Transcripts For CNBC Closing Bell 20140121

Investors happened around 10 00 eastern time this morning. We had a pretty good rally on the open and then it just fell apart. The dow was up 75 on the open and then down triple digits much the of the day, but were coming back even though we had pretty decent earn from Johnson Johnson and verizon. A lot of the guys are starting to leave to get ahead of what could be nor thanksmore nasty weather. The dow is off about 41 points. Braving the storm and making his way to the New York Stock Exchange is johnson and johnson alex gorsky. A more modest outlook for 2014 is hitting this dow xlonant today today. Apple, a positive report on the company has investors optimistic. Its up 1. 6 now. So is wall street ready to love apples stock again . And is retaking 700 out of the question for this year . Not out of the question. Were at 550 today. Well take a closer look at one of the most owned and certainly one of the most interesting stocks out there, apple. Yeah. And weve got a ton of tech earnings coming after the bell. Cannot wait to see what kind of read we get. Lets look at markets. The dow is off about 46 points or about a third of 1 . Recall the closing high december 31st this index was 16,588. Were at 16,411. The nasdaq also under some pressure. But its the outperformer adding 20 points. Finally a look at the s p 500. Its closing high 1850 on january 15th. Its at 1841 up just two or three points at this hour bill. Lets talk about it kelly. Joining me in the closing bell exchange, david nelson from bell point asset management. Loved him on ozzie and hair yetrriet. Gordon, i am going to start with you. I want play by play on today. What is with the volatility . We have had a 200plus point swing for the dow industrial average today. Whats going on . Some of the technical guys are saying this is a negative reverse, reciprocal inverse play right now. Im not so sure i believe that. The fact of the matter is bill look, this market so far this year and i joke about the january fake but its been interesting. The multiples have expanded. Were at a spot which how much more do we have that we can actually throw money at and see this thing grow. I think youre starting to see the psychology of the personality of this market early is people are getting afraid of things here and we dont have the same optimism that we had last year. Guys are looking to get out a little quicker than they were this time last year. Let me put in english what gordon said to begin with. That reverseal pattern. We hit a high that exceeded fridays high and we were destined it looked like to hit a low exceeding fridays low but i dont know if thats going to happen today but that could are been a key reversal as they say in this market kelly. Thats the technical side. I wonder about some of the fundamentals as we start to work through earnings season. The revenue side of things that allimportant revenue number as people like to say, has looked okay, about in line with whats happened historically. More half of companies are beating, but whats interesting on the earnings side we actually arent seeing great numbers in terms of the size of the beats or even the number of companies beating. Is it too soon to make something out of that . Youre right. Right now the surprise ratio is only about 2. 2 . Thats lower than the trailing four quarter average, about 4 . Were a little lower by how much companies are beating by. We did improve this morning. All Nine Companies that reported beat earnings estimates. Johnson johnson and verizon, delta being another one of those. We did get a boost on the beat rate. Its now at 61 . Now, when i was on last week we were only at about 54 which was historically very low. 61 getting better. Still below the 65 average weve seen over the last 15 years or so. But we are heading up a little bit, and the overall great rate was boosted by the beats. Were looking at 5. 4 for the Fourth Quarter. What do you make of the earnings season so far, good bad, ugly what do you think . I think at this level i think people are getting accustomed to having the bar a little bit higher than we had in prior years. You dont have the margin of safety of lower valuations that we had at the beginning of last year. So i think convection is lacking, and for that reason the market is trying to find a direction one way or the other. I think by the end of the year we still will see an up year but i think the volatility will be choppyier this year than last year. It certainly has been early on this year. Why . What happened on december 31 . What changed . I dont think anything drastically changed except when you sit down with your clients theyre looking at last years performance and saying can we do that again . The answer is unlikely. That lack of conviction is leaving us in a directionless market for now. Art cashin just stopping by mentioning we have 150 million to sell at this hour. David nelson i just wonder it wasnt unexpected for the market to be correcting early in the year. It seemed like everyone was calling for a bit of a pullback. So at what point do the buyers start to turn out in more force . You know i think a lot of traders would tell you everybody is looking at the 50day moving average, and it acts as kind of a magnet. It acted as a magnet last year although we traded above it pretty far for most of the year, but what i think will likely happen is the market may just surprise everybody and head sideways for a while while the 50day moving average catches up. Were not una lot. Were certainly not down a lot. The earnings are mixed. You said it earlier, it depends on the company. Delta had an outstanding quarter. It was a blowout. As a matter of fact, im not even sure, but it might be a record quarter. Johnson johnson was a low quality beat. It was not a great quarter. The guidance was tepid. Im very interested to see what the ceo has to say later in the program. Meantime j j is down 1. 4 today, among the laggards in the dow. Rick santelli. Theyre buying the bonds. Yield down to 2. 82 . Theyre not only buying our bonds. Theyre buying spanish bonds, irish bonds, portuguese bonds. Ill tell what you if you look at any tenyear pretty much since the 31st of december its been down yields. Not the way many in the fixed income market that i discuss markets with would have guessed for 2014 but it is what it is and i think when you try to pair that knowledge with the health of the Banking System like in europe or in a specific country like in spain, it doesnt square. In similar ways it didnt square with equities in the economy. I think the surprise for 2014 is going to be relative value trades in the Interest Rate arena will continue to be sideways to lower yields and its going to be interesting to see how all that pans out against the money available to go with fixed income versus equities. Is this what we used to call the risks off trade . Are they running for cover . I dont think its risk off trade. I think its fundamentals off trade. Sort of relatedly, Jon Hilsenrath writing that the next round of taper something probably a go another 10 billion at the feds next meeting. Its kind of interesting to juxtapose that report with again, what were seeing in terms of the tenyear today, which is yields moving lower, not higher. Is that inconsistent . I dont think so. Look, the way theyve done the tapering, kelly, it seems to me theyve been pretty good about it. Theyre doing it in a measured way and, of course they can always turn around if they feel its necessary. Theyve sort of done a nice job of taking that off the table. If you go back to last year one of the things we saw is that as we got to the end of the year no one wanted to sell stocks because they were looking to cut their losses or anything like that. It was a real squeeze into the end of the year. Were getting to the beginning of this year and theres just sort of a mishmash of data but were starting to see an honest market. Earnings will set the tone so everybody has to do their homework and pay attention. Christine, you feel that for this quarter the telecomes and the financials will outwe are forms but they seem to be at odds. One would be a classic defensive play and the other is very much a growth play. Whats going on there . You know the story with telecom, theres only Six Companies within the sector. So its really not heavily weighted in the entire index. The story with telecom is the fact that Sprint Nextel which was included last quarter is not included this quarter. If you take out sprint from the year ago quarter, telecom would only be up 25 and not the 85 were seeing it right now. Financials doing great. We saw a lot of Great Results from the big banks last week looking at about 15 growth for the sector as a whole due to diversified Financial Services and, of course the Insurance Industry up about 20 year over year. A lot of that again is due to easy comparisons because we had Hurricane Sandy a year ago impacting results for the insurance companies. I have to quickly ask because as you mention, the financial earnings looked good and yet the shares, especially today the morgan and goldmans of the year are really getting hit sharply. Anyone here david, do you want to comment well, sure, you pointed to goldman and goldman has a particular problem. Trading revenues are down for a lot of these firms. That isnt going to happen for some of the company. Im not sure goldman is a great lock going into 2014. I think just the opposite for jpmorgan and bank of america had an outstanding quarter. Theyre far more diversified institutions. I think they will do a lot better than some of the trading houses. All right. Thanks, folks. Get home safely. Please. Walk dont run. Thanks. As we showed you earlier, there is another massive snowstorm hitting the northeast right now and creating some nightmareish commuting conditions and grounding lots of flights. Nbcs danielle lee joins us now. Shes got more on what really has been a surprise storm, danielle. Reporter hi, kelly. Were in the heart of what could be the worst snowstorm that d. C. Has seen in three years. The most snowfall possibly in three years. Conditions have really changed in the last hour and the most significant change is taking place behind me. You may be able to notice that the snow is now sticking to the roadways. That will make travel difficult, especially as people try to head home from work. Because of the storm, federal workers were told