Transcripts For CNBC Squawk On The Street 20140121

Despite the first decline in german Investor Confidence in about six months. The roadmap begins with a slew of bigname earnings, verizon, j j and travelers and delta beating estimates well break down the quarters of each. Taking a large position in dow chemical calling for a Strategic Review. And attention Business Travelers the eastern half of the u. S. Bracing for another big snowstorm and biting cold, well get into that, but first, its a big morning for earnings. Three dow components in the mix, verizon and j j and travelers beating the streets with their quarterly results. Outside of the dow Delta Air Lines did also exceed consensus with profit of 65 cents a share helped by lower fuel costs. Lets go through the big dow names. Bus unlike last week unlike last week almost uniformly good. I like what verizon had to say, buzzing about it with david beforehand. I like the earnings per share. I really like the Revenue Growth. I like the churn. There was a discussion about churn. Still below one. Frankly like directv. Like comcast, Parent Company. People just keep signing up. It is a remarkable juggernaut of an industry. But different from at t to a certain extent and tmobile. Here you have the case where theyre not suffering at all from competition from tmobile, in fact, they may be courting numbers from tmobile seeing that growth at verizon. If you growth, they had a bit of a problem in terms of throughput for the lte, you know, the 4g that youre all on, if you try to get data in big urban areas in new york city, they were always thought of the best. They must have thrown a good amount of money at it because it seems to have improved and they did not lose subscribers as a result. Wireless margins still look good. The calls going on right now and i havent had a chance to really listen to much of it so well see if we get anything else but overall it looks like a pretty good quarter from verizon. You raise a really good point the idea of improving the network. One thing that stood out, verizon said 16. 5 billion and for 2014 and a lot thought capx would be down and its good for the telco equipment companies. Buying media assets from intel, thats the other story. Fios revenue was up 16 and more than a third, i think 35 on customers who can receive fios do. Our building is going fios. We havent had the vote we need to make sure theres enough available households in the building so theyll take it from the street to the actual building. But the purchase of the intel overthetop platform if we can call it that, thats what it essentially is, is interesting. Its not a large dollar amount by any means, a few hundred million bucks is what were thinking. Theyre going to integrate ipbased tv services with fios video to further differentiate fios from traditional able tv offerings and reduce ongoing deployment costs. Theyll be getting bigger in the programming game, too. I think many of us, i switched from time warner to verizon. And ive got to tell you that these numbers show that theres some sort of technological superiority. Its interesting to hark back to what you were talking about the activism and the bid for time warner. Fios is taking share, not from cost cast, because comcast numbers were juggernaut. Theres so many moving parts, i do not see tmobile taking share. No. And fios competes 13 overlap with time warner table. The biggest overlap where it competes the most is cablevision if you want to think about that. Interesting. And, of course, Time Warner Cable for its part would say to charter just going down that road for a minute, youre not competing with anybody the way were competing against fios. Weve got a much tougher go here. Right. Give us a break when you say you can improve things so dramatically, you try to come in and fight with fios. Come in the water is fine. Your point, the numbers so far, carl, this is a day where between activism and earnings, it is a very different tone from last week. Yes. J j beats by four cents. U. S. Sales up seven led by pharma. Their guidance for the year under consensus of 575 to 585 where the street is but some have pointed out they did the same thing last year and beat hand handily. Goreski is under promise, overdeliver. His predecessor was an overpromise, undeliver. Hes learned the lesson. Remember, pharma is this company. This companys got growth pharma unlike pretty much all the other big dogs. I like the growth that i see in the highermargin businesses in some of these drugs. Its still another good number for them. People think its a tylenol play or a neutrogena play, its a highgrowth biotech play unlike bristolmyers. Wow. Its been a while. Bristolmyers will report a good quarter i think, i like j j and travelers, and they buy back more. Fishman is not a promoter. No. Hes not a promoter. No, hes not. But its worked for him. Travelers was a big beat, 268 versus 215. Premiums up five. Claims were down. Right. But it has had some trouble getting breaking out past 90. Once again, storms raised rates and the next year no storms, big profit. Right. But travelers been buying back stock. Im sure there will be something on the call. The last time there was a concern, he mentioned competition. One of the things people need to realize at home when youre on a conference call, if you hear the word mixed or competition, the hedge funds come in and blast it out. They just react like that to some sort of program. Competition, blast. Speaking of hedge funds, what a morning. Wow. We got activism front and center, of course, not to mention it all. But dan lopes taking dow chemical the bigger activism of the morning. Its constructive actism if you will from morlobe amr. Loeb. In this case, its a letter released on this relatively new website called harvest. If you want to know the its hvst. Com. Its not enough to be a billionaire, you got to own a stake in a website and put your letters out there to drive traffic to it. Thats the case here. You remember kyle bass also releasing his views on gm on this same platform a few weeks back. As for those views from mr. Loeb they are centered on dow chemicals underperformance really since 1999 makes a point right at the beginning of his letter, saying, the stock price is the same it was in april 99, 15 years ago you could have purchased this for the same amount of money. Incredible. Lets get to it, guys. Lets separate the petrochemical business from the rest of the company. Dows petrochemical Operational Strategy has been to migrate downstream supposedly to earn higher margins but he said its not working and you should be focused upstream where youll benefit in the enormous drop in natural gas which is a key feedstock and separate it out and take your time, by the way, says mr. Loeb. The nomination deadline has already passed for getting directors, so theres not going to be a fight here for most likely a year. That means they have a year conceivably to consider some of these things. The question is where other shareholders are. Loeb clearly believes as weve seen when they take the large stakes in megacap companies that he has the support of the other top ten shareholders. Thats what you need because otherwise you wont go very far because he doesnt have a big economic interest to dictate terms. Coleman at dupont took these actions. If you look at Eastman Chemical and westlake, these were companies that really embraced the natural gas shale revolution. I will tell you that liverist has decided to open plants. Hes going to build a plant. Hes one of the few really out there. But at the same time the underperformance is stark. And i completely understand the idea that the company has been undermanaged, the deals, the car valve for commodity versus the spinout of coleman or the merger to spinout with ppg. Its undermanaged and theres a sense that liveris is a professorer. He was a guest this morning on cnbc. He joined Andrew Sorkin from davos. Liveris did know that loeb was coming. Interesting timing on their part. Concluding the interview just prior to mr. Loebs release of the letter. Heres what liveris had to say. We should all be thinking like the nelson peltzers, i have no problem with people saying heres better waifs to get things done but as management you have to think about those ways which i believe at dow weve been doing. If you look at Something Like my Balance Sheet which is the best its been in about a decade, weve got expensives on it like the preferred from warren buffett. If you get the stock up above 52 for any length of time you will get rid of those preferreds. They can convert. They will be converted, i believe, and that will, he mentioned how expensive they are, of course, paying that dividend, so thats another thought process here if you can get the stock moving towards 52 and get it to average that price for 20 of 30 trading days, they convert. Thats another expensive thing done away with on the Balance Sheet. This will be interesting to watch. And, again, loeb, sony, remember, somewhat friendly. Unclear whether it really got much done there. He might claim that he did in terms of transparency, but certainly they have not done the subsidiary ipo they were calling for. Loebs cf they sold their phosphate business, friendlier and in this case thats the way hes going trying to be constructive. Well see, 1. 3 billion stake is his largest single position. Its really big and we have to watch it because dow chemical could be worth a considerable amount of money. And then theres nelson peltzer, of course, being added to the board in mondelez and as Andrew Ross Sorkin reported earlier this morning not going to push for a pepsi deal. But clearly loeb not the only activist making some news today. I think this is a company, i can speak on the fundamental side has been undermanaged a lot. People feel it should have had longer growth. Had a long history in cad burca. They are fighting history, heinz made a lot of changes internally and wendys, did a lot of good there, ingersollrand, for those who say the story is over, it could be just beginning. Interesting heinz was the last time that pelz ran a proxy fight. It appeared he was close to doing so here, sources indicated he wanted two board seats it would appear and he ends up getting a board seat for himself and no stand still. In other words, meaning that, you know, he doesnt have to support the board in what it does. But, of course, he most likely will. If he had gone to a proxy fight, he would have gone after four seats. But its interesting he hasnt done that. A lot of times they dont want to go to proxy fights. Youre seeing a lot more settlements than fights and heinz is a long, long time ago. Heinz he did get in and Robert Johnson came on when i did a mad money show at university of texas, he came on. And i thought for sure he would say bill johnson. Bill johnson, im sorry. That there was not a report and he says that they put good guys on the heinz board. I believe chuck bunch ppg of the pittsburgh ties. And they originated a lot of good ideas and he welcomed them. I wonder if Irene Rosenfeld doesnt actually welcome some of the ideas from pelz even though i know there was not a lot of goodwill, you never know when goodwill can spring. As you point out its about operations. Its not about a pepsi deal. Thats off the table in terms of him pushing for anything like that. Its just about doing better. He was relatively specific on some of those ideas when we talked to him at delivering alpha in july. Heres a listen. My fault with irene is twofold. First of all i think the name mondelez, i think that hurts us two multiples. Really . It sounds like a disease. Suffering from mondelez. What but, youre right, her margins are way, way lower than what they should be. And when irene and i meet again, in the very near future, we thats exactly what well talk about. They got to have more changes now. Ill tell you that. Nelson does a lot of work about overhead. And kind of lets call it wiggle and royal. Theres people who own you can try theres a lot of unallocated overhead and hes been a laser on that. I dont think he likes imperial ceos. Yeah. And after a couple of not great years at trion they had a strong year last year, they were up 40. That was a big year and they needed it because theyd had a couple of lackluster years performancewise at the fund itself. Look at wendys. Its remarkable. Its been a fantastic burger and stock. I bet it is. When we come back, a ceo whose company is helping to bring bitcoin to the masses. Stick around to find out. Another winter blast meantime getting ready to take aim at the east coast and well get a forecast and one of the areas preparing for the storm. A couple thousand Flights Canceled around the eastern seaboard today and then the analysts moves from marriott to ge to apple to burger king to the gap. More squawk on the street live from post nine in a moment. [ 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 we do . I took the trash out. 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Call today to request your free decision guide and find the aarp Medicare Supplement plan to go the distance with you. Go long. The northeast bracing for its second big winter storm of the new year. Its already caused federal offices in washington, d. C. , to close today. Weather channels jim cantore is in the Nations Capital with the latest. Good morning, jim. Reporter were talking about schools closed 99. 