Transcripts For CNBC Squawk Box 20150115

One was anticipating. You know the Central Banks are good about telling the markets what theyre going to do in advance and when that doesnt happen you see swings like this. The Swiss National bank coming out with its news saying it was going to delock the swiss franc from the euro. Since 2011 they had been tying the currency cap in 2011. Swiss national bairng was saying you had to have 1. 2 swiss francs to the euro. They let that go unexpectedly. Moved 30 . Basically 120 euro. 120 swiss francs to the euro. Yeah down. 86. Right. Its complicated stuff and theres a lot to get your head around but this is a massive move. Weve never seen a currency swing like this before. It was also the u. S. Dollar we saw the swing against because the dollar was high against the swiss frank because it was tied to the euro. When they let that go it was a massive snap. So it had been that they were benefitting by being tied to a weak euro but it wanted to go much higher and obviously i want it wanted to go much higher. We need an expert. People in the past look who made it here. I need him to explain to me why these markets would get risk on i appreciate how big a trading part how relevant is this little im glad i bought the Swiss Army Knives last year. Oil go down 60 and then a major currency moves 30 one day all bets are off. How do you stake your claim on anything at that point . Thats part of it too. These markets are insane. Unpredictable. Im going to blame this whole euro experiment which is so stupid to try to have all the multispeed economies with a fixed currency this is what happens. Who are you blaming . The whole european experiment to try to all of these it should be 50 less. The swiss franc should be 50 more. This all just happened in the last hour. We have been scrambling to get our arms around this and were lucky enough to have people willing to scramble with us. Were joined by mark commander. Forest is here on set and well done. Lucky were in new york now. I love the fact that youre in new york. Ten minutes door to door im here. It was awesome. Everybody is like who cares. Can we just not talk about this . Its amazing. We did. We have been talking about it over and over again how they have been steadfast and holding this. Thats the take away. We all thought that maybe this time it was different. Maybe the central bank could hold the Exchange Rate because its always failed. You never had a central bank be able to intervene in perpetuity and you saw them giving up finally after three years of intervention and this is the single biggest surprise. Everybody thought it was the market that was going to drive the euro swiss down. The fact that snb just walked away thats where you see this massive dislocation. We had essentially euro swiss going to parody. The inflow of money because they knew the swiss franc was undervalued. They realized it was impossible to hold the peg after qe. This is getting ahead of it. They basically said you know what theres no way theyll be able to hold the peg. What about the just explain to the viewers, i already understand completely but what about the action that the ecb does next week would make it impossible to hold that peg. Ecb continues to deval its currency. To Southwest Airlines the euro would go further. It kept putting further and further pressure because the point is that ecb was going to lower lower rates in europe. It makes it much less interesting. Money would have been flowing out of the swiss franc. Not to mention the fact that the russians continue im going to admit this is still over my head. Explain to me why im supposed to care about the swiss franc. Its the company money. Your capachino is going to cost you 10. To the extent you think theres broader implications. Mark is probably better to speak to this than i am. I have no idea what the longer term implications are. Its not going to be a global impact. In my ways the fact that the euro came down is positive because it helps exports in the long run. But Financial Sector we have no idea where the euro trades are. Theres a lot of people that lost a lot of money today. A thousand point move. Hedge funds and everything else. So chandler why does this mean that the risktrade is why was holding the cap on why did that mean people would put risktrades on and now theyll take it off. I dont think thats what it means. I think what the market is seeing now it doesnt have to do with the euro zone. It was a swiss Bank Strategy to fight inflation. Before 2011 when they put the cap on the currency they tried buying foreign bonds to avoid their version of qe instead of buying domestic bonds because there wasnt enough of them. They had to buy foreign bonds. Thats failed to fight deflation. So they pegged the currency or capped the currency and now theyre giving up on it. The force at work is not about the euro zone. Do i agree that anticipation of foreign bond buying in the euro zone in the next two meetings helped impel the previous strategy. The key here is that oil prices Commodity Prices collapsed. Well see this. Headline cpi is going to end up going negative. Already tomorrow its a 1 headline to maybe. 5 . Let me try and connect some dots here. What were watching is a central bank not able to hold the line on deflation. This is a small central bank and Swiss National bank but this is this foretelling the future when it comes to the United States central bank and europes central bank . Are they going to be able to hold the line when it comes to this massive deflation when youre looking at oil prices down 60 and the other turmoil that comes with that. This is the most pornimportant thing to keep in mind. The Federal Reserve doesnt target headline inflation. Core inflation is going to remain sticky and in that basket of goods that make up our core inflation measures housing costs are Something Like 40 . Housing prices are sticky. This is going to keep core inflation up. Not headline inflation. This is a big difference between the Federal Reserve and other Central Banks. You can criticize it for several reasons and mandates and other stuff but at the end of the day targeting core inflation is superior to targeting headline inflation because of the noise. Im confused. Hold on. Was the swiss frank because the swiss are so frugal and they dont they have their house in order is that why its always seen as a safe haven. Always of course. How could they possibly have the same currency as greece. They dont. Im not saying euro but it was tied to this had to happen didnt it . The point is the reason why they created the peg in the first place was to help all of their multinational corporations because the swiss frank was get sog strong it was going to make it impossible for them to trade. Its not about trade. Its about deflation. Im talking about why they initially did this. Why they initially did this. Its not about trade. Its about deflation. It was always about deflation. It was never about trade. They wanted to prop up their economy and they did. The big question is what happens to their economy. Lets bring in steve reese. Global head of equity strategy at jp morgan. He just got off the phone with his colleagues in europe. Where were they in europe. Freaking out. It doesnt matter. They all have the same currency. Did you talk to someone in switzerland. London. Close. Pounds. Same continent. Switzerland is about 17 of the overall European Equity market today and its an export driven economy so its a negative for switzerland but on the margin it removes a competitor for the broader euro zone. I dont think it derails the story in europe. Negative for swiss stocks today. Theyre down about 5 to 6 in local terms but look at them in euro and theyre actually up. The timing i think is very interesting ahead of the ecb next week. They had to do this ahead of the ecb meeting. For sure. We just saw yesterday that the court clears the way. That was going to be the last Sticking Point to say that maybe the ecb would have trouble doing this soon but the deck was cleared and theyre trying to move ahead of this. Exactly. Whats most interesting to me is this is a three year trade but the bottom line is Central Banks, bottom line is intervention eventually always fails in the market. We really thought this was going to be different. This with the most outlier case weve ever seen. How big is the Swiss National bank compared to the ecb. Its tiny but the dynamics that you cannot control your currency forever. The market is going to pressure you to where it wanted to go. Okay. So now, because this is so insane. Its reviving concerns held by households and banks and this is putting pressure on all the banks already theyre down 5 and 6 . Why . Swiss frank rates are negative. Its easy to finance because it seems like poland has pay back and the frank is going to be much more. Much more. Whatever you made up on the low Interest Rate you more than lost. Thats the game people always lose on. Remember they took out the foreign currency mortgages before the swiss adopted negative Interest Rates. This is the kind of problem that we see not just in Eastern Central europe but remember the bis report. Many countries and companies have borrowed dollars on low Interest Rates and the weak dollar. Theres a currency mix match out there and swiss even though its a small economy measured by gdp its above its weight. Its currency is an International Currency. People flock to it. It could have continued to intervene like it had been. The market didnt force it too. The swiss chose not to continue to build reserves through intervention. Expanding its balance sheet. It was not the market that other Central Banks telegraphed their moves. It caught the market by surprise. Thats why were reacting. Are we on a line thats being tape recorded . Is that why we keep hearing the beep. Im afraid so. Dont say anything you wouldnt want other people to know about. Wait a second isnt everything we say always going out were on tv anyway. Recorded and live. Marc what do you think the Financial Sector implications are for this . Because what we dont know is how big the losses are in all of this and how big is this going to be everywhere. Not just for example a lot stopped quoting them today. Some of them might go out of business. Theres a lot of fall out of this that we do not yet know and its going to be very interesting to see exactly what happens the next couple of weeks. I feel better for Retail Investors in Foreign Exchange. Its a dangerous game but i dont think thats the biggest problem. No but i mean the market is going to rally. I think that we saw that move yesterday down to below 180. U. S. Yields are going to continue to fall. Investors, retail and institution have little choice but to move into equities because the yields in the bond market are too low for even people that need fixed income. So rather than worrying about retail id worry about people that live on fixed income. Theyll be hurt by this continue decline in yield. Not the retail speculator taking on risk at their own desires. Do we need to put a foreign franc relationship do you have any idea its the 100 fillers make it. Just in case you were worried. Im going to watch the ratio. I cant do this marc. Remember when like the end of the year i said its going to be a most volatile year even in my wildest imagination didnt think it was going to count like this. You thought you could count on the Swiss National bank. I think this may be the first shoe of many to drop as we go forward. The Financial Markets will be in much bigger turmoil than all of us think. How come we never complained about the Swiss National bank being like china as a currency manipulator . Well because theyre well you know the swiss is the biggest and the most pronounced in the g10 universe but every central bank is trying to control their currency one way or another. Swiss was the most obvious and strictest in terms of their approach. I go further the swiss is not part of the g10. Theyre not part of the g7 agreement. The swiss economically is a small part of the World Economy so when the Federal Reserve, actually the u. S. Treasury issues its report a couple of times a year about Foreign Exchange market they give the Swiss National bank a pass because its too small to really matter in the global event from the Federal Reserve and the treasurys point of view. It clearly matters to markets. Often times they come from places that we werent watching that you didnt think mattered all that much. Its is a well established International Currency of risk reserve. The swiss franc can sink us. Go ahead. Its a very small part of global reserves. This is a important for speculators and some investors but at the end of the day its more indicative of the pressure of other countries as well with Falling Oil Prices experiencing deflation and disinflation and what it really turns into is very low nominal growth. This is a challenge not only for the Swiss National bank but all Central Banks including the Federal Reserve we also have low nominal go from the u. S. They going to raise Interest Rates this year. The fed is. I thought it was data dependent. I think they will. Would you buy today . You say buy equities then. We are. We thought this year would be more volatile and were seeing that play out. I think theres a great time to be slowing adding u. S. Equities. Top sectors are consumer discretionaryies discretionaries. Do you think we should break up jp morgan. I cant comment on that. You love that stuff. I know you love that. He lizelizabeth warren relates back to her once again. Always. Thank you for making us feel smarter about this. We appreciate it. A major Product Launch from the company many call the apple of china plus whats the real story behind samsung and blackberry. Reports, rumors and speculations sending shares of the canadian smartphone maker. With plus heres a look back at this day in history. Check it out. You just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. Because youre not you youre a whole airline. And its not a ticket youre upgrading its your entire operations, from domestic to international. Which means you need help from a whole team of advisors. From workforce strategies to Tech Solutions and a thousand other things. So you call pwc. The right people to get the extraordinary done. Chinas Biggest Smartphone maker unveiling its latest device with the goal of going head to head with the iphone 6 plus. Eunice has details on that. Good morning, xiaomi means little rice but the Chinese Company has big ambitions. Theyre the Third Largest smartphone maker in the world behind apple and samsung but the company has been able to really do that and gain ground because it has been able to sell a very acceptable phones at cut rate prices. Now what were see as good that the ceo is moving into the premium end. He is going to be unveiling the xiaomi note. This is a phone he says is going to go head to head directly with apples iphone plus. He went through all the specs. Lots of different features including a 13 megapixel camera. He said that overall its going to be thinner as well as shorter and lighter phone han the iphone 6 plus. The price is what is attractive as well. The base model is 376. The proversion which is the one competing on the high end is going to be 540. Its still cheaper here than the iphone 6 plus in china but at the same time it is showing a bit of a departure from xiaomi into the high end and taking apple on head to head. Thank you for that report. Lets talk about blackberry and samsung this morning because theyre denying that theyre in deal talks. Routers report said samsung offered to buy the company for 7. 