Transcripts For CNBC Squawk On The Street 20160415

Empire comes in ahead of expectations and well get Industrial Production in just a few minutes. Our roadmap begins with a close eye on dow 18k and what to expect from doha. Citigroup sharers are trading in the green, this after the Company Reported a better than expected quarter despite a decline in profits. And senator sanders going after it again with jeff immelt in a very heated debate in brooklyn last night. First up stocks looking to extend their winning streak. The dow ending within 74 points of 18,000. Meantime Oil Prices Falling this morning ahead of the meeting of the Top Producers in doha. And the chinese economy grew 6. 7 in q1. Thats exactly in line. Theyre starting to deliver on the governments numbers. The fact that they couldnt deliver the governments numbers is showing that theyve really got their act together. By the way, the state owned Companies Getting a little more leeway. They generate stuff they dont need. Oil, i think it was amazing to me that it kept ramping right into the meeting. Its very hard for the market to rally. Its very hard. Proven to be a statebid market. Oils got to start churning up. I still think chinas coming back, but this oil numbers got to be its got to be up to 43, 44 in this meeting, and its not going to. Of course, the gdp number is the slowest since 09. Right. Fixed asset number, it got a lot of peoples attention. The estimate was 10. 4. 25 of the exports, they go right to europe. So if europe gets better, china, theyre much more connected than our economy. I still believe that the dumping is going on everywhere because they dont have the need. The values of houses, theyre getting inflation. The rate hikes are working, but i do think that obviously so much in china and oil i think chinas fine. Oil is not. Theyre let manager think that this meeting is going to be a fiasco. In china, youre talking total bank loans up 25 jeer over year. Those are leak well, i mean it doesnt appear that theyre dwiting as much growth for flooding the market with as much money as they are. Thats true. Not yet. I think this is the lead indicator you want to look at. This shanghai deposit didnt go down. We talked about it all the way down and then it went up and we didnt care. And the Service Sector is not coming around for the way they anticipated. I just think youve become sanguine on china. I am becoming san jean. Yesterday you were talking the regime. I was talking on the regime. I were hoping they were cracking down. Zombie companies. They have a lot of zombie companies. They do. If things are starting to look better, will they keep cracking down or let it ride . I think they might let it ride and it might be up to every country on earth. Right now it comes to the i. T. You know, the trade commission is looking at dumping aluminum. Look at what happens is they put the tariffs on. Things more than double. People have to protect themselves from china. This has become more universal with politicians, almost universal. Obama, very strong protection. Much stronger than people acknowledge. Speaking of emerging markets lets get to citi. First quarter earnings of 1. 10 dollars. That beats estimates. Revenues above consensus. Citi grew loans into deposits but added marketsensitive products. Trading down 13, they had guided down 15. Ib revenue down 27. They guided down 25. March was good. Aprils in line with march. Thats a very good sign. This is 72 of tangible book value. If they get the highs, they can buy a ton. Like the fact that Citi Holdings is going away. Remember, that Citi Holdings has been real. It will go away by the end of the year. A magnificent work by corbett corbat. I think corbat is going to be the worst of first in terms of what hes done with citi. This is very encouraging. Really. No. I just made everything i just said. No. I listen to what you have to say very seriously. I do a serious amount of work so i think its good you do that. Im aware. I worked on this and the phillies. Dont even start with the phillies. Ill start with corbat. What about book value . Lets work from there . The Biggest Discount theyve ever had and youre going to be buying a particular for 72 cents when you get that buyback. And you think these banks will trade back to book . If the government decides that thiel return, corbat will buy dividends. If you want to put rangings in, its going to be jpmorgan, then citi, then bank of america, and then wells. Thats interesting. Jpmorgan down 11, then citi and b of a with 16. B of a is its kind of interesting. They buried the lead. Their mobile app is struggling. Its by far the Fastest Growing app. As your app grows, youre allowed to cut people. Lets say i check my banses three times a day. That costs them money. If i can do it on the app, it doesnt cost them money. Their growth was extraordinary. It wasnt like they went to the q a. You know how i like to write conference calls, how my next life i would advise conference calls. I mean dont bury the lead, mr. Moynihan. That is the story. They have the best tech. The best tech. Speaking of that, how about this bloomberg piece. Theyre cutting out airfare, hotels, entertainment. What are they doing there . Theyve done a lot on transitioning to younger bankers. Thats right. In his letter in the annual report, blankfein and he focused in part on how theyve been able to reduce expenses and reducing head count. Theyve done that, but apparently theres a lot more. When i worked at Goldman Sachs and the professor at bucknell, i had dinner the other night, hes a great professor. When you submit expenses, you travel. Hotels. I mean you try to find the cheapest hotel. I was a motel 6 guy when i was on the road for them. I was going to syracuse and i was like, do you have any roadways . Here, roadways . Mcdonalds. You werent sharing rooms like they do at walmart. No, but you did not do i mean if Lloyd Blankfein looked at my expenses, he would say, cramers good. He takes the subway, the rocket up town number black car for cramer. Nifr took a black car once for goldman. Are you oust your mind . When i went to go see balmer, microsoft, when i brought that in, paid for it myself, the airfare. I love it. I worked for bill kruver. Geez. Hes the best. Hes the best ever. They never let that stuff go. The most intense president ial debasement Hillary Clinton and Bernie Sanders squared off ahead of new yorks tuesdays primary. Sparred over a number of issues including wall street banks, minimum wage. Bernie sanders took aim at jeff immelt once again. Take a listen. What we need do is to tell this guy immelt whos the head of General Electric, he doesnt like me, thats fine. He has outsourced hundreds of thousands of decent paying jobs throughout the world, cut his work force and by the way, it turns out that both verizon and General Electric in a given year paid nothing in federal income tax despite making billions. Of course, the two sides have been going at it. Immelts oped. And sanders earlier in the week saying i welcome their contempt. Yeah. This is a new philosophy. I think that those of us who follow technology companies, i think its interesting that hes not thinking tech. The Tech Companies make nothing here. I mean there is no reason for jeff immelt to have a factory in vermont. He could have that factory in mexico and pay those people 3 an hour with no controls, no health care, no unions, but he keeps it in vermont. Mr. Sanders tax plan includes what he believes will be 100 additional billion from corporations that dont pay their fair share, a trillion over ten years. Of course, thats not the key part of his tax plan which evolves around a Financial Transactions tax. If you look behind the research it starts with the Caveat Emptor from the guys who wrote it in 2012 but it would call for 50 bases points. 50 basis points on bond transactions. They think it would perhaps cut trading by 50 . But raise 300 billion a year according to the research. To make sure nobody trades and we make a lot of money. I dont want to make fun of the guy. Hes a senator and theres only 100 of them. How does he feel about the workers . Ted cruzs tax plan is worth a read too. When we come back, a courtroom showdown today between a government and a firm which shows shares of fannie and fredd freddie. And Terry Lundgren. Were going for four Straight Days on the dow and the s p. More squawk on the street from post 9 in a minute. Seizing opportunity. And id like to. Cut. So im gonna take this opportunity to direct. Thank you, well call you. Evening, film noir, smoke, atmosphere. Bob. Youre a young farmhand and e trade is your cow. Milk it. E trade is all about seizing opportunity. We believe in the power of active management. Management, by debating our research to find the best investments. By looking at global and local insights to benefit from different points of view. And by consistently breaking apart risk to focus on longterm value. We actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. Breaking news. Lets get to rick santelli. Down 0. 6 on our production. Of course, thats a month over month number. A last look also, lost a tenth from down a half of 1 . Now stands down at 1. 