9 of them not only d. C. But also into philly and also baltimore here, Train Service the mark between washington and baltimore also shutting down, they are still leaving one rail open but were starting to lose ways to get home later on this afternoon and that has always been the big concern with this, the evening rush hour, thats when we will maximize the storms potential. Thats when it will snow the heaviest. Well also see that accompanied by wind and falling temperatures, and that will be not only here but all the way up through the northeast megalopolis, d. C. , philly, new york and boston. A huge concern as we work through the afternoon as conditions on the ground and in the air will continue to deteriorate. You mentioned the federal offices are closed and whats interesting is especially for d. C. And the southern areas theres winter storm warnings out all the way down to the tidewater of virginia, southeast of virginia were talking about, is the type of snow. It will be a very light, fluffy snow, not the kind of snow you make snow men with or have a snowball fight with, its very low water content, and it will blow and drift around and cause visibilities to drop quickly to a quarter or a mile or less. Even long after the snow is gone tomorrow expect a lot of blowing and drifting of that snow and bitterly cold and dangerous temperatures well below zero. This is what you call the bite of winter and its going to bite pretty hard here on this midjanuary day. Back to you. My favorite quote thank you, jim. My favorite quote is from mayor de blasio from new york, he came into office on the first vortex, with it was so excited they decided to do it again. When you see the market up, remember, people will be running home today. Theyre not going to stay until the end of the day. The day after tomorrow was on the other night and i caught a little bit of the end there. The polar vortex. Global warming was not in the Global Warming an important article about china exporting pollution to us and taking our jobs. That had been my position and suddenly its becoming mainstream. But read those stories. Very important in terms of what our country may end up doing with the chinese. And watch nat gas, powering half the homes in this country. Propane, ive been watching propane, thats a group thats been horrendous. Suddenly propane has come together and amerigas did a deal with Energy Transfer partners and did a unit sale, its a big propane company, largest in the country. When we return mad dash, and take one more look at futures not a bad start as we cram a lot of news into a holiday shortened week. Futures imply almost a triple digit gap open. A lot more squawk on the street straight ahead. Fifteen minutes could save you fifteen percent or more on car insurance. Yeah. Everybody knows that. Did you know there is an oldest trick in the book . What . Trick number one. Lookest over there. Ha ha. Madeest thou look. So endeth the trick. Hey. Yes. Geico. Fifteen minutes could save you. Well, you know. Easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a 150 amazon. Com gift card. Call 18882800149 now. Optionsxpress by charles schwab. Go [ male announcer ] its chaos out there. But the mclass sees in your blind spot. Pulls you back into your lane. Even brakes all by itself. Its almost like it couldnt crash. Even if it tried. The 2014 mclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. The holidays complete and i feel like william tell all right, we got a mad dash on a tuesday. Man, there was some good fat ball this wreckeeekend . Dont you ever talk about me dont you open your mouth about the best stock picker in the game all right. I wont. I wont. Thank you. Hes almost as smart as you are. Almost. Stanford and a great poet and one of the most articulate people in the nfl and i do love him. Absolutely entertaining. And also informative. As you are. Well, thank you. What are we talking about on the mad dash . Get your hand out of my face and well talk. I tried to shake his hand. Alcoa, jpmorgan had been a naysayer about the great work of who . Kleinfeld, and this was a breakout quarter and they shut some more smelting. Bhp is shutting smelting as well, too. I think this company is on the warpath to make big money this year. Do you . Yes, i do. Which means a lot more klaus kleinfeld, youll hear more as the year goes. Appro pro of what loeb wants, cut the upstream, make it so they become the lowcost producer. They have a new plant coming online in saudi arabia. The lowest cost producer of aluminum. And lightweighting think about the word we heard from phil lebeau about ford motor that is uniquely about alcoa. 3 million screws in any new plane from boeing, alcoa. Lets move on to planes and delta. Okay, delta, this is one, you know, we have an extremely full plane, be sure that your overhead, you know, all that stuff, thats about delta. Once again, delta by the way, lowering the cost of its getter better planes in that use less fuel. Fuel has come down. They bought a refinery in a very kind of radical action. This is delta and northwestern, the country has been carved up and the Justice Department has blessed it. This is a precursor to a series of great quarts United Continental will be good and southwest will be good and the standout i believe will be American Airlines and the merger with us airways. You have to read through the lines, okay, but i think its just terrific and thats why we grabbed them right after their gains. I liked it. I love erin andrews. Her father loves our show. He loves our show. Here dad is a great watcher of cnbc. All she did was pat him on the butt. Come on. Weve got the opening bell in about 3 1 2 minutes. A lot more squawk on the street including jim cramers Richard Sherman imitation right after this. voseeker of the sublime. Ro. 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. Who found a magic seashell. It told him what was happening on the Trading Floor in real time. The shell brought him great fame. But then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their Trading Platform. [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with think or swim from td ameritrade. Youre watching squawk on the street on this tuesday. Hope you had a good long weekend. Live from the Financial Capital of the world. The opening bell in about 30 seconds, and it looks like were going to get close to break even for the year, guys. The dow needs 118 points. Futures would imply were going to get close to that. S p needs about 9 1 2 but its been said for this morning for the year so far sideways has been the new action. Well, i mean, one of the things when i went over the charts this weekend. Industrials had been on fire. Banks have been terrific. Health care good. Oil horrendous. Horrendous declines in that group. I mean, just and then retails been by far the worst. I could not find a single retail chart that i didnt think was a short. Every one a short. Really . Yeah. Every one a short. Theres a look at the s p and pretty good breadth at the beginning. Chc group celebrating its ipo which took place last friday. Popeyes louisiana kitchen the franchiser and operator of popeyes restaurant. Will be on the show. From philadelphia, theyve done a remarkable job and one of the bankable 21 in get rich carefully i cant wait to see her. You mentioned oil, jim, exen is cut by b of a to neutral and the price target goes to 106, up 16 in the Fourth Quarter. It was really the only major that was up. Almost Everything Else at royal dutch did not have that good of a quarter. Youll see Conoco Philips is down to a 4 yield. The bigger use, schlumberger and Halliburton Service numbers were quite good and the Helicopter Company does a lot of offshore where i know that the chatter is maybe, maybe not. Offshore has been very good and middle east drilling particularly, yes, iraq. Has been very strong. Ill tell you whats getting some power leading the s p is dow chemical, david. 6 . Its nice when you can take a 1. 3 billion position, youre not a mutual fund, youre a Large Hedge Fund that is activist in nature oftentimes and right away you are up 6 1 2 the minute you divulge the position even if you dont get anything youre asking from. Isnt that a good point. Mr. Loeb asking for a Strategic Review, separating the petrochemicals from the rest of the businesses. You seem to also think its not a bad idea to at least investigate. I look at dupont and i think about all dows run a series of ads for years talking about the human quotient, all the different high value added businesses they have internally. In the meantime theyve been somewhat aggressive in trying to build plants but a lot of Companies Already had Chemical Company plants within this area where the feedstock is so inexpensive. This is still a Great American story. The renaissance. By the way, unless we get the export of oil, i mean, theres just a glut everywhere. Natural gas because thats a byproduct of finding oil, we burn off more than we use. And so people feel like, well, if we burn it, why isnt dow chemical 100 based here. Theyve also had a series of missteps and a lot of people feel he buys high and sells low. He followed through on the purchase of rohm haas and many people thought they would walk away and they did not. I guess even now theres a question as to whether programs they should have figured out a way out instead of following through. Look at ppg. I mean, this Company Reported another magnificent quarter. They have systematically gotten out of commodity, systematically gone into proprietary and thats what people are expecting of dow. You break the two companies up, you get a proprietary and a commodity, hey, do you know what, i like that. You mentioned retail, jim, a lot going on with target. Not only were there two arrests reportedly made in connection with that breach, the journal says today they actually gave up on smarter technology years ago. Yes. That might have prevented all of this and cowan cuts it to an underperform basically saying the buyback history and holding on to as much cash as they can. The New York Times piece was devastating in terms of the size of the breach target. And suddenly everyone around the country i think is looking at their credit card bill in a way they havent done before and i think that targets part and parcel of this real negative feel for tech for retail. Other than gap stores, where there is a remarkable sell to buy just saying its undervalued. I do not trust this group. I reiterate. I do not trust this group. Sterns point is comps get easier they were a rare holiday outperformer and the short thesis worked wonderfully in the latter half of last year. Theres other groups to buy. Other groups are on the move today and i just think when you do retail when the smoke clears people say, well, you know, this is not an important time for retail now in january. Theres not a lot of data points. You just have the stench of the last quarter. Stern also by the way takes tjx to a neutral. That stock was up 40 in the past 12 months. Alltime high valuation. Thats a brutal one for my Charitable Trust, been the biggest winner that and macys the two retailers that done very well. But the issue here, again, is the outperformance versus the decline in the group. Watch walmart. Walmart is another really horrible chart frankly. Horrible. We talked a good deal about mondelez shares down 2 this morning. Perhaps there was a thought that there would be a proxy fight and would bring on even more change. I dont know. M a, not much to speak of. Its not a monday so we couldnt have a merger monday anyway. I thought bud, you know. Right. Ambev buying back a korean brewer from private equity that they sold them and what a deal for the private equity guys. Yeah, talk about sell low, buy high or something. They sold it at the time to help reduce the debt when they were doing the bud deal and now they come back for it. Ibm also i should mention in talks to sell its lowend server business to lenovo and the stock is not up. Thats been hit by activism and i think got belligerent. That was carl icahn for a long time. He was a no shares for a long time. Activism is front and center this year already. There was a note put out this morning i thought was very important, appro pro of what happened with verizon and capx saying its okay to buy juniper, why . Because elliott managements in there and they feel that elliott managements going to be able to accomplish some things that people didnt expect. When i look at the amount of money that verizon is spending and you know sprint is spending because they have a 3,000year perspective on sprint, right, 200year perspective . I think people have to recognize this group is still cheap. Jpmorgan goes hold to buy altera. These are other spending plays. I just like this group very much. And well get ibm tonight along with texan and xilinx, it will be a busy few days. Xilinx takes off. Stock gen cuts to a hold even though susquehanna makes it a great idea. It will be a july launch not a september, october launch. I think that apple again is an undervalued stock. My father always said theres certain Retail Products that are fo football, its on sale here and there. Apple has become this kind of much talked situation, up three, down three, i think you have to stop trading the ticks. And theres people who are, like, jim, jim, doing something about apple. Do something about apple . Who do i look like . Do something about apple. Do i look like some sort of, like, a wizard. Cook can do something. Jim, do something with oil. Ive seen you look wizard like. When i put on my Richard Sherman clothes. Dont talk to me about apple. Apple does report next weekend. All the estimates on iphone shipments and volume are going to start to get very interesting. I think so. I think people will go through the fine tooth comb. I saw some pictures where there werent lines in china and then i saw pictures where there were lines in china. If apple would pay 100 chinese actors, the stock would be up ten. Enough of this playing the line game. You can pay them cheap in china. The foxconn guys. Apple has retail chains, and mall traffics down. Look at starbucks goes conviction buy to buy. And i think, again, people are saying, well, starbucks is not immune. Starbucks raw costs going up. And people taking pictures at badlooking sears. Ive seen those. Again, you know, retail. Retail, retail. The latest pastime talk into your local retail store and take a picture of it. You mentioned goldman taking starbucks off the conviction list and replacing it with burger king which has been a beautiful performer at the expense of mcdonalds. Talking about bringing out value there. Burger king is i think that i continue to think that a food chain issue. People dont want burger king. But thats an alltime high. Its working. Its working. And wendys did very well. This is all chockfull when you talk about the banks, hilton came public this time, not that not that long ago. Now we got the assumption of coverage by all the firms, right . Basel coming over, that was a company that successfully said we got to bring out value in commodities and if you go to louisiana, i love going to louisiana because you see handson not just true detective, what a series, but just the immense amount of petrochemical activity going on. The largest project in louisiana is the ellen g. Cheniere Energy Export of natural gas. Maybe 30,000 jobs being generated and 10,000 people scrambling to be able to build the plants. And get rid of the l g, and we had studies about how much more expensive European Energy is, and more European Companies moving to the delta and the gulf than we have. The early enthusiasm has brought us only 24 points on the dow. The kickoff openings on monday. Lets get to pisani on the floor, hey, bob. Happy tuesday. Bottom line is were not that far from historic highs on the s p 500. You see the dow, dow chemical or dow, but its dragging up not just the overall markets particularly the material sector. Put up dow chemical up about 8 on word that dan loeb investment and that is dragging up the materials sector as a whole. Youll see thats a Market Leader this morning along with some of the other subgroups in that particular group. As far as earnings go, kind of a mixed story today. All of the Major Companies reporting beat on the top line and most of them beat on the bottom line as well. Verizon is on the up side here buying intel media assets. One of the cloud tv products. Delta is doing great. Thats a should be right near a historic high, it was earlier in the day and ameritrade came out a short while ago. They beat. Sort of a mixed start here for the earnings season. You mentioned you like to watch Johnson Johnson i like to watch unilever because they always come out and talk sector by sector and country by country. This is one of the biggest food guys in the world. Europe was flat. I was a little disappointed to hear that, they did say Southern Europe was stabilizing. Asia was very mixed. They said china and indonesia were growing, but they singled out vietnam, thailand and south africa, they said they were all below historic rates here. Seemed a little puzzled by that. South americas doing great. Double digit sales growth. North america had lower volumes but they mentioned personal care was stronger. Whats it all mean . I would call it a fairly mixed picture, i would have liked to see more optimistic comments on europe and asia. Were in the middle of earnings season and through with banks and generally we did very well, the markets held up very well on the Bank Earnings and today well really turn to the tech group, so tonight will be ibm, texas instruments, amd, xilinx will be reporting after midnight. China gdp growth did you see it over the weekend, 7. 