Transcripts For CNBC Squawk On The Street 20150202

Closed up some 8 . And then the tenyear yield still below 17. Six more weeks of winter but a Second Chance for the markets this year. Investors looking to kick off february in the green after closing out of january. Represented the worst month in a year. Lower oil prices pushing exxon mobils Fourth Quarter down, 21 . But thats still better than wall street thought it might have been. And a controversial call on super bowl xlix rivalled by some controversial calls by advertisers. For two ceos, it gets personal. But first up hoping to get their mojo back up. They posted their biggest monthly losses in a year. Blue chips down about 37. Nasdaq down about 21. January was good for socalled safe havens. Treasuries, their best monthly performance since 2011. Gold an 8 gain. Interesting month. Things like netflix, merck, unh still working, jim. Yeah, it was one of those market where is the domestic stocks did well. A smattering of high growth did well. A couple of big caps. But in the end, it was a disappointing quarter. In the end, when we kind of limped into february companies that had done quite well apple, 118, 119, goes right back. Visa, good quarter. Right at the end it starts slipping. 3m had a good quarter. I can count on two hands, the really great quarters. Just had a lot of quarters that were just kind of you said for last week for every apple, theres a ton of microsoft. For every sky works, theres a qualcomm. Yeah. And the ones that a lot of these are favorites. Qualcomm was a big favorite coming in. I just feel like there was a sense of thank heavens this month is over. Their earnings are so low, youve got to see the whole aggregate of the s p go down. It can conversely go up. We start with continued focus i almost hate to say it on greece. Theres just no way to get around it. Were going to keep hearing various things and its going to be difficult to get a real read on that situation, but it is going to roil the markets to a certain extent. The dollar continues to show itself in the face of guidance that well get from any number of multinationals. That will continue. I guess well be dealing with this for some time. Not to mention ukraine doesnt look quite as bad. Ukraine is bad. One of the things i thought was just really confusing was that some Companies Just got currency totally wrong. Some companies did a little bit of hedging, did it right. But no matter what, the Conference Calls if you go back over the ibm Conference Call it was basically how the currency made it and it was just tepid anyway. And the guys who were tepid and had not so great currency are really the ones that continued to just roll over. Opposed to google, which actually had a pretty decent quarter and currency did hurt. Yes, but there was one where if you look inside it youre right. It was a very good quarter. Because there were a lot of metrics that started to go up. Also they had some discipline. I think that was the theme. Who was the disciplined spender who hadnt been and then you have these really crazy things. You had shake shack. It was just so expensively valued, and so you have all these other panes that are really struggling and then you have shake shack, you say i dont know, i mean this market is euphoric on a given day. Downbeat on two days for every euphoric day. Its a good way to look at it. Tough start. Exxon did fall, but that share is a beat. Gives you a sense since estimates have come in. Youll see the stock not roar, even though it should. Exxon is a really wellrun financial company. In the meantime we got additional ripple effects. Wages going up. The cost currents whether it be greece, whether it be china, theyre just really not great. Although russell would back up your point about staying stateside. He passed it. To give it to marshawn. Oh the russell index a lot of good calls. Domestics as well. Are we still held hostage to oil prices so to speak in this market . I think so. We havent seen weak ones yet. We havent seen the ones that are beginning to say we are cash flow. When i see that i see that exxon is cutting back its buy, the next thing i know is what happens to these other guys . The guys we know havent reported yet, where the cash flow is just falling off a cliff. You mentioned russell wilson. Super bowl xlix will be remembered for what some say was the worst play call ever. One yard away from the end zone 20 seconds to go in regulation the Seattle Seahawks choose to pass the ball instead of handing it off to star tailback marshawn lynch. The result was that interception by butler giving the new England Patriots a 2824 victory. A fourth super bowl title, Bill Belichick as coach and tom brady as quarterback. Bring pete carroll said real hard luck. Real hard luck. Trent dilfer was a Great Quarterback in the hall of fame, saying look you have the greatest running back in the world right now. In the world. In the end, winner. Advertisers. Stayed until the end. Right . Versus last year. Advertisers, turned it off. I didnt even have a rooting interest and i still find it painful to watch a team lose like that. And i just find myself wondering as a jets fan, if my team made it and lost like that it might even be worse than being 313. I dont even know. All of my fandom is in question. Why do i even bother, if that can happen to your team. Would you have wanted to face paul allen in the moments following that game . Oh, my gosh. He looked unhappy when they were winning. He did. You know im a Richard Sherman fan, they threw at sherman once and it looks like he has to have an operation on his elbow, maybe an operation on his shoulder. The other side of the defense, Byron Maxwell is a really good player, but they had guys that got hurt. I think we always want to look at the last play and its a lot more up to the last play. By the way, you mentioned advertisers winning. The most tweeted super bowl ever 28. 4 million tweets. 265 million facebook posts. Wow. The cfo tweeted an interactive thing. And i wish them you know i think this is kind of a make or break week. If they can say you know what the quarter started, and be a little less episodic. But you go from super bowl to what . I mean thats the problem. Whats the next big thing that were going to be and it comes back on twitter, talking about the stock to Monthly Average users and what kind of a growth rate will we really see and continued conversation at least from the Investment Community about the difficulty of really accessing that world. You dont think average users is going to transcend the month . No. I dont either. But dick costolo thats what its come to. Just silence. That was the best one yet. My advice is to give it to marshawn lynch. Well see what the earnings say. By the way, they do have a new instant timeline. Meaning as a new user you dont have to curate your own timeline. The times today, are reviews it and says it was actually better than the reviewers own timeline. Its what people areal kaing for. But everyones on to him. Why am i so frustrated with twitter . Here you go youre on meet the press and its a real honor. Everyones tweeting the pictures. Its not like twitter is paying us. How much are you paid when you tweet . Im not. But how much are you paid for Everything Else you do . Fair amount. But twitters got this huge number of people, the biggest people in the world, theyre all tweeting and they cant monetize it . I mean theyre giving twitter this unbelievable base of content, and it doesnt seem to matter. How about the twitter fights between john legere heres legere. Half commercial halfdata speeds. Do we have some of the response . The ceo of sprent. Dude you have trashy kim. Ha ha. Jokes on you. I think its interesting that hes not going to just take it from legere. You get this kind of thing. You dont see randall stevenson. It must be the kids that tweet. Kids are in there. Well talk more about the ads later on in the program. What did well. What did not. A couple of advertisers took it on the chin last night. A couple of busts. Also william cobb will visit us. Well hear his game plan for beating the competition this tax season. One more look at the premarket. Down two months in a row. Eight out of ten sectors down year to date. A lot more squawk on the street from post nine in a moment. Know that chasing performance can mean lower returns and fewer choices in retirement. Know that proper allocation could help increase returns so you can enjoy that second home sooner. Know the right Financial Planning can help you save for college and retirement. Know where you stand with pnc total insight. A new investing and Banking Experience with personalized guidance and online tools. Visit a branch, call or go online today. For the second straight week, the northeast getting hit with a winter storm. In the middle of it all today is adam reese, whos in white plains new york. Adam, good morning. Good morning to you, karm. Round two for this region second time in less than a week. Its ground hog day. This is winter storm linus. And it has left about six inches of snow in this region. Started at about 8 00 last night. As you can see here in white plains, were about 30 miles north of new york city. And theyre stimll digging out here. New york city is doing okay. Businesses are open. Schools are open. But in this area there are a lot of delays. A lot of schools are closed. The big problem will be this afternoon as this snow turns into ice, slush, mixed with rain. Thats going to be a problem. The