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tv   Worldwide Exchange  CNBC  April 18, 2022 5:00am-6:00am EDT

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that got addicted to the medication, the drug, and began selling it, because at the end of the day, if you want to get high, you're gonna get high. it is 5:00 a.m. here 2:00 a.m. at twitter headquarters here is your top five at 5:00. it is musk versus twitter. they fight the buyout with some seeing it as extreme measure captivating corporate america and wall street. what you have to say about it all. stocks looking to get back on the right track after the losing streak. the number of high profile names set to report. we layout the ones to watch. the american airlines ceo
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saying you can count on us pledged by the man in charge to make sure your plane takes off on time this summer. and will soaring borrowing costs hit the housing market the ceo of coldwell banker is here it is happening on monday, april 18th on "worldwide exchange. good morning, good afternoon, good evening welcome from wherever in the world you may be watching. thank you very much for joining us i'm brian sullivan we have an absolutely packed hour for you to kickoff the week let's not daly and get to the monday money futures are down across the board. not by a lot dow off 78 the nasdaq looks to be the bigger decliner. assuming this trend holds. nasdaq futures down .%
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all of the major averages are having a rough month s&p 500 is now down nearly 10% from its high to begin the year. can corporate earnings turn things around? a number of names hitting the tape this week with the 60 members of the s&p 500 and seven dow reporting. bank of america and ibm and johnson & johnson and tesla. the ten-year yield is rising to the highest level in three years. 2.86%. check this out maybe your market stat of the day or week. the major stock averages and yields or government bonds are down this year believe it or not, that combination. stocks and government bonds down has only ever happened one time before that was in 1994 which was also a hyper aggressive year for the
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fed to hike rates. an unusual and historic and not in a good way start to the year for the stock and bond markets that stat courtesy of evercore isi. as for oil, will it move higher? it is fractionally lower right now. russian rockets hitting lviv this morning lviv is seen as a safe haven the home of much of the western media. nbc news people coming to us every day from lviv. wishing them all the best. more on that coming up later on here on cnbc let's go now around the world. a lower overnight session in asia new data for the chinese government the china economy grew 4.5% in the first quarter. most of that growth occurred in january and february lockdowns beginning in march closed factories and kept tens of millions of people literally confined to their homes.
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in some cities, they still are there is a concern this quarter could show a slowdown. in china, trading in hong kong is closed for the easter holiday and same for the mainland europe today. trade will happen tomorrow when it comes back up and other headlines and news around elon musk not involving twitter. bertha coombs is here with that. good morning, bertha >> good morning, brian a group of tesla stockholders are suing elon musk over his 2018 tweets about taking tesla private. they are asking a federal judge to force musk to stop commenting on the case claiming he is trying to influence jurors in a lawsuit on the matter. shareholders are sues after musk said he considered taking the ev maker private at $420 per share
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and said he had funding secured to do so in a statement to cnbc, musk's lawyer said that his client was considering taking tesla private and could have adding that the plaintiff's lawyers are trying to make a buck. american airlines ceo vowing his company is reliable heading into the peak summer travel season speaking at the event last week, robert ison said the priority is making sure passengers can count on american to get where they are going this summer and beyond the comments follow the decision earlier this month by american's partner in the northeast, jetblue, to cut as much as 10% of summer flying to avoid cancellations and delays and the third chapter of the popular harry potter spinoff series "fantastic beasts" not roaring into its box office debut. the movie pulling in $43 million
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domestically landing in number one. brian, that marks one of the worst openings for the series with the two prior films taking in $62 million and $74 million in the openingopenings is it fair to compare with pre-pandemic >> and easter and passover the same weekend let's see how things go next week bertha, thank you. see you in a few minutes. let's kickoff this big week with one of our favorite guests. some of the best there are out there. ben, great to have you on the program. i meant that i enjoy reading your work. i'll get to twitter in a second. i saw your note on it. i want to start with the macro markets. you heard the stat for the first time since 1994 to
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start a year, 28 yearsi ago, major stocks and bonds were both down at this point in the year what do you make of that >> good morning, brian the environment that the market has to accept to go fast and faster and tightening in the previous cycles. it reminds you of what happened in '94 that is one similarity inflation. that is the same now as back in '94. the market, bond and stock market, have to accept to go higher than last time. it seems to indicate something may be around 3% it could be 3.5% of the fund rate the treasury yield is up to $2$ 2.86%. it will continue to put pressure on the stock market.
