Transcripts For CNBC Squawk On The Street 20160224

Oil minister made strong comments about Production Cuts. Were going to look at the ripple effects across the energy market. Honeywell singing a different tune. The United Technology is about the prospects for the merger of the two. Target and lowes. Both retailers are in the red before the bell. Stocks falling all around the globe. The saudis ruling out this Production Cut and then data from the api showing a bigger than expected build in u. S. Crude. Of course, well get eia cue out with its own inventories in about 90 minutes. Its been a rough couple of days. Both the chatter and that, jim. Its a hoax, the deal. What they basically said is were going to produce a lot more if iran and iraq produce a lot more. Theyre good for about 3. 25, 3. 5 a day. Not only was there never any deal but they went up to 11. Theyre doing 10. 5. All these people who came on and said they dont care, are they out of their minds . Whats it been . A year and a half . Lets go over the numbers. U. S. Crude slips to hit only 8 8. 7 million in 2016. That needs what the saudis drop. They want to see a 50 drop because theyre seeing a 50 capex like chesapeake. Were going nowhere fast. Short covering. We go back to 2016, which, by the way s a crucial number when you go back over the Conference Call. Big picture, does opec have any power . Theres no opec. Its just the saudis. We were this close to being sel selfsufficient, and we still are, cant we . Unfortunately its the gunk and you didnt have i dont mean to say unfortunately, because those against the big keystone would recognize this. This oil is going to get to their country. Theres no place to put it. And the problem with no place to put it, were only exporting gasoline and thats not enough. We went up because of the deal with the saudis and russians. Youre calling the oil message a hoax. That leads me to believe you dont have trust in this whole bounce that weve seen in the past week with the stocks. I think we got overbought very quickly. I think a lot of companies there were big shifts with the cyclicals. We came back from china and china had five out of six. That bounce has now been unkun and youre look at a freeport and chesapeake. Every night, transocean last night had a bit rate. Its very leavered yoil companies and you over what wells fargo said recently. You realize that theres an Oil Industrial complex that really does include the banks, including the steal companies and freeport and these are right back on the redhot griddle while the consumer is going to do better. I hope that doesnt mean James Bullard who i totally agree with, hes on squawk tomorrow. You guys are simpatico. What does it mean . Jp bank talking about earnings and committed lines and lines that have already been drawn down and lines that maybe. I would point out when a bank is about to go out, it will draw down all available before it files. If youve got any commitment whatsoever to an energy company, even if theyre not currently fulfilled, lets call it medium to small energy company, lets assume it would be. Didnt like that at all. Here theyre talking about their exposure. 44 billion. I quote mark papa who used to come on squawk box all the time. He said there would be a lot of bodies, a lot of bankruptcies. A lot of bad loans have not been recognized at a wells fargo. But j. P. Morgan has reserved it. Stays there for months. Thats nothing. The average Exploration Company loses money at 35 a barrel. Last i looked, were not at 35 a barrel. By the way, canadian tar sands making minus one. Thank you rbn and rusty brazil. You can argue. They are pumping like furiously. The exposure is huge. Now the saudis are sitting there saying when is it going to roll over. Not very soon. Ive got to tell you, wells, not them. How about bank of america. Ill lied to see that number. Wed like to see that number. Wed like to see that number. Do you really want to see that number . I dont know. Brian got a big pay increase. Its stuck in your craw a little bit, didnt it . Youve mentioned it a couple of times. They talked about 21 billion in the exposure but they onto used utilized exposure. The point i was just making. If youre one of the bodies, mark pappa pap pap pa was it. A year ago they thought that was the point and they all got crushed. All im saying is theres a 25, 26 level where i think the banks are understood reserve and the banked are saying theyre fully reserved. The last time i heard i had houses i wanted to give them. This is not the big short two. Jpmorgan is senior. Senior to what . Its a hole in the ground. Maybe you can build some houses. To your point were not talking about skur advertised products on top of skur advertised products, referenced skur advertised products, security advertised products that dont make sense. Youve got to go to norway where it was destroyed. Narvik . Narvik. Let me pull back from my this is simple exposure. The fact is its fabulous. They were hoping to buy all the stock back in the world. I dont know if thiel be able do that. I went back very closely and scrutinized the jpmorgan report and if you go back and look at the presentations, youre not going see this gigantic amount of debt that was now revealed in the fed 9, the fed 10, and yesterdays presentations. So all i can tell you is theres a reason why these stocks are going down and the reason is theres a lot more bad loans than they realize. Theyre discuss southeast cured, the head of others, but an e p company is losing a ton of money. The only places that are really feasible in our country are the scoop in oklahoma and some of the perm i ant. Thats it. If you say so. On a brighter side. Comps up, lowes meantime posted q4 on rating cents in line. Full year guidance were above expectations. Target up. Makes amazon looks bad. This target target looks better. Listen. Now i am talk on my book. Brian cornell really delivered. 1. 5, 2 on the comps. I would not look at the average earnings per share. Home was incredibly strong. Lowes i like it very much and i have a really nice lowes, youve got to start reporting the day before home kai podepot. Come on, guys. Whatever they do they report on the 22nd, report on the 21st. Report sunday, i dont care. Stop reporting after home depot. Youre up against some difficult comparisons. Did you hear . Were you on the comps call. No. Lowes put h. D. Putting up 8. 9, lowes, 5. 