Transcripts For CNBC Closing Bell 20150206 : vimarsana.com

CNBC Closing Bell February 6, 2015

But it seems people would rather have the tortoise than the hare. The question about this one is whether we will get the same result. Yields are moving up. Well talk to Rick Santelli about that. Gold is getting slammed. Oil has been a little higher today and it goes back to the jobs report. Its jobs friday. Well see how that wraps up trading with an hour to go. The dow right now is down 57 points as traders troo toy make sense of where this leaves the fed and what happens next with the u. S. Economy. The s p is off 5 points and the nasdaq down 15. Declines of a quarter to a third of a percent across the board at the moment today. Twohour closing bell panel. Scott cavanaugh of first national. Weve got eric stein of eaton vance. Christine short from he is estimize. Weve Steve Liesman and Rick Santelli in chicago. Steve liesman, 257,000 jobs created. The Unemployment Rate dipped goes up to 5. 7 . Regale us here. Theres a lot to regale you with, bill, because i think the big story is not so much the 257,000, its the prior revisions adding 147,000 jobs to december and november which were all part of a broader annual benchmark revision that really upped the trajectory of job growth to now an additional 15,000 per month. I dont have a chart but it looks like job trajectory is going straight up in terms of monthly growth and so what has happened, bill is that our sense of the underlying strength of the job market took a major step forward, and theres another detail in there which is that the Household Survey showed 700,000 people coming back into the workforce which is why the Unemployment Rate rose. If theres a good reason for the Unemployment Rate to rise its that. Its that a strong job market is attracting people from the sidelines to raise their hand and say, you know im back available for work, count me as part of the workforce. Im wondering scott, what investors are supposed to do now that weve gotten to the point of the economic cycle. What do you buy . Is the time for cyclicals over . We know defensives have rallied on the low Interest Rate environment. Personally i like financials. I believe with this jobs number going into this i did not think that the fed was going to be able to move and personally after this jobs number i personally think this has really opened up the door for the fed to strongly consider moving. So i believe financials are going to be very strong and also i believe that u. S. Based companies will remain strong. Rick we talked about this the other day. If we got a big jobs number you could see those yields on the long end of the curve moving back above their october lows. We didnt get the blowout number but the yields have still moved above those levels havent they . Yes, they have. And weve actually been discussing for about a week now, bill, that the flavor of the marketplace just didnt seem as though you were going to get enough buying to challenge some of those low yields like last weeks 20month low at 1. 64 established in 10s. Were 30 basis points higher on the week looks to be the highest close in basically four weeks, and it underscores were above that very important 1. 86 that gave us so many great trades really since the mid october wild session. So you really want to be careful here. Im certainly not saying that i think rates are going to skyrocket or were going to take away the notion that rates will be soft all year but trends come in many different Time Packages and i think the shortterm trend continues to be especially now at these levels we may come very close to testing what we settled at last year which is around 2. 16 , 2. 17 . We need to be careful. One thick i wantng i want to bring up the only reason we look at jobs jobs, jobs is because we always associated better jobs with more money in consumers pockets. Todays wage jump is most likely nine states that enacted minimum wage hikes effective january 1st but in the grand scheme of things, theres no better way to handicap jobs than seeing a lot of then and not a lot of movement in wages, so i think we need to pay close attention to these dynamics. Thats a point and, eric as investors start to think about whether Interest Rates, as rick said not only have already made a move higher but may make another one, what should they do about the kind of bond funds theyre in the kind of fixed income instruments . What are you recommending . What were not recommending is shortterm treasuries shortterm Investment Grade corporates but i think other parts of the market leveraged loans are good certain parts of emerging markets high yield bonds. I think if you can find with all the volatility in markets, if you can find funds that go long and short, that can take short duration positions, i think thats a great place to be. You dont think thats risky at all, eric . A lot of those calls are basically not only hotly debated, pretty reliant on the data. Basically you got to get a manager who gets every single one of those right. Are you confident you can do that . I dont think you need a manager thats going to get every one right but you need one that takes a longer term approach and doesnt rely just on instruments that have worked in the past. The great returns in the past but Going Forward i think youll need to be a little more tactical in todays markets. Christine, we cant forget all the earnings that came out this week and they had marketmoving implications whether it was disney or some of the industrials that are suffering from the stronger dollar out there. Yesterday we had a flood of earnings and today all of those Companies Reported last night have seen very very heavy volume. What have you made of what weve heard from Corporate America about what theyre earning right now . Last night was very exciting. We said social Media Companies were reporting, it was going to be very crucial. Twitter, linkedin both up double digits. Yelp down double digits. Overall the season for the s p 500 sort of lackluster thus far. Were looking for 6. 