when you have corporate buybacks and insiders selling into the buyback. And that happens a lot too. This is a real heart breaking stuff for shareholders. They bought more stock back at 80, 40. They wish they had their capital. Let me read you something. This is what Warren Buffett wrote a in a letter two years ago relating to i be rks m. What should berkshire cheer for during the period theyre going to own this company . I wont keep you in suspense. We should wish for ibms stock price the languish throughout the five years. Meaning hes in fact hoping that it languishes so they can buy back the stock at what he believes is going to be lower prices. That not make sense to you . You have to ask him. When you look at it do this then. Differentiate to me the difference between what you think is going on at apple and what you think is happening at ibm. I think as joe said first of all apple has is storing up so much cash it does not have enough opportunities to invest that money. I think that that is not necessarily the case at a place like exxon or ibm where previous will i in exxons case the returns on capital are de minimis. They cant find by any valuation metric thats what we hear again and again. Why is apple selling to cheaply based on all these forward assumptions. You cant always be right about whether your stock is cheaper or not. But in aggregate they cant be right. And thats the point. In aggregate in effect theyre buying the stock market. And if returns on capital in Corporate America are 15 to 20 , im happen foi take nine. What does that tell us about return on cammal Going Forward . And thats the real signaling. And by the way their timing is terrible. Theyre always buying back record amounts generally when the market is high. And theyre buying back nothing when the market is low. Youve seen charles work he buys back the buybacks and says it shrinks the market. I think its a concurring indicator. I think its highest at market peaks and lowest at market bottoms. Were going to have more from jim throughout the hour. When we come back the leadership baton being passed at home depot. And later inflation data that could move market. S. An update from the ceo of intel. Squawk box will be right back. Ameriprise asked people a simple question in retirement, will you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. Everyone has retirement questions. So ameriprise created the exclusive confident retirement approach. Now you and your ameripise advisor. Can get the real answers you need. Start building your confident retirement today. E financial noise financial noise financial noise financial noise we got some news out of home depot. The Company Announcing the ceo is taking on the role of chairman. The current chair is set to retire on february 2nd. Look at shares of home depot on that news. He just became the ceo november 1st. Hes also adding the chairman title to his role. Going to have a frank statue at home depots. In the front door of every home depot you walk into. Its kind of the end of an era. He doesnt look as homey and nice. He did manage if you look at that stock over his term of being there, it was an unbelievable time. I know. The previous guy bought the supply chain. Do we have his picture . Because he was like howdy, come on in. Can i help you with something . I dont know. Maybe we dont have it. But he was like the barney five. You got me and im barney fife. No thats not it. The one in the orange apron where hes smiling. Yeah. Maybe reretired it. I want to get chanos in one of those. But only an apron. I know who barney fife is. Mayberry. He was also ralph farley. Moving on. Oh no wonder were just stuck here in the mud. The squawk platinum portfolio is back. And now you can go online to cnbc pro on cnbc. Com and track the Portfolio Managers picks in realtime and read their exclusive analysis and their rationale rationale. You brought us three, jason . Three today. How psyched are you . Dont give us three average picks or are these your best picks . We would have included one more which is samsung preferred. Okay. Well, we wont put it on the screen. But whisper it . Samsung . But preferred. It might get taken over by blackberry we found out the other day. Do i have that wrong . Okay. Lets go over these. Why do you like it . First, what we do is always have a combination of combination. Were focused a lot on quality. I think we started with procter gamble. Right. So its a business where theres streamlining simplifying, theyre focusing it on the core. Its an incredible business. Youve got a company where they do 80 billion in sales. They dominate their market places from a market share perspective. And the earnings power should be going up as the increased focus yields Better Business execution. Okay. And they will eventually where are they as far as ceo now . Have they finally picked anybody yet . For ag . Yeah. I mean i just woundnderwonder. Their ond old one left and running the va. And they brought lafferty back and hes going to be 70. Not that thats old. We both know thats not that old now. Weve got Rupert Murdoch today with fox in his 80s. And mary ellison whos around 70 as well. Then youve got sumner. And we like ceos with experience behind them. Really . What a concept. Whats in ex . Next would be fox. Theyre a neighbor of yours now down the street. We actually own comcast as well. We like the media space. That was a fast move. Youll be back. Quick pivot. Nice. But fox is just incredibly well positioned. There you go again. So moving