5. Theyre always the bridesmaid. Lets give tjx some credit. Again, see, you always have to you like to put it in terms of movies. Was it star wars where you cant compare it. But i do think it was an Academy Award runnerup for the best Conference Call. Tough market yesterday. Stock didnt really do very much. The stock didnt do very much. Thank you for that. Was nthat a surprise . I think oil takes the stock down which is completely wrong. They buyering back stock. Every aisle was good. It did double digits in the south, which was a great. They kid incredible in roofing. You know what . It was an easy winter. In tools they were doing double digits. Their Christmas Season was now. The planning season. Dont take a cue from the stocks and theyre taking the cue from s p futures which is taking a cue from the oil which is taking a cue from the oil minister, a lot of cues. Thats one powerful man in al nigh emeigh. The futures were down. He basically said, listen, over my dead body. The cost is 20 actually the cost is 11. I dont know where he came up with 20. I love the guy, but come on. Theres a lot in earnings. Sales force and transocean. I think another ring might have canceled. Do you know how many idle rings they have . Its extraordinary. All right. Youve taken it to a new level this morning. Youre like this is a personal best for you. You know why . I had a cup of coffee. This is going to happen. I think you dpierng start levitating. Watch it. There would be a screen overhead. Youre responsible. It aint going to happen. When we come back, we ee get honeywells response to utx. Apple versus fbi. Mike pompeo says tim cook should not stand up against the f bii. More squawk on the street in a minute. Your boss . Yourself . Your family . Our Financial Advisors are free to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. Every insurance policy has a number. But not every Insurance Company understands the life behind it. For those whove served and the families who supported them, we offer our best service in return. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. Welcome back. Late yesterday honeywell releasing a press release right before the market closed taking issue with comments made by United Technologies ceo Gregory Hayes about a potential tieup between the two deals. Honeywell for its part saying it believes, in fact, that the combination would not see a material obstacle from antitrust regulators. In fact, they say it would benefit our customers and enhance the ability to offer a more comprehensive solution for them. There you see a quote for them. We told you yesterday honeywell was citing in its conversations that had taken place with United Technologies previously. Of course, those technologies dating back to april and may when honeywell made an approach last september and yet again last week when the two companies had facetoface meetings and a new proposal was presented. 42 of that in cash. The rest of that in honeywell shares. Its interesting they have chosen not to simply say, see you later. Its unclear whether they would have made the same decision had these talks not been made public. They decided not to follow up with a socalled public baearer. Now its been made public they seem to be going a few rounds here. They do not seem to folding up a tent and going home. One of the latest examples of what we may expect. Theyre trying to communicate with their Shareholder Base saying, hey, we see a lot of merits in this transaction. We believe its a transaction that can get done and that would add value to all of the shareholders in the combination. Theyre also telling their own sharmds, were not going to go crazy in the combination, but theyre making it clear, jim, that theyre not done and the question then becomes, okay, what is the response of the United Technology shareholders and if they do get a response and let this hang out for a while. The question becomes does honeywell come again with a higher offer or something that also includes some protection on the antitrust fund. Im not saying thats going to happen but its clear they have yet to say its done. Quite the opposite. How does it work . You have a ceo mr. Hayes comes on. Its very bad for the commerce. Isnt that exhibit a if you want to the antitrust department . It is very difficult when a ceo is saying things about antitrust conceivably to take them back. Heres what mr. Hayes had to say. The fact of the matter governorneance has always been big deal. It amt going to happen. Weve thaerd many times. Were, of course, trying many times to make it clear they were not going to engachlkt many of these take a life on their own. As we talked on and off camera, its also the eu which could be very important if they were to ever actually get together and try to forge a combination. I do think if you own the cob pick and engine and fight language and a lot within the planes, i think anyone at boeing would argue, hey, listen, theres no one to pit against each other. I would argue its basically a way to say, hey, listen, were taking some of your margin away. This is a reaction which i thought mr. Hayes maybe was i wish he had postured less, so to speak f youre trying to put that together. Boeing and airbus have had their way. This is clearly going to be a case of a great debate. Mr. Hayes kind of minimized that one. That was to say, we even got landing gear and engines. Dont mess with us. And they did. They messed with them big time. They dont make any money on it. Its on the service revenue, so they need everything they can. They would be able to go to airbus. Wait a second. Which is kind of what you want. I dont know. I mean if youre antitrust, youre watching this show, youd say, listen, im going bring this guy up there. Well get cramers mad dash. A lot still to come including Oil Inventories in about an hour. Dont go away. They say that in life, we shouldnt sweat the small stuff. But when youre building a mercedesbenz, there really is no small stuff. Every decision. Every component. Is an integral part of what makes the 2016 cclass one of our most sophisticated cars ever. Because when youre setting a new benchmark for refinement, it is the small stuff. That makes the biggest impression. The 2016 cclass. Lease the c300 for 399 a month at your local mercedesbenz dealer. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive wont keep you up at night. N know you have insights from professional investment strategists to help set your mind at ease. Know that planning for retirement can be the least of your worries. With the guidance of a pnc investments financial advisor, know you can get help staying on track for the future youve always wanted. All right. It times for mad dash. We try harder. David, what happened with the world, gm, morgan stanley. Avis with a projection looking for 330 to 343. Theyre now guiding down to 270. David, this was the good one. Remember hertz was the bad one and the guys bought zipcar . This took my breath away. I remember when we got the numbers from the millennials not getting their licenses. Is there a wholesale shift going on . An anticar shift . Morgan stanley says they could be done in terms of gains. You know, im im baffled, im baffled. People are getting in an uber instead of renting. Oneday rentals have increased. Its not clear that uber is impacting them. I would say those who own the stock here, jim, point out to me that you have a 17 Free Cash Flow yield. Thats strong. I thought the order was good. Youre saying, tell me something. What dont we know. The guidelines were so abysmal. Thats the one where theyre winning and hertz is losing. And then im like, are you kidding me . Id like to know more. It raised eyebrows. It raised eyebrows. Perhaps well learn. Have i talked with you about the exposure . A lot more to talk, oil and gas and some of the other things. The opening bell is coming up next. Youre watching cnbcs squawk on the street like from the Financial Capital of the world. Were watching oils and the bank specifically. Some weakness out of europe. This warning out of hmbc that a brexit could crush the pound down . That was incredible. I think that story is being overdone. I dont think theyre going to do it. I do think hsbc has horrendous numbers. You can blame it on anything, but those numbers, man, were awful. That yield is very high. These european banks have not delivered. By the way, in terms of foreign stocks, anyone see that . Thats company that is a joint venture between brazils valet and bhp. When you charge the ceo of the division with homicide implications. On a day where moodsys push brad still further into junk territory. Theres br still. Indoor team cycling events raising money to fight rare cancers. The andersons celebrating its 20th anniversary. I think you had a note, out of gm . Man. This thing was so negative. Resuming coverage. Gross margins expect to fall from 10 to just near break even. I mean theyre talking about an extraordinary scenario that would be enough to be able to wipe out their profits . I dont know. I red this and i said, this is so out of synch with what im seeing. Whats it based on. Its recession. I imagine brazils got to be a part of it. Didnt dan ahman suggest canceling that . They had been realized profitability. Their estimates are 3 below consensus but the bottom line is youve got to sell. Its going to 26. Its incredibly knellive. I think hes been saying, look. The negativity is stabs to affect the market. This is a critical piece. I dont know. It was a little devastating frankly. Yeah. I mean, geez. Midday, viacom saying its received incoming interest from outside parties in terms of investments. Pair mount has been suffering for some time. They kwoited saying some dont consider it a major studio given how few movies it puts out but viacom stock has moved up. Now its down. They bought paramount for 10 billion, of course, many years ago. I made a comparison perhaps a week or two ago to what it might be worth now but thats not fair because it did include Madison Square garden back then. It did produce the tv company which went with cbs. So its not apples to apples versus what they paid now but it isnt anywhere near that. People got excited. Its amazing the number of wouldbe sales and yahoo which, by the way, even more funds wag in on. Canyon sent a letter, another shareholder. Theyve been pretty vocal just saying we want to make sure youre moving this process along. We believe you should sell the core business. So they keep the pressure on. Theyre pretty busy fielding various letters from their ownership. I dont have an update for you right now. But the outgoing calls are being made. There does seem to be some interest. Well see whether it comes to a deal. Wi know the studio has value. Lionsgate doing just terrible. Crushed. Kung fu beganpanda 3 is goo be a big hit. Jamie dimon, get back to that level. On the 11 jp bottomed at 52. 50, which is about two dollars. He may have to do some averaging down. Its a big purchase. Remember, these ceos can flip. It just so happens, he turns out to be worth a lot more than people in the country. If he goes down there what does he own, 6. 75 million shares . Iltss a lot. They say, listen, can we police understand, we it. Im going to give them that. Im going to give them that. If it was wiped out they would still be doing pretty well. Thats how much the banks have saved. Im going to give them that. Are you more concerned about bank of america . Yes. Id like to see bank of americas total exposure, not just the you know, the entire possibilities. Maybe they say, jim, we dont have any more than that. Thats the entire possibilities. Id like to see the e and p breakdowns. They gave you a talk about what exactly they have but not all the companies were doing apples to apples. Wells was using a 42 million number. Bank of america was using a 41 million number. Youre not using the en they gave you the utilized exposure. You have taught me the difference between utilized and total. Right. It doesnt mean it wont be. They would pull down that line prior to filing. Again, the mark pappa is raising money mark pappa came in here the last time he was on, the oil was flying. He came on with mad money and said, listen, i think its too high. Are you kidding me . Jim, when you come back to the banks and look at the performance already this year, less than two months into the year. Morgan stanley down 11 . Goldman sachs down. Bank of america down. Look, either the book value is not that firm or maybe because of oil and gas or because theyre not going have these rate increase. Remember, there were supposed to be four rate increases. That would have moved up the needle for all of these. The one that is most puzzling is morgan stanley. He should come on because i dont think he should be lumped in. Im always trying to Book Temperature gas. Its called hustle. Yes, it is. And it works for you. When you have someone on like mr. Harks sometimes it can be rev latorre. Sometimes it can. Unless youre in the sports world. Someone just comments on the sports world and theyre going going to blow this off. It was peytonlike. Remember when peyton was pretty convinced . Apple has a story. How this may go beyond one phone and whether its bill gates or ted olson, everybody is weighing in on this, loretta lynch. Right. This was not sound narrow. Youre going to cecil con valley saying, hey, listen, guys, you cant say its narrow when its all these phones you want. You cant. Its going to be a longer fight. Maybe they need congress. I dont think youre going to get a real con senn suz. No. If it does make its way up the process for quite some time. Who knows. You know, theres people who say apple did this because they want to sell more phones. Tiresome. Tiresome. The whole companys been based on privacy. All of a sudden its a gimmick . Samsung says, wow, well give up everybody. You know what john ledger is going to say . Open a commode. Take us all. Listen. Telecommunications providers have cooperated with the government and, we know, cooperated with the nsa. That is a very good the point. Very much so. Some still argue collection of metadata is not what theyre asking for of app. If you got my phone, youd see pictures of dogs. If the government wants my phone, take it. Enjoy it. But we know that. Youre an open book. Enjoy. Only one dow stock in the green. Thats utx. Mary is on the floor. Hi, mary. Yesterday the dow and the s p closing back into correction territory after the decline and the klein as it continues to pull back. Lets take a look at what is happened in europe because were seeing numbers, concerns about the breks i. Theres a downkbrad of the city of minors. Concerns of when