Likely added 193,000 private jobs last month. And then the Big Government jobs report out on friday. Sara, thanks. In Corporate News, a number of legal headlines out of the Financial Sector this morning, jpmorgan agreeing to pay 614 million in the mortgage fraud case. The late nest a string of legal claims against the bank. As part of the settlement, jpm admitted it defrauded federal agencies by underwriting mortgage loans. At issue, thousands of insured loans that were not eligible for insurance by the fha or department of veteran affairs. Morgan stanley will pay 1. 25 billion to resolve the mortgage lawsuit. Morgan will add 150 million to its legal reserve as a result of the settlement. And a new judge priding over the bank of americas proposed 8. 5 million settlement has postponed entering a final judgment in the case. The decision raises the possibility of additional rel maneuvers. The judge agreed this wouldnt take effect until at least february 19th. Andrew, what was the total of those fines i just read about . What did you say there . What was the total of those fines i just read. 8. 5 million, 115 million. Just a days worth of work. Weve got tech news for you this morning. Microsofts new Ceo Satya Nadella is going to be getting a base salary more than 70 million higher than Steve Ballmers base pay. He will be eligible for an annual cash bonus up to 6. 3 million as well as stock rewards. He could receive up to 18 million his fist year on the job. He has nothing on googles eric schmidt. This is the second time in less than three years that he has received an equity award of that side. I dont know what microof the is doing. And i know you compared him with Steve Ballmer, but i like how the journal compared it to other tech ceos. Is that like saying yada, yada, yada as well as stock awards . What is if im reading this right, im reading your script, will be eligible for an annual cash bonus up to 6. 3 million as well as stock awards. Total of 18 million. But only 18 million. At ibm, it was 16 million. Marissa mayer, the annual salary was 1 million but, of course, there were equity compensations. Packaged to 36. 4 million. I dont know if anybody read the wall street journal this morning. The most interesting nugget on this whole thing, the fact that the reason why alan mulally dropped out was because he didnt want because there was such friction in class with Steve Ballmer who was going to remain on the board, one sentence bizarrely buried in the story that explained why and i dont know if thats really why alan mulally left, but the suggestion was they kind of hated each other, the story said, i thought that was fascinating. It was unclear. He was set up to be a frontrunner when rick sherman put out the no predicting alan mulally. All of a sudden, his name sort of dropped off. Anyway, that is a fantastic story. Theres so many nuggets of jewelry all throughout. You didnt read this piece. You dont know what im talking about . My feet are still freezing from standing in the snow. Its the classic bill gates you have a driver. Thats right. Don thompson, now the chairman of microsoft, formerly of semantic, it was going to be thompson, bill gates and thompson standing in front of the staff yesterday and bill gates looks at thompson and says, no, no, only us. These little anecdotes which are fun for those readers up at this early hour. We certainly know. It took us several months to get that decision. Lets get a check on the markets this morning. Futures not doing a whole lot at this early hour. Adp at 8 15. Private sector jobs report. After yesterdays sort of mini rebound, would you call it . Its better than red arrows, which is what this is looking like right now. The dow jones down about 50. Its early still. Nasdaq down 16. Were still in earnings season. So far, i dont know, how would you rate the earnings season . I would say that profits look overall like they well, profit is okay, but the guidance has some trouble. I was looking a day ago. I havent done an update on it, but big down turn in the outlook for the First Quarter. Yeah. Back in january, i want to say, we were up near 7 or 8 . Now the outlook for q1 is 4. 5 . So thats down. Even though q2 remains up by 9. 9 and change. Just wanted to make sure. Some other markets on the move, i want to check on oil. We had seen elevated Energy Prices throughout the week. Crude oil, 98. 02. Brent crude, the International Benchmark elevated here this morning. Nat gas under a little bit of pressure, but its been a pretty big rally. Who would have thought significantly lower yields. Everyone called for higher yields. Steve raises his hand. I didnt think lower yields. I just thought mostly unchanged yields. You realize whats happening, right isnt it true i dont know if you want to talk about this now. Speak out on it now while you can. This is a mistake to put the two of us together. So forget Everything Else that is going on. The fed, as it reduces the amount of qe out there, actually staying about in place as a percentage of the total issuance that its taking down because of the deficits come down, the government is issuing somewhat less in the way of new bonds. Okay . So the 65 billion i havent run the numbers in a little bit, but its more or less on par with the 85 in the older world with higher deficits as well when it comes to more regions. And thats come as a bit of a surprise. The better deficits, its a bit of a surprise. But there was still forecast ahead. So the fed had to taper just to remain as stimulative as it was. Good point. How about the u. S. Dollar moving, especially the dollar yen. Under pressure, 101. Stronger yen, weaker u. S. Dollar this morning. The euro is under pressure, as well. Did it disappointing data out of europe and the pound, as well. Pretty much a strong dollar across the board. We want to track on gold, as well. Gold prices 1256, slightly higher. Weve both gotten a safe haven bid. I wish i hadnt bought bitcoins, but i wish i had. I told you about my missed opportunity, 5 a bitcoin. And that would be worth what now . I could have done it because nobody knew what it was at the time. And there are no regulations on it. Yeah, pretty much. What about asian markets . A mini rebound in japan overnight. Adam joins us live from tokyo with the story. Adam, 4 selloff the day before. 11 rebound. Doesnt seem like much. And it doesnt look like its going to last, either, sara. You just read the dollar yen cross. Were looking at more strength is in the jap jack niece yen. A lot will hinge on exactly what the idp number comes up with and, of course, the nfp number which comes on friday to dictate sentiment including equities, fixed income and currencies. As you well know, in the United States, the performance of Japanese Equities are tightly correlated, positively correla e correlated to the movement in the dollar yen. That said, we did see the markets down from the trading session here in tokyo on wednesday. It was up about 170 plus points to the nikkei 225. But a far cry from the savaging that we saw on the previous trading session when we lost about 600 points. In terms of what were moving, the markets is all about the shift towards the corporate earnings season as you guys are also in currently. With consumer electronic stocks once again outperforming in these equity markets, the likes of panasonic, that was the staff performer in tokyo today after they announced that their profits down double digits, 20 is 730 million u. S. Dollars for the october to december period. In fact, the ninemonth period returning to the plaque after three years black after successive losses. Because of some os thof those n businesses. In the meantime, sony is very much in focus in tokyo today. Media reports suggesting that they might be close to selling their stake in terms of their pc division. They have the pcs and they have been bleeding red ink for many, many years. Sony will be coming out with their Earnings Report on thursday in tokyo, so a lot of eyes will be on that. As you well know, activist investors have been pressing very hard for the chief executive and the board of director toes shake up sony and, of course, divide out some of these divisions that are not performing any more and, of course, may be spinning off some of the other divisions like the entertainment. In the meantime, autos in focus, did very, very well in japan on the back of toyotas numbers. Rising five fold. It was pretty much a good session for tokyo stocks, but it could all change tomorrow depending on how you guys performance tonight in the United States. Thank you, adam. That computer business at sony, thats going to happen later this week from my sources. So i think we will see that. More importantly, adam, i dont know if we still have you, people are now telling me the value of sonys entertainment business is whoorth more than t whole stupid business combined. Potentially that the when he is whole piout opportunity could arise. The thing is, andrew, if you look back at what daniel loeb is trying to suggest to the board of directors of sony last year, they said, look, you know, they need to spin off some of these outperforming divisions like they just mentioned, entertainment. But if you look back at the q2 numb numbers, it was the Entertainment Division that didnt do so well because they didnt have some huge blockbuster movies. So it hasnt been performing all that well. Really, at the end of the day, those numbers in sony were boosted by Financial Services, insurance business. So it doesnt have a lot of legs to go on at this point in time. Yes, the playstation 4 managed to outperform, you know, when they launched it back in november in the United States. They saw solid sales in december. But a lot of people are saying that sony needs to do a lot more and a lot faster to cut away some of these recommend rajjing businesses that have been dr dragging them down for years. By the way, the cultural issue is they cant get rid of them. They put them next to the elevator in hopes that they get the joique that theyre going to leave. But then because they have so much pride, they stay there. If you go into the offices in japan, they literally put them there but they dont go. If we had the kind of snow you get in the stadz, we would be shut for months, let me tell you. Outpacers over decliners by a ratio of 6 3 this morning. The ftse is up 16 points, so pretty flat on the last 48 hours. As far as data is concerned, we had services pmi coming out. 58 points, a little lower than we thought. But the long run average for this series has been 55. So still well into expansion territory and the composite number now pointing to quarterly growth in the uk around 0. 8 , which is fairley good quarter on quarter. The german markets off 0. 2 . Off about 0. 1 for the cac 40. Break that down into the sectors. This is where we stand at the moment. Weighted to the upside. Chemicals and construction have any real sense of weakness, down 0. 3 . Health care is up about 0. 5 . Along with the basic resources and banks. No big moves every way. One stock worth pointing out today, the swatch brand up nearly 4 today. The ceo says that china is going like crazy in terms of sales there today. And they had good numbers, as well, expecting healthy growth this year. Watch and jewelry sales hoping net profit up more than 2 in 2013. So china, one market that is good for this company. Thats where we stand right now in europe. Back to you. All right. Thanks very much, ross. Lets get a check on global currency markets this morning. Of course, in the lead lately, joining us is camilla sutton, the chief current strategist at scofa bank. Also with us, rich costinas from citigroup. Camilla, a week ago we were all sitting here freaking out about currencies from argentina, from turkey, things seem to have calmed a little. Is the worst over for these emerging market currencies . Its always hard to pinpoint the worst is over. But i think what 2014 has told us so far is weve reintroduced tail risk. I think thats a big theme for 2014 and were going to have periods of rolling risk that continue to spike up. When we look at what fed policy did after the crisis, which is really to take away that tail risk, as we move away from unconventional policy, were seeing that tail risk reenter. I think tail risk has reentered. Its part of all the fx stories. You know, we talk about volatility being back for the stock market. Were seeing it in currencies, too. Very unusual to see these kind of 1. 5 to 2 swings in currencies daytoday. Whats driving that . Who is actually selling . Well, i think from our side its still leverage investors that are predominantly driving this selloff. But we havent seen a lot of the longer term or real Money Capital selling aggressively. The em currencies overall. In general, its still some of the shortterm people adjusting their portfolio. I think one of the interesting things about volatility is if you look at currency volatility, its elevated in em. But if you look across assets, equity volatility is quite high. But fixed income volatility still remains quite low. So one of the things that we look at is given the fact that emerging markets are selling off, bond volatility being low really kind of indicates to us that some of those underlying positions are remaining in place and that this is more of a shortterm correction rather than a longterm repricing of emfx. What about the underlying economics of these countries. First when it comes to their debt, are they more in control of their debt in the sense that more of it is local currently compared to other crises or do they have large exterior dollarbased debt . Its very much a stock in currencies. Some positions are better than they were back in 2006, 2007. But in general, theres still as has been talked about, the fragile five, the ones that are very depend yallant on external servicing to cover this debt. Camilla, do you see any move tomorrow . It gets interesting. I think what we have tomorrow is no move from the ecb. What were likely to see is on march 6th when they release new forecasts, that will be the time when theyre able to decrease their inflation outlook. There are two things that will have the ecb to act. One is unwanted tightening and the other is more dissen flainf. Weve seen ongoing signs of that. Tomorrow is going to be laying the groundwork. March 6th is the meeting when we see all the time. Camilla, can i stick with you for a second . I just want to know the process by which fed tapering creates unwinding of the carry trade. It was supposed to be an Interest Rate differential, and now u. S. Interest rates are back down again. Theres not a whole lot less money out there from the fed because they went from 85 to 65. Why would the carry trades unwind because of what the fed did . You know this better than anyone. To look at forex. The market is looking ahead and all of a sudden the markets saying, look, really loose policy has been able to, for the em, for all the pieces, cover up all these other problems, structural imbalances, bigger imbalances. Now were at the time where the fed is moving ahead and so far theyve really indicated that they expect whats happening in the yen to be part of whats going on. And because of that, i think that it has markets realizing its time to reprice. Its the grounds are shifting here. Even though its not really going to complete until maybe the end of this year. The grounds have shifted and we are moving from one phase to another. And markets know how to price that. Thanks for starting the morning here with currencies. A lot going on, camilla and rich. Good to see you both. You know, steve, i think when you see the japanese yen strengthen like this, it jives with what weve been seeing, this flight to quality. Right. Im trying to break apart real stuff as in the flow of money from fear stuff, which is the sense of will there be an exit. And im trying to figure out if theres a mechanical thing where the fed dialing back on qe creates less money out there. Is it tapered money, excess reserves . Its not that easy. Its not that straightforward. Why wouldnt the carry trade be back on . It is a long conversaon. We have another story we have to bring you. We are now just days away from the start of the Winter Olympics. Of course, being brafoadcast on nbc. This is big. At t has now become the first major advertiser to protest russias antigay laws. In a blog, the company saying russias law is harmful to lesbian, gooi gay, bisexual and transgender individuals and families and its harmful to society. I should also say some of this conversation began in davos just two weeks ago when dan loeb and paul singer sponsored a breakfast about this issue. They are big supporters of really trying to appeal these laws in this country. There was a huge protest that went on in atlanta around co cocaco cocacola. Also for businesses, a big one over the next two or three weeks. So im fascinated by that. I am, too. We can also talk about the carry trade, as well. This to me is moving the world forward. And my thing is its backwards. No. Coming up, the countdown to the adp employment report, some clues about the governments release on friday. And has Mother Nature started to take a bite out of the economy . More nasty weather. This is a live look at chicago. Well get the National Forecast when squawk box comes right back. Announcer where can an investor be a name and not a number . Scottrade. