Transcripts For CNBC Squawk On The Street 20150116

Marketsen futures in the red. Fallout from the Swiss Central Bank move continues with sharp moves in the oil market. Earnings from Goldman Sachs, intel. Goldmans down 2 in premarket. Favorable and selective treatment in luxembourg. Eu lays out its case. Stocks in the midst of a fivesession losing streak. Markets continuing to absorb the surprise move by the Swiss Central Bank. Oil prices on the rise after iea slashes growth forecast for nonopec oil supply by 350,000 barrel as day, adding signs are mounting the tide will turn when it comes to price recovery. Jim, seems like currency brokers will get the lions share of the attention early on. Yeah fxcm the outfit everyones talking about, david, when i was getting made up, have you looks at fxcm i steal your thunder. Yes. You move fast in 25 minutes. When you tell me to look at something, i look at it. Downgraded to underperform. Capital raise critical for solvency. A major focus. What happened with fxcm, well get into it this hour goes on and next hour sara eisen will join us. Their customers caught, leverage you can use in currency trading enormous, customers caught with the move in the swiss franc we talked about yesterday, hence, negative balances 225 million, capital, they need it, where are they going to get it is the question, hence, that stock is 1. 50 trading 12something yesterday and though it was down the question is is there spillover effect to larger brokers . Right. Probably not is what im picking up. I agree. Currencies are much much smaller percentage of so many other the Online Brokers discount brokers and the like. A lot of places took a hit. This is a you have the post some event you didnt count on trying to see who really got hurt. I dont want to overdo it because there are very few firms that i think really let Retail Investors be this unfortunately foolish. By that dealing in currencies . I trade in currencies and i have to tell you, the ability of money you can loss while you go to lunch is extraordinary. Other firms not by the way, curb ability of their customers to lever as much. Im hoping to speak to ceo of another one. Those looking for other potential or other potential fallout here may be disappointed but its an ongoing story. Glad you raised. One Market Participants are focusing on the fallout from this violent move in a major currency. Right. Its difficult because you want to put it in perspective. People watch the show think, wait a second what do i care . Other people say, switzerland is trying not to be spy press, they didnt want the Banking Sector to take over the country. Theres other people who say, you know what . Europe is too unfathomable let me go elsewhere but when they go elsewhere they stumble into the banks, largest part of the s p, and the earnings there, for the most part have been horrendous. Horrendous. Yes. Were going to keep our eye on that obviously. Any breach of Capital Requirements theyre talking about. The or one, Goldman Sachs, reporting Fourth Quarter earnings 4. 38 a share, a beat. Profits fell from yearago period hurt by weakness in fixed income trading and 16 decline in Investment Banking revenue. The lowest annual trading revenue since 2005. And after two years of beating by almost 40 cents, 6 cents does not seem like a lot, jim. No. You like to compare on ficc fixed income currency commodity, and they were not stellar, frankly. But they were stellar on equities you can say, who cares . You can say, cramer its your division, youre like partial to it, which i am but they did the quarter to quarter for goldman, i know out of sync to Say Something positive plus 21 yearoveryear, for bank of america, for the when you look at bank of america, they are minus ten for quarter to quarter. Citi minus 38. Jpmorgan, minus 11. Thats not na impressive. And you go over thaesh exts equity. Fixed income in line bank of america similar, citi better than citi. Jpmorgan was better i point that out, jpmorgan feel as grieved about its stock. But you know what . Its not about personal. Its business. It is. And to your point, with goldman, looking down this is not a great week for Bank Earnings as you just said. No. Its the numbers that are giving small amount of concern to some investors. Everyones going to look back, as i said two weeks from now, the buffett bank wells fargo, they didnt have legal, they have 70 million customers, we really like them theyve got potential growth, but in the end, these are Oil Companies. Theyre Oil Companies because oil goes down, no one wants to own oil stock. All of the companies would have done much better but im the fit for goldman, its the gold mine for goldman. I was surprised. Obviously, it moves around. Right. Talking down 2 yearoveryear from 2013 to 14. Not good. What they call client execution continue to operate in a challenging environment, Economic Uncertainty contributed to low levels of activity which you can use every single quarter as an excuse. Yeah. Economic uncertainty. Look, i think the areas look, watch suntrust my Charitable Trust owns it suntrust blew numbers away, glood quart good quarter, one legal issue. Could use good Bank Earnings after a week like this. Maybe well get bank that has absolutely i have can i just say that the most frequent phrase on these Bank Quarters was, but x legal. No, legal is unfortunately legal is a line item. Citis line item. Jpmorgan legal frankly i was shocked. Ill say it 2015 was going to be fresh start. Citi, i thought fresh start. No. Its not. Legal remains operating item. Carl asked that question the other day whether it should be included. It should not be a separate item and one could make the argument it shouldnt be although others will say were at the tail end of the period. Last year of this Assault Using jamie dimons words, many will disagree with that. The regular jamie, memo regulators dont like it. Dont lose your cool jamie. Im a guy who loses his cool i know than this has become a cost of doing business legal and its not supposed to be. Supposed to be behind these guys. Thats why i say wells shines through. John stumpf theres no legal. I mean its actual its a business. You know its like a retail store, they didnt have the retail growth that i used too like when cross sell maybe but its a business. Yeah. Its not an appendage of a major legal firm. Absolutely. You want long legal i want to bring several law firms publicly you know how much i pay . 23 times earnings for a legal firm. Would you really . Yes, i would. Other big one, intel, Fourth Quarter results beat the street issuing cautious guidance on revenue and Gross Margins for the Current Quarter. What Brian Krzaich had to say on squawk about growing his company in a flat pc market. Projection for 2015 is relatively flat pc base from unit perspective and actually a slight decline in asps, as our average selling price, as we continue to see some pressure there, but were able to grow the company with our Data Center Business internet of things flash memory and other products that were in now, we think we can grow. Okay. Interesting exchange in part chanos was on who said hes short intel, has been six months on weak pcs. Look complain nose makes good and bad. Caterpillar was right, wrong, right. Seagate, western digital, wrong, wrong. I was im intel hawk i admit, i used to go there. Brian krzaich is a turn to the old guys when the andy groh period. Hes a scientist. A great quarter. Stock, you might have been shored if youre chanos. This was a terrific Conference Call. Theyre very conservative. They said the First Quarters seasonally down dont workry about the second quarter, spending less doing much more. Pcs no longer as much as levered to, its the data centered group. A terrific Conference Call. Brian krzaich did a great job. Its being wronged by headlines which says guidance was weaker because it was not. Feel better now . I feel much better. I was pissed off, the questions, show some respect. Too Brian Krzaich . Whos part. I did not expect a good year last year. I exed. A bad year. I did not expect this company to be able to broaden its reach and at the same time cut losses, not spend willynilly. Its right what theyre doing with communication business. Thats the key, isnt it. In terms of not doing a bad job. Not doing a bad job is not enough. Id rather they do a good job. I would too but he was dealt a bad hand in communications. A pc company, what he said what the chinese are doing with the notebooks with the tablets, were looking at this as a pc company, making a mistake. Its better than that. Congratulations, you deserve being best performing stock in the dow. Hes way too nonpromotional. Ill do it for it. Brian krzaich is doing a fan fantastic job. 44 in 2014. Reinvented the company on the fly. And a great engineer. A very funny guy, too. I wish hes hes nice sense of humor. Always important for me. Interview on readddit, hes a gamer. Hard to make a response when youre making jokes. When we come back amazon and eu regulators crosshairs when it comes to taxes. Well fill you in. The u. S. Move to ease the decades long travel restriction to cuba which begins to lift today. Coming up later on. Premarket. We have moved 3200 points up and down in the dow in just 10 sessions and looking for a down open your old 401k is rolled over into a Td Ameritrade ira. Yes so no set up fees wooh yeah so i get help from rollover consultants . Wooh yes no rollover hassle. Great. Woah oh, were spiking things, robbie. For all the confidence you need. Thats better Td Ameritrade. You got this. Take a look at premarket. Numbers coming out. Not just goldman, intel earnings. Cpi the biggest drop since 08. Yearoveryear,. 8 on Consumer Prices and core 1. 6. Disinflation something were not escaping. So i dont want to lose sight of the fact i know when you have this volatility that people think, if the individual must be bad, we didnt see a lot in the Fourth Quarter. Industrial productions out now. Rick santellis got that. Rick . Down. 1 on headline Industrial Production for the month of december. Capacity utilization 79. 7. In terms of Industrial Production, thats pretty much right in line with estimates. Last month a big jump. They didnt take away. It was 1. 