7 , heavens knows how they hit the targets, 7. 7 , december retail sales up 13. 6 only a slight deceleration from november so overall the economic numbers for china were not that bad. By the way they injected a lot of money the peoples bank of china into the system overnight and i think that might have helped move the markets up a little bit there. I want to talk about lenovo maybe buying ibms lowend server business the x86 business, this is the food chain exhibited in technology these days. Remember lenovo bought ibms pc business in 2005 and by all accounts theyve done a great job managing that business even improving the margins a little bit but the business is so tough pc steals are plummeting worldwide and even they have to go out and buy more businesses just to figure out a way to keep growing. Ibm is disappointed the last couple times. Tonight its going to be important. Guys, back to you. All right, thanks very much, bob pisani. Shares of verizon are down this morning after what looked like a good quarter. A couple of things to share from this somewhat unexpected, certainly very small but perhaps important acquisition of intels lets call it media assets for lack of a better term. This gets into things like cloud tv products and services. I know it gets kind of complicated or can make some peoples eyes glaze over. Asked about the acsis, they said as far as the onq acquisition, theyll integrate it into fios Video Service and trying to differentiate it even more so the fiber to the home versus others with the tv offerings and reducing deployment costs and also raised the prospect of getting more elegant search and discovery and interactivity and screen use and also the idea that when they own 100 of Verizon Wireless, theyre going to take that platform and integrate it more deeply with the Verizon Wireless 4glte network and deliver it to you on your phone or mobile device wherever you are as a result of this acquisition. Worth paying attention to simply because dollarwise its quite small intels now out of that business. We thought they would be become another provider of content services and distributor. I felt this is the rationalization about intel, i didnt think the quarter was nearas bad. My Charitable Trust owns it. I look at this verizon and i think were in the mode again if youre spending we dont like you. Thats what it is. We want more money back in buyback. We want more money in dividend. I mean, if youre a gilead, you can spend all you want because we want that. Amazon can spend all it wants. But with verizon we want that dividend higher and somehow we feel that when they do Something Like this maybe they cant. Or capx as you pointed out as well and lot of the stocks reacting. Lets move on from stocks to bonds and head over to the bond pits. Rick santelli join us from the cme group in chicago. Rick . We continue to see that the ten year is idling at lower yields. Now, granted, we havent had a huge rally pushing the rates down but the intraday and open the chart up to december and ultimately further back towards october you can see were hovering very close in the zone close to threemonth low closing yields. If we consider that most of this really is about the yield curve at the moment and most of the talk has been about the steepness of the yield curve, well, that hasnt been true for a while. Whether you look at fives to tens hovering close to a 4plus month tight. Tightest its been in the separation of those yields or two to tens which was thought to be fait accompli and remained very much anchored on the short end we see a 2 1 2 month tight on twos to tens, this is something to Pay Attention to. We know that the street likes to be long the intermediate part of the curve and the five has been under the most pressure even though all rates have been rather sticky but drifting southbound. The dollar index is having a very robust year but if you really want to take a look whats going on with the dollar index you can look at the euro or the canadian on the euro side we are gaining strength and on the canadian side all developed currency are cooking in grease against canada. Were at the best levels since september of 2009 and we need to stay on top of this chart. The last chart weve heard about the huge injections about china. Bob pisani talked about the seven handle on gdp and it wasnt long ago we were almost double that and tens of billions of liquidity, the shibor is down a bit but it seemed to continued jump towards elevated levels. Rick santelli in chicago. When we come back, does amazon have esp . The Online Retail giant looking to anticipate what you want shipped . Get some details on that when squawk on the street continues. You want to be a richer man change changes turn and face the strange we know were not the center of your life, but well do our best to help you connect to what is. Natural gas futures are rallying strongly here about 11 cents near the highs of the session. At 4. 44. Of course, the deep freeze poir experiencing in the middle part of the country and the snowstorm now hitting the northeast is a big factor in the rise were seeing here in heating fuels. Natural gas leading the charge here and were continuing to watch whether natural gas will rebound toward the 4. 50 level that we saw as the recent high. Back to you. Thats capital oil and gas. Dont buy any natural gas company. A lot of people say capital chesapeake and capital oil is the one to buy. Amazon has filed for a patent shipping system that would anticipate what customers buy to reduce shipping time. The system would analyze all sorts of Customer Data and move products from a full imcenter to a shipping hub close to the customer in the anticipation of an eventual purchase. Brings us to this morning squawk on the tweet, were asking you to help us come up with a slogan by completing the following, amazon we deliver it faster than blank. Well get your responses throughout the morning. David, can this work . Probably. They have an enormous amount of data on so many different customers. They have so many algorithms working so well at that company whether its picking, packing and shipping and any other number of things. Listen years ago when i did my first walmart documentary people remarked on the fact that walmart stocked stores that were about to get hit with a hurricane with an overabundance of strawberry poptarts because they know during hurricanes people love strawberry poptarts. Why . Who knows. Not dissimilar from what amazon might think about doing using the data they have. I was going to say faster than peyton manning, a pass by peyton manning. Well get 6 in 60 after a break. 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. 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 this magic moment at a company thats bringing media and technology together. Next is every second of nbcuniversals coverage 0f the 2014 olympic winter games. Its connecting over one million lowincome americans to Broadband Internet at home. Its a place named one americas most veteran friendly employers. Next is information and entertainment in ways you never thought possible. Welcome to whats next. Comcastnbcuniversal. Forget about it. Netflix earnings tomorrow. Pacific crest is saying it could go down to 200 maybe things are slowing there. And well starts haynes. Hain has been remarkable this has great organic growth it is the next Great Food Company in this world. Remind us whats coming up tonight. Afce is changes its name to popeyes louisiana kitchen and cheryl will be on the show. Youve got to listen to her. If you want to know how to change your culture, you are in a secondrate culture, listen to cheryl, she has taught many. See you tonight, jim. Lets get to simon and see whats coming up next. Well keep everybody plugged into dan loebs interest in dow chemical. The latest developments ahead. Also were going to show you an atm that converts real money to bitcoin, and theres an avalanche of Research Notes out today on hilton the 40day lockup has expired. Find out what the insiders think of that big ipo. Hour two, squawk on the street, monday morning. [ tires screech ] [ car alarm chirps ] [ male announcer ] we dont just certify our preowned vehicles. We inspect, analyze, and recondition each one, until its nothing short of a genuine certified preowned mercedesbenz for the next new owner. [ car alarm chirps ] hurry in to your authorized mercedesbenz dealer for 1. 99 financing during our certified preowned sales event through february 28th. Welcome back to squawk on the street. The roadmap begins with the markets and the dow and the s p a few points away from alltime highs. And dan loeb taking a significant position in dow chemical calling for a Strategic Review. David will have more on that in a bit. Plus, have you ever wondered what a bitcoin atm looks like . Were talking to the ceo of a company that makes them. Find out what it is and how it works a little later on. But first, on the market, u. S. Stocks near record highs a new 13year high for the nasdaq. Want to bring in two guests on very different thoughts on where the market may be headed, lets bring in the founder of tiger 21 and jim mccoggin Principal Global Investors ceo. Jim, we are looking at new highs on the markets and close to record high territory. Are the earnings justifying it . Is there enough good news in terms of earnings and Revenue Growth . I dont think it needs to be really, really good news. I think all it needs to be is a continuation of 2. 5 to 3 growth in the economy. The u. S. Private sector is doing better than most people think. As you go around the country you hear entrepreneurs, businesses doing well because of low energy costs. You hear about the Housing Market improving. And you hear about innovation and productivity. A lot of the best stuff going on around the world in terms of innovation is in the u. S. I think the u. S. Private sector is doing a lot better than most people think. Its doing well enough to continue the momentum on the market. About a 17 times p e ratio the s p 500 is not in bubble territory. Its not overextended. I would say stay up to weight on u. S. Equities and buy on setb k setbacks. Im glad you brought up valuations, michael, at some point you have to look at the valuations and wonder when we start looking expensive given what were seeing in the economy and the Global Economy and with Revenue Growth. Its true. But at the same time with low Interest Rates, many of our members at tiger 21 are trying to figure out where to put their money and the momentum is good. I think jim had it just about right. Having said that last year was such a great market, some of our members are nervous about where its going from here. Who are your members and what sort of sentiment do they have right now in the stock market . Tiger 21 is the Largest Network of private investors, High Net Worth investors, about 220 members managing over 2 billion of their own assets. Its surprising how pessimistic they are worse than 2013 in terms of returns. I dont think they are pessimistic, its that 2013 was so spectacular they are just used to a reversion to the mean in everything they do and they are wondering particularly with qe continuing how long this can go on. Michael, they have access, of course, to more investments than a lot of people watching at home. Right. They in theory have the expert analysis as well to get them there. What are the hot areas for you . I mean, theres a lot of money still in private equity. Actually the big story for our members is private equity. Since 2008 all of the growth in our equity exposure has been private equity. But i think the difference is these arent passive investments. This is an opportunity to roll up our shirtsleeves and actually get involved, so its not simply a market return. Its where people can use their skills. Yeah. Jim, let me ask you, i really admire the optimism that you continually bring to the conversation and you manage a huge amount of money, we should note that. But one of the reasons why the market, jim, did so well last year is because ceos saw fit to buy back half a trillion dollars of their own stock. I imagine now with january being relatively flat, not really going anywhere, that the conversation behind closed doors may be changing slightly. They may be saying, actually, am i safe to buy my stock here when people look back at that activity 12 months down the line, will the market have moved sufficiently to say that that was a good way to spend our cash. Can you give us any color on that, jim . I think youre right, simon. I think that buyback activity may slow down. But do remember that theres a bit more of the animal spirits around in terms of other corporate activity including acquisitions, so i think acquisitions and maybe even Capital Investment to improve during the year which will all be good for profits. So, im not as pessimistic to take that one data point. I think there are a number of other data points that may turn negative. Commodities is a supply story. They may remain fairly weak. We got davos this week and europe. When i talk privately with European Business people, they are pretty pessimistic about things in the euro zone with some reason, so you may get some of these things going on to create a setback. Dont forget to buy u. S. Equities if that happens. And very quickly, does that mean you like domestic equities . Those companies with more exposure in the United States versus the multinationals . Absolutely. I would buy us towards small and midcaps that tend to be more domestic. I would tend to be quite wary of any companies that are too much linked into commodities because of the oversupply. And i would be concerned about just coming into the results season. Id be concerned about anything thats too much linked into the pc. That seems to be going into a tailspin quicker than most other people realize. Tech could be okay but not the pc area. A lot of it has to do with windows 8 and windows 7 if you believe hp. Guys, well leave it there. Michael sonnenfeld. Thank you. Speaking of tech weve got diverging views on apple coming out. And josh lipton is here to explain. Morning, gosh. Hey, carl, yeah, before apple results next week analysts weighing in this morning about different views where the stock heads from here. Apple stock has not kicked off the year with a bang, its down 3 so far in 2014. That, of course, after a big move, since hitting its low in late june of 388 its up 40 . The team at stock gen arent big fans and they put it to a hold, only 20 of analysts covi s cov apple have a hold rating on the stock. Their point is the global handset market was strong in q4 with volumes up 10 year over year. Usually you would expect apple to outperform the market when it releases new products but stock gen said its checks indicate that volumes may come in below expectations. Also they were telling clients with the lower price 5c in the mix they said investors should expect the average selling price for q1 to be 4 lower. A different view at susquehanna. Their analysts are bulled up on apple. They call it the top idea for 2014. They say theres little question that the iphone 5s has been a success and they expect the iphone 6 to be a big catalyst and they are looking for a july launch which they say isnt reflected in the streets estimates and they believe that the stock looks attractively valued. Who is right . We could have a better sense when apple reports results on january 27th after the close. Simon, back to you. Okay, thank