6. Lets look at the ratusage rate. Theyve been sliding. Thats well below the expectations were looking for. Also a downgrade, the last look, february originally received 76. 7 now stands at 75. 3. No matter how you slice it, its a tough one to quantify and various aspects of mining and economy all figure in. It seems to have turned. All in all, lots of questions going on here. David fab eric back to you. All right. Thank you very much, mr. Santelli. Stand by because i know youll be interested in this story. In about a half an hour oral arguments are going get in the way between Perry Capital, Large Hedge Fund here. Now, the case states back to the governments decision in 2012 to change the terms of its bailout of fannie and freddie. What had been a payment of a 10 dividend became a sweep of all the profits to the treasury, and those profits have amounted to 250 billion in total versus 185 billion that was contributed for the bailout. Perry along with other shareholders sued contending the government was taking money from shareholders. After a loss in 2014, perry appeal and new documents unsealed this week which seem to poke a hole in the golfs defense in its change to the approach to the gncs and their profit may bolster an appeal. The government contends funneling it would help to protect tax players from future expected losses but Perry Capital will argue the government knew just the opposite. Profits were about to explode and theyll rely on a deposition of a former ceo of fabny may in july to make their point. Heres Perry Capitals attorney matt mcgill. The ceo testified that fannie mae and freddie mac were going to be profitable for the foreseeable future and that would result in a writeup of some 50 billion of deferred tax assets and it was at precisely that moment, literally days later that the government made a decision to take all the profits of fannie mae and freddie mac for themselves. Mcfarland testified that she told the treasurer on august 9, 2012, that fannie mae was, now, quote, in a sustainable profitability, that we would be able to deliver sustainable profits over time. Now mcgill says the reasons the treasury and faa cited for sweeping profits have been shown as false given the testimony received since perry first lost in court. In the lower court the government told a story and the story was in 2012 fannie mae and freddie mac were on deaths door and that the only way to keep them alive would be to do this trade where they would trade this dividend for a nemt worth sweep. What it showed is that was false from the beginning and this, of course, is always happening right at the moment, at the very moment that the government is experiencing a crisis over the debt ceiling. It just so happens that the billions of dollars that poured into treasury over the course of 2013 staved off the debt ceiling crisis for several weeks. This morning perrys lawyers, mr. Mcgill, mr. Olson from gibson dunn, theyre together, and, of course, the government will be in front of the d. C. Court of appeals making a case looking for an order that will come from the court, they hope, that vacates that third amendment. They should get a ruling lets call it anywhere from six weeks to nine week, Something Like that. A fascinating story that continues to be followed closely. A lot of twitter traffic earlier in the week when the documents became unsealed and therefore were allowed to be in the public realm as will the arguments today. Preferred or thats what perry holds. Its also what berkowitz and fairhome where trials were being used are going to be useful, they believe, and then youve got ackman in a lot of the common and some prefer. But, jim, if the d. C. Court were to rule in perrys favor, all of the all the equity related to these gscs would go up as they did this week when we at least saw these documents for the first time. I want to caution people. Thats a very what we heard was a very compelling argument but the other side has been winning. They didnt even get to make real oral arguments. Right. Well see. D. C. Court of appeals has heavy hitters as you know. Douglas ginsburg. They either have been considered for the Supreme Court or are always talked about. Professors of mining. Well find out about that. Well get crime eers mad dash, count down to tauping bell and take a look at another premarket. The dow is coming off its best close since july and the s p, its best since early november. Dont go away. boy ma, pa why do we settle for cable . mom because were settlers and thats what we do. girl but with directv and at t, you can get your tv and Wireless Service from one provider. dad are not we your providers . Do we not provide you with this succulent jackrabbit pie . This delicious graywater soup . And a single lick of the family lolli every harvest moon . vo dont be a settler, get a 100 reward card when you switch to directv. All right. We almost got another week in the books. Of course, villanova is going to ring the opening bell. Mr. Cramer may have had something do with that. The wildcats. Theres the coach up there. All right. Time for the mad dash as you hear the cheers on a friday. Where are we going . This may be a deal too far. This is 57 million shares being priced at 9. 25. This stock did go out much, much higher. Ten and change. Heres the problem. When oils down as it is today, they may not hold. This is the one right ahead of doha, but it is a terrific discount to the blast sale. Remind everyone of what ensco does. Theyre an oil driller. If we were to look at it a couple of years aerks it used to have a very big dividend. If you believe and i dont. Deep water drilling is so out of favor. I mean we saw energy 21 the other day. Deep water drilling. It is best. If you can bierks get them in. They upsized the deal. Its going be 50, youre going to be able to flip and make a little money. I want to warn people all these deals have worked. Initially they not when oil dips. Pioneer did. All these primary offerings from these oil related companies right pioneer, devin, newfield. Their coffer is getting more money in. When you listen to the Bank Conference calls, you know the bank are pulling the strings here. When they say raise equity. Bingo, they do equity. But they made you a fortune. By the way, we want to be the underwriter. No. See, the banks, of course, they say that. I mean keep this in mind that this is the fight. What better than transocean. All right. All right. Weve got a few minutes to the opening bell. This is the ncaa champion, villanova wildcats will ring the bell. Jims going to talk with head coach jay wright. The call just came in. Shes about to arrive. And with her, a flood of potential patients. A deluge of digital records. Xrays, mris. All on account. Of penelope. But with the help of at t, and a network that scales up and down ondemand, this hospital can be ready. Giving them the agility to be flexible reliable. Because no one knows like at t. Youre watching cnbc, squawk on the street, live from the Financial Capital of the world. Opening bell in minutes. We got citis earnings. That comes in advance of next week. 103 s p names next week. Goldman, netflix, ibu, qualcomm, you name it. You cant really do homework all on this. Theres too many. Thats the way it is. Meanwhile Industrial Production was no good. You heard santelli tell you down 0. 6. Mining down 12. 9 year on year says a lot. Troy global got an upgrading. Caterpillar is upgraded. Be careful. Those stocks have run. Theres the opening bell. The nasdaq today, its cnbcs make it, a storytelling platform fueled by americas on tre pentrepreneurial spirit. Over at the big board you can probably see by now its the villanova wildcats celebrating their ncaa victory and jim is going to talk to jay wright and the teams captains in a few minutes. You must be thrilled. I am. This is philadelphia. We havent had much to cheer for. I did my show there in 2013. Just love the school, love the people. Love the model. Were going to talk about how their model is different. Yes. And maybe coach wrights future. Coach wright says hes never going to leave nova. Very nice. What have we gotten to. A couple of other things going on. Actually today mcdonalds. I was looking at a chart of fast food versus casual dining. Theyve been showing off at their operators conference. Now, remember, estabrook has done a remarkable job. Hes going introduce whatevers been best working around the world and the kiosk moving in and out. Hes going to do loyalty too. Hes going to get to everything. You know, the idea that you dont have to wait in line youll not have to wait in line. It would be really fabulous. Estabrook is very forward thinking. I mean because youre early here and right in terms of the movement of the stock. You liked it below 100 as i remember on the turn. Yes, i did. And you believe in estabrook. Here you are up significantly and you think theres a lot more to go. I look at what Howard Schultz has done with technology and starbucks and what patty doyle has done with dominos and i know that mcdonalds has been the least technological of any of these company, even panera 2. 