3. That was a biggie. 79. 7 definitely on the light side. 1 revision down to 80 on last month. And the last time we were down at 79. 7 it wasnt that long ago, when you consider the 80. 1 some of the best numbers like all numbers youve been referencing back to 08. Were at 79. 3 in october. We have university of Michigan Sentiment to go as we hoover around that symbolic 1. 75 for tenyear note yields. David fabering back to you. Thank you, mr. Santelli. Back to a story following this morning and its truly a developing story. Focused in part on fxcm the Brokerage Firm focuses on currencies that said last night it had a 225 million negative equity balance as a result of what happened to clients trading with the swiss franc. Glenn stevens, another trading plat form with focus on currencies publicly traded Company Market value of 340 million as of close last evening. Glenn, first, thanks for getting to the phone. What can you tell us about what youre seeing amongst your client base in this currency trading universe and what steps perhaps you had taken to mitigate what befell your competitor fxcm . Hi, david. Thanks for the opportunity to weigh in here. Actually, as you might expect theres a fair amount of incoming inquiry centered on concerns about their money, their balances their ability to execute trade to either enter or exit positions that theyre already in and also just comfort and safety of overall accounts. And ultimately unfortunately here this is an industry where policies can vary from company to company and this is one of those examples where we were able to identify what was the Pressure Cooker that was developing with this Swiss National bank and although the move this week was obviously caught people flatfooted and by surprise it wasnt surprising there was potential for this kind of move because as six months ago we started working with our clients to change the required amount of collateral to hold against this related product, keep in mind this is focused swiss related products particularly euro swiss cross. Its not currencies its a swiss focused product and particularly it was a trade that people were putting on to bet that the snb didnt back away. When you did they have a large disconnect in a short amount of time that put other players in a challenging situation. Ultimately, there are a lot of safeguards built into protecting customer funds and gain in particular, as i said you know as early as summertime of last year, kind of starting in june, we were having discussions with clients and policy changes to create a stronger buffer between when this could happen and what the outcome would be. Right. We ended up faring well because of those things. Right. My understanding, you actually had an analyst dinner last night where you shared Risk Management strategy that you increased margins on this very trade, unlike fxcm which allowed people to trade at 501 which is a significant amount of leverage 501 . What happens now i wonder whether youre concerned about your industry because these kind of things can tend to have negative effect on sentiment overall and some of your clients may be concerned. I know youre addressing that concern. People may want to say i dont know. When it comes to fxcm i dont know if high moneys safe there, im getting out. What is the next step for that company, do you believe . So the reality here is that sometimes there is a disconnect between you know reality and perception, but then they start to converge. We have seen that in other industries where you know, it wasnt that long ago where certain banks were actually in good state and they were perceived to not be and you end up with a negative call that has to be fought through ar dueduously. Not to comment on somebody elses business but fxcm will be faced with pr challenge, they have an actual hole to fill. To be fair. The bulk of customer deposits are actually protected under rules globally. In regulators entities like uk or in japan or places like that they do have mechanisms to protect customer funds. However, in order to do this business you have to have a strong balance sheet. You know we have made press releases from yesterday and throughout today, were in good shape, were in better shape than ever as a company and fxcms going to have challenges but they do have to include all kinds of alternatives securing up their situation. Lets talk about one of the alternatives. Have you been in contact with them at all, if theres an opportunity for a firm like yours to step in and do something, would you conceivably do it . Or have you talked to them yet . So without comment specifically obviously given the sensitivity, we are an active participant in as a matter of fact, most active participant in our industry you know, we have completed six deals in last 18 months alone. We never take anything off the table. Anding look sometimes it makes sense to do these for customers and shareholders. So you know you never say never but i wouldnt go beyond that in terms of commenting on specific discussions. Fxcm shares are halted. News pending. Well bring people that. A black swan currency event, was it. It was far out, people can pull out and look at the bell curve everybody the lines dont touch zero. If were three, four deviations out and that defines a black swan be this is way out on the probability curve. As i said they were actually smd was developing a pressure situation that people paying attention to it saw there was a chance for it to happen. Not when not likely but not zero. Thanks for joining us and shedding more light on a developing story for sure. 150 billion convert in may of 2013 in which their big offerings on. Fxcm. Be careful. Those who think its a common stock situation, they did a private equity offer. I think 40 of the firm held by principal more shores than show up typically in your data systems. Yeah. There was also another small convert offered oh my. A ton of paper, 35 cents looking for a bid be careful. Its not common stock will determine this thing. Well see. Count down to the opening bell cramers mad dash weve not gotten to analysts moves on netflix, costco the rails, lululemon, euro below 116. Fresh 11year low. Back from post 9 in a moment. Female announcer during sleep trains huge year end Clearance Sale, get beautyrest, posturepedic even tempurpedic mattress sets at low clearance prices. Plus, free sameday delivery, setup and removal of your old set. And through monday, get 3 years interestfree financing on selected models. But hurry this special financing offer ends Martin Luther king jr. Day. Dont miss the year end Clearance Sale at sleep train. Your ticket to a better nights sleep 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. So, how do you feel about cash back . I would not say im into it. But lets see where this goes. [ buzzer ] do you like to travel . Im all about free travel, babe. Thats what i do. [ buzzer ] balance transfers you up for that . Well unh. Too soon . [ female announcer ] fortunately, theres an easier way, with creditcards. Com. Compare hundreds of cards from every major bank and find the one thats right for you. Creditcards. Com. Its simple. Search, compare, and apply. [ ice rattles ] four minutes before the opening bell. Time for mad dash with jim. Netflix. Yeah. You know i like the balance the positive with negative here. Theres a very positive note by callan on netflix, saying upgrade to outperform improving subtrends and rising content. This is a come been nation the more original content, twice number of originals in 1314, international is doing well. This is one of many upgrades weve seen. And they fall on deaf ears because speculative stocks in the go pros has doon poorlyne poorly. Watch netflix, if you think speculative stocks will come back. 7. 7 hours a weeng timek time spent up from a year ago. Those of us who dont want to buy the stock i cant own stocks individually people are big believers in netflix and bought the stock. Schlumberger lays off a lot of people but raises dividend. Schlumberger is first of all a great company. Its in a different league. I like the guys from halliburton. Schlumberger is gold standard. And what theyre talking about is dont lose sight of the fact that north america, because youre in north america, is really much worse than the other guys. Talking about pricing middle east and asia will be better than north america and they lay the comparison to 2009 and say its not this is the Conference Call that just ended wed be disappointed if we dont do significantly better than 2009. They did raise dividend. Whats the fly in the ointment . The stock is not down much. Its not down much from when oil was at 100 before. Its not a uchblthturn. Some say its 120 to below 80, thats a lot. Right. Oil, Morgan Stanley, that was one of the spike look Everybody Loves schlumberger. Again, just like netflix, if you think oils going to turn watch schlumberger. Be acquire jpmorgan put out a very damning note about oils using the major oils saying that the consensus 50 too high many many numbers cut. Schlumberger be up today, if oil were to reverse and go down hard, why did i pay up for schlumberger. That was a mistake. Credit suisses tries argue oil will not knock rails off the rails. Rails were hoping to see more oil business. Michael wards call, csx, oil is an asterisk Union Pacific does a big fracking business but not much. The coal trade was not that good on csx but it wasnt bad. Natural gas is so low, people are continuing to switch from coal to nat gas. People try to pick winners in retail. Bernstein initiated outperform kors lulu tjx. Tjx a big european exposure thats hurt them but its well run. Lululemon, cross fire here upgrade and downgrade lulu. I think lulu is in a major comeback. I was surprised they did lb a good company they had a a hold. Kors dangerous for me but its come down a lot. Big momentum names of last Year Priceline below 1000 for the first time in a long time. Tripadvisor slammed. Well talk too priceline later. Youve got to. Remember what my father said on his deathbed, be careful of tri vag go, that guy has mesmerizing blue eyes. Theres a look at s p at