to stay home. I have been noticing as i walk around some stores are saying they are closing early to get people off the roads as soon as possible. Here in d. C. Alone, 200 snowplows are out throughout the region. The same is true many schools have been closed. There are up to ten inches possible in parts of the northeast. Right here in d. C. About five inches. Close to 3,000 flights have been canceled. More than 1 thoub,000 others delayed. This snow is expected to last through late tonight, possibly early tomorrow morning. Now, when thats done, were not going to get a lot of relief because after that comes these very cold temperatures that are going to last through at least saturday. The next thing to be worried about tomorrow as everyone is heading to work is a whole lot of ice. Kelly and bill back to you. Thanks very much. Stay safe and warm if you can. Were bearing down on that close. Weve got about 45 minutes left to go and the dow continues to be the dog here weighed down by a couple of components. Ibm, the second biggest component, reports after the bell. The s p 500 and nasdaq is are still slightly positive. The dow definitely doesnt tell the whole story today. He was one of wall streets biggest bears before he turned bullish late last year. Coming up Morgan Stanleys adam parker tells us whether the latest selloff weve had recently, the stutter step start to the year is making him rethink that bullish call. And Johnson Johnson helping to drag down the dow today after a lukewarm earnings outlook. Coming up the companys ceo joins us exclusively for an earnings update and tells us how taxes inside of obamacare are also impacting the bottom line. And are player safety issues bad behavior off the field, sky high ticket prices a triple whammy for the nfl in super agent Lee Steinberg weighs in next. And we want your take on ticket prices for the super bowl. Well reveal your best tweets coming up on the closing bell. Youre watching cnbc, first in business worldwide. Stacys mom has got it goin on stacys mom has got it goin on stacys mom has got it goin on [ male announcer ] the beautifully practical and practically beautiful cadillac srx. Lease this 2014 cadillac srx for around 319 a month with premium Care Maintenance included. vo you are a business pro. Seeker of the sublime. You can separate runway ridiculousness. From fashion that flies off the shelves. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. natalie ooooh, i like your style. vo so do we, and we want your take on go national. Go like a pro. [ male announcer ] legalzoom has helped start over 1 million businesses. If you have a business idea, we have a personalized legal solution thats right for you. With easy stepbystep guidance, were here to help you turn your dream into a reality. Start your Business Today with legalzoom. Well the dow gave up early gains, but as you can see, the other major averages are faring much better. Dominic chu, whats going on today . Bill, how about this . Well start off with alcoa nearly 2 1 2 year highs. The stock upgraded by jpmorgan. Increases the price target to 15 bucks a share. Those shares on the mop dow. Dow chemical is moving higher on the news a hedge fund has take an large state. Delta air lines, better than expected Fourth Quarter profits boosted by lower fuel costs. On the flip side theres fire eye. After jpmorgan down grades the Cyber Security firm to a neutral rating to an overweight. The stock had surged after the beginning of the year when they said they would buy mandient. Starbucks removed from goldmans conviction buy list. Some weakness in a mixed market. Thanks very much. We are less than two weeks away from the first cold weather super bowl. This ought to be fun. It will be played just a few miles from here at Metlife Stadium. The wlpeather we see today is probably making the nfl a little nervous. They are saying we could be in the 50s at that time in two weeks but not today. They have 12 layers of backup plans but the big game isnt the only thing people are talking about when it comes to the nfl. From concurssions to high ticket prices, the image of the nfl continues to suffer. Even president obama allowed hesaid he wouldnt allow his son if he had one to play football. Does the league have a serious image problem . We welcome back Lee Steinberg the original Jerry Mcguire. One of the most renowned sports agents in history. Welcome back lee. Thank you. Is there an image problem . Every time we talk about the nfl theres some problem whether its the concussions the injuries, the thug nature of it all. Whats going on there . If theyre having a problem, the fact that three of the top five rated shows almost every week this season were nighttime nfl football meaning the pregame show on sunday night outranked 87 other forms of entertainment. Concussion is an existential threat to the nfl because i now believe that when an offensive lineman hits a defensive lineman at the inception of every play it produces a low level concussive hit. Every play . Every play. So you could have an offensive lineman coming out of the game with 10,000 sub concussive hits none of which were diagnosed, none of which hes aware of and the aggregate of which is much worse than three knockout blows. Is there anything they can do about that . I have been helping Helmet Company called take. Right now helmets just protect against Skull Fracture but this attenuates the energy coil. We need pharmaceuticals to help heal the brain, better diagnostic techniques on the sidelines to stop return to play, and we have to teach kids not to block and tackle with their head when theyre in pop warner. Or should we just be turning off the television . Its hard not to hear this and think about the extent to which any of us who watch these games and really enjoy it are also feeding in to creating this massive problem. Well, the truth of the matter is i got so disturbed about this when my quarterbacks kept having concussions, wed go to doctors, they didnt have the answers. In 2007 we had a neurologist who said three or morecussions lead to a higher rate of als, premature see not guilty premature senility. This starts to become a franchise issue to borrow a term and were reminded the judge just threw out one potential settlement. What happens now . What should the nfl do here . Well theres great liability, as you said and the nfl can never let that lawsuit go to court because they did surveys, they knew damage was occurring, and they told the players nothing. So when this comes out, that would really besmirched the league. We urgently need to get after reform. Look, if 30 of the mothers in this country tell their boys you can play any sport except tackle football, it wont kill football. Its just the socioeconomics of those people who play it will be very akin to boxing. Speaking of economics, ticket prices. In fact, all prices involving spords sports are going up. At Metlife Stadium for the super bowl one of the suites is being offered up for 1 million. Now, thats an extreme example but it highlights the inflation that exists in sports today. How much higher does this go in terms of salaries and prices and values out there . Its all a function of the television market. We now have 300 networks fighting with each other for the right to show their promos on sunday or in the nights to build up monday through friday. Its all about the bottom line value of the networks. So this is loss leader bidding. When i started back in 1975 each team is its share of the nfl contract got 2 million in tv money. Today its 130 million per team per season. Franchise values 16. 5 million is what seattle and tampa bay cost in 1976. Even in 1995 130 million. Last year the Cleveland Browns sold for over 1 billion. So actually the owners are in fine shape because they have a salary cap to limb the playit the players. In your book you talk about some of the trends you witnessed in your career. I just wonder why now . Why write this book which includes a lot of personal reflection as well. I crashed behind alcohol back in the year 2010 and walked away from the world. Put sobriety first. Made sure i was a good father and sober. That was four years ago and were just relaunching a new business which will be representation and now the new form of how these agencies are done is you have all the talent over here Marketing Arm that can market teams, leagues, corporations and then you have content supply sports theme Motion Pictures Television Video games, mobile phone apps and any interactive concept that can use multiple platforms of content supply monetize them and drive more revenue and so it was time to write it and i wanted to give people some hope some behind the scenes. Talk about the sports movies that i was involved in like Jerry Mcguire and then were having our huge Super Bowl Party for the 26th time the day before the super bowl. I think my invite is in the mail . Oh, no your invite is right here. It must be in the mail in the snow. Youre a better person now as a result. Are you a better agent, very quickly . I think so. I think with maturity i mean i had 60 first round draft picks in football in the very first pick in the draft eight times. Half the starting quarterbacks seven players in the hall of fame did boxing did baseball. But at the end of the day i think ive got a keener sense for the fragility of every day and two things from my dad. Treasure relationships, especially family and be an agent for change and help people who cant help themselves. I like that way of thinking about an agent. Well see you, leigh. Thank you. My pleasure. Leigh steinberg. Heading towards the close. 35 minutes left in the trading session. The dow is down 50 points but it was up 75 down 140, so its been a wild trading day today. If only alcoa were still in the index. Right, right, exactly. Its a tale of two teams on apple. One downgrading the stock while other says its the best of 2013. Apple is trading higher today. And the u. S. Is not the only country being hit by a massive data breach. Tens of millions of people in germany and especially in south korea have also had personal data leaked in recent weeks. Why are hackers seemingly winning the Cyber Security war all of a sudden . Thats coming up on the closing bell. Here at fidelity, we give you the most Free Research reports customizable charts, powerful screening tools and guaranteed onesecond trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, Td Ameritrade and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. Welcome back. Here is a look at apple which is up 1. 