0 as they bring in shakes. Technology gives you another leg up and you havent seen that with mcdonalds. s ta brooke has seen what worked in australia and in europe. He really gets it and everybodys bought in. The franchises have bought in. These are a remarkable figure. Hes really energized that. People want to have a mcdonalds franchise. Today by the way, the anniversary of ray krocs first restaurant opening in des plaines, illinois, what a story. What a story that was. It sounds like you dont take a gander ahead of this meeting. No. Look. This meeting remember, the chatter of this meeting started february 11th and if you take a look, thats when its streaming 26. Theres no way anything that great can come out of the meeting. I understand that. But, remember, i think it has. Been underneath them. Thats different than where we were. The demand has picked up around the world including china. Yesterday the iea came out with statistics. The u. S. Is beginning to drop. Its finally dropping really hard. If youre on the wells fargo conference call, you know thats a major concern. Theyre the kind of companies you may not want to lend to. Be aware that these marginal producers really theyre getting driven out. Yes although there is this belief if they get higher, theyll come back quick sflie thats true. Theyll sell futures oil if it gets that high. Because they know they can lock in. Thats what they know they have to do in order to please the banks. At the same time theres nothing you can do if you cant start new drilling because its a little too expensive. I saw a downgrade today. Actually the finest drill never the country. Then youre a little concerned. What are you hearing about baker use by . There are various reports. You saw them reporting on the potential of carlisle being a buyer. By the way, were getting close. April 30th. Either one can walk away and theres a thought they could use to do so. The breakup fee is 3. 5 million. As of now, you know, we need an update on that, but it appeared they were willing to go to cord against the doj when it came last week and a lot of it was focused you were talking earlier it was focused on deep water drilling. It was all about deep water drilling. Every market theyre within deep water. I understand deep water drill the reason they like it is theres millions. Its not just these are short lived assets. By the way, exxon field started in 1928. They did it. They bought another oil company. Paid too much money. But deepwater drilling makes a lot of sense. Chevrons got lots of coming on this year. The problem with deepwater drilling is it costs a fortune going in and the only ones you see going are the ones that have been much in advance that did years ago. It takes a little time. Lots of discussion in fo footwear. They say theyre seeing a lot more promotion in mens basketball, teen highprofile names. This is the mall. The mall is the theme. I mean i was asking the guys from gamestop yesterday, he said, listen, their mall traffic is not as e everybody else. Canon admitted its terrible. Footlocker mall, hearing numbers down 15 , 16 , 17 traffic. The mall is going away so fast its kind of astonishing. The really good retailers are amazed at the millennials. Theres also some thought that people still go to mall bus they have their mall with them and its a social experience and then they buy stuff on their phone anyway. Them they take pictures of each other. The only store i know thats doing well is sephora. The reason is so they dont have blemishes when they whack out of the apple store. Who says i dont do that anyway. How come i break out like a teenager if i dont take it off . On the subway, you know were going to talk to lundgren later this morning. Hes still making some money in that segment. Youve got ask him. The mall traffic is hideous. Im not kidding. Im talking secular decline. Talking about declines, im looking at allergan. Are you kidding me . Its up 28 cents. Thats fine. I mention allergan because other than the day that brent saunders, ceo sat here the morning after the deal with faiz er pfizer, that stock has gone down every day, jim. There were reports of negatives from some research i had never heard of, but its one thing after another. You talked about it. 217 on this stock. Do you now take a look . It seems to be sold by everybody. I did a consult with my travel trust. We had some allergan. I said, listen we bought some here at 220, probably will buy some at 200. The fact is theres a note out saying theyre going to indeed close. Theyve got a little more than 40 billion in debt. As david said yesterday, they can go buy someone. Thats the idea. Thats what theyll do. Some say they wont get there. I have a pretty High Conviction on it. You listen to sara eisen and jack lew yesterday, secretary jack lew, and you do get jittery about what can and cant happen because it seems like everything that hasnt everything thats gone wrong has gone wrong from companies. Verizon was it. Yes, right. So just be aware that allergan being up is like a threepoint play with four seconds against unc. It doesnt happen all that much. No. Its a rarity. At least lately. You know, im waiting for unc to stop and play at the floor rather than going half court. How about the game opener for nfl in september, carolina at denver. Thats smart. Yes. How about the two home games around christmas. The phils and eagles. The wife doesnt like that. Thats all right. I can tell her were going on vacation to philadelphia for a week. Who would want to do that . W. C. Fields. Its almost perfectly flat lets get to bob on the floor. Its almost perfectly flat. Oil is down and not surprisingly the stocks are down, but not as much as you might think. Even between oil and energy stocks. The more important story is financials. Not only a story today but a story all week. Citigroup, you see it at 2. 5 on its earnings. Good nuchlt regents financial. Also good enough. Not great, not outstanding. Some flaws. Not as bad as many people feared it might be. There you see it moving. I want to emphasize what its looked like for the week overall. Regions up, bank of america, jpmorgan, even wells fargo. Remember, this is unloved of all the sectors. Teen value guys werent picking on them. This has changed a lot this week here. We have seen modest loan growth in most of the big names. And, of course, while there has been some provisions set aside for possibly defaults on the energy book and some of the marginal producers are being squeezed out, we have seen comments that they have lowered the chances for big energy defalls down the road. There are defaults but the concerns about really big ones have mitigating it as you see oil has moved up. Of course, the interest has come up and that interest margin we have talked about is very tough for a lot of banks. Tough for regional banks. Thats because they get most of their money. They get a lot of their money from loans. They dont have a lot of the trading that the Big Money Center banks have. So they need that Interest Income higher t regional banks, to be able to make their money. The bottom line here, a pretty good week for most of the bangs. I want to turn our attention to the other. The ipo market finally starting to open up. Thats the exchange operator. Thats good news. Thats high theiren the initial amount of shares offered. The price stock, 1719. They priced at the high end of the range. Take a look at the background on them. They found that in 2005 they are the Second Largest Exchange, they say, by for equities by market share. They have 21 of the share of the equity volume and theyre most famous for a 2012 trading. They caused quite a stir in the markets. Apparently there was some kind of system overload. The system itself crashed. Im trying to be fair to everybody. This was an epic embarrassment. The rest were erroneous trades and a few pennies. My question here, when did it happen, when is the stock going to reopen if at all. And four years later it is supposed to reopen today. I anticipate it will open around 10 30 a. M. Eastern time. As for whats next. A lot of them coming. Three big naples, mgm growth properties, american renal, and secureworks. Lets see if we can get this busy going again. Guys, back to you. Would that be something . That would be something. You see a city. Listen, no ipos. Obviously goldman cutting expenses, that would be good for goldman and morgan stanley. The equities business has been ill. Its been dead. First quartering nothing. You can see why these stocks would go up. By the way, there was a downgrade to sell kwels fargo to piper. Wells is the one thats become the whipping boy this quarter. This would be big for goldman. There have been no deals. They kill us and get it. If they kill the deals, the heck with them. Well come at them with everything weve got. Got it. Lets check in with rick santelli. Good morning, rick zbhood morning. Were going to have a longterm charge of utilization rates. But today merit as look. This chart goes back to the summer of 2010. Why did i pick the summer of 2010 . Because at 9 15 eastern when i brought this number out, i knew it was weak and i talked about the trend being lower, but the read of 74. 