the top of the screen. [ bell ringing ] opening bell for friday at big board. City harvest feeding new yorkers facing hunger and over at the nasdaq avid technology, provide or of audio and Video Technology a company we know well in the tv business. If youre in the editing business, the gold standard. Does Goldman Sachs put a cherry on the sundae of Bank Earnings this week . Heres the issue with goldman. The stocks been down day after day, anticipating of a not great quarter then give you kind of a not great, not bad quarter. Equitys a big business for goldman and it was very good. Investment banking was very good. Were betting fixed income currency commoditys going to be terrible so it comes out to be terrible. Not particularly good. They brought back a ton of stock with a lower basis. Yeah. Do i want to buy goldman . People want to short this a few dollars above the tangible book value. Thats never a good trade. The fact is that i Citi Jpmorgan and bank of america has softened the beach for landing of Goldman Sachs. So its not going to be devastating. When you see the vix up 50 in 12 days, when you see oil moving 10 in a single session, when you see the swiss doing are you feeling like we are due for a big flush . And i dont mean to the upside. Frankly, were kind of in the midst of a big flush. Those who are in some of the stocks that were the gopros Retail Investor got caught they already have in the big flush. I want to see biotech pull back. Biotech pulls back for a second day youre in big flush territory. Ive had some these companies are saving peoples lives, absolutely. But if biotech rolls over for a skd second day id say were in trouble because thats been the leader. I dont think that i think that weve now prepped, well have a horrible earnings season. Thats what this week did. If companies that did better stocks ready to go hard. Weve been prepped. Weve been prepared for it. We have. What i wonder is how many other investors choose to go to the sidelines as a result of the volatility though they may have they may have somewhat constructive outlook but theyre like im marshal cash and ill wait for a discount down the road. I think thats right. Its happening. I think thats happening and the volumes reflecting it. Its a time where you wake up and frankly, look did i flow fxcm this morning . No. No. I bunch of guys which they got shorted yesterday when it was down 15 , which they realized ramifications of the moving on the franc. The fact its trading down 60 from where it was i think its ongoing. I think that the volatility scares people like the flash crash. I like to come back and say theres nothing systemic. You want to blowout of stocks because you have big gains i totally get that but there are opportunities developing by the day and you have to know where to look for them. Im more sanguine than most people. Theres brewing populace discussion of schlumberger. You coved it with layoffs and dividend but up almost 2 today. Reminds ow yofyou of cisco or amazon laid off workers. 9,000 people a lot of jobs. I blundered in a schlumberger Job Interview at m. I. T. Thats good, thats good. I said i have no idea what im doing here and i dont know anything because they are the best. Theyre laying off the best. I dont understand why you would ever have sat down for an interview with schlumberger. I didnt know what they did. I went to Goldman Sachs and got the job. Easier. I didnt know schlumberger. Heard it was a good company. Theyre the giant. Theyre the best. All could have gone very differently. Yes, it could. Would have been amazing if i were an oil man. Youre becoming an oil man in a way. You have a great interest in it. Again, theyre saying if you spend all of your time looking at the United States thats a mistake. Its not as bad. Now, ive got to tell you, this was the last good quarter theyre going to have. But 9,000 number is whats caught peoples attention, to carls point, and we can expect more of than some people look at u. S. Economy and say a lot of the job growth certainly highend job growth or good wages have been a result of whats going on here. As you say its globaling schlumberger. But those numbers may be coming home. Youll see wage earnings, wage earnings go down again. These are high paid people laid off. Schlumberger, im sure that either people say why are they laying off people and raising the dividend . A proactive company. They understand that this is a cyclical business. Ill use the not first rodeo thing. Do i want to buy schlumberger . Im saying if you dont believe in jpmorgan if you say to yourself, you know what. They have reached thafrd bottom you reach for schlumberger. I dont think they have because you know youll get big cuts from the majors. Complain nose was right. Youll say, what was i thinking . Schlumberger the dividends not big anyway. I think, again, this is a pause in the downturn in the oils. But the rest of the market i see real value. Suntrust hanging in there. Really . Celgene is hanging in there. Suntrust. Suntrust look at that. Theres an example. They have one legal charge we knew it they had very good growth. They actually were remember yesterday saying some of the regionals going to have i wondered whether we might see consolidation. I got pushback from source whose called me later and said the fed is not interested in letting anybody do anything. But i still do wonder. Maybe some bankers getting very excited but well see. Banks like, pnc and suntrusts, banks starting to say more activity, things are better. Suntrust the Top Performing s p component of the morning. Stock dropped from 42 to 36 in a Straight Line as if it were bank of america. Its not. I mean its a good reege in bank in a growth area. Pnc, good reege in bank in a kind of growth area. If you get away from the legal champion jamie dimons Conference Call it was a i dont know. I was on the call i was on the call with journalists i wasnt on the call with the we were doing our show with the analysts i didnt hear a screed. You cant attack regulators. I totally i did an America First segment yesterday. Might be lindburg without at antisemitism. You dont want to be in front of the regulators and thats what im talking about screed. I knew a couple. A couple regulators, new regulators. It was supposed to be over. Carl, it was supposed to be over. Wasnt over for citi. It wasnt over for bank of america. Tried to make to seem it was more over. But theres just an we cant take it anymore. We cant take if it werent for legal. I cant take it. I cant take it. Ive never known you to have its world weariness. Genuine dows up 20 points. I think pisanis going to take us to post 8 where fxcm trades bob . Were waiting for it to open we have no idea guys standing around here, some traders, waiting for it to open here. Take a looking fxcm, news pending, this stocks not opens at New York Stock Exchange. The biggest Retail Foreign Exchange broker. They announced that due to what was going on with the Swiss National Bank Announcement clients experienced anything losses again rated negative balance owed to fxcm. Number 225 million, what it means clients, a lot of money, the company may be in breach of regulatory Capital Requirements. In the meantime, its not trading anywhere else. However it was trading in preopen and trading around 1. 50. Thats not a mistake. 1. 50. You see 12. 63. Talking about potentially huge drop. Right now, were just waiting for news and see whats going to happen from the company and get a company announcement. Obviously, discussing alternatives to get capital back to the levels that would put them in compliance. Thats what were waiting for right now. Lets me talk about the Energy Complex because with schlumberger announcing cut of 9,000 jobs people wanted to see what was going on. At the open i didnt see schlumberger from here, but at the open schlumberger trading to upside. Most of the other stocks in that sector were also modestly to the upside. The banks i dont want to say anything about goldman, youve talked about it so much but whats important here about them is the big Regional Banks, comericas, pnc and suntrust generally reported earnings that were better than expected. And i think the long growth was pretty good overall. Comerica 6. 9 loan growth. Pnc, 4. 7 loan growth excellent. Suntrust, 4. 1 that may have been a bit on the light side but overall, still very very good numbers in terms of loan growth. Everybody wants to talk about net interest margins, its true net interest margins are lower quarter over quarter. 2. 57 for comerica, 2. 89 for pnc suntrust. Theyre down maybe ten basis points quarter over quarter. Of course the simple reason for that is that the yields that they can get from the loans there, they are lending out, have been lower. We all know about the flattening of the yield curve. This creates a problem for net interest margin. Overall Regional Bank reports that three out today were pretty good here. Lets move on and talk about ipos. Havent talked about them in a month. Guess what . Business is starting up again. Weve got a few problems here. Just reflecting the problems in the market weep have three ipos that tried to price today on of them, two of the three prices below expectations and one of them was postpones, not a great start. Patriot nation priced below expectation expectations. Thats they provide Workers Compensation market place for insurance companies. Small deal country bank corp wisconsin u. S. Bank, priced below 16. Southerland, Real Estate Finance company postponed due to market conditions. Thats an old saw in street we couldnt find any buyers at the price we wanted. That will probably come in the future. Next week maybe things will improve by next week because you know whats going to come . Its on the calendar. Box, finally coming. Big online file sharing company, that is scheduled to price thursday night for friday 12. 5 million shares. Its a modest deal but wellknown company. This will be the first test for the new year for Big Companies and big ipo here. In front of fxcm 12. 