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why im with scottrade. Announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. All the snow and ice this winter is creating a shortage of salt. Now areas are rationing their salt. Road crews are experimenting with liquid cheese brine. I guess they have plenty of that, mixing that in with rock salt before it goes on the road. What . Yeah. It tries to make the salt wetter, i guess, to make the salt stick in place rather than bouncing away. That looks like a live shot of getting here to work. I was behind those truck these morning. So you had to wait. That is not a bad place to be. No, but we were hoping to move faster than the trucks were moving was sort of the problem. Lets talk about the harsh weather for much of the east coast this morning. There could be more on the way. Lets get to the National Forecast now from the weather channels jennifer delgado. Good morning, jennifer. Good morning, guys. Youre right. It is messy out there. The cheese brine is down in parts of new jersey. We have Winter Weather alerts in place from parts of the midwest over towards new england. We have been seeing a lot of snow coming down and were also talking about freezing rain as well as that wintry mix. Anywhere youre seeing in purple as well as the pink shading setting up across northern parts of virginia as well as into philadelphia. Notice, new york, youve been dealing with some very heavy snow out there. But youre going to be looking at icy conditions, as well. That means driving on the roadways for areas including north jersey as well as new york. Its going to be really messy out there. You can see that wintry mix is working in. In addition to the snow you guys had earlier this week, youre getting another round. Some locations up to about 3 inches of snowfall. It is going to be cold out there. Well help you time this out for you. We started off 7 15 a. M. You see where the wintry mix is. The snow is going to be heaviest across areas like boston where theyre expecting in some of these locations 10 inches of snowfall, maybe even a foot. As we look ahead to 12 15, new york, youre going to start to get some of that warm air in place and thats changing that precipitation over to rain. And that is good news because that shows you the warming thats going to be happening there. By time youre driving home this evening, really, the bulk of the heavy stuff is gone for new york as well as into pennsylvania. Still hanging on to parts in new england. Boston, its going to be messy out there if youre driving home. Hopefully a lot of you are going to be off work tonight because it is still going be dealing with some very heavy snowfall in the course of very cold temperatures lead to go icy spots. If you want to know how much we are talking, some of these locations, as i said, more than a foot of snow and that means boston, parts of Southern New Hampshire as well as vermont and for new york, it looks like 1 to 3 inches for you. Steve, i know its messy in new jersey. Its going to be messier across parts of boston this time. You won this one over boston. I guess so. Except we have the everybody is a loser. We have the ice, too, another fabulous component. Thanks very much, jennifer. Youre welcome. The weather is grabbing attention at the fed. I heard a little somethingsomething yesterday. Its all the weathers fault. The economy. I know the fed is interested to the extent to which the weather could have some responsibility for the recent weakness in the data. I know theyre thinking its not the only thing. Perhaps some snapback. We had two strong quarters. And you had a lot of inventory built in the third and forty quarter. So youre going to have some putback a little bit in the First Quarter. Thats very usual. I did this yesterday. You could be 1 to 2 lower on an average in the second half because of that. But here is what i think theyre looking at, which is what i understand. Theyre trying to look at population adjusted weather degree days. Population adjusted weather degree what does that mean . How much of the population is affected . Right, by the lower than normal temperatures. And theyre trying to look at that and fold that into the Economic Data. The bottom line is its going to take us some time to figure all this stuff out. By the way, the next is the economy going to be more screwed up because of whats going on this month . Yeah. Thats when the data youll get the data next month or so. Right. But here is what you have. Youll have a down turn because of the weather. A snapback because of the weather, right . But neither one of those points are telling you the truly true story about the economy. So theres going be a lot of confusion in the data, assuming you get this trough and this peak as a result of it all. But the up shot is how could they move on policy or change their current path to policy given that we dont know how much i think they wont. I think the thinking there is that it took a lot of accumulated evidence to get to taper. It would take a lot of accumulated evidence to get off of taper. You have a Climate Change discussion, but joe is not here. Coming up, we should talk about health care and obamacare. Were going to kick off this discussion right after this short break. And the other question, did you know there is a propane shortage in this country . I didnt know this. Its not going to threaten your backyard grill, but it may impact everything you eat. Weve got that story coming up in the next half hour. But first, take a look at yesterdays winners and losers. Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. But with less energy, moodiness, and a low sex drive, i had to do something. I saw my doctor. A blood test showed it was low testosterone, not age. We talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer, worsening prostate symptoms, decreased sperm count, ankle, feet or body swelling, enlarged or painful breasts, problems breathing while sleeping and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about axiron. Good morning. Welcome back to squawk box right here on cnbc. About 6 33 on the east coast. Im Andrew Ross Sorkin. Sara sara isen is in today. Becky quick and joe kernen will be joining us live from bebl peach this coming friday. Thats always a hardship assignment that they they always they never want to go, they push back and then and Clint Eastwood i hear is the highlight. It strikes me this morning how much smarter becky and joe are than you. You how is it they know not to come in today, they end up in pebble beach, you come in in the sleet and snow and theyre who knows where. Of all things. Ive thought this one through and i havent figured it out. Im going to bring smu other headlines this morning. We are now less than two hours away from that january adp employment report. Polled forecasters say the economy likely added 193,000 private jobs last month. In washington news, the federal government is taking steps to avoid hitting the debt limit. Will temporarily suspend treasury securities to state and local governments starting at noon on friday. That move will be followed by other bookkeeping maneuvers with the goal of keeping the government functioning until congress decides to raise the debt limit. And some Corporate News just crossing the wires, the eu and google reaching a landmark dial in an antitrust case. This would settle that threeyear investigation and prevent a fine up to 5 million. The investigation started back in 2010 after a dozen businesses accused google of promoting its own services at their expense. And now you understand why eric schmidt is getting paid 100 million. 100 million is cheap if youre saving 5 billion. My guest is some of the staff thing no, no, eric schmidt is responsible forethis settlement. Hes been the man in the middle of these negotiations. Everything he does now is basically negotiate with regulators. Thats his job. Just telling you. I dont think you have to pay him 100 million to do that. You have some guys who would do it for 80 or 70 even. Are you raising your hand . Id do it for 60. Andrew, weve been told to me move to this. The futures this morning, down red arrows, 353 on the dow, 16 on the nasdaq. S p 7. 85 right now. Lets look at europe, which was down, as well. Mixed. Up 0. 25 on the ftse. Up 7. 39 points on the cac and the dax down just fractionally. Asia this morning was up a bit. 1 plus on the nikkei. The hang seng, thats open, right, sara . Hang seng . Yeah. Shanghai is not. Okay. Korea up about 0. 25 , andrew. Joining us now to talk more about the markets, the men with the purple ties. This morning, lee has a purple tie on. Lee partridge. And john lonski, moodys chief financial markets. My question is not whether i should hold my stocks because Everybody Knows were not going to sell our stocks amid all this craziness. My question is whether im supposed to buy stocks right now. My answer would be no. I would wait for some clear signs that the market has stabilized. If its stabilized, then im too late. Then youre trying to be too cute by trying to time the bottom. Why try to catch the falling knight using that tired cliche. Where are you on this, mr. Purple tie . Andrew, i would say more people have more stocks than what they need to begin with. Oversupposed. Theyre oversupposed from the beginning. People dont know why the stock market rose 32 last year. Its basically the same as saying stocks went up because stocks went up. How much more do we have to go, then . And what gets us there . That is fair value . Were trading at 17 times earnings. Theres heavidy projections. Are we going to hit 115, 120 earnings per share on the s p 500. I think thats a kwen big question mark. You have some real formidable headwinds. The fed has tapering 20 billion in pure chases. If Mortgage Rates are going up, that creates a lot of headwind. If im not buying and im sitting do you want me sitting in cash waiting to pounce for this moment where im going to be too or do you want me sitting in bonds . God forbid, im sitting in bonds. But bonds are the lead performers thus far in 2014. Thats right. And the question of ov overvaluati overvaluation, overvaluation doesnt necessarily imply that the market is about to tank. We can have an extended period of overvaluation. What tends to matter most in a rising market for equities is that profits continue to grow. For the most part, the consensus is calling for an extended climb by profits throughout 2014 and into 2015. Nethe numbers were actually double digits in the third and Fourth Quarter. I think the numbers were 4, 5 for the First Quarter, around 9 tell me when im wrong here for the Second Quarter and double digits for third and Fourth Quarter. I think thats overly optimistic, but theyre pretty high in terms of the outlook. I want to know, if you choose, andrew, for example, not to buy stocks, what else should you be buying . Thats what im keep it in cash or my point, i guess, is that there arent very many decent alternatives out there. How about gold, bonds, the dollar . I stayed away from gold. I wouldnt be that averse to holding cash. Id look at shorter term bonds where you have less price risk. You might want to go out, you know, with bonds to a maturity no longer than, perhaps, five years to play it on the safe side. Were starting to see the tenyear treasury make two runs for 3 . Both sooidz times it failed them. That was in september and most recently late december, early january. And maybe thats telling us that the uk economy, the World Economy is not quite yet Strong Enough to shoulder a tenyear treasury yields of 3 or higher. So one of the big surprises this year may be that the tenyear treasury yields averages something less than 3 . Especially yet the labor market doesnt strengthen enough to provide us with something more substantial in terms of income growth. Steve, can i interject one point here . I think questioning where you put your money is the right question. And right now, its very difficult to see what the future is going to look like. So a lot of people tell you they have a crystal ball, they know what stocks are going to do. History has taught us that the experts are wrong more often than are right. So we firmly believe in diversification. Commodities are an important part of the portfolio. You think about what is a reasonable inflation hedge . Agriculture is a much better inflation hedge than gold, which is a surprise to people. Why am i inflation right now . That seems like the least worry that i have out there. Is it . Look at emerging markets. There is some inflation. But its theres different cycles going on around the globe. Right now, we are facing deflationary forces, but it can switch as labor markets here start to tighten. The market has been wrong and a place inflation throughout most of the current recovery. 59 of the months of the current recovery, the tips contract has overestimated inflation. Previous recoveries said overestimation was no higher than 35 . We have this huge inventory build up in the second half of last year. And that tends to support the argument that in the early part of 2014 were going to see core pc price index inflation on a year to year basis go under 1 . What how does the fed react to that . Folks should know that the pc price indicator rather than the cpi is where the fete really follows. That tends to run lower than the cpi. So youre saying they move further away from their 2 goal and then below 1 , which has been a concern of deflation in the past for that. I would not be surprised if something arises not right away, but perhaps towards the middle of this year with the fed decides to temporarily halt tapering. Wow. Because of downward pressure in pricing. And, john, how much weather is in these weak numbers right now, in your opinion . Well, especially in the housing front, you know, construction activities, being hurt, industrial activities, so the polar vortex makes it very difficult to interpret. The jobses numbers were going to be getting for january as well as what we had earlier from ism on manufacturing activity. Have you had a chance to take things apart . You know, i wouldnt be surprised if payrolls growth is at least 100,000 jobs less than otherwise because of inclement weather. Wow. Thats important. Mr. Purple ties, thank you for coming in. Greet conversations. We thank you. Appreciate it a lot. I looked at important investment. All right. Next, did people order up Buffalo Wild Wings last quarter . Well find out. Also, netflix was one of the biggest stock market darlings of 2013. Now the streaming Video Service is capitalizing on one of its hit shows. Good news if youre a house of cards fan, next on squawk box. Welcome back to squawk box. Equity futures at this hour pointing south. Dow jones indicated to saturday lower by 43 points. The s p down by almost 7. And the nasdaq by more than 13. Check out shares of Buffalo Wild Wings here in early market. And last year. The Restaurant Franchise reporting Fourth Quarter profits of 1. 