Transcripts For CNBC Squawk On The Street 20140129 : vimarsa

CNBC Squawk On The Street January 29, 2014

Open ahead of the fed even after turkeys surprise Interest Rate hike did help to stem some concerns related to emerging markets. Boeing, jetblue, dow chemical and at t beat expectations well break them down. But yahoo shares under pressure this morning after reporting a drop in revenue for a fourth consecutive quarter due to a decline in display ad prices. A day after the dow snapped a fivesession losing streak futures are lower, investors turning their attention toward Ben Bernankes final policy meeting, the central bank expected to further pare back stimulus, but turkey, jim, at least for the open will be the story. And for a while there the turkish lira was up 3 and it looked like they impressed the market. 22 years ago we went through the cycle but thats too long for most people. They tried to stem the capital decline, i saw it last night, they forgot what happened to their country when they tried to do this. And what happened initially you thought things would stabilize and they did multiple devaluations and they ended up with hyperinflation and there was a big hiccup in our country because of turkey, but we are more interconnected now. Unless you own turkish stocks, unless you owned the biggest bank at the time, you didnt realize how badly it would hit. Right. What happens is because people dont remember or they were too young, people initially are going to say everythings fine and three days from now well be talking about turkey as a major crisis and the contagion from turkey. Thats the arc. I dont want to panic people. I want to be the opposite, if you look back at the periods of International Emerging market problems chiefly the 1997 financial crisis which Stanley Fisher on the fed he remembers. Then you had an initial decline in the s p and then a year later you were up dramatically, 865, goes to 1098. A year later you had the russian ruble crisis, a total collapse, really bad and you went from 1174 to 1096 and then you were at 1348 not that long after. You have to go through the pain as people do not remember what happened. This could be a 2 to 6 decline on the s p. Really . You think we are at the beginning of that today. I think this is what you see. These are the percentages. This is the way its played out before. Yeah. Particularly if you use the russian template. And i know that if you want to really get technical and a lot of these people trade off technicals, you take the 100day moving average the initial decline and 2 and people come in and try to stabilize it and then it can go down to 6 if people believe the markets will stay. For those new to the story, turkey hiked rates. They hiked their overnight rate. They hiked their oneweek lending rate and not by a little, 450 basis points doubling the rate. Did they have a choice . Did the bank have a choice over there . Well, no. Yes, they could have. They could have switched governments and perhaps get someone we have a little more confidence in not necessarily in the rate hike. Theyve got some geopolitical stuff going on, too. I think its important. But they all come out at one tom and people blame the fed. Youll have to hear that for a while. It really doesnt have as much to do the fed as people think because our rates havent changed. But what has to happen, carl, people have to recognize this is the beginning, has been the beginning in that country of hyperinflation and hyperinflation means massive devaluations, they will lose a lot of money. Viewers might ask why does that affect my at t . I mean, other than my tupperware which actually has a big business in turkey. Like i look for these periods and in 1992 i said come to the panic because i was young and i said, geez, this panic you mentioned this yesterday. Wow, you know, im young but i know more than everyone else because i understand the turkan, and there are people that think they understand and they reposition but in the interim they come on tv and write articles and now we have blogs where they say it has to happen here, and when the smoke clears bristolmyers is up dramatically but not before they go to 46, 47. Why do i pick on bristolmyers. Because it has nothing to did with turkey. Your playbook is to bucking up and not buy on perceived weakness, right . Right. And then what . You look at what is good yield because our rates wont go up dramatically. You have to cover what you have to cover. Yeah. Its 14 its 14 degrees out. Im not going to ignore the weather. I got to cover the weather if im a general news guy. Sure. I cant focus on some news anchor that iveever heard of which is the lead story in one of our papers. This is what happens. What im not trying to do is be complacent. Im saying this historically has happened. I remember when people told me dont worry about russia in 98 and goldman did a gigantic deal and then i put on the big short. And then, like, three months later, wow, why did i think that russia was us . This is what happens. We are a stronger economy. You listen to the president last obviously listened to the president last night, were doing better than everyone else, but theres a cycle to people who have never run money and a lot of people say emerging markets represent great opportunities. I wouldnt be playing this completely wrong. Id be saying, 12 , im getting 2 over there and then my money is cut 50 because theres a massive devaluation and then they devalue again and then the turkish economy stabilizes. You mentioned the things said in the states the president with the state of the Union Address and led with a lot about manufacturing, innovation and to a large degree speaking of the weather natural gas. Take a listen. The all the above Energy Strategy i announced a few years ago is working and today america is closer to Energy Independence than we have been in decades. One of the reasons why is natural gas. Businesses plan to invest almost 100 billion in new factories that use natural gas. Ill cut red tape to help states get those factories built and put folks to work. And this congress can help by putting people