you very much, josh. The northeast is bracing for its second big winter storm of the new year and its already caused federal offices in d. C. To close down. The weather channels jim cantore is in d. C. With the very latest, so here we go again, jim. Reporter yeah, simon. This looks like it will be for real. If you go back and look at all the weather statistics which we love to do as meteorologists, you have to go all the way back to january 26th of 2011 before we had the last 2inch snowfall right here where im standing, the moral of the story is weve had a few busts along the way, but this one will be a big hitter for the district and especially for the evening rush. That was the forecast all along. Its starting to happen now and you can see the visibilities starting to go down and light snow at this time, but you go just a few miles off to my northwest, four or five miles and its already starting to accumulate on the ground and up toward frederick, maryland, a half inch to an inch of snow on the ground about 50 miles away. Its coming in and will only get heavier this afternoon and obviously a good choice to keep the kids at home and close the federal offices. The big hope now is, is we can have mass transit cooperate swimmingly. Now youve got the big busses, the snows coming down and one of those babe jackknifes and you have people sitting on the roads for hours until they can get that cleared up especially if we start snowing an inch or two an hour and thats the big concern this afternoon. This is a huge impact for air and ground travel all the way up into boston by this evening. Were going to have many, many areas that will be pretty much shut down in terms of any types of travel. People need to get home and hunker down and wait this one out because really by tomorrow at this time, most areas with the exception of possibly boston and the east coast of new england will be out of it. And then well just deal with the wind and the bitterly cold temperatures to follow. Were talking about windchills here even tomorrow morning that will be 10 to 15 below zero. Simon, back to you. Okay, thank you very much. Reporter bye, buddy. Lets head to dominick chu in the meantime. And get a quick market flash. Blackberry shares are up 8 , the company is getting a Big Government contract over the weekend it announced this. 80,000 blackberry devices will work on the defense departments Management System at the end of the month. If you recall, the stock rose 6 on friday after a Research Report from citron suggested they had a minimum price target of 15 bucks, again, some more positive news coming out for blackberry, carl, back to you. Thanks so much. The activist investor strikes again dan loeb revealing that third points largest investment is . Dow chemical. Urging the company to spin off part of its business. Faber will have some details on that when squawk on the street returns. 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. This is an alltime high on Delta Air Lines topping estimates and projecting strong growth for the Current Quarter and year. Our phil lebeau back at hq with more on their numbers. We talked about how delta would start the Airlines Earnings parade with big numbers, they did not disappoint this morning. Earnings coming in two cents better than the street expected. Revenue strong in the Fourth Quarter and we knew it would be because december they were saying that passenger revenue would be way above estimates. There you see earnings and revenue coming in better than expected. What was driving it in the Fourth Quarter . December passenger revenue was surging. In fact, they saw a big increase in passenger revenue. Overall the annual earnings were up by 1. 1 billion. Its been a long time since weve seen that from an airline where they can increase annual earnings like that and as we mentioned the Fourth Quarter driven by stronger passenger revenue. Theyve been maintaining their capacity and actually increasing it slightly and starting to see profit margin growth. One reason the stock is up more than 3 today, they are forecasting strong operating margins in the First Quarter up in the range of 6 to 8 and it also helps, guys, when you have jet fuel costs in a relatively tight range. Jet fuel costs for all of 2013, david, down 91 million. Not very often that the airlines can benefit from jet fuel not going up, but you put that along with an increased revenue and thats why you see delta shares now trading at an alltime high. Guys, back to you. How about those margins . Theyve got them. Thanks very much, phil lebeau. Want to move on to dow chemical shares which can be up 7. 5 in early trading still up 5. 3 on news we first brought you that dan loebs Third Point Hedge Fund has made dow chemical its largest single position a 1. 3 billion stake in dow chemical which will make third point amongst the top ten shareholders in the company and a letter that was released by third point this morning, details its views about the companys future and its hopes that it will engage advisers to consider a Strategic Review under which it would potentially split off its petrochemical unit from specialty chemical business. Essentially creating two separate companies. One being jettison, that being petrochemicals. Dan loeb going on in the letter to talk about the strategy at the company which he believes has been faulty, where it has been to migrate downstream to supposedly earn higher margins to become more specialty, that is in petrochemicals, and to increase the number of customerfacing prod dugts but saying, hey, the shale revolution in north america, the incredible drop in Natural Gas Prices which is a feedstock for much of that business has actually made upstream a Better Business to be in, you know, he doesnt like it, he would rather see it separated he believes. Great strides can be made in profitability and cash flow for the company. Word to separate out those businesses. It is a constructive letter. It is not an attack in any way. Andrew liverwas aware of loebs foray into his company stock. In fact, prior to joining us on squawk box this morning, i dont know if we have it, but if we do at this point we can show you Andrew Liveris joined us moments before we learned of mr. Loebs interest in his country. What he had to say on the subject of activism. We should all be thinking like the nelson peltz. I have no notion with people coming into your stock and saying heres better ways to get things done, but what you got to be doing as management is thinking about those ways which i believe we at dow have been doing. I want to hone in on a point if you look at Something Like my Balance Sheet which the best its been in about a decade, weve got expensive items like the preferreds from warren buffett. The hope is if you see a significant rise in the stock price above 52, for example, that expensive preferred he was mentioning would be converted to common. Warren buffett. Well see what the companys response is, but this is something thats going to take some time to play out. Loeb intentionally came with the position after the filing deadline for nominating directors, so theres not going to be any proxy fight in the nearterm future at all here. In fact, it would appear to be a position in which he will wait sometime. But then in the belief that other top ten shareholders support his point of view certainly will be applying pressure to see if they can get the ends that they are looking for. Third point for its part also up about 25 last year. Of course, underperforming the s p but outperforming many other hedge funds. I wonder if theres any sense that dow would actually go through with this and spin off the petrochemical business. Do you have any intel on that . At this point not a lot to share with you. Well see what the company has to say and whether it feels an obligation in part to put something out along those lines. Liveris seemed open. And its not as if theyre not aware of that. The main concern may be related to the integrated nature of their portfolio overall particularly in that business but loeb has counterarguments about why he believes that integration is not vital to the company. Thank you, david. Coming up on the program social Networking Companies have been battling it out over pictures and chat, but whats the next big battleground for these stocks . Well have the answer after the break. [ male announcer ] what if a Small Company became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. I nethats my geico digital wim. 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. 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. Everything looking good. Velocity 1,200 feet per second. [ man 2 ] your looking great to us, eagle. 2,000 feet. Still looking very good. 1,400 feet. [ male announcer ] funny thing happens when you shoot for the moon. Ahh, thats affirmative. [ male announcer ] you get there. Youre a go for landing, over. [ male announcer ] the all new cadillac cts, the 2014 motor trend car of the year. [ 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 a lot of trouble for retailers lately. Target struggling after the data breach and getting a downgrade this morning at cowan, as people like best buy sees weakened Holiday Shopping and jcpenney closing doors, could it signal trouble ahead for retailers . And james fallon joins us on the news line. Good to talk to you again. Good morning. Cowans point is not only is the breach difficult but theyll be in the mode of cash preservation. The title of the report is buy, buy, buyback, do you think its that dire . I think target faces some challenges, as do a lot of retailers in that segment. I mean, obviously, there will be customer reaction against going to target. They had to get over that at christmastime by offering 10 off the entire store. But the more the reports about the data breach go on, the more consumer uncertainty will grow. Plus they had challenges even before the data breach. Yeah. Have you sensed promotions bleeding more into january or at a bigger level into january than you would have expected . I think promotions have bled into january more than expected. It will be key around president s day and obviously once the spring merchandise really starts hitting the store floors and the promotions continue. Obviously the vendors have yet to report numbers and thats those are the ones who will be squeezed with the promotions definitely. Its been reported in berlin that the germans have uncovered up to 16 million compromised online accounts. The events at target just dont seem to be isolated. Is the industry i mean, how would you gauge the mood in the industry at the moment and a general nervousness about preserving cash or having to deal with what seems almost to be like a sort of damoclese hanging over them. Look at what happened with tjx a few years ago and the length of time it took them to deal with the issue, it was a several hundred million charge to their bottom line. And i think everyone obviously at retail is scurrying around trying to find out if theyve been breached. There are up to six other retailers that have yet to be identified. If it, then, goes global, i mean, thats a major problem. I mean, and its going to raise consumer uncertainty everywhere. James, there are those, our own jim cramer says he doesnt trust the group at large. But stern upgrades gap from a sell all the way to a buy. They say there were not many, but there were some holiday winners and that the comps will obviously be easier in 2014. Is there any element of the group that you think actually is poised to accelerate rather than the opposite . I mean, obviously gap is doing well but they had their struggles in the u. S. Macys continues to motor ahead at the higher end and in ord and nordstroms continues to do well. But across the board they arent seeing the buoyancy that they were hoping to see like they did this time last year. Were always entering the First Quarter and the end of the quarter where retailers feel good times are back and around the third and Fourth Quarters they get a slap in the face. What should they be doing exactly . Is it cost cutting and reorganizing . Is it focusing internationally or perhaps beefing up their Online Presence . In a sense its almost all three. I think that cost cutting, america remains overstored. And obviously the problems at jcpenney at sears, at kmart indicate that. I think International Expansion where possible is obviously a strategy but shouldnt be see as a be all and end all. And online is increasingly important, but obviously retailers as they learned at the Holiday Season online growth basically eats into brick and mortar growth. Its not as if the consumer is spending double basically. So, its to find this balance between the brick and mortar and online world and that will take several years if not longer. Jimmy fallon as one of our viewers points out. Not that one. He makes a lot more money than i do. Taking time to talk retail. And target shares hitting a new intraday low, 52week low. With facebook expected to announce a news reader app in the coming weeks all eyes are on how social media stocks will leverage new readers as an advertising goal mine. Julia boorstin joins us with more on the story and explain what a news reader is, julia, good morning. Good morning to you, simon. Heres why news readers will be valuable, they aggregate content from across sites and creates a virtual magazine of sorts they can keep readers engaged rather than have them leave for separate news sites and they can draw more ad dollars. Facebook is expected to launch a news reader app called paper. A pew study last fall found nearly a third of all u. S. Adults get news on facebook. Its been trying to drive real time events with facebook launching a trending feature to show what news people were talking about just last week. Linkedin relaunched pulse this last fall after acquiring the company for 90 million in april and twitter a natural place to follow news has been working to make it easier to follow conversations about whats happening. Rbcs mark mahaney said the Companies Want to offer users more tools while better targeting ads. Some of these Companies Like a twitter and a facebook what peoples news interests are tell them something about that person. Those companies then, twitter and facebook, can then can go to advertisers with supposedly but probably accurately a better description of what that user is and, therefore, allow advertisers to better target that user. One private player in this space, flip board aggregates news articles into a personalized virtual magazine. In december it raised 50 million from goldman sachs, Kliner Perkins and others at an 800 million valuation. Flip board could be an acquisition target for twitter or yahoo or others and well see if they opt out to build their own alternative rather than buy a company like flip board. Back over to you. All right. An interesting paradigm shift in the way we get news. Julia boorstin, thanks very much. Straight ahead, hilton having a bit of a rocky ride since its ipo back in december. It is higher. 11 different firms initiated coverage on the stock today as the lockup expires and well talk to two of them after the break. [ intercom ] drivers, to your marks. Go [ male announcer ] its chaos out there. But the mclass sees in your blind spot. Pulls you back into your lane. Even brakes all by itself. Its almost like it couldnt crash. Even if it tried. The 2014 mclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. See your authorized dealer for exceptional offers voseeker of the sublime. Ro. 