10 on 345 million in revenue versus estimated earnings per share of 106 on 347 million of revenue. And theyre now serving pepsi, if you remember. They went from coke to pepsi. Wings are in right now. Wings are in. I think we should have wings over here. Hollywood news, besides watching live Business News all day, i bet some people forced to stay home may be checking out their netflix for some bing viewing. One way to do that would be to get going on more episodes of house of cards. The original will now be getting a third season of the washingtonbased drama. The Second Season will premier on february 14th on valentines day. All 13 episodes will be available all at once. Just two points on this situation. They bought this thing two seasons at one time. Which had never been done in tv land. Usually, you know, a network buys one season at best. Oftentimes they buy until they renew it. Everybody had said that the creators of this show had not were never going to make a small fortune off this because the first two seasons nobody night was going to be a hit, so netflix got a great deal. They just now finally got the payday. So everybody who is involved in this is now theyre making money, yeah. The creators of the show just made this all work. Catching up the third season. Yes. But actors historically never want to do a third season. If youre kevin spacey, a youre a movie guy, you could i can get 5, 10 million well, no, no. Theres not as much money in tv traditionally as movies. Netflix, that stock has been one high flyer. Coming up youve got to watch this show. My wife watches it. It gets a little i thought it was very realistic up until the end, but i wont give away what that means. Youre an establishment anchor at the show, the music plays, you ignore it. Im felg in, i follow it. Coming up, the weather is causing a shortage of pressure. Find out why this supply problem could have a national impact. And were not talk about your backyard grill, but first, check out the price of natural gas, which has been moving higher. More squawk box coming next. Actually, its lower right now. This is humira, adalimumab. This is humira working to help relieve my pain. This is humira helping me through the twists and turns. This is humira helping to protect my joints from further damage. Doctors have been prescribing humira for over ten years. Humira works by targeting and helping to block a specific source of inflammation that contributes to ra symptoms. For many adults, humira is proven to help relieve pain and stop further joint damage. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira , your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Ask your doctor if humira can work for you. This is humira at work. [ male announcer ] with nearly 7 million investors. Oh hey, neill, how are you . [ male announcer ]. Youd expect us to have a highly skilled call center. Kevin, neill holleys on line one. Ok, great. [ male announcer ] and we do. Its how edward jones makes sense of investing. As this wicked Winter Weather stretches on, the midwest supply of propane is thinning out. Its causing record high prices and forcing many stations to declare propane emergencies. Didnt know that was a declaration that was possible. Our Morgan Brennan is in one of those states. She joins us now from sully, iowa. Good morning, morgan. Reporter good morning. And yes, propane prices are at record highs as the shortage continues, especially in the midwest and northeast where 6 million homes and nearly 1 million farms use propane as their primary heating source. In the last week of january alone, we saw the National Average price of propane top 4 a gallon. That was a 30 jump in that just in the week, way above levels we saw last year. Here in iowa where we are, prices surged 80 in a week. In some places hitting as high as 5 a gallon. Now, why are we seeing this . Pardon the pun, steve, but this is a perfect storm of issues. Obviously, the cold, cold weather. I mean, here, its five degrees before the windchill. Also were seeing a recordbreaking wet and late crop. That required more propanepowered heaters to dry it. Also increased exports. Propane exports are at record highs right now according to the eia. 400,000 barrels of propane getting exported per day. In the summer months when inventory has historically built here in the United States before we built the export capacity, instead that propane went outside the country primarily to latin america, europe and some asian markets. Reporter now, combine all of this with a transportation bottleneck, having pipeline issues, railcar issues, there are not enough trucks to transport propane. Theres not even enough drivers to do it. So were seeing all of this is causing the d. O. T. To declare an emergency situation for 35 states and washington, d. C. Theyre loosening restrictions to get more propane out of the storage hubs in kansas and texas, to places like iowa and other hardhit states. Eventually, hopefully this is going to get better. As you guys know, seeing the Winter Weather, second storm there just this week, it could get worse before that happens. Steve, back to you. Morgan, thanks very much. Please go get and stay warm. Wheres sully . Morgan in sully, iowa. I dont know where that is. But im going to look it up. Okay. Reporter an hour outside of des moines. Okay. Coming up, were going to talk about the economy. It is in focus, and it is all about jobs. Could the upcoming numbers spark another selloff . Plus, when will all the flight delays and cancellations start to hurt the Airline Sector . This weather not helping these airline companies. How much snow is too much for the nations air carriers and investors . Weve got that story and a lot more coming up in two very big hours of squawk box when we return. 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. Could save you fifteen percent or more on car insurance. Mmmhmmm. Everybody knows that. Well, did you know that old macdonald was a really bad speller . Your word is. Cow. Cow. Cow. C. O. W. E. I. E. I. O. [buzzer] dangnabbit. Geico. Fifteen minutes could save you. Well, you know. Good morning and welcome back to squawk box on a very snowy day here on cnbc. Im Andrew Ross Sorkin along with steve liesman. Sara is here. Becky and joe will rejoin us this friday live from what i imagine is Better Weather in pebble beach on the other side of the country. Lets take a look at the futures, see how things are setting themselves up for the day. After a little bit of a better day yesterday, it looks like this morning may not start nearly as well. Sort of like a snow day. Dow jones looks like it would open down about 60 points off. S p 500 off about almost 9 points and the nasdaq off about 16 points. We also have some Morning Headlines for you this morning. Todays market fortunes could be driven by the monthly adp report for january. Heres the number to watch. Economists are expecting that report to show 193,000 new private sector jobs last month. And of course, those numbers will be out at 8 15 eastern time. And we will bring them to you and, of course, steve and saras instant analysis. We do have breaking news for you right now. This is big. Cvs caremark, that chain is announcing it is going to remove cigarettes and tobacco from all 7,600 of its pharmacy locations by october 1st of this year. The president of cvs pharmacy explaining the decision to nbcs tom costello. This positions us really towards where health care is going because we know the sale of tobacco is extremely inconsistent with being a Health Care Provider. We certainly expect other people who are in the pharmacy business to look at the mirror and ask themselves, where do they want to be in the next few years and what kind of role do they want to play in health care. But ultimately that will be their decision. Tom costello joins us in about 15 minutes with more. I have to tell you, i know were supposed to be journalists and not have views. I applaud this. The idea that they were selling cigarettes next to pharmaceuticals and drugs at a health care store never made sense to begin with. I think its an interesting decision cvs is making. To me it sounds like cvs and walgreens has been doing this as well, going all in on health care, on obamacare, making them sort of more useful to consumers, educating consumers about health care, giving out more health care services. So to me, thats what this sounds like, that theyre focusing on that, and therefore giving this up. The question is how much revenue how much sales are they going to lose . Theyre saying a billion dollars . I think thats the number. But what about ecigarettes . Will they still sell those . And nontobacco replacements . You mean like the gum. Like chew. The chew, right. Chew and all that kind of stuff. I dont know. We will find out. I also wonder, i mean, they sell other unhealthy things. Like potato chips and soda. Sugary drinks. Do they sell alcohol at drugstores . Take a look at this. While weve been talking, and this is premarket action, take it for what it is. Looks like cvs caremark stock dropping because they are going to take a hit on this as a principled stand at least for now in terms of the economics because they will lose money at least initially on this. Hard to say, by the way, theres probably marketing value in this from an economic perspective, but beyond that, this seems to be more of, you know, a board saying we dont want to be in this business as opposed to, you know, we can make more money by not being in this business. Its an interesting call. Its going to be debated, by the way, by the shareholder advocates out there who say that the company should only take into account and i had this argument the other day with the fine, fine gentlemen. The shareholder. Right. And this is maybe it is, maybe it isnt. Im not sure. A company doing what it considers to be the right thing. This is the right thing. Arguably the right thing. Exactly in the interest of the shareholder or not . Let me ask you another question. Does this make walgreens do Something Different . Does it make a walmart do you know, do other Major Companies that have tried to fashion their brand around being good for at least the lifestyle . Maybe not a Health Care Company in the same way that cvs is, say we shouldnt be in this business either, and do customers either revolt, or do they applaud this, and what does that mean . And by the way, its probably not right to look at the share value right now to say this is good or bad for shareholder because as you say, over time if walgreens does this, it puts pressure on them. It would be interesting if they do this because i would think that they would be taking market share here from cvs. Yes, you can approximate the value, but people go in to buy cigarettes and they end up buying gum p. Walgreens is not going to run ads saying were so thrilled to sell cigarettes, please come visit us. My point is whether or not the head of cvs sort of said that, that we think were on the leading edge of this, so were getting there earlier than maybe my competitors. Can i ask you a question . Youre the closest to this topic than i think maybe you are, i dont know if youre a smoker or not. Im not a smoker, but i do frequent drugstores. Steve, will this you know, how do you think about this . Its part of whats going on. Yeah. I dont think much of it. Do you begrudge them . Not at all. I dont know what the sort of sense is on all this. Its all good. I just think its part of the trend. If you look at walgreens, theyre offering more services, more health care services. Theyre offering, you know, free flu shots and various other things. Kind of hard to do that and sell cigarettes. Exactly. So to me, the question is how much business are they likely to gain by going all in on sort of being more of a Health Care Company . Walgreens is walgreens picking up cvss loss here . A little bit. Marginal. I want to know the market cap of cvs and how much they lose of the market cap from this. What percent is worth you should read this. I should have read the other one. We are now cultural story. Were now just days away thats a good point there. Were just days away from the start of the Winter Olympics. You can see the countdown in the wall right there. In advance of the games, at t becoming the first major advertiser to protest russias antigay law. In a blog post, the company saying, quote, russias law is harmful to lesbian, gay, bisexual and transgender individuals, and families, and its harmful to a diverse society. At t is a major Winter Olympics advertiser and a longtime sponsor of the United States olympic committee. Does this put pressure on all the other olympic advertisers to say were going to make a stand . And does this become the story of the next two weeks beyond the sports . Let me ask you, andrew, first. Im trying to figure out in my head the down side of at t saying what its saying. Is it really going to offend russia here . By saying it opposes the law . Is sounds like its bold, but im just wondering, is there a down side to at t and any other company saying this . I assume that theres not. Well, it depends. I assume at t has very little business in russia. I think they do have some, i suspect. Cocacola the one we were talking about in the last hour, a lot of people have been protesting. They sell a lot of product in russia. As you earlier reported, i applaud at t for doing this. Absolutely. Randall stevenson should stand up and take a bow. How controversial is it. For a company to come out and say i oppose not here, but is it something that has a down side to at t . Go to the middle east. It gets tough, probably. There are places this becomes a sort of well, it is the first. Well see if other Companies Follow will be the question. We have some Earnings Reports to talk about this morning that i want to flag here. Dow component merck posting quarterly reports. Earnings missing the mark by just a penny. Revenue came in a bit shy. Checking out merck reaction. Time warner reported profit of 1. 