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within the stock market, there is a lot of interesting opportunities on the bull and bear side. this is the environment. lowest stocks and high yields. >> we'll get to the opportunities in a second. i want to follow-up on that since we're talking about 1994 which was a major rate hiking environment. fed raised rates 2.5% in 1994. in 1995, i'm pulling the numbers out of the air -- forgive me if they are not perfect -- dow rose 33%. does this necessarily mean the market can't later on do well or is this a very different situation? >> i think there is some analogy to 1995. what happened then, the fed typically took enough action to get that inflation rate back down and that is still in the bond market.
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if you look at inflation expectation. they have to be broken out there is some expectation that the fed has to move the fund rate higher. it doesn't mean the inflation cannot moderate over time. i think that is the scenario from '95 moderating inflation next neyear we could head that way, brian. this year, of course, we have the ukraine situation with the pressure that is the inflation story. >> there was no war in southern europe in 1994 at least in ukraine. energy rocketing higher unlike '94. you said interesting opportunities, ben, out there. where are some of the opportunities as you see them now? >> i look at several things, brian. i think one, the energy market continues to be in play. if you look at oil servicing
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companies, you would think that oil prices don't really come up so far and all the way back to $50 a barrel despite the efforts to clean up supply, i think big oil companies are under valued relative to servicing. we deal with reopening we talked about it many times. the global reopening is still there. china will reopen as well. that is the other play at the moment in the abirlines and hotels and leisure sector sdpsector >> we hope china reopens soon. that means covid lockdowns are over and people are safe and healthy and the world even over in china gets back to more normal ben eamons, pleasure to get you on to kick off the week. thank you very much. >> trahanks, brian. you're welcome when we he come back, is oil heading to $150 or higher?
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we have an interview to layout the balance come together markets. and more on the elon musk twitter takeover bid sarah fisher has the latest on the fight. we talk about the stock and what you should do with it in the morning rbi. stick around we now find that 85% of individual investors are interested in sustainable investing. among millennials, the interest is even stronger. ♪♪ one of the big trends in sustainable investing is data, and the ability to understand how sustainable your investments are. by taking that information into account, investors can make better decisions for the long term. sustainability is not about one number. it's about variables like water usage, data privacy, consumer trust, diversity, land use and conservation.
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welcome or welcome back. good monday morning. let's talk energy. there is glrowing chatter that the eu is weighing the phase-in ban on russian oil this as they deal with the ongoing energy crisis. prices for electricity and natural gas are five times what we pay in north america. oil is above $100 here and $110 in europe. the next guest says growing sanctions on moscow and structure issues and under investment are setting the stage for a bigger price spike eric, the senior portfolio manager at ninepoint partners is joining us from calgary. we appreciate it, eric thank you for getting up or staying up and talking to the world here on cnbc structural under investment has been a thing for years is it finally coming home to
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roost? china will reopen at some point fully. when that happens, what will happen with oil demand >> you make an excellent point demand back to pre-covid levels before shanghai. the real story is the supply we are in a post-u.s. hyper growth world investors have to share the worst in american history. what are we saying to the shale companies? don't grow don't you dare repeat this incident from the past i'll get paid with special d dividends and buy backs. under investment in the last six or seven years where they had to adhere to maintain social spending to get regime change and we have the global super majors esg is mission accomplished. what they have done is inject
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uncertainty and fear in the fear of peak demand that is leading to supply. they stopped spending in 2014. the oil price is back to 2014 levels and spending is down by half it takes four or five or six years to bring on a mega project. the demand surge, especially travel related surge later this year, combined with the short cycle saying don't grow. you have the long cycle where the cupboard is bare now i think we are in a structure -- >> oil production. okay oil production estimates here in the states, eia, back to 13 million. we are seeing rig counts up in canada we are seeing production gently nudge higher at least here, we are seeing that tick up do you think it sounds like that could be counter balanced or at least not balanced out as the world grows by what's happening with many opec nations, which,
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because they let things go, they he can't make some of the quotas. >> absolutely. what we are seeing is march 7 with the biggest opec numbers were under producing quota it is further evidence of spare capacity we are looking at u.s. share growth of 800,000 is labor shorl you need to rename growth and dare not repeat. you need to pay a special dividend you have the spr release which is politics heading into the midterm. we have a structure challenge going forward. as a guy like i spend every waking hour with my job and kids trying to figure out where the necessary barrels come from because we will consume oil the rest of the our lifetimes. the fact that we will all drive
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electric cars is bogus how much should i invest and what should i value in long dated reserves why would i dare put value on it it is the very special time where we have structure supply challenges and no easy fix. >> leave us with a name you love i know one of them is sonovus. it had a heck of a run off the pandemic lows, eric. 2.5 to 17.5. why is cve still a name you like >> you look at any stock chart and say how can i own an energy stock? energy stocks are cheaper than march 2020 lows. use $100 a company with 30 years of reserves and it is trading at 30% free cash yield.