on this is great. I love rupert. I love roger. Whats exceptional about fox now is the last couple years theyve been investing heavily for growth. They could double their earnings per share. Not Many Companies have that kind of growth ahead of them. And they have good stable recurring businesses. A great platform. While that may be a head wind over the longterm its a huge growth profile. Do you imagine they will end up trying to make another big acquisition a la time warner . Were you bullish if they were to do that day . We like to say its almost all about the price. We thought with price discipline, the deal made sense. It gives you a lot of heft and the combination of the platform does make sense at the right price. We loved that management was disciplined. They killed it. They continued to execute. And along the way they did something really valued which is they moved the satellite businesses. Got a pile of cash. Did it in a fairly tax efficient way. And that was an asset which was generating nothing on the net income line. Did you believe theres more consolidation, what do you think fox will end up doing . I think fox is going to be disciplined. Theyve grown the business they have today relatively organically. Theyve done some tuck ins here and there, but theyre on organic growth story. They have the best platform. Jason thanks. Ag is still there but there was a shakeup back in october. One of the fab five left. Now there are four internal candidates it seems to succeed him. One says chanos you ignorant slut. You are arguing your book. How can fewer shares reduction over the last four months not be predictive of higher prices. Companies like ibm be a leverage and underperform over time. But when Companies Use a portion of Free Cash Flow given the no growth world of today, how is that bad . And he didnt say ignorant slut. I said that. I added that. The record just shows again that corporations buy back the most stock at market tops and least at market bottoms. It just tells you that no reflection on current profitability. But its telling you that corporate growth which every Analyst Thinks is going to happen may not be there. And it might be wise but on a signaling basis it tells us that corporate returns are too high. But it is a slow growth world as charles points out. You got to do what you got to do occasionally. All right. Did you do oracle . We did not. Do you like oracle . We do. Theyre an example of a company where they bought back stock intelligently. Yeah. Okay good. All right, jason. Thank you. Thank you. When we come back this morning, postage prices could be going up again. So buy all the forever stamps you can right now. And later inside intels numbers. A conversation with the chip makers ceo. Squawk box will be right back. Next week were squawking in davos. Squawk box is live from the World Economic forum with the biggest names in business and politics. The lineup includes blackrocks larry fink Lloyd Blankfein, randall stevenson. Plus ceos from blackstone etna and a lot more. Squawk box live from the World Economic forum in davos, switzerland. Starting tuesday at 6 00 a. M. Eastern. Profit from it. Barbara just bought a bike. She wrote a tweet about it. You cant learn much from that. But take data from millions of tweets combine that with your companys supply chain and sales data. Apply ibm analytics and expertise, and all of a sudden, you can learn which bikes to build what to make them from, where to sell them. Because barbara and the world just told you how to build a better bike. Theres a new way to work and its made with ibm. Welcome back to squawk box this morning. British Police Announcing they have arrested a man in connection with the Cyber Attacks that happened on playstation and xbox systems. They suffered outages over the christmas holiday. A group called lizard squad claimed responsibility for that. Also the u. S. Postal service is now proposing slight increases for mailing letters and postcards. But first class forever stamps will remain in their present 49 cents. Rise of 1. 15 to 1. 20 internationally. Postcards would increase by a penny. People still send postcards . The increases are the latest to achieve financial stability. If you send a letter from the United States to switzerland, does the u. S. Postal service now have to pay more to the Postal Service in switzerland to get the letter . Because they share a little bit of that have to you know the cost goes up. My phone needs work over there. Youre back on davos. Yeah. Last year i didnt pay for something and everything stopped. Everything stopped. There was an amount of data you need. Oh you have to have a certain amount. What about the first class forever stamps and how would that work under your scenario . Theyre saying the isnt there an arbitrage possibility . You know who did that . Charles ponzi. He ashrbitraged them after world war i. Theres a beer battle brewing in the keystone state. Claiming a particular Brewing Company was banned from donating free beer to the inaugural ball of governor elect tom wolfe who is a democrat. State representative says wolfs Transition Team was punishing yuengling because they supported the right to work laws. That makes it more difficult for labor unions. Pennsylvania is not a right to work state right now. And theyre calling if ar ban of yuengling in that state even though its headquartered today in pennsylvania. Did you see this piece . After a slowdown in right to work adoptions across the country, they apparently a lot of