17 per share, 2 cents above estimates. Revenue also beat analysts forecasts. Time warner also announcing a 10 Dividend Increase and a new 5 billion stock buyback program. Good for shareholders. And google has reached a tentative deal with european regulators to settle that threeyear antitrust case. Google, turns out, has pledged to display links to rival sites in a clearly visible and comparable way. That was the quote to its own services. The eu will now take comment on the proposal to google competitors after which it will then decide whether to give the final approval. So that was sort of googles way of making nice and pacifying those concerns. And i still think spending 100 million for that may be the best deal of the day. 100 million, the new pay package. And i still think somebody out there would have done that same job for 50 million. Maybe, maybe. We want to talk about the markets because u. S. Stocks are bouncing back. We saw that yesterday. This morning, a little pressure on futures. Well see how much resilience is out there and how much bargain hunting comes into the mix. Joining us now, john lynch, regional chief Investment Officer at Wells Fargo Private Bank in charlotte. John, is it time yet for the bargain hunters to swoop in and look for buys . Hey, sara, good morning. Yeah, we had a nice rally yesterday, but it was only about a 25 of what we lost on monday. So im not convinced the time is just right yet. The technical breakdown has been pretty strong. And i would like to see, as im sure you would, a twohandle, 200,000 or so on private payrolls, maybe get a good comment from the ecb tomorrow, follow that up, if were able to get that with a good jobs report friday, we may not get this elusive 10 correction just yet. Ive got to think, though, that the technical repair is going to take a while. So you sound a little bit cautious here. Are there any portfolio moves you should be making, or should you just stay in it for the long haul and not be deterred . Well, im glad you said portfolio because thats something we try to emphasize here at wells fargo. Make sure were not positioning for the next trade. Were all about rebalancing and taking advantage of weakness to add to positions where portfolios havent participated. We still think the longerterm trend is favorable for profits, more historically averaged. Add profits, call it 6 or 7 with an income opportunity on the equity market. Were looking at more historically average return opportunities. We do think in spite of what the tenyear has done these past couple of weeks, we still think the trend is gradually higher. So consequently, we want to keep durations on the shorter end. We still want to favor credit risk or Interest Rate risk. Yeah, everyone thought that the bond market that yields had bottomed. Everyone thought get out of bonds. Theyre looking increasingly risky. The surprise of 2014 to me has been a very strong trade. Yields have gone even lower. What would you say . Would you say this is the greatest opportunity right now to get out of bonds, or should you keep some . You and me both being surprised on that. Yeah, everyone was leaning into the wind, right . And then the tenyear turned around. I think its more a function of risk off, if you will. I still think ultimately if a Federal Reserve has quadrupled its balance sheet, the bank of england, swiss bank, ecb has doubled theirs, boj has doubled theirs, theres going to be a longerterm inflationary risk as a result of this. I dont think were going to go to 1980type levels of inflation, but ive got to think down the line, if you buy the tenyear yielding 2. 6 , if you own that a decade out, im fairly confident inflation will have eaten away at that total return. We want to underweight sovereigns, treasuries and look for opportunities in spread sectors, whether it be corporates and also take advantage of some of the muni selloff from last fall due to the puerto rican and detroit situations. All right. Thanks, john, for the tips. Its been a rocky new year to start the year for stocks. John lynch. Friday is the big jobs report. Its also the day that we hit the debt ceiling. Yes, they can put in temporary maneuvers, but could we go again to the brink . I think its march, isnt it, that they pushed it ahead . Because of the extraordinary measures . Yeah, but jack lew has been warning, midfebruary. I thought he said midmarch. Ben white has a thing on this this morning that we could take a look at and talk about after the break. We also have the big story now of the morning. Cvs just saying no to Tobacco Products. Its no longer going to be selling cigarettes, cigars, chewing tobacco. That answers that question we had about, steve, whats coming off the shelves. Including the chew and all that other stuff. All that coming off starting october 1st. More about this bold move, what it cost for the drugstore chain, what everybody else is going to do about it. Were going to do that next. I want to know that means theyre going to take candy and alcohol off, too. Well see about that when we come back. Cast your vote today for the most influential Business Leaders of the last quarter century. Go to cnbc. Com 25. Make your picks from our list and submit your vote. You could even write in your own. Who will be the cnbc first 25 . Vote today. Where do we go now, guys . Are we going to go were going to talk puerto rico. Were going to keep reading. S p cutting its Credit Rating on puerto rico to junk status. The agency cites concerns about the cashstrapped u. S. Territories ability to Access Capital markets. The call makes it harder for the caribbean market to borrow in the 3. 7 trillion Municipal Bond market. The territory has been preparing to return to the market for the First Time Since august. Tough news. Coming up, more snow means more cancellations and flight delays. Is Mother Nature going to take a bite out of Airline Profits . Theyve been going strong lately. With had will it start to hurt the industry which is really starting to take off, or is the weather a nonissue . Well discuss next. Time now for todays aflac trivia question. What is americas favorite condiment . 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Theres nothing like being your own boss and my customers are really liking your flat rate shipping. Fedex one rate. Really makes my life easier. Maybe a promotion is in order. Good news. I got a new title. And a raise . Management couldnt make that happen. [ male announcer ] introducing fedex one rate. Simple, flat rate shipping with the reliability of fedex. Now the answer to todays aflac trivia question. What is americas favorite condiment . The answer mayonnaise. The u. S. Consumes 2 billion worth each year. Aflac. Im not a mayonnaise guy. We were just talking about that. Weve got to talk about this extreme weather. Causing massive flight delays and cancellations. Lets talk about what this all means. Here to talk about the impact on this rough weather is having on airlines, michael boyd, one of our favorite, chairman of the boyd group. Help us here, which airlines are going to get impacted the most, and what kind of losses are we talking about . We think industry losses could be somewhere in the neighborhood of 300 about 500,000 when you consider everything. Air travel is episodic. Just give us the time frame. Thats our january snapshot . Through january. Through january. Were now into february, and this weekends going to get worse, apparently. Its going to get a lot worse. Its almost like the Airline Industry did something karmically bad. Theyre blanketing every hub east of the mississippi, doing a good job keeping airplanes on the ground. Were looking at 500 million or more in terms of lost revenue and then other losses beyond that. Its, you know, for some airlines like jetblue, thats going to hurt. Other airlines like, say, american where they have a global network, its going to hurt less, but its still going to hurt. You said american. Is there anybody else you put in this sort of not winner category, but life is relative so lets call them winners . Oh, sure, like alaska airlines. Theyre up in frozen alaska on the west coast. Or, for example, virgin america. Those kinds of carriers, spirit, theyre not going to get hurt as badly. But those that focus on the east coast and certainly in the midwest, theyre going to get hit very badly. Thats united, thats american, that certainly is jetblue. But again, jetblue doesnt have the same network that the other carriers have. In terms of mitigating those losses on a relative basis among the losers, is there one or two airlines you think is somehow better operated or better prepared to the extent that you can be . Jetblue made the right decision. If you cant fly reliably, park it, wait it out and go from there. That makes a lot of sense. And you have rules now that if you get diverted from hartford to laguardia and cant find a gate, the government is going to fine you. They just ground everything. Sorry. No, michael, i just wanted to ask you on top of all these weather issues, weve been hearing more about this new law requiring pilots to rest more. How much is that exacerbating thattes problems for the airlines . Thats when this comes to the fore when you have offschedule operations. That eats up a lot of pilot time which means that pilot cant operate that last leg say from chicago to new york because he or she is out of time. Airlines anticipate that and cancel early. But it does make it worse. Theres no question. Okay. Michael, thank you for joining us this morning, helping us try to understand all this. Stay warm and safe up there in the air where you are. Well talk to you soon. Were going to move on and talk about cvs because that is the big story. Cvs taking Tobacco Products off the shelves. Nbcs tom costello joins us from bethesda, maryland. He had that big interview. Tom. Reporter good morning. Cvs says it could not reconcile the contradiction between trying to improve peoples lives through pharmacy help and also through better products and also, of course, through their minute clinics, while at the same time, selling Tobacco Products. So by october 1st, they say, they will have removed all Tobacco Products from store shelves. They say this is going to cost them about a 1. 5 billion in tobacco sales, another 500 million in sales of other things that people buy when they come to the store. But they believe that this is an important part of them transitioning to more of a Health Care Provider type of role as opposed to, of course, just a retailer. So the question this morning, i think, that everybody is asking is, will other pharmacy retailers feel pressure to do the same . You know, they have been under tremendous pressure from the american pharmacists association, the American Lung association, cancer, heart, you name it, all of them have been pressuring these retailers for years, saying this makes no sense for you as a pharmacy to be selling Tobacco Products. Walgreens, duane reade, riteaid, you name it. Theyd have to give up cash, no doubt, on sales, but will they gain it in terms of good will from customers, and is this simply where were going where in five, ten years were going to say why the heck did we ever tolerate pharmacists to sell Tobacco Products . So this morning cvs breaking the mold and setting the standard, and well see how this plays out throughout the entire sector, guys. But its a fascinating and a big day. When i talked to the president of cvs, she makes the point were simply trying to transition to more of this Health Care Provider role. We cant be in tobacco anymore. And while we think its going to be a 1. 5 million to 2 billion hit, we think its the right thing to do from a corporate and an ethical perspective as well. And theyre clearly taking a principled stand. When we reported your report earlier, the first tweets and emails we got from readers were what about alcohol, liquor, the candy that you see when you first get to the Cash Register and other sugary drinks and things like that, did you get the chance to talk to her about that . Reporter ive got to tell you, i didnt ask her if they were going to take candy off the shelves. Theres a big difference i think between candy and cigarettes. The evidence is so overwhelming about the role that cigarettes plays in our society, 500,000 deaths every year attributed to smokingrelated illnesses and, of course, that issue is one that the pressure has been growing on not only big tobacco over the years but also these retailers to do something about. You know, this is clearly a position that cvs has decided that it has to take because it simply could not continue selling Tobacco Products. Tom, i know youve got to run. Is your expectation or is their expectation rather, cvss expectation that others will follow suit because of the principled decision theyre taking . Reporter i asked her that. She said she would not be surprised, but shes not you know, this news was embargoed until 7 00 a. M. This morning. So im sure that some of it was out there already and kind of leaked and people were hearing about it. Walgreens, in particular, has been under shareholder pressure to do something for some time. But it will be interesting to see how this plays out. But she wouldnt venture a guess as to whether their competitors would do the same or whether this decision might drive people to their competitors or will people say, you know what is this this is an opportunity for me to quit. I should point out, cvs is also starting a campaign to help people quit, and the white house this morning weighing in. President obama saying he applauds cvs and hopes others will follow suit. Tom costello, thank you for bringing us that report this morning. Appreciate it very much. Reporter you bet. Sara, you were saying Dollar Stores, right . Yeah, i got a note in from stacy, a cnbc contributor, go to Dollar Stores and walmart. They probably wont pull them. Timing the markets, not always the wise thing to do unless you really know what youre doing. And even then, its tough. We talk to strategists watching the charts for you 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. Welcome back to squawk box. In the headlines, a lot of news to bring you. Dow component merck reporting quarterly profit of 88 Cents Per Share, 1 cent below estimates. Revenue was also slightly shy of consensus. Results were impacted in part by patent expirations. Lets hope theyre not patient expirations and negative currency effects. Also president obama now praising cvs caremark for its decision this morning, just announced, to stop selling Tobacco Products at its stores. That coming earlier this hour. Cvs will end those sales, they say, by october. Becoming the first u. S. Drugstore chain to do so. Theyre saying this could cost them about 1. 5 billion directly and perhaps more from those folks who come in to buy cigarettes and other things and now they may not. Were also watching shares of dow component 3m. Get your postit notes out. The company has announced a new stock buyback program. The plan existing an existing 7. 5 billion program. But on the markets here, our next guest is a market timer. He gained fame last year when he likened the Dow Jones Industrial average of 2013 to that of 1929. And then made a spoton call about just how far the rally would take us. So far, it has been dead right. What are the technicals telling us now . With us, founder and ceo of demark appenalytics. I know everybody follows your stuff, hedge funds, investors. 1929 sounds scary. Zloo it sounds a little extreme but so far its aligned perfectly. When we uncovered that relationship last year, we were pretty silent about it because it was extreme. The early part of october, we said wait, theres more here than meets the eye. And on october 9th, we went public and said the stock market had made its low just as it had done in 1929. In just the month prior to the peak in 1929, it was october 9th, by the way. And we expected a rally of 12. 6 , which was identical to the rally in 1929. They were both 12. 6 . Yeah, but the other bad thing that happened the bad thing that happened in 1929, october, the crash. Is that where were heading . If were looking at it very carefully right now. What happened when the market made its high september 3rd, there were 23 subsequent trading days where the Dow Jones Industrial average had a shortterm bottom. 