6 easternings growth. Revenues a little lower at 2 . Were still seeing that lower top line number. However, its only were only seeing growth because of a handful of companies that have come in with big beats. Im mainly talking apple. Its the Largest Company in the s p 500. Very heavily weighted. If you exclude apple growth drops almost in half to 3. 5 . You know 6. 6 not terrible but if you look over the last couple quarter when we had double digit Earnings Growth Revenue Growth of close to 5 and knowing its just a handful of very Large Companies there is some concern. Analysts have been ratcheting down forward fourquarter earnings. Theres a lot mentioned of the stronger dollar weaker picture being a problem, Lower Oil Prices. Theres some concerns in the future. I take some of that with a grain of salt because we know as we get closer to earnings season those numbers will move a little more. So far kind of eh. Its been an okay earnings season but its really the Big Companies that have pushed the growth rate higher. Steve, scott mentioned hes buying the financials. Economically speaking, how do you think the Financial System is positioned . Is it going to be a better 2015 than it has been at this point since the financial crisis . If you just work the macro on that kelly, what you see is a person with a job is a better credit risk than a person without a job. The longer that person is in a job, the better credit risk they are. The better credit risk out there, better credit quality in the broader population creates more loan opportunities. Thats something thats been missing for a while. You combine that with getting some of the regulations weve been waiting for in place and you could see a better loan environment. I want to pick up on one thing the prior guest just talked about which is if were in a time here of Rising Consumer demand and rising demand overall, better growth, then this is a time when companies you would think would be bringing on new workers, spending more money on capital spending. I think this challenges the investment thesis of the last seven years where investors were glomming onto companies that were cutting and keeping their bottom line up from a lack of demand, but now its a different environment so it might be that investors have to start to take their horizons and look out a little further over future profits, not necessarily next quarters. But, steve, they dont know what tax policy is going to be. They dont know how theyre going to be able to amortize their equipment. All the issues will be taking away from the logic you just outlined. I agree tax policy is critical and it would be great if they got that stuff together. Where i challenge su whether or not theres an unusual amount of tax uncertainty than what weve had, for example, the past eight years and balancing that on the other side rick i would put is the idea of demand and i think the companies are reasonably good at or better than i am and i think better than you are at forecasting their demand and if they see it coming it means theyre going to have to bring on workers to meet that future demand. Certainly have them trained and have the machines for them to work with to do so. Beyond the inventory cycle that is jump up and jump down and give us gdp like 2. 6 after a 5 . I think thats right. Im going to ask a question, rick that would be more interesting coming from you, but you really think there will be tax policy coming out of washington . No, and thats why i dont think youre going to get the kind of Business Investment that anybody is looking for. It makes so much sense. But todaysonin the journal nails it. When you get tax policy in december thats retroactive for the previous 11 months im sorry, but you cant plan retroactively what you didnt do in january. And that goes back, by the way, last word on this steve, but to the proposal rand paul had with Barbara Boxer that would allow companies to bring their cash back at 6. 5 . Hes trying to push five years with an eye toward making it permanent. Is that the kind of policy we want . Should we take what we can get, in other words . If that would be good for our companies if were not going to get real Corporate Tax overhaul. What we have to do is get off of this hamster cycle of these one off repatriation things. Thats got to end. You know that, i know that the treasury knows that. I believe Congress Knows that. Whatever they end up with its got to be something thats permanent because what happens is companies will wait until they get that amnesty to bring the money back. We have to come up with a better system and what is incredibly frustrating from reporting on this story for almost a decade now is everybody agrees. Both sides agree. There may be two or three Percentage Points apart in terms of what they can do and its time to it sounds really stupid to put away the stupid differences and come up with a tax plan because what rick is saying i think is real in that tax policy can hold back important investment. I would think so. Agreed steve, yeah. Thanks guys. Everybody have a good weekend. Appreciate your thoughts. Thank you. By the way, dont miss Steve Liesmans exclusive interview with treasury secretary jack lew coming up monday morning first thing, 6 00 a. M. Eastern time squawk box. Coming up 50 minutes to go to the close. Markets are taking a leg lower. Well see if europe could spoil the party with the dow off 90 points. Back below 17,800. The nasdaq is off half a percent, the s p is off 7. Clearly a huge week for stocks. The dow on track to lock in its best weekly gain in over three years. Plus, we have the ceo of etf jind wisdom tree speaking with us exclusively. Well find out if he thinks these gains are here to stay and if hes seeing more investors plunge into the markets