5 billion. The stocks surged on that report but then dropped in a big way. Quite sharply on the companys responses. Here with us this morning is amil. He is communications analyst. Good morning. Thank you. Do you believe them when they say theyre not in talk or do you believe the original report . Lets go back. We already had some form of speculation in one shape or form of blackberry being taken out. Now if you look at the commentary he is saying that everything is on the table. Ceo of blackberry. Correct. He said i dont rule anything out. Im transforming this company. Whatever is best for the shareholders hell do. Is he transforming the company . Is there value . Is there 7. 5 billion worth of value. Besides becky being a customer theres not a lot left. You have to look at what blackberry does. I look at it in three or four different parts. We all agree that they were pioneers in enterprising. People say the value of the patent portfolio, somewhere between 1. 2 and 1. 5 billion. Sure depends on who is counting. Who is counting. Then you have the operating system. They have a new operating system. The world has evolved into an ios and android. Do we say thats worthless. Or do you say that samsung wants to create differentiation and you talked about xiaomi. You want differentiation. Do you write it off . Call it half a billion . Billion . I dont know what it is and the third component is infrastructure. Every quarter they spent, 300 million in spending their infrastructure and finally you have 40 million subscribers . Does that go to zero . 25 million . So when you add up all of these things depending on whou is looking at blackberry how desperate they are you could come to anywhere between 7 to 8 billion enterprise. Were talking about it in the context of blackberry but what does it mean to samsung and what does it mean to google. If im google and i saw that report and i realize that samsung is a major player in the Android Market without samsung i dont even know whether android would be android today what are they thinking . Well honestly google doesnt care who is going to win or not because at the end of the day you looked at xiaomi. Theyre going to depend on google. What their bigger issue is ios versus android. Thats what theyre looking at. Put to the extent that you believe samsung is going to move over to the extent you think they want to move to a blackberry platform to get away from android. From time to time samsung always wanted to look at alternatives operating system alternatives. I think its a big call to make that theyre moving toward a blackberry system but theres always that risk from googles point of view because were talking about differentiation against apple. 12 months out is blackberry an independent company . Thats speculation. Its too speculative. I cant make that call but in all likelihood if mr. Chen youre an analyst youre supposed to predict the future. If he is able to continue transforming his company into software and achieve his goals on the software and services. But if he doesnt achieve what he can, everything will be on the table. Thank you for helping us sort through this this morning. Thank you. Kmug it could be the currency story of our lifetime. Shockwaves through the Global Market this morning. Capping its cap on the strength of the franc. Well take a look at the major multinationals that are most exposed. You know when i said for the swiss and the greeks they have the same currency i was saying if the franc is tied to the euro and the greeks have the euro you have these two completely so people are saying i think thats why they had to undo that. This is rocking markets all over the world. The swiss market though the stock market down about 8 . Its already blown about 100 billion already today. Swiped out in a moment of minutes. Its 13 different currencies in the euro that the ecb follows. And now in hungary. Anyway first as we head to break heres a look at how futures are setting themselves up. Thanks for taking my line. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Look so forward to you coming here. We cant wait for you to join us for a glass of wine or two. Well drink to that cheers. Is it wine wednesday. What are you having there . Its wine every day. If its wine what about margarita monday . At thetequilla tuesday. Whats friday . Friday i dont have a liquor that starts with an f. Frangelica friday. Thank you. Its me . Oh it is. I cant tell that. Oh were getting to know our new neighbors here in new york city and we thank our colleagues at nbc news for their warm welcome. You know its easy for people like Brian Williams to say theyre going to bring a casserole. I have not seen the casserole. I saw him and he still pretended like it was on his way. I want it homemade too. The big story this morning youre looking at it this morning comes from switzerland. The swiss frank soaring with the euro. The move comes after Central Banks shocked the markets by scrapping its long standing cap on the strength of the currency. The impact being felt throughout the markets. The euro plunging against the dollar for stocks in switzerland. Theyre likely going to continue to trade a little bit lower. Heres the look down about 11 . And that isnt necessarily what were talking about in terms of global influence although 11 move. Its the biggest one day decline in over 25 years. Youre talking about 100 billion that evaporated from the swiss market. The ceo is calling this a tsunami for the swiss economy. Moves in the euros and the dollars and our futures here in the United States moved rapidly. We went to down 150 points on the knee jerk reaction and now settling out in the middle. Its down about 100 points. Thats worst than the last 20 or 30 minutes. Thats the big one of the morning. A couple of other ones were watching too. Quarterly results from the worlds biggest financial players. Well hear from bank of america, city group, black rock before the opening bell. Blackrock is out now. These numbers right now blackrock once again beating expectations expectations. Looks like an adjusted number of 482. Looking for 467 but the revenue number is relatively in line with what was expecting. Im going to get a few other numbers in here as well adjusted 482. Both numbers beating the expectations. They talk about assets under management which are a huge number there. Up another 8 in the 4th quarter. Im not even sure what the number is because its changing rapidly. Longterm net in flows for 2014. 87. 8 billion in the Fourth Quarter alone. Heres a couple of things were watching. The day packed with Economic Data. Were dealing and at 8 30 eastern well get the Producer Price index and new info on the health of the housing market. The number of properties that are in foreclosure the process dropped last year to the lowest several since 2006 so well put that in the good category this morning. Take another look at the markets this morning. As we showed you futures are being rocked by the news coming from the Swiss National bank. We started at 4 30 a. M. With a gain of better than 100 points for the futures. That all turned around on the shock move from the Swiss National bank. What happened with the u. S. Futures market is they tanked immediately. Dow futures falling. They have been bouncing back and forth but theyre down about 85 points. S p futures off by 11. 5 points. The nasdaq down by 22 and this comes after a series of volatile days for the markets we have been watching. Its been the oil Market Driving things. The bond market has been driving things and today well watch the currency market move things. Lets check out european shares. The swiss shares are taking a massive hit down better than 8 . Also seeing declines in other european markets. The ftse off by. 6 and these markets closed before the Swiss National bank made its moves. Nikkei up by 1. 8 and the hang seng up by 1 . Lets look at oil prices. We havent paid attention to them today but wti this morning is down 67 cents to 47. 81. The yield in the u. S. Is below 10 . Another new low. 1. 797 . Check out the dollar because the currency market is where a lot of the action is taking place. Not going to see it on all the boards although you do see it at the bottom. Thats a decline of 14 and improvement from what happened immediately following the Swiss National banks announcement. The euro fell by 33 versus the swiss bank. Thats evened out to a decline of 14. 5 . The dollar this morning is up against the euro trading all the way down at 117. 21. Gold prices too at this point gold is thats a massive move for gold. Up 22. What you see happening in the currency market is going to rocket all markets today. Gold up about 22 to 1,256. 80 an ounce. Lets take a look at the companies that stand to get hit the hardest from a weaker euro. Joining us is mike thompson. Hes managing director of s p capital iq. This is a surprise. Its made a murky earnings season even murkier. What do you do . I dont think any company that relies heavily on european earnings expected such a big move. You know you have to think this is probably outside most of their hedging activities. This is abnormal. You know i think the bigger issue is what this means, what it really indicates is going on in europe which is the deflation nary pressure deflationary pressures and whats going on. Its for coke and pepsi and mcdonalds that had a nice tail wind from the fact theyre getting profits from the overseas corporations from stronger currency euro into the u. S. Dollar. That goes against them. Hopefully some of that can be offset by what seems to be now emerging as the place to be which is the United States in terms of the lendings. We went back to the back of the line and proversely this might be a real opportunity because as you saw gold went up but i wouldnt be surprised you see u. S. Treasuries start to rise and what theyll have to do is buy dollars and in addition after awhile people will say i need a little bit more so theyll take a look at stocks but the problem with stocks is that the earnings picture is murk murky before this. But repatriatiing it back to the United States it makes it less attractive to bring the money back. It certainly doesnt help them but a lot of companies do. We always talk about the companies that mark a lot over and dont bring it back but a lot of companies do bring it back. Just recently ebay brought a lot of money back. So yes it would make it even less attractive to bring the money back but id say that the bigger issue for these folks is what does that mean for european operations . How is it going to effect the automotive sector. And sales slow down. Consumer discretion. Those are the three sectors that have the highest exposures to whats happening over particularly in europe in terms of a deval youuation of the euro. Why cant we look at this as possible that the fed doesnt do what its going to do. The swiss finally figured out we cant continue to do this. If we raise rates in april or june and the dollar is already strengthening beyond belief and the rest of the yields are continuing to drop and were strengthening right now at zero. If we go up how much stronger it almost prevents us from going up. It will make it worst for exports right . Youre right. They might be in a reverse box box. The other issue this takes a lot off the feds. It gives them more breathing room. This is a global deflationary process. When the u. S. Economy was kind of having its stumbles it was actually benefitting from strength elsewhere. Now its kind of isolated the other way. Is Larry Sommers right that you missed your chance to raise rates because to fight deflation what you would do would be to lower rates but we cant lower rates below zero. But whats wrong with letting the market do it on its own. This is the way the market is supposed to work. In fact let the market determine the level of rate and in a Global Marketplace that might make sense. Thats an admission that the Central Banks are ineffective. It also could be just the motion that you know it actually brings more Market Pricing into the world of treasuries and things like that. Yesterday jp morgans earnings were impaired. And yet their activity and their ability to make money because of the shape of the curve was inhibited. So who would have thunk. All right. Thank you. Thank you. Not the same as the thompson reuters. Different. S p capital iq. But you were at thompson for awhile. You remember people used to come in and then you wouldnt correct them. Yeah. Coming up the search for whats behind the drop in google shares. The stock near bare market levels and later squawks market master on where hes finding value right now plus barry diller never would come to new jersey. He is coming here though today. Thats like 50 or 60 of the reason why we moved here. To get barry diller in here. Squawk box will be right back. How can power consumption in china impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price we understand the connections of a complex, global economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Ive been called a control freak. I like to think of myself as more of a control. Enthusiast. Mmm, a perfect 177degrees. And thats why this road warrior rents from national. I can bypass the counter and go straight to my car. And i dont have to talk to any humans, unless i want to. And i dont. And national lets me choose any car in the aisle. Control. Its so, whats the word . Sexy. Go national. Go like a pro. If you are just waking up this morning check out the swiss franc, a staggering development overnight after years of capping the strength of the swiss franc versus the euro. The Swiss National bank in light of whats going to happen next week theoretically with the ecb they removed the cap and its hard to think of these things but in terms of the euro it used to be it would take 120 swiss francs. 