63, halted for news pending. Well come back to you. Bob pisani at post 8. The bond pits. Rick santelli at cme in chicago. Good morning, rick. You know, good morning. And im going to Say Something i havent really said many mornings of late and that is treasury yields are going up a little bit. Keep in mind it isnt a capitulationlike trade. Its a bit of a panic trade, get in front of the euro ecb meeting trade, scrambling to cover short trade. Whatever it is theres less of it this morning. But lets start at the beginning of the yield curve. Lets look at an october 1st, 2014 chart of twoyear. Thats last time we were here. As a matter of fact, if you look at anything with 2s like 10s minus 2s, of course continuing to see flattening because twoyear isnt keeping up with the rest of the curve. If you hook in in anything other, 5s, 10s, 10s, 30s, youre seeing reversal of the flattening. Now lets go one year back on the comp. So for fiveyear comp june of 2013, i want to go back to 2012. So you can see the context of the moves. Theres not a lot down here but these are important levels. We just dont want to breach them on a weekly closing basis. If we go to may of 2012 for 10s, comp into 13 you can see the same dynamic. We know that july of 2012 historic low yield was a whisker under 140. Back to the tens granular. Twoday of tens. Rates popped today but you can see in context that we need to get up to yesterdays range to get people fired up. But what i found fascinating, todays numbers werent indicative, they were hurdles. After the 8 30 number we saw less inflation or after the 9 15 number, you know you could argue it was kind of in line but light on capacity utilization, the markets of yields moves higher after each not because data was strong but because data was behinl the market and its back to other things moving the market. Foreign exchange look at charts like this because you dont see them very often. Two day of the euro versus the swiss. Notice how it overshot yesterdays historic day. Look how its come to rest right around parody unbelievable. And if we go to the last chart, going a year back from the comp year going november of sorry, got to get rid of 2003 2003. 2004 is the cover. But that euro seems bottomless as we get ready for next week. Its not only davos, its the ecb meeting. Back to you. Even as you speak, the dax back above 10,000. Thanks for that Rick Santelli. Watching oil, too. Rates going high moving a lot of stuff around. Jackie deangelis. Good morning to you, carl. We are rebounding after yesterdays roller coaster ride. Trading at 47. 62, up 90 cents and brent testing that 50 mark 49. 66, that 50 is key resistance level. Meantime traders saying they dont want to be short going into the long weekend. Also talking about the iea, Oil Market Report out this morning. Nonopec producers reportedly will cut back on production but overall production will increase. So sort of mixed message supportive of price but was the price recovery expected in oil is not likely imminent. Meantime, more layoffs with big Oil Companies. Schlumberger reporting its cutting 9,000 jobs in addition to what weve heard from apache bp and halliburton. Bp in that second phase of the Deepwater Horizon Oil spill trial verdict likely to pay 13 billion plus in fines getting downgrades on wall street because of that though less than expected. A lot to watch in the oil patch today. Do expect more volatility in the pricing but, as i said probably finish higher today as traders are saying theyre cautious going into the weekend. Thank you for that. Jackie deangelis. The ceo of intel rival arm holdings whose Chip Technology powers most of the smartphones has a big presence in wearables market. Talk about the future. Dows hanging in there, s ps back to 1998. Watching europe as rates tick higher. Back in a moment. These days, the most important person in your business could be a software developer. So, hows the app coming . Weve got to make something great. Hows the app coming . Weve got to do it fast. Lets do this on bluemix. You can build apps with analytics, big data, even ibm watson. That could give us the edge. Lets do this on bluemix. It can provide code for you. We could be first to market. Because being best is priority one. Being first is priority one. Theres a new way to work and its made with ibm. Jim, highly keyed into what rates are doing. As a result of what banks are doing today. You need to go back. Two issues with banks one, Interest Rates went the wrong way. Okay. And then the other was that there still is this legal overhang and i have to tell you, the rates going the wrong way, thats part of the business. Legal overhang seems wrong to me. These guys are disliked by the by you pick it up theres another mortgage issue, another mortgage. You thought its like bp you thought you made a deal with the government, justice department, nothing go as way. Thats what i think is the reason why. A critic would answer do you not believe allegations of rigging in the market should be ignored . Definitely not. I was hoping this somehow would not become 2015s focus and when i listened it was. It may be. Although rates do play a large role here. And for the most part they continue to squeeze margins at these big banks. Still making a ton of money. They are, they are. They dont have leverage to it. Right. As we pointed out, jpmorgan had a record year. Thats important to point out, they can make money. Theyre making money, no doubt about that. But that may get back to the original point, the an tip think they face above what is deserved. Many argue they deserve everything they get and carls point, you cant manipulate the markets. I was looking to be able to put a normalized earnings multiple on whats normal . Thats the thing, i cant. Thats the risk. Theyre not buying back theyre buying back stock, theyre boosting dividends as much as they can. These are much they are utilities, i agree. Theyre just regulated. Theyre regulated because they screwed up. I thought it was over. And i understand i understand jamie dimons frustration. It is a little overdone. Well get stop trading with jim in a moment with the dow roughly flat. You . Just take a closer look. It works how you want to work. With a Fidelity Investment professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. Youre driving along, having a perfectly nice day, when out of nowhere a pickup truck slams into your brand new car. One second it wasnt there and the next second. Boom youve had your first accident. Now you have to make your first claim. So you talk to your Insurance Company and. Boom youre blindsided for a second time. They wont give you enough money to replace your brand new car. Dont those people know youre already shaken up . Liberty mutuals new car replacement will pay for the entire value of your car plus depreciation. Call and for drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch to Liberty Mutual insurance and you could save up to 423 dollars. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty mutual insurance. Time for cramer and stop trading trading. I said some things when Stewart Miller talks well get better clarity on Home Building and the Home Building numbers lennar have, the Conference Call was plaintiff. It was interesting here stewart, maybe not as good pricing pressure and that drove the group down barclays downgrades the group. If lennar doesnt do well, thats the leader, the group wont do well. Miller, people should listen to the call it was sobering to me. I expected more upbeat talk. People said the same thing the morning kbh came out, right . Thats whats interesting. I have been saying well kbh, theres problems but its specific to kbh. But miller making me feel uncertain. I cant call stewart, youre too downbeat. Stewart millers downbeat. Did a great job. Like jpmorgan like bank of america, making a lot of money but wasnt upbeat. I wanted him to say this is our chance mortgage originations talking about pricing pressure how houston could be an issue because of oil. And cheap fland krisland to crisis has been bought. Ill listen to Toll Brothers but i it was disappointing. It wasnt disappointing in like wow, they did a bad job. Was disappointing stewart always saying this is a great moment a lot of demand. You didnt get that. And the stock just got crushed during the Conference Call. And it was stewart being honest as he always is. Good man. Whats on mad money. Biotech next generation we have ptc, we have relypsa, catamaran. Halo biomarin have been stars, relypsa up 300 . You may hear me talking about it like regeneron and celgene. Really . Whats their main therapy, sorry . Something may be better for biogen and a Crohns Disease cure. Green bay seattle, new england. Not an issue. Brady turns 38 this summer. You want to go with new england . Absolutely. And theyre begging you i know youre not supposed to talk spread jimmy the greek but begging you to take green bay. Pete carroll, get 7 1 2 and be safe. Enjoy the weekend. See you tonight. Consumer sentiment after the break. E my life special by being apart of it. everyone cheers glad you made it buddy. Thanks for inviting me. Thanks again my friends. For everything for all your help. Through all lifes milestones our trusted advisors are with you every step of the way. Congratulations thanks for helping me plan for my retirement. You should Come Celebrate with us. Id be honored. Plan for your goals with advisors you know and trust. So you can celebrate today and feel confident about tomorrow. Chase. So you can. [ male announcer ] approaching medicare eligibility . Dont put off checking out your Medicare Options until 65. Now is a good time to get the ball rolling. Medicare only covers about 80 of part b medical costs. The rest is up to you. Thats where aarp Medicare Supplement insurance plans insured by unitedhealthcare Insurance Company, come in. Like all standardized Medicare Supplement insurance plans they could help save you in outofpocket medical costs. Taking informed steps really makes a difference later. Thats what it means to go long™. Call now and request this free decision guide and explore the range of aarp Medicare Supplement plans. All plans like these let you choose any doctor or hospital that accepts medicare patients. These are the only Medicare Supplement insurance plans endorsed by aarp. Call now and request your free decision guide and start gathering the information you need to help you go long™. Good friday morning. Welcome back to squawk on the street. Im Carl Quintanilla with sara eisen, simon hobbs, david faber at the New York Stock Exchange dealing with secondary effects of the move by the Swiss National bank. Currency brokers under pressure in addition to goldman earnings and intel earnings. Crude, buying here back to 47. 