5 today. It is one of the winners in a mixed session, this despite some back and forth calls by analysts on the stock. Josh lipton has the details. Apple is ready to report results next week and ahead of that news two analysts offering very different views about what investors should do with the stock. Apple is down about 2 so far this year. Thats after, of course a big move since late june. Its up 40 . The team at susquehanna says the stock will move higher. Their price target is 650 and they call apple the top idea for 2014. Theyre expecting a july launch of the iphone 6. But analysts over at socgen they arent as optimistic. They downgrade apple to a hold. Their checks indicate iphone volumes could come in below expectations. With the lower priced 5c in the mix, the average selling price for q1 will be 4 lower than a year ago. So a buy and a hold. Wh is who is right . Well know more on june 27th after the close when apple reports. With apple trading at 550 right now is it the ripe time to buy, it says . Joining us our bull today is john bright and weve got Maxwell Maxwell ever the skeptic on apple with zt wealth. John, why do you think the stock is going much higher from here . Well theres a few reasons. One, apple is well positioned for the mobile revolution. Strategically with their devices, their software their app store, iitunes store. Thats driving revenue growth. That equal multiple expansion. Factor in new products capital allocation, first half of next year or this year. We like the stock, we have a 700 target. Max, whats your concern about the shares . The multiples are low, the stock is it quite cheap. The issue is the future. Its whether were going to get any kind of new product. Having the smallest most expensive smartphone on the market isnt going to cut it forever. If they wait until they have literally disgusted those people by doing new marketing instead of new products it will be too late. If you dont believe me ask nokia or that plaque berblackberry. Max are you worried youre clinging to an old model under steve jobs. That was a time of transformation in technology and now youre worried about the evolution instead of revolution. Shouldnt you embrace tim cook at this point . I think tim is doing a great job. I think evolution makes sense, but periodically you need to do Something Different or at least do something competitive. In other words, you know someone has an iphone if they dont look impoverished and they have the smallest phone you have seen anyone with. You know somebody who has that tablet but constantly renaming the tablet or cutting its weight isnt going to cut it forever. Margin or market share. So far they have been choosing both which is why the fundamentals are good. But you cant do both unless you do more revolutionary innovation. What could potentially take the shares back towards say that 700 mark . What would it take at this point . Well first, china mobile that was recently announced, we know that thats an enormous market in units. We dont know the profitability. That will be key on monday to learn what the profitability of that contract looks like. Thats an enormous market opportunity. Secondly, expect that new iphone to come out with a larger screen. 2014 is going to be a year where tv landscape is going to change and mobile viewing on tablets and on smartphones is enormous. Lastly, the advantage apple has is their software is their app store, is their itunes store. That captures the content which is what drives the usage of the iphone and tablet devices. But do you think people like max who are still skeptical of apple at this point have a point where theyre not seeing the same kind of Transformational Technology that was the hallmark of this company for years . Well when youre talking about maxs side of the equation, thats going to be a tougher sled because tablets really are eating away at the pc market. The transformational product will be in the tv environment. Weve said this before. I think weve talked about it on this program before but thats where the landscape is changing the most. Thats where their dna is. Thats what fits with everyone having an iphone ipad and some form of apple tv thats an actual tv. By the time the thing comes out though, nobody is going to be watching television anymore. The public is cutting the cord. Its what happened to itunes too. Itunes is a runoff asset because everybody wants streaming. I think the tv is important but i think, again, apple sort of slipped to second behind googles chrome cast and everyone is copying apples successful model. They at least have to do the apple model better than everybody else to hold up to the multiples and price tags they attach to their goods. We could go on all day. This is one of the great water cooler topics of wall street what about apple. Thanks for joining us guys. Thank you. Be safe out there. Big news. A familiar name to wall street is running for governor of california. Julia boorstin joining us now. Who is it . Neal cash curry. Hes officially declared he is running for california governor after leaving the treasury. He went to pimco where he was managing director. He also formerly worked at Goldman Sachs. Kashkari has been testing the waters for a while. Now that hes officially declared hes going after the gubernatorial seat he says his Top Priorities are jobs and education. Kelly, back over to you. Wow. All right. What do you think . Bill is the californian here. Moderate republican. Hes going to have a tough row if jerry brown is running again i think but well see. Exactly. Thanks. Thank you, julia. Dow is off 50 points. We have green arrows for the s p and nasdaq. 15 points off alltime highs for the s p 500. But the bears have been edging out the bulls just a bit. When the books are written for 2014, which one will have their day. Morgan stanleys adam parker will weigh in coming up. Ibm could be a major factor in terms of the dows direction for tomorrow. That component set to release earnings at the top of the hour. Well get you instant analysis and investor reaction to these potentially marketmoving results. Thats coming up in just a bit. And be sure to stay with cnbc this entire snowy night. It is shark tank night. Shark tank tuesday begins at 8 00 eastern time and runs to midnight right here on cnbc. [ male announcer ] this is the story of the dusty basement at 1406 35th street the old dining table at 25th and hoffman. And the little room above the strip mall off roble avenue. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment [ male announcer ] this is george. The day building a play set begins with a surprise twinge of back pain. And a choice. Take up to 4 advil in a day or 2 aleve for all day relief. [ male announcer ] thats handy. Its been a lifeline for millions, something known as deposit advances. Theyre the loans you get against upcoming paychecks seemingly a Good Business for lenders and a needed resource for consumers in a pinch. However, a change in regulations have some banks bailing on such loans now. Kayla tausche joins us with the story and the potential unintended consequences as a result. Kayla . Consumers get payday loans from three places, online, at a lenders store front or at a bank al least until last week. The only four banks offering this service, regents financial, fifth third, wells fargo and u. S. Bank corp all in the last week announcing they would be phasing out programs that offer advanced loans on customers direct deposits. A Bank Provides an emergency loan of up to half the paycheck thats expected to clear on a certain date. When it does clear the bank pays itself back. 10 bucks on every 100 bucks borrowed. Because the loan is only outstanding for a few days the interest is charged on a first window. Its repaid within ten days. Its implied Interest Rate 365 . Far higher than advertised. Bringing about yet another problem. Dependency. What we consider these loans to be is an entrance into a cycle of debt. Again, longterm use, longterm reliance on triple digit Interest Rate credit. Using these loans backtoback again and again and that leads to longterm financial insecurity. If consumers dont have the money to repay a very high cost loan at their next paycheck, theyre not going to have it back to back to back to back. Consumers who dip into advanced deposits do it an average of eight times a year. That led the fdic to weigh in in november. They said banks should use the same underwriting standards for these loans that they do for say mortgages. Look at the creditworthiness and make sure they can afford the interest youre charging them. When this came out, the banks decided they would shutter this product which leads you to believe they knew this wasnt such a healthy product all along. You think . No comment. Dick bove has a point that just because you change regulations that the need is changed. What are some of the nontraditional lateenders that a lot of customers will need to go to . The regulators werent trying to block them out. They just said look at the borrowing patterns of some of the customers, look at the creditworthiness and you see what they did. What a concept. Thanks kayla. See you later. Our next guest says investors might not have it as easy as they did in 2013 when good news and bad news was good news for stocks. Joining us right now adam parker from morgan stanley. Welcome back my friend. I mean you were the high profile skeptic of last years bull market. Then you decided you were going to turn bullish at the end of last year and weve had anemic begin to the year. Its been about a year. We got bullish about a year ago and were glad we had that correct bull call yesterday. We continue to be bullish. The debate i have with investors is about the price to earnings ratio or that multiple. Thats the note youre referencing that we wrote today. Lets talk about the multiple a little bit. Its getting so much attention. Goldman notably a week or so ago said the market looks fairly if not overvalues and john husman just wrote an open letter to the federal concerned about market valuation. I think its hard to use that level and say the market is at 15. 