1. 2 swiss francs to buy a euro. And when they removed it the euro has been so weak the swiss franc where to where it would have gone. 86 at one point. What we heard people describe it today is athe swiss bank saying they couldnt hold the line. Yesterday was the decision that came from the European Court saying that what they plan to do was legal. Thats seen as the last hurdle preventing the ecb from taking action. They have been talking about doing Something Like this for years. We might actually see it next week. We have to think of the angle of the watch collector. Swiss watch collector. What happened to the value of all of those watches today. I thought of my army knives. I brought a couple home last year. They go up or down. I guess they went up in value. Did they just go up 30 . I believe they did. You have a nice watch on right. I do. Swiss watch. Yeah. Well good for you. So were doing better. Were doing better. Maybe not the case this morning because futures have been under pressure. Also coming up influential tech analyst joins us to talk google. Shares of the stock down 12 in the last year and then Mario Gabelli. He told us that the market was at a reasonable place to buy stocks but he did caution that the volatile recovery left equities with no margin of safety but not overpriced. Were going to find out what he thinks in light of the currency fluctuates and volatility of the markets. Stick around. Squawk box will be right back. Ameriprise asked people a simple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry but you worry. What happens when your paychecks stop . Because everyone has retirement questions. Ameriprise created the exclusive confident retirement approach. To get the real answers you need. Start building your confident retirement today. You just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. Because youre not you youre a whole airline. And its not a ticket youre upgrading its your entire operations, from domestic to international. Which means you need help from a whole team of advisors. From workforce strategies to Tech Solutions and a thousand other things. So you call pwc. The right people to get the extraordinary done. Welcome back to squawk box. Google hitting a 52week low this week. Concerns that the company has lost focus and maybe losing some market share to competitors like facebook. The stock is down about 14 over the last six months while the s p index is up 5 over the same period. Joining us now with a little talk about the future of tech and what it means to google mark mahaney. Good morning to you, mark. Good morning, andrew. Do we give up on google . What do you attribute all of this to . I think there are four or five overhang issues. One of them just ties into one of your prior commentatesors. Google has exposure to europe and the currencies. So like the rest of large cap, thats a head wind. But as you mentioned, theres increasing concern that the incremental ad dollars, theres concern about this apple Safari Browser. Decision will come up. Maybe goozgle loses that share. Theres concerns over the decisions theyre making. All those things have come together to bring that multiple down to a market multiple. Lets walk through each to understand your implications. The biggest cloud has to be europe and what the regulators really do there. Do you think ends up happening . Yeah thats very hard to call. We think its highly unlikely that the extreme case happens that google is somehow broken up. There are not any natural assets for them to spin off. We doubt that plays out. The concern about the incremental dollars going to google, the checks we do with advertisers, ad agencies et cetera, google remains the company that is perceived to have the highest r. O. Y. They perfected search advertising. I dont think thats an issue for google. Lets talk about apple and safari. What do you think the chance what do you think the real chance is that apple decides that they are no longer going to make google a default Search Engine on that browser and what that means on the desktop version of your computers and the mobile versions . I think you would have to look at more than 50 chance of that happening. The so what for google, however, is we think thats a 3 impact to revenue and earnings. Risk to apple of doing this what percentage of google searches on a daily basis are coming from a Safari Browser . We dont know. We would say its in the teens percent. So teens percent, if you will, lets call it 15 . Well make it up for now. Why do you think it would only impact the bottom line by 3 or 4 . Because theres three things consumers can do in response to this. Secondly drop safari as their browser and actually switch over to chrome. And use the Google Chrome search app on the phone. Theres an application. Are you worried theyre in amazon territory when it comes to investment investing things that may not work out . Im not. I think this company made the right portfolio in terms of longterm trends. Internet into car, google is there. Theyve also got great plays off of youtube, google play. This is the broadest internet port foal you out there. To answer your first question were buyers of stock. We think its a great entry point. Whats the target real quick before we go. 700. We think they deserve a premium of Something Like 20 times 16 earnings. That gets you to 700 bucks. Thank you for joining us. Thank you andrew. When we come back this morning, a swiss game changer this morning. Switzerlands central bank shocking the markets. Scrapped the zero ceiling which was its tie to the euro. That meant some real shakeouts in the markets for currencies and that has impacted markets around the globe. Also europe floor. Well, they called it a ceiling. It was a swiss ceil euro floor. But they were saying 1. 20. Couldnt go below that. Now they can. Markets taking advantage of that. When we come back we also have Quarterly Results from bank of america. Financial noise financial noise financial noise the evolution of luxury continues. The next generation 2015 escalade. Welcome back to squawk box right here on cnbc first in business worldwide. Im Andrew Ross Sorkin along with joe kernen and becky quick. Coming up this hour weve got a lot to talk about. Currency markets shaking up. And were waiting for bank of americas report. And then the next frontier for the internet. Sir Richard Branson backing a play to bring internet to rural areas. And our guest here this morning Mario Gabelli. Were going to get to him in just a couple of minutes. But first lets tell you whats going on. Were looking for quarterly numbers from bank of america. Well bring you those numbers as soon as we get them. Before we do all of that we got todays top stories. And if youre waking up this morning, the big story is the currency markets this morning in a very surprise move switzerlands bank snapped its rate of 1. 20 to the swiss euro. To head off inflation. In response the euro plunged against the swiss franc. If the losses hold it would be the biggest oneday drop on record. As joe had mentioned who said it this morning . Were going to remember this day for a long time. It is the ides of january. We should take a look at the u. S. Equity futures. Because they have been very volatile in the premarket. They have moved all over. They were in the green several hours before this move. Now in the red. The dow looking it would open down 68 points. The s p 500 opening off about 9. 5 points. Lots of questions. What was the estimate on bank of america . It looks like it was a miss. 25 cents versus the 31 cents the street was expecting. Revenue also below. There are a few things that are happening here. You can say that the banks in general probably got caught off guard by that Interest Rate drop at the end of the quarter. That is costing a lot of them. It cost jpmorgan yesterday. Looks like the same situation with bank of america. I think theyre revenue is 29. 94. What was it supposed to be . It was supposed to be 20. 94. That is to be in line. Theres a dva and nondva. I think the majority of the analysts follow the non dva. Theres not an apples to apples comparison. Bank of america has a lot of different moving pieces. Most of analysts go with the dva number which would be 18. 95. But you also see earnings fell to 7 cents because thats what increased charges. The charges at it still up to 31 cents a share. And then theres all the other metrics that were talking about. The stocks down though. Do we have it there . I did not look at bank of america shares before this came out. Obviously the market overall is under pressure because of the swiss francs. But this is a miss on top of that for bank of america. Yesterday expressed in swiss francs it would have been not quite as good as today, right . Can you start figuring that out . Right. If you look it was the swiss market. Fell 8. 5 in local terms. But some stocks were trading higher. You get crushed if youre a Swiss National owning those stocks. Again, thats like a very quick look at whats been happening with bank of america. This is one of many financials were getting today. Here to take a broader look at some of the banks is anton schutz. Anton, i know these numbers are just out, but what do you think . Well you know no ones expecting much out of them. And unfortunately with the lowered bar from yesterday, they dont look terrific on the surface. Clearly theres a lot of detail missing in what i know. These stocks have been pummelled. Bkx is down 10 year to day. Had a nice performance in december. But i think these stocks are all set up to bounce off of these notgreat numbers. Obviously macro has changed really quickly. Changed yesterday. Changed again today. Probably will change tomorrow. So i think what you have to look at is the conference calls, long growth. We saw some long growth at jpmorgan. Obviously some good Mortgage Business. Its been costly in the past. But put with rates where they are, the Mortgage Business is primed to run very well. Capital return will be critical on the conference calls. So discussion will be very important. And of course everybodys going to want to know whats your exposure to energy both good and bad. What energy loans are you making, what do you have and hows that going to help your consumer portfolio. Clearly on the retail sales, we havent seen strength in the consumer yet. I think consumer Balance Sheets are strengthening and i think theyll be good for banks with Retail Businesses like credit card. So i think consumer activity will be important. Clearly the credit exposure is going to be a question too. The Interest Rate moves we saw at the end of last year that are continuing this quarter, the currency moves that were seeing today, that throws a lot of things into question. How do you change the way you evaluate the banks overall as a result of some of these macro issues . Yeah i mean you know the way my portfolio is positioned i do have exposure. Some of the big Banks Like Bank of america, i do own that. We do have some citi. But we own a lot of small takeover names and the small banks have been growning loans faster. There are over 300 deals in small names last year. So the trend is up. And a harder Interest Rate environment makes it more likely that Smaller Banks cant compete and are going to sell. And thats the way im looking at my portfolio for the most part. On the big, theyre cheap. You keep waiting for the regulators to stop fining them and punishing them. I mean thats what youre waiting for. But they all trade very cheaply to earnings. Its just the future growth. It just doesnt seem to want to show up given the rate environment. Anton, are you focused on any regional banks anywhere . Are you to used on the carolinas, florida, anything special . Yeah i really love the southeast. I love the growth. Great demographics. Some it of driven by taxes. And large fortune 500 companies have been relocated to places like the carolinas. Really great growth markets. The Research Triangle and charlotte and florida is bouncing back. So you have credit recovery. Georgias got cranes back up in atlanta. Pretty amazing given the state of things a couple years ago. So very good growth. Again, very fragmented. The largest independent bank in North Carolina which we own is 4 billion in assets. The bigger banks want in because of the growth. Thats where im focused. I dont know if you follow blookrock but that company came out and beat expectations by quite a bit. Also raising its dividend by another 13 . It was already at 2. 