8 is the lowest since august of 2010. We need to factor that in. Lets look at an intraday of tens. Lets be fair. We test the upper end of the range which has recently been around that 180 level. Yields are definitely up on the week but they dip down a bit on the day versus yesterdays close. Boy, you know, the 08 09 level held. Does that mean were done testing it . Im not sure. Itsing is cant it held that level. Weve been talking about the hyg. This is the investment grade. Wow. What a moon shot. Reach for yield. Even yesterday and the day before, tens and 30s were invokeded on the auctions. A dollar yen. What a week a difference makes. Were toying with, 109 now. Its been higher. When you look at the year, you get a bit depressed, thats for sure. Carl, back to you. Thanks so much, rick santelli. When we come back jim is going to talk with jay wright, the head coach of the villanova wildcats. Meanwhile promoting its make it phenomena. Well be right back. 98,352 whats that . The number of units well make next month to maximize earnings. Thats a projection. No, its a fact. Based on hundreds of proprietary and open data sets folded into a realtime, actionable analytics model. Nine. Eight. Three. Five. Two. Youre not gonna round that up . You dont round up facts. Powerful analytics driving decisions for the worlds most valuable brands. Every Auto Insurance policy has a number. But not every Insurance Company understands the life behind it. Those who have served our nation. Have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. From from the opening bell, wildcats. Threepoint shot at the buzzer. Coach jay wright. Senior captains. Right . I want go right there. This is a different kind of program. You go to school. You graduate, you graduate. Tell us about the program, why this is not just another team, okaysome. Its important to us. We get guys that want to come and be a part of something bigger than themselves, you know. Weve got a 100 graduation right. Every guy thats been there for four years, they graduate. Thats why they can be here today. Theyre way ahead. Kris jenkins, he made the shot, hes had a dream to be here. He watches. Thats the essence. Repeatedly, we all watch the games. Always undervalued like the stock. What was it like to be able to play and realize that even the great announcers say, look, these guys cant be counted on and then blow out everybody. I think its an attitude we have every single day in practice. We try not to listen to anyone on the court but focus on the 25 to 60 feet. How about the teamwork . When i see everybody play, i dont think, two years and gopro. You want to go four years and finish and get a degree. Definitely. Everyone understands as soon as you come in the program, were hard workers yochl u start working from day one. Youre so good you can leave early, so be it, but if not, you get to the point where ryan got to. He has great leadership. Want younger guys who lead great examples. The idea i see about villanova is teamwork, which is what you get in business. The great businesses that win are ceo inspires, everybody bice in. It seems like the noble way to do things. Thats what we want. We want each guy to benefit individually but we want him to believe that the best way for me to be successful is to give everything to the team. Both of these two will graduate on time and i think they will play in the nba, but its because they gave it in to the team, being a part of villanova basketball. Thats going to get them the result they want. And the idea weve seen you grow in your role, you want the best guys you can coach. Not necessarily the best players, right . Exactly. We want the best most talented people that believe if i go to villanova and i become a apartment of that program,ly be the most successful i can be as opposed to a guy that says im a great player, i want to go to villanova and get out of there as fast as i can. I want to be a part of it and i want to believe in it. Coach, you yourself obviously other opportunities have been open to you. You seem to bleed nova, bleed wildcat. Jimmy is putting me on the spot. I know youre staying. I know youre saying. I love what the program is about. The university, our president. Father peter donahue, our athletic director, they believe the same thing. They want these guys to graduate more than they want them to win a national championship. So do we. It just fits. I love become a part of that. I love the family. Father peter sat with my dad during the show in 2012. My father was so proud. I spoke to your dad right before the game. He didnt want to talk about the stockmarket. I said, listen, i think your sons about to win the national championship. But obviously its family place, right . You guys are very much involve and your program is very family. All the families are at the games. As a matter of fact, some of their parents are here today. But our group of parents that come to the game, theyre like theyre like a mob, man. They come together, they stick together, and, you know, we have a saying once a wildcat, always a wildcat. Thats for our players, the parents of the players and all the family members. We want them to be part of this for life. Were very proud of you. I want to thank you so much. Im going go back to carl. Congratulations once again. Thank you. Great stuff, jim. Well get stock trading with jim in just a moment. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. We believe in the power of active management. Management, by debating our research to find the best investments. By looking at global and local insights to benefit from different points of view. And by consistently breaking apart risk to focus on longterm value. We actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. Man, im glaaflac c pays cash. Isnt Major Medical enough . No whos gonna help cover the holes in their plans . Aflac like rising copays and deductibles. Aflac or help pay the mortgage . Or child care . Aflaaac and everyday expenses . Aflac learn about one day pay at aflac. Com boat blurlbrlblrlbr omg. You are so funny. In the time it took me to type that, if i were driving 55 miles an hour, id have driven the length of a football field blindly. Not funny at all. Dont text and drive. The more you know. Great time for a shiny floor wax, no . Not funny at all. Dont text and drive. Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Nice work. That was amazing. Theyre fabulous, my hooers. Fitbit. Pipe eer comes out and says stick with it. They keep it as a whole. This is one of the most if not the most controversial stock in the market right now because the bulls say the health and wellness play, which im saying, target gave it to all of their employers, the bears say its just a fad not unlike gopro and i have to tell people, look, youve got to judge. I believe, but ive been dead wrong. Winner, jay wright, loser, fitbit. Jim studied up this weekend. Yechlt hs. Very nice. Thats such a big win. They said it could never happen. They did. The odds were so bad. Wow. Like molly no show in the movie the gauntlet. Congratulations to you. Thank you. When we come back an exclusive with Terry Lundgren. Dont go away. If youre going to make a statement. Make sure its an intelligent one. The allnew audi a4, with available virtual cockpit. Whyour boss . Ork for . Yourself . Your family . Our Financial Advisors are free to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. Hey, jesse. Who are you . Im vern, the orange money retirement rabbit from voya. Vern from voya . Yep, vern from voya. Why are you orange . Thats a little weird. Really . Thats the weird part in this scenario . Look, orange money represents the money you put away for retirement. Save a little here and there, and over time, your money could multiply. See . Ah, ok. So, why are you orange . Funny. See how voya can help you get organized at voya. Com. Im in charge of it all. Business expenses, so ive been snapping photos of my receipts and keeping track of them in quickbooks. Now im on top of my expenses, and my bees. Best 68,000 employees ever. Thats how we own it. Weinto a new american century. Born with a hunger to fly and a passion to build something better. And what an amazing time its been, decade after decade of innovation, inspiration and wonder. So, we say thank you america for a century of trust, for the privilege of flying higher and higher, together. Technology moves faster than ever. The allnew audi a4, with apple carplay integration. Good morning, welcome to squawk on the street. Carl quintanilla, sara eisen, simon hobbs, and david faber. We go to rick santelli. This is a preliminary read. It isnt a final. We lost the nine handle. Im a little surprised. 89 president 7. Our last final read, of course, for march was 91. How bad was it . If you go back to september it was 87. 2. Heres whats interesting. Yo view to go back to november 14 to find another. Theyre not common as of late. When you look at the current conditions, it was 105. 