7 times so that helps me predict the next years return. It doesnt. Knowing todays multiple does not help you at all predict the next 12 months return. Im pretty opt stickimisticoptimistic. We have 10 total return for this year in our forecast. But i think we could be wrong. We could be too wimpy in that assessment. I think theres a chance theres an upside for the multiple. Your guesstimate for the s p at the end of the year admittedly it sounds a little gimmicky 2014 for 2014. Does that sound optimistic. Its 10 upside. 6 operating Earnings Growth 2 repurchases, so shares being bought back. So the remainder to get to about that 10 total return is about 2 . I dont think thats that much multiple expansion, particularly compared to what we saw last year. I think the case for multiple expansion is three fold. One, off steeper curve. Two, historical precedent. All three times you have seen this much multiple expansion, its continued for 12 to 24 months beyond that in history. And the third is the bear case in earnings. What could cause you to be afraid of an earnings decline. Much of our research focuses on where you could see volatility introduced into the earnings estimates. As you say, its easier to kind of bet that multiples will increase as the cycle continues than to necessarily justify thats the right thing to be the case. Should investors even if they can see where youre coming from, should they be worried that the fed, for example, might overreact to what it views as frothy markets or that generally might be accompanied by more concern about whether or not it indicates a healthy level of Market Pricing . Theres no question that if the fed moves the front end, they can move markets, and so i dont think you want to fight that conventional policy. I just dont see how they move the front then with inflation and Employment Data where they are. So i think we have a nice window here where you can dream growth is going to be better but you can also be confident theyre not going to move the front end. As we just showed youre overweighting health cares and materials for 2014. Adam, always good to see you. Thanks. Take care guys. Thank you. Heading towards the close, 15 minutes left. The pattern remains. The dow down 43 points but look at the nasdaq up 25 points right now. Very much a mixed market today. Down here we are picking up to about 200 million to the sell side. So well watch the index in the final moments of trading here. Target just the tip of the iceberg as more reports today of credit and i. D. Theft around the globe are surfacing. Tens of millions in south korea and germany. It seems like hackers are just one step ahead. They are running the game. How can Cyber Security catch up if it can . After the bell were just 12 days away from the first east coast super bowl and it could look a little bit like it does right now. Keep in mind, were just getting warnings about this storm yesterday. The cheapest after market tickets for the soup bieluper bowl are going for 3 grand. Tweet us your thoughts cnbcclosingbell. 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. Tdd 18886282419 searching for trade ideas that spark your curiosity tdd 18886282419 can take you in many directions. Tdd 18886282419 you read this. Watch that. Tdd 18886282419 you look for whats next. 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So you can manage your business expenses and access them online instantly with the Game Changing app from ink. We didnt get into business to spend time managing receipts thats why we have ink. We like being in business because we like being creative we like interacting with people. So you have time to focus on the things you love. Ink from chase. So you can. Snow is coming down in the midatlantic northwestern states just like the dow today, right . Yes. Some big earnings out before the bell driving things and theres a big to do after the bell which could set the tone. Kelly, that biggie is ibm. Big blue expected to earn 5. 99 in earnings in its Fourth Quarter on sales of about 28. 3 billion. Big blue a certain focus for investors. Also Texas Instruments reporting after the closing bell today. Its expected to make 46 cents a share on sales of around 2. 99 billion. And then theres xilinx the third Major Company to report in the after hours. The street is forecasting a profit of 54 cents a share on sales of 601 million. Now, earlier today it was Johnson Johnson a huge focus for investors. It reported better than expected results but its shares fell after it gave a more tepid Sales Outlook for the year this as its rate of Prescription Drug sales starts to decelerate. In a programming note j j ceo alex gorsky will be on live later on in the show in an exclusive. Also Td Ameritrade with its fiscal First Quarter results this morning. It reported better than expected earnings on a 30 rise in profits and client assets rose by 24 . The ceo also on later on in the show in that next half hour so well see both those interviews that will certainly be paying close attention to. Back over to you. At the rock gary . Oh, okay. You know the weather is bad when they cancel a hockey game. Did you know they canceled the flyers game in philadelphia tonight and theyre getting the pruntbrunt of it. In minnesota when temperatures were minus 20 they were still playing winter classics outside. So i think the east coast, you know oh, yeah. Minnesota needs to take a page out of the minnesota handbook. Upper midwest, we give them their due. They know what theyre doing up there. Were down 45 points. Ten minutes left in the trading session. Should 85 people on planet earth have more combined wealth than 3. 5 billion . A new study says thats a fact. Is it a terrible thing . Our allstar panels delves into that topic later on in the show. You wont want to miss it. You can separate runway ridiculousness. From fashion that flies off the shelves. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. 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Joining me right now on this is terry dolan. Its clear that the market is paying attention to earnings and fundamentals again isnt it . Yeah actually is that good or bad . Its actually good and i think what we see here is a little more new money coming into the market keeping the market up a little more than what i expected it to be in january, and i think a lot of pundits, if you will thought the market would be weaker in january. So i think the market is kind of, you know, at bay here in some sense or another and i think its going to trade lower, at least in the short run. Net net for this year so far were kind of sideways here. Right. The s p has been zigzagging. What would move it lower . We already know the fed is going to taper. We already know what earnings are coming out like right now. What could move it lower in your view . I think just the basic correction from the over extension in the december movement into the year end. Theres a little bit of an extended move there. Just a simple correction. Im not suggesting the market is going to fall apart. Are you talking about a 10 move lower . We havent had one in a while. Let me see. Yeah im talking, yeah at least 10 . I can see the dow trading down to 16,000. I could see 1820 or so on the s p 500. Just to give the averages a chance to catch their breath if you will. All right. Got to go terry. I was going to say i think we can again as we mentioned prior to the end of the year take our lead from the long bond and as you see, the long bond trading down around 2. 88 perfectionor 2. 86. Keep an eye on the bond market. Thats going to be the key along with inflation throughout the rest of this year. Got it. Thanks terry. See you later. Take a break. Come back with the closing countdown. Then ibm is due right at the top of the hour. Well have instant analysis of the potential marketmoving report coming up. Stay tuned. Fifteen percent or more on car insurance. Yeah. Everybody knows that. 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[ male announcer ] stick it to the market before you get stuck. Get the most extensive charting wherever you are with the mobile trader app from Td Ameritrade. 90 seconds left as we head toward the close. It will all be about earnings coming up. Ibm reports momentarily. We also have Texas Instruments and xilinx reporting. You can see ibm is down with the rest of its fellow dow components. Ti and xilinx are fractionally higher, bob pisani. They are paying attention to earnings again. Yeah. Ibm will be very important. Thats a big stock, over 100. We saw some expensive names weigh down the dow. The dow did not represent what was going on in the stock market. This was a good day. 2 to 1 advancing to declining stocks. It was just travelers, Johnson Johnson, verizon as their earnings came out. They sold on the earnings news even though they werent that terrible. Guidance was not great. Guidance was not great for a couple of the companies. Johnson and johnson was a bit of a doument but disappointment. But overall this was a good day. Its one of the rare days the dow is out of sync with the rest of the markets. Thanks very much. Speaking of Johnson Johnson, we have ceo alex gorsky coming up. Kelly will be talking to him about those earnings and stay tuned, ibms earnings coming up. That will have an impact. This is the second hour of the closing bell with kelly evans and company. See you tomorrow kelly, and stay safe. Thank you, bill. Welcome to the second hour of the closing bell. Im kelly evans and on this snowy day down here on wall street, here is how were finishing. As bob just mentioned, the dow not necessarily representing the broader strength of the market. The nasdaq up about 28 points. The s p 500 up about 5. The dow finishing lower by 42 weighed down by some major components. Ibm due to report earnings any second now. Lets get straight to it with todays panel. Sharon epperson and kate kelly, carol roth. Also joining us for more fast money contributor guy adami. There was not a rule about wearing blue or green and being a burnett to make it on the set. You know what i think is interesting, i have been talking to traders about the possibility of some downside 5 to 10 , maybe 15 in this First Quarter, and i feel like theres a little bit more consensus building around that even though from time to time people even on this panel tell me im crazy for reflecting that. I never recall calling you crazy. Guy, do you think shes crazy. Kate, are you kidding me . Shes sharp as a tack. Forget the dow. The s p, the resiliency of the s p again, it had every opportunity to sort of fail today and it looked for a long time like it was and then the last few hours of the day