18. Already yielding 2. 23 . Is this one of the ones you follow . Would you be interested in Something Like that . Well i mean i do follow the asset managers. I mean clearly theyre best of breed. Theyve done a great job. They have a large fixed income business. Clearly wind in the sails with all these moves in the bond market. So for those of us including me who keep waiting for higher rates, this has been a very Good Business for blackrock. Clearly some of the pain felt at pimco has led to flows in blackrock. Very wellrun company. Clearly still some exposure to blackrock. So good for pnc as well you know, bet of rate in terms of managers. Im a big fan of larry fink. When youre looking at debt almost 100 trillion you know hes got 4. 5 trillion. So we are always thinking hes done a fabulous job and will continue to do so. But pnc i own some pnc because of that. They have about im going to cuff numbers about. 18 share. So you hitchhike on it. At some point theyll do something with that stock again. I agree. We like Money Managers though. Yeah. I think pnc absolutely has a chance potentially again think about harvesting. They like that stake. Its been a great money manager for them. And they want to grow on the southeast. They obviously did a transaction where they bought a big unit for rbc. They want more market share there. They see a lot of Market Growth as well. We do have exposure to it. Anntonanton, thanks for joining us today. Hes already been posing some questions. Our guest host this morning, Value Investing legend icon supermario. Mario gabelli. You do own some banks, but youre more Money Management right . Well, i mentioned, too, before that some people will go and look at beijing as a place to invest or and we said baltimore. So we own in lake mason. Were big holders of that for a long time. And weve been fair lip large holdest of janus. I think we you do own goldman and morgan stanley. But its not their prime business. When i was 40 years ago to become a partner, you buy at book sell at book. Goldman was selling below book and it was not a complicated do. Could you explain this . Thats not a new transaction for you then . You sold some ibm and bought goldman sachs. That was a different issue. That was timing. You run 50 billion like were doing, we have Money Managers. No need to brag and let us know everything. The bank of america just get news in here i was explaining, joe. Okay. But the 7 cents in charges. And the charges were based on 1. 2 billion to revenue based on Net Interest Income . Charges to revenue for market related net income. You said one of the reasons you like it is because of the net i am focused on bank of new york neepz are net interest margins will rise at some point. Maybe a surprise white swan, not a black swan through 2015 will mean the rate wills go up faster than anticipated. So im buying state street, northern trust, and bank of new york with bank of new york being the one that is more likely than not is bank of new york, is that a piggyback on peltz . No no, no. Peltz comes along and gives you an extra tail wind. A lot can be done there. So what happened here . Do you understand . Market related Net Interest Income adjustment 1. 2 billion. Is this because Interest Rates unexpectedly yields unexpectedly fell at the end of last year . Yeah. They got a little extra squeeze. Theyre coming down. The stock ran up to 42 or 43 and its back down to 37 or 38. I like what is happening in the trust banks because that 200 trillion, theyve done a fabulous job and they are more conservative or alert about how they invest their assets to get a higher current return. If i understand this properly, i think the banks were caught by surprise that Interest Rates actually declined at the end of last year. I cant comment on that. Anton and those that follow that its not a core competency. A billion is what we manage. Were sensitive about every stock. But if im looking over for takeovers i would go to the carolinas and florida. Just looking at best buy quickly here too. You dont own any of that do you . Larry has been a big fan of best buy. Trying to figure out what happened. They closed about 39. I think its indicated at 36 or so. After the Company Reported what its holiday revenue was. I dont know whether its below or not. But thats whats happening right now. Its down about 7 . Saying some positive things about large screen tvs and mobile phones. The nineweek that doesnt International Revenue down almost 12 . Domestic revenue rose 13. 4 . Thats kind of interesting. But the nineweek same store sales domestic increased 2. 6 . Revenue up total 2. 1 . But the International Revenue is weak. Youre going to find that on every company over the next the euro last year was 1. 38. Now i dont know where it is this morning. 1. 17. And the canadian currency and latinamerican currency. When youre looking at revenues and the earnings of the s p are going to have a really big head wind. I just want to quote the ceo for one second. I expect the holiday growth rate was lower than previous quarters due to the pressure we outlined last quarter relating to last years initial rollout of ship from store. Remember we talked the cost of doing all the ship from store stuff is quite expensive. People think its cheaper but its not. And the two gaming consoles and this ones interesting, was declined by the interest in tablets. But youre looking at a change in the way consumers are buying goods. And, you know but the margin compression, the cost for the way we like to buy goods now cost more and it hasnt caught up with the prices. You know i looked we studied costco. I havent studied best buy. Theyve got a 10 gross margin. They do quite well. So when we look at retailing, we have our own niches. I talked to you about oreilly autoparts vendor. These have done quite well. And the users of energy have been the beneficiaryies of it. But i stick with best buy. Thank you for that. We will come back of course to dr. Love. We also have a big lineup to come this morning. A top fund manager adding visa to the squawk platinum portfolio. Joining us in a little bit to tell us why plastic pays off. And then a shocking currency move with ripple effects throughout the markets. Dennis gartman is going to break down this mornings swiss surprise. Then we have sir Richard Branson. Hes going to be joining us. Hes backing a new satellite network. So weve got a lot to come. Well be back. They have been all over the map. We saw the dow futures up about 150 points and then the National Bank stepped in. They removed the peg they were tying themselves to the euro with. They had Exchange Rate between the swiss franc and the euro at 1. 2 swiss francs to the euro. That the bank would no longer stand in the way. That the franc wanted to go sharper up. We watched futures fall by 150 points. Theyve been bouncing back and forth since that time. The dow is up about 18 points. The s p up by 1. 5. You havent seen anything yet. Watch what continues to happen this morning. Home builder erer lennar out with earnings this morning. Lennar sold homes at higher prices. Revenue was essentially in line. That stock looks like its up about 1. 6 . Also Economic Data on tap today i thought i was done sorry. At 8 30 eastern time were going to get weekly jobless claims the Producer Price index, the empire state survey. Youre never done. No. Never done. In fact continue now. When we come back this morning theres a great trade on lennar. But well talk about it later. Make sure you stick around for that. New ideas for the squawk platinum portfolio right after this. And later, the entertainment plays that could make you money this year. Mario gabellis take is also to come this morning. Stick around. Squawk box will be right back. Breath in. And. Exhale. Aflac and a gentle wavelike motion. Ahhhahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just four days. Ahh four days . Yep. See why speed matters, at aflac. Com. Welcome back to squawk box. The squawk platinum portfolio is back. Now you can go online to cnbc pro on cnbc. Com to check the managers picks. Plus read up on their exclusive analysis. Here with her picks today is sarah mallick. Thank you for joining us. Youve been doing this with us for awhile now. You have three picks youre sticking with. We do. Thanks for having me back. First one we like is visa. We think investors arent giving them enough credit. As that moves to credit we think that should grow in the high single digits. Visa also has a great Free Cash Flow profile. We expect them to buy a billion worth of stock this year. Why these compared to mastercard . We like their positioning. 50 of their volumes in the u. S. They have nice emerging markets exposure. Theyre more associated with the base and all make us prefer visa right now. Do you ever worry that somehow that the apple pay or future of Something Like an apple l pay completely and utterly disrupts the credit card business . We see that as being complementary to visa. We think visa is still well positioned and they should continue to do well even in an apple pay world. With apple pay, yes. But its sort of a bitcoinish. Apple thinks forget about visa and mastercard, were going it ourselves. Thats not what were seeing in the future. Either way. Lets go through the other couple of names. Airmark is your next one. Yes. We think they should hit the mark this year. New ceo from pepsi bottling. He knows that pennies count and thats what aramark needs. As he focuses on food and labor marks, we think that will help their margins get back to the industry standard. That should help them close their valuation. Whats the upside . We dont actually give out actually price targets, but we do see them closing their valuation gap. All three of these, and well get to the last one in a second but all three you look at and say there is 10 upside 20 upside, 30 . I mean how do you why are you putting it on the list . The viewer whos trying to think im going to try to piggyback on you. Were putting on the list because they have tail winds. Which has a strong tail wind from lower oil prices. Look at the nice segues shes able to make. Keep going. Like aramark the new ceo comes to place and makes them more profitable. You were nodding at aramark. We wrote a report on it prior to the ipo. Clearly in the Food Service Business theyre a leader. Its consolidating and theyve done a good job. Wed like to see more inflation on food because that gets passed through at a constant margin which works quite well. On ppg, implications on price of oil . 70 to 80 of their costs of goods sold are from oil derif derivatives derivatives. This should help them increase margins. Another strong Free Cash Flow story, we expect them to buy back a billion in stock year to date. And theyre shedding noncore businesses. Okay. The competition is on. Thank you for coming in. Thanks for having me. No longer your professors tia loan. So youve got a lot more going. Thank you. And dont forget you can now go online to cnbc pro on cnbc. Com. Track the pros picks and do it in realtime get alerts and exclusive analysis. Coming up in the next hour john rogers jr. Hes going to weigh in with his top picks for 2015. You like this quote. The snb raised the fees that it will charge banks to keep them depositing money. So theyre not theyre not lowering their Interest Rates. Theyre raising the negative Interest Rate. Now to get them to take your money. They want noun go out into the economy, this is their way of enforcing it. Wouldnt be get sog strong if they left Interest Rates where they were. So to offset this but its so bizarre. Coming up a deal to bring highspeed internet to rural areas. Virgin ga laktlactic backing a new one. Sir Richard Branson and greg wyler when we return. You just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. Because youre not you youre a whole airline. And its not a ticket youre upgrading its your entire operations, from domestic to international. Which means you need help from a whole team of advisors. From workforce strategies to Tech Solutions and a thousand other things. So you call pwc. The right people to get the extraordinary done. Welcome back to squawk box, everyone. In our headlines this morning, bank of america posting earnings and revenue that were below what wall street had been anticipating. There was lower revenue from fixed income trading. That stock is down by about 2 this morning. Blackrock raising its Quarterly Cash Dividend by 13 to 2. 18 a share. Even before that it was already yielding 2. 23 . Thats big news for blackrock as well. Well see where the stock trades at the open today. And shares of best buy getting crushed this morning. The company reporting same store sales rose 2. 