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moderating growth. buyback shares you see an increase in the q1 earnings you say i'm paying less than 3 times value to cash flow on $100 oil. i need free call on 27 years of 30% free cash flow yields. all of the companies are saying the same thing it is time for the shareholders to get paid with buybacks and meaningful dividends going forward. >> going forward we are watching cve as well as the macro markets. eric, i appreciate you coming on the program. i'll let you get back to bed take care. have a great day thank you very much. >> thanks for having me. >> we are waking them up in albert an. coming up, the morning rbi on what you think about twitter, musk and would-be deal. big bank earnings failing to impress so far will bank of america turn that around or smaller banks the
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welcome back big bank earnings wrapping up with bank of america rolling out today. the big bank numbers eh less than impressive are the biggest banks really the place to invest right now? let's bring in gerard cassidy of rbc.
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ge gerard, welcome back the big seven. the last is ready to roll out today. bank of america. do you expected to see anything different than jpmorgan chase and goldman and others >> brian, no i think you are right. the biggest banks have certainly have are mixed trends this quarter. especially as you know in the capital markets area investment banking numbers have been adversely impacted for all of those players the trading numbers haven't been as weak as we would have thought. the investment banking side hasn't consumer side and traditional banking areas are doing quite well >> yeah, these biggest banks, gerard, when you look at 5% mortgage rate. the ceo of coldwell banker is coming up on housing and real estate we have inve investment bankings
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rolling out a bit. how does this ultimately play out? is it the anchor around their ankle? >> it is a really good question because when you look at the outlook for investment banking, it is still under pressure although backlogs have been built up, it is interesting to see if market conditions allow a number of these companies, for example, to go public. the real core part of the business which is traditional lending particularly, brian, commercial and industrial lending, that commercial lending is where the strength is you saw it with the number of banks announced on thursday and wednesday. that is driven by capital expenses and inventory rebuilding the residential mortgage area is another area which is weak because of the high mortgage rates. >> we love to use the term bank
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like they he aare all the same five community banks the term is a catch-all. the terms are different. is this why -- they're not small. 5th/3rd is not small they he ave commodity and fixed income trades. >> brian, not everybody fully understands that they lump the banks together they are different the regional banks, 5th/3rd, pnc, huntington, m&t don't have the commodity trading area and they are not fixed income traders. they are the better banks in the traditional banking business when rates move higher because
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the fed is raising short-term interest rates, the spreads and margins will widen which helps profitability over the next 6 to 12 months in our view. >> you have a long day ahead with bank of america rolling out. we will watch the middle names pnc and 5th/3rd. gerard, thank you. >> thank you, brian. coming up, red pill, blue pill, poison pill? the twitter strategy to fight off elon musk. and axios' sara fisher is here if you haven't already, follow the "worldwide exchange" podcast on all of the podcasting platforms. or are right back after this sht break. grab a coffee. we're back in two minutes.