stages a late rally and closes up 5. To me the continued resiliency in the s p in what i think is in the wake of or in the face of what is a hodgepodge of earnings is really interesting. I notice the wall street journal picked up on this Goldman Sachs report. Do you think theres some traction . I do because what type of environment do we find ourselves in . People talk about historical valuations and were cheap or in line with historical pes. In the world we live in today you say what you want about europe, europe is a mess. The United States were muddling along. What is the right valuation for that . I mean i can make a pretty compelling argument that maybe forward valuation for the s p should be more like 13 or 14 instead of 16 or 17. Sharon . Well my focus today of course has been on this horrible weather we have outside and what thats doing to commodity approximates. Natural gas. Natural gas has been on a tear. That, of course, has to do with the fact theres some traders that are concerned about whether or not were going to have enough natural gas to last the winter. We saw the biggest decline in storage levels in last weeks report. Well see extremely cold temperatures again for the next ten days or so. Whats really worrying people half of the country uses natural gas, but about 5 uses propane, and there have been such shortages that in ohio theres actually an energy state of emergency in terms of supplies and trying to get the supplies to where they need to be so that is also resulting in higher prices. A lot of people are going to be paying see heating bills they havent seen in many years that are higher its a great point. If you look at consumer discretionary, that had a little more of a struggle today. I think for a year its a sector thats perhaps more overvalued and i want to go to guy on that. The differential between the different sectors, obviously Something Like Consumer Staples that was up a little bit today, consumer discorrectionary was struggling. Do you think this will be a year where it really is very sector dependent versus perhaps buying theoverall market . Without question. Carol, i think you agree with me on this. I think youre probably as skeptical as i am in terms of the broader market. No guy, never. What were seeing is to me is the consumer strapped yes or no . Some of the numbers indicate that maybe the consumer is not as healthy as we may think. Clearly theyve been spending but are they in a position where they should be spending . Or do we find ourselves making the same mistakes we made six or seven years ago . So to your point, i think you could see a really challenging retail environment this year Going Forward. Elon this is what makes it so interesting. Hilsenrath writing in the journal there will be another 10 billion tape they are month. The fed is on course. Fine. But what about some of the other indications that point towards a more middling outcome and suggest perhaps the fed shouldnt be too quick to assume that this recovery is intact and that the progress weve seen over the last couple months will be sustained . I think the point of the story though is that january is not necessarily the time to make that decision. I think march is really going to be the meeting to watch. You will have Fourth Quarterg dp. Janet yellins first meeting and theres going to be a press conference. The other thing that i think to keep an eye on is all this talk of the tapering is obscuring the Bigger Picture of the fed which is what is going to happen to Forward Guidance. We could be at the feds threshold of 6. 5 the next time that they meet in march. So what does that mean for Forward Guidance . I found that story very interesting the one you just mentioned because it suggests that the fed isnt taking one month of negative data terribly seriously even though as you say, elon theres far from consensus that were out of the woods yet here. So it seems like its a very mixed picture and in terms of the ratios weve been talking about, 17 historically hard to sustain in the market although i know folks that think it could go to 18 later this year. So again, some division of opinion there and i think perhaps thats why were seeing choppiness in the market. Theres a division of opinion for the Retail Investor they need to know this is likely not going to last. Historically we have not seen returns like we saw in 2013. If they are looking at the 401 k statements and theyre still keeping with the same Asset Allocation theyve had, theyre going to be in trouble. They need to think about taking some of those profits that they have off the table and rebalancing if they havent already. I think a lot of folks are reticent to do that because they want to see the same kind ever returns they saw. And i cannot get the fed out of the way fast enough because i think it is leading to companies hoarding their cash instead of putting it to work in terms of Capital Investment and hiring. I think it will be better for the economy, it will be better for jobs better for wages if they start tapering fast and furious. One second. I just want to draw peoples attention it whats happening on screen. Ibm, the second biggest component, is reporting earnings. Early indication suggest even though x items earnings would be a beat relative to the consensus, the revenue figure seems very light. Josh lip to beton is taking a look at the earnings numbers with us. We can get out to him right now. As those shares are moving higher by about 1 but its choppy. Yeah, kelly. What the street was looking for was 5. 99 on 28. 3 billion. Big blue reports 6. 13 on 27. 7 billion. So a beat on the bottom but coming in a little light on the top line. As for Guidance Full Year 2014 guidance, the street was looking for 1797. Ibm says at least 18. But 5. 99 on 28. 3 billion. They beat on the bottom is 6. 13. A little light on the top. Well get back to you with more news as we get it. Great stuff. Thank you. I want to now introduce dan morgan. Our own jon fortt is here for the reaction to the numbers. Understanding you are still just looking through them dan, any early thoughts here . Well its not too surprising that revenue is light. We know kelly, that the last couple really the last two years ib mm has really struggled to grow revenues. Its nice to see the bottom line be above expectations. The big question is how were they able to do that . Was it through, you know, onetime item a tax credit or something, or was it actually some other initiative in terms of growth. That tom line number is a little concerning. Jon . Kelly, a key passage from the press release, let me read it to you. Revenues from the companys Growth Markets decreased 9 down 6 cost of currency. Revenuefvenues in the bric countries decreased 14 . Thats 11 constant currency. Ha shows some of the key areas theyre counting on for increased business china included, continue to be a trouble area for them. That is going to be an issue for a number of enterprise players as we see this earnings season play out most likely. Some of them some of the smaller ones have been able to buck this trend. But some of the big u. S. Companies having trouble not only in china but other emerging markets which are seeing a slowdown. Thats going to be an impact on revenues for the rest of them. Shares are climbing a little higher, up 1. 5 despite those headwinds and those important markets you cite. Dan, i wonder how we can think about this potential sale of the server business to a lenovo a decade ago. How that might fit in with the headwinds theyre facing in some emerging markets. Well exactly. Ibm has struggled in hardware. It was down 16 on the third quarter, down 11 before that. And they obviously want to get in the higher growth areas which are going to be software and obviously services. So were seeing that trend tonight as you mentioned in terms of divesting that off like they did the pc unit a couple years ago which turned out to be a great move after weve seen all the struggles with dell and hb in the hp in the pc area. The core growth areas Going Forward are going to have to be in the cloud. They made an acquisition last year in that area but the key areas im looking for in this quarter is how much did software grow. I want to see the Service Bookings in the Fourth Quarter. I think consensus was 18. 5 billion. The shares again now moving a little bit lower. Theyre up half a percent. Some indication that perhaps the beat on that earnings number was owed to a much lower effective tax rate. Such an important story and an interesting way of looking at the shifting of fortunes for some big tech. Dan and jon, thank you very much. Really appreciate it. Our thanks as well to guy adami. Before we let you go any quick thoughts on ibm. Im he seesequestered so i havent seen as much as id like to see. All the ibm problems seem to be ibm specific and thats a pretty significant revenue miss so maybe the action were seeing now is just sort of people squaring themselves up. Thanks guy. You can catch much more of guy coming up on fast money at 5 00 p. M. And we have some breaking news on pimco. A big mover. Dom chu whats happening . This is Mohamed Elerian a frequent guest on our programming. Ceo andcoci o of pimco has resigned from pimco. Mohamed el erian resigning effective midmarch. The Parent Company announced Mohamed Elerian will leave but will still say in terms of advisory capacity with the board of management. Hes going to advise the board on Global Economic and policy issues. He will report to the ceo of the Parent Company of pimco. Bill gross, the founder of pimco, will remain chief investment officer. Pimcos managing directors have elected Douglas Hodge as the new chief executive officer. Hes currently the chief operating officer of pimco. Jay jacobs will be he was the global head of Talent Management and now will be president of pimco. So Mohamed Elerian stepping down from his role as ceo and cocio of pimco. Well stay on with allon as an advisory capacity. Back over to you. Dom chu, want to get some thoughts from the panel because Mohamed Elerian is one of the most prolific and visible faces in the asset community. Absolutely. This is a real surprise and of course, it comes at the end of a period where pimco has had some trouble and itsin its very wellknown bond funds. Its not been a good time to invest in bonds. Folks have been favoring the stock market which we were just talking about a moment ago. Its been a tough couple years. That may