23 days aligns with the low end on monday. And subsequent to that, we had a fourday rally. And the market unraveled, went down 48 . Were currently at that inflection point. Like i said, so far, everythings aligned. We think the next two to three days are extremely critical. We get into the minutia as well as the long term. And what it looks like to us, if we were to get, just as an example, today were to be at an up close. And then tomorrow, we close down. And we follow a lower opening the next day and trade a little weaker. Were probably going to unravel quickly. Now, yesterday we did have an up close. Most of the major u. S. Indices. So if we get a down close today and tomorrow we open lower and trade lower, were probably going to unravel and the news, regardless what it is on friday, perceived negative. For everybody whos saying im just going to hold. Im going to hang tight and im going to hold, and then the question we were asking this morning is should you be buying on this quote, unquote dip . Im getting the idea that maybe you should be selling everything. Not really because we said that the market, on the air with Rick Santelli, it topped on january 14th. The Dow Jones Industrial average topped you missed it by a day. Yeah, we did. But if you use the Dow Jones Industrial average, it topped on december 31st. Thats what were using as our reference. 23 days, back to the dow jones average. Like i said, weve already participated in that decline. And right now were watching very carefully because that sequence is very important. We do a lot of analysis in our shop, and we dedicate it to it 24 hours a day. Whats the down side from here . As far as you can see . Okay. If you go back to 1987, for example, we projected off the august 25th high at that time that we would have a correction of 62 off that intraday high. And we went down to approximately 1600 on october 20th. And march 25th of 2000, we use the s p average, and it was about 1520, 1540. We took 60 again. And the actual low was the september 21st low, and it came right to the tick of our 61. 2 projection. What were seeing right now, if the market does unravel, i think well have a 60 correction of 40 off the high. Which would put us about 1100 if that happens. Thats painful. It would be. The thing that gives us more confidence what about the vix, for instance . Can you factor these other things in there . Sure. Whats happening now is very timely as well. The vix has exceeded the level of 21 four times this is the fifth time in the last 12 to 16 months. Every time the vix has exceeded 21, the market has rallied. Its been the day of the low. But whats going to happen, people are conditioned just like they are with the market. Every time the market breaks down, they reenter the market and the market rallies. I think the fact that the vix is at 21 right now is significant because this could be the one time that the market doesnt respond. And it goes lower and the vix goes higher. What would change the dynamic to break to the high side . We think its almost preordained right now. What could happen, we could get something akin to what happened september 25th in 1987. The market made its peak on august 25th high. Then it had a decline, kind of meandered around the lows for a period of time and then struggled and did a really feeble rally into the peak in early october prior to the decline, waterfalled decline. And i think we could see that outcome. If the market in the next couple days is unable to record that down close and a lower opening can we just go to the 40 down . Its extreme. I understand. Totally. I assume you put percentages on this stuff. I can tell you with high probability and normal certainty, i hate to say that because theres nothing certain in this business, if the market were to say today close higher, ive been getting very specific, but weve done that before. At the we made a forecast in april of 2011 at the market peak when the market was 1370, approximately, 1365, we projected down side that the market would go to 1075, okay. And everyone was saying no way. No way. On august 9th, we made a low. Very basic, what are you doing with your money . Sidelines. Sidelines. Sitting in cash . Bonds . Gold . Bitcoin . Treasury bills. Technical watchers, gold is an interesting one, down almost 30 last year. It was the first rough year. Is it headed back up . Sure. When we were on with Rick Santelli december 16th, gold was trading at approximately 1245 to 1260, intraday move. And we project the down side that gold would go to 1180, 1156, 1180. That forecast was really made back in september of 2011. If you were to take 60 of the high when gold made its high in 1920, take 60 of that, that will get you right down to 1180. We did not make a good low on gold at that june bottom, and we did not make a good low. When we were around rick, we projected the low would be december 31st because of tax law. That was the exact date of low. Markets dont make lows the way they made that low was made on december 31st. We always call it a reversal. And markets usually make lows with extreme pessimism. The pessimism does not only occur with intraday low. The closing low is also weak. We got a big reversal with the strong close that day. So were confident were going to break that low. Tom, how accurate are you . How can i judge if your calls are a success . Do you have a percentage that you say . No. How do i know that following you is an investable proposition for me . Were not asking anyone to follow ourselves. Were sharing research. Weve done 40plus years of really intense research. How accurate are your calls . I dont know. Ask people who dlai steve cohen, i know, is a fan. Best trader in history. Yes. How do you remember all the dates . You see charts in your head . Yes, i do. My wife had our first delivery back in the olden days, they had those monitors. I say hey, this looks like a breakout. She looked at me and said, were not working now. But i know, most of the people who work with us are really committed to the markets and probably should be committed to the institution as well. We are obsessed with markets. I dont know, as far as accuracy, sometimes its uncanny. People have attributed a lot of attention to us success, that 1076 call. That was the april high. There was an august premature low just like were seeing in gold right now. I think were going to undercut the low. Shanghai index is another one. The last six turns have been identified to the day. But weve got some really big busts, too. Sometimes the accuracy is thank you for scaring the heck out of us. Hopefully it wont happen. Maybe it wont unfold the next few days. In fact, i hope youre right and wrong in this case. Right and left. Either way, thanks for coming in and talking with us. Thomas demark, always good to talk to you. Wow. Im still hung up on the 40 . We will all hope it doesnt, but youre coming back if it does. Coming up, much more on this story this morning. The big one, cvs dumping Tobacco Products from its stores. Also when we come back, aramark serving up public results after going public last year. Weve got the first interview with the ceo after the break. You do not want to miss this because robert frank has a cool story. Hes going to take us to the world of the super rich storage game. Weve got more on squawk coming right back. Mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. 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Checking on futures this morning, looks like a lower start for wall street after a rebound yesterday. Futures indicating Dow Jones Industrial average set to open lower. Just about 60 points. Theyve been relatively unchanged throughout the morning. Well watch how they respond to the adp report, private sector jobs at 8 15. S p futures down 9. Making headlines, connecticuts democratic governor is calling for the state to raise its minimum wage to 10. 10 an hour. That matches president obamas call last month to raise the National Minimum wage to that level. Washington state currently has the highest minimum in the nation, 9. 32 an hour. Were going to talk about aramark, reporting better than expected earnings in revenue. The companys ceo, you know aramark because they provide the food, just about everything, cafeterias, airplanes, prisons. What else is on the list, eric . Well, we like to say we provide services where people learn, work, play and recover. Everything from education to sports to, you know, the world of business and industry as well as health care, our core businesses. First lets talk about the earnings and then i want to get into the economy. And ive got a hundred other questions including the minimum wage issue which i assume may be hitting you or at least you have a few on. But lets just go through the earnings first. You beat on both sides. The request he is whether you can keep this up, and what are you actually seeing in the economy . Well, i think first and foremost, as you saw this morning, were very excited about our First Quarter as a public company. I think you can look at the results we posted and really across every financial indicator, strong topline growth. Weve been very focused on making sure, you know, we enhance our margins which we did which drove doubledigits operating income and a doubledigits Earnings Growth that did beat expectations. You know, were very excited not just about the quarter but were actually very excited about the future as well. You know, one of the things thats applicable to our Business Model is this is a very resilient Business Model that can perform both in great Economic Times and even more challenging Economic Times. So its a resilient model. To the extent that you have your finger on the pulse of the economy and maybe a barometer, what do you think is going on in the real economy versus what were seeing in the markets right now . Well, i think, you know, we continue to see a consumer thats very cautious. I think thats going to continue. Theres been a lot of talk about the emerging markets the last few weeks. To be honest with you, we see continued Growth Opportunity in the emerging markets. We saw doubledigit growth. What percentage of your business right now . Its about 8 , andrew. Weve doubled it over the last five years, but its continued to grow double digit as it did in First Quarter. We grew our emerging market business 18 . Are there particular countries you dont want to touch right now or you think are going to be tougher than others . Well, were very targeted. Theres been a lot of talk about asia. It was up double digit led by china up 21 . Very Strong Performance in south america. You know, i think as we look at the emerging market business, its continued to grow double digit. And right now, you know, i think emerging markets will continue to grow at threefold what youll see developing markets. So we continue to see Growth OpportunitiesGoing Forward in emerging markets. What are you seeing in terms of corporate spending right now, appetite from executives to lay out more money and invest in their businesses . Well, its an interesting question. Again, for us, as you think about some of the challenging Economic Indicators that were all faced with right now, its interesting that for us as businesses face those challenges or educational institutions face those challenges or Health Care Institutions face those challenges, it actually can play right into our favor. They tend to look at those productivity opportunities as an opportunity to outsource, foodservice or Facility Services that we provide them. So for us as those pressures continue, thats what i talk about, this resilient Business Model that helps us in even more challenging Economic Times. And we would expect that outsourcing trend to continue. Eric, i want you to weigh in on this debate about the minimum wage in connecticut now, calling for an increase in the wage as well. What do you think it would do a, to your business, but also more broadly to the economy . Well, its a great question, andrew. I mean, i think we start one of our core values is front line first. We want to do whats right for our employees first and foremost. Having said that, 99 of our employees are paid above the minimum wage today. So as we look at this and as we look at, you know, what the options are and how to evaluate those options, we want to do whats right for our business. We want to do whats right for the overall economy. I think one of the things that has to be front and center as we go through the decisionmaking matrix is to make sure whatever we do has the right impact on employment and the broad economy. And to me thats the screen by which we would look at it. I appreciate that, but what is the answer, then . Is 10. 10 right . Is that wrong . What would it do to your business . Again, i think for our business, 1 of our employees are paid the minimum wage today. As we assess the whole opportunity on minimum wage, assuming its reasonable relative to what is looked at, it would have minimal impact on us. Having said that, i think it is the question of what would it do to the overall Employment Situation and the broad economy that becomes the key decision. Okay. Eric, we are going to leave the conversation there. Please stay warm. I think philly may be worse off than new york right now. Thanks again. He employs 270,000 people. I know. And the fact that only 1 of them are paid minimum wage. Not bad. Not bad. All right. Our next story takes selfstorage to a whole new level. The place where the super rich store their stuff. Cars, paintings, you name it, robert frank brings us inside next. How do they get the shots inside my house like that . Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Robert frank. Robert . Steve, you dont worry about it, but the wealthy sure do because theyre buying a lot of expensive stuff. And increasingly theyre storing it in places like the robo vault. Tonight were going to take you inside one of the most expensish warehouses in america. This is a place where the wealthy store their art, wine, collectible cars. And for security reasons rather than elevators and stairs, all of the items are retrieved with a 70ton robotic lift. Lets take a look. Reporter youre inside one of the largest, most hightech vaults in the country. To get a super car in or out, you need a secret code and a fingerprint that sets this robo crane in motion. Sending it on a hunt to retrieve a ferrari 458 italia from deep inside the vault. The valet, the way all the pieces move together. Enjoy the view. Reporter ron loves watching a ferrari dance through the vault. Even the ones that arent his. This is stateoftheart kind of thing. What more could you ask for . And guys, you know, we were joking about it earlier, but if you look around the world, this is one of those burgeoning, quiet economies where these Storage Facilities for the wealthy are just exploding. Singapore, geneva, luxembourg, theyre all building storage for all of this art and wine people are buying that they cant fit in their four or five homes. And this is becoming a huge business. But its also attracted some controversy, of course, because, you know, this could be used for money laundering, for miding illicit goods and that kind of thing. Robert, how much does it cost to park your car in one of these effectively . They dont give us any prices. My guess is they range from about, you know, 1,000 a month to thousands of dollars a month, depending on how much youre storing there and depending on the size of the unit. So this is a lot more expensive than public storage, but, you know, if youre talking about a 30 million collectible car, it makes sense. Are they insured . Whos responsible . Well, thats one of the big issues. Yes, theyre insured. But, you know, a lot of with all these Storage Facilities growing, we had a case with the chelsea wine vault here in new york with a lot of the richest new yorkers had their wine stored, and some of it was damaged in sandy. Theyre still working that out in the courts. Although its safer than putting it in your house, theres still a lot of questions when there are claims. Robert, do people keep cash in this . You remember walter white kept that all of his cash in the storage facility. Yes, he