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. About an hour into trading some of the stories were talking about 7 31 on the west coast and 10 31 on wall street, alcoa is up 6 and jpmorgan jup grading from overweight to neutral and citing a bigger aluminum market and Starboard Value is calling on Darden Restaurants to delay its planned spinoff of red lockster, they sent a letter to darden ceo and board urging the company to consider other way of boosting shareholder value including cost cuts and lock heed rising to a new 52week high. No fewer than 11 fresh Research Notes are out this morning on hilton as the 48day lockup period expires so banks and brokers involved in the hotel giants ipo back on december 11th. Two leading analysts join us now, Joel Simpkins and joel klatt from jpmorgan. Both have 25 price targets and an outperform or overweight rating. Everybody seems united theres a Great Management Team at hilton, for people like you its really about the type line. You come back time and time again to the growth that theyre exhibiting. Are you sure its quality growth and not just a franchising of the brands . Well, its a combination of management and franchising hotels and it is global. Hilton is following a strategy that merritt and starwood and others in the lodging sector are doing and taking advantage of the demand for Global Brands outside the u. S. So, we do think the pipeline is quality. Whats important for the pipeline is that it generates and stimulates attractive fee growth and for the next couple years and as far as the eye can see, we should have nice recurring low double digit fee growth and that should be a segment that gets a relatively higher valuation multiple. The People Publishing today, 5 of the 11 are neutral or more positive, 23 to 27 is the price range. Deutsche bank is the most enthusiastic at 27 a share. How did you get to the valuation that youre at now . Let me mention that last week morning star rated hilton a sell and put a price target of 16 on it because in their view the street is overestimating the longterm growth potential, the cyclicality of the business and the significant Capital Expenditures they say that it will require for the hiltonowned businesses. How would you respond to that more bearish view . We certainly disagree with that view, obviously were outperform with a 25 target price and we see the values for starwood and hyatt and marriott and these are the comparables and we feel were in the middle inings of the current lodging cycle and we think the outlook for the next couple years looks encouraging. As joe mentioned earlier theres a big runway for International Growth opportunities with hilton with 40 million members in its database. Independent hotels want to affiliate with its brand. If the elephant standing in the room is blackstone which has still 76 of the voting power you describe it, hilton, as a controlled company, therefore, and presumably they will want to exit their stake when the lockups start expiring in 180 days. Thats a significant headwind potentially, joseph, isnt it . The answer to that is it depends on where the fundamentals are and where the sentiment is. At times selling stock could enhance liquidity with a trading liquidity of the stock, so it doesnt necessarily have to be this huge overhang or this huge risk. But just to go back on the lodging fundamentals and when growth accelerates and thats certainly our view for 14 over the last 25 years 90 of the time when the growth accelerates, the stocks tend to outperform the s p 500 and if you look back to 2013, the growth comparisons are not very difficult. We had Group Business lag. We had government business that was very depressed. We had the fiscal crisis in the 3q and 4q and comparisons in europe and china and asiapacific in general are relatively easy, so there are things to get excited about on a global basis. Im just curious from a consumer point of view and the strategic perspective, how does the hotel group like a hilton get its Customer Loyalty program in check and get customers coming back in an era of priceline and orbitz where it becomes all about pricing . This is an area that the new Management Team has done a great job with over the last fiveplus years. If you look back five years ago they had about 25 or less million members in their database and roughly 39 million. They used to have blackout dates that made it fairly prohibitive to use their reward points and now theyve really kind of migrated that. Theyve done a good job in terms of ecommerce channels, but, again, they have a broad brand suite and consumers whether they are staying at a hilton garden inn, once in the system the switching costs are pretty high and no difference between marriott or stoorwood, theres pretty good Customer Loyalty once they get people locked in. Its good to sue both. Joel simpkins and joel griefkin. According to search metrics it appears expedia lost 25 of its Search Visibility via google over possible unnatural links. Lets bring in jon fortt. I dont under what it means either. It sounds scandalous. Unnatural links. We should show the stock. Expedia has been hit on this tweet out. Tell us whats going on here. Search traffic is huge for a site like expedia, people are looking for destinations and the cheapest flight from here there and often use search. Its a reputation business, the way googles algorithm is set up, if a bunch of sites link to you for a certain reason, oit means you are more credible and you show up higher in the Search Rankings and people are more likely to click on your links and what a light of sites do they pay bloggers to link to them. Thats illegal under googles rules but they do it anyway. Typically big brands like expedia that also pay for ads the scuttlebutt in the community is they dont get penalized for this sort of thing, its smaller sites like rap genius, they get penalized, that happens. Its a big deal. We dont know here, we dont know googles done that. I reached out to expedia and still not got a response to them but we think and suspect that google is punishing them for doing something it doesnt like. The reason we suspect that is people have looked at other sites search traffic and it hasnt fallen off the same way so this isnt seasonal. Theres no other, you know, easy explanation for why this kind of dropoff has happened. Its the kind of thing that happens when there has been this kind of penalty. And people have been talking about it in the Search Engine optimization community. It is a huge conflict of interest, though. If ryanairs ceo is correct when he let slip in that interview a couple weeks ago that google is increasingly going to become an Online Travel agency itself, how on earth will it square that with all these other pate participants . I think another issue that everybody including investors should be thinking about this is googles core business. Smart home is not. If this is a problem that they need to fix, they dont need individuals searching around for penalizing expedia, they need a big technological solution for this. I think identify almost understand it now, thank you, jon. I almost did a good job there. You did a good job. Im just very slow. Lets get over to dominick chu and check in on exxon today. What a story, dom. What a story is right, people look at exxonmobil and the stock is taking a dip after bank of america downgraded it from a neutral rating to a buy and reduces its price target to 106 bucks a share to 110 a share and said its nearterm performance could be tempered by headwinds outside of hs control and that downgrade hitting the xom shares. Dominick chu, thanks very much. Youve heard of the bitcoin atms but how exactly do they work . Well, weve got the maker of one of the atms coming on with us and hell tell us everything about the machines, what they do, and whether theyre safe, after the break. 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. 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Tdd 18886282419 all with no trade minimum. And only 8. 95 a trade. Tdd 18886282419 open an account and earn 300 commissionfree online trades. Call 18886282419 to learn more. Tdd 18886282419 so you can take charge of your trading. Well, if youre looking to get a piece of the bitcoin action without mining it or going through exchanges, a bitcoin atm promises to make it super easy to turn your dollars into cryptocash like this one made by lamassu, is it work or is it even legal . Zach is the ceo at lamussa, i know you put your cash in the machine and you cant get your cash out. Well, its actually an easy machine to use. Cash to bitcoin in 15 seconds and you scan in your bitcoin address and put in cash and send and you have the bitcoins within a matter of seconds. Its very simple to use. Bitcoin isnt exactly legal currency, isnt legal tender in this country. So, is it legal to have an atm . How does that work . Bitcoin is definitely legal as it stands right now. And all the Government Agencies have been saying the same thing. In fact, some of the governing agencies hold quite a bit of bitcoin and they plan to sell it so its obviously not illegal as far as theyre concerned. As far as the Regulatory Environment and where to place these and what licenses you need, well, thats a good question. It seems to be a lot more difficult in the u. S. Than it is in other places such as our neighbors in canada. Weve seen a number of regulators try to take on this issue, but so far its not regulated. So, is it really safe for the public to go out and use it and use atms and use their hardearned cash to transfer it into bitcoin . Well, its definitely safe for the users. In fact, bitcoin as an ecommerce is a lot safer than the other Payment Methods that we have today. Theyre a lot safer than credit cards. Fraud is almost impossible with bitcoin. And with credit cards its happening all the time. Target just had a big problem with it. Theyre always chargebacks and stolen credit cards and it makes it very difficult for merchants to use and end users. Bitcoin is a much Better Technology for using on the internet. Im looking at it there. I see on the internet a bitcoin is worth 898. 90, i find it quite difficult to get that much into that machine, wouldnt i . Real money . I mean, how many currencies does it do . It doesnt look very technical. Well, the beautiful thing about bitcoin is you dont have to buy a whole one. You can buy any small point. You can put in 1 into a machine and get the equivalent of 1. 1 millibitcoin. And you can start with 100 and use it at overstock. Com to buy something you need and i think youll see its the easiest purchase experience youve ever had on the internet. Why couldnt i umes the dollars in my hand to go and buy something and not risk the plunge in value . Well, i mean, how would you use the hundred dollars you have in your wallet to buy something online . How would you transfer the 100 you have in your wallet overseas immediately without any middle men . So, bitcoin has certain advantages that cash doesnt. It definitely has advantages that credit cards dont have. As far as the price is concerned, its true, the price is going up and down all the time. Its definitely its definitely fluctuating but thats only one part of bitcoin. Bitcoin is a currency and a Payment Method and its a whole additional platform for ecommerce and many of the things we havent actually even seen yet. Its interesting value propositions given all the security risks were seeing with credit cards and the problems with the other retailers. Youre planning to bring one to new york, is that right . Yes, we have one on order and its going to new york city, the question remains what is the Regulatory Environment in new york. Now currently talking about a bit license they want to have in new york. Hopefully that will make it easier than a Money Services business license that may be required that would be very difficult for Small Businesses to obtain. In the meantime, zach, its a wonderful way of making money disappear. Because you have this anonymous bitcoin on your folio or whatever it is. Its ideal for Money Laundering. Isnt assisting Money Laundering in this country a crime . Well, assisting Money Laundering is definitely a crime. But bitcoin actually isnt as anonymous as some people think. In fact, the dollar is still a much better tool for Money Laundering than bitcoin is. Bitcoin is a public ledger. Its very easy to track. If youre a money launderer, you are probably better off sticking to the dollar than you are sticking to bitcoin. Okay, thanks for the advice. Thanks for the advice. Well look for the atms, hard to believe, bitcoin atms, the ceo of lamussu, the company that makes them. How well does amazon know you . Well, maybe better than you think. Its trying to predetect what you want to buy what you want to buy before you buy it. Well talk about it later on. Squawk on the street is back, monday morning on cnbc. [ 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. Body pain . Back pain . Try bayer back and body. Its bayer aspirin plus a special pain relief booster, to relieve sore backs and soothe aching muscles fast. Get moving again, with bayer back and body. Lets get over to the cme group in chicago this morning and get the santelli exchange. Rick . Good morning, carl. You know, many are talking, of course, and still debating a little over a week agos very weak u. S. Employment report. All of us, including myself, most of this traders and sources i deal with on this floor and through the airwaves, believe that the economy and specifically the jobs market is not nearly as weak as the last report. You need to take more of an averaging approach considering the revisions that were positive and some of the loftier numbers that weve had. I understand that. Theres also a notion if things are getting this much better around the globe why do we need so much central bank test tubes if we really have the growth . Look at whats going on with regard to china and tens of billions that continue to add into their economy in the form of liquidity injections and, yes, maybe a 7 handle on gdps enviable developed economy but looking at the history of china it is somewhat of a low t watermark. Now, lets consider whats going on here with regard to the weak and sometimes spotty and sometimes drong strong data in the u. S. The taper seems to be on track. Many believe in the january meeting were going to see it ramp up a bit. Lets look at things logically. Ive said many times that all stimulus is spongeable. Meaning if u. S. Adds liquidity or bank of japan adds liquidity theres no boundary, to liquidity and the impact on the Global Economy. Lets enter a name. Lets enter peter hooper. Okay . Hess a chief economist and a manage b director at deutsche bank. Deutsche bank is by far the iconic bank. Always on the inflation fighting scene with germany as a whole. If you follow many of his interviews from reuters to most recent on bloomberg what you will find is hes making comments like maybe we have to move towards a more traditional qe or the ecb may move more towards a more traditional qe. Why is this important . If youve been keeping up a lot of the muches that occurred pushing rates down, specific cry by banks in Southern Europe, look at the charts of spanish tenyear, portuguese tenyear. Weve done that. A lot of test tubing can show positive things like show Interest Rates but does it generate the type of growth thats self sustaining. It seems like the fix is in. Its seems as though the Southern European Interest Rates are getting to the point where, hey, they almost seem to be empowered by the notion that somebody is going to be on the Balance Sheet to help them with these purchases. Is it going to be long qe . Why is it important . The bigger the qes around the globe, the bigger is question how its going to turn out. In the end can i tell you its a fat tail, no . But it certainly is a balancing argument to all the cumbayahs coming out of the stabilization the last several years and future growth for 2014 for the eurozone. Carl, back to you. Thats why we turn to you for some of those balancing arguments. Thanks a lot. Tweet time. Amazon wants to give you what you want before you want it. The company has filed for a patent shipping system that would anticipate what customers want to buy to reduce shipping time. Were asking you to help amazon to come up with a slogan for a speedier service. Complete the following, amazon, we deliver it faster than blank. Tweet us and we will read your answers next. 