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twitter going extreme in fighting off elon musk will the latest move hurt the stock even more? stocks hurt overall as rising rates and soaring inflation crush investor sentiment. can a huge week this week turn all the bears into bulls will the rates rock the housing market the ceo of coldwell banker real estate is here it is happening on monday, april 18th this is "worldwide exchange"
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here on cnbc >> welcome or welcome back hope you had a great easter and passover i'm brian sullivan we have an absolutely huge half hour left in worldwide exchange in what is going to be a busy day here on cnbc let's get right to it. your monday money looks like this dow futures losses have accelerating a bit dow futures down .20%. nasdaq futures, once again, look like they are having a tough april or year which will continue nasdaq futures off 106 down .50%. the major averages, by the way, having a rough april which is traditionally one of the better months for the stock market. certainly not this year. we do have a huge week of earnings on tap. 60 members of the s&p and
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recseven dow, some are the same company reporting with numbers reporting this morning the 10-year yield at the highest level in more than three years hitting 2.86% overnight. we are getting closer to getting back to 3% we hit this at the beginning of the show that is earlier. if you missed it, i'll repeat it major stock averages and prices of government bonds are both down at this point in the year for the same time, the only time it happened before, stocks and government bonds fallen together, was in 1994. that according to evercore isi stocks go up and buyers go to bonds. not this year. stocks and bonds both selloff. have not seen this kind of start to a year in 28 years. by the way, that was also an
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aggressive fed hiking cycle back t then to to the fascinating story of elon musk and twitter. let's quickly recap. elon musk made a bid to buy twitter for $54.20 a share twitter ceo and board tried to block the takeover by creating a shareholder rights plan better known as a poison pill you will hear that term a lot. a lot of lawyers try to make it sound fancy. a poison pill is a basic thing somebody like elon musk were to buy 15% or more of twitter without the board approving, other shareholders immediately get the right to buy more twitter stock at a discount. the idea is the poison pill cannot actually stop a deal.
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it can make it more expensive that any buyer, musk or anybody else, ultimately just walks away the defense is not perfect it is not used that often. it can work to block takeovers remember ten years ago netflix and carl icahn and a poison pill adopted by netflix icahn walked away richer for it. musk is not happy with this move or twitter's board musk tweeted over the weekend. wow. with jack departing, the twitter board collectively owns almost no shares. their economic interests are not aligned with shareholders. jack, of course, jack dorsey, the co-founder and former ceo of twitter. will this poison pill or other defense work in fending off musk
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or any other buyer time will tell let's be clear unless the twitter board has a higher offer, thinks it will get a higher offer, or fundamentally believes twitter is worth more than musk's offer, it facings crippling lawsuits unless musk walks away and the stock sinks the price covering twitter is $45 a share. that is $9 below the musk offer. three of all analysts that cover twitter have a higher price target than the musk bid one of those is just 50 cents higher twitter board could face an uphill fight if musk gets more
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aggressioggressive with his offr and more with the details. sarah fisher of axios is doing great reporting. she is joining us. satellit sarah, i think everybody worked all weekend long we appreciate you coming on. to you, what has been the most striking development over the last 42 to 72 hours? >> there are fewer reports over the weekend, brian, that elon musk may join with silverlake to potentially help finance the bid tie it private the reason that matters is if they enact a poison pill and it is more expensive for mooelon m to come in, he would have to liquidity. n liquidate he will have to come in without
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having to liquidate his personal wealth that is a possible plan b for elon musk in this situation. we're probably going to find out in the next few days whether or not that is the course of action >> you are making such an important point. we say elon musk, the world's richest man. it is not like he is walking around with $280 billion in his wa wallet it's tied up in equity a lot of that is wrapped around it by debt even musk, as rich as he is on tesla stock, he would have to make some financial sacrifices, would he not to get a deal of this size done >> absolutely. tesla has been a rocket ship over the past two years. liquidating out of the stock is not an easy decision for elon musk you have to remember, elon musk
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is not smomebody who deescalate. he says he has a plan b in place if the board doesn't approve the takeover plan or go further and enact a poison pill. you should believe him the plan b is get the private fina financing. i think this will continue to make headlines this week, brian. >> okay. he is not the only one, the irony, sarah, we are talking about a fight for twitter and quoting everybody on twitter it is the point. it shows the power that the platform has the most bizarre tweet of the week jack dorsey, an interesting guy. the long beard p stories of whatever you want to believe about jack dorsey stepping down. somebody tweeted at him about the board of twitter by the way, he's leaving the board. it's the company he co-founded