did. Is that a possibility . Or you have to keep it at the bank . We dont know. Theres some weird stuff that they kept in here that one of the weirdest collections they had in here when we were shooting was a case of dinosaur bones that was being shipped to a big museum. So, you know, there may be, and you dont really have to declare everything thats in there, maybe, but my guess is, you know, the expense and the amount of disclosure thats now required for this, people are probably using less expensive, less visible storage areas for methamphetamine cash is my guess. This facility were looking at, where is that located . Ft. Lauderdale, florida. Why is it i guess why does it have to go deep under the ground . The cost of doing that seems kind of incredible. It looks, obviously, like something out of a movie. Ferrari can survive a nuclear blast. Exactly. Why dont you know that . This is designed to withstand bullets, fire, 200mileanhour winds. And if you live in florida, you know, and youre in a hurricaneprone area on the ocean, you know, your car is actually safer in here. Your wine is safer in here. A lot of the people who store stuff in this warehouse have lived through a hurricane and had to carry their wine or their cars somewhere. In this area, this is like a fort knox. They can leave it there, and its safe from just about anything thats going to happen. Much safer than themselves. Robert, do they have to give their name, and does the owner of the storage facility, are they required to tell authorities, for example, if they have stuff by somebody who may be accused of a crime . In this one, they do. Now, if youre talking about the ones overseas, thats where its gotten very black market. If you talk about these facilities in singapore, geneva and luxembourg, its nondeclared, and theres no tax if you have a transaction inside the warehouse. So theres a lot of funky stuff going on overseas. This one in the u. S. , theres a lot of disclosure. The electricity goes down, by the way, then youre stuck. This has a generator for two weeks. So again, your ferrari is fine. You may be in trouble, but your ferrari would be fine for two weeks. Thank you, robert. Terrific story. And do not forget to tune into the secret lives of the super rich. These are the best. He does such a good job with these things. Eye candy. Thats tonight at 9 00 p. M. On cnbc. Were back in just a moment. Fifteen minutes could save you fifteen percent or more on car insurance. Everybody knows that parker. Well, did you know auctioneers make bad Grocery Store clerks . Thatll be 23. 50. Now. 75, 23. 75, hold em. Hey now do i hear 23. 75 . 24 hey 24 dollar, 24 and a quarter, quarter, now half, 24 and a half and. 75 25 now a quarter, hey 26 and a quarter, do you wanna pay now, you wanna do it, 25 and a quarter sold to the man in the khaki jacket geico. Fifteen minutes could save you. Well, you know. Cvs is just saying no. The drugstore chain taking Tobacco Products off the shelves. We have the reaction to the bold move. The countdown to jobs. First up, the adp employment report for january. We have the numbers at 8 15 a. M. Eastern time. And has the january market slide created some pockets of opportunity . Tech investor paul meeks gives us stocks to watch. Squawk box begins right now. And i aint gonna be treated this way welcome back to squawk box here on cnbc, first in business worldwide. Steve liesmans with us telling you this is the grateful dead. What is this . Cold rain and snow. Which makes sense because of the weather. I am Andrew Ross Sorkin. Steve liesman is in for joe. Sara is in for becky. They have the day off. Well catch up with them because theyll be coming to us from the other coast where its much warmer, pebble beach on friday. Meantime, headlines for you this morning. The january adp employment report is now about 15 minutes away. Of course, well bring it to you when it comes. The forecasters say the economy likely added 189,000 private jobs last month. Steve and sara will have great analysis when it hits. Also, some Corporate News this morning, the eu and google reaching a landmark deal in an antitrust case. This would settle that threeyearold investigation and prevent a fine of up to 5 billion. The investigation started back in 2010 after more than a dozen kpl complainants accused them of promoting their own services at their expense. And the talker of the morning, a story weve been talking about all morning, cvs caremark is kicking the habit. That chain announcing it is going to be removing cigarettes and all tobacco from all 7,600 pharmacy locations by october 1st of this year. The president of cvs pharmacy explaining the decision to nbcs tom costello. This positions us really towards where health care is going because we know the sale of tobacco is extremely inconsistent with being a Health Care Provider. We certainly expect other people who are in the pharmacy business to look at the mirror themselves and ask themselves where do they want to be in the next few years, and what kind of role do they want to play in health care. But ultimately that will be their decision to make. And we should note that in a statement, walgreens saying that it has been evaluating the tobacco product category for some time and will continue to do so. Meantime, president obama releasing a statement of his own. He applauded cvss decision. He, of course, is a smoker. We should also note was. Or was a smoker. People say that he might occasionally still be a smoker. They will have nicorette and other things at cvs. Ecigarettes apparently also staying at least temporarily. Turns out according to the New York Times article, cvs doesnt sell ecigarettes. Theyre trying to figure out what the fda says about them. Thats a work in progress. Candy still at cvs. Candy, soda, no alcohol, though. I dont think they sell alcohol. You were saying the dollar store might be a winner in this. Tobacco stocks. At some point we should look at those. I imagine they would be getting hit. Yeah, Philip Morris interpret. Well have to see the fallout. Certainly is a big decision. First we check on markets on this wednesday morning. U. S. Equity futures pointing to a lower start across the board. S p futures indicated to lower to open lower by 10 points. Dow futures have been moving south pretty much all morning l long. Nasdaq also in the red, down 18. All of this ahead of the 8 15 adp jobs report. In europe, its been sort of a mixed session. Asia first, overnight, japans nikkei got a bounce, 1. 2 . Still has a long way to recover from the selloff. Its now 14 since the peak at the end of december. Hang seng closed lower. Remember, Chinese Markets in shanghai are closed for the lunar new year. In europe, mixed bag. Ftse 100 in the uk and france higher. Germany lower. Disappointing Economic Data to chew on over in europe. It was looking like things were turning a corner but not such a smooth shot up. Definitely not. Im just reading this isi report. Did you see it on cvs . 1. 5 to 2 of total corporate revenue from not selling cigarettes. Its going to take a hit. But saying theres other opportunities. The company is identifying whether or not they could potentially offset. One of our twitter followers asked whether that opportunity would be medical marijuana. 6 to 9 cents a share, is that right, 0. 6 to 0. 9 cents. Its really 2 billion in revenue that they say theyre losing. 1. 5 billion to direct and another 1. 5 billion. The others are getting new business with obamacare and promoting services. More shelf space theyre saving on cigarettes, theyre actually going to be able to reconfigure no, but its not like a total loss. There will be other things they can sell. To Global Markets now. Joining us now, im sorry, there was two jims. Chief executive officer of Principal Global Investors and jim osullivan. Good morning. At High Frequency economics. Let me turn to jim osullivan. Steve. Jim, you made it interesting an Interesting Research paper the other day about the difference between shortterm and longterm unemployment. And the idea that the shortterm unemployment is doing okay, and its the longterm unemployment thats a separate problem. And there may not be as much slack in the economy as we think. Yes. I mean, its obviously an important issue ultimately for when the fed has to start reversing. Its not an immediate issue, oo the market. You look at the survey and companies are asked how many job openings they have they are unable to fill. 23 of firms say they have job openings theyre not able to fill. And thats the highest number since january 2008. January 2008, the Unemployment Rate was 5 . Today its 6. 7 . The shortterm Unemployment Rate, people unemployed for no more than 26 beakweeks, 4 pi. 1. There is literature that suggests that the shortterm Unemployment Rate that is the key indicator in terms of labor market pressures p sfwhoop what are you expecting in jobs on friday . Steve, seasonal adjustments in the weather are going to make it slightly confused, i suspect. But i think the consensus is about right. It seems to me that the u. S. Economy underlying and well see this when we get a few months of a run is creating about 200,000 jobs a month. I think many people are actually underestimating how well the u. S. Economy is doing. I think the factors of low energy, productivity and innovation and a recovering Housing Market continue to drive the u. S. Economy in a pretty positive direction. Even though were in a riskoff world with all the bad news thats been coming from emerging markets. So id stick with the u. S. Market. And by the way, on the other jims point, i still think there is a decent output gap in the u. S. Economy. And i wouldnt write off the longerterm unemployed so quickly. Jim osullivan, i wonder how much you can really make of a jobs report these days with this weather. I mean, its been so messy, not to mention all the seasonal adjustment that comes in around december and january. How seriously if youre a trader, if youre an investor should you take the number on friday . Well, keep in mind when you look at the raw numbers on friday that theres a 3 million swing underneath the surface just for a not seasonally adjusted change from december to january. Crazy. Theyre very volatile numbers this time of year. Theres no question weather has been extreme. Maybe its an excuse to some extent. I think if anything, you could get some payback for weather effects in december that the sample week in early january was on the mild side. Now january as a whole was cold, but in any event, weather obviously can play havoc with these numbers. So you cant take them too literally, whatever they are. If i lose my job tomorrow, which could happen because of something i might say right here on television. It is not going to happen. What are my chances of getting back to work versus if ive been out of work for six months . What are my chances of getting back to work . I dont know what the percentages are, but obviously statistically, youre more likely, the more recent that you are out of work. Just to go back to the other jims point, im certainly not saying that the longterm unemployed should be written off. Clearly its a fed goal here to get those people back in the work force before theyre lost for good. And thats absolutely what they should be doing. The goal should be to get longterm unemployment down. I have an opinion on this is which i think the fed may have done what it could do to put the unemployed back to work, and especially when you see that short term coming down, it tells me that were maybe now into a more normal market, where if i lose my job, i can get back to work. And that maybe now what were talking about with the longterm unemployed is an issue for the fiscal side. Maybe some of the programs that president obama brought up. Im sure there were republican ideas, but increasingly less is an issue for monetary policy. I think it is an argument for keeping mostly easy. We may be getting close to a tradeoff. Obviously they have a cushion in that inflation is 1 or so. Their ultimate goal is 2 . There is a little cushion and they can keep on pushing. We may be at the point where unemployment is low enough for shortterm unemployment that we do start seeing some wage pressures and some drifting up in inflation. Its not going to suddenly go from 1 to 3 . So the fed does have some time. But i think it does change the balance of risks a little bit Going Forward. To the other jim, youre looking through the weather, through some of the shortterm things here. Whats your outlook for Economic Growth and, say, the stock market for the next several months . Yeah, for the u. S. Economy, i would look over the next several months to growth will probably, because of the way inventories have gone and because of the weather dipped down a little bit in the First Quarter, maybe 2 . But i think were back up to 2. 5, 3 for the rest of the year. I think notwithstanding the earlier discussion, i think the output gap is on our side. And i do think therefore that with many people underestimating the strength of the u. S. Economy, this is a time to buy on setbacks. January has actually seen, for all the frenzied rhetoric, january saw midsingledigits. Id be buying on setbacks and waiting on u. S. Equities. In terms of other equity markets, id be much more wary. I think its too early to be heavily into emerging. I think europe is dangerous, but stick with the u. S. Equities. While were talking about jobs, jim osullivan, i just wanted to ask you very quickly here about that cbo report for all the republicans that say obamacares a job killer. They got some ammunition that it will shrink the labor force by 2 million, equivalent of 2 million workers over the next several years. Yes. Is that something you factored in . Its a little nuanced. Its a question of supply, not demand. Its not effective for jobs according to analysis right now. Its more of a longterm supply of labor. Ultimately, as people evaluate the Participation Rate, then thats something you have to consider in terms of how much the drop in the Participation Rate is secular and structural as distinct from cyclical, and that could be another reason to bring down the Participation Rate. The jim and the other jim, thank you for joining us. After the break, adp employment released at 8 15 eastern. Wi well have the numbers. And check out cvs making the multibilliondollar decision to drop Tobacco Products. Well talk to an analyst about that bold move at 8 30 eastern. Were back with more of squawk in just a second. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. You want everything. Orks with the mobile trader app. An expert ford technician knows your cars Health Depends on a full, complete checkup. The works. Because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. Get our multipoint inspection with a a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup. Only at your ford dealer. Welcome back to squawk box. You were just looking at a live shot of chicago there. Nasty out, by the way. Nasty here. New york city schools, i think, are open. At least the last time i looked, they were. Thats going to make some peoples day a little bit tougher. We should tell you whats going on in the futures. Dow looks like it would open down 70 points after what was a better day yesterday. Nasdaq would open down 20 points and s p 500 down about 11. Steves got the news. Adp reporting that nonfarm payrolls, private sector rising by 175,000, thats their estimate. The estimate was 189,000, which is also, by the way, the full estimate for this friday. I think given how weak the data was, i think this is a victory for the bulls or at least not the bears, anyway. 