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. [ male announcer ] a car that is able to see, to calculate, to think and can respond to what it encounters. Even if that means completely stopping itself. Its the stuff of science fiction. Minus the fiction. The 2014 eclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. With all the opinions about stocks out there, how do you know which ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of fidelity investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Amazon has filed for a patent system which anticipate what customers buy to reduce shipping time. This morning were asking you to help amazon come up with a slogan for this speedier service. Just complete following. Amazon, we deliver faster than what . David writes, amazon delivers faster than the speed of thought. Not bad. One writes, we deliver it faster than yesterday. And matt write, we deliver it faster than you can email your cancelation. A lot of jokes about what is the service you anticipate they return to amazon after they ship it to you. It is fascinating. I thought someone was going to make a joke about the drones, faster than the drone delivery. You spend your entire time opening boxes and wrapping them up again and sending them back, it would be rid clousz. Meantime, dow is having trouble getting out of the red. If you take goldman, ibm, j and j and travel eretravelers, you negative points right there which is more than offsetting what visa managed to contribute. We failed to break even for the year which is 165. 76 and side ways ways to down continues to be the story. Look at nasdaq. It continues to go higher. Today nasdaq stocks, the technology sector, seems to be doing pretty nicely. The story right now, earnings with the taper sort of baked in. The federal reserves next move. Its earnings, specific stock stories. One that i was watching today is abm deciding to buy back the south korean brewery. I thought this was interesting in light of last weeks deal buying beam, jim beam, global domination for the beer and spirits makers. David, i was just talking to you about the fact that pretty good deal even though it seems strange that theyre paying three times what they actually sold oriental brewery for. Because it turns out they have this clause in it they can buy it back within five years at 11 times ebitda earnings and the multiples have been higher for the south korean and asian breweries because its such a hot spot for growth. I thought that was interesting. That was turn, i believe, when they were trying to pair their Balance Sheet a bit and now they tell people it will be two times ebitda in terms of leverage ratio. Not quite as soon as they anticipated. Big in south korea . More. 2 growth since 2009 through 2012 for the Beer Industry and south korea. And this is its a dueopoly. Biggest market share. The real growth is in irish whiskey. And bourbon. Thats where its at. In in country. Are we going to talk milan in half an hour . Ive got so many things to tell you about. Im bursting at the seams. I can tell you. In the meantime, if youre just joining us, heres what you missed. Welcome to squawk on the street. Heres whats happened so far. Just got off the phone with nelson peltz and heres the headline. As part of his agreement to join the board, he will not be pushing for a merger between mondayelez and pepsi. We should all be thinking nike the nelson peltz. I have no problem with the notion of people coming into the stock and iing heres better ways to get things done. What youve got to do is be thinking about those ways which i believe we at dow have been doing. Ceo of dow chemical has a new very large shareholder in the ranks at dow and active shareholder at bay. Dan lobes third point has taken 1. 3 billion possession in dow chemical. Its constructive activism, if you will, for mr. Lobe as opposed to the very nasty activism he sometimes will engage in. The numbers so far, carl, this is a day where between activism and earnings, it is a very different tone from wall street. Yes. Dont you ever talk dont you ever talk about me. Dont you open your mouth about the best stock picker in the game. [ bell ringing ] a lot of the best stuff thats going on around the world in terms of innovation is in the u. S. So i think the u. S. Private sector is doing a lot better than most people think. Good tuesday morning. Were live here at post 9 of the New York Stock Exchange with a check on the markets. Dow being dragged down by companies who had a pretty good quarter. J and j, travelers both have managed to fail to get out of the red today. Thats bringing us down 42 points. S p is up 3 and a 30. And the nasdaq up some 15 points. Shares of verizon slipping despite Fourth Quarter earnings that beat analyst estimates. Verizon will buy intels web tv unit for an undisclosed price. Shares of baker hughes moving to the upside after Fourth Quarter numbers did beat consensus. Profit rs of the Oil Field Services company were helped by a Strong Performance in the middle east and africa. If you live on the east coast get ready for snow. A massive winter storm is already shut down government offices in washington. Could dump up to a foot of snow on new york, boston, and philadelphia. Keep it here. Well tell you what it could mean for Business Travel by air. Plus, amazon is entering the mind reading business, so to speak. The shipping giant patenting technology that would let it predict what you want to buy before you actually buy it. Well tell you how it all works in a moment. And the luxury sector is looking strong. The number of people who bought luxury goods topped 330 million last year and that number only expected to multiply. So what can companies do to grab a share of this growing market . Well talk to the former ceo of chanel later this hour. The massive storm looks to be packing a major punch now air travel. 2,000 flights have been delayed or canceled. Things most likely going to get worse for the airlines. For more, lets bring in jim, an Airline Analyst with s p capital iq. We want to get to delta earnings in a moment but, first, the weather on our minds. Now were getting a second major storm disrupting travel. How disruptive is it for the airlines and their business . Yeah, i think this is going to be a very disruptive storm and were off to a very poor start to a winter season. Theres going to be obviously tens of millions of dollars of additional costs added. Lost Revenue Opportunities as passengers cancel their flights. This is another in a string of bad weather related events for the airlines. How adept are the airlines in managing storms like this . I would imagine theyve gotten better. We saw after the polar vortex all the flight cancelations. Things resumed pretty smoothly. I think it depends on the carrier and the size of the carrier. I think we did see some carriers like jetblue do a poor job react to the weather last time around and delta, united, american with bigger infrastructure, bigger capacity can adjust better than they do. Since youre distinguishing the carriers, lets talk about earnings, especially for dale with a blowout quarter. Did delta do well because of overall tail winds for the industry . Things are looking better, airlines are in the black . Is there something specifically that delta is doing right . Certainly a part of it. Airline fundamentals have never been stronger. The airlines have done a great job managing capacity. Delta air is leading the way in transformed u. S. Industry. Theyre well ahead of the pact in unit premiums. They integrated with Northwest Airlines and they are reaping the benefits. How much of a game changer was going vertical on energy and fuel . Can we quantify to what degree that added to the quarter . Yeah, the refinery they bought last year is not profitable for them still so its a drag on the numbers. They did this by having overall lower fuel costs because the Energy Prices are lower and they did have hedging games during the quarter. Mostly it came on the back of a Strong Revenue performance and good nonfield cost control. They talk about adding capacity to the year. 2 to 3 . Can we still say overall the industry is being disciplined and obviously pretty flush times . Yes, we consider 2 to 3 is self control, especially the way theyre doing it is replacing smaller planes with larger ones and theyre going get a unit revenue premium on those types of planes and give passengers a better experience at the same time. As the u. S. Economy and Global Economy starts looking better, Business Travel outlook is certainly higher. I saw that in your note. What is delta doing specifically to corporate traveler better than of others . Delta has given a good travel experience to the customer while others have dropped the ball, mainly united where they have had problems getting their customer wheres they need to be sometimes. What is the American Us Airways merger mean for delta . Does it help to have a bigger stronger competitor at all . In the long run its going to be a fierce competitor to give them problems down the road maybe. Right now what it means is continued capacity discipline for the industry. Theres not going to be a lot of capacity coming out of american or u. S airways as they rationalize their fleet. Its going to help keep capacity under control and keep Pricing Power for the airlines. Jim, theres always a sentiment question when it comes to airlines because theres a whole college of invest that says dont ever touch these names. It may look good but youre going to get burned eventually. Has that been completely turned over or are there still people who are negative and is that giving us some kind of wall of worry to climb in the sector . Well, obviously its still high risk industry. Its sill cyclical industry thats going to see boons and busts. A company like delta has transformed through debt reduction, giving cash back to shareholders by buying back stock and dividends. When they had 8 billion onetime reversal of a tax carry forward. Thats turned it positive for the first time in years. Its a much healthier company and much healthier industry that i think is going to continue to attract investors. Are we going to see higher ticket fares this year as a result of airlines looking healthier . I think ticket fares are going up. If you look at inflation adjusted basis its still a good bargain when you travel around the country and throughout the world. Thanks for filling us in on the airline industry. Brace for another winter storm. Better earnings though from delta. Jim, thanks. Meantime, amazon getting a new patent for what it calls annis atory system. It predicts your future purchases based on things such as previous buys and site searches. Jon fortt has more on this. I guess we know when home depot prepares for a hurricane theyre going bring in more shovels. Is it Something Like that . I think its Something Like that. Amazon has been in the mind reading business for a long time. When you go to their home page theyve got recommendations and send you emails that have clearly been kind of snooping in on their click activity. I think this is more about using what they know to cut their own costs. Remember for a lot of primary members they guaranteed theyre going to get that item to you within two days. This might allow them to move the item closer to you before you order it so they dont have to use planes which are more expensive. They can use trucks which are less expensive. Lts, if theyre going to deliver stuff to you by drone theyve got to have it close for the drone to deliver it first. And less reliant on ups or some other vendor that you obviously cant always count on. Well, in the patent filing they still talk about common carriers like ups doing a majority of the freight. Its mostly based on keeping the package on the ground where its cheaper as opposed to having to fly it and incur those costs. We know a lot of ups logjam was regarding their error of planes in kentucky. Absolutely. I find it interest that amazon has been investing and focussed on this idea of faster shipping with prime, with the drones. And theyve been buying up warehouses and robots. How advanced are they versus other Online Retailers . Theyve invested a lot in their network for logistics. Thats where a lot of amazons money goes as opposed to delivering profits back to shareholders. Customers are never going to tell me can you deliver that to me a little bit more slowly and make me pay more for it. This is the primary thing hes focused on. This is another way down the line for him to be able to do that and either invest the money he would have paid for Airline Tickets in your package or maybe eventually giving some profits back to shareholders. Do you think the cost to prime goes up this year . Its already ticking higher if you want to get super saver shipping. Im not sure about prime going higher because thats an important part of their digital strategy. If they want to drive growth in digital they want hike the price. Get them in the house first and sell stuff to them later on. Razor blade thing actually works sometimes. Its amazing. Their video content also on prime has been growing tremendously. Though i wonder if an Downton Abbey plot line. Dont spoil it. The last season, that was terrible ending. Kicking off season four. A couple of surprises the past couple weeks. Interesting story, jon, thanks. All of it. Brings us to this mornings squawk on the tweet. Help amazon come up with a slow again for this new service by completing the following. Amazon, we deliver it faster than what . Tweet us at squawk street and we will get your answers later on this afternoon. I like the creative answers. Speaking of amazon, as its competitors try to get inventory closer and closer to your home. Thats increasing demand for Warehouse Space and expensive populated markets. Well tell you more about thanchts but first, Rick Santelli, taking a closer look at europe this morning. Absabsolutely. Watercooler talk. Were going get andrew to weigh in. Financial times points out, bungled mortgage products in europe. Default rates, twoyear high. All this is occurring when Interest Rates in a country like spain and portugal and weak economies are moving lower. Does that make any sense . I dont think it does. Lets see what Andrew Brenner thinks. When . Bottom of the hour. [ male announcer ] what kind of energy is so abundant, it can help provide the power for all this . Natural gas. More than ever before, americas electricity is generated by it. Exxonmobil uses advanced visualization and Drilling Technologies to produce natural gas. Powering