03. Road map as we head into the weekend. Goldman sachs tops earnings hit by weak bond trading. What you should be doing with the stock. Intel hurt by falling sales but the company can grow despite that. Find out why jim chanos is shorting the stock. The toll on Retail Foreign Exchange brokers. Fxcm saying it may be in breach of Capital Requirements. Much more on that. First up Rick Santelli at cme. Breaking news on Consumer Sentiment. Rick . Okay. You do have to buckle up. If you have a heart condition, take your pill now because the preliminary january read is 98. 2 for michigan. Stratospheric. I dont know if i have enough of my database in front of me to give you a comp. I had 93. 6 last set of reads best since 06. 96. 5 goes back to july of 05. Where we have to go he looks like well have to go all the way to january of 2004 to find a higher number. That is quite spectacular, on a confidence. Who says gasoline doesnt make a difference. Now, heres something interesting. Oneyear inflation rate that the respondents have in the sur 2. 8 to 2. 4 but the fiveyear outlook solid 2. 8. Numbers dont jive with what we see with pce or todays cpi but they have a real world feeling, humans at the other side of that survey. Yields on that you know move a basis point higher but they have so much on on their plate, think ecb, think under 25 basis points, jgbs and trying to digest threeday weekend in front of than really you know can the ecb do anything to live up to expectations . Thats the question on this trading floor. Back to you. Thank you. Blowout number on Consumer Confidence Rick Santelli. Swiss national bankss abrupt move leading to losses among Retail Foreign Exchange brokers across the globe. Fxcm one of the biggest platforms, might be in breach of some Capital Requirements after suffering losses of 225 million. Bob pisani at the fxcm post. We know the stock was halted after down more than 80 in the premarket. Waiting for it to open and heaven knows if its going to open, because what were trying to determine, what the companys trying to figure out, whether or not they can raise enough capital to stay in business. Thats what happened. Take a look. Stock is officially halted. But it was trading in the preopen as low as i saw 1. 50. Thats not a typo. Talking about declines of 80 , 90 . But its officially halted right out in and not traded at all here in the New York Stock Exchange. Whats important, the company said, because of what happened to the Swiss National bank yesterday, they the clients experienced significant losses and clients now owe fxcm at least 225 million. So potentially in breach of several important regulatory requirements and theyre trying to figure out if they can raise additional money in order to stay in business. This is what happens when you make a snap decision and all of a sudden impose a change in the Capital Requirements or requirements of Currency Exchange caps because when you actually people anticipate something going to happen theyll have a few minutes or hour to adjust positions, raid liquidity. Nobody had a chance. Positions were repriced 30 between the swiss franc and euro like that. Heres your profit loss. All of a sudden its down here and nothing you can do about it nothing you can raise, and that causes dislocation. Heres a very good example of that right now. We dont know when this is going open normally i and a reasonable idea, could be an hour next week, we dont know. Well keep you up to date. Making calls on this one all morning. David, you have as well. Speaking of the cftc officially they are reviewing, the commodities futures trading commission, the official regulator here of the Retail Foreign Exchange brokers which people dont know about. But theyre websites set up download a trading platform. These are mom and pop. Theyve exploded in the last few years, twitter, more access, people talk about Foreign Exchange. You can trade with enormous laev leverage in the case of fxcm, 501. If you want to buy 100 of something sometimes 1001. Thats what came back to hurt them. We had the ceo of gain capital on who pointed out, they had been increasing margin requirements in their accounts over the last six months in fear of perhaps something along the lines of this black swan event, if you will occurring. So theyre in a better position. The question for fxcm is, what do they do now in terms of can they raise enough debt or equity to reequitize the Company Given the losses. I think the bigger issue, a lot of people have spoke been this for a long time whether Retail Investors should be allowed to change Foreign Exchange markets on massive efforts. People get wiped out very quickly. Foreign exchange is a difficult thing as a professional to trade. Here allowing ordinary people on the street to get in and lose shirts. Maybe thats a country it is where they should be allowed to do that. A lot of people concerned for a long time this is not where Retail Investors should be. Absolutely correct. The wild west of trading in the past because 1 move can wipe out an entire retail trader with these leverage positions in place. Thats true of any market. The difference is here its Foreign Exchange can swing without any reason. There isnt an idea of fair value in Foreign Exchange, a valuation to which you will drive back. Its a complete different market. Institutional investors have the advantage, they can trade with bigger sums of money to absorb shocks better. And swap out as they go. We dont make every risky investment illegal in the country. Thats how it works. True. It is regulated by the cftc included in dodd frank increased Capital Requirements these Retail Companies needed to hold but the question is was it enough . Is that going to protect them . Clearly as fxcm said it may be in breach of that. Its got 3. 13 tangible book value prior to losses. 3. 13 tangible book prior to customer losses and the stock which hasnt opened 1. 50. Uk a retail breaker, insolvency, new zealand one of the trading houses failed. More than just them. Talk about how its impacting the broader markets, this entire move. Markets react here volatility to whats happening in the currency market. Dow down 42 points. S p and nasdaq in positive territory. Zwroining joining us for more, dan hackman and Portfolio Manager at nfj investment group. What about the ripple effects from the Foreign Exchange market and how its be absorbed in equities and currencies . Do you think we have seen the last of these trades . I dont think weve seen the last but i dont expect further water falltype declines that weve seen in equities, oil, weve seen water falltype drops in bond yields as well. And really you have to go back to unfortunately scare q. Point in time 2008 before you saw anything similar to this situation. So i do think were getting closer to some bottoms, some levels that will have some support. But i dont think its over yet. But if im a u. S. Equity investor, you specialize in fixed income so you can answer this, if theres a 30 move on a currency, and even if that settles down to half of that or 15 move what does that do . Why do i need to care about that if im an investor in a u. S. Stock . Well because it creates uncertainty in the market place. When you have german bunn yields on the fiveyear in germany, negative real rates, that spooks people. I think you have this lack of confidence in the marketplace when you see these extreme type of moves and decisions out of Central Banks. I think its all about confidence. Is your confidence shaken in this Central Bank Surprise move and potential for others . I think that definitely lost a lot of Investor Trust by the moves. At the same time one of the things in terms how we can respond to that would than what its doing is increasing market volatility. And nfj we focus on dividendpaying stocks and thats one of the best ways to soften volatility. Look back over the last 40 years, over threeyear time horizon dividendpaying stocks have been less volatility in broader markets in every time horizon. Thats one of of the best reactions to combat the lack of Investor Confidence in the Central Banks. For many people its much more than that. Its a clear indication that blind faith in Central Banks is really not warranted. And that although the Central Banks remember the Swiss National bank is one of the most respected, one of the most risk adverse. They have do a massive utufrnrn, what will other Central Banks have to do down the line. Although they have given themselves immense money to spend and inflate asset markets they are only human, Swiss National bank didnt see what was coming down the corner it painted itself into a corner as a result and had to break all of its promises. And those people that bet and gone long on investments on the basis of their word have been burned. You come back to that central question, could that happen with the fed here . I dont think so. I think this is all about communication and in all due respect, i think what happened over in switzerland was poor communication. It was a surprise move. It was not telegraphed. The fed goes way out of its way, if you may, to make sure that they give you some kind of indication of what theyre looking at what theyre expecting and what kind of moves they think will happen. Like the Feds Fund Rate increased, they telegraphed well in advance theyve been looking at may june time frame for that. I think its all about getting the information out in a timely and basis and making sure that investors can see whats coming down the road not get blindsided. Thanks dan. Burns, over to you, i think dan well lose your shot thanks for joining us. Burns, quickly here on this Consumer Confidence number this blowout number that rick reported, why is there es a disconnect