175,000 is the number. December revised, down 11,000 to still a strong 227. I remember that goes back against the governments 74,000. And theres the nonfarm payroll estimate of 189,000. Strength, the most strength in small business, up 75,000. Medium business, 66,000. And large, 34,000. By sector, the goodsproducing sector, 16,000. By the way, with construction up 25,000, and i guess we have mark zandi coming up, going to ask him about this right away i was going to say. Zmoo manufacturing down 12,000. Dont know if theres a potential weather impact there or whatever is going on in manufacturing. Lets see, professional services, 49,000. So in trend is how i would call this. Lets bring in mark zandi. Hes on the phone this morning. Chief economist at moodys. Theyre going down. Just give it time to settle. This is an ail goe rhythm algor black box trade. Lets go to mark zandi. If hes not here, maybe its his program. Mark, good morning. Good morning. Good morning. What do you make of this report, 175,000 . I think you said it, its right on trend. Be on stra abstracting from weather effects and other things unexplainable, the trend is between 175,000 and 2 200k. Its hard to look at the 25,000 gain in construction and say theres a big weather effect in the economy or in jobs right here. Yeah. You should know, you know, adp doesnt really pick up weather effects well. The bls measures people who are paid. The adp measures people who are on their payrolls, active employees on the payroll. So if there are weather effects, the adp number wont pick that up, at least not to the same degree that bls would pick it up. I think in that sense, a better measure of the underlying trend abstracting from weather effects. So if im not paid but im still on the payroll, not being paid means i dont show up as a job on the payroll reports of the government, but being on the payroll means i show up on adp jobs. Thats beautiful. You explained it beautifully. Thats exactly right. This is what George Costanzo in seinfeld believes. Thats it. That sounded good in im just wondering broadly about the disconnect. Steve, you mentioned between the government report that we got last time around. Thats exactly where i was going, sara. Good question. And then the adp report which was much better last month. 74,000 revised 227,000. Can we really glean anything from this one about fridays number . Well, you know, id say a couple things. I mean, the bls number in december was more than weather. I mean, that was weather partially. There was a lot of other bizarre things going on that i dont think reflect any kind of reality. I think the adp number is closer to reality. I think that in january, there was still weather effects but much less so. Its hard to remember back, but that survey week, the week of january 12th, was actually a relatively warm, dry week. The rest of the month was a mess. But that week was warm. I dont know that i dont think we got any weather bounceback in january. But i dont know that weather was playing as big a role in the month. Mark, we had a big decline in Government Spending in the Fourth Quarter in the gdp reports. What do you expect is happening with Government Employment right now . Did they reaccelerate in terms of some of the firings that were going on or the declines in payrolls . No, you know, steve, that reflects the shutdown, right . So you had all these folks that werent working. During the month. And that, in fact, did show up in terms of the gdp number. It didnt affect the Payroll Employment number, but it did affect the gdp number. So that was more shutdown effects. Nonetheless, you abstracting from that, the thorough government is still shedding jobs probably 3, 4, 5k per month, and i would expect that to continue throughout most of this year. I have go us the big picture. This is the first i know its light and the market seems to be treating it as light, although now it was down 49, i guess, on the dow, a little bit better than it was. This is the first, more or less, in line back to the trend report we were on in a while. Yes. Is this telling you the economy is still at 2, 2. 5 economy, still a 150,000 to 200,000 jobs economy per month . Its better than that. Its a 3 economy, and its 175,000 to 200k monthly payroll gain. I think the economy nothing changed in december, january fundamentally. The economy is still improving. Its just getting masked by, you know. I can personally attest to it. I was sitting in my house because theres literally a tree down across my driveway. It is a mess. And its been like this for, you know, a couple months. And it really is starting to affect the data. Its good to see more jobs are coming back to the economy. Im curious about wages. I always look at the average Hourly Earnings and the monthly jobs report. Any sign of movement there, real pickup in wages which weve been waiting for for so long . No, no. I mean, the Unemployment Rate is still 6. 7 . You still have a boatload of people who have stepped out of the work force because theyre discouraged. Thats partly why the Participation Rate is down. Theres just a lot of underemployed. Weve got a lot more work to do to tighten up the labor market before we start to get wage growth. The interesting thing is, you know, if you had told me, you know, five, six years ago that we had a 6. 7 Unemployment Rate and had fallen 3 percentage points, what would wage growth be doing, i would say it would be falling. But the fact that its still 2 is interesting. I think businesses are willing to pay their workers inflation but no more than that. And they wont be willing to pay more than that until the labor market tightens up. Very quickly, weve got to go, but do you expect a big revision to this 74,000 from the government on friday . For the prior month . You know, steve, i dont know if it will. I bet you this. I bet you a year from now when we get all the revisions in, it wont be 74k. It will be 174k. We will see you friday, mark. Thanks for joining us this morning. That was valuable to have him on after the release. I thits an important report. Its a bit of a redirect after the defense obliterated the defense, then the adp comes back and says maybe its not as bad as it seems. Looking owesier in adp. Coming up, a major olympics advertiser speaking out against russias antigay laws. Bus caremark kicking the hackett, deciding to pull all Tobacco Products from its shelves. Will its competitors follow suit . And what does the decision mean for the tobacco giants . An industry analyst weighs in on that multibilliondollar question next. I always say be the man with the plan but with less energy, moodiness, and a low sex drive, i had to do something. I saw my doctor. A blood test showed it was low testosterone, not age. We talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer, worsening prostate symptoms, decreased sperm count, ankle, feet or body swelling, enlarged or painful breasts, problems breathing while sleeping and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about axiron. Am welcome back. Our top story this morning, the adp employment report. Mark zandi just told us the economy gained 175,000 jobs last month, 12,000 light of the estimate of 189,000. Futures worse, better, now worse again, down 83 on the dow jones. S p down 13. Im talking about the implied open after the fair value numbers. Nasdaq down about 24 points. Yeah, thats the low of the session, isnt it . I think 83. Were just days away from the start of the Winter Olympics. And in advance of the games, at t has become the first major advertiser to protest russias antigay law. In a blog post, the company says, quote, russias law is harmful to lesbian, gay, bisexual and transgender individuals and hardlmful to a diverse society. At t is a longtime sponsor of the United States olympic econo committee. I think this could be a big thing. In other olympics news, moodys says hosting the games in sochi is unlikely to provide much of a boost to the russian economy. The olympics will cost the country reported 50 billion. Thats always a question, right . If a local if a place gets a boost from the olympics. Im not excited about going on a vacation to sochi. Most Sports Events are not the boom theyre expected to be. World cup, all of that . Doesnt always work out. Coming up, well get more reaction to the cvs move to drop Tobacco Products that just happened this morning. Well look at this from the big tobacco side of the equation. Will other retailers follow suit . This could be a big move. Were also going to take a check, get some of the stock opportunities created from this january slide. As we head to a break, take a look at u. S. Equicquity futures. The dow opened down about 80 points. Were back in a moment. Fedex one rate. Really makes my life easier. Maybe a promotion is in order. Good news. I got a new title. And a raise . Management couldnt make that happen. [ male announcer ] introducing fedex one rate. Simple, flat rate shipping with the reliability of fedex. 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. Lets get a check on Market Reaction to that adp report. Just showed private sector jobs growth. Well have more in a few minutes. Dow jones industrial average down to near session lows at this point. Set to open higher by or lower by 83 points. The s p 500 pointing to a lower start. Almost 14 points down. And the nasdaq down nearly 24 points. At this early hour. Time warner reported Fourth Quarter profit of 1. 17 per share. 2 cents above estimates. Revenue also came in above consensus. And time warner announced a hike and a 5 billion stock buyback program. A company that specializes in diagnostic products, myriad earned 66 Cents Per Share for the Second Quarter. 20 cents above estimates. Also raised the 2014 outlook. That one should be a big mover today. And ralph lauren shares rising in premarket trading. The company reporting fiscal Third Quarter profit, 257 per share, beating estimates by 6 cents, also upped its 2014 revenue outlook. The big story of the morning, at least talker of the morning at least, cvs making the multibillion 2 billion decision to drop all Tobacco Products by october 1st. Nik modi is on the line for us. What does this mean for Tobacco Companies, nik . I think its important to keep in context that the drug channel in general in totality is about 5 of the channel mix for all Tobacco Companies in the u. S. The predominant amount is sold through Convenience Stores which is a major class of trade. You know, the reality is, even just in the general landscape of the entire industry, this is a very small piece of the business. The second point i would say is foot traffic, you know. If drugstores arent selling the product, i think the corto bako consumer will go to another channel to buy the product. Thats kind of how i think about this. I know it sounds like a pretty big event, but at least to the p ls of the company, i dont know its going to be that material. I appreciate if its just cvs, thats one thing. If you throw walgreens in there, other companies, and then do you ever get to the point where a walmart, which i know, look, walmart sells guns, so maybe this will never happen, but, you know, to the extent that there becomes a social movement for Something Like this to happen, then what . Yeah. Like i said, even with walgreens and the rest of the drug channel, its still 5 of the overall industry. But again, you know, weve seen this time and time again in different channels. So for instance, the dollar channel was resisting to sell tobacco for quite some time. And they realized they were losing a lot of foot traffic to competing retailers. And so they started selling tobacco about 18 months ago. Again, in the end, we have to realize tobacco is a unique category. And the consumer is going to find a way to get their product. Still up in the air is ecigarettes. Of the big Tobacco Companies, are they all making ecigarettes now . I think from my understanding, its possible that a cvs caremark could still sell a product like that, and theyre also obviously selling likes like nicorette and things along those lines. This is what i think is the more interesting story line here. First of all, most of the major guys are selling ecigarettes. Alltrade just purchased greensmoke two days ago, which is a leading product in terms of product efficacy and quality. So they all are in the category. What i think is most interesting is what will cvs actually do . Because that will make a big statement in terms of how the perception of this category will be with the consumer. Cvs has basically made a commitment to health and wellness. If they sell ecigarettes, what does that say in terms of smoking cessation, relative risk. So i think its going to be a very interesting decision had they make it. Of course, theyre waiting for clarity from the fda. I wonder if this is a good time to be buying Tobacco Companies. Usually they do well when theres lots of volatility. And you dont seem too shaken by this decision by cvs. No. Interestingly enough, we put out a piece this morning titled dislocation. We have not seen the category or sector dislocated relative to the macros like today. For instance, emerging markets, big area of concern which is why a lot of stocks have sold off. Tobacco has underperformed and none of my companies have any emerging market exposure. The second thing is dividend yield spreads have widened relative to the tenyear which is a key vart for valuations. So thats attractive. The last is when the vix is elevated and rising, tobacco stocks tend to outperform which makes sense because its classic defensive sector. And its underperforming now. We think this is an opportune time to start looking long on some of these names. I know cvs is a Domestic Company so it may not have any kind of international impact, but do pharmacies and other drugoriented companies or retailers internationally where there is still some growth in the Cigarette Market or tobacco market, do they sell tobacco . Yeah, im not familiar with any International Retailers that do not sell tobacco. I know canada, they dont do it, but i guess you can consider that part of north america. But im not familiar with any, you know, folks overseas making those types of decisions at this point. Nik, thanks for joining us on this, big talker of the morning. Appreciate it. Thanks for having me. A little less than one hour until the opening bell. Just want to check on markets here. It looks like futures are still indicating a slightly lower start after adp came in a little bit shy of estimates. Rick santelli will join us now from the cme in chicago with a little more Market Reaction. Good morning, rick. Reporter good morning, sara. Well, we continue to see all the logical dynamics. You get a weak number, and ill leave all the boilerplate subtext of weather to others to debate. The markets have moved. We see yields once again moving into the high 250s and the tenyear pretty much where theyve come to rest at their lows intraday levels. Were hovering right now at 260, but that isnt the point. The point is that, that were going to hear all day long how much the weather impacted this number, how much the weather impacted other numbers. And while thats occurring, were going to see this mostly virtuous negative cycle, i guess not to virtuous, kind of the exact mirror image opposite of what weve had the last 2 1 2 years where the data would come out bad. It was good news is bad news. Stocks would rally. Were going to go through the other id, but this ones going to be a whole lot more uncomfortable for viewers because theyll cringe when they hear excuses in my opinion. Rates continue to mirror and track whether its the nikkei, dollaryen, euroyen, poundyen. The guys on that side trading fixed income watch the guys on that side trading the stock market. And if the stock market opens under pressure and bounces, youll see Interest Rates pop back up. But if we see triple digits in the first hour or so, i would definitely think that would be getting closer and closer to a test of the 2 1 2 level. Dollar index also traded off. Theres this notion that the dollar is going to benefit from a flight to safety. Once again, what we are seeing really isnt a flight so safety. The catalyst was a runaway from positions. An expulsion of positions, so to speak. And i think that were just seeing a rebalancing of that. This jobs report, in my opinion, is very indicative of what were going to see on friday. All right, Rick Santelli, thanks very much. Also just got a note from Dennis Gartman to check out gold which is sharply higher after the adp report as well. Did bitcoin go up, too . I dont agree that this was such a bad number. And ill tell you why. Several of the numbers weve had recently have missed by several standard deviations. This one missed, but its within a tolerance. Missing by 12,000 on a base of 189, and youre trying to count 136 million jobs. Right, not a big miss. Not like having at 56, ends up at 51, thats a big miss. This was within tolerance. On trend was your phrase. On trend. And that was my phrase. I dont know, maybe the market is looking to sell off, but i dont see this as guessing the economy as weak. Take that to the bank. I dont know about that. When we come back, pockets of opportunities. Are there stocks out there that are worth a second look right now despite the recent market volatility . Well get names to watch from a tech investor, paul meeks is going to come up on the program when we return. But first, take a look at gold which sara was just talking about. Were back in a moment. [ male announcer ] how did edward jones become one of the biggest Financial Services companies in the country . Hey. Yours . Not anymore. Come on in. [ male announcer ] by meeting you more than halfway. Its how edward jones makes sense of investing. Cozy or cool meow or woof . Exactly the way you want it. Until boom your mattress a battleground of thwarted desire. Enter the sleep number bed. An innovative design that lets couples sleep together in individualized comfort. Hes the softy his sleep number setting is 35. Youre the rock, at 60. As your needs change, you can adjust your sleep number bed, so you can sleep better together. The ultimate sleep number event is on now only at a sleep number store. With queen mattresses as low as 599. 