right now and where he sees stocks ending by december 31. And up next the price wars heating up in the pharmaceutical industry. Meg terel elterrel with a special report report. Were back in two. [ male announcer ] approaching medicare eligibility . Dont put off checking out your Medicare Options until 65. Now is a good time to get the ball rolling. Medicare only covers about 80 of part b medical costs. The rest is up to you. Thats where aarp Medicare Supplement insurance plans insured by unitedhealthcare insurance company, come in. Like all standardized Medicare Supplement insurance plans they could help save you in outofpocket medical costs. Taking informed steps really makes a difference later. Meg terrell with a special ™. Call now and request this free decision guide and explore the range of aarp Medicare Supplement plans. All plans like these let you choose any doctor or hospital that accepts medicare patients. These are the only Medicare Supplement insurance plans endorsed by aarp. Call now and request your free decision guide and start gathering the information you need to help you go long™. Its like a tv curse. This happens on golf coverage. When you mention that a golfer hasnt threeputted all tournament immediately he or she threeputts. Weve been mentioning the dow is on track for its best week since december of 11 and now were not. Weve jinxed it. The dow falling back. Were down 85 points. Anything more than 75 points or thereabouts and we dont have it. So right now were seeing the lows of the session for the industrials, for the s p, and the nasdaq. Look at the ten sectors inside the s p 500 index. Two are positive everybody else is negative. Those financials he likes are trading higher and telecom leads the way. Weve got some breaking news on greece. Michelle carusocabrera has the details. Hi, michelle. I feel like theres breaking news at this time from greece every day this week. Theres a new headline from the head of all the European Finance ministers who frequently get together. The leader of it has come out and put more pressure on greece today saying that they have got to apply for a bailout extension by february 16th at the latest or else theyre going to run out of time. This is significant because, remember europe is very process oriented place. You have to get this done by this date or else theres a whole Ripple Effect that follows on. What this means is if greece runs out if greece hits february 28th when their official Bailout Program expires, lots of things go into effect. Thats when its quite possible the ecb could cut them off completely, could lead to things like capital controls et cetera. Everybody in europe moving the calendar forward on greece trying to get them to come to the table now and make a decision now and greece keeps trying to push it to may, june july et cetera but everything is going against them at this point and that may be why we see the dow moving lower. Michelle thank you so much. Well keep an eye on it here. Off 85 points. Were watching the 75 point level to see if this is one of the biggest weeks in some thim. Who would have thunk it. Price wars have begun heating up to the pharmaceutical industry. We saw it play out in real time with gilead stock. Gilead shocked its investors when it says discounts to its huge hepatitis c drugs will be bigger than the street anticipated. 46 compared with 22 in 2014. Now, gilead said that was partially due to more patients covered by public pairs like medicaid and the va receiving the drugs at rebates of more than 50 . Its also due to increasing competition. The list prices range from 63,000 for eight weeks of treatment to more than 94,000 for 12 weeks. But, of course they represent a huge advance over previous drugs because theyre curative for most patients and carry fewer side effects but the drugs have sparked major pushback and drug pricing pressure has become the Biggest Issue with the expectations that drugs for cholesterol, cancer and other areas could be next. Back to you guys. Meg terrell, thank you so much. A big story this week and now more reaction with someone who has been very involved in the drug pricing story. Essex press scrips chief medical officer steve miller. Steve, welcome. Thaction for joining us today, and i guess youre not surprised ed by this discounting going on. You signed a deal to be the exclusive carrier and now thats what gilead is doing with cvs. Are we in the midst of the beginning of a major price war in the drug industry . Thanks for having me. You know i think this is a new era were entering into so we have more drugs coming out that are competitors to existing products and it gives pharmacy benefit managers like express scripts to try to get better value for our patients and clients. It sounds like thats what is most important for you guys driving that better price for your customers. Almost the old walmart model, isnt it. Exactly right. Weve gotten to the scale that it really makes a difference. Were talking about we negotiate for 85 million americans, 25 million just on our National Preferred form edred form ewe lear. However, you know what the critics are saying about the deal you struck for example. Youre essentially shutting out patients who could receive gileads hep c drugs. Are these drugs interchangeable or what do you say to those saying this exclusive deal shuts out certain patients and takes the decisionmaking away from doctors . So these cases are actually unique because you have to have drugs that are clinically equally important. So in this particular case you had two drugs that both have a 95 cure rate. The real difference between these two products is the gilead product you take once a day, the other product you take twice a day. We think for 10,000 difference patients are willing to take the drug twice a day for just 84 days and get to cure. But youre right, this wont

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