the g20 meets at the end. There wont be anyone to support the economy the target for the yuan was lower. Yesterday we get the d. O. E. Numbers later today. Saudi arabia basically down. We want to point out the company is talking about its deficit. Its had a long and stheet debine what you might see a iit. The vicks also a little higher as you might expect as, again, investors are concerned about the weak Energy Outlook and, of course, concerns about the global economy. Lets take a look at the financials as well because there are a couple of things that placement we did have a number of fed officials commenting and theyre downplaying negative interest in the u. S. And certainly not saying or they are. Well expect it later this year. Maybe not the four hikes. We did get retail numbers. With lowes being the exception. Its results were ooh less. Its stock not reporting. Carl, back to you. Mary, see you soon. Mary thompson. Thank you. Lets get to bonds with rick. Good morning, carl. As we continue to see the big drops in the equity market, its is purchase of treasuries, purchases of boons, the real question is speck laters. Sell rallies and equities or is it going to change the technicals. Were down to a hn ill. Is the chai going for tenyear rating dchlt we have a lot of important players and mr. Look at a day of boons with tenyear note rates. Theres no doubt theres a tefbive trade there. Lets look at a twoday of the dollar chen, shall we . Open the chard up to. You can see how far back this trade going. Whenl you see these risk aftof and the unravelening on after that which pushes the dow bedow. Nobody knows what its going to do. Nobody hows how london and the u. S. In. And the spn is. Look at 2000le 8 but more importantly lets open up the char to to year. Were coming for a mump blingerstore. Still to come, thousand Budget Committee member chris val hollins wants to tighten some of the restrictions on the Corporate Tax enversion. Were back in a minute. Google showed off its humanlike robot atlas. Its smaller than its predecessor and is not tethered to a power cord. Interesting to watch. At the same time getting news that spotify is moving a lot of their technology to google cloud from aws. A nice little win for alba bet. And etsy doing better than expected. Was that robot about to get up . I think he was getting up on his own. Thats pretty cool. Thats frightening. Merger bots. Theyre not going to happen. A. I. Is number three. How about rg3 . Playing for another. There he goes. Oh, man, thats scary. Why is that scary . It scares me. You get scared by something real. I want them to look like they did in sleeper. Good call. You know the woody allen character. That to me is friendlier. Miles stan idish. Youre right. You can still rule on mars. You can grohl potatoes. Lets take a break. The market is down 231. Dont go away. 4 4 its time for stock tradin. Remember. It has nothing do with oil. A great sale. Congratulations to these guys. Build a better mousetrap. My problem with that is if youre using 25 oil, that may be too optimistic. Evans losing money. I suggest they do some more work. Do some more work because your work is not as good as it should be. Look at inflation in the three years. Gold goes up every day. Theyve downgraded over and over again. Gold is a reaction. Its a very confusion situation right now. I want people to be careful. It was 26 and why shouldnt they go back to 26. I dont know. Theres no room. Pajama traders. Pajama traders. They do not they have feet pajama and they sit there and watch twitter. Those guys woke up and smelled the coffee like the accountants should do at jpmorgan. Their Computers Never sleep. Dont either. Im like a merger bot. Like terminator. Vista. Another Conference Call to listen to and read. Whats on tap . D. A. T. Reporting. Louisiana popeyes. My kids make fun of me. They say popeyes, but im from louisiana. Its a little ridiculous. The machines, they not only can get up, they can sell stocks when oils down, especially Companies Like popeyes louisiana kitchen. Was that robot about to buy popeyes . Im not sure. Id like to. When we come back, new hoemt sales and mike pompeo on apple versus the fbi. Back in a minute. I know youre my financial advisor, but are you gonna bring up that stock again . Well you need to think about selling some of it. My dad gave me those shares, you know. He ran that company. I get it. But you know i think you own too much. Gotta manage your risk. And youve gotta switch to decaf. An honest opinion, even if you disagree. With 13,000 Financial Advisors, its how edward jones makes sense of investing. Sometimes they just drop in. Always obvious. 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. Good wednesday morning. Welcome back to squawk on the street. Im Carl Quintanilla along with sara hobson, david farber and michael holmes. Lets get to rick santelli. Yes. Wleerking for a number thats down somewhere between 4 and 4. 5 , somewhere in the 520 cap. We dropped the handle 449,000, which when you frame it against an unrevised decembers 544,000 is a drop of 9. 2 and 4. 9d 4, is only the weakest since last year. If you want to really understand whats going on, of course, lets aim east and go to diana olick and dig deep sbeer this january report. Diana . Well, rick, as you said, this is a disappointing number. We got 494,000 and that is well below expectations. This is based on signed contracts. Thats folks out shopping during jarch, not the closings we generally see. You know me. Im always going to be looking a tt home price. Mean yad price, newly built, 272,800,000. Thats lower than a year ago when it was 2 2,000. Toll brothers were able to raise their prices and now theyre looking at the home end buyer. So its a good time. Wed like to see a little more housing starts. Were running at a 3point low. Were getting more of a supply which could help easing prices for buyers out there looking in february. Thats a disappointing one at 449,000. Carl . Thank you for that. Meantime stocks as we said are falling as fresh declines worry investors along with these concerns about what theyre calling a protection it. Good morning to both of you. Good morning. It was short res setting. We didnt take out trough valuations. Was that a head fake . Its not a head fake per se. I think you can justify the rally. At the end of the day for the markets to make a real low, the fed has to get pressed out of the market and thats not happening any time soon. While they may pause. They havent done that. Until thanes oil and treasury and dollars will continue to dominate in the markets. Maury, weve had fisher and others. Are they back . I think your chances of negative rates are really very low. If the fed feels they have to do, that they have to feel they have to turn to something as negative at shortterm rates. You know, krishna, i wonder if thats what you said. This really is all about oil. I wonder if wed see that. Is this about the feds speaking more hawkishly than we would like . Clearly oil is an issue, but i think