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he responded with this tweet it's always been the dysfunction of the company that's jack dorsey it seems to me, unless i'm misreading something, sarah, that jack dorsey is kind of slamming the board of the company that he founded and the very board he used to sit on i find this -- i don't think i've ever seen or heard anything like this in 26 years. >> let's peel this back a little bit. we know jack dorsey likes and admires elon musk. that sounds crazy with the circumstances. it may be jack dorsey sees elon musk as somebody who would want him as an ally perhaps what he is signaling is a different maneuver or the way the board could handle him jack dorsey signaling the
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dysfu dysfunction means twitter is going through changes. the private activist firm pushed jack dorsey out. he resigned, but reporting suggests it was under pressure you bring in a new ceo an engineer. he is trying to grapple with the policies with the war in ukraine and a lot of misinformation. now to have elon musk come in. it seems dorsey is saying twitter existed on lots of dysfunction and changes. it doesn't mean it needs a huge new injection of life. that's the way i read that tweet. someone couldmisinterpret it we don't need a massive takeover on twitter to help survive twitter has been adaptable the last thing i would say, brian, twitter made a change a year ago in the business model
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that is where you are getting the pressure maybe they are not seeing the returns on the subscription business. >> great poibnts. the ceo is under 40. he made comments a couple of years ago saying free speech is not our priority whatever he meant by that, that's going around and people are going after. this fight is nowhere near close to done. sarah fisher, thank you very much for coming on the program odd stuff by jack dorsey we will to more in a few minutes. and coming up after the break, the ceo of coldwell banker with the rates of housing and the one thing all homeowners should be doing now but most aren't
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welcome back let's talk real estate home buyers come out this time of year checkbooks in hand did you know 40% of home sales occur between march and june the pandemic years could be hitting the brakes a bit mortgage rates up 3% to 5% in the last three months. that is the quickest move by mortgage rates in 35 years let's talk more about all this
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and something all you homeowners should be doing with ryan gorman ceo of coldwell banker ryan, spring selling season or spring has sprung. ryan, what are you hearing from all your agents across america >> sure. thank you for having me. spring is the busy time of year. the latest challenge is a lack of listings. too little inventory we are selling whatever is coming on the market in 18 days on average we have high velocity. we are seeing a lot of transaction. with inventory limited, you have prices continuing to increase. buyer advantage is strong. it is strong and fundamental it is for all the right reasons. looking to upsize or get a second home they can use more
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now they are working rehe mremoy we see that trend continue even with the rates >> the pace of buying as we have seen, by the way, 5% used to be considered low i'm not that old, ryan i'm old enough to remember ten years ago. 5% was wow a bargain. now it is expensive. 5% is the same number. people buy homes on the monthly payment normally not the overall cost do you think price increases and you have to regulator prices come down a bit so the monthly payment stays within a range >> price increases need regulated. year over year price increases 16% or 17% year over year. longer term is not sustainable that is not to say pricing is not appropriate today. it reflects demand we are not building enough homes to meet the needs in the
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economy. probably 5 million more homes constructed today could be sold and we could come close to meeting demand with prices increasing on mortgage rates relatively quickly, yes it is a rapid increase, but a rapidly moving market. the rate increase will tamp down a little bit however, if you have been in the market, you are looking at m multiple offers everywhere high cash down the winners in the bids are high cash buyer wh ers who are not id by the rates i hope this can go away and i can buy in a more normal marketplace. i continue to see demand very strong. >> this is incredible stuff. everybody always likes to talk about home values. you had research and i could not believe the numbers. i rubbed my eyes and did a double take, ryan. 46% of homeowners don't know
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what their home is worth how is that possible >> you have lots of information out there that would tell you what your home is worth. i would say now more than ever before, you need a trusted adviser and expert to inform you on that. that is not a sales pitch for coldwell banker. if you sit down today and understand what a well positioned home is worth in the market, literally in this moment in your neighborhood, you will be surprised that stat comes from a lot of those individuals and homeowners who thought they had a rough sense, but an actual sense of the real dollar amount educated them in a big way. surprising as you rub your eyes with the number and then it led them to action that's really the value for the home today maybe we can acceleratee can moe years from now to leverage that value. i believe as more become aware