4. Just a little dip from our last look. So we want to Pay Attention to this, of course. But it will change in about 2 1 2 weeks. Simon, back to you. Thank you very much, rick. Gop frontrunner donald trump looking to regain his winning mojo over the weekend. New york, of course, sets for primary on tuesday with Trump Holding a commanding prepoll lead. An Ohio Governor john kasich vying for second place taking a not so direct shot at trumps antitrade rhetoric during an interview with our own larry kudler last night. Take a listen. Competition innovation is good. I think, larry, the problem is when we do not enforce the trade rules because these countries are sneaky. You cant not let people cheat. So if they cheat, youve got punish them. If they dont cheat, you trade with them. Thats where innovation comes, thats where consumers benefit. So this whole business about were going to put all these tariffs on. Willy nilly . No, thats not the issue. The issue is when they cheat. John kasich speaking to larry kudler last night and cnbc contributor larry is with us this morning. Good morning. Good morning, simon. Kasich has gotten better at this. Youre right. Thats a pretty good observation. Hes got good messaging now. Hes on a growth message. I like his liberalized trade position. I think hes exactly right. At the beginning of that theres another clip. He kind of hedges. Then i push dont tariffs hurt consumers for example. And then he went into the competition, which is very good. So good for john. Hes got a good tax plan. Hes pro grouchlkt i think, by the way, hes going to edge cruz out for second place in new york which in delegate terms is actually worth something. Im glad you raised something to ted cruz because, he was on squawk box for an hour this morning. It was a wide ranging interview. Pra perhaps the most poignant was playing it. Take a listen. The fed has for those with assets has drin up stock prices but thats not built on anything new or an increase in the intrinsic value. Its based on playing games with money which means a crash will be coming. In a sense echoing trumps prediction of a very massive recession. Yes, yes, yes. Look. I agree with most of what senator cruz said this morning. I thought he did very well. By the way, i thought arthurs solution was good. Deregulate. Cruze has a good progrowth tax refo reform plan. Trump has one. It is very heavily comes down very heavily on businesses and very heavily on workers. 71 of the revenues in mr. Cruzs plan comes from that business vet. To me, simon, with the greatest respect, doing want the u. S. Edging toward europe. If you want to get rid of the income tax and appeal the 16th amendment and i was there when it was signed, that was in 1916, i believe. Get rid of the income tax and go to a consumption tax. Im okay with that. Cruz says it comes in all stripes and shapes. I understand. All these plans have to be tweaked. The main thing is they want to lower marginal tax rates particularly on business which i still think is the key and i like what theyre saying. Trump i like, cruz i like. I thought kasich was impressive too. Trumps at 15 on corporate taxes. Cruz gets rid of them entire lchlt but he gets that 10 flat tax. Trump is at 0, 10, 20, and 25. How does the how do these plans not blow a hole in the deficit. Look. It depends how theyre finally constructed, okay. Mr. Trump has too large a standard deduction, however, if he puts in full cash expense in, that will have a lot of growth impact. I want to say generically, i wouldnt pay too much attention to these models. Theyre good guys. If you lower it. Full cash extension kbochlt territorial, im telling you the growth impact will be greater than any human living being believes except for me. Sf i could whisper this silently, yes. Im an old reagan supporter. By the way, if i can help this economy, business is important, were not competitive, money is leaving, blah, blah, blah. Lets talk about tuesday which is when they vote. I dont know if you can help me out. The New York Post is endorsing trump with an interesting message. Trump is now an imperfect messenger but carrying the best message. Hes the best of new york values and the best hope for americans who rightly feel betrayed. Mind you i havent endorsed and im not going to endorse but its an interesting editorial. Trump does have the perfection. Kasich was endorsed by tthe daily news which doesnt have quite the following as New York Post. The times endorsed him, am i right about that . Okay. Its an imperfect process. Trump got there first with respect to the anger of the middle class which hasnt had a wage increase since 2000. Whether i agree with that or not, okay, and then, of course, cutting taxes, he got there first. He tapped into that vein and hes never given up that number one pochlgts hes widening his lead. Trump is plus 32 points. Trump is at 54. Kasich at 52. Were running out of time. We must mention what happened on tell investigation where Bernie Sanders and Hillary Clinton were knocking the hell out of each other at one point. I mean clinton may win this. She may win the fight, but for some of the bouts, she really looks as if shes on the ropes. I think its a good point. She cant seem to put him away. Youre right. Last night was a screaming match. It was like your worst argument with your wife or husband. I heard what did i hear. I heard a lot of tax increases. I heard a lot of expand obamacare last night. I didnt hear stuff that i like to haefrmt other people may disagree with me, i respect that. But it just shows me shes in a tough fight right here in new york, by the way, where these she didnt want the debate in the first place, really, it would appear. She was reluctant to have the debate on new york territory, budget she . Wasnt she . Yes. I have to say one thing. Poli mrs. Clinton has to take positions. Last night she dodged. Ill give you an example. Bernie sanders wants to raise the payroll tax for upper end people. He wants to do that. Mrs. Clinton six different times didnt want to make a commitment. I think shes got a problem there. At some point hes going to keep hammering away. If she moves further to the left she might not win further down the line. We have to leave it there. Nice to see you, simon. Larry kudler. We have to talk about another big bank. Citis earnings and revenue topping expectations. The stock is trading right now. Wilfred frost is back at hq with all of the details. Hello, again, wilfred . Hello, sara. Coming in at 1. 10 versus 1. 03. The all Important Energy provision was 455 million. This was in line with forecasts. On the call we got the clear ens guidance of any of the banks on future writedown this year. If oil prices are close to 30, then we can expect another 1 billion of charge this year, whereas, above 40, the picture is a lot better. The cfo saying hes not confident yet this was the worst quarter for energy provisions. On the Capital Market size, they painted another picture. Banking down 27 whereas equities and fixed interest were only down 13 . The call suggested that the m a pipeline had an opportunity to bounce back on their own calls. Some weakness in their consumer business in asia, but in the u. S. , john says they definitely saw growth for the First Time Since 2008. As you know, also touching on the living women issue, they passed their living will earlier this week and the cfo said theres certainly recognition. Weve put in a lot of hard work and that is somewhat reflected here. No doubt he delivered that line with a wry smile, albeit i could only hear him and not see him. City gained 2 . Sara. Thank you. Wilfred frost on the banks. Up next all banks launching significant gains. The dow inching back toward 18,000. Were off 26 points right now. Can it hold its gains and will the momentum continue. And later an exclusive interview with macys Ceo Terry Lundgren. Well be right back. Whats ahead for oil and the critical week . Jackie deangelis has more. Good morning. Good morning to you. Thats right. Our oil survey polled analysts, investors, and big energy as well to get their pricing as we head into the weekend where we get an answer out of doha. Obviously its created a lot of volatility. Opinions are pretty much split. Oil prices could move higher from here, but its not necessarily much higher. In fact, in the second half of the year, most of our respondents think that youre going to see a wti and brent price of 40 to 50. Remember, street estimates right now are going to see bigger rue bounds, maybe 60 60 to 70. Meanwhile its definitely put a premium in this marked even though they dont know whats going to happen. More than 50 of our respon accidents said they think theres a greater than 50 chance something will happen, but they dont know exactly what that will be. And while they feel that a no deal outcome could take these prices lower, they dont necessarily think it will be much lower. Most respon accidents said they dont think well see the bottoms that we saw earlier in the year when we got to close to 26 a barrel. The most important factor influencing prices right now, still over supply. Thats the main issue. Remember, go have an oil glut on our hands. Global demand and dollar fluctuations still key factors. With respect to sunday, who holds the power . Everyone agrees its saudi arabia. But others say its the iranians and others as well. Some headlines how the oil minister will not go to doha, a delegate