to work by building fueling stations that shift more cars and trucks from foreign oil to american natural gas. Youve had your finger on the pulse of the energy boom for a long time. Didnt mention the keystone pipeline, but is it net positive or its nothing. I did a posttextual analysis of the 2012 inaugural. He said something very similar. As a matter of fact, the next day he went to a u. P. S. Plant in vegas where they were using natural gas fuel. The stocks that people bought off this because they were worried think this was going to be a boom in natural gas gas stations were Clean Energy Fuels which is the biggest natural gas stations, the stock went from 12 to 24 going into and after the state of the inaugural and then, you know, after the state of the union four months later stock was back to 12, you had a complete repeal of the game. West port innovations, again, that went from 27 to 48 into the speech, state of the union and five months later it was at 22. It meant absolutely nothing and this will mean nothing too, because you need congressional approval to get the subsidies. Exxon is against the natural gas stations and they bought the largest Natural Gas Company they fought this issue, lets just say if you invest on this history is against you. Again, i hate to do it. Wow, im looking at the 2012 inaugural, im at 345 but maybe it will help people not lose money. Its said the state of the union is not a market driver. People did buy in big time Clean Energy Fuels and they got slaughtered. You short Energy Futures if it goes up 50 , 60 because the president was not able to muster any legislation last time and, remember, the president is an all Energy Systems guy. Solar city is the way you would play this because solar city knows how to game things and they have good congressional mind share but, you know, Clean Energy Fuels and west port people take them up because people forget 2012 because that was a really long time ago. Yes. What does move stocks is earnings and on the earnings front boeing beat expectations with the Fourth Quarter number, its current year outlook is disappointing the street. Dow chemical blew past consensus and raising dividends and expand Buyback Program and jetblue earnings surging on improved passenger traffic and stronger revenue. Boeing sees deliveries this year, 715 to 725 that is below the street, though. They have been cautious in the past. Oh, i know and jim mcnerney, we were looking for 87 to we were looking for Something Like 92 billion in revs and 87. 5 to 89. 5 and he comes in at 700 to 720. And people will sell boeing down today and sell it down tomorrow because people will be shocked and wait a second, something is off kilter in boeing and then boeing will be ready for a sustained rise. United technologies and honeywell on the show tonight, dave cody. Good. Have really given you a much better outlook. I love jim, hes one of the bankable 21s but he wont play all his cards here. Remember the most important thing that happened with boeing was the incredible deal they made with the unions which actually gives you much more upside. Im not saying that jims sandbagging. Im saying jims a conservative guy and people will freak out and thats part of the arc of freaking out that i indicated earlier. People love to freak out, why do they do that . Because they got to freak out ahead of the other guy who is freaking out. One guy is selling boeing at 131 and theres a guy that will sell it at 129, im real smart. Im ahead of that guy. Boeing did raise guidance two times last year. Its something to watch. 20year plan. Do you know what, try to get a dreamliner, you got to go to 2020 to get a dreamliner. Heres a real funny one American Airlines three guys who upgraded. Every day i say buy the stock and now three guys like it. Im getting nervous. Doug parker will be on tonight. American airlines is doing spectacularly well and this time theres no to your knowledge be able to cut prices. You know, thats another group to take a look at. Dont buy American Airlines up, thats a silly thing to do, it will be taken down, you know, with the overall market but then you probably do want to buy it. Dow 65 cents does beat 43. We mentioned the div hike and the buyback volume growth up two. Is dan loebs strategy beginning to work. I dont know. Coatings were very strong. Ag plus 13. Not as good as dupont who had more, but the feedstock down 6 thats natural gas. Some bear early on will come in today and short it 4560 saying natural gas went from three to five. But what really matters is this purchase of 4. 5 billion says we are unlike apple were going to be underneath and were going to buy hand over fist. Liveris is talking about a shock being cheap and apple should or shouldnt have said well buy with two hands. With all the divestitures and spinoffs they may change the name some say of dow chemical. They should change it to humanco. This is a very good ag story. Dupont, dow and monsanto are all feed the world. But chipotle says you better feed it naturally and we have Buffalo Wild Wings on, are those chickens suffering because if they are, im going to where the chickens are having a better time before we kill them. A rough morningphoria hoo after the companys Fourth Quarter numbers, is the honeymoon finally over for ma rissia myers, and Buffalo Wild Wings sally smith one of the bankable 21 in his new book get rich quickly. Take a look at futures, weve about all over the map over the past, say 18 hours but the implied open is down 147 or so on the dow. A lot more squawk on the street live from post nine in a moment. [ tires screech ] [ car alarm chirps ] [ male announcer ] we dont just certify our preowned vehicles. We inspect, analyze, and recondition each one, until its nothing short of a genuine certified preowned mercedesbenz for the next new owner. [ car alarm chirps ] hurry in to your authorized mercedesbenz dealer for 1. 