roads are beginning to be very icy. Youre going to want to be very careful. And this afternoons rush hour is going to be a problem. So again, on the roads this afternoon, were going to see some ice as temperatures drop. Carl . Adam, thank you so much. Certainly were feeling it here in new york city today. Adam reese of msnbc. The president is proposing a 4 trillion budget for the 2016 fiscal year aimed at aiding the middle class. Among his proposals, a tax on Companies Overseas profits, raising spending on highways and transit systems. Hes going to talk more about this later on this morning. But 14 repatriation tax, 19 down the road. You get taxed on that one time and trying to link that to about half a trillion in infrastructure spending. Makes sense, but are they really trying to link it just to that . One of the things i felt this this administration has been saying jack lew said it lets move on comprehensive tax reform. Did all the things that they talked about that were against the 1 or isnt that all part of one . Are they beginning to say listen, without the tax increases for the wealthy, youre not going to get this. Because i just think that this is kind of thrown out there. Sounds kind of interesting. Not exactly the rates anyone was looking for. I know from the republican party. But if its comprehensive, its dead. The republicans are not going to vote for the tax increases for the wealthy. No but does it become part of a larger conversation about tax reform . Do you really get there, or is it all just doa . I think its doa permsonally. Theres still some hope that youll see movement on the corporate side of things. Look if this were just proposed and they came back to say that was their opening bid and then you got back to nine and come out with 11 i think it would be great. Its all linked with a step up in basis that would hurt the middle class more than anything they do. You know theyre trying to tax the people they think really have the free ride and republicans dont want that. So what does it matter . Just a carrot of interest. Its just a fairness thing. Thats where you raise the money. Although that wont amount theyll tell you it wont amount to much. Its easy to call just a couple of guys. 4 trillion. Its funny 50 years ago, our budget was 99 billion. Johnson was coming in under 100 billion with his budget. All these numbers mean nothing versus the entitlements. This is that sliver discretionary. The entitlements just start ballooning and no ones talk entitlements, right . The only reason youre doing all this shuffling is because theres this little part of the budget that theyre able to control. The rest of it is medicare and social security. There is some hope that we bent the cost curve on medical. Yes. And that would be huge. If that happens, then our kids are doing okay. If you look at this we dont talk about our kids anymore. There was that period where, well, what is our gift to our children . When you look at this stuff, its bad. We are getting some ratings information on the super bowl last night. Which was on nbc, of course. Our corporate parent delivering the highest overnight rating in super bowl history. With a 49 if im reading this right, a 49. 7. Wow . A 49 . And it looks like 72 in the demo. Overnight topped to 50 in each halfhour, from 8 00 p. M. Forward. Up 4 from last year. Up 3 from the prior record. Tv . Television. Linear television. Yeah. People didnt play video games . They watched this game. They watched katy perry. Approaches our numbers right here on squawk on the street. Thats amazing. It is a shared experience as everybody says. The one we have as a nation, everyone would argue is the intel. Isnt that something . Were a great secular nation. Well get cramers mad dash. Well count down to the opening bell in just a moment. More squawk on the street is back in a minute. Why do we do it . Why do we spend every waking moment, thinking about people . Why are we so committed to keeping you connected . Why combine performance with a conscience . Why innovate for a future without accidents . Why do any of it . Why do all of it . Because if it matters to you its everything to us. The xc60 crossover. From volvo. Lease the wellequipped volvo xc60 today. Visit your local volvo showroom for details. Its a monday. Time for a mad dash with about seven minutes or so to go. Some stocks are just houses of pain no matter what. It just never ends. Jeffries goes a big estimate cut here. Now you say, well where have they been . People kind of hoped. They kept hoping that at some level, this thing would represent some value. When day rates roll over we have seen patterns where these stocks have always been the worst to own. The oil service, rig companies. And youre going to see a lot of as all these big projects are cancelled that are deep water, thats their specialty. But theres got to be a bottom somewhere. Youre talking about a stock thats down as you can see 62 . Youve got to worry about that Balance Sheet. You are. This is one of those where its going to transcend stock and youre beginning to be talking about it from the finance side. Right now where were worried in this area is larger private companies that have borrowed a lot. Aubrey mclendon. And then youve got kkr deals. Free port youre borrowing a lot of money. And then youre talk about a public company. A lot of the other guys are capitalized fairly well. This company does not have young riggs versus say energy services. But that doesnt matter either. One of the worst performing stocks in the s p. I know people want very much to buy this every time they see the oil futures tick up. If you feel that way, buy exxon. Just dont fool around with the Balance Sheet. Its too dangerous. Now we want to move to pepsi. Wells fargo knows they reported february they report february 11. Pepsico, big presence in the halftime with katy perry. So then the question is do these things matter to brand . Does it matter to drink . If you actually see an acceleration in a line item like gatorade, that would be very big. It used to be one of the great drivers. Good yield, good management. Why not buy some . Not bad. Continued pressure a bit from an activist there. Well, on the board. Maybe johnson on the board can get in. A very smart guy. Johnson going on the board. Thats right. And not distracted. Youre absolutely right. I actually had forgotten frankly. How can you remember anything after Pete Carrolls move . What if youre a seattle fan . The russell 2,000. Ive got to change that. Its the butler 2000 . The west alabama 2000 . Squawk on the street is back with a lot more. Opinions. Theres no shortage in this world. Who do you trust . Whose analysis is accurate . How do you make sense of it all . A simple unbiased stock score consolidated from the opinions of independent analysts. Is that too much to ask . Nope. Equity summary score powered by starmine, will help you execute your ideas with speed and conviction. And its only on fidelity. Com. Open an account and find more of the expertise you need to be a better investor. Youre watching cnbc squawk on the street. Live from the Financial Capital of the world. Opening bell in about a minute and a half as we kick off february with the dow and s p down for two straight months. The last four dow moves have been by either up or down 195 points. That volatility that was missing for a while is clearly back. Yeah and people cant seem to get adjusted to that 17,000 18,000 level and how that may not be that big. Instead, they say wow, this is a horrible day. I thought it was interesting when visa split. But whats really happening to me is what i see is people are losing faith. I think people feel like weve had a really big run. Stocks got extended. A down january after three or more up years, that has been a pattern and this is a third year in a president s term those have been good. So maybe we just say january, special exception lets see what happens. Got to get through a lot this week. Disney chipotle earnings auto sales tomorrow. Well get fox cores go pro, twitter, buffalo wild. These are all stocks that are deeply identified with the retail investor. I look at that number for super bowl. Gasoline coming down. Does that impact it . Youre going to see a lot of hear a loott of stories that are very retail. Lets get a look at the opening bell here and a peek at the s p at the top of your screen. H r block marking the top of the tax season. Well talk with the ceo in just a few moments. Over at the nasdaq the philadelphia 76ers celebrating its new patriot hardware platform. They have something to celebrate. The opening bell. Thats terrific. Certainly not the record. Which is horrendous. Their time will come. You think so . Well the draft. Theoretically. I went to see them recently. They won a game. Are they in double digits in wins . No. Are you kidding me . My mom was a season ticketholder. They went 973. It was the worst in history. Mike smith sat next to her. At that point, he still liked philadelphia. This team is going to rival them. S p. So s p is right around the 2000 level. Some of the refineries are beginning to chase what happened to them. Again, this whole talk about the idea that theres been a dramatic increase in driving dramatic decrease in drilling. Theres a sense that maybe some of the economies have a wider start. Theyre just not seeing the spending. These are very very wellthoughtof. Theyre just now seeing the goodness. On a day where there was a miss. Even though incomes are okay. Retail effect is a bit like waiting. 