5 . But it warrants that it expects same store sales growth to be flat or negative. You can see right now that stock is down by 6 . The dow tumbling nearly 500 points since tuesdays high. Dom chu joins us now with more on the market reset. And just more of the same for 2015, really. Youre right. We talk about this volatility that we havent seen in quite some time for the markets. We ended the year last year. And were starting off in 2015 with it. So this is the year to date chart of the Dow Jones Industrial average. We kind of totaled up showing you every single up and down move through the intraday movements through the course of any trading day. As you can see here weve had a volatile ride. If you count all of the up and down moves on an intraday basis, weve walked if you will, about 3,000 points or about 3,000 steps in the market place for the dow jones. Thats a big, big move here up and down across the board. That market volatility very much a story for this particular at least morning here was we go into the second a of the month. Some notes here. We have seen that 500 points come off since those tuesday highs. This is the worst fourday dow losing streak in three months. So youve got to go back quite a bit of time before you see anything like weve seen over the past four days here. And then of course you talk about though record lows for treasury yields on the 30 year. 2. 39 , 2. 4 . Just some more indication here that growth is slowing down. If youre looking for one bright spot in the market at least for the s p 500, we saw a slew of 52week lows hit yesterday. But one stock actually did pretty well. And that was mohawk industries. Check out that stock. It was actually up. Its up about 12 so far this past year. It actually made a new record high in yesterdays trade, guys. Back over to you. 3,000 points not so bad. 1500 up 1500 down. It hasnt been quite that bad, dom, but 3,000 straight down would be bad too. So weve had ups and downs. But net were down how much since the beginning of the year on the dow . 500, 700 points . Were down about 4 from its highs that weve seen here. So well see what happens. All right. And we know youll be watching it for us dom. Thanks. You got it. Switzerlands central bank if you havent heard this already this morning it gave up on targeting an exchange against the euro. Plummeting 10. 5 . Weve seen all kinds of moves in currencies and markets around the world. Joining us now on the squawk line is dennis gartman. Dennis you say that this decision is the swiss Central Banks decision as the Worst Central Bank move youve seen in four decades of watching the market. Why is that . Well it is. Because one, they gave you no indication this was going to happen. They had been spending enormous amounts of money, enormous amounts of swiss francs which they could create at the central bank. Intervention to send your currency lower or to keep it lower is easily accomplished. They have quit doing that. The swiss franc has soared as a result. The money that the Swiss Central Bank is going to lose is going to be in the tens of billions of dollars. The impact upon the swiss stock market and the losses that are accruing to swiss citizens this morning are going to be hard for the Swiss National Bank Officials to defend. I dont know how theyre going to be able to do that. This really is i think, a silly decision on their part. And it has been it has inflicted enormous losses across the world to a great number of people. Not the least of which will be the people who hold mortgages. We heard that talked about earlier today. Predicated in swiss francs. The damage has been severe. Our guest host is Mario Gabelli. Youve got to have something that keeps you awake and on your toes for Something Like this. Theres a lot of things that can happen. Last year nobody thought about putin going into crimea. Nobody thought about oil going as low as it did. This year what can go wrong . Youve got 1. 3 trillion of junk bonds and 15 of that is in oil. Something can go wrong there. And the banks of the United States have perceived to be quality and strong maybe a bank will go bust. So in that currency change you know, theres a lot of dynamics. And the swiss will do with the swiss will do. And too bad. You know somebodys caught naked, it is what it is. Youre going to lose a lot of money. When you have things that happen that quickly, the good news is somebodys going to lose money. Theyre unprepared to take risk. Thats what capitalism is about. Its a good way to keep people kind of focused on what they should be doing every day. Dennis what do you do in terms of moving your positions around today as a result . Well the only thing ive got on them im actually very fortunate because im short the euro against the British Pound Sterling which is working, the only other thing i find interesting and really quite fascinating is the manner in which stock Index Futures have gone from being up dramatically to down dramatically and now relatively unchanged. I think this breeds confusion. And i think confusion sends people to the sidelines. I think were going to see greater amounts of volatility. The vix index is probably going to soar on this. You might get the vix to rally simply because this breeds confusion. And confusion breeds contempt. I think this was an ill advised move. I will hitchhike on that dennis. Confusion also breeds opportunity. I consider it opportunity. Youre half empty. My class is half full. Well, ill tell you what. To be corrected by Mario Gabelli is good. Youre not being corrected. Youre extremely good at what you do. Thank you, sir. Thank you for calling in today. We appreciate it. My honor. You be well. Cheers. You too. Also Steve Leisman has an interview with Christine Lagarde. It will be interesting to get her take on all these moves as well. Coming up when we return the space race is on. Virgin galactic funding new satellites that will be delivering internet to underserved areas. Sir Richard Branson will join us with greg wyler next founder of the project Company Behind the project. Well tell you about it when we return. In my world, wall isnt a street. Return on investment isnt the only return im looking forward to. For some every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Start investing with as little as fifty dollars. 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Up about 54 points on the dow. Right now up about 6 on the s p. But in recent sessions you cant even where we are at 10 00 a. M. , you dont know where were going to be at 4 00. At least weve recovered after the initial shock of that move by the Swiss National bank. You dont know where youre going to be at 7 30 a. M. How about this day we were up almost 300. Then dropped down 150. It has been interesting moves. Lets turn to our guest host morning. Legendary investor Mario Gabelli to get this thoughts. You said this creates opportunities. You saw opportunities even before these moves. Youve been watching media very closely. Do you see . In the media world were talking about the 3 billion new consumers. But the smartphone and penetration of mobile devices need content and distribution. One of your guests coming up deals with wireless connectivity. The president of the United States is saying we have to bring broadband into the local communities, have competition, get you up to significant speeds. So theres a lot on distribution. For my point of view i like the content companies and i like to look at stocks that are beat up i can own for the next three or four years. One of them that jumps out and its 700 million shares. Has done a fabulous job. Theyve got great cash flow. Theyve got shortterm issue. But over the next five years this is a stock that will double and do even more than that. So buying back taking excess cash flow positioning itself. So thats what i want. Sony has done a fantastic job. I think at some point there will be a consolidation. Obviously doing well in beverly park. And something will happen. You said consolidation. You say consolidation in context of zone snisony . No. Columbia pictures paramount. Something will happen. Youve got another guest coming on at 8 00 so let me step back. John malone Warren Buffett have been Wealth Builders for the last 30 years. Right now if you have the fingerprints of john malone on all of his companies and theres a grid of them including directv and several others. Hes got 110 billion of equity capital, not counting the debt. He personally has 8 billion in the game. Not like warren. Warrens got a little more. But the point is what is he doing on financial engengineering. He comes to work every day thinking of scale and consolidation. And discovery is part of his fingerprint. And david understands that. And so you think discovery becomes a larger umbrella for a much dr. Or its a 20 billion. Youre paying for facebook, alibaba, google hundreds of billions. Theyre trying to get into this business. Well you know they want to be in the content business. Who do they want to own . How do we see global consolidation . Theres a company in the caribbean coming out of england that wants to do something. We had a guest mel karmazin that said he thinks cbs should be together. I love mel spp he looking for a job . Obviously he sold his Radio Station to cbs. He understands that. The understands the fact you need a network thats limping. Able that things could be done on and would work. Youve got national in between that. Thats an element that will be in play at some point in time. And theres a lot that will go on. Mel this week . Last week. It was last week. I didnt know. I just hey, you can have mel any time. He was in the last week in the last seven days i should say. There we go. Just to be clear, none of this is going to happen nothing really happens until we get some clarify from the fcc in terms of what Net Neutrality really means, all the other deals on the table. The directv is clear that that has to be done. And for my point of view consolidation is an important dynamic. You need scale, you need structure, and you need to consolidate some of these players. Notwithstanding that, youre not going to have clarity on Net Neutrality. Whatever the fcc announces in the next couple weeks will be debated in court for a year or two. The toll for trucks is like 50. The toll for cars is 14 before discounts. And so youve got to have heavy users pay more. Otherwise whos going to pay for the 45 billion. Whos going to pay for the infrastructure. You want to maintain that infrastructure. You know, north korea not north korea. South korea was better than anyone else in wireless for a long time in broadband and speeds. So the other part is live entertainment. You know. Youre in a studio here where and were across the street from the owner of the company you like a lot. Madison square garden is splitting up and doing engineering. You have Companies Like others that are involved in live entertainment. And that plays. Okay . Whether its any entertainer you want. I like country and western and anything to do with nashville so im focused on that right now. You also started telling me something. Sometimes you move a little faster than i do. Never. Explain to me about what it is youre following with the growth of pets. Why would anyone like on monday morning of this week why is there consolidation in so ill give you some statistics. Ill have to read one because i want a less than unaccurate number. There are 53,000 veterinarians practicing. And there are 85 million dogs 94 million cats. So when you think about what were looking at who distributes companion pet products . Patterson and shine who are very Good Companies and obviously nwi which was taken over. Who is providing the Health Care Products the veterinaries need . Thats how theres a consolidation going on there. Ill stop there. All right. Mario, thank you again. Mario our guest host this hour. More from him in a moment. When we come back Richard Branson on his new investment on satellite for rural areas. Out of 42 vehicles. Based on 6 different criteria. Why did a panel of 11 automotive experts. Name the Volkswagen Golf motor trends 2015 car of the year . Well give you four good reasons the allnew Volkswagen Golf starting at 17,995. Theres an Award Winning golf for everyone. Welcome back to squawk box this morning. The need for speed sparking a space race as Tech Companies jockey over ways to bring faster Internet Connections to more of the worlds population. Virgin galactic announcing today a new investment in one web which is launching low earth satellites to offer broadband to rural areas. Sir Richard Branson joins me now from his home in the caribbean and we hope to talk to his ceo in just a little bit of one web. But richard, tell us about what youre trying to do and who the audience is for these satellites. Because people have tried to do this before, but its always been pretty tough to make the economics work. Well we partnered up with qualcomm. We plan to put an initial array of 468 satellites out. And if thats successful we want to go to 2,400 satellites. So more satellites than are currently in the sky today. The idea is to try to reach the literally billions of people who dont have Internet Access or wifi access. A lot of them dont even have mobile phone access. And to do so with good quality reception at good prices. And thats something which we both feel confident about and weve got some other quite large investors who are going to be announced over the last two or three months who also believe in the idea and think it could work. Richard, the model for this and in particular the audience, is this u. S. Based . Global . Lets talk about the economics. Because im just curious to try to understand what the cost base will be for those who are trying to get this service relative to other opportunities and where you see this all relative to what google is trying to do, for example, with lune. They as far as america is concerned, obviously whatever president obama announces tomorrow is great. But there will still be plenty of places in america where they cant get Internet Access. And well be able to supply those. But i think the big beneficiaries of this are going to be third world countries where theyre just not getting education, theyre not getting, you know all the benefits that you get from having internet. And being able to set up their own businesses and so on. I think they will benefit enormously from this. As far as price is concerned, the initial array is