republicans at this point think that the writing was on the wall in this last election. That its time again for states that have right to work have been performing much better than other states. But well see. Also we should show you this video. Three rhinos are back home after escaping from a safari zoo in israel. The rhinos managed to escape through a side gate after a guard fell asleep. When the animals arrived at the parking lot, they were spotted by passers by who called the police who then alerted the safari. The zoo manager rushed to the site and drove them back by clapping his hands. They were caught on camera running back to the safari while being chased by the guard who has since been fired. Rhinos are really dangerous. Theyre dangerous, but hippos are too. Hippos are the most dangerous animal. There was one chasing a boat. But did you see jeb bush and Chris Christie a couple others going by. Coming up intel beating the street. Well have. Why did a panel of 11 automotive experts. Name the Volkswagen Golf motor trends 2015 car of the year . Well give you four good reasons the allnew Volkswagen Golf starting at 17,995. Theres an Award Winning golf for everyone. E financial noise financial noise financial noise financial noise sunday dinners at my house. Its a full day for me, and i love it. But when i started having back pain my sister had to come help. I dont like asking for help. I took tylenol but i had to take six pills to get through the day. So my daughter brought over some aleve. Its just two pills, all day and now, im back aleve. Two pills. All day strong, all day long. And now introducing aleve pm for a better am. Have you heard of the new dialing procedure for for the 415 and 628 area codes . No what is it . Starting february 21, 2015 if you have a 415 or 628 number youll need to dial. 1 plus the area code plus the phone number for all calls. Okay, but what if i have a 415 number, and im calling a 415 number . Youll still need to dial. 1 plus the area code plus the phone number. So when in doubt, dial it out welcome back to squawk box. Breaking news. Decembers read on cpi drops exactly as expected. 4. It is a big drop. But lets pull out things we all use. On food and energy unchanged. We could argue thats a little light. Like yesterday many were expecting this component to be up a bit. We were looking for. 1. If youre looking year over year, up. 8. On core 1. 6. Absolutely no revisions to last month. So that year over year core rate moves from 1. 7 to 1. 6 and of course we still have production. University of michigan Treasury International capital flows and a threeday weekend. But maybe one thing is most noted. Interest rates around the globe are dropping. People like Larry Summers running around the globe, probably will be at davos with you guys next week talking about we need more stimulus bigger stimulus. But in the end as we get ready for qe to lower rates in europe as japans 10year drips under. 25 . Yes, under 25 basis points our 10year just breached 170. I am sure that europe will be completely healed because their bund yield is dropping. Back to you. I know. We need qe over there. Got to get that if we can get the 15 basis points its like you know, seven minute abs. You cant get a decent workout with seven. You need eight minutes. Dont you think 15 basis points will do it . Havent they got most of the benefit . Most of what occurs in europe is bank loans. Not the bonds. The euro might help. Steve leisman is here with more on the numbers. Madame lagarde know you . Shes known me for awhile. From my musical . What do you mean . No no. Because were playing tonight. No, im just kidding. Shameless plug 762. She also gave a speech. But she had no idea that was coming from the Swiss National bank, right . That they were going to let the floor go . No, she had no idea. What else would i be talking about . Yes. She had no idea . Nobody did. Thats weird, isnt it . You would think they would go on because people would front run it. The bank itself i dont think it shows the dangers of using Exchange Rate policy wind of instead of Monetary Policy. But why didnt they Say Something this couldnt last forever. Give hints were out there to help everybody figure out. Becky, put your finger on a currency trading button and im a central banker and obviously this cant last forever. Buy buy buy buy buy. You see a drop of 8 in stocks instead of but the feds been saying that the last six months. Nobodys hitting that button. Did it occur to you that because it was pegged at the euro switzerlands currency the franc, how about all the other economies that have the euro that have where should their currencies actually be . That is the central problem with the euro itself. How do they possibly expect it to work . Well first of all, it was a political concept. It was an idea of doing oh we have all these economic reasons were going to fold in there. The concept was we have an open economy like in the states here. You would adjust the difference in it. It hasnt worked. The theory has proven to be nonworkable. I want to talk about this. Now it gets a little interesting. Rick was correct. A little light on the core. What are we watching for here . Were watching for whether or not whats happening in the headline which policy makers are i think correctly ignoring as they did on the upside because theyre taking out the volatility. Is it affecting the core right now . Its unchanged. We have a 1. 6 instead of 1. 