25 for paying off debt. But he did point out, said once that is saved on average, by the end of the year theyre looking for nice spending buzz people feel better off. Visas Conference Call was brilliant. Its a play. If you think of these Conference Calls as plays, they kind of lead to an overall conclusion. Visas was dont worry about the dollar. Were going to make the number anyway. It was very joyous. Well, its not going to be set to music. Joyous. Joyous. Thats very nice. Maybe theyll make it to broadway. Somewhere in previews. I think that dfs, that was very much a new haven. Some of these other guys are just pure summer stock. Did want to come back to shake shack. Public offering right behind us on friday. We spoke to the ceo and founder danny meyer. It was up over 128 at close. Priced at 21. Enormous amount of loyalty. Theres no doubt. I had a chance to speak to a few hedge funds. I thought for sure theyre just going to short it. But a few looking at still buying it. Maybe not quite here. But not far off from this level. Because of the loyalty of their customer base. The fact that even when you look at that base versus some of the competitors that we talked to them about, the five guys the in and out, they still seem to have a lot more stickiness with shake shack. Its hard to get there on a valuation at this point. Heres the issue. When you mention it to some critical people, they say look they each make a huge amount of money. I see the loyalty. And danny meyer, if you go there and you say i love my sister, theyre not giving you a free burger. No. Get a hug. I thought the mcdonalds commercial was very interesting. Its not for everybody. Not everybody gets i really love my dog, heres a big mac and fries. Theres a contingency. But interesting approach. I thought it was telling that it wasnt about the food. Because that is not their selling point right now. Its funny buzz niny because shake shack is so totally about the food. I didnt get any on friday. We actually had to go. It was all around us. The truck outside was a twohour wait. You dont want this to be like the Container Store where theres great loyalty, you pay the people a lot and then the stock fizzles. You want it to be like chipotle from day one. And thats very hard. Because chipotle their main thing is throughput. Supply chain. Thats what happens when you get up to a certain number of stores. But i think youre absolutely right. The fact that you have said there arent going to be at least in your base its extraordinary. They buy some more and they get an okay basis. Its hard to imagine at this level. Stock now actually flat to up on the day. The times once called danny the best restaurateur ever seen. I call it the fire people. The fire table. I dont think you can fire me. I mean you could. We havent touched on some retail needs. Lands end new ceo. Ever core macys with a buy. Terry was here last weekend. He was right. That offensive line that he outfits for brady, i think that macys is a great domestic situation. Lands end was definitely hurt. Still have some association with sears. Its tough when youre associated with sears. Just very tough. Yeah. We havent mentioned china. Some of the data out there over the weekend not encouraging. Were you . Im worried about china. Its almost as if they stopped importing. Almost as if the country is on pause until europe starts. I think that we all 3ms Conference Call, wellorchestrated again. Was it joyous . No. It was it was like a rhapsody. A rhapsody . Yes, a rhapsody not in blue. Well 3m is more like in china, they have respiratory problems. People just wearing the masks. Both of us having been there recently. You cant. I dont see how people its not a way to live. And they didnt stop the cars and trucks for you when you got there. I wasnt in beijing at the time, but they were doing it there because they were having the president was there. But maybe it will move to shanghai. Another city ive never heard of. 500 cities that are larger than philadelphia where im from. Did want to mention shares of apple, because we have news that the company is doing another bond offering. If you remember when they did a bond offering previously, i think they hit the lows on the tenyear right around them. Back towards those lows right now. I dont see that in the filing but just mentioning some may wonder why are you going to be issuing, whether its 5, 7, 10 or even 30year notes at am when you have 170plus billion dollars in cash. Its a reasonable question. But it does go back to a previous conversation, Corporate Tax reform. Cant bring it back without paying a very large well, what you pay in taxes. I wonder if the interest costs are tax deductible. Use it to buy back stock and you actually save money because of what youre paying on your dividend. Just the insanity of the koesmd i think everyone know s code. I think everyone of sane mind looks at Something Like the apple people and says this is exhibit a for why weve got to fix this code. But good luck. The dow is up 44. Lets get to bob pisani who is back on the floor for us. A week after covering the etf conference. Gold is on the downside. But oil is up. Thats helping oil stocks and exxons beat here. So a look at some of the big names. These names are stabilizing right now. Haliburton was, what 70 six months ago, but its 40 now. And thats stabilized in the high 30s, low 40s. Just the last month and a half or so. Thats certainly good news. Schlumberger conoco accidental. The important thing about exxons earnings is things fell apart in the Fourth Quarter, but heres the fullyear earnings for the company for the last few years. 2013, 7. 37. 2014 actually made more money. The prior three quarters were great. Heres the problem. Look at that 2015 number. 4. 28 for the estimate. Huh . Were talking about a 40 decrease in earnings. Take a look at exxon stock. Its Little Wonder youre essentially sitting at a 52week low. Lets not quibble about a couple of dollars. Thats where were at right now. The other big problem is the buybacks. Exxon announced a 1 billion buy back for q1 of 2015. Im going to project that out. If theyre talking about 4 billion for the year, thats a problem. Theyve been reducing the buybacks for a few years. 21 billion, 2013 16. 12. 9 in 2013. Youre talking about a company with a market cap of 370 billion. A 4 billion buyback if thats what theyre going to do in 2015. Thats a rounding error. Thats virtually irrelevant. Its not going to have any impact on the stock price at all. I think thats the problem. Why not increase the buyback when the stock is down . I dont think they know where the oil prices are. What if it stays low for another two years . I think thats the problem. One good thing about exxon right now is they keep increasing the di dend dividend. Highly unlikely theyre going to freeze or cut that dividend. Thats their big differentiator. Theyre talking about very significant increases in inflation, over 5 for food costs in 2014. Guys, keep an eye on that. The number of Companies Mention that in the Fourth Quarter. Become to you, david. Thanks very much bob. In that deal, of course with remember u. S. Foods. Theyre going to be selling a number of Food Distribution centers to Performance Food Group in order to get that u. S. Foods deal through the antitrust authorities, or their hope is. So thats why that is taking place there. On friday as we told you around this time on friday we would, we got later that day the results from that huge auction of wireless spectrum by the u. S. Government that raised roughly 45 billion for First Responders networks and probably just for the general treasury as well. We found out who the winners were. I should say who paid the most. Not clear that theyre winners so to speak. But who paid the most. At t the leader. But a lot of the analysis this morning is focused on dish a company thats kind of a riddle wrapped in an enigma wrapped in a puzzle to a certain extent. What is the strategy being pursued by its Controlling Shareholder . What is the plan there . Having spent 13. 3 billion gross, around 10 billion net is what they will have spent. Were not getting on friday anything beyond confirmtory press releases saying yes, we spent that amount of money. Were going to have to wait to really hear more details around their strategy whether its at t and its decision to spend over 18 billion, or verizon, which perhaps spent less than some anticipated, or as i said, dish. You may say wait a second they actually made their bids through socalled designated entities that are allowed to buy at a 25 discount. Dish does control 85 of those entities, or owned 85 of the entity, but it doesnt control them. And it will. It may kind of be polluting the intent of this. Were moving through this a little too quickly here, but the fact is if they were to sell that spectrum within the first two years, theyd have to pay become that discount. Weve got a lot of people weighing in wondering whats dish really going to do with all of this spectrum. It spent about 3 billion on spectrum thats now worth multiples of that. And then it buys another 10 billion worth of spectrum in this auction. What is it going to do with it all . Has it gotten too large simply through the value of the spectrum for anyone to actually buy . Do they just reach commercial agreements with a lot of providers out there . Basically leasing the spectrum . Or was there something bigger coming here . We dont know. They say most of the ideas weve heard