these are symptoms rather than the cause. The cause has been the 18month fed talk of deflation and delever rasing on a global basis and while the u. S. Economy continues to do okay, the rest of the world is still growing at a very slow rate and they need to support things on a global bay is. Mar maury, the reason theyre tacking about that is theyre not sure its going lead a substantial imprint on the economy. They spoke readily about what they can do. Where are you on where the fed thinks it is and the strength of the recovery here . I think the fed is going to pass up the next few opportunities to raise the funds rate. I dont see them starting to raise the funds rate until we get out into the autumn. I think the prerequisite for that is you need to see theres two prewrerprerequisite. You also need to get beyond this soft spot and overall gdp and thats going to continue through the first half. So i think the feds out of the picture in terms of what they actually would do until we get past the soft spot in the economy, which is probably more like the second half of this year. Krishna, what explains the relative strength in the consumer on a week when were getting home depot and lowes, these giants that proadvice it. How is that not a stronger antirecessionary argument . I dont think we are in a recession. I think while some of the markets may be indicating that, i think Economic Growth is strong enough. I sthi what the world wants is a good bond. When they cant get that level in a bond market and theyre scared of the credit, they go to equities to find solace. I think thats what theyre looking at. Its astonishing to see. Today the tenyears at 166, maury. What does that tell you about whats happening in the real economy . What it tells you is the tenure is very focused on inflation and at a day when oil has come back down, im not surprised the tenyear yield is coming down. Its not telling me so mucher the real economy in terms of jobs or the gdp. Its telling me more about inflation. Its two weeks away. It must be something that prss rates down. Do you believe its actually reasonably strong. Not spectacular but strong at the moment . I dont think its strong and solid at the moment. I think were looking at gdp and i think until we get some stability in oil prices and some stability in the dollar, were probably going to have very slow motion, slow Economic Growth. I think we start to pull out of that later but for the time being i think the numbers are going to continue to look very soft. One last question, that marty heldstein piece where he argued the economy, whether its economy, wages, cpi, confidence, retail, the economy is much stronger than the stockmarkets gifrping you credit for because the stock marked pulled forward in all those gaens. What did you think of that . Well, look, the economy is doing well on the consumer side and thats what it was like. Youre not on the verge of recession. I think the markets are acting like theyre getting that. We were glad to hear it. Thanks for the insight. Wanted to mention we have an ipo. Its the biggest ipo of the year, which as i mentioned is not saying much. It is trading, trading higher. A little action. The ceo is mark pappa. Again, this is one that skauled a blank check to go bargain hunting in the oil patch. In other words, raising money to do deals in the battered which is why its flat. On day when oil is falled a second day. Crude oil seeing a steep slide following another 3 . Well talk to the canadian minister of Natural Resources about what he sees when squawk on the street comes right back. Your investments through good times and bad. For over 75 years, our clients have relied on us to bring our best thinking to their investments so in a variety of market conditions. You can feel confident. In our experience. Call a t. Rowe price retirement specialist or your advisor. To see how we can help make the most of your retirement savings. T. Rowe price. Invest with confidence. [martha and mildred are good to. Go. Heres your invoice, ladies. A few stops later, and it looks like big ollie is on the mend. It might not seem that glamorous having an old pickup truck for an office. Or filling your days looking down the south end of a heifer, but. I wouldnt have it any other way. Look at that, i had my best month ever. And earned a shiny new office upgrade. I run on quickbooks. Thats how i own it. Today marks the first day of the export of liquefied lgs. Jackie deangelis joins us. Absolutely. Good morning, simon. This is a groundbreaking move that chenier is making at this point. Groundbreaking really when you think about it. This project was in the works since 2010, so roughly ten years of planning here, lots of capex investment in this as well. Cheniere has a roughly twoyear lead on its competition in terms of the export so really positioning itself as a Market Leader here. Now, the process taking place behind me on this tanker, its going to leave later today s the loading and propping process. s when they turn the natural gas into liquid and they actually put it on the ship. Were talking about gs being sent off to brazil today. Meantime experts are his store igs. We have access to it now which has really revolutionized what has happens, giving companies a place to go with it especially as prices are so low right now. Market for this internationally will be south america, europe, also the far east just to name a few. People are worried about this in terms of pricing. Will it raise the prices here at home. The Companies Say studies show we have enough supply that for at least the next 20 years you wont see prices significantly increase from here. Were talking about oil exports out of the u. S. As well. So were seeing a revolution near. Cheniere certainly leading the way foorkd guys. Back to you. Jackie deangelus, very cool to see you live. The saudis oil minister rattling things, listen to what he says. Not many. Theyre wasting aur time. Good to see you. Thanks. Glad to be seen by you. The market took this very powerful statement from the saudis as effectively saying, nope, no Production Cuts. Is that how you ski it . Its a tough time. Theres a flood including in canada where particularly in our producing provinces there have been human consequences to these pric prices, job losses, layoffs. Its a tough time to the industry. We believe there are innovators that will adapt to the new reality. You know whats interesting is the saudi arabia minister al naimi said theyre going to have to get out. A lot of folks seem to think he was naming american and canadian companies. Do you think he was . There have been lots the of cost compression and were seeing that in the human relations part of their operations. Were seating it in investments and processes. Its the reality of this economic moment interactionally. At the same time there are many leaders in canadas oil and gas sector who are being innovative in the way in which were extracting and the ways in which were seeking more reliably efficient and sustainable ways