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of the value today and i encourage you to contact a coldwell banker agent or someone else with that people need to become more educated >> maybe if people think the peak or close to it is in, they put the house on the market because they have been waiting to make more money on the house. ryan g oorman, thank you talk to you soon >> thank you on deck, cfra's angela zinno on what to do with the twitter stock with the elon drama and your morning rbi and musk's move to buy the company we are celebrating financia literacy month we have kari firestone with the latest >> i think financial literacy is important for the country because it is a great equalizer. it allows people to be
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twit utility? should it be more regulated given the influence over the media? you guys are clear on this one 72% said no. it is not a public utility next up and in the same vain, we asked the fill in the blank question quote. the answer is somewhere in the middle if you had to pick one, twitter is more of a social platform or news distributor 59% said it is a news distributor. now both of those first two polls are esoteric, we know. that was the point we wanted to get in your head. we got to the heart of it with the third poll elon musk eventually takes over
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twitter? yes or no. a little surprisingly, 59% said no musk does not win twitter. given musk's history of success, we thought the answer nimight go in the other direction that is a poll twitter may be happy to see they need shareholders if musk or another buyer accelerates however it plays out, this twitter/musk saga may not be random, but you have to admit, it is interesting. let's stay there we highlighted earlier in the program. the average analyst price target is $54.20 offer. one of those is your guest right now. that is angelo zinno at cfra he has a $55 target.
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he actually downgraded the stock. angelo, great to have you on on. why the downgreade? >> the risk/reward wasn't there. we downgraded the stock on thursday morning low 50s and 540s at that time we said it puts a cap to some extend on the stock. sure, there could be a plan p option a higher revised offer from musk or another bidder. i think at this point in time, that's all hearsay especially with this poison pill announcement over the extended holiday weekend. i think at this point it is -- we would rather have investors sit on the sidelines and prefer things to play out >> poison pills are something we
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talked about 20 years ago. haven't seen one since carl icahn and netflix in 2012. it is an extreme tactic. it can work. sometimes it works and sometimes it doesn't what do you make of it what does it show about twitter's board? why are they afraid of elon musk >> i think as far as the board here, i think they he fear at the end of the day if musk wins out here, and gets his hands on twitter, he will have a massive overhaul within the management team and board you know, i think there is a lot of fear out there on whether or not musk will be able to do what he sets out to do. the problem then becomes with musk because he has so much on his hands. i think dorsey is leaving the company and stepped down as ceo
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is because he wasn't able to run twitter properly i think that is with mufsk as well the other point as far as the responsibility of the bosard, te price offered here is a great price for shareholders you look at the valuation. it is a very difficult scenario to get north of $60. our view from the shareholder persp perspective, this is a desccent price. >> we have 20 seconds left the stock is $8 under. the market doesn't believe a deal is going to happen. twitter's board and ceo are in big trouble. they will be sued by all the lawyers. >> absolutely right. i think you have the poison pill which buys them time to find another bidder you are right. this is the stock that continues to grind lower potentially to
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the low $30 price range without another bidder out there >> angelo zino, cfra you haven't been we appreciate you taking time. thank you. we told you it would be an action packed hour a lot going on we will see you 23 hours from now tomorrow on "worldwide exchange." for now, we leave you with stock futures down and oil flat. twitter saga still rolling on. vegeawk" and the gang picking up cora next. have a spectacular monday. take care. it's there. it's everywhere. but for someone to be able to work from here, there has to be someone here making sure everything is safe. secure. consistent. so log in from here. or here. assured that someone is here ready to fix anything. anytime. anywhere. even here. that's because nobody... and i mean nobody...
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good morning earnings season rampingup. we start with bank of america. that's this hour we will get through 60 s&p 500
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companies before week's end. love me tender that is the message from elon musk was he teasing for his play in twitter or just listening to elvis on a saturday afternoon? nobody knows china reporting surprising first quarter growth, but those draconian covid lockdowns are not fully baked in it is monday, april 18th, 2022 today is tax day "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc live from nasdaq i'm andrew ross sorkin and joe kernen becky is off today let's show you the futures on monday morning three hours before we set to

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