our lives. While reducing emissions by up to 60 . Energy lives here. [announcer]. If you think the best bed for one of you might be a compromise for the other one. [woman]ask me about our tempurpedic. [announcer] theyre sleeping on the newest tempurpedic bed. The new tempur choice. [man]two people. Two remotes. [announcer] firmness settings for the head,legs,and back. And with tempur on top,that famous tempurpedic comfort comes any way you like it [woman]ask me about the lumbar button. [man]shes got her side. And ive got my side. [announcer] tempurpedic. The most highly recommended bed in america. [woman]dont touch my side all right. On the market. Take a look at the materials sector. One of the winner on the s p 500 which just flipped into negative territory. Dominic chu at headquarters with more on materials. Sarah, strong day for stocks leadably bialcoa and dow chemical. Increased price target to 15 a share. The company is seeing them hit double digit percentage increases for earnings estimates a as for dow chemical, its moving higher on word dan loebs third point has taken a seat in the company. Both companies, alcoa and whats happening with dow, helping to drive those materials stocks. Carl, back over to you. Thank you, dom. Look at the dow. Interesting, a lot of these laggards had already been in place earlier in the morning. Goldman, ibm, j and j, travelers, general electric. Even though some of the earnings out of them werent too bad and being helped by other stocks like a visa which was adding to the index. But for the time being we have taken a sharp leg down. We were down about 40 points. Now down 122 points. Interestingly, alcoa which dom was just mentioning, had it not left the dow, would be the best performing component this year by a factor of two or three. Classic timing the way they managed some of these indices. Its not in the dow and were all suffering for it as a result. Just looking at the action in europe. Looks like were still seeing gains, world stock, were strong overnight with the latest infusion of liquidity into china. So europe going smoothly. European stock up to sixyear highs. Bright spot in World Markets with the s p turning lower. Bear in mind, ibm does report tonight so people might be getting skittish of what we will be hearing tr them. In the meantime, more and more shopping continues to move online to places like amazon. The demand for warehouses and distribution facilities is bigger than over. Diana olick live in washington with more on that this morning. Hi. Hi. Youre right, amazon anticipates what you want theyre going to need a place to put it. More demand for warehouses. We called this the least sexy sector in real estate but its the hotest thanks to retails big move online. Warehouse is the strongest prospect for both investment and development in 2014. That according to the latest pwc investor survey. Two thirds of survey respondents thought they were a buy. Back in november we spoke to ceo of chambers Street Properties which went pub blig last year with a focus on warehouse. He noted that distributors are looking to shorten the time frame it takes to get goods to market. That has presented a need for new modern, more efficient warehouses. Were seeing smaller buildings being emptied and moving into these newer, more modern facilities. So were seeing a lot of major corporations, whirlpool, unilever, amazon, loads of Companies Like that taking advantage of these new developments and new trends. All right. So how to play the warehouse game. Reits. Alexander says you want to look at the smaller names, east group, egp, hes got a buy on that. And other groups include prologis and Dct Industrial and first industrial. The housing recovery, homebuilders and home improvers start to move in more products this sector is only expanding and were going to talk more about development in warehouse sectors as welcoming up on power lunch. I love that, diana. Who says warehouses are not sexy . Diana olick in washington. Lets stay with retail and focus on luxury spending. Its growing very fast. Whats the disconnect and how long can the trend continue . Well ask someone who knows a thing or two about luxury, former ceo of chanel, arie. [ 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 this magic moment voseeker of the sublime. Ro. 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. Body pain . Back pain . Try bayer back and body. Its bayer aspirin plus a special pain relief booster, to relieve sore backs and soothe aching muscles fast. Get moving again, with bayer back and body. At afraud could meanuld blower credit scores. And higher Interest Rates when you apply for a credit card. Its a problem waiting to happen. Check your credit score, check your Credit Report at experian. Com. The snow is starting to stick in the Nations Capital, here in new york as well. Check out whats happening with shares of the Security Firm that went public last september. The stock is down 7 p and trading after jpmorgan downgrades shares to knew trillion from overweight. The stock had been on fire since the beginning of the year when it announced it was buying Security Firm for a billion dollars. That hot streak coming to a bit of a close here in todays trade. Interesting debate over that name today. In the meantime, watching the markets, marginally down 40 or some odd points on the dow. Not quite session lows but awfully close as a lot of things appeared to be going the markets way. Estimating coming in on track. The taper with the fed next week would be unchanged. There has been some selling. Were getting close to a european close. Sometimes a dicey time for the u. S. Markets. In eight minutes, well see what happens both in the next hour and this afternoon. Recovering a bit from that. Yeah. Meantime, winter antique show is kicking off this week celebrating the diamond jubilee. For that and how the affluent are spending their money Arie Kopelman is the chairman of the winter antique show. He joins us this morning having braved the fdr. Happy to be here. Whats the feeling about how luxury is holding up this year versus this time last year . It was pretty good. No, luxury continues to hold up. But lets face it, it also tracks with the financial Macro Economic data. When wall street is healthy you see a lot of things healthy like luxury goods. And so there you are. Its fairly simple. Nice things are being said about bonuses at major banks. Yeah. Real estate and the cities held up pretty well. Yep. Could we be poised to set new records in luxury this year . I dont know about records but it will continue it has been b a long upward track. And that will continue. I dont think theres any question. When it does flatten out you will see market shares change a little bit. But Certain Companies will remain very, very healthy. Carl and i spend a lot of time talking about the struggles of retail right now. Jcpenney and even macys, which has been their best in class restructuring, cutting jobs. I find this bifurcation interesting. Lower end struggling. Higher end and luxury just totally doing fine. Is there a lesson there for the other rea retailors to take . A lot of people care about quality and style. And as long as that continues, it certainly will with healthy emerging markets in addition to the western markets. I think youre going to see that continue for a very long time. Were not concerned about that, frankly at chanel, and the bigger concern is, what happens to the out markets because im involved with the winter antique show. So despite the chanel and other luxury goods issues, we are very hopeful that this will be a banner year for the antique show. Youve been reading about all the records being set. More more about the decorative outs. Were very excited about this show and with wall street being where it is, we have our fingers crossed that were kicking off the 60th year on just the right foot. Theres always talk about china and whether the consumer, the highend consumer survives there or continues to prosper. Sochi is coming up and were starting to do more stories about russia and trying expatriate their money into hard goods like real estate or antiques. Where is the real strength, would you say . Right now its been mostly in the contemporary fine arts market. I think if youre going to speculate, if you look at this as an alternative aspect situation, you have to be careful. Consult your actuary tables because the cycles are going to be locker. You dont know whether its going to be 10 or 20 or 5 years before a particular market will turn around. Fine french furniture is on its butt right now and who knew . People bye that in anticipation of a turn around, i hope you live a long time. What are you saying, you have to old some antiques 1020, years to make money . You know, theres no way to know because certain pockets that take off on the short term and others that will recover over a very long period of time. So i dont think your warehousing antiques in order to make money. I think you primarily buy things to enjoy them with the hope that over the long haul they will appreciate substantially. Whats wrong with 1th century french furniture . Well, tastes do change. Its a trend. What happens is kids today, primarily, young people, even with a lot of money, theyre very interested in modernism. Mid century and so forth. So youre talking modernism and contemporary things. And you can mix that up with occasion alal antiques but in t main theyre not buying what used to be called fff, fine french furniture, because it looks a little old to them. Yeah. And something that their parents or certainly their grandparents may have mad. Thats not really true with what were trying to do with the antique show because, frankly, there are wonderful trends toward ek electicism in design where people are mixing and matching all kinds of Different Things so you can have a wonderful 18th century american high boy with a piece of contemporary glass. And we have a wonderful dealer, new dealer in the show called glass past who specializes in glass from 1870 to 170 and that kind of stuff will mix with 18th century material. So this is what its about,. All right. Coming up, the bells are about to sound across europe in just a few minutes left in europes trading day. Well have the close, details and impact on the u. S. 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. Thats a good thing, but it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, they could save you in outofpocket medical costs. Call today to request a free decision guide. With these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. Join the millions who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. And provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. European markets are closing now. All right. Stronger euro lets bring in simon hobbs as we count you down to the close in the uk and across continental europe. Simon . Looks like the microphone troubles. We will try again later. Apologize for the audio difficulty. In the meantime, dow is still down 115 points. Lets bring in art cashin, director of floor operations at ubs here at post 9 to talk about that. Art, good morning. Good morning. Can you explain what happened in the last half hour . If you live by the component you die by the component. Handful of dow stocks that mostly multinationals that got hit a little bit after 11 00. Ibm, Johnson Johnson. The viewers have to remember that the dow is weighted far differently than all the others. Everybody else is weighted by capitalization. The dow is primarily weighted by price. So if, for example, Johnson Johnson is down 2 1 2 points, thats 20 points on the dow. So you get five stocks down 20 points were down 100. You can make some comparisons. Theories around that there was some sharp futures trade after 11 00. That didnt seem to impact things because the s p is down far less than the dow is right now. Right. There had been some talk about 1840 being an interesting technical level. Had we already not been passed that point . Yeah and no. I think, now, again, not to belabor the point, if you look at friday when the dow was up, you had two stocks that contributed 75 points to a dow that was up only 31. With the changes they made in the dow, it is somewhat over leveraged right now. And because of those prices . Yeah. If you put very high price stocks in the weight shifts. Yeah. And its very easy for a stock that sells at 120 to drop three points. A stock is trading at 30, thats not going to happen. Curious, art, what is the word on the street in people talking about earnings, specific stock stories, it sounds like today . Were going to continue to watch the earnings and the big debate, are they meeting their go goals and where they are. There is residual concern about some of the backdrops, margins is a percentage of the dow. Various other things that have been warning signs. Nothing that rings an alarm bell quite yet. Thats why we do to you first, art. And you look good. Art cashin here at post 9 rchlt. Lets get to bob pisani. We do seem to have hit an air pocket. It was around 1840. Put up the s p 500. We had two groups down at 10 00 eastern time. The big one was a little after 11 00 just prior to the european close. Thats when the dow excuse me, the s p hit 1840 and that was the point. I watched the volume levels at the spider which is the s p 500 etf. We had a noticeable pickup in volume and selling activity the second it hit 1840 today. You can argue its a technical level or not but that is where the market started to move. As for the rest of the market im a little disappointed by some of the reaction to the earnings numbers. Lets look at Johnson Johnson, for example. They had a quarterly beat. Im told by guys who trade this a lot, the 2014 outlook was disappointing but it held up all right preopen and then right at the open they sold it off. Verizon beat by a penny. Never particularly convinced when a company like verizon beats by just a penny and obviously the street wasnt either. You can see it sold off right at the open. Travelers is a little harder to figure out. They had a great number, as far as i can see, the underwriting performance was terrific. Catastrophe losses were lower than expected. And yet they continue to sell this off right at the open. Verizon did not have a great month, by the way. Down 4 . I just want to note all the steel stocks weak here today and iron ore stocks as goldman was predicting lower steel prices throughout 2014 on concerns about china. Those stocks are all getting hit and all the big steel names are down as well. Guys, back to you. Cliffs is down 6 . Weve got simon hobbs back with us on the european close. There are two things that i want to draw to your attention. One is the gloomy nature of the earnings in urp today. Unilever has done okay on the merging markets. Again there as you can see. If i just show you the others, some you may not know, for example, a french Power Engineering jirngts. Dsm makes vitamins and its on the earning side. The flip side of that remains those peripheral bond markets which continue to rally like portugal which may return fully to the debt market. The yield on the tenyear fell therefore below 5 for the first time in 3 1 2 years today. Couple more things that might interest you. The president of france said maybe about to ditch his relationship of seven years after it was discovered, of course, or it was alleged that he had an affair with an actress. Hes still mum in public on that subject but a lot of speculation. In the meantime, as everybody tries to get a piece of american ceos in switzerland, it appears today in washington post. Europe one which is a news talk station in france. Try an interview with a french radio station, mr. Obama, that does not compromise with the news. Not sure what theyre saying there. Clearly im not sure what the other underlying tone of that is. Maybe lost in translation. That got some attention this morning. For more on europe lets get to Rick Santelli in chicago this morning. Down here were not worried about the affairs of franceois hollande or the mentality that hes running away from makes for interesting fodder on Trading Floors. Andrew brenner, thank you for taking the time. Quickly, im sure youre paying close attention to whats happening in france. It seems as though they just cant find the mechanism thats going to bring the economy moving to ward so they can kind of slice and dice. Any thoughts on the economy of france . No, not really. I think the French Economy has been looking bad for a long time. Im just amazed at the french bonds are trading well through uk gilts. No justity indication for it. Lets look at europe under the context of the southern economies that simon talks so fondly does every day. Hes quekt. Its up strong for the year but yet if you look at the nikkei or you look at the hang sang or our s p, not so much. In the end, how can the paper of these southern banks be as hot as some of the stocks that people are trading in the u. S. And around the globe just several months ago but yet when you dig down deep, whether its nonperforming loans, to slice and dice securities that are at a twoyear high default rate, how can we reconcile all of this, andy . Theres no way you can reconcile tenyear spanish debt right now at 372. Theyre going to be announcing within the next day or two a tenyear deal. If youring looking at where its trading against the u. S. , look at even if its trading against apple. Apple ten years, 3 5 8, aa plus. Spain is a bbb minus. 