are implausible, impractical, or illegal. As for all of the kerfuffle about this designated entity strategy and the fact that they shouldnt be able to use it well, wrote a very good note saying its been used in the past. Same designated structure by at t and verizon and the fcc wont have much justification to do anything but issue those licenses to dish. Finally, let me show you a great chart here if i can on spectrum holdings. Thats where we all end up. Lack at sprint. We forget how much spectrum they own. Wow. Thats why they didnt bid at all. Right. Their problem is not spectrum. Its getting the network to work properly. And the former ceo used to speak. So weve got a lot of places that we dont cover. Lets get to chicago now. Rick san delltelli joins us. The treasury market continues to be in kind of short pass mode and clearly, it strategized that higher income even without the accompanying higher spending, was pretty good news. You see rates crept up a bit. But were only about a base point and a half to hire from that level, considering were back down at 169. Were off the 164, 165, opening the chart up. Friday was the lowest close since may of 2013. As you can see on that chart. And the 30s, of course had their alltime low closing yield on friday, and 222 couldnt quite get down there again. If you look at a twoday boom similar, they traded under 30 basis points twice. Last week and today. So they have a Double Bottom right around 29 basis points. Jgb is hovering around 30 basis points similar yield. But its fascinating to see that their mid january low alltime close is down at 20 basis points. This chart starts at the 21st. No big bounces, but definitely short passes treading water. Back to you. Thank you very much, rick santelli. It is that time of year for hr blocks ceo. William cobb will be here at post nine in a minute. Dont go away. Startupny. Its working for new york state. Already 55 companies are investing over 98 Million Dollars and creating over 2100 jobs. From long island to all across upstate new york, more businesses are coming to new york. They are paying no property taxes no Corporate Taxes no sales taxes. And with over 300 locations, and 3. 7 million square feet available, theres a place thats right for your business. See if startupny can work for you. Go to startup. Ny. Gov. Joining us is william cobb. Sir, were hearing about 6 Million People about to be surprised because of the Affordable Care act. How many of them have come to you because youve got those extended hours and they know that they cant figure this out by themselves . Weve had a fair amount of people. People are confused because they either have to reconcile if theyre in the exchanges, against their actual income, or they have to pay a penalty. So the government now estimates about three to six Million People will pay a tax penalty, and about 20 million others are so are seeking an exemption, this which is what we can help people find. How many people would you say normally have not needed help versus now . Its a welloff group of people. Its hard to estimate, but now because of additional forms and this reconciliation to the actual your actual income, it is a lot more. I mean its millions more. Were seeing that in the amount of people coming into our offices now. Is there a way to quantify the margins dealing with those types of customers as opposed to customers in the past . Well its a little you know, were still figuring it out, carl, because its so early in the season and ive said this all along. I said we have to see this play out. Some people are coming in we actually even had a day early in january, where we just answered questions. People are trying to figure out what to bring in etc. Ive told analysts this is going to play out over a couple of years. Tax season is just kicking off. What are you finding in terms of response to this new ad campaign that youve got out there that i think a lot of our viewers are probably seeing . Yeah you know whats been great we call it refund season now. Thats really what tax season is. About 85 of people wind up getting a refund. So thats really what were trying to do. Its the most important financial event for so many millions of americans that weve had a great response and weve got our taxpayer richard is a bowtie guy. And people really love the ads. And its drawing people in. People are talking about how this is going to be one of the latest periods where the refund has come. How will that impact Consumer Spending . Refunds just started coming in. Weve actually sent out a few billion already. But the irs just started releasing refunds friday. So people over the weekend started to get refunds. So i dont know exactly how its beginning to affect but its about the same timing as last year. Might even be a little earlier. But at this point, refunds seem to be flowing in in a normal course. Are audit rates creeping up as they were in the past few years . I would hard to say about this year carl, but i think what were seeing is that this is beginning to happen this is going to be easy to audit on the Affordable Care act. You either have insurance or you dont. You either fill out the form or you dont. People will say im not going to worry about it. This is an easy one to audit, frankly, which is ironic. I think that when i listen to the tax code ive got to ask you. All these different proposals. The 529 in and out. The step up in basis. These are radical proposals, arent they . They are. And thats one of the reasons why i dont react to any of them. I have to see what becomes the law of the land. What we do we dont lobby one way or the other. We interpret the law. But obviously we observe it. But i cant react to anything until it actually becomes law, because otherwise, you know ill drive my Tax Institute crazy. Sounds good. Thanks so much for coming in. Thanks for having me. William cobb. Well get stock trading with jim in a moment. Dow is down about 28 points. Do go away. Then theres trusting your vehicle maintenance to ford service confidence. Our expertise, technology, and high quality parts mean your peace of mind. Now you can get the works, a multipoint inspection with a Synthetic Blend Oil change tire rotation, Brake Inspection and more. 29. 95 or less. Whats that thing . I moved our old Security System out here to see if it could monitor the front yard. Why dont you switch to xfinity home . I get live video monitoring and 24 7 professional monitoring that i can arm and disarm from anywhere. Hear ye the awkward teenage one has arrived dont be old fashioned. Xfinity customers add xfinity home for 29. 95 a month for 12 months. Plus for a limited time, get a Free Security camera call 1800 xfinity or visit comcast. Com xfinityhome. Quickly on tax reform you think well get something done . Not a chance. You dont buy it . Never. Wall street . Nothings going to happen. That was jim on meet the press yesterday. Did a lot of talk. You cannot link corporate with individual. Republicans want individual cut for wealthy. President wants individual rocks for wealthy. You get all this cool stuff about income tax and corporates but theyre not going to let these be unbundled. Lets get stop trading. I tell you, this is a treacherous market. When the oil started going up these airlines are getting killed. United airlines delta. Take a look at those stocks. This is the definition of a treacherous market. These go up big. And then you get a little bit of a reverse in oil and then they get crushed. Just be careful right now. Got to let this thing go. Whats on mad tonight . We have a Company Called dexcom which makes diabetes monitoring. You get apple, you link it with your cell phone, you link it with your device. Next thing you know, you find out if your kids got a problem at school. Very important if they have diabetes. See you tonight, jim. All right, thank you. Jim cramer tonight, 6 00 p. M. When we come back breaking news on ism, plus some Super Bowl Ad winners and losers in a moment. Im only in my 60s. Ive got a nice long life ahead. Big plans. So when i found out medicare doesnt pay all my medical expenses, i looked at my options. Then i got a Medicare Supplement insurance plan. 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So we found a plan that can travel with us. Anywhere in the country. [ male announcer ] join the millions of people who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp an Organization Serving the needs of people 50 and over for generations. Remember, all Medicare Supplement insurance plans help cover what medicare doesnt pay. And could save you in outofpocket medical costs. Call now to request your free decision guide. And learn more about the kinds of plans that will be here for you now and down the road. I have a lifetime of experience. So i know how important that is. Got some breaking news here. Rick santelli is in chicago. Rick . Construction spending up. 4. Last month revised from minus. 3 to minus. 2. But to be up. 4 is a bit smaller than we were looking for. The biggie is january ism. Expecting 54. 5. We end up with 53. 5. Thats the weakest number in exactly one year. 51. 8 last january of 2014. Lets look at prices paid. They were at 35. Were expecting a number of 40. If we look at the employment index, because a lot of employment numbers this week had moved from 56 to 54. 1. And of course the other biggie we like to watch, new orders move from 57. 8 down to 52. 