going to cost nearly 2 billion to do. But we can still be very competitive on price as far as the end use is concerned. And we believe that they the break even of this is not enormous. You know its something which qualcomm and virgin group looked at closely. We feel makes sense economically as well. Its also you know fantastic for Virgin Galactic because we have laumpbl ofnch of one which is an efficient way of putting satellites in space. We can literally take off every three or four hours, replenish satellites when they come out of the five years. And take off again and put more up. So its a great boost for Virgin Galactic as well. Sir richard, im sure you looked at others who tried to do this before. They didnt do it successfully. What is different about this . Weve looked we certainly looked at others. And it hasnt deterred us. I think whats different now is that you know we have Virgin Galactic which can put up small satellites cheaply, quickly, and efficiently. We you can build small satellites now for a fraction of the price that you could ten years ago. And were going to be talking about, you know the quantity of small satellites which enable us to be able to drive the cost down to an incredibly competitive level. And theres a lot of Technological Breakthroughs that have taken place since the companies of the past. Sir Richard Branson, we thank you for joining us this morning. We wish you well with it. Its a great project. If any its actually works and is as successful as you want it to be it will do great things for reaching a lot of people who dont have the service right now. So thank you. We look forward to tracking it. Thanks. Coming up barry diller. The owner of brands like match. Com, tinder. Also citigroup numbers expected any minute. Well bring you the numbers only as squawk box can do. Always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Say youre a finance guy. A farmer. A researcher. You used to depend on experience. The internet. Your gut. Today you can use ibm watson analytics. It can make sense of all kinds of data. Uncover hidden correlations and new opportunities. And give recommendations with more confidence on who will buy. What to make. Where to plant. Which helps you make smarter decisions. Theres a new way to work and its made with ibm. Doing business with barry diller, the media mogul our special guest. From freedom of speech to tinder to Floating Islands. His expertise on the big deals in the works and the next big thing to hit the industry. Volatility is the name of the game. Citi citi citi citi citi group earnings. And the power of the social media. As the final hour of squawk box begins right now. Cy live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box here on cnbc first in business worldwide. Im joe kernen along with becky quick and Andrew Ross Sorkin. I think were in the presence of greatness with barry diller. Barry diller is here. Thanks for coming to new jersey. The shows 20 years old now. Are we in new jersey . You are confused. This is new york. Thank you. But i think the cars are distracting. As a backdrop . Yeah. We like the energy. Well its nice for you. I think the goal is to make it nice for viewers. Im sorry. Its none of my business but ive been watching. You are a guy who knows a thing or two. If you could slow the traffic to four miles an hour. Itd be a good shot. Be a better shot. Okay. Lets talk about what has broiled the markets. And you read the commentary not really with currency traders here, but definitely abroad. They havent seen anything like this in 30 years. Theyre calling it a tsunami and a hurricane and a tornado. Switzerlands central bank shocking the markets by scrapping its longstanding cap on the franc. The impact being felt throughout the market. The euro once again plunging against the dollar but the euros been plunging for awhile. And, you know the swiss franc has been going down with it when normally it wouldnt have. At least at the swiss franc, very strong. It moved 30 just this morning. Backed off a little bit. But its roiling Financial Markets. Well find out what it means. Because eventually our stock sold off to down almost triple digits. Were up right now. Check out whats happening in europe at this hour. Actually there is the euro at 1. 17 right now. The european markets are actually doing a little bit better, but not in switzerland, obviously. That market was down as much as 10 . U. S. Futures have been all over the map. But right now theyre now down. You saw it was up four a second ago. The last time we checked it was up 60. So traders are trying to figure out exactly what this means in this country. Earlier this morning Mark Chandler talked about the currency market and how bond rates are putting pressure on investors to get into equities. I think investors retail and institution have little choice but to move into equities because the yields in the bond markets are too low for even fixed income. People who need fixed income. So rather than worrying about retail, i worry about people on fixed in k, pensioners retired people. Those are the people that will continue to be hurt. Not the leading spectator. Much or on all this in just a bit. You can imagine if there is qe next week and the euro continues to weaken and weve still got this swiss franc pegged lower and lower. Much more painful at this point. Right. They had to do it now. But they also had to lower Interest Rates which is actually raising the amount that they charge banks to hold. They didnt give any advanced notice. Most when they do moves like this, the ecb has been talking about what its going to do next week. Without advanced notice thats when you see massive moves. But for swiss exports, its going to be hard. And for swiss banks which already had problems now theyve got to pay more money just for the bank to hold their deposits. Quite a bit more. So its a negative theres not been an Interest Rate. Tough pay them to hold it. Citigroup earnings out moments ago. Right now the stock is indicated lower. Thats the first move were seeing. 48. 11. It closed at 49. 05. Were down about 2 because its another miss here. 6 cents versus the 9 cents they had been expecting. Also 17. 8 billion in revenue versus the 18. 5 billion expected. Bigger than expected legal fees. A profit of only 350 million. That includes 3. 5 billion, some of those legal charges were previously disclosed others are repositioning charges. And that compares to a year early profit of 2. 46 billion. Corvat acknowledging that it fell short of our expectations. But still got a stock now trading below 50. Come back a little bit. 48. 13. But thats what the fiveyear chart looks like on that name. Heres what else is happening right now. Bank of america posting earnings and revenue that was also below wall streets expectations. Impacted in part by fixed income trading because we saw those big changes. More pressure than expected at the end of the quarter. You can see this morning the stock is down about 3 . 15. 56 is the last trade. Blackrock raising by 13 . That stock was already yielding 2. 23 even before that. Well see what happens to this stock this morning. We have not gotten bids on this yet today. But best buy, that stock is under some pressure this morning. After the Company Posted better than expected Holiday Season sales, but also cautioned that its going to be includesing spending in order to promote sales growth and warns it expects same store to be flat. Lets get to the man of the hour. We are happy to be joined by barry diller visionary in the media world for over three decades. His career has been well documented from Paramount Pictures to fox to qvc. These are just a few of iacs brands. In addition to being Senior Executive at iac, he is also the chairman and executive of expedia. We are happy to have you in our studio for the very first time. Im happy to be here. As joe made the point many times, we moved for you. I appreciate it. Thats pretty complementary, is it not . Its complementary, but i may not hold. But we need vision. I remember when you bought that like it was on tv to buy stuff. It was like why would anyone buy that thing. It was all about the internet even back then. I listen to what you say. It had no vision and it just had curiosity. But it worked. Andrews curious a lot. I bet hes curious right now. Ill tell you what im curious about. We havent talked in awhile or since the news last week of this horrible tragic massacre in france. And we havent talked since the sony hacking event and what that means for free speech and what it means to be an executive of a Big Media Company and how you deal with all of this. Well thats large. On sony and i do think it has reflections on it. Sony is not a hero in inception in the sense they decided to make a movie that had huge controversy. They made the decision to have a movie that was controversial or didnt work you make movies youre going to make mistakes. I dont blame them much for that. I think of all the players in this they deserve the most sympathy because they were actually the victim. And they then were i think, absolutely unheroically banged by the president who didnt have the facts and while he was saying the absurdity of you should have called me. Yes, i have a business decision to make get the president. I mean its kind of crazy. And hes been watching all of this. If they were interested in helping, they could have called sony as well. Well they had been i believe, at a very senior female level of the white house been talking to sony executives directly. Also sony at the time that he made his statement, they were working on a digital release. I was working on it for our service to be a digital release. So i think hes not a hero. The Motion Picture industry is absolutely unheroic. They for three weeks said nothing. Nothing about standing up for free speech. Nothing about the responsibility editorial responsibility et cetera. They were utterly silent. So that means that all of the members were saying huhuh. Were not getting involved. So one of the things about this free speech thing is that you have to, of course one of the things is when you have an incident of any kind everyone has to get involved. Like they did after the terrible paris. So they aint heroes. The only real hero oddly is george clooney. Why . Because for three weeks right after this happened he did try to gather support. He wrote a letter to all the heads of the Movie Companies and dozens of celebrities to sign. Celebrities said okay well sign. Not one studio would sign it. In the end no one would sign it. So he really did try and stand up. So i think that you know the swirl of this is that theres an issue of free speech publicly and theres an issue of free speech privately. Public free speech has responsibilities. I dont think private has any responsibility. Would you have made the movie . Actually, i dont know if i would or not. I probably i dont know. Stupid to say. Its so easy to say i wouldnt. But ive made so many crappy movies over a very long career and i think weve made some great movies but you make movies, youre going to make mistakes. Ive made movies you know we made a movie once called warriors that the first weekend warriors was a kind of violent film and the first week there was a shootout in a theater. And we withdrew the movie. We never showed it again. You make mistakes. Okay. With the understanding that sony was the victim we still saw lots of email traffic and other things from the executives at sony. So my question to you is is there a fallout from that . When you look at the ceo or amy pascal and some of the things that were said what do you do . Its so ridiculous. Amy pascal and scott rudin are not racists of any kind or color. Zero, not. Were they insensitive . Slightly insensitive. Are you, you, you, and everybody else . Totally in private. We are all insensitive other than what were sensitive about. And so to the absurdity of her going to that fraud al sharpton and asking for forgiveness and then he making a statement saying should she lose her job, he said i havent decided that yet. I thought the world has gone nuts. Private any kind of private communication, emails. We all have to know that whatever you say more than likely its going to get out. But the terrible thing is to see a thing on a cab which says if you dont want it on page six, dont do it. I would like to ask anyone would they want to live their lives in every respect of their life that way . But thats why the studio heads wouldnt stand up. They all thought there before the grace of god goes i. They all had emails they didnt want dug into. All of us do. I should say all of us. Who doesnt . Any fallout though longterm for sony . None whatsoever. All this stuff saying its the end of amy pascal because of this, thats pooey. By the way, i think michael handled himself well. He was working on releasing the film. And then to get blind sided by the person that hed been supportive of all this time didnt even give him the courtesy of saying you know were going to Say Something in a few minutes. Everyone was waiting for that press conference. We were in negotiations with sony during that and had to wait until the president spoke. No one knew what he was going to say. Were going to slip in a quick break and come back and talk to you about m a. I want to hear about this deal with woody allen. And other issues. Stay where you are. When we come bab, more from barry diller including his plans to build a Floating Island off of manhattan. Then some marketmoving data. Jobless claims and. Rks pi minutes away. Also value picks with Ariel Investment ceo and a battle over ipa. Squawk box will be right back. She inspires you. No question about that. But your erectile dysfunction that could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid long term injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision or any allergic reactions like rash, hives, swelling of the lips tongue or throat or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. Welcome back everybody. Were joined once again by barry diller. We look to you for judgment on content. Ive heard you say theres all sorts of good things on television. Most of it happens to be on showtime or hbo or whatever youre watching. I was wondering if youre watching things on netflix or amazon. They just got heralded at the golden globes. So what do you think . Where are you watching content these days . I am not watching content anywhere close to the way i used to of course which was one of four channels. And you would actually there was a thing called i cant this is take it out. Its screaming in my ear. So i dont watch Linear Television anymore. And i havent for years. Since the dvr, since directv, since all of that. So i only watch shows im interested. I dont watch networks any longer. I think thats true for a growing number of people. I think because you get more and more optionalty. It is going to break up the kind of closed system will break up with all of these other opportunities. And Peoples Television viewing is going to be to a program, to a theme of a concept. Its going to be its simply not your mothers media any longer. Will you look for the words squawk box . Were you searching for the words there . You were watching us this morning, werent you . No. Howd you see the cars going by . I saw them yesterday. Okay. So you were watching yesterday. Thats close enough. Youve got a good thing going which is called live. Anything that is live then youre going to be able to draw people to actually say oh its the morning, ill watch you or one of the other bimbo shows. Take that. Amazon just did a deal with woody allen. Yes. Probably for a lot of money, we think. I would think. But yes. Does that make sense to you . And do the economics theres a lot of money going to original programming. To some degree is great for the viewer. But i wonder longterm if the whole thing still works. Well you have to the models are really changing. Here you have amazon. Amazon is not doing this for benefit of advertisers. Essentially the program in this case is the advertising. Because amazon only wants to get more people to sign up to prime. And if they sign up to prime, they get a whole slew of things some of which is fresh new video. So thats a model no one has ever heard of. And theres by the way, they dont care i presume they couldnt care less how many viewers they get. Probably like to have some but the issue for them will be do they think it enhances and increases the subscribers to prime into their ecosystem. So you cant compete with that. If you are out there thinking i got to get ratings because if i get ratings, then i can get advertising. Of course theres now no Pricing Power with advertisers anymore. Because the advertising swish is moving, of course, to Digital Mobile et cetera. Theres no Pricing Power there. Theres no Pricing Power for cable programmers because theyve stretched the bacon so wide with costs of 130 or 50 for all this stuff very little of which you want. So youre not going to get the kind of increases that programmers guide. And if youre a cable operator your margins are being decimated on the program side. I hate to interrupt, but quickly let me tell you of breaking news. Target Corporation Just out with news it plans to discontinue its canadian operations. Obviously those canadian operations have been the big problem that have been dragging down stock for quite a while. If you look at whats happening with that stock price target shares are trading higher on this news. 77 is the last trade i see after it closed yet at 74. 33. They say they are unable to find a way to get target canada to profitability until 2021. As a result, thats why theyre making this move. It has 133 stores about 17,600 employees. They do expect 500 million to 600 million in cash cost. More on this in a bit. Did they ever make money . No. Never made money . I dont believe so. People the analysts the street even though target had the big breach last year the data breach what analysts were saying at the time was they were more concerned about the target canadian operations than they were the breach itself. None of the lumber jack shirts and the hats with flippers. Im kidding. I love canada. Thats our most faithful ally and friend. We had canadians standing outside the other day. We did. You have one of those hats. I do. I love it. Going to turn back to barry diller. We had dick parsons on last week and mel karmazin on who made the point he thinks time warner should merge with cbs. But dick made the point that he thinks that once this deal gets approved or not, you will see a domino effect. For what i was saying before if you cant get Pricing Power and growth because all these areas are challenges because the inevitability of the move the centrist moving from a close system to an open digital system has such consequences. If you cant get growth, you have to consolidate. I think what happens is it consolidates. You see now almost nobody who has a cable channel or a broadcast channel takes much outside programming. They essentially it is now utterly vertically integrated. And is that a good thing or bad thing . For who . For the customer. Whos the customer . The customer is the viewer. Okay. For the viewer its a good thing. The reason its a good thing, all of this stuff, is because you have models now that have come up hbo, netflix. Netflix hbo was always in the business of not counting viewers but being able to push the boundaries and do interesting things. Netflix even more so. Amazon everyone more so because of their differentiated i wonder. Would you see a woody allen deal with anybody other than an amazon . Almost impossible. It would be very unlikely. And so for the viewer theyre getting choices they never had. Its why television right now creatively is so far superior to movies. As a creative enterprise. Weve got big screens too. What happens in february and how would you say that that happened . You got wheeler who probably knows pretty well who shaub done. Done what should be done. And then the president who northeast deep in his heart whats right. I think he appeases his base a lot with things he knows are not going to happen. He can at least be on the right side of things for the far left. Theyre on the other side of this argument than you are. No. Im sure you dont want the 1932 rules, do you . You want it as a utility . Excuse me. Ill tell you what i want. Okay. Tell me. This dialogue has been going on for at least ten years. It has had a wonderful effect. It has had Net Neutrality without did sh. Were already there. Excuse me. Without rule making. The reason its habit, though is because of the dialogue because of the fear of the players that if they should make some misstep, the they should do something wrong, put traffic ahead of somebody elses traffic. If they should do the bad practices that have happened from the beginning of communications in terms of taking over everybody, so thats retarded them just that its in the air. Right . Right. So i simply would like this argument to go on for another ten years and everything would be fine. I think no one is going to pass title 2 with restrictions from the 30s. I dont want that tell me what i want. He wants a modified title 2. He wants a modern one. One that says certain not nearly the smartest. One that sen certain basic things but conserves a free market system. He doesnt like free markets anywhere. Thats not true at all. Anywhere. So the status quo is probably thats different than what the president has asked for. Thats what i was trying to get you to say. I think the idea of him so superficially first of all, he cant direct the fcc. No. He can try. Independent agency. He can try, but he cant. President s cant direct the fed either. Can you stick around a little bit longer . Was i leaving . Im happy to leave. No were begging. Were groveling. Stay. Okay. We have a bit of data that could move markets. Plus more on this mornings swiss market surprise. Also metals hit heart over the past week. Copper falling over six straight days. Lead now at a 30month low. Our portfolio guest says theres a stock play there right for the pickings. Well talk about all that in just a moment. Barbara just bought a bike. She wrote a tweet about it. You cant learn much from that. But take data from millions of tweets combine that with your companys supply chain and sales data. Apply ibm analytics and expertise, and all of a sudden, you can learn which bikes to build what to make them from, where to sell them. Because barbara and the world just told you how to build a better bike. Theres a new way to work and its made with ibm. Welcome back to squawk box. Breaking news. Empire january, a better than current read. Just shy of expected. But heres where the actions at. Buckle up. Ppi. Were looking for a number down. 4 . We all know Energy Prices are going down. We just about got it. A little light, actually. Down. 3 . But heres the secret. If you take out food and energy what would you expect . Lower or higher . Up. 3 . Thats a big jump. All the numbers last month were unrevised, so i find that a bit fascinating. And if you look year over year its now over 2 . 2. 1 . 3 higher than our last look. 1. 1 if you include energy. We have a horrible deflation problem. I can only think about world war ii when i look at the fact were 1. 1 on ppi on a year over year basis. We could argue stability. We could argue deflation, inflation. Look what the swiss did this morning. Let me think. Are prices calibrated by things like Interest Rates and what your currency is worth . Central banks gone wild. Itll be new in the spring. We want to Pay Attention to how it moves the markets. Back to the gang on the desk. Squawk box new york. All right, rick. Thank you. Lets bring in Steve Leisman on the numbers and Michelle Carusocabrera whos here on the swiss franc. Do you think about the numbers today . Obviously as rick said the food and energy on ppi was a surprise. It looks like it was driven by services, some increases in private capital equipment. But im seeing a little bit natural gas up 3. 2 . So thats going to drive it. Gas up 14. 5. So a nice beat on the upside for empire state. And i did not see or hear claims. Did rick give us claims . This is a volatile period here for claims. Looks like they rose to a fourmonth high. 316,000. Right. Youre looking for a big increase with layouts. And the question is how much the seasonals get that. On the swiss franc i know michelles going to talk about it but a lot of people saying this is the first victim of qe. Saying that what this is all about is getting out in front of next weeks move by the European Central bank because what was going to happen was they were going to have this basically need to buy a whole lot of euros. It has skyrocketed. Michelle . Welcome to the world currency wars. They keep saying how do you defend a currency . If youre trying to keep it from going up you have to go out there and buy the other currency. Right . So you print up all the francs and keep buying euros and keep buying euros. How much longer were they going to do that when they knew the European Central bank was committed to weakening the thing they were buying and putting on their balance sheet. At some point they think well have to cover our losses. The thing that was shocking was it came without any warning. Weve seen from the Central Banks over the last five or six years is much advanced notice are hey the market is coming the move is coming. Becky, the general rule has been when it comes to monetary policy, youre absolutely right. But usually when they do Exchange Rate actions, they tend to be unannounced. In part because of the Exchange Traders to really get in front of these kinds of actions. By the way, just want to mention, this is one of the things maybe one of the first things i get to when i talk to Christine Lagarde today. And i think michelle correctly brings up the possibility of currency wars with one guy rotating around the other and sidestepping downward. We were going to send you an email to maybe bring up the swiss franc. Thanks joe. Thats brilliant. Youve got it covered, sounds like. Which is why you are who you are. Im just you know you think very deeply about these things to come up with these kind of answers. Becky, your point. Watch for dislocation. Right . And watch for people who made money. Because defending currencies on either side is difficult. Its like price indexing. Its like things all of a sudden itll work eventually. Yeah. All right. Thank you steve and michelle. The squawk platinum portfolio is back. You can go to cnbc pro on cnbc. Com to track the Portfolio Managers picks realtime. Hear with us A John Rogers at ariel fund. John has 10 billion under management. Have you changed any of the thams that you brought us in the past . Were working more on our Industrial Companies these days. Our vice chairman made the case that everyone talks about low Energy Prices being great for the consumer. Its also great for Industrial Companies. They have to get their products from the plant to wherever theyre going to go. Costs a lot of energy to build steel and run a plant. So we think Lower Energy Costs are really going to help Industrial Companies too. Hopefully the ones that arent involved in oil and gas production. So you picked the right ones. Which ones . Are those the ones youre bringing us today . Those are our favorites these day. Anixter telecom. Its been around far long time. Sam zell is the larnlgest shareholder. Next on the list . Kenemetal. Its really underperformed. They compete with Warren Buffetts iskar out in israel. Theyve done well against them. Is it down just with that