of producing oil and gas. The government is very aware of human consequences on families in the short term and in the longer term were seeing that there are innovations and we think that we will be better off in the meanian turn than we ared a the moment. Can you put a number on it . I cant. I can tell you about 63,000 jobs have been lost in alberta. The government has a role to play in terms of insurance and other ways in which we ensure that parts of canada are suffering, other parts come to help, which has really been the history and there will be no difference this time as the oilproducing provinces are going through a difficult period. The rest of the country will respond and be there for them. And yet through all of this difficulty and pain its been amazing to see it actually pick up and continue to grow and flow. How long can that continue with prices at these levels . Well, there inevitably will be consolidation as there will be internationally. Canada is a terrific place to invest. Its stable. Im confident theyll be doing it. Minister, ive been listening about one part of canada helping out the other parts and those parts hurting because of the low price of oil is. That an appeal to reinfigure rate the acceptance of pipelines across canada which clearly have been highly controversy and id like to get your take on keystone in 2016 as we head to an election. Is that still a live issue for you . We expressed at the time our disappointment in the decision. It was an american decision. We have a very important relationship on many, many fronts including the energy front. As a matter of fact, we signed a letter of understanding in my hometown of winnipeg just a few weeks ago that talks about Continental Energy on climate change, carbon captured storage. Climate change and adaptation, so were deepening the conversation in north america and i think thats also a very positive note. On poplines we have changed it. Meaningful. Were taking the time to make sure thats the case. When its time to make the decisions, those decisions by the regulator and ultimately the government will carry the confidence of canadians. We were talking just now about lng here in this country. Five, ten years down the line, do we massive will i need to increase the number of pipes across, say, north america, canada, and the United States . Is that part of where we have to be in your view or not. Well, i mean that will depend on international circumstance. As you know, very often we have to make 30 40year decisions out of political and nique nomic moment in time and that is often the source of controversy. What you do is use science. Fact ts and an evidence based system along with community involvemonthold and Community Engagement to make the best you can of current circumstances so theres a short term strategy of changing these rules in transition and a longer term which is investment which is the cornerstone of it. We now have a main date from the canadian people and were beginning to implement the elements of that. And finally based on your world view of supply and demand, how and when does the price of oil stop falling . You know. You should come to houston and ask that question of 20 people. Youll get a variety of 20 answers. I think the best you can do is take a compendium of advice, do what you think is reasonable under the circumstance. Most predictions are that well see a gradual rise in 2016 and more stable prices in 2018, but, you know, its very difficult for governments to be in thes by of making predictions. You have do what you can with the advice available. We veal to make assumptions when its time to put budgets together. As you know, its fluid and changes every day. Thank you for joining us. Very good to see you. Its my pleasure. Hes the minister of Natural Resources from canada. When we come back, donald trump winning big in nevada as super tuesday dross closer. A run for the white house when we return. Its intelligent drive is msystems. Ng. Paradigmshifting. Its technologyfilled cabin. Jawdropping. Its performance. Breathtaking. Its selfparking. And selfbraking. Showstopping. The allnew glc. Mercedesbenz resets the bar for the luxury suv. Starting at 38,950. Here at the Td Ameritrade they work all the time. Sup jj, working hard . Working 24 7 on mobile trader, rated 1 trading app on the app store. It lets you trade stocks, options, futures. Even advanced orders. And it offers more charts than a lot of other competitors do on desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivatives pricing model, honey . Td ameritrade. Welcome back to squawk on the street. The index is tracking for its worst day sense february 2nd. Leading transportation stocks to the downside. Shares of avis stock. That stock on pace for its worst day. They had been strong as of late, now showing a second straight day of weakness, carl. Back over to you guys. Thanks, dom, for that. Dominic chu. Donald trump winning by a land slide. Marco rubio coming in second, ted cruz a very close third. Chief washington correspondent john harwood has more on that from d. C. Good morning, john. Good morning, carl. It put him on a solid path unless something upsets the apple cart. 45 of the vote by donald trump. Marco rubio in a disstand second. Ted cruz close behind as long as that vote is decided. The second place, third place finishers simply dont have a chance. He kmanlsd too broad a coalition within the republican party. Lets take a look at the delicate math and see where he stands right now. That is way ahead of cruz and rubio who each have 17. John kasich with 17. B ben carson with four. Huge delegate hall there. March 8th, thats where john kasich hopes to break through. And march 15th, thats when the snowball started to roll downhill if the candidate gets hot. The key tests are going to be on march 1st. Ted cruz has got to beat donald trump if theres going to be an argument. On march 18, rubio has got to win in florida, his home stand. John kasich has to win in ohio. Both rubio and kasich trail in their home states. Carl . John, thank you. Theyve survivor s certainly got the momentum. A bill introduced today by congressman chris van hollen. Hell join us live with how it works when we come right back. Welcome back to squawk on the street. Im bertha coombs. The expectation is for a build of about 2 million to 3 Million Barrels compared to 3. 