9. So definitely anything over 50 is positive. But positively could have been a bit better according to the whispers im hearing from traders over my shoulder. Back to you. Rick thank you very much. Rick santelli in chicago. Welcome back to squawk on the street. Post nine at the new york stock exchange. Simon is off this week. Markets down session low is 67 points. At 17,103 we exactly a thousand points below the dows alltime high. January marked the worst month for u. S. Stocks since january of last year. Can we expect a more bullish month for february . Joining us this morning on post nine is the bull of wall street tomley. Its good to have you back. You dont mind being called that do you . Maybe you do. Its long as its not a permanent label. Fair enough. Are you worried about how the year has begun . How earnings season has transpired . How some of the macro data is turning out . A down january is not what you want to see. Earnings have been the bottom line beats have been good, but the guidance hasnt been great. But i think were really looking at a plethora of sort of negative headlines, whether its europe oil, dollar. But we really have to focus on some of the things that are going to matter like consumer. The consumer i think is beginning to have some positive catalysts over the course of the year and i think thats going to turn sentiment back into bullish. Were going to wait to see. We continue to wait for gas prices to show their face in the form of spending. Jobs this friday, the estimate for wages is a plus3 but we remember that negative print in december. And there was some confusion because of that. I also think we have to remember credit is really a big story. Its been restricted to consumers. Theyve had bad credit stores. That reset is happening this year. I think lending standards are coming down and i think its going to play through stronger housing. I do think were going to see some things that get us more optimistic about the durability of the expansion. You mentioned the dollar. Its a big theme on earnings season and were watching the headlines out of greece. Does the u. S. Dollar make the u. S. Stock market more attractive particularly for foreigners . Because art hogan was quoted in the wall street journal today. He called it a magnet for global capital, the fact that weve got a strong u. S. Currency. Yeah we published a piece last friday just looking at this issue, and pes expand. Thats a capital flow issue. And another thing that happens when you have strong dollar is actually theres a flurry of inbound mergers. European Companies Buying u. S. And of course thats good for value indications. You expecting that . Yes. Yes. So i think the u. S. Companies have so much cash. Got a big cap ex cycle. I think were going to see mergers this year that act as a catalyst for stocks. A stronger dollar i mean we have better buying power overseas as a company as opposed to the other way around. David, its counterintuitive because we looked at over 30 years of merger data and you would think hey, with a strong dollar we go on a shopping spree. Turned out, Companies Want to be where capital will have the best return which means they chase strong currencyies, relative growth is strong here. Thats why the mergers come this way. Any sectors in particular, youre looking for that to happen in . Typically, its actually the industrials, health care and materials. Thats really where the mergers take place. Health care is unique. But industrials and materials the companies are so interchangeable. I think thats why really mergers take place where you want mergers to take place. Back to the consumer for a second. We havent seen that spending uptick that many have talked about as a result of the savings from the falling gasoline prices. I dont know if youve done any work on this historically or not that leads you to believe we will see it. Right now it seems to just be being saved. Yeah and mastercard made that comment. And visa did, too. That consumers are saving a big portion of the savings. I think its because until it feels permanent, theyre going to take the extra money and put it back into liquidity. I think as soon as they feel its permanent, i think spending really picks up. So i think its a june quarter, march quarter story of Consumer Spending. Just in time for gas to start bouncing back if youre a Boone Pickens or somebody like that, right . Yes. And i think sometime this year energy is going to be a great investment story as well. Not yet. It might be. It might be. You just have to do it when everyones given up and the stocks go up on bad news. You got a year end target still in place . Yes, we still think were going to have a nice double digit year. I know people are worried stocks havent risen seven years in a row. We published a piece saying it happened 1,280 times since 1870. In other words, theres 1,280 times you can have seven consecutive years of gains. Its all playing with your charts and i guess where you stop and start. Or theres a problem with people just doing calendar analysis. Thats really why people are saying stocks dont go up for seven years. We found the longest streak was 14 consecutive years of gains. You happy with this earnings season so far . It doesnt feel particularly good. I think the guidance hasnt felt good. But, you know Companies Love to have reasons to cut expectations. And this is a great time for companies to dial down. Lack of visibility. But i think companies are cutting guidance. And the bottom line beats have been very strong. I think its making it easier for companies the rest of the year. How does the fed dynamic play into your forecast . Counting on something . One and done in september . Something 2016 . Were not real fed watchers, but to me intuitively, i just dont think theres inflationary pressures on the wages or housing, so i think the fed is going to be patient. I think its more of a 2016 event. Theres been a couple of calls for the first hike to come the next year. Good to see you again. Great to see you guys. Another monday another major storm blanketing the east coast and parts of the west coast. Tremaine lee is at Laguardia Airport with the impact over there. What are you seeing so far . The great yogi berra once said its like deja vu all over again. Across the country, 2,700 flights cancelled. With chicago hit the hardest. Here at laguardia, where we got about four inches of slushy stuff, folks are hunkered down throughout the terminal. Jfk, not far from here, 124 flights cancelled. So folks are waiting to see if they can get in or out of the city. Folks are concerned about later on today and this evening. What happens once the temperature starts dropping and remains below zero . Will we get that ice skating rink effect on the highways . So the mayor and other city officials have urged folks, if you can stay off the roads, do so. Here at laguardia, when you see that red, folks are seeing red. The frustration and concern over will they be able to get home. And theyre kind of preparing for what could be a long icy road back to where they came from. Everybody knows exactly what you mean. Thank you so much. When we come back, well talk to the top democrat on the house budget committee, on the president s Budget Proposal unveiled today. And it is being widely recognize lyly criticized this morning, the seahawks choosing to pass with 20 seconds left. And look what happened. Well round up the worst corporate calls in history. What tops the seahawks last night . New coke blockbuster passing on netflix. Tweet us some of your ideas at squawk on the street and well show you a little later on. Dow is down, were back in a moment. Dow down 122 now. Lets get to dom. Shake shack down. The stock has moved lower to the tune of around 6 , over 6 now in early day two trading. Remember, they priced their stock at 21 a share. The stock rocketed higher, more than doubling making it worth more than a billion and a half dollars. Valuation concerns will be a big part of this for some time to come. So interesting day here for shake shack shareholders. Back over to you. Session lows here on the dow. S p well below 2,000 at 1982. Jims point earlier with royal on the rise, hanging on to a slight gain. Airlines are just getting she shelacked. Some of the cruise lines. Looked like we were going to start february on an up note after that brutal january for u. S. Stocks. Worst month since last february. And the big question people were wondering is does that set the tone for 2015. It certainly didnt last year. But it does have a High Percentage chance of correlating with the way stocks perform the rest of the year. So not a great way to start the month of february. Weve got a lot of big reports in terms of earnings and the jobs report on friday. A lot of data still to come. Well get auto sales tomorrow and start that monthly charge toward the jobs number. Adp on wednesday. Productivity thursday. And then the estimate for jobs i think is 235, which is lower than the threemonth average of 288. And the estimate for wages is again for a slight gain of. 3 even though weve been let down in december. November was revised down a touch. And with that 200,000plus job creation number a lot of folks are saying its a factor especially when it comes to the bond market what the Federal Reserve is looking for. The other big story, of course is the president ial budget. Set to kick off the new fiscal fight with congressional republicans. Of course, were going to talk a lot about this. This is the 4 trillion budget. Calls for more infrastructure spending. But pays for it in the way of higher