26 unemployment. We had a frent friend that just webtd through spain and he wrote about it, he talked to me about all the different projects that are not being finished. All the foreclosures that are not happening. These banks are sick. Theres no question about it. Theyre going to have massive writeoffs. Theres no justification for spain where its trading right now. But yet the fixed seems to be in. Whether you buy stocks i dont have any flesh in the game, so to me, to look at why or causeeffect relationships why stocks are up and i look at Central Banks and the southern economies and their securities, i look at their fundamentals, it doesnt add up. Where is the fat tailed to this . Where are investors sure to be found on the wrong side of the scrimmage line . Is there going to be a heads up, early warnings, a flag, something . Rick, i think as they look across the world and see more and more tapering and they realire realize the fed is going to get rid of qe, i think the people are going to look at where yields are, theyre going to say what are you doing . Lending spain money at twoyear money at 98 basis points or tenyear money at 372 or Everything Else behind it. I think spain will back up along with other countries, along with Interest Rates in general. But spain and italy, the risk doesnt justify the reward. Thanks for taking the time. Just remember, when a spanish ten against a u. S. Ten is approaching 80 basis points, boy, if you want to buy spain, what does that say about the u. S. Tenyear . Back to you, carl and simon. Nice point made, Rick Santelli in chicago. When we return, before a Major Company launches a new app how can they make sure its safe and itsth it works properly . Thats where squawk breakthrough comes in. Testing new apps forring google and microsoft. 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. 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. We are the thinkers. The job jugglers. The up allnighters. And the ones who turn ideas into action. Weve made our passions our lifes work. We strive for the moments where we can say, i did it we are entrepreneurs who started it all. With a signature. Legalzoom has helped start over 1 million businesses, turning dreamers into business owners. And were here to help start yours. It is nasty out there but do not worry, coming up, under armour just announcing the biggest deal in college sports. Were going to talk to the companys founder and ceo live. Major calls on the street today from apple to google to ge and others. Did the analysts get it right . Traders are weighing in. Delta stocks taking stock after the report but Budget Airlines more grounded . We have a high flying debate straight ahead on the halftime show at the top of the hour. Todays stock breakthrough is known for app casting. The Parent Company of this network, comcast, as the big clients. Last week it raised 43 million in funding led by goldman sachs. As hinted, may be plan for a ipo. Joining us here at post 9, good to see you. First, tell us a little bit how it works. Why would a google need to use you . What are you doing that it cant do itself. One of the things that were doing which is really unique is were testing in the wild. Meaning were testing on real devices, real configuration in the hands of real users. Community of 100,000 professional testers and theyre the ones who are actually doing the testing. It produces different rul resul all together. Youve got a front row seat. What are going to be the big trends for apps this year . So definitely mobile payments. You know, from our perspective, security around mobile payments is critical. You know, i think engaging with big brands, so today we see big brands really seeing apps but the web experience and the instore experience which you know a lot of retailer rsz actually doing. How far in advance will you get this app and how long do you test, when do you hand it back . We actually Start Testing at a really early stage. We dont just do the functional testing but usability testing. We do load testing in order to make sure it performs under load. Must be some crazy nondisclosure agreements, i would guess. Absolutely. Whats the liability risk if you miss something or youre wrong . Softwarest testing is not 100 eye enscience. We have a lot of testers. We can cover more ground more quickly. We get results faster. But, you know, things can happen. Rarely does it happen when we get used. Security concerns has been present. We have seen what happens with target and online. Thats not necessarily in apps but how are you beefing up your security testing . We have Security Experts that actually specialize in app security testing. Today we have a lot of information, personal information, credit card information, we do transaction with the phones and this is where we come into play. I mentioned the goldman sachs, the fact you raised a lot of money. Whats the next step for you on this path towards ipo . Five years old. We focus on Software Services but were expanding beyond that. Its about an his ticks and use sentiment analytics. Its about tools pryor to launch and post launch. We announced Company Name Change to a close a few months from now and ensuring the experience for brands that are launching software and apps to the market. I find it interesting that youre based in new england. Not exactly the hotbed for technology companies. We have a few ufss in the u. S. We have a office which is in the valley. We have a seattle office. So really, you know, major location in the u. S. And where apps gets developed. Good to see you. Good to hear about the company. M. I. T. Is not too far away. No. Smart college grads. Ceo and cofounder of utest. When we come back, earning season out in full force. Reporting both tonight. Tomorrow, the rest of the week, next week, when it comes to earnings you know exactly who you have to call. Earnings squad,s s is i ase oh, there you are. The earnings squad is coming up next. 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. Nwas the most watchedage otelevision event ever. S so, whats next . The upcoming winter games from sochi. Where every second of nbc universals coverage will be available on every device. On tv, online or streaming on the nbc sports live extra app. Beginning february 6th, experience the winter games everywhere. Welcome to whats next. Comcast nbcuniversal squad. Everybody is talking about helping you trade the stories you may have missed. Dominic chu and stephanie link. Lets start off with big earnings movers. Travelers trading lower although posting better than expected quarterly profits. U. S. Insurer reporting higher premiums while disaster losses declined. Verizon trading lower after a profitable Fourth Quarter. Phone carrier benefiting from Verizon Wireless and fios kusz her hers. Got to start off our squad, the inaugural squad of the season, dom, youve been following this story. Its amazing chart here because 52week high and immediately backed off. It was up 7 , 8 in the premarket. Up 4 to 5 hrs to start the day. Its been drifting lower with the rest of the market ever since. Earnings beat, sales beat. They even boosted their forecast, selling more drugs for alzheimers and hypertension and blood pressure. This stock had a tremendous run over the course of the past year. Restructuring is really an early inning so youre getting a Good Opportunity from buying. The first full quarter under new ceo as well. Thats a big one as well. A lot of the same things are playing out in Johnson Johnson. Were watch that one as well today. Beating wall streetest mights but trending lower after releasing a modest 2014 outlook. Analysts are now going after the street and saying is that they did this a year ago. They set up very mod desz forecasts early on and end up beating it. Already we have rbc coming out saying, you know what, buy the dip on this one because its a great opportunity. The pharma trends are behind them at this point. The consumer business has, in fact, been stabilizing. Interesting out of the Earnings Call though. They mention the medical devices tax. They mention that a few times. Thats to listen for as we get earnings from the other medical device makers later on this week. They mention the yen, the devaluation of the yen will hit them harder. That could be a theme throughout the season. This is only the first week but were likely to hear that throughout. You said it, the pharmaceutical business is the reason why you own this company and they just put up almost 12 growth year over year on a Constant Currency basis. That is impressive for a company this size. I think the disappointment is the operating margins, gross margins. A little underwomening. If this stock is 90s, gets to 99, thats an opportunity. This has been almost an amazing chart for the day and behind this chart is heavy volume already has traded the average daily volume so far in the session. So its making this move on some very strong moves here. Want to check out halliburton, too. That reported better than expected Fourth Quarter earnings. Stephanie, youre watching this one. The number, it was a penny beat and they did a good job in north america and latin america and porckets in international. Margins were disappointing and guidance. They tempered guidance for north american business. I think the theme in oil services this year is going to be international because bake irhughes said it could be growing 10 for the year. I dont think thats priced into the shares. Those are the names i would be looking at. Schlumberger has the highest exposure to international. The one out of halliburton is they had weakness in europe as well as africa. It doesnt look like theyre doing that well. They have pockets. It was pockets of okay. Theyre doing okay. Certainly schlumberger and baker hughes did better internationally but the guidance from all three is 10 growth for the year internationally. Regulatory in the u. S. Is concerned as well. Keep an eye on that. That does it for earnings squad. Join the conversation. Well be back with the earnings preview for tomorrow. Coming up next on squawk on the street, amazon wants to give you what you want before you know you even want it. The Company Filing for a patent shipping system that would anticipate what customers buy to reduce shipping time. New products from the Fulfillment Center to the shipping hub closer to the customer and that is coming up next on squawk on the street. [ 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. To prove to you that aleve is the better choice for him, hes agreed to give it up. Thats today . [ male announcer ] well be with him all day as he goes back to taking tylenol. I was okay, but after lunch my knee started to hurt again. And now ive got to take more pills. Yup. Another pill stop. Can i get my aleve back yet . For my pain, i want my aleve. [ male announcer ] look for the easyopen red arthritis cap. [ 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 just seconds ago in trenton, new jersey, new Jersey Governor Chris Christie inaugurated for the second time in his prepared remarks talked about bipartisanship and the need for diversity. The only hiccup for today is hes had to cancel a party for tonight that was scheduled to take place on ellis island mostly because of the weather. It is going to be nasty in new york, new jersey, and the entire eastern seaboard for the next 24 hour or so. Theres a look at the governor taking the office. Again, in trenton. Lets get the squawk on the tweet today. Amazon has filed for a patent shipping system that would anticipate what customers bye to reduce shipping time. Weve been asking you to help amazon come up with a slow again for the service. Amazon, we deliver it faster than what . Silver writes, amazon, we deliver it faster than you can change your mind. We deliver it faster than you can afford it. And we deliver it faster than is that the doorbell . Not bad. Amazon is having a good day today. Up more than 1 . Going aifr the overall market which is down right now. Youre seeing it a lot on the dow. I thought it was interesting to see art cashin talk about the new index leadings and how that can make a difference. Johnson johnson getting hit hard and dragging down the index. Cashin saying with all the changes made to the dow last year its somewhat over leveraged is how he put it because some of the stocks are so expensive it doesnt take much to swing them in either direction. Youre looking at a few of them, namely ibm. Theyve missed more than theyve beat ten in the last, say, six or eight quarters. And more concerns about their looking to sell some of their lowend business. So well see what it does tonight. It has set the tone for old cap tech or big cap tech. The other one is Johnson Johnson because the headline appears to be pretty good with profit, they are jumping 37 . Stronger sales for bandaids to the pharmaceuticals. Interesting to see the pressure. Guidance is a little conservative going into 2014. Always good having you here. Always good to be here. In the meantime, scott wapner headquarters and the half time. What a difference sentiment makes. Thank you. Were following the biggest stories on the treat today. Inside the golden dome, under armour scores a big deal with notre dame. Calls of the day. Big one on apple, the gap, target, ge and others. Our traders s debate it. Dan loeb making big news today. Should you follow his lead . Joe terranova is a big bull on the airlines and so is josh brown but hes making a more budget conscious case. Stephanie link is looking into j and js earnings. Steven weiss, rob from ubs, the managing director, 8 billion