be a reflection of that. Theres no context surrounded as of now though. It does sound like an orderly transition given theyve already elected a successor. Hopefully hell come on our air sometime soon and tell us about his plans as he often has in the past. But im quite surprised. For all those Bond Investors out there, there hasnt been a change in the chief investment officer. Bill gross is still running the show there. I think there are a lot of Bond Investors, particularly those retirees who were planning on that Bond Fund Income to keep them through, and they have been so disappointed. They may be worried about what the investment philosophy of pimco will be Going Forward. From what were hearing right now, that doesnt seem to be the change. It seems to be executive shuffling. Fascinating move. Mohamed elerian leaving pimco. Bill gross staying on in his cio role. Im sure well have much more on that as we learn more. A nasty winter storm is brewing up a travel nightmare from washington to boston. Thousands of Flights Canceled schools closed. The federal government telling its employees to stay home and the storm has many more hours to go if forecasters are right. Lets get to Nbcs Jay Gray in trenton with the latest on the storm. Jay . Reporter and we started this morning covering the inauguration, the second term of governor chris christie. Its turned to a weather story as you talk about. Take a look around the snow has been falling continuously for hours, and thats something that we expect to see continue through the evening. The wind has picked up dramatically. In fact, first order of business for governor christie after being sworn in for a second time was to declare a state of emergency because of the severe winter conditions here. This is a snowstorm thats affecting the entire east coast and parts of the midwest right now, and, again, these severe conditions with snow here in the new jersey area topping out between 10 and 15 inches are likely to continue through tomorrow. This coming on the heels of what was another noreaster just weeks ago that really crippled things, and, again, it looks like they are in for the same kind of problems with this storm, a storm that started out looking like it would just be a dusting and continued to increase and forecasters saw the conditions turning into what we are now seeing as a very severe storm. Kelly, back to you. And as you said jay, almost seeming to come out of nowhere. Thank you so much. Straight ahead, a tale of two stocks. Td ameritrade defying gravity on better than expected earnings and Johnson Johnson sinking on disappointing guidance. The ceos of both will speak with me coming up. Also ahead, hackers may be winning the war over your credit card and other personal data. Well talk to a top security expert about why that is and what can be done to turn the tide. Keep it right here. Youre watching cnbc, first in business worldwide. Welcome back. Here is a look at Td Ameritrade. Shares climb schzas much as 8 . Whats behind the move and is the individual investor really back . Joining me now in a cnbc exclusive a fred tomczyk, the president and ceo of Td Ameritrade ameritrade. Welcome. Great to be here. Theres so many things i want to ask you about. Its a fascinating lens into investor behavior. Lets start with the amount of trading activity you saw in the Fourth Quarter. Perhaps no surprise stocks are moving higher and so did trading activity. Our trades per day during the quarter were 414,000. Thats up 24 yearoveryear. And i think what also caught the market by surprise so far in january our trades per day are running 467,000, so even stronger. This is fascinating to me. Youre coming off already an upward trend, and the first part of the year has been a difficult one for markets, and i understand that volatility is generally good for your kind of business. Thats right. But we havent seen that much of a pickup in volatility. Its been more a churning in place. But the market has been moving up and down a bit. And i think investors saw s p 500 was up basically 30 and theyre seeing that all that happened, youre seeing fund flows shift to equities and, you know, you are seeing a little bit more volatility and generally a lot of optimism in the market right now. Which is interesting. And i dont know if you guys look at it the way sometimes analysts do gauging using retail behavior as a contrarian indicator or is it actually a good, healthy sign that finally more individual investors are participating in the market . I think its a healthy sign. Our investors have been investing all the way through this. If you look at the Investor Movement index, its been climbing now for a good six, seven, eight, nine months. We had one month where it went down but its at the highest level since we tracked it for the last four years. Its been pretty healthy. Yeah. How much growth do you expect this year because youre coming off a period of increasing assets by double digits for several years in a row and as mentioned, the market finished at alltime highs. Are you worried that you wont be able to match that performance in 2014 . You know the way we manage the company is the focus on the things that matter and we look at key metrics. And right now what were seeing is, you know, log ins, new account openings new account fundings are all trending in the right direction. The asset gathering is robust. And we just keep focused on the basics of the business and running it day to day. Well let the market environment go up and down but we just keep very much focused on that. When you hit a market like this youre in a good position to capitalize. There have been a lot of breakaway brokers. A lot of people talking about this for a number of years. Is it your sense that that activity continues to pick up and more people are defecting and coming your way . I think it varies where it comes from but weve had a very good success in the independent registered Investment Adviser channel. Our breakaway broker pipelines remain very robust. We have our raa conference next week in orlando. We have record numbers of people showing up. So were pretty excited about it. What about competition in this space . Its a very competitive business and some big players in it. Were one of them. Its very competitive, but its been competitive for a long time but it is the fastest growth channel in wealth manage am today. Last question just want to ask again as we try to gauge whether this market activity has been healthy or what to worry about, what can you tell us about people borrowing on margin, about leverage generally youre seeing in terms of the individual investor right now . Well our margin loans are up. They ended the quarterback at 9. 7 billion and they crossed through 10 billion in the month of january so theyred a record levels but when you look at the market and the buying power, it doesnt look abnormal based on historical trends. All right. And last word 2014 to you depies starting off with a little bit of a churn, do you still think the market finishes positive here . I know youre not you dont have to make that call but is that your sense . My sense is whether youre looking at bankers comments about loans, whether youre talking to Business People whether youre talking to consumers, i think things are generally bullish here. I would expect the equity markets to be up again, but whenever you see these markets where everybody is bullish and its pretty consistent right now, its not unusual to see a correction. That wouldnt be a bad thing in many respects because markets never go straight up. Unless its 2013. Unless its 2013. And then they sort of do. But they wont be up as much as 2013 i dont think. Fred tomczyk, thank you so much for joining us. Coming off a Strong Quarter and a strong start to the year it sounds like. Thank you. Please be safe as you leave the exchange this evening. Are the hackers winning. On top of targets data breach affecting millions theres word that half of skoshgsouth koreas population has been hacked as well, millions in germany. What is really going on and what needs to be done to turn the tide in the Global Security war . Well be right back. Mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. 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And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. Welcome back. The fight to keep skrardcredit card and other personal data secure appears to be global. South korea and germany reporting breaches. Courtney reagan joins us to summarize whaes going on. Just as the arrests are made in connection to the target data breach two more massive hacks are announced overseas and one smaller breach in the u. S. U. S. Authorities have arrested and arraigned mexican nationaling Daniel Dominguez and mary garcia as they attempted to enter the country in mcallen texas. 96 fraudulent cards were found on the pair 22 more seized later. All linked to south texas accounts compromised in the data breach at target. Its unclear if thats two were involved in actually stealing the data from target. The Mcallen Police believe the crime spreads beyond the u. S. And mexico and there are others involved. Prosecutors say 80 million credit cards may have been promised in south korea. The Financial Services commission is blaming the Credit Card Companies for the breach though its believed a contract employee at the korean Credit Bureau began stealing data in 2012 selling that data to a loans company. Plus germanys Internet Security agency says 16 million online accounts have been promised. Thats aleemail addresses and shopping portals. California based easton bell they say it, too, is a victim of hackers. 