5 Million Barrels. Thats compared to the industry yesterday of 7 Million Barrels. Slightly better looking number than the big build we saw yesterday in terms of gasoline. We saw a decline of 2 Million Barrels and we also saw a decline of distillati ates. It looks like if my eyes are not deceiving me. Cushing had been flachlt people continue to watch the buildup of stockpiles at the nymex delivery hub. Thats negative but its coming well off the lows and we have stayed within this range of about 30 to 34 for about seven weeks or so, notwithstanding some of those big possibles we have seen with the hopes that opec might be moving toward a Production Cut. Now on to sue herera with a news update. Thank you so much and heres whats happening at this hour. President obama is seeking to nominate a Supreme Court justice who has an independent mind and understands how the rule of lay affecting the daily reality of peoples lives nchl a post on scotusblog. Com he urged the senate to consider his nominee. A t family of a woman who claimed she got Ovarian Cancer from Johnson Johnson got a. They found the wreckage of a small plane carry 2g 3 people on board that crashed in bad weather in the mountains of nepal. The plane appeared to have flown directly into a mountain. And 7vanderbilt Josh Henderson who had taken only two threepointers in his career lofting an 80foot shot. It went in. It gave them a halftime lead in a game they went on to win, 8074. Pretty amazing stuff. Back down to you, david. Thanks very much, sue. A bill introduced yesterday but unlike to pass in an Election Year aims to prevent companies from lowering effective tax rates after they move their headquarters overseas. Its a strategy known as earnings strings. Joining me, Maryland Democratic congressman chris van hollen. Nice to have you. Thank you for having me. Why a bill now that seems to have so little chance of actually getting anywhere . David, earlier you were talking about the elections, and these inversions are exactly the kind of thing that is driving the American Public crazy. These are corporations playing with the tax code because by reduce their income Tax Liability theyre requiring their citizens to pay even more when theyre benefitting from american infrastructure, the education system, and so its a this is a bill ive introduced with send 11. We have bills that stop earnings stripping. Right. Where a loan is made to the u. S. Subsidiary and therefore they can lower their earnings, their taxable earnings by actually paying interest on that which is tax deductible. I ive been following this for some time and there are Many Companies that have already inverted and in many industries, those that arent able to are at a competitive disadvantage to those who can bring back to the u. S. And so ive seen a lot of these companies decide to set out to a Foreign Company all together. Thats not a good ending here either, is it . No. Ant i dont think you can find many cases like that. These are American Companies that want to maintain a majority of the shareholders, but simply stop paying. Congressman, i have a list of over 50 company dms 2014. More than that in 2015 that did so. Now, some sold out to companies that already were investfvertedd point is the same. No, no,ite knows tt same. Yeah, it is because theyre inskrerting companies that arent, so it is. Theyre Foreign Companies. So these are as you know, these are u. S. Companies that are acquiring Foreign Companies even though they still have a majority of u. S. Shareholders. Thenned a you said, the right hand is paying the left hand essentially loading it up. I understand. Youre talking about the inversions taking place now. Im talking about in answering your assertion that there werent a lot of Foreign Companies buying u. S. Expressways. I mean ganl bought actavis. Now, actavis was foreign inquired. Actavis bought others. It goes on and on. My point is dont you need comprehensive tax reform to actually deal with the problem thats going to end up with many u. S. Companies simply selling out to others because they can can access cash. Im looking at reforming the Corporate Tax system in a way that stops the incensus right now to move american jobs and capital overseas. As you well know, david camm p put forward a tax reform plan and the one who ran fastest and furthest was speaker boehner. In the meantime it seems to me we should stop the most egregious aversion. We have another bill to deal with inversion bills ought owl. This deals with the most egregious ones. Its undeniably a ripoff of the american taxpayer. Weve been talking how theyve been in an angry mood. This is exactly the kind of thing theyre angry about, corporations able to use these loop hollywoods to rip off american taxpayers and a congress that refuses to close the loopholes. Thats the problem. But people theyll look at you. What really puzzles me is why youre doing this now. You know, the volume of transactions last year was 5 trillion. Arent you acting after the horse has already bolted . They should have done this three or four years ago. Why come out and granstand now . We tried to introduce this. Welcome to the party. Wish you had been on the air calling for continuation to scloes the door. Right now were trying to deal with the most egregious part of it and we would welcome support because it is undeniably a huge riboff of the american taxpayer. Youre there every day. Youre not talk about this. Thats really unfair. Really unfair. I dont think you watch that often, but i was talking about inversions and pointing them out before anyone knew what it was. I understand that part. Do you think we should wait years and years before we close the door on this . No, not necessarily. Right. My expectation that theyre not going to do everything its not to United States but the owners is naive. If theres an opportunity for them and their competitors have already taken that opportunity. May find themselves as a disadvantage,re going to do its. I want to emphasize we set the rules in terms of the tax code. The rye alt eality is it would them from ripping them off. I think all of you know thats not going to happen any time soon. You can argue this provision wont go anywhere and the reality is the reason people are so ticked off around the country is because we cant get a vote on this keep of thing in the cob. So we think it does a service to the public key bait to put foortd a solution that is a real problem. Understood, congressman. We appreciate you joining us and well continue following it here and discuss it in the future. Chris van hollen. Thank you. Democrat from maryland. When we come back, Jason Calacanis will be weighing in. Hell be joining squawk aulie live. Well be right back here on squawk on the street. Rises, who do we treat next . More squawk on the street coming up. Welcome back to squawk on the streets. The stock trades. The financials are slipping. The worst today. The trades, the worst performing among all major success tors. Doublets you look at Northern Bank corp, charles schwab. All down by 4 . These names are sending the spider bank down. Tag by more than 2 . Its tracking for the second Straight Loss over 2 . Sara, a lot of foges out there saying financials are an integral part. Right now its not look very good. Back over to you, sara. The stocks are looking at 1 decline. Lets go back to rick santelli. Good morning, rick. Good morning. Im like to welcome biederman, biederman, biederman. Charles biederman, thanks for taking the time. Good to be here. I have to start out with a friend of yours, martin heldstein. The u. S. Economy is in good shape. One of the sentiments is income is rising, production is tag sharply. Two