will go in his place, its thoord see how theyll have an accord if you dont have the influences, the important people that you need to have the important conversation. Guys, back to you. Well wait and see. Well see you monday if not before, jackie. Thank you so much. Jackie deangelis. Meanwhile they upgraded. Christina lagarde was with sara yesterday at the world bank meeting. Heres what she said. We have slightly upgraded because we took into account the measures they have announced recently under the plan. We have a slight concern and we certainly will convey the message to the chinese authorities and hope they follow through and implement on some of the major reforms all such conditions that really need to lay the ground to sustain a Sustainable Growth and transition in china. Guys, happy friday. Good to see you both. Maybe the story this week, stephen, is how cool some of these numbers are running whether its inflation, retail sales, michigan just now. Does that sort of cancel out some of the good news we receive with pmis . I think its very mixed data and we receive an economic psych frl our forecast, 2 . Real gdp. A recession is not our base case but neither is mixed growth. Its showing more milk toast, macroenvironment is going to be with us for a while. I think this is where were going to be for a while. You think we bounce around for the remainder of the year . I think so. It looks kind of flattish. More flat than ish maybe. We would be looking globally. Looking for a global opportunity. But i think the u. S. Markets from here kind of flattish in the face of, as you mentioned, the feds not going to move aggressively. Earnings are coming in negatively. Do you agree and if so is there a more creative trade than to try to buy some highyearolds . I think he makes some great points. You talk to clients. They wonder why am i globally diversified when i can be in the u. S. But really better Investment Opportunities are around the world whether its japan, emerging markets have been beaten down. So i do think there is a sense that going global could be where some of the better Market Opportunities are. When it comes to china, you heard this a little bit out of lagarde just there. The message seems to be things are better and thats why the overall market has been able to rebound. Theyre not out of the woods and people are expecting bumps along this transition in their economy and its clearly a riching to u. S. Talks. And its a multiyear road that theyre traveling. This is not multimonth. Theyre transitioning from a threedecadeold Development Strategy into a new one. Theres going to be a lot of bumps. I think the 6. 5 is where they have. Weve seen it from emerging markets. I guess and im wondering, jeremy, what the strategy is then. You do have to be wary of economies or emerging markets or things directly tied to the story given the process is far from over . This is one of the big stories ive been writing about. Theres old china versus new china. The old china is state run banks. New china is sort of technology, consumer companies. They said they have a goal of making an assumption based on economy. For the long run you have to be focused the newer china. Like alibaba, ten senn, jd. Com. Csxe is it. Thats where you grou. Not the old china state run companies. Stephen, the biggest buyer on this market are ceos buying back their own Company Stock with their own funds. Reuters ran a story suggesting that the number of companies that have announced buybacks is falling quite rapidly, and as their cash flow, you dont see companies able to increase their cash flow moving forward through the year. So you oom see what theyre able to buy back diminish. Mmhmm. What does that do . Again, we dont so the market will be flat because ceos are not buying back their own stock. Thats a part of it. But another pa of it as well as valuations. You know, in the medium to long term, evaluations matter a lot. Your points are well taken, but in terms of valuation, if one looks at europe or japan, a merging market switch are beginning their evaluations or theyre your alley. Valuations are much better for next year, arent they . You could argue that the earnings rebound the second half of the year. The stockmarket could rise quite confident lie li into next year if were to believe what the analysts say. You could make that argument. You can look at where valuations have been and are likely to be in 2017. Your ally, you want to look there as well. Not to disagree with you but valuations are very important. Stephen, jeremy, good thank guys. Good to see you both. Thank you. Coming up on the program, an ipo did not work four years ago. Bats is trying again this morning. Well have more on that after the break. Owen hey kevin. Hey, fancy seeing you here. Uh, i live right over there actually. Youve been to my place. No, i wasnt. Oh look, you dropped something. Its your resume with a 20 dollar bill taped to it. Thats weird. You want to work for ge too. Hahaha, what . Well were always looking for developers who are up for big world changing challenges like making planes, trains and hospitals run better. Why dont you check your new watch and tell me what time i should be there. Oh, i dont hire people. Im a developer. Im gonna need monday off. Again, not my call. In new york state, we believe tomorrow starts today. All across the state, the economy is growing, with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. Like in buffalo, where the largest solar gigafactory in the western hemisphere will soon energize the world. And in syracuse, where imagination is in production. Let us help grow your companys tomorrow today at business. Ny. Gov Serena Williams. Hi watson. You are a fierce competitor. Ive heard that. I have analysed your biggest matches. Oh really . When down a point, you serve an ace 5. 8 times more than other top players. You sound like a coach. I am not. But i can customize Training Programs based on biomarker data. Watson, thats pretty impressive. You might say i am the Serena Williams of cloudbased cognitive systems. Nah, i wouldnt go that far. Mary buys a little lamb. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of the at t network, a network that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. B. A. T. S is trying again on its own. Bob is on the floor. Any indication . Weve got it. B. A. T. S is open. Its trading around 22. There we go. Thank you very much. 22. 50. Lets recap what happened here. The important thing is price last night at 19. 13. 3 million shares. Thats above the initial talk. Theyve increased the size. 1719 was the price talk. Now trading at 22 and change. The company itself, remember, founded back in 2005 here. Tight Second Largest Exchange for equities. Its got about 21 . They compete against nasdaq as well as the New York Stock Exchange and its the biggest. This is a very important ipo because its a bellwether. Number one, they have to get it out for their own purposes, of course, but, number two, as a bellwether or how the rest of the market may go. This is the first significant ipo since the beginning of december, believe it or not. And theres a lot of them that are waiting in the wings in the next week or two to see how this is going and determine whether or not they want to go. Next week, well have mgm growth properties, which is a big casino read. Many of the big casinos in las vegas. Kidney dialysis owner and secureworks. Thats the dell spinoff. Theres many, many more waiting in the wings. At least 120 are on file. 50 as well. A lot riding on this. As you see initially, a very promising open for bats open manchtd remember they had that Famous Technology glitch. Guys, back to you. Well see what happens. Straight ahead, macys Ceo Terry Lundgren live for an exclusive interview. Well hear what he has to say about the future of the retail industry, malls in america, and the state of the consumer. Dont go away. Nothing unleashes power. Quite like the human foot. Introducing the 255 horsepower lexus is 300 allwheeldrive. With twentyfive percent more base horsepower. Once driven, theres no going back. This is my retirement. Retiring retired tires. And i never get tired of it. Are you entirely prepared to retire . Plan your never tiring retiring retired tires retirement with e trade. Plan your never tiring retiring retired tires retirement p. That, you haveit, wait yoto rinse it first like. Bakedon . Its never gonna work. Alfredo. Dish issues . Cascade platinum. Powers. Through. Your toughest stuckon food. So let your dishwasher be the dishwasher. E . Told you it would work. Cascade. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Your cnbc news update at this hour. The magnitude 6. 5 quake toppled houses and buckled roads. 