7 year over year core cpi rate. Then were going to get the pce which is what the fed actually follows. Thats probably going to tick down to 1. 3 which is what . Its further from the feds 2 goal. So i think this question of will they act this year should act this year and was my base case. Its not anymore. Im not ready to make a firm call they dont move this year, but i think delaying it is probably on given what rosengren said early today. And talking about whether its on this year. Okay. All right. Well, i just wonder whats next. Did you get a call from jim . I know weve got to go but do you think the fed moves this year . I have no idea. I have no clue. You want to bet him . Bet him on a dinner or something . One quick thing though. Steve, maybe you have a thought on this. The swiss move whats switzerlands most important business . Chocolate. Banking. Banking. And so they were tied to the euro all of a sudden. Right. Meanwhile Swiss Banking has been under scrutiny for other reasons. Are they losing deposits by being in the euro . Thats interesting. If im a russian depositor in swiss banks, im watching my currency go down. And whereas before the swiss franc was a unique safe hain. It was a good day yesterday. If you were in francs with, it was a good day for those guys. I dont know. But im throwing that out there. Im just wondering. Where are you playing at . Because i think we have some this is what youll be no, no. This is what youll be subjected to. Joe, im not going to let it that is so you did that for paula abdul. It was a long time ago, joe. In a galaxy far, far away. I wish simon would have heard that. We have really good video of me playing. Okay . Why do they keep bringing i know why they keep bringing that up. Bullseye was canceled after that. Joe, remind me not to hire you as my agent. Lets do the video. At the end. Thanks. Good luck at the concert tonight. When we return intels ceo on the latest Quarterly Report and the future of the pc market. Check out how investors reacted after the bell to those numbers. Squawk box is going to be returning in a moment. Hi. Pete and jon najarian here in new york city outside of the nasdaq, where we bring you live daily market updates. And today, we have a very special free gift for you. So many viewers email us wanting to know our secrets on how we trade options. So we put our secrets into a new book. And if youre one of the first 250 people to call in right now and just cover shipping and handling well send you a copy for free. Look at the rate of return weve made on some of our recent options trades versus what we would have made had we just bought the stock. Theres no comparison. To make the best returns in todays market, you have to learn how to trade options. And our book will show you how to do it for free. Jon has been Trading Options for more than 30 years. Pete is one of the top 100 traders in the country. And our book will teach you how to trade options for free. So call now. [ male announcer ] call the number on your screen now for your free copy of jon and petes new book. Thats. see the number on your screen call now. You just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. Because youre not you youre a whole airline. And its not a ticket youre upgrading its your entire operations, from domestic to international. Which means you need help from a whole team of advisors. From workforce strategies to Tech Solutions and a thousand other things. So you call pwc. The right people to get the extraordinary done. Welcome back, everybody. Intel beating on both the top and bottom lines. But the guidance came in light of estimates. That put some pressure on the stock in the afterhours trading yesterday. You saw the stock moved down after the closing bell. Also raising concerns about the growth of intels mobile business. Joining us now is brian kra san krzanich. Were you surprised by the reaction . You beat on the top and bottom line. But down to guidance it was less enthusiastic than the street had been hoping for . You know i try not to watch the stock day to day. Strategies play out over a long time. It was right about in line for a seasonal transition from q4 to a q1. And in line with our expectations for 2015 which are, you know midsingledigit growth projections. Investors who were disappointed voiced some concerns about the mobile unit b. If im an investor in intel, lay out the case for me. Why do you think intel will dominate in the mobile space, lets say five years down the road. Sure. You know the mobile space is becoming more and more important. Theres fewer and fewer companies who have modem capabilities. Thats becoming a commodity that is rare and important. And so you need to have that. You need to build out your mobile capability in order to really set the pace in that area. So thats part of it. The other thing is that the customers whether you want to sell pcs or servers, most of them also want a single supply source to go for the mobile products as well. So its important that were in the mobile space. You cant be absent from that space and expect also to be in the pc business in the internet of things business and selling that same customer or server as well. You need to have this broad base of products for the customers. Lets talk about pcs in general. We know that things were a little better than had been anticipated for the pc market last year. Thats not saying a whole lot. That just says the sales werent down as much as anticipated. Where do you see pc sales . Is this something that stabilizes in 2015 . Yeah. If you look at our forecasts for 