how consumers are feeling and what theyre doing with spending . Probably the big driver in terms of why consumers theyre demonstrating confidence in numbers but at the same time not seeing spending youve seen employment gains substantial employment gains over the past year, unemployment rates come down over a percentage point, more telling youve seen the wage softness. We havent seen the wages kick in. Why is that . It could be that Labor Participation rate hovering around alltime low levels. It could just be that during the great recessions you didnt have employers cut wages so as such they dont have the need to raise wages. Now that said we think that with oil prices pulling back that probably amounts to a 3 tax cut for consumers. So thats something that Going Forward, you should probably expect to see roll through the Economic Data next couple of months. Weve been told were expected to see. Wondering when it will happen. Thank you for joining us on the breaking news. And thanks to dan hackman at u. S. Bank Wealth Management. Relaxed guidelines come into effect for u. S. Citizens wanting to travel to cuba but booking that direct flight to havana wont be easy. Wishful thinking. Year not in cuba . Not yet. Here in engingnin englewood cliffs. Just as pretty. What you can do. I can get on a plane now . Not quite. Now, as of today, permitted forms of travel become much much easier. There are 12 authorizes categories of travel going for religious reasons, humanitarian visit family training for entrepreneurs, private sector folks, journalist permitted categories. You can get on a plane, you dont have to fill out a lot of paperwork like you did in the past. No permission in advance. Straightup tourism, sit on a beach, still prohibited. How are they going to enforce this . Wink and nod . Its not clear but they are. Or its going to be on the honor system. Still, theres not a lot of flights. There are daily charter flights every day from miami to havana. Airlines as of today no longer need a license. United has said as soon as they are legally able to offer flights once the d. O. T. Finishes negotiations with the cuban government, theyre going to offer flights to havana from newark and also houston. Third country travel permitted. You want to go through canada plaxico, if youre going for permitted reasons thats okay. The key thing is is not how you are going but why you are going. Once you go you can now bring stuff back. In the past you could only bring back art, books and music on cds. You could not buy a magnet tshirt. You can bring back 400 worth of cuban merchandise, 100 of cigar and or liquor. Cigars directly from cuba. Cuban cigars in london all the time, you cannot bring them back from london. Those are the biggest questions that i get. For ceos a big day they can export agricultural equipment, thank you. Later in the program, exclusive interview with the ceo of orbitz worldwide. Interesting if you go into barney hard fords website did i cant find a mention of cuba. Well ask him why. When we come back, a rough week for Goldman Sachs. Stock down 6 in that time falling again today after results hit by weak bond trading. On the Conference Call the swiss move immaterial to result but was what we witnesses, quote, pretty extraordinary. What to do with the stock when squawk on the street returns. Ameriprise asked people a simple question in retirement, will you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. Everyone has retirement questions. So ameriprise created the exclusive confident retirement approach. Now you and your ameripise advisor. Can get the real answers you need. Start building your confident retirement today. Some calling the first real blowup of the year. Fxcm halted for trading. Of course down almost 90 before the bell this morning, as we look at the ripple effects of the move by the Swiss National bank dwrefdyesterday. Good morning. Watching shares of precision cast parts as well metal components maker. The stocks lowing after forecast results, citing falling sales to oil and gas industry. Analysts here downgrading stock from hold to buy. Slars shares down 13. 5 . Near the session low. Earnings season kicking off big time. Goldman sachs results, profit hit by weak bond trading. Mary thompson with the details on that. Simon, profits at Investment Bank declining yearoveryear impacts by the weak trading results in fixes income commodities and currencies. Decline in revenue from debt and equity underwriting hurting the bottomed line. Headlines from the call that is still ongoing. The cfo harvey shschwartz saying moves in the swiss franc unprecedented but immaterial too the firm. Positive in that its been allowing the company to engage with clientsen he also said extension of the volcker rule good to see. This gives goldman more time to sell some investments it holds in its own books. Recent volatility schwartz saying it was no surprise that credit had a tough quarter given russias troubles worries. Greece and the treasury flash crash. This may not have been good volatility, goldman did benefit from the swings in oil prices as the firm has been helping their clients navigate this decline. The energy price has been declining our ability to be active and valuable provider of hedging solutions and market maker to our energy sensitive and commodity sensitive clients, the kind of thank that you really see. Earnings ahead of estimates, that was the smallest beat of 6 cent business Goldman Sachs since Third Quarter 20 1. Revenue 7. 69 billion. During the quarter, firm posting yearoveryear declines in revenue in all business units, quarter over quarter Investment Management saw increase in revenue. Sore spot for goldman, sore spot for all banks, especially goelg a larger than expected dekind in revenue. Those was offset by double digit percentage increase in equity trading, which was unusually and surprisingly strong. It was better than expected. For all of last year the compensation expenses unchanges. Ratio to revenue compensation expenses to revenue, 36. 8 . Back to you. Mary thompson thank you. Seem to be disappointing week for banks all around. Equity analyst at s p capital. Happy friday not so happy friday as the case may be. Happy friday. As it applies to goldman quarters rer of beating by 40 60 cents are the days of the blowout over . A wellmanaged company but the rules have changed and this company is the proxy of the Capital Markets of all large banks. If they dont execute in fixed income its very lard to have exceptional performance. My concern, and why we have a whole recommendation, is that you can have volatility in fixed income product but was if you dont have high Trading Volume its not going to help performance. And the First Quarter coming up 2015, is the strongest quarter historically for goldman and others. And i think for those covering the company, you know less confidence as we see goldmans results today. Yeah. So if trading is an issue there, and loan origination is a problem in other banks, and Interest Rates continue to dwindle, is there anything among the majors that you do like . Well you know goldman continues to manage where they can. But im going to tell you that Morgan Stanley on tuesdays going to have probably the best story. You know the mix of their business is is so different than goldman. Goldman, 45 , 50 institutional client trading, particularly fixes income. Morgan stanley its a much smaller number Morgan Stanley has this trajectory with Wealth Asset Management and also they calibrated in fixes income trading only areas where they think they can take money. So theyre not there for all of the product categories just to support the client. Theres a big difference here. On the subject of Morgan Stanley, as we go into that what do you think the tolerance is with investors for increasingly rewarding the staff this year . As has been promised with management and as is expected by many in the bonus . This is for many people that work at Morgan Stanley this is a water shed moment for the bankers up to the legal team if they dont get paid i hear simply arent sticking around the ceo of Morgan Stanley references that. At the end of the day, 2015 its going to be another good year like 14 for Morgan Stanley. And when we look at Morgan Stanley, you know i think theyre executing on their fiveyear strategy and were seeing improving margins and solid top line growth. That means weve got a target price of 45 at Morgan Stanley, its a strong buy recommendation. You think the dividends at risk in any of the names here ken . I directly cover Goldman Sachs and also Morgan Stanley. Lets talk about Goldman Sachs. You know they raised you know, they do raise the dividend yearly and they bought back 6 billion of stock which helps on earnings and return on equity. Ken, i dont expect you to cover Credit Suisse or ubs but the tectonic plates are shifting. Lost a fifth of the value in a session in a quarter, swiss francs done what we know what its done how does it affect Wealth Management industry . How far does it stretch to the names that you cover, do you think . Whats the color here . In the case of episodic events like swiss franc, for the businesses of goldman and Morgan Stanley, these are very small businesses. Theyre larger for banks Like Deutsche Bank and onces youve mentioned. I dont believe its going to have either a direct financial or a confidence impact particularly on u. S. Wealth management. Finally, ken, a big discussion about legal costs and the degree to which analysts should be separating them from corporating models some say analyst whose do that should be ashamed. Do you agree. Like the cockroach theory. If you have 3 4 and legal costs maybe it operating. Goldman had a clean quarter didnt have that issue. I suspect Morgan Stanley will be okay. I think others arent as clean as you say. Exactly. Thank you so much. Have a good weekend. Ken leen from s p capital iq. Intel says revenues from pc business fell about 3 in the Fourth Quarter. Jim chanos is shorting the stock. But intel ceo says the company can grow with flat sales. Whos right . 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. 