1,600 soldiers were deployed to help with the cleanup exports. Transport minister resigning after details of absence of reports were leaked. She resigned after a discussion with the belgium prime minister. According to south korean and u. S. Officials. They said the missile exploded in the air just a few seconds after liftoff that and youve got to see it to believe it. In montana three gunman decided to rob a local bar. One couple was oblivious because they only had eyes for each other. They continued to kiss throughout the robbery. The robbers left with an undisclosed amount of cash. They only ha back over to you. Stocks trading near the flat line right now. The dow is down. The leaders on the s p, transocean, chipotle again and macys. Macys ceo is coming on the program. Theyre going to discuss the future of the industry and the changing consumer. Our Courtney Reagan is live with ceo and chairman Terry Lundgren of macys. Take it away zbhood morning. Im here in arizona on this beautiful morning. Good morning. Congratulations on a great conference so far. Thank you. Wrapping it up here today. I want to start by talking about the state of the consumer. Last year when we talked you said consumers are spending but theyre spending on their cars, their home, and putting in savings. Theyre not buying what youre selling. Has that changed . Thats whats driving whatever positive news there is in consumption and therefore gdp, such a large part of it, its been in those other categories and the savings. The consumers have been saving. Which is ultimately a good thing over time. But theyre not in our categories to the degree that we would have expected them to be at this point in time and were seeing that throughout the Fashion Retail industry. But, you know, its just a matter of time when theyve got their house, theyve got their room extension, their automobile. Theyre still going to have savings left over. So we forecast our own sales to be positive in the Fourth Quarter and i think thats whats going to happen. And negative till then. We had you know, all of our industry had a tough year, so when you do, you buy the inventory early in advance and then you own it, you know. And then youve got to clear it through that first quarter, so i think were now we call it our 2015 was our setback. First half of 2016 is our setup and then our comeback goes toward the end of the year and thats how weve database thats how weve planned it. Planned or inventory, receipts, staffing. Thats what were looking at toward the balance of this year. One of the students hoar at the university of arizona really respects macys and everything you do for the school and business. They shop at fast retailers. How do you win them back if at all . Listen, clearly weve seen this impact of fast fax over particularly the last five years. Theres an appetite for that growth and youre seeing more of that and youre seeing young consumers going to product thats very inexpensive, may not last for a very long time but it didnt matter for them. They buy it friday afternoon for friday night. So how we compete with that is always about product. So last year weve launched several new lines specifically targeted. We purposely we have a certain Quality Standard that were going to live up to always and so theres not going to be exactly what theyre going have, but it is going to be focused on lower price, great value, one, but also where we are getting them now is in the athletic category. So the Millennial Consumer is really driving that business for us. Its been one of the Fastest Growing part of our business. Athletic footwear. Athletic apparel. I would say that and some of the Home Furnishings have been doing well with young consumers. Theyre moving out of the house, getting their own place and theyre buying furniture which they cant get from fast fashion. Theyre buying it from macys. Theres been a lot of talk about real estate. You made a couple of key hires. What are the priorities . First of all, thinkty last time i was on the show, i said were looking for this person who has these skill sets that we dont have in our company. They had a true real estate expert that understands joint ventures, that understands transactions in the real estate world, that understands maximizing the value of your real estate portfolio. That doesnt exist in most retail companies. We have it now. So thank you. We had a flood of responses and we hired and outstanding guy with all of these skills and all of this talent. And doug, as he said yesterday to me when we were communicating back and forth, drinking from a fire hose right now. Weve had all these advisers from east hill, green street, and, of course, some of our banker relationships that real estate expertise who have been working with us for several months on all of these subjects of real estate valuation and opportunities to maximize that value. And so doug is catching up. So his short term objective is to leadership all we have learned up to this point and then start representing us. Doug tesler, i wanted to correct myself. Simon has a question for you. Good morning, mr. Lundgren. You will be aware more than everyone else that stock this year is down 40 . On one of the key drivers is what you do. Hence the reason youve made the appointment. Hence the reason you put a specialist on the board. Are you open to this . Do you say, look, i think we can maximize that by going through a full spinoff. Would you be open to that conversation given whats happened in the past . I would be. Hes the expert. Im not the expert nor is anyone in our company. So we actually, as you said, we now have some of that expertise both on our board as well as on management side. And so id be open to that. Im just telling you it would be hard for me to imagine that he would conclude Something Different than the experts have concluded and the experts as i described the outside advisers have been the ones who have made the recommendation up to this point. But simon, were wide open to all the best possibilities for us to make sure that were maximizing the value and at the same time, you know, first and foremost driving our sales at top line because ultimately thats whats going to drive the top price for macys and all of our competitors who have had similar challenges with the valuations of their companys portfolio. Simon has another question. You would be one of the most respected Management Teams throughout in a details environment. What would you shay seay to shareholders . What would turn that around in the future given what youre doing now . Well, simon, as i began to sark certainly were going to maximize that with real estate, but the most important thing thats going to drive our business or drive our stock price is our business topline sales. When we grow on the top line, were very good at converting that to bottom line. Just a year and a half ago, we achieved that. Five years of growth of averaging a billion of Growth Without adding new stores and then we reached 14 ebitda which is the highest. We know how to do that. Weve got to a terrific broadbased Management Team of experts, but thats the key. That is the absolute key is making sure all of these moves were doing now in the setup period are going to pay off to grow the business overtime and we forecast that for the Fourth Quarter. Speaking of growing the business, another venture that youve entered into recently is with alibaba in china. How is that going . What are the learnings so far and are you looking to expand that for growth . Yes. So this has been first of all, i think alibaba is, again, theyre the experts in Online Retailing in maybe the world, but certainly in china. And so we have put the not only put the team of people in china, weve also put our inventory in china for this business were doing with our relationship with alibaba there. So its a relately narrow invento inventory. This is a learning process for us right now. We expect over time and this is where the eyeballs are. This is where the people are. But the eventual tourists. Getting them exposed is part of our business, part of euro strategy here. Im very excited about whats going on. By the way, ten years ago when i started looking hard at the china market and visiting there every year and multiple time as year in some cases, i thought we were going to open big giant physical stores. Ive changed my mind completely by learning and being in consumers homes and studying alibaba. This is a consumer that has been faster to adapt mobile technology than the americans have, okay. So i get it now. And so this is the way for us to start. We may eventually have stories there, but, you know, all of this is just changing in the way that were thinking about how were going to get to the largest middle class in the world. So a good start but a lot still to learn. A lot to learn. Thank yo so much for joining us, terry. Im going to send it back to you. Carl back at the New York Stock Exchange. Thank you so much. Still ahead, recores kara swisher or should we say San Francisco mayor kara swisher, maybe not quite yet but kara will join squawk alley to talk about her potential plans in politics. Well be right back. Whoa. Whats going on here . Oh hey allison. Im val, the orange money retirement squirrel from voya. Val from voya . Yeah, val from voya. Quick question, what are voya retirement squirrels doing in my house . Were putting away acorns. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person . No, im more like a metaphor. Okay, a spokesmetaphor. No, im. Youre a spokesmetaphor. Yeah. Ok. See how voya can help you get organized at voya. Com. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Steve, other than making im here atme move stuff,rade trader offices. What are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Ha on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. Td ameritrade. Whack back to squawk on the street. Rick santelli with one of my favorite guests. Yra harris. He was already trading foreign exchange. Boy, if you stacked all your cards that you traded over the years, it would probably be as tall as the empire state building. We could talk a lot of things. Lets talk macro. If everyone is bank rolling us quarter after quarter, year after year, we lose money we keep running back to them and say we need more money but we trade them exactly the same, how dwloung think theyre going keep sponsoring our activity . Not very long. If youre the ceo of gm and all you want to make is volts and volts arent selling and you keep making them, what happens to your stock prize . You go bankrupt. They might have their hearts in the right place, but no matter how much they do, they end up with more debt and no progress. Is there just a fear that if they change strategy its a sign of weakness . What is it . They hide behind a village of counterfactuals. Look it. You and i may have discussed this. Qe 1 was necessary. Thats all they had and all they kept doing. So now we have the imf meetings this week. And jack lew is like no intervention, please. Let me speak norm times language. Imf is a remnant of the colonial past. It sevens no purpose. Theyre about as purpszful as is naacp is. Theyre gone. Their royal is gone. The imf is going give me more money. They dont need any more money. Theyre sitting on a pile of gold. Theres nothing like hoarding gold like it meant something. Why are they not securitizing gold. Congress is right, dont give them another dime. Do something with your assets. You have a huge art of liquidity. Now lagarde is coming out. Shes talking about all the tax grab thats going on in the world. She came out of a giant tax world that came forward. Go back and fix it that way. The world has really lost its way and everything becomes a counterfactual. Stop. A good trading . What happens when you get in a hole . Stop digging. The Central Banks have stopped. They stopped working in japan. Japan is actually a classy case. They were able to get away with some of the policies because the rest of the world had enough growth. Why are we in a kurrency war. Everyone is fighting for growth. This is not the 90s where they could try these policies and piggyback on the rest of the world. Unfortunately were coming in on this. We see how much. Theres Larry Summers talking about fiscal stimulus. You know what . You know what . Ive heard all that been. Heres my one comment. Theres been a lot of talk of late about tsa, right . Yep. We appropriated more money. Did we really . It goes into the general fund like so much does. Infrastructure, general fund, slush fund. It seems like the money goes to the wrong place. Yra harris, i never saw anybodys veins pop more than mine, have a good weekend. Back to you. A lot of vein popping. Up next, a lot of suv luxury makers getting in on the craze. Will u. S. Makers be able to compete . More on that question when we come right back. The first stock index musiwas createdoughout over 100 years ago as a benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. We believe in the power of active management. Management, by debating our research to find the best investments. By looking at global and local insights to benefit from different points of view. And by consistently breaking apart risk to focus on longterm value. We actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. Sport utility vehicles and cross overs jumping 16 last year. But now luxury auto makers are getting in on the action. Were talking mazarati, and bentley to name a few. All debuting recently. U. S. Companies are not taking the competition lightly. Joining us to explain is jim stewart. You recently went to the new york auto show. Is that what inspired this . That is what inspired it. But there was nobody there. They were all at these giant suv displays and in one little area there was the cadillac ecalade, the bentley, the new mazarati and there was a line. This is the far end luxury auto makers getting into the sweet spot of luxury suvs. Theyre moving for the high margin. So starting to wonder why it took them so long but also the detroit auto makers were talking about ford and gm. They have opinion a little slow moving off market here. Yes you can easily drop six figures on a cadillac but were not talking 200,000, 220, 250 very high profit margin area so theyre moving in, theyre trying to squeeze the segment from the top and then i think also very interesting, jaguar is coming in with one that starts around 40,000 so theyre coming in right at the middle. The real sweet spot and this is very significant for the auto makers because they each had about 10. 8 billion of profit last year almost all of which comes from trucks, suvs, and cross overs. Is this because of Lower Oil Prices . Theres a debate about that. Some of this has to do with oil prices and i talked to customers and said does this bother you at all . Absolutely no one cared but the fact is that the fuel efficiency has gotten a lot better on these things. I was surprised that theyre not that different from a lot of the larger cars. Partly because many of them are being built on car platform but also people are not making their purchases based on the cost of gas. They dont care about the cost of lots of things. It might be allowing a marginal buyer to consider this price range. Its definitely pushing vehicle sales but i think thats effecting more than mid range and the lower end than it is this high profit margin area and one of the things that i found, look, this is competition is capitalism but the way that the market is being segmented now theres narrower slices of this suv pod and range rover has come out with this tie in with a gun manufacturer and i was thinking oh, right i bet a lot of suv owners are gun lovers, naturally. So they have combined. The car has the same wood as rival stock and they have the gun storage compartment but they sell for about 280,000 or something. You dont get a gun. You actually have to bring your own gun to those. You couldnt sell it in certain states. Lets think about it a little bit. I wouldnt know how far we would want to push this tie in guns and suvs. How large is the universe of buyers for 250,000 cars. I wouldnt have thought it was very big but theyre saying the dem graphics there are big and growing and even especially in places like china. Even they were telling me africa where there are some very highly concentrated wealth at the top where theres a big market for cars that can go over potholes because the roads arent good that are perceived as safe, whether you have a gun or not and theres a market for this. For those people that are watching in europe and asia, the americans have been made fun of for decades for having gas guzzling cars but if you live here and live through the weather that people have to face all through the state of the road which is is a real issue particularly when you get through winter you can understand why people have these types of cars. If you have to get a family to work in the middle of all of that stuff going on. Its a harsh environment often but not always in this country. Given your background, one of the biggest Growth Markets for suvs believe it or not is europe. Well, theyre not dead. What do you think theyre doing. But the streets are so tiny. You can barely get through them. All the streets are tiny across europe. Have you not been down an autobon. Yes i have. Theyre doing well and europe is a strong growth market. Everybody should take a ride at least once. Because theres no speed limit. But the one thing its a safety thing. They want big. They feel its dangerous out there and if theyre in a crash they want to be in the biggest vehicle. Theres crazy people out there. Just remember that this weekend. Good to see you as always. Before we go to break we do want to mention today is our verial lenlted line producers last day. She is in charge of this 10 00 a. M. Hour. She has been trying to make it sing despite our efforts to sabotage it every day. She has been at cnbc for 8 years. Congratulations as they start their new life in texas with their soon to be born baby girl. She is an excellent juggler. Thank you johanna. Coming up on the program, why one journalist says no one needs an apple watch. Squawk alley is next. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive i am a technological breakthrough. This morning i read over 4000 articles on leukemia. In less than a second. speaking japanese i can understand euphemisms, idiosyncrasy and complex metaphors. I know every detail of every public Quarterly Report in the last 20 years. And im just getting warmed up. Hello. My name is watson. Together we can outthink the limits of whats possible. Welcome to the cognitive era. Good morning it is 8 00 a. M. An its 11 00 a. M. On wall street and squawk alabama sli live. Squawk alley is live