taxes. For instance, on corporates. Lets talk a little bit more about the president s budget. Weve got do we have out in washington, d. C. Right now . Chris van hollen joining us here to preview, congressman from maryland, a democrat and Ranking Member on the house budget committee. Thanks for joining us congressman. Good to be with you this morning. So is there anything in this budget that we think that republicans and democrats will actually agree on . Or is it just dead on arrival as the pessimists are saying . Well, a couple things where i hope we can find common ground. Number one, on the infrastructure piece you just mentioned, theres actually some overlap between the way the president proposes to pay for it dealing with portions of the International Tax system. And the way the former republican chairman of the ways and Means Committee proposed to deal with some of those International Tax issues and use some of the proceeds to fund the Transportation Trust Fund Infrastructure at a substantial level. So that may be one area of potential agreement down the road. There are also a lot of republicans that would like to see us increase the defense and National Security component of the budget. The president said hed like to do that. Hed also like to increase our investments in science and research, infrastructure and education. Paul ryan already called it on nbc over the weekend envy economics. Says maybe popular politics to go for the middle class economics, but this whole topdown distribution does not add to Economic Growth. Whats the response to that . Well its interesting, paul ryans tax plan the one that he and mitt romney put forward, actually redistributes income from the folks in the middle up to the folks in the top. So its interesting to hear this talk about the politics of envy. The Tax Policy Center said that that ryanromney plan would actually increase the tax burden on folks in the middle a regular family by about 2,000. What the president says is the current tax system is skewed in favor of folks who are making money off of hard work. And he wants to create a tax system that rewards work. Do you really think that through these adjustments to the tax system, the president can efficiently tackle inequality, which is such a big problem . Do you really think this will move the needle when it comes to closing the gap . Actually i think boosting Economic Growth and new incentives for some higher wages, as well as allowing middle class taxpayers to keep a little bit more of what they earn . Yeah, by definition theyll have a little more after tax income to go out and spend in the economy. The other complaint about this budget is the debt levels. I mean nearly 500 billion deficit grows by the year. That is high. And that goes back to the republicans argument that were going to bankrupt our children and not be able to pay for anything in this economy. That is historically a record high. You know its interesting, because republicans are planning to bring to the floor of the house as we speak some Corporate Tax cuts that are not paid for, which would significantly increase the deficit. Look in fiscal year 2016 the president s budget actually reduces the deficit as a share of gdp. As you know. And over the tenyear period reduces the current baseline. In other words, reduces the deficit relative to the baseline by about two trillion through a combination of targeted program cuts, but also the elimination of a lot of special interest tax breaks that dont belong in the code. Congressman, you think the white house is chastened by its reversal on 529s . Well, i think that was a mistake on both policy grounds and political grounds. But the reality is if you look at the president s entire middle class tax cut package, it will provide significant benefits, especially to families with young kids who are struggling with childcare costs. Theyll get about a 3,000 tax credit to go to pay for childcare, and all of us know that if you have a working family, you want to make sure that your child is in a secure place, and a place where theyll be able to learn. What are the chances you think they lose their tax exempt status . That i dont know. Theres not been a lot of discussion about that. All i do know is i know the seahawks are kicking themselves after that last call. Yeah ill say. Well see how the politics play out around the budget. Thanks for joining us. Democratic congressman Chris Van Hollen from washington. When we come back take a look at shares of exxon mobil today. Best beat for the Company Relative to estimates in about five years. The earnings calls happening right now. Some headlines in just a moment. But first, do not adjust your television set. This was a chevy ad that ran last night that had more than a few households grabbing their remote and jumping out of their chair. Winners and losers of the ad bowl. After a break. Budweiser once again capitalizing on the cuteness of a puppy, making what many are calling the best ad from last nights super bowl. Forking up to 4. 5 million. Ratings showing last night did deliver the highest viewership in super bowl history. Joining us to break down some of the winners, losers and the impact of social media is jim cooper. Its god to see you. Good morning. Overall grade, good or bad . In general, i would give it a bplus. I think there was a lot of interesting new players that showed up. That took a huge risk in spending that 4. 5 million. These are small companies, their creativity was really good. Now theyre on mainstream radar after being in such a big stage. You want to explain what was up with the fascination with dads . Yeah dadvertising was interesting. Is that the term . Maybe now it is. In general, the super bowl this year was very positive. Very familyfocused. Dads were a big part of it this year. And a lot of these ads were pretty good. Except for nationwide. What were they thinking . Nationwide, i have no idea. It was the one sort of downer of the entire super bowl and they got crushed on social media for us. They just brought the mood down. A dead boy . Freaked out my 9yearold ill tell you that much. Freaked me out. Does someone get fired . Someone will definitely be called. You think so . They got talked about. They got talked about hard on social media. The tweets were relentless. The recognition, even though it was broad, it has to be good otherwise its not valued . Theyll get a little lift but i think that was pretty tough. I think that people really were bummed out about it. A lot of these ads, i couldnt tell you who they were for. And i just wonder to what extent that actually goes beyond my attention span. Because so many of them are a message, but then you dont even know who the actual advertiser really was. Thats true. It was very intense and powerful, and you sort of forget that its an ad for bmw or something else. But the social media gives them a very long runway before the game to really sort of see their branding. So by the time you see a lot of these ads, you actually do know what they were for. I think he was talking about the always one. Sarah had to tell me who it was for. It was actually interesting. It was p gs always brand, which is feminine hygiene products. Nothing you would have taken from that ad, which had a great message. That was released earlier last year and it did so well virally, that they felt like they had to do it over again. Microsoft, with the prosthetics. Very heartwarming. Obviously coke trying to turn social media sb a less evil animal. Things like that. Mcdonalds. You give hugs as currency. In abage of social media, do those play as well . I think so. Sentimentality and humor really do well. People want to feel good ultimately watching these ads during the game. Snark and sarcasm doesnt really play that well. And i think that all those ads sort of tapped into that sentimentality. They are sometimes in the position of having to defend it later because of that snark that you mentioned. But they know thats the deal. They know thats the deal. There werent too many of those ads in this game. I really think that everybody leaned very heavily against being positive and up beat. What about tmobile and Kim Kardashian . You think that risk was worth it . I dont. I mean, its Kim Kardashian. You really need to sort of go there and have a much more creative ad. I thought the ad was very flat and there wasnt much there to it. How about the blue pill ad . I thought given the lack of humor, i enjoyed that ad. It was clever. It was unexpected and beautifully shot. Four and a half million. Is it a bargain . In this media era . I think you have to start taking the context that this super bowl had the biggest Television Audience ever. Broke a record. It was also the tweet bowl. The most tweeted super bowl ever. So you do get a lot of exposure for your marketing, especially if its received well. The newbie ads. 15 guys who have never been to the super bowl before. Those guys are now on our stage. Were aware of them because they advertised in the super bowl. Big part of the game, no doubt about that. Thanks for coming in. My pleasure. Thank you. Best part of the game some might argue. Coming up more on exxon results out earlier this morning. Plus other than ads, its what people are talking about this morning. No question about it. Passing on second and goal. Giving up an interception. And the game. So were asking what business decision rivals pete carroll as the worst . Tweet us get creative. Well share some answers later in the hour. The future of the market is never clear. But at t. Rowe price we can help guide your retirement savings. Our experience is one reason 100 of our Retirement Funds beat their 10year lipper averages. So wherever your longterm goals take you we can help you feel confident. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Call us or your advisor. T. Rowe price. Invest with confidence. Your moms got your back. Your friends have your back. Your dogs definitely got your back. But whos got your back when you need legal help . We do. Were legalzoom, and over the last 10 years, weve helped millions of people protect their families and run their businesses. We have the right people onhand to answer your questions backed by a trusted network of attorneys. So visit us today for legal help you can count on. Legalzoom. Legal help is here. An hour into trading, some of the stories were watching signs of a slowdown in manufacturing growth. The ism index falling more than expected to 53. 5 in january versus 55. 1 in the previous month. Pitney bowes posting a quarterly revenue miss. Last nights telecast of super bowl xlix delivered the highest overnight rating in the championship games history. A 72 share. That means 72 of televisions were tuned to nbcs broadcast of the game. Meantime keeping an eye on shares of exxon, climbing right now after the Company Reported Fourth Quarter earnings that actually beat the street. Stock up more than 1 with oil continuing to struggle. What will it take to revive these companies in the market . Joining us on the phone, paul sankey. I understand you just jumped off a call with exxon mobil. What can you tell us in terms of the highlights and the tone on oil prices and how exxon is dealing with it . The call was frankly boring. It always is. But i think the tone here today that were beginning to rally a little bit in oil prices. And exxon is going up relatively less, but still catching a bid here given that the market stopped going down every day. I think thats what some of the investors are wondering, if exxon earnings were down about 18 from last year, nearly halved from last what does that mean for the Smaller Companies if exxon is considered the powerhouse and the more insulated one of the group . Yeah and dont forget that these results were flattered by a legal win that they had regarding venezuela and some additional tax givebacks neither of which were true operational earnings. So were not considering this to be a beat from exxon. We think its a miss. Extremely defensive. A terrific standout here right now. We think its retained some kind of buyback. We had chevron going to zero buyback on friday. So it will remain very defensive as oil falls. The key question for us is when does it start going back up again. Were going to see much less spending and its beginning to be difficult to avoid much Higher Oil Prices in the future. Exxon is on the call right now, as you know. We remain committed to growing our dividend. Why such a stark difference in Balance Sheet strategy between exxon and chevron . Well chevron has been spending much more aggressively. Chevron for a smaller company, a company of 2 3 the size of chevron has been spending more dollars, up to 40 billion annually recently to try to grow production really through australian lng, exxon has been more conservative and thats been a huge differentiation. The other thing exxon has is more refining much more chemicals. That obviously heavily affects its relative earnings power when oil and gas have fallen so hard. That chevron halting buybacks was somewhat of a surprise. Will it be able to maintain the dividend that has been such a good draw for investors . Yeah for these guys all of these companies, its very very lasting. They have to keep increasing it because it would become a real decline. But if you dont beat inflation, your real dividend is falling. For chevron, lets say 30 billion of cash flow theyve got 8 billion in dividends to pay. Still spending over 30 billion of cap ex. So we do expect the cup to be required certainly if oil stays anywhere near where we are today. And these companies will become more and more dividend payout stories with essentially shrinking volumes over time. Conoco phillips are just accepting thats the way the world is going to be. The less they spend, ultimately the higher the price theyll go. We think the pain will last. Quickly, paul, one call that wasnt so boring occidental petroleum. I think you asked the ceo whether it was going to put itself up for sale or looking at m and a possibilities. What can you tell us about that name and others that might take advantage of these cheap valuations . Hes got an excellent sense of humor. He had taken a look at chevron, and i think he was joking because of the possibility of taking over chevron is zero. Alternatively, the stock started going up because people assumed he was thinking of selling the company to chevron, which is out of the question. So it was kind of a i think the general picture is were going to have to see Oil Prices Stay low into the second half and then there will be a huge second leg down in the oil equities. Thats basically what we think will happen. Thanks for joining us paul sankey, oil research analyst. So you guys made mention earlier pitney bowes, after reporting earnings that were in line with expectations. Pitney bowes now sees revenue, looking for growth of 2 . So those pitney bowes shares the worst performers in the s p right now. When we come back, Keurig Green Mountain is going cold. Dont go away. Lets get over to the cme group. Check in with rick santelli. Good morning, carl. Id like to welcome my first guest of the week charles bearen. Thanks, chuck. Good to be with you, buddy. I know theres a lot of macro indicators. Baltic dry index. Its 608. Hovering at the lowest level since 86. Well call it darn close to 30 years. How does it weave into the story, charles . Well zero interest by the central bank has created a tremendous amount of excess production of various commodities around the world. And so there was lots of buildup of tonnage to carry all this stuff because supposedly it was going to be sustainable. But what were realizing is that all that excess demand when Interest Rates first went down is just temporary, a oneshot thing. Now nobody needs that much cargo capacity. Now, i know gdp is a very crude mechanism to assess the entire economy. But it is what we have. And when we factored in our last look at 2. 6, basically put the entire 2014 right around 2. 5 . You know which is arguably just a couple of tenths better than weve been averaging the last several years. What does that tell you . Well look, the quarter of the gdp game was due to Higher Health care spending under obamacare. Hospitals, Drug Companies charged whatever they want and the government pays. So that was up. We had inventories up. Gee, thats great. We have junk loans, financing, huge amount of auto sales. And we have our children are being given money by the government to hang out while theyre supposedly going to school. And then when they finish they become, you know mid 20s. They have so much debt they cant become entrepreneurs anymore. Because theyre strangled by that. So we have a nogrowth economy, like ive been saying on your show for the last year ive been saying interest bond prices have to keep going up. Long bond has to keep going down. I think the long bond is going to make the tenyear will be at a record low and not too long for now. What do you think important variable for that is . In my own calculations, i cant dismiss that possibility either but i have to tell you, one significant turnstile of buying that has to be going full tlot throttle to challenge the 138 of july 2012 closing alltime yield for tens, would be weak stocks. If that turnstile isnt there, im not sure that the linkages to europe and some of their lower rates is going to have enough horsepower. Your thoughts . Bond prices have been going up, yields have been coming down at the same time stock prices keep going up. So as long as the number of shares in the stock market does not grow and theres more money chasing fewer shares stock prices are going to keep going up. And it doesnt mean the economy is not going to get you know the economy is not getting any better. And therefore bond prices are going to keep going down because the only thing Central Banks can do is print money. They cant create Sustainable Growth and we have no growth government policies. Charles, thank you. You always give us different points to think about. Not all of them good necessarily. Thank you. Sarah, its all yours. It is one of the stories of the morning, widely criticized. The seahawks choosing to pass with 20 seconds left instead of just giving the ball to marshawn limpbl lynch. So we rounded up some of the worst corporate calls. Some Business Decisions that rival Pete Carrolls for alltime worst. One of the biggies, new coke. Remember that . Cocacola introducing a new recipe to much fanfare. Only took 79 days new coke was gone. Had to bring back coke classic. Excite, which has evolved into ask. Com, had the chance to buy google for only 750,000. And another one, blockbuster passing on netflix over a decade ago. I do not remember this. For 50 million. Now its market cap is 27 billion. And jcpenney, another one ending proportions. Remember ron johnson got rid of coupons and sales and promotions. Obviously since sacked. But not before sales fell off a cliff along with the stock price. I know you guys have been going back and forth. Hp autonomy. Hp compact. Time warner aol. Netflix quickster. Remember the quickster fiasco. I would throw in sprint and nextel. M a i always come back to. Some of these you cant say if they had bought google it would have been google. If mcdonalds had not spun off chipotle, would it be chipotle. Still coulda woulda shoulda. What is google now . 