99 know better sleep with sleep number. Welcome back to squawk box. Lets take a look at futures right now. Following that adp private sector jobs report, came out at 8 15. A little shy of estimates right now. Futures indicating a slightly lower start. There we go. Down 73 points for the dow. Nasdaq down 20. And s p down 12. Theyve been pretty much lower all morning long. It took a little bit of a lag lower on the adp report. Some investors headed to the sidelines, but our next guest is pacing his buying because he thinks theres so much opportunity. Paul meeks. I always feel like im mispronouncing it. He joins us now with stock picks and outlook on tech companies. Paul, how are you . Good morning. Help us here. You like some tech numbers. Youre apparently picking this stuff up and youre not worried. We had a guy on this program i think in the last hour or two who thinks it could have a correction of 40 on the market. Yeah, i realized that, but i see it a different way. The way i look at things is i dont think stocks are egregiously overvalued. I dont think theyre necessarily cheap, but i think theyre about fair to maybe slightly above fair. So im encouraged there. I think the u. S. Is on the mend. I do think that europe which has been in the doldrums for a long time is somewhat on the mend. Of course, emerging markets has gone to hell in a handbasket. But all that considered, ive been fortunate to have fund flows. And so my cash position has risen. And im taking advantage buying some great names. Not too quickly, not in too much size, but slowly and deliberately during this correction. Lets walk through some names. I want to start with google. Theres been news out this morning that they just settled this antitrust case as well as the other news that eric schmidt just got. A nice little 100 million bump in compensation. You still like that stock at these price valuations . Id probably buy google a little lower, but yeah, i do. I think the stocks worth at least 20 to 40 more. What else do you love right now . I stee starbucee starbucks is o . I run a growth fund. Within the tech sector, qualcomm and microchip are interesting here. Ive been trying to buy some classic growth names beyond the tech sector. Starbucks is one. Borgwarner is another one. Tjx which is the Tj Maxx Stores is a third. Help me with one thing. All of us are sitting around thinking that were in correction territory. Were on our way in a big way. Do you care . Is your expectation that we end the year higher . Where are you in all of this in terms of you say youre pacing your buying. Im just trying to understand at what point do you think this is going to bottom out if it does . I think what happens this year is i dont know how long or how deep this correction is going to be. I do think that as you go et to december 31st of 2014, well absorb any correction. And this may not be the only one during the year, and we will end up higher. Lets go through a couple others that you really like. I see go ahead. Sorry. No, go ahead. No, please. I was going to go to bwa, which is the auto parts supplier. We can put that up on the screen. What do you like about that company . Well, borgwarner is a very interesting company. The company has shown very steady growth over a long period of time despite just the poor january results from the automakers. I think thats more of an aberration due to poor weather. Borgwarner is very nicely positioned and has a great track record. I expect them to continue to grow nicely. The stock has come down a bit, gives me the chance to buy some. Before we go, one more name . I do like starbucks. Were here in seattle preparing for the super bowl parade in a couple of hours. Starbucks is a great company. The Comp Stores Sales have gone from 9 to 5 which is still wildly successful for any type of retailer. And the stock has come down a lot if you look at the stock chart. A Good Opportunity to buy a stock and at least some sort of a discount in a real nice, highquality company. Paul meeks, thanks for joining us. Appreciate your time. Thanks for being on the program. U this. Coming up, it will take more than a little snowstorm to keep jim cramer from his post. We get his take on the cvs story and the stocks surrounding the drugstore chains decision to drop Tobacco Products. More squawk coming back next. This friday, squawk box hits the west coast. We are live from the at t pro am with special guests all morning long. At t ceo randall stevenson, former Sun Microsystems ceo scott mcneilly, pga tour superstore ceo Dick Sullivan and a special interview with Clint Eastwood. Squawk box west coast edition is friday only on cnbc. Profit from it. Make it happen with fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Snowy, wintry day. And on this morning, cvs making that multibilliondollar decision to drop all Tobacco Products by october 1st. We want to bring in Scott Mushkin covering cvs, joins us on the cnbc news line. Scott, clearly this was a bold decision. Might turn out to be an expensive decision, but is it a Good Business decision . You know, we think it definitely is. We agree with cvs that selling cigarettes in a pharmacy is kind of counter to what theyre trying to do. And so theyve taken a step. Theyve been contemplating it actually i think for a number of years. And we say kudos to the Management Team for doing it. Clearly, they give up 2 billion in revenues and 6 to 9 cents this year in earnings, but to demonstrate the strength of their business, they havent adjusted their one of the thinge about cvs, we think the business has a lot of strength behind it. Do you think the strategy going more towards a Health Care Provider and giving more services in health care will give cvs a Competitive Edge over its rivals . We do. They have a new head of their retail groups and shes been with the company a long time and is one of their best executives. Shes been put in charge of retail. Really to take advantage of all the traffic thats going to the cvs stores because of the pharmacy. And so we think this is really compatible. Its one of her first big moves and we like the decision. Do you think others are going to follow suit . You know, i think theres going to be mounting pressure on pharmacies to follow suit although i think some of them will be a little bit hesitant right now probably liking some of the traffic they may pick up in the front end from the move. When you say that this is a good financial decision as well, how do you justify that when they talk about 2 billion in revenue that theyre no longer going to have . I think in the short term the fact that they can offset it makes you feel good about the trend of their business underlying, the underlying business. In the long term from a strategic perspective, one of the things that will happen with health care its going to be much more consumer driven with the Affordable Care act, so the brand and what it stands for will become more and more important in attracting customers. You think people wouldnt go into the store that there werent cigarettes there. Ive never thought about the fact that theres cigarettes at cva or any of these drugstores. Certainly not the majority of the population but theres definitely a group of people particularly as you get into the Younger Generation that would not like that product in the store. And its obviously just not compatible with what theyre trying to do. Clearly the Affordable Care act is trading a lot of opportunities for these retail pharmacies. Who is best positioned to take advantage . We think absolutely the answer is cva as they combine both their caremark business with the retail business. Very large players in the medicaid, managed medicaid area and we think theyre going to take advantage of that. Thats been one of the biggest Growth Drivers with the Affordable Care act so far. So, we think its hands down cvs best decision. That pretty much jives with the decision today to stop selling Tobacco Products. Thanks for joining us last minute on the story. Thanks very much for having me. Lets get down to the New York Stock Exchange and i want to hear what jim cramer has to say about all of this. Jim . Whats going on . What do you think about the decision . I dont like cutting numbers, i dont like tobacco. When i saw Dollar General move into this business even though the margins were squeezed, it cut gross margins, it did boost traffic so Dollar Generals the way to go. Walgreens is looking at all options. Rite aid has been on fire. That has a little bit more of a downscale customer, rite aid could be a place to go. I like cvs, i like the company, the stock has been straight down in a while. Im in a holistic rap that this is good. That shelf staff will be taken up by medical marijuana and that gets the stock back up because that group is the hottest group in the world. No, cutting numbers cvs is not what i want if i own a stock in what has become a very treacherous environment. We just had this analyst on. He tried to say long term that cigarettes are not compatible with the brand and that long term it would be better for business. Do you buy that piece of it . No. Okay. And do you i mean, what i mean, i thought your question about walmart was a great one. These companies dont really look, its great, cvs is committed to health care. Thats absolutely right. Tobacco is real bad. We could go through case by case and decide what these companies are doing. In the end this is capitalism, all right . And if cvs thinks tobacco is bad for business, theyll get rid of it. People dont wake up one morning and say, do you know what, im going to is that right to do well and good. It just doesnt work like that. Walgreens is a terrific company. If walgreens pulls out and said, listen, we think tobacco is so bad its attracting people who are the wrong customer like an Abercrombie Fitch thing, i dont know, maybe thats the way to justify it. I just think that cvs is doing whats right but that doesnt make you more money. Let me ask you a different question. Randall stevenson at t put out a statement in support of gay and lesbian and bisexual stra transgender. Transgender. And theres a lot going with russia and the olympics, should they be making political statements and what does it do for their business . Again, nothing. Look, theres be someone maybe who switches their im talking to dick cheney at the commissioners ball this weekend at the nfl so we can link everything. But i do think, again, i mean, these are great statements. I dont want to i put another hat on and said im so glad cvs is doing this. I hate tobacco i think its the scourge of this country. Im pro any sort of equality moves. But, again, i mean, im stuck with the four walls of trying to figure out the eps and the eps for cvs just got worse and im taking down numbers cvs. This is a market thats not saying, you know, im going to buy cvs, theyre good citizens. It doesnt work like that. Jim cramer taking us back to reality and i appreciate it. Well see you at 9 00 eastern time on squawk on the street. Thanks, jim. Speaking on behalf of the shareholder. Its a good point. Thats the honest we can all feel good about it but in the immediate term he is correct. All right. Next the stock of the day. And as we head to break check out what futures are doing this morning. They are pointing to a lower start but theyre cutting their losses ahead of the open after that adp report. Squawk box will be right back. Theres a saying around here, you stand behind what you say. Around here you dont make excuses. You make commitments. And when you cant live up to them, you own up, and make it right. Some people think the kind of accountability that thrives on so many streets in this country has gone missing in the places where its needed most. But i know youll still find it when you know where to look. In a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. The stock of the day ralph lauren. Love that company. You wear their company. The company posting betterthanexpected Quarterly Results and raising its fullyear revenue outlook and adding to the stock buyback plan. As my mother would say we should have more of these type of people. And i contributed to their earnings. It is not minimal when you contribute its a big thing. But do you think will really help . The olympics. Why will they help . They are the official outfitter and last year when they made the products in china and it was a big kerfuffle and it was a big deal. But now they are made here. You bought the fullbody skating suit . Today im wearing my sweater. What did you say . I have no mark on it. This is not ralph. Ive never stood as an economics reporter why i pay somebody money to wear their logo on my shirt. I felt they should pay me for that. I dont wear stuff with logos. You are modest, insignias sell. Guys, thanks for joining us this morning. Make sure you join us tomorrow. Street signs begins right now. Im giving you a long look every day every day every day every day i write the book morning. And welcome to squawk on the street im david faber with jim cramer. Author of get rich carefully who had a very successful book signing at new yorks union square. Standing room only. Thats what i like to hear. And scott wapner is joining us and were live from the New York Stock Exchange and carl is on a plane right now for so much dhi. Lets take a look at the futures. You can see weve got an implied open that would put us down on the s p and the dow, of course