99 financing during our certified preowned sales event through february 28th. All right. Take a look at futures. Some sustained weakness here even though liquidity it seems has been a little thin. Its been very volatile today, but were all watching the turkey rate hike and, of course, the fed statement coming later this afternoon. When you were on doing a great job, i dont know how you do it, it was on for five hours yesterday. Yeah. The futures were up nine ticks. And asia had a decent night. I cant believe how badly these people are misreading the market. The restaurant was closed and i couldnt and i had to rely on orange juice. When i see the futures up this much, what that does is set up a lot of people for a fall. Futures should have reacted immediately to turkey and they were thinking, oh, the fed doesnt have to taper. Dont be so simplistic. There was a feeling at first that the bank there did more than the market expected, right . The bank is going to cut your currency 50 in a nanosecond, you know, i put some money in turkey trying to get that reaching for that yield in 92 and i come in, how did i lose 50 of my money and then i say next day i mean virtually in a few weeks. Theres an emerging market fund trying to reach maybe theyll be out of business soon so we dont have to worry about them. In the meantime, yahoo shares dropping, display ad prices fell again. Ceo Marissa Mayer on last nights Conference Call getting Overall Company growth to a pace were happy with will take multiple years but im very pleased with our progress in my first full year as ceo. In 2014, we will continue our efforts around people, products and traffic. While concentrating our efforts on revenue. We expect the business to exhibit stable momentum with some modest acceleration in the second half of the year. We talked yesterday morning, jim, not just about display ad but what happens if alibaba begins to slow and thats exactly what happened. Pacific crest headline on their research captioned it well, alibaba growth slows, core not yet ready to take the lead. You know, i think what people dont understand is google and facebook have spent a fortune on tech. And yahoo apparently must have started in tech, 40 of their hires are in tech. These are technology companies. Theyre not content companies. Yes, katie couric, terrific get, but the amount of money they have to spend on tech to catch up to facebook and google is monumental, alibaba has to go up in order for the honeymoon to continue. Shes not going to replace decastro, but puts her in front of advertisers trying to get them to spend money on the platform. Theyre all about technology, and google has Programmatic Advertising and shes up against really big, really big, great companies. If she werent up against google and facebook, a lot of this would be a lot easier, but they are really formidable. Its, like, United States and britain on the west in 1943. Dont mess with us. You know . Because were coming for you in 44. I dont mean to analogize. Of course. The axis at a certain point, it tips against them and not, again, dont want to relate politically to who they are, but im just saying shes up against two of the great arsenals of democracy and shes the member of the democracy, too, but you cant go up against facebook and google without spending a fortune. Theyre just its just what war you have to what a war. Walmart is ramping up its internet Grocery Shopping strategy. Published reports say the retailers denver customers can order online and pick them up at a nearby store without having to set foot inside. Interesting today because the president will spend some time giving a speech at a costco in maryland. Right. Not at a walmart probably by design . You know, Credit Suisse comes out with a recommendation to go hold to buy walmart on a day that wasnt so hideous, you can see that stock up a buck and a half, saying that merchandising and tech issues have been fixed. I always find it amusing to study costco. Its one of the big three, st starbucks, costco and macys. And the president is going to a place where its cheaper do you think he has the black card or the regular card . They are always mad at me because i have the white card, the president should get a black card because its really a better return. I imagine so, but it speaks to the strategic plays the likes of amazon are making, right . Trying to make shopping which we know is challenged in terms of the physical move to shop a little easier. Here it is, my daughter goes to tulane, must be 35 degrees there because they were shutting classes. Theres parts of the country that have totally shut down. Yeah. Totally. You see atlanta today . Theres not going to be a lot of shopping but there will be a lot of amazon shopping and, you know, i think that what you have to recognize is that youre going to see numbers be bad because of the cold. That is a live picture that you are seeing. Amazing shot of atlanta, i believe. Looks like atlanta. And where the ice storms created commutes yesterday and today, jim, that lasted well into the hours. Yeah. So, i mean, just be aware the numbers are going to be tough again for the end of january. What can i say . The weather is very, very important to these places. January so far this january, seven of the top ten alltime demand days for natural gas in this country. Thats an amazing stat. Natural gas spiked to five thats why people will say, im shorting dow. But it doesnt store well. So much going on today. Well get jims mad dash as we count down to the opening bell looking at a weak open. A lot more squawk on the street from the nyse is straight ahead. Lets say you pay your guy around 2 percent to manage your money. Thats not much, you think except its 2 percent every year. Go to e trade and find out how much our advice and guidance costs. Spoiler alert. Its low. Its guidance on your terms not ours. E trade. Less for us, more for you. The day building a play set begins with a surprise twinge of back pain. And a choice. Take up to 4 advil in a day or 2 aleve for all day relief. [ male announcer ] thats handy. Just a couple days left in january. The dows down 4 for the month. It looks to be adding to the losses. Futures indicate a weak open after turkey hikes rates in the emergency meeting. In the meantime a few moments befo

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