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. Intel reporting Fourth Quarter earnings beat projecting 13. 7 billion in revenue for the upcoming First Quarter. Jon fortt made his way here to post 9 to talk about that and the guidance for the current quart, still a bit of a debate the guidance for the Current Quarter isnt bad. Seasonally you expect down 6 . The thing is street looking for a little bit better because 2014 was a lot better than intel overall projected. They projected flat earnings overall. Turned out to be up like 25 . Intel saying just stick to what were tell you is going to happen we think thats whats going to happen. Pc market getting weaker as Brian Krzaich said. But he thinks theyve got other irons in the fire to help. Take a listen. Projection for 2015 is a relatively flat pc base from unit perspective. Probably slight decline in asps as average selling price, you know, we continue to see some pressure there, but were able to grow the company with our Data Center Business internet of things, flash memory and other products that were in now, we think we can grow. So if youre jim complain nose, here chanos, pc market from revenue perspective coming down. Theres some risk. Now Data Center Business which they said would grow 15 , yearoveryear relies on a lot of the cloud providers, facebooks, googles amazon so it can be lumpy. Windows 10 from microsoft, what if people dont like it . What if they delay purchases . What if theyre not excited about it . Those are risks. The case on intel, theyre sell morgue units, theyve laid the groundwork for mobile and theyll come out with the sophia chip which will cost less to produce, sell more profitably, wont be losing as much money and this business, if it goes through as expected thats able to carry them to growth. Intel number one in the dow last year. Wondering if expectations are raises given its tremendous performance. I think thats the main issue. Intel trying to tamp down expect taxs, 2014 better than expected pc market stronger Data Center Market good because of cloud providers continuing to buy our chips. Now weve laid the ground work for mobile but dont expect the pc market to go gang busters. See you in 30 minutes. Straight ahead on the program Retail Foreign Exchange brokerage fxcm halted for trading after customers suffered massive losses after the Swiss National banks surprise move yesterday. Company says that its cuss mefrs owe it at least 120 million. More on that when we come back. [announcer ] what if one stalk of broccoli could protect you from cancer . What if one push up could prevent Heart Disease . [man grunts] one wishful thinking, right . But there is one step you can take to help prevent another serious disease pneumococcal pneumonia. One dose of the prevnar 13® vaccine can help protect you. 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Consumer sentiment 11year highs, up 4 points 98. 27 shares of suntrust up 3 loan growth helping the bank beat the street with numbers. And kroeg somewhere hershey, hitting new alltime highs. Markets digest switzerlands surprise move to scrap the currency cap. The story of the day, of the week, and potentially of the year. Live outside the Swiss National bank, ground zero, with the latest. Reporter its been a tumultuous day today. A lot of Market Reaction from the 10 drop in yesterdays session. Ive spoken to a lot of analysts and Fund Managers through the day, many saying its a wait and see project were having to deal with at the moment. Look at ramifications, though what the snb has done some arguing that they couldnt do anything other than stop this pegging scenario thats been in place for more than three years. Balance sheet expansion very very hefty, couldnt expand 30 billion to 40 billion of fx buying per month without coming out of the trade at some point. One analyst quote unquote said the Worlds Largest Fx Hedge Fund on the wrong side of the trade, had he continued down this path of preventing their currency from accelerating. The swiss Foreign Exchange reserves at a record shy of 500 billion swiss francs, a large portion of that held in euros dollars. Where would the breaking point have been . Again i spoke to a couple of people who had no other way other than coming out. Should they have warns the market an indication thats another discussion altogether. As weve heard throughout the session as well imf, Christina Lagarde irritated, one argue, on the liesman interview, that she didnt know anything and other people sounding irritated at the top, too. Snb having gone down the path now an issue of waiting to see whether 0 to front run the ecb and warn the market its a bullish thing were heading into with ecb quantitative easing. The Swiss National bank is not speaking as of now after the decision. Thank you very much for the update. I want to draw your attention as the world watches reverberations in the currency market to the urt reagainst the dollar. The dollar as we speak, hitting its highest level since november 2003 the dollar index, seeing new lows for the euro. 115. Could go below 115, down a full percent as everyone weighs the ramifications of this david. Very brave of you to call the snbs move perhaps the event of the year on january 16th. Could be. Have you ever seen a currency move 30 . That becomes the benchmark through the year. Well come back and say, sara bigger than the snb . I dare you to come up with a bigger story. Next thursday . Thats baked in. All right. Assuming black swan event, claiming victims. We want more on that specific to fxcm which excited severe customer losses from the swiss franc, capital shortfall the stock halted. An analyst follows that company and joins now. Rich expectations here in terms of the future for this company . Well they certainly need capital in the announcement last night they experienced 225 million negative customer losses and might be in breach of capital. The platform is executing trade this morning, were told but we think they need an injection of capital. You think theyll be able to pull it off . In a recent note this morning they need to raise 150 million in capital, can they do it through debt offer organize bringing in equity and obviously massively diluting the Shareholder Base . Well thats that is the question here. And thats the suspense as we wait for the stock to open and whatever news they have one thing to note though the founders and partners of fxcm own 44 of the company. So i dont believe they want to see their, you know their investment, the time and effort theyve put in building this firm to go you know fully theyll do everything from a debt perspective and if it has to be equity you know its going to be highly dilutive given as you mentioned this morning earlier scheduled book value at 313 prior to these customer losses. Right. What do people miss here rich . You say in your note people including yourself perceive primarily agency based model as low risk compared to, we spoke to the ceo of gain capital, which has a principal based model, gain would seem according to the ceo, and these guys got crushed. We missed what youve been talking about the black swan event of a currency move whether you call it 20 , 23 . You know you dont normally see currency moves that much and given that type of leverage that you give customers and we believe fxcm was given 50x leverage thats 2 margin. 2 move you wipe out equity at least on that trade. Again, you saw much more than 2 move. We think this is you know someone mentioned earlier, this is maybe the event, you know of the year when you talk about market movements. I got called out for saying so early in january. The Foreign Exchange market is the biggest, the most liquid, more than 5 trillion trades on it every single day. Retail is a small part of. Im wondering how much of a Systemic Risk this is these smaller this is 700 million market cap company. Its not going to take down the system. I wonder what ripple effects it could have. Yeah, i dont think were this is sort of like the oil dramatic drop in crude. I dont think were going to know the full ramifications for a while. But certainly the first, this is certainly the first indication with these retail players that were leveraged up and that couldnt withstand the 23 swiss franc move whether big banks have exposure they certainly have much bigger Balance Sheets might have, you know more timely risk controls than say, than, you know at least one of these fx brokers. As you said david, youve talked to gain they proactivety took Risk Management procedures by lowering leverage three, four months ago. Rich let me push back on this idea that its a black swan event. That you should have it was a 15 move we got on the currency a major currency shouldnt businesses like this be able to withstand that . Shouldnt and the issue here is surely that they havent requested enough money up front from Retail Investors. Doesnt that seem raunchy . Can we discard it, theyre a kaz walg of casualty of a big move in the market . Shouldnt they have taken precautions to shore up the company in advance of that and their clients . You have a good point. The u. S. They reduce leverage down i believe its 20 25 x is what is allowed. In the uk its above 50. But to your point, you know 50 x leverage means youre required 2 margin. So even if you had a more anything above 2 move in the currency you have lost that equity on that trade. A customer may have more equity account in other positions but given that if it was 1 leverage than 1 move wipes you out. I do think that you know there may be more scrutiny about the leverage leverage. If you look at equity markets 50 margin. So you can its only 2 x leverage. Rich, do you personally believe that Retail Investors should be allowed to trade Foreign Exchange in this way. Not at the leverage numbers that were seeing not at 100 or yeah i think it needs to be reviewed by the regulators. Rich, a developing story. Appreciate your insight on. Still waiting to hear from fxcm with potential news if its an investment or something they can keep the firm in business. Rich repetto on the phone. All of the financial world is reacting to the move. Just getting comments on the wire from one of the fed president s regional president , who is the minneapolis fed president. Speaking in a speech answering q a on the move he says quote, i will say the Swiss National banks action was a surprise to me. So he like Christine Lagarde was not called and given a warning. Im beginning to take it on my own assessment for the u. S. Economy. Just a preview there. Expect central bankers are doing a lot of calls behind the scenes to figure out what ramifications are this. If it wasnt a surprise youd make a lot of money. You could have bet against it and made a lot of money. Many in the market have done that. But it goes to the question of coordinated central bank policy. What the ecb will do next week and realizing you cant cope. What do a pebble watch and espresso machine have in common . Live in squawk alley. Crude at the high of the session after the best Consumer Sentiment numbers in ten years. Well be right back. Financial noise financial noise financial noise cme group, check in with Rick Santelli and get the santelli exchange. Carl, thank you. We all know that one of the hottest topics for the last several plus months and maybe the hottest topic a hot topic for many quarters to come is the big drop in energy maybe even bigger story is technology and fracking and other big stories, things we used to use we dont use anymore in the transitions. So that makes this particular guest, jerry calley very important. The president and ceo of nerc. Thank you for taking time this morning, jerry. Thank you. Good morning. Good morning. All right. You know for many of that is dont pay as close attention as your group does and you have subgroups all over the country, what are reserve margins and why should my listeners and viewers care . We want to make sure that theres adequate power to supply demand. We know that demand changes season to season between winter and summer and also through the daily cycle and we also have extreme cold like we saw last year during the polar vortex and we need to have enough supply in case we lose some generation or something happens on the grids. We want to make sure we have a high rely ability and to do that we need extra reserve margin on the system. How that is rely ability . Are there enough reserves . Talking about the likelihood of bronouts if we get enough 35 below windchill in chicago or four, five months summers where its 110 degrees are we going to have brownouts do you think. Some areas have challenges. Partially due to some of the initial retirements weve seen in the coal plants, particularly the midwest where earlier environmental rules from the Environmental Protection agency epa, on air and water rules has caused a lot of pressure towards retirements of coal units. Weve seen retirements, 5 of the u. S. Generation fleet retire already. So its shortening those margins, we have less exhecess capacity. Let me stop you there. Running low on time. If im hearing you correct, i personally love natural gas, i think its clean. I think a lot of this is a good thing. Now, the reason i think reading some of your work well have an issue, is because of my second topic, the last half minute its about compliance deadlines, mandated by the epa. In other words everything were talking about, everything we see in energy should be a good thing but the problem is these good things arent ready for prime time at the time the epa says they must be. Explain that. We have a huge transition Going Forward with the carbon rules, 111d and theresen in an initial deadline of 2020 that will meet some targets. Its going to be difficult to switch out the generation that needs to change out between nuclear and coal to gas operated and renewables and we need the Pipeline Infrastructure to support those gas units and we also need to make sure we have the operational control of the grid to stay reliable. Gerry, thank you very much because i walk away after listening to you, that a lot of things going on are good things but unrealistic from a regulatory body on when those good things have to be in place. We will keep having you back and give us updates as we get closer to some of these deadlines and legislation to push them back. Thanks again and lets go back to sara. And i have got quite the move for you, watch the euro right now, it is absolutely slumping to new lows. Just broke 1. 15. For all of you planning a european vacation good news for you. This is a plunge more than 1 move comes after the Swiss National bank took itself out saying we were weigh not going to be buying the euro anymore. Because. To keep the franc from getting too strong because it was too difficult or expensive. Next thursday. The ecb is expected to ease perhaps putting more pressure hundreds of billions of dollars. And a new strong dollar. We will see how that impacts equity prices. The real action is in the currency market. Up next on the program an exclusive interview with the ceo of orbitz world wide. His takes on new rules today. Plus why the Online Travel agents have been hit so hard by the moves on Foreign Exchange. If there wasnt enough excitement, squawk alley takes to the air, jon fortt has our preview. Hey, simon. Buckle up plenty to talk about. First of all intel earnings there are pluses and minuses. The revenue in the pc market shrinking but the intel ceo thinks he can grow anyway. Plus, xiaomi former google executive why are they meeting with Mark Zuckerberg and kara swisher of re code will talk about the next phase of life if it is life for google glass on squawk alley. Dont miss it. 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Citizens can travel without getting a license from the federal government although if you travel you may have to say you were there for one of a dozen prescribed reasons. Joining us now from chicago is the ceo of the Online Travel agency orbitz barney harford. Welcome back to the show. Thank you. Great to be here. You have been passionate about the need for change over cuba but when i went on your web sigh today, i cant find really much product there, i cant see immediately a mention of cuba at all. Im guessing thats important for the broader point that still general tourism is not allowed there . Youre right. Its 50 years theres been an embargo on u. S. Travelers traveling to cuba and American Companies operating in cuba and the regulation changes that came through yesterday very exciting weve been very impressed by how fast treasury has been moving to open up and simplify arranging travel to cuba and we are looking to how we can expand our supply offerings to include Hotels Flights and be able to bring cuba to our travelers. Are you clear what the legal position is. I was talking to one of the big Cruise Companies earlier today and they were saying look were still struggling over this. We think you still have to get an act through congress we think that although it will happen we have months to go on this before its a grown light for entrepreneurs effectively . Well, we think theres certainly additional questions we have to treasury to achieve complete clarity on the meeting the regulations. Only been a few weeks since the administration announced these changes so they have been operating rapidly. We fully expect to be able to offer travel to cuba within the year. Barney, whats happening within the Online Travel agencies in general at the moment. I use the term liberally. Some of the bigger rivals like priceline have been hit bad. Priceline from the peak last march down about a quarter of its value, about 19 billion, i know trip adviser is down. Is this about Foreign Exchange and not getting the kind of returns that they would have got abroad or do you think its something more systemic going on . Its hard for me to comment on, stock market price changes for even ourselves or our competitors but i think youre certainly seeing some impact of the currency moves that weve been seeing in a particular strengthening dollar and weakening euro. Orbitz we have a greater exposure to the u. S. 70 of revenue comes from the u. S. As you see a strengthening dollars thats great for the majority of our travelers because it allows them to be makes europe as a destination more affordable. Clearly businesses have greater exposure to europe meaning that their earnings when translate into dollars may be impacted by the fact that those euros translate in a lower rate. You and expedia within the universe you both stand out. In fairness if you talk to analysts some are concerned broader term you dont have the size and scale to bid effectively against the likes of expedia and priceline and say look barney has done a great job through the own brand label, doing back office for other people you run ammentions operation but that will fall out of the figures and they will be more challenged what would you say to people concerned in that way. We have three key parts of the business. A flourishing bc business. I think people may have tried to write us off in the past but they see our continued and ongoing growth really showing through and i think weve been able to develop some super compelling loyalty Consumer Value propositions and strong mobile capabilities. One day of last december over 50 of the Hotel Bookings were coming through mobile devices. In addition weve got b to b businesses, private label relationships you reference partnering with like american express, long relations and solid. Corporate travel arranging managed travel solutions for companies around the world. Its a well diversified and Large Business and were very excited about our prospects. Good to see you. Thank you for joining us. Barney harford the ceo of orbitz, joining us live from chicago. Markets, weve got a leg up in the u. S. Equity markets with the dow up about 7 points. S p 500 now up more than half a percent and with that well send it to carl for squawk alley. Thanks guys. Good morning. It is 8 00 a. M. At intel Head Quarters in california 11 00 a. M. On wall street and squawk alley is live. Welcome to squawk alley for a friday. Joining us kevin oleary, chairman of oleary funds, investor on shark tank. Great to be here. Kayla is out, jon fortt with us as well covering intel which well get to in a moment. Really quick as sara said the dow up about