6,000 web shoppers information may have been stolen during the month of december. Kelly . And many more retailers we dont even know about yet, courtney. Thank you so much. My next guest says securing our personal data is a matter of staying at least one step ahead of the hackers. The problem is how. Mike potts is ceo of a Cyber Security firm. Mike, welcome. Good to be here with you. Look forward to coming today and sharing some of the Remarkable Research that is talking about whats actually happening and the disconnect that basically these compromises are not making it up to the ceo suite. Only 20 of them understand whats happening. I was going to say thats an interesting point. Before we even get into that, here is what i want to know. Has something fundamentally changed . Why is this becoming so much more prolific so much more widespread . Is it because of the perpetrators, because of the systems being perpetrated . What is your take here . Kelly, the old Security Model is broken and we are going to go through this again and again and again. In fact in this research that was just released 48 of the companies that we interviewed felt that within the next six months, a material breach was going to occur and the reason being is the perimeter mod selel is broken. As soon as you lock the doors on your house and Office Building the criminals have been able to figure out how to pick the locks. Credit cards have been around for decades. So what has changed . Is it that theyve better figured out how to infiltrate . Should we be generalizeding here or is it in the case of a target some of their Software Online Storage Systems for this data that are being penetrated as opposed to the credit card systems themselves . Well its twofold, kelly. Again, organized crime has gotten much better in terms of how they hire perhaps a group of kids to write a piece of malware that can be interjected on a pos device as the case was in target. In the case of the magnetic strip way of actually handling credit card processing, that has become very compromisable, if you will. Were eventually going to move to a pin and chip technology. Its not going to cure everything but it will make it more difficult to siphon off this information that has been siphoned off as of recent. Im bringing in the panel, mike. This is sharon epperson. Why is malware being so difficult to detect early on. Its my understanding from reports that the target breach when that was discovered there was 0 detection of the malware issue. Why is it taking so long for those to come to light . Sharon fast forward over whats happened in the past few years, malware is being produced at a slower rate and antivirus systems were able to keep up. Now its happening at such a prolific speed and also relative to the sophistication of it. Av systems, firewalls, and perimeter Defense Systems arent able to keep up with it. As a matter of fact, some of the malware still hasnt been signaturized across the board. Simon hobbs over the weekend was talking about options to basically cut off your credit card if you want to keep any information. But its difficult. Are we going to go back to carrying around a money clip with a wad of bills or will we see seriously, universal security quality ratings for retailers . Whats next for consumers . Whats really scary is what we talk about on this panel every week seems to be the smart home and how everything is going to be connected and its already connected. Thats even scarier. Theyre breaking into your house. What could be some of the potential hacking things that are going to happen there. Were already seeing there was a report even a refrigerator there was a spam attack. Not just a refrigerator but think about your data thats going to be kept by the government now, the health care records. I think we talked about last week i said the luxury of the future is going to be privacy, and i think this is again another data point here and id like to ask mike is this the new normal . Is there anything that really can be done or are these hackers always going to be one step ahead because it seems like, you know, the data is out there and accessible and theres going to be some way to access it . Briefly, mike. You alluded to the internet of things. Im working with over 650 customers day in and day out and theyre sweating bullets relative to trying to get operational visibility and Security Intelligence and its a lean forward Incident Response effort in investing in actually this investigative action to learn with whats happening, to protect your network. By the way, were never going to be completely secure. Its the question of how do we shut these types of compromises down before they become material such as in the case with target at 40 million credit cards, 70 million records. 22 billion, by the way, is the potential. Thats like breaking in ft. Knox. Absolutely. Thank you, mike. Thank you. Great to be here with you. Really appreciate it. Stocks move. Johnson johnson move on the back of disappointing guidance. Plus well learn about some new drugs in the works and if obamacare will continue to have a Material Impact on the company. Dont go anywhere. [ male announcer ] heres a question for you is your tv powered by coal . Natural gas . Nuclear . Or renewables like solar. And wind . Lets find out. This is where americas electricity comes from. A diversity of Energy Sources helps ensure the electricity we need is reliable. Take the energy quiz. Energy lives here. Never mind the snow outside. A blizzard of after the bell action is hitting wall street right now. Were going to start off with a look at big blue. Shares of ibm are down 2. 5 in the afterhours. Thats after the worlds Biggest Technology Services Company reported profits that beat wall street forecasts. However, revenues did fall short of expectations driven by among other things weakness in hardware sales. This marks the second straight yeari ibm has reported a decline in annual revenue. It says it sees tax return earningsearn 2014 returns come in at 18 beating expectations. And nuance said q1 earnings will be around 21 cents a share. Now, earlier in the day it was Johnson Johnson reporting a better than expected Fourth Quarter Earnings Report but its Share Price Fell after it forecast 2014 earnings at the lower end of wall street expectations. So three movers before and after the bell shaking things up today. Dom thanks very much. Speaking of which, did the market overreact to the guidance out of Johnson Johnson and in a cnbc exclusive were joined by the chairman and ceo, alex gorsky. Welcome to the nyse. Thank you for having me. Lets start with your business and on the kind of core device side where the Obamacare Tax being implemented was a hit to earnings. How material is that and how much of an impact do you expect that to have on the business Going Forward . Overall i was really proud to present all of our results today and just like maybe some of the snow that were seeing is exceed exceeding forecasts, we were able to do that too in a number of areas. One of the areas was a medical device area. In a market thats seen some macroeconomic impact and some of the uncertainty caused by unemployment and other things around the world, what weve seen is a slower but steadier uptake among some of our medical device areas, particularly orthopedics. Were cautiously optimistic that some of the demand is with people getting some certainty. Which is kind of when it comes to the obamacare legislation, which does include this medical device tax, you noted it was a hit in the quarter, is that off set by some of the positive trends youre seeing as a result of the legislation . What is the net outcome so far in the early days . Weve been supporters of making sure we get more patients access to health care because if we make great innovations but people cant get access to it it doesnt make a difference. We felt that was very important. And what weve seen is we have made a significant contribution through fees and taxes. Last year we estimated about 1 billion. It will be slightly more this year. We do project there will be increased numbers of patients that will be able to get access through medicaid as well as through the exchanges. And, look, we want to make sure Going Forward people can get access but we can also continue to be rewarded for innovation we bring to the marketplace as well to make a difference. Its interesting to look at the evolution of your business over time and that devices business, about 40 of revenue. But the pharmacy side of it is effectively 40 now, too, and you talked about the outstanding growth. Some people said were not sure if increase the pharma side 12 in an environment where some of the drug cost 20,000 a top and the over time trend seems to be that that affordability is not going to be there is sustainable. Is it your expectation that double digit sales growth is sustainable and that as a percent of total business the pharma side will keep growing. Whats most important is for us to innovate and bring dr. Ution to market that will make a difference to patients over the year. Weve had a successful run. Very difficult to treat cancers where youre saving lives. We did it for prostate cancer, type two diabetes. Our researchers have done a great job. Our commercial teams have also done really well. We think when you bring real innovation to the market whether its in the United States or europe or china, you can be rewarded. At the same time you have to make sure that the quality is there, that the controls are there. You know during the quarter you had a number of high profile recalls and one of the criticisms of your successor, your the guy who ran the place before you was that he basically focused too much on cost control and not enough on quality. What are you doing to reassure investors here that quality is being addressed, that it wont be an issue in 2014 and that you wont be facing the risk that comes along with more recalls . Look, over the past several years weve been taking a number of important steps to always ensure that the high quality and safety the consumers and patients expect of Johnson Johnson is upheld in the marketplace. We centralized and standardized our quality and supply chain systems. What we see, for example, with our over the counter products in the United States weve met all of our requirements on time and weve started to relaunch those products back into the marketplace. 75 of those we intend to have back out entering into the market relaunching through our trade partners. The other quality systems, whether its audits and other safety monitoring were applying best practices. Were committed to Patient Safety and high quality at everything we do. Putting the recalls behind you. Slool. Alex gorsky thank you for joining me on a tough day in terms of conditions to get to the stock exchange. Thank you very much. Speaking of cold weather, well, weve got a hot website. Well tell you which stories of clicking on cnbc. Com as many people are snowed in. The hot list is coming up next. And the weather were seeing right now thats hitting the east coast could strike again on super bowl sunday. Would you rather stay home to watch the big game even if you could afford a ticket . Tweet us cnbcclosingbell. Your thoughts on air at the end of the program. Dont go anywhere. Nspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. [ male announcer ] eeny, meeny, miny, go. More adventures await in the new sevenpassenger lexus gx. Lease the 2014 gx 460 for 499 a month for 27 months. See your lexus dealer. [ male announcer ] this is the story of the little room over the pizza place on Chestnut Street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i95. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment welcome back. The stream of earnings continues after hours. Dom chu, what can you tell us about amd . Its down right now and down big. Its down 9 10 in the after hours session. Amd reporting earnings that come out better 6 cents a share in terms of its adjusted earnings per share in the Fourth Quarter. That beats the average analyst estimate of 5 cents. This time around its the forecast that has investors worried. They think that their First Quarter revenues will come in between 1. 29 to 1. 38 billion. The average analyst estimate was 1. 36 billion. So the lower to mid end of that guidance below wall street expectations. That also represents a decline over last years ref through. Amd is a smaller chip company to intel but it still has a lot of chips that go into video game consoles. A md certainly a focus for a lot of traders in the after hours. Youre absolutely right. Tech more broadly here after hours whether its an actual miss or a worse than expected guidance number seems to be the theme at least for now. Thank you, dom. I want to see if its the earnings that are lighting up the website or other things people are clicking on. Allen wastler joins us with the hot list. Right now whats burning it up Mohamed Elerian. The news that broke earlier on your show. We have the story up right now. Its aquarcquireing readers at the right of 200 people a minute. Hes written some commentary for our website. Hes a regular plensresence on the network. Anytime i throw up one of his pieces, you see the readers crank up on it. Theyre trying to figure out whats going on at pimco. A lot of rich people listen to him, right . That happens to be our second story. What are the super rich putting their money . There was an interview with mike sonnenfeld, the tiger 21 fund. A lot of rich people in that. He says theyre going into private equity eschewing the stock market. They dont think it can do a repeat from 2013 to 2014. But my number three, okay Warren Buffett teaming up with quicken loans for the 1 billion march madness prize. That thing has been dominant all week. Already close to 30,000 people have read that story. Essentially theyre putting up 1 billion for the perfect bracket. If you can believe it. Incredible. Well see if anybody does that. But people love march madness, they love Warren Buffett. Its a winner on the website. Allen wastler, youre a winner. A new study revealing 85 of the worlds wealthiest people own as much as the bottom half of the global population. Is that necessarily a bad thing . Our panel chiming in next. Well be right back. Lot can happen in a second. 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So during the same week that some of the worlds wealthiest individuals gathering for the World International forum in switzerland. Oxfam released the top 85 richest people. Oxfam is concerned that such a concentration of wealth could have an adverse impact on human progress. Are they right . Want to bring this one open up to our panel for discussion. And i guess the question comes down to this is this are people being rewarded because they are creating wealth that the entire planet benefits from . Or is this a sign that theres something fundamentally wrong and skewed with a system that needs to be fixed . I think theres two issues here. Theres a moral issue, right . Is it okay for wealth to be distributed in this manner for the bottom half of the world. As much as 85 people. But theres an economic question. Is inequality hampering Economic Growth . And the jury is out on this. This is something the fed has looked at. And it really remains to be seen how much this sort of widening of the wealth and income inequality is going to affect the economics. I think its the wrong question. I think everybodys so focused on the gap and inequality. But the focus should be on the poverty. Weve gone through a very strange period here. Were moving from Service Manufacturing to services. Technology. Were in this Creative Destruction period, if you will. We need people to have more skills better skills. And be focused around that. When we Start Talking about inequality and talking about one group having more at the expense of another, that is just blatantly untrue. Its assuming theres one pie and having the wealth on one side does not grow the pie. And thats not the cases. And the focus is on the taxes, that the rich dont pay enough and the poor pay too much. But the focus needs to be on employment. Getting the longterm unemployed, and getting jobs in the new economy. Not the old manufacturing jobs that are going away. There was a good column in the new york times. David brooks last friday talking about this issue. Saying its not useful to talk about inequality. From a policy perspective, you think inequality was a problem, raise the minimum wage. Its far from a nobrainer. Its developing consensus. But you need to look at the context around poverty. Who tends to be impoverished . What are the conditions . Whether it be single parenting, where you live lack of education and so on. O a more nuanced approach may be in order. One of the foremost researchers on inequality said he has a book coming out on all of this. One of the things to watch, this will be interesting. Oxfam almost calls out the people going to davos, youre so worried about this you shouldnt be the ones dodging taxes and getting around some of these things. And he says radical Bank Transparency means a Global Wealth tax is coming. Thats going to be a fascinating thing to watch. I just retweeted a tweet from a mock account connected to a famous woman on wall street. I wont mention. But you can look it up on twitter. Finally in davos with my peers. Missed all you Little People back at the recession. Oh my. Thats a Perfect Place to leave it. Its so telling. Thank you, guys. Old man winter slamming the northeast. Take a look at this. Its a live shot right outside cnbc headquarters in new jersey. Super bowl tickets are going for a minimum 2,800 apiece. Will you dish out the big bucks or watch it at home . Your thoughts when we come back. [ tires screech ] chewleys finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. Get the most extensive charting wherever you are with the mobile trader app from Td Ameritrade. I always say be the man with the plan but with less energy, moodiness, and a low sex drive, i had to do something. I saw my doctor. 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Ask your doctor about axiron. I need proof of insurance. Thats my geico Digital Insurance id card gots all my pertinents on it and such. Works for me. Turn to the camera. Ah, actually i think my eyes might ha. Next Digital Insurance id cards. Just a tap away on the geico app. Huh, fifteen minutes could save you fifteen percent or more on car insurance. Everybody knows that. Well, did you know that when a tree falls in the forest and no ones around, it does make a sound . Ohhh. Ugh. Geico. Little help here. vo you are a business pro. Seeker of the sublime. You can separate runway ridiculousness. From fashion that flies off the shelves. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. Welcome back. Heres some perspective. A ticket for the first super bowl in sunny los angeles cost 12. Believe it or not, the game wasnt sold out. That was in 1967 by the way. In present day, for the first super bowl to be played in the new york metropolitan area if you can find a ticket chances are youre paying in the thousands. Dominic chu has been shopping for tickets. How much are you looking to spend . Its a lot of money. They say the current average list price for the super bowl ticket is around 4,100. Thats up 18 , just since january 6th. It was up around 3,400 then. The average sales price is currently 3,300. And the most expensive seat in the house is in the lower club. 140 section. Thats going to cost you 38,000. Theres a 13,000 parking spots available, compared to the 80,000 spots being sold for the super bowl. The lowest price is 294. The highest price goes up to 970. Stubhub is providing private transportation if you buy tickets from them. The most expensive suite, if you are in that market is 962,000 with the cheapest available suite at 318,000. Thats about 24 to 30 ticket suites. The same luxury suite for a regular season game goes for 350,000. This is not going to be a cheap proposition whatsoever. Just incredible. Carol, i just want to know if dom is crying as he is doing the research because his 49ers didnt make it to the super bowl . I am crying just to let you know. Dom thanks. We want to know whether you would shell out that cash for the super bowl or stay in the comforts of your own home to watch the game. Heres a couple of your thoughts. Jeff, i never paid to attend the super bowl. I prefer tv couch, my own snacks. Johnny says id rather watch the super bowl at home and use the money to buy more stocks. Thats a nice one. I would agree that you waste so much time going back and forth to the bathroom. None of those suites i read dont have a hot tub. Theres no hot tub. Theres a hot tub at my house. Im coming to your house for the super bowl obviously. Ill bet they have an organic kosher hot dog, though. And a great diet soda. Thats how much it costs to park in new york. Well see you in a couple of weeks. Fast money is coming up in a few seconds. Whats on the docket . Cyber security is hot, hot. Weve got the ceo of a company that was actually happened to be profiled in usa today. Shape security. They are revolutionizeing industry. Polly morphism and bot walls. This could be the next target. Its desperately needed. Fast money starts right now. Live from the Nasdaq Market site in a snowy times square. Im melissa lee. Our traders are tim seymour, steven p. Grasso, Karen Finerman and guy adami. Well talk to the executive editor of citron research. It is calling for an urgent trading warning. Its sending one stock down 10 . Well have details coming up. Our top story. Old tech withers while new tech