400 billion company . Quite a bit. One other person says letting gates keep the license for ms doss. A lot of them are involved in tech for some reason probably because theres just so much change. Also the facebook phone was out there. Amazons phone was out there. We could go on all day with these. Sometimes we do. Yes, of course. Up next Keurig Green Mountain a moon shot the last two years. But a new report, not too optimistic ahead of earnings. Coke pepsico, Keurig Green Mountain, well discuss when we come back. Of americans try. To cook healthy meals. Yet up to 90 fall short in getting key nutrients from food alone. Lets do more. Add one a day 50 . Complete with key nutrients we may need. Plus it supports physical energy with b vitamins. One a day 50 at ally bank no branches equals great rates. Its a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. The 415, 628 area code overlay begins. Starting february 21, 2015, if you have a 415 or 628 number youll need to dial 1 plus the area code plus the phone number for all calls. Even for calls within the same area code. Youll still need to dial 1 plus the area code plus the phone number. So when in doubt dial it out for more Information Contact your service provider, visit the website at www. Cpuc. Ca. Gov 415areacode clsa with an underperformed rating noting theyre cautious over keurigs planned cold system rollout. Certainly got our attention. Joining us is the beverage analyst, levy. Good to see you. Why are you not optimistic like a lot of wall street on specifically keurig cold . Were much more cautious than average on the cold system. We think one of the big advantages of hot, and it has been a huge success, is that its convenient. Its much more convenient than making coffee from grounds at home. The difference we think that soft drinks are so widely available, so inexpensive, and to pop open a can takes about three seconds. So you can argue its a little heavier to get it into your fridge. But on a price value basis were just not sure that its such a compelling idea to Middle America. Well i think they would argue that its not just soft drinks, right . Its not just carbonated beverages. Theres going to be all sorts of other cold drinks and a new and exciting way to reinvigorate a category thats been declineing for the past several years. Obviously coke agrees with them. I think that theres potential for this to be a great success, but a lot depends on exactly how functional the machine is. Its going to be using pods that have a chemical that creates a carbonation effect immediately. Dont know what the uptick will be on that. The at least wealthy americans tend to be the biggest users of packaged soft drinks and we dont know how widespread penetration and uptick of the machine will be inhouse. Why do you think coke is buying them outright . A lot of folks say the bull case on cure rigkeurig is coke just buys them outright. I think they would have to offer about a 25 premium. And cokes Balance Sheet isnt as strong as it might appear at first blush. They also have 40 billion plus in net debt and a lot of their cash is actually sitting overseas. So not so easy for them to make a u. S. Acquisition. Its not impossible. I would argue that the board is probably not in a hurry to approve another expensive largescale acquisition. I think the equity stake method is going to be the way they stay in this. I actually mentioned brian kelly used to be an executive at cocacola. How does 2015 shake out for coke . Whats the plan for growth . Do they have any sort of convincing plan to turn around this prolonged slide in soft drinks and the business . Their plan is very much to grow carbonated soft drinks, grow brand coke which is quite different really from pepsi. Theyre gaining market share, but the problem is the market is not growing. They have reversed for a month or two a decline in sugared colas. I dont see anything particularly different. I think the fact that theyve taken a stake in both Green Mountain and monster tells you that theyve recognized theyve got to go outside their core business. So were actually very cautious. They obviously have terrible head winds from currency. Its going to hit them later, but its still going to hit them. Pepsi has a big stake in russia. Earnings for coke next tuesday, a lot of investors are waiting for this. Do you think pepsi is going to enter that system because coke obviously has the partnership but dr. Pepper has a deal with them as well. What does that mean for pepsi . Pepsi has been slow on the uptick on a number of different things. I think theyre going to watch it very closely. They will look at getting in if they have to. As the ceo said, if it takes me three seconds to pop a can open and 45 seconds to brew a cola at home thats probably 42 seconds too long. So i think they are very skeptical and again, i dont think there will be no uptake but how deep amongst Middle America this machine will have and how its going to be priced. Finally, now that theres a board member at pepsi what do you think is going to be done . Looks like pepsi still doesnt want to split the businesses but what sort of changes do you think hes going to push for . I certainly believe this company eventually will be split into two businesses. Ive always believed companies that focus on one thing tend to perform much better over time. I think the better performance of both businesses is what you really shoot for. I think hes going to push for that very hard. It may still be two or three years away. A lot of potential changes to watch. Thank you, caroline. Good to see you. Keeping our ion apple this morning as well. Not quite back to the record levels of last week. But filing some documents for another bond sale. A little bit earlier in the year this time. Not quite as big in the last couple of years. People are talking about the yield expected to be almost a full point above treasuries. Yeah, i mean thats what weve been seeing in the Investment Grade bond market is not necessarily coming down as much as rates have come down. You do have spreads widening a bit. Certainly high yield where youve seen so much you have such a large Concentration Energy has been a bit dicier if you will its been important to keep an eye on those bond markets. Yeah, this has been the Corporate Bond bonanza. Especially in Investment Grade. Because treasury yields have been so low. For years. With apple and mind and technology lets have a look at whats coming up next on squawk alley. Were going to dive more into those Super Bowl Ads. Tech names, a little controversy in there. Also winners and losers in social media. Finally, amazon has been selling off stake. Similar to what bill gates has done overtime. Is that going to get amazon into trouble . Well talk about it. Tune into squawk alley coming up next. Your moms got your back. Your friends have your back. Your dogs definitely got your back. But whos got your back when you need legal help . We do. Were legalzoom, and over the last 10 years, weve helped millions of people protect their families and run their businesses. We have the right people onhand to answer your questions backed by a trusted network of attorneys. So visit us today for legal help you can count on. Legalzoom. Legal help is here. Theres nothing more romantic than a spontaneous moment. So why pause to take a pill . 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For a free 30tablet trial go to cialis. Com you just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. Because youre not you youre a whole airline. And its not a ticket youre upgrading its your entire operations, from domestic to international. Which means you need help from a whole team of advisors. From workforce strategies to Tech Solutions and a thousand other things. So you call pwc. The right people to get the extraordinary done. Welcome back to squawk on the street. The second worst performing stock today is moodys. Thats after the wall street journal reported they are investigating the Credit Ratings agency. They are looking at the firms bond ratings ahead of the financial crisis but the inquiry is in the early stages and may not lead to a lawsuit. That comes on the heels of another which is also being scrutinized by the doj. Back over to you. Thanks for the update there. Lets take a look at how the Broader Market is fairing. A little bit better. The dow is coming back from earlier losses. Was down more than 120 points at one point. Now down 35 on this first trading day of february. Weve got a jobs report later in the week of course and many more big earnings report. Energy was the worst performing group in january. Over to you for squawk alley. Good morning. It is 9 00 a. M. In glendale arizona. Squawk alley is live. Welcome to squawk alley, day after the super bowl. Who better to talk to than John Steinberg whos forgotten more about ads than most of us will ever know. The patriots of course 2824 against the seahawks. Delivered record ratings for our parent nbc. Time to measure up madison avenues winners and losers. Companies paid 4. 5 million on 30 seconds of air space from the brady bunch to that throwback