in general . Why have they had a tough year . Because of lower Commodity Prices. They have a lot of products that support the industry. Thats been hurtful for them. We think longterm theyre going to be extraordinary. And whats your third one . The third one is mts. They do testing systems, highperformance testing systems. Weve been out to visit them. They had a huge Big Industrial testing equipment thats really world class. All right. Weve got to keep it short this time. Can you tell us anything about star wars that we dont know . The new star wars movie . Im not in charge of that yet. What . Next time just a little something. You know what i mean . Harrison ford got hurt or something, right . Last year yeah. His leg. Hes all right though. Is he 70 yet . Still hans solo. All right, all right they snap like that. You got it out of your ear. I dont have that much input. Too many things going on. You can no go online to cnbc pro. I said this leading into him, did i not . On cnbc. Com to tra kck the pros picks. Still to come tomorrow paul meeks and jason subotky. Coming up next, barry diller is here. Hes sticking with us for the rest of the hour. Weve got a lot of ground to cover with him including management shakeup at tinder. Dont roll your eyes. This is going to be a great conversation. As we head to break, take a look at why do we do it . Why do we spend every waking moment, thinking about people . Why are we so committed to keeping you connected . Why combine performance with efficiency . Why innovate for a future without accidents . Why do any of it . Why do all of it . Because if it matters to you its everything to us. The xc60 crossover. From volvo. Lease the wellequipped volvo xc60 today. Visit your local volvo showroom for details. Boy once upon a time, there was a nice house that lived with a family. One day, it started to rain. The house tried to keep out all the water, but water got inside and ruined everybodys everythings. The house thought she let the family down. They just didnt think it could happen. They told the house they would take better care of her. Always. Announcer protect what matters. Get flood insurance. Push your enterprise and you can move the world. But to get from the old way to the new youll need the right it infrastructure. From a partner who knows how to make your enterprise more agile, borderless and secure. Hp helps business move on all the possibilities of today. And stay ready for everything that is still to come. We are happy to be joined today by squawk regular barry diller. Visionary. Not quite a cnbc contributor yet. But were talking. A visionary in the media world for over three decades. Senior executive at iac and expedia. Where were we last time when we oh. So what we decided was that probably those very draconian rules that the president wanted for Net Neutrality never happen. So then were back to my initial question. Why would he pretend it could happen other than to just sort of sound good to people . Thats a good thing that its like saying who doesnt like clean air and water . It just is more complicated than that. And since hes up for saying anything about almost anything because theres nothing that happens that a statement doesnt come out about, so he made a statement about this. I dont take it as by the way, since he cant influence really truly the fcc, its just meaningless. Put democrats on it. Theres more of a majority i feel like it puts pressure on wheeler to not go all the e wa i to make it look like hes listening to him. I think wheeler is a practical man. And i think he knows that. He knows business. He gets it. If he does propose rule making it is not going to be draconian. Itll fix maybe a little of title 2 for certain limited purposes. Other than that it wont be. I dont really worry about it. If they did do it dont you think that it would dry up the Huge Investment . Thats absurd. At t would still invest . They have huge margins. I mean nobody is because its a duopoly or monopoly. The thing that should happen and im really angry that it hasnt is this dumb government in this case precluded tmobile and sprint from merging. And then you get a real competitor that would go in and would undercut everything else. Youd get real competitive pricing and get better service. And the government said oh the third and fourth. But its ridiculous. Its a total duopoly. So unless you create a third wheel of competition and they used your stupid formula. What formula is that . Another thing from the 30s that we still dredge up. Okay. That didnt make sense. Like, those two major players. Tmobile and sprint. The thing is youd have i mean masasan has improves the service and competes like hell. And thats what this market broadband needs. So i mean anyway. But you think these deals do happen and you do think which deals . Comcast oh i think consolidation, theres no way around it. What happens to the future of viacom sumners holdings . Oh, sumner. Sumner, no one knows. Theres no way to know. Because presumably hescould change his will at any moment. He does vote the share so he directs the outcome of cbs and viacom. And not only does he not want to die, he will refuse to die without ordering the future. So its only whats in his mind. Theres no way to know. What do you think john malone is up to . Your old frenemy. No johns my friend. Hes been my partner since i left fox. And i first of all, almost no one has the mind of john. He just has a fantastic brain. I think hes happier than ever. And hes building a huge Cable Company under the noses of almost everyone outside the United States. Hes the biggest cable player in the world. Do you think he still wants to is this still a piece of the puzzle he wants . Andcharter is a vehicle in the u. S. He tried with time warner but i think they screwed it up. By the same hand that kind of soured john and mine at the moment. Theyll make progress. Look. Comcast is not going to be the only real programmer. Programmer and digitaler in the broadband Distribution Program business. All right. Barry diller is our guest host for this house. Squawk box will be right back. Being a keen observer of the world has gotten you far but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. The next six weeks are critically important to see how the guests connect with our brand during this important Holiday Season. And im going to analyze and assess every single store in canada. But every store has to improve. Were seeing performance improvement. But were way behind where we should be. So this is a critical Holiday Season for target and canada. That was target Ceo Brian Cornell talking to Courtney Reagan in november. This morning we just learned that the answer target is exiting canada saying its unable to find a realistic scenario in which target canada can become profitable before 2021. Shares rising this morning on that news. Weve got much more though from barry diller and we want to get to him including the success of tinder when we come right back. And also programming note. Tomorrows squawk box guest host is legendary short seller jim chanos. Hes going to join us at 7 30 a. M. Eastern. Were back in just a moment. Ameriprise asked people a simple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry but you worry. What happens when your paychecks stop . Because everyone has retirement questions. 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And our book will teach you how to trade options for free. So call now. [ male announcer ] call the number on your screen now for your free copy of jon and petes new book. Thats. see the number on your screen call now. Youve been unmatched, right. Right. Tinder. Not on tinder no. Whatever on match. Two bad dates. Oh. Martha. Yeah you said try again, right . That was Martha Stewart at our cnbc 25 event a couple of months ago. Joined by the gentleman you in saw to martha. Right, barry diller. Senior executive at iac. Yeah. How did you get that deal . Know someone there . Majority shareholder of tinder. Marthas not on tinder apparently. That would be that would be probably easy. No it would probably be irrelevant, im afraid. All right. Theres a word for it. So tinder at the Atlanta Hawks game. Yes. There is world, i dont i im scared to move forward. Youre a little above the age limit. Thank you. Thank you for that. I dont you said its not about hooking up anymore. People using it socially. I said its not anywhere near only about it because the thing is tinder particularly for people who are going to cities where they dont know people whatever, they go on tinder in order to be part of a Community Find out what to do who to talk to et cetera et cetera, who to meet, yes, is there flirt going on . Probably so. Enormous number of people use it as a communications tool. Thats what Michelle Carusocabrera is saying she uses it when she lands in a new city. She says she uses it for. Figuring out whats happening, where to go quickly. Its true. Its a wonderful look all of the stuff is harkes back to princess phone, but, no this is just another way, sophisticated, technically, you know enabled way to communicate. To be to be talking, and people like to do that. So you know visionary and everything that weve called you today, media into the future, five, ten years content is important. Will content, will they figure out a way to get paid everything its worth, somehow . Well as i say, they dont have Pricing Power. How what happens . Well i think consolidation happens. I think in other words, look for amazon you said earlier, probably paid well woody allen, well, right . Yeah. Hes being paid by a kind of alternative method than advertising or subscription kind of models. And so i think what happens is first, you get consolidation, you get absolute vertical integration. In other words, if you own amazon, youre going to own your programming. Netflix owns all of its programming. Hbos always owned all of its programming done they pay people well but people working for the man, meaning independent producers are gone because theres no model for independent producers anymore. Great fortunes jill brookes probably made 1 billion out of the simpsons cocreator and producer of the simpsons. Those days are gone i think. Doesnt mean people wont get well paid and who would be sorry for people making 4 million, 12 million instead of 140. Commercials only on live events at some point . I dont know. Look, the thing is its going fast and slow. Fast is everybody and their mother is getting into digital programming. Right. Of all different kinds, valuations and all of that noise. Thats very fast. Slow is this is a model, this closed system is a model that has been built up over a very long periods of time and its going to be five or ten years before right now youre getting chinks in it no more cable growth no more people to subscribe. In fact cable degrowth. So i think that that you know that that so to speak pileon means youre going to have different models and if you dont have the different models barry, can you talk about the cocacola board. Sure. The companys under assault from David Winters. Please. Thats what i say. Hes just another blow hard. Hes got 100 shares. And, you know so i dont look, companys hardly under siege. The Company Acted in a dignified way. I might have been less dignified in my response to the missed math, a kind word to say, for what David Winters said about cocacolas compensation programs but did you appreciate how much compensation being distributed at the time, meaning what happened what was voted on what happened which is really weird its weird what happened cocacola had a Compensation Plan in place for a very long time. They had to renew the plan. The rules said that they had to say that x number of shares would be would be given over a fouryear period, right . Cokecacola had no intention over a fouryear period at least ten, maybe a 20year period. But if you took the fouryear period and didnt read underneath it and dwrund standunderstand it, it wasnt an obligation you would have said coke was giving away all of the stuff to its employees and diluting shareholders. In fact, cokes delusion under 1 standard for companies, et cetera, its all blown to hell. It was not, it should have been better explained. Coke learned a lesson. Should have explained it in more detail at the outset. Okay. Two other quick questions for you. Building a Floating Island. Yes. Off of manhattan. Fool that i am. How did that happen . What is that about . It happened what do you think of criticism about it. I understand it. I mean you do anything people are going to criticize it. Im sympathetic to it and all. It happened because we my wife and i played a fairly big role in the high line and loved the high line love the lower west side, i love public spaces and this opportunity came to build basically tear down a pier and rebuild it. About was prosaic idea. I said why dont we be ambitious and get really be ambitious about what it looks like what kind of park it is we can have performances. Like many things it grew and i think its i think its going to be i mean hopefully we will be able to do it. I think we will it will i think, be great for people. Looks awesome. As a new yorker i hope it works. Appreciate what youve done for the high line and all of than thank you for being here coming in. See you next week. Or not. Sure. But you have to travel to where i am. Very far away. We can arrange that. We can arrange that. Thats it for us today. Join us tomorrow. Time for squawk on the street. Good thursday morning. Welcome to squawk on the street. Im Carl Quintanilla with Jim Cramer David Faber at new york stock exchange. Were down four straight days. Talk about whipsaw action this morning, as the Swiss National bank abandons its cap against the euro cuts rates. More on what that means. Citi and b of a under whelming bank earnings. Ppi came