sentences later, basically paraphrase f phrasing that the unwindings of mismanaged prici. Amen. Listen. We have a solid 2 economy. Maybe eve detear rating from that. Wages, weve had one month of popping. We hope its more. Dwlou square the motion . Theres such a naivety about everything. Whether its the 2 economy in the shoulder bags or dumb legislation reforming dumber legislation is a good idea. Well, Corporate Taxes is the most difficult thing. The money they make overseas is taxed overseas. Instead of the stupid policy of taxes twice, companies are trying to avoid that and companies are saying it. Why are they you should tax people taking money out of companies. It hinders Economic Growth. The real problem were having is lack of Economic Growth. Not that we need to tax more and it make it d michigan. We track. Every day. Growth sthas stopped. If you read press rae reince millennial. If you lead some of the come men tear with sofr. You think that, wow, thilgs are file. We have no Economic Growth in the United States. Industrial activity is slumping around the world. Ze zero. They will ease again because the last thing they want is anybody to be hurt about their assets or money in their pockets. So were going to have a bubble again or another boom when the fed and everybody else starts helicoptering money around. I think you pretty much summed everything up. Next time we talk about the etf. Thank you. Simon hobbs. Back to you. Up next. Republican congressman mike pompeo weighs in on the encryption debate. Why he says tim cook shouldnt stand in the fbi and his invitation for cook to join the committee. Squawk on the street will be right back. Just want to show you the chart of crude oil. Wti crude still falling more than 2 . As you can see it it popped after we got that supply data at 10 30 a. M. Eastern time which did show a builder build by 3. 5 Million Barrels last week. Analysts looking for a number around 2. 4 Million Barrels although they were pretty bearish on this number after the api suggested that were going to see more crude oil stock piles and were watching the price of crude because as goes oil so goes the market. Now to the high stakes fight between apple and the fbi over creating antiencryption software to access the iphone used by one of the San Bernardino shooters. They have until the end of today to respond to the house energy and Commerce Committee which is asking both to come to testify before it. Joining us now kansas republican congressman, a member of that committee and also the house intelligence committee. Welcome to the show. Good morning. You clearly feel very strongly about this. This is an easy case. Theres no privacy at stake between this particular phone and apple. The owner of the phone has given consent. And give that information over to the government in order to make sure that there arent more folks out of there part of isis trying to kill further folks. Whats fascinating is you describe it as so easy and thats not now where it would appear Public Opinion is in this country given the deep skepticism that exists. 46 almost half of the American Public believe that apple should not bend to the fbi and if you look at those under 40 that rises to 64 . Apple is playing out some deep privacy interest here but none exists. Theres complicated issues around encryption and how we handle that but this is not the case. This is a simple one. This is not the fbi acting on its own. This is not the citizen claiming a privacy interest. This is a dead terrorist that happened to be recorded on a phone that he didnt even own and the person that owned that phone is saying yes, please apple, help take this phone that i purchased from you and help Law Enforcement do its job in help keeping america safe. Thats how you phrase it which is why its easy for you. Those are the facts simon. But other people in a legal sense would see it in a very different environment. That actually whats happening here is that the courts are being asked to tell apple to create a piece of software to unencrypt a device that does not exist at the moment. Theres an argument as to whether the courts are exceeding that power. Theres another argument as to whether actually code is covered by freedom of speech essentially. Thats what they will argue in court. Thats very different from where you are. On those issues, what would you say . Simon, i actually think thats pretty clear too. If its the case that Congress Needs to step in and amend the act that theyre talking about. Its a piece of legislation, we need to update that to make clear that it is the case when the government goes through appropriate procedures and follows what the Fourth Amendment requires and gets a warrant based on probable cause from an article 3 court. If we need to update that language i think congress ought to. Its one of the reasons we asked them to come testify before our committee. We absolutely ought to do that. And if we need to change the law to do that, so be it. Its not that simple though congressman because even fellow republicans disagree with you. We had the congressman on the program a few days agatha said he is siding with apple here and this is a real encroachment on american civil liberties. I just happen to disagree strongly. Theres folks on lots of sides of this issue. I think the facts in this particular case are pretty plain. I think apple has tried to paint this as a branding tool. They said buy my phone and you can conduct illegal activity on this phone. I dont think thats appropriate and i dont think the American People will support that. But i guess, how can you know whether this is a one off case . How can you ensure that when theres already reports this morning that the doj has a number of other requests out for apple to go through iphones unrelated to this case. This could open a whole can of worms. I dont think this is a one off case at all. This is an example of the case where the government has done precisely what it needs to do. It didnt act on its own. It went to court just like for a couple of hundred years sheriff offices all across this country go to courts based on probable cause and have judges evaluate whether its appropriate under the 4th amendment for the government to have access to a house or phone or other technology. There will be other cases like this one where its completely appropriate or pursuant to a court order to give access to a piece of equipment. In the meantime congressman do you know if the fbi director tim cook have agreed to the invitation. No, sir. I dont know the status. What i last heard neither of them have agreed to come but i expect both of them will. Its hopeful. Its good to see you, sir. Come back and talk to us again. Republican from kansas reporting on the intelligence and intelligence committee. Fbi special agent will weigh in. Thats straight ahead on squawk alley. Were back after a quick break. Good morning, it is 8 00 a. M. At google headquaters in mountainview, california. Its 11 00 a. M. On wall street and squawk alley is live