2015, one of the things weve been able to do is really transition that the company can grow and thats what weve projected. Those midsingledigit growth rates. With a pc base thats flat. So actually our projection for 2015 is a relatively flat pc base from a unit perspective. And actually a slight decline as our average selling prices as we continue to see some pressure there. But were able to grow the company with our data center business, the internet of things, flash memory and all the other products were in now. We think we can grow. So our projections for the pc a flattish year. Anything above that will be growth above our numbers. Hows the relationship with apple . The stock was under pressure earlier this week on the idea apple might not be using intel chips down the road. Have you heard anything to that effect . Have you had any discussions with the company . I just hear the same rumors. You know, heres my perspective. Our relationship with apple is strong and the products are great. Apple is always going to be choose the supplier who can provide them the most amount of capability and innovation for them to build on, for them to innovate. Theyre a Company Based on innovation. Our job is to continue to deliver parts that have that capability. That are better than our competitors. And then they want to use our parts. So i wake up every morning making sure that you know across the board whether its apple or any of our customers, we have our provide the most competitive part performance, price, reliability. All of those factors. Hey. Brian, joe kernen. I dont think we spoke. What was your education . Just out of curiosity. You have an ee guy or a physicist . Or just out of curiosity, what are you . My focus is actually from school is physical chemistry. Beautiful. All right. My question then is i myself am a little bit excited about the successful fabrication of this new electric gate over material. Did you see that at the university of texas . I saw that article. You know youre probably the first person who said physical chemistry is beautiful. So thanks. Youre beautiful. Physical chemistry is beautiful. The reason i ask this what is that old expression about the laws being greatly exaggerated. But this could extend it how far . People are saying if they are successful in the next phase that this would go another 50 years or something . You know the real thing about moores law is its an economic law. Its about not only shrinking the transiter by 50 , but youre driving the cost down as well in that discussion. And by doing that thats whats driving the proliferation of the Electronic Devices weve seen. Okay. Yeah, i just wanted to get the Positive Side of things in the future. Now i have to let chanos in brian. I dont know what hes going to say to you about it. Well thank you. Going to hell in a hand basket. Thank you professor. The floor is yours, sir. Thank you. Brian, two quick questions of the numbers. Receivables up 24 year over year versus 6 revenues. And even broader receivables minus payables also up versus revenues. Was there a stretch in the quarter . Is that okay . Is that going to come back down . Well you know for the guy who just said he was the physical chemistry guy and the technologist, you asked a complex business question. No that was jim chanos. The short seller. Yes, were pretty comfortable. If you look at q4 inventories ended really in line with seasonally where we see slight burn as we go through the Fourth Quarter. Our receivables were up a little bit. Thats normal. Thats just kind of timing of when things come in. So overall were very comfortable from where our customers are, where our inventory is across the supply chain. We think things are right in line and played out just as we would have expect. As you seasonal move through a Fourth Quarter period where, you know, the consumers buying and youre moving into q1 again. One more followup. Thinking about your capital spending, you have a 10 billion budget this year. Let me think about your depreciation, how you think about that. Because one of the concerns about intels numbers is the depreciation expands at 3 billion is almost 3 billion below your cap x. And given that Revenue Growth is single digits, is that depreciation understated . Do you worry about that . Meaning its almost 50 cents a share. Sure. So one of the things you have to understand is the capital we deploy has a varied depreciation life. Some of the capital will be for buildings and infrastructure has up to you know 20year depreciation cycles. And then other times when youre buying equipment for the moores law for our clean rooms, it may have a fouryear or fiveyear depreciation cycle. So when we project out over time were very comfortable with where our depreciation is. It does climb a little bit over time, but not excessively. Brian, i got to im going to go in a totally different direction on you for a second. Because its sort of a buzzy story going around. At ces you made this commitment to spend 300 million to increase workforce diversity. Apparently Jesse Jackson was sitting in the front row. What do you think the diversity problem is in Silicon Valley . And the other critique that was going around yesterday, was it apparently intel and a number of other Big Companies in the valley dont observe what i think were observing. Were not going to be on the air monday which is Martin Luther king day. Sure. Lets go back to the diversity and why is it important and what are we doing. So you know we wanted to go out weve been reporting our diversity numbers for ten years. And so weve been working on this problem. And weve made incremental improvement. But just like our moores law, we go out and say every two years were going to do moores law. We dont always know how to do that. Were inventing how to do that. We think the same thing. By making a bold statement that we would be at full representation by 2020, its going to push us as a company to go drive the innovation and the fixes in place to achieve that goal. The fixes are varied. If you look at our female population, technical females coming into the company, we actually are right in line with whats available. You know were hiring about 25 . Whats happening is theyre dropping out, not advancing at the rate we want them to. Thats a problem set. With other minorities there are other issues. And as far as Martin Luther king day, we have typically you know, this is an example where were going to go fix some issues. Weve typically not observed it. We wanted to give employees the most amount of choice. So we actually use floating holidays much more than fixed holidays. And so you know Martin Luther king day, many days weve allowed people to take as floating days to choose when they take it off, based on their families. I committed to the reverend wed take a look at 2016 whether we would put Martin Luther king day as permanent holiday. Brian, i want to thank you very much. Appreciate your coming on today. Well talk more right now, there are nerds in our audience and you know that currently theres something called International Technology road map for semiconductors which tells us how far we can go with Concern Technology on moors law. We can get out to 2028. Quantum computing, we need one chip. Its other things that use chips but out to 2028 moores law we can keep doing that. This latest thing im reading how you do it its amazing. You can find a new frontier. Theres nothing stopping you and a lot helping you. Technology thats with you always. This is our promise. Its never been better to wander because wherever you go, youll find us doing everything we can, so you can. E financial noise financial noise financial noise financial noise welcome back to squawk box. Retail Foreign Exchange brokers are getting hard after the Swiss Central Bank shocked the world banning its tie from the euro to the swiss franc. In the uk the broker filed ford insolvency and here in the United States fx warns it may be in requirements after sufferinged 225 million. Shares plunging in premarket trading. Check out other brokers including gain capital, a big loser this morning. Down to the new york stock exchange. Jim cramer joins us now. Goldman alumnus. Results, in you go in the journal, biggest banks lag behind as economy gains steam. The piece basically says that for whatever reason whether dodd frank or regulation or whatever it is that banks just arent participating in what is a better economy for a lot of companies. Do we cry a river or is it their own fault . Thats pretty true. I was surprised at the lack of leverage of upside for bank of america, citi not oriented but not great. Jpmorgan will tell you, we had quarter of a lifetime but i didnt see great growth. Wells fargo which everyone slammed initially you circle back wells doesnt have legal, bells has wells has good lending. Wells will do well. And so i felt that that was the only one that really had decent growth. This morning we have suntrust growth looks very good there. But it may not matter because this group is regarded as being a commodity and commodity theyre hawking is treasuries and might as well be all one big vanilla box. So no ones going to look at this group until rates go higher. All right. We had jamie the other day, jamie dimon, and i huffington post, my god, i dont know like he said something about mom and apple pie. I got inundated with anyway thanks, jim. Absolutely. Say hi to jim. Up next long and short of it with our guest host jim chanos. Squawk box will be back. Next week squawking in davos. Live from the World Economic forum with the biggest names in business and politics. The lineup includes blackrocks larry fink Goldman Sachss Lloyd Blankfein, at ts randall stevenson, ceos from aetna, dow chemical novartis and a lot more. Squawk box live from the World Economic forum in davos. Profit from it. Being a keen observer of the world has gotten you far but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Playing the long and short of it with guest host jim chanos. Rapid fire. Packers to the super bowl. Go, pack go long eurozone. Hedged. Bill ackman . Long. Favorite new york restaurant . Not long or short. Going to get me in trouble. Michael whites restaurant. Apple watch . Short. And best Power Breakfast in new york . Cnbc. Oh. Perfect answer. Thank you for being here. That was fun. Jim, thank you for everything today. A pleasure seeing you. Thanks. That does it for us today. Folks, next week well in be davos, starting tuesday. Join us then. Right now its time for squawk on the street. Good friday morning. Welcome to squawk on the street. Im Carl Quintanilla with Jim Cramer David Faber at new york stock exchange. Bulls continue to take incoming fire this morning as goldman and intel bring disappointment to earnings season. Currency brokers feeling the first shockwaves of yesterday. Dows down 10 of past 13 sessions. Oil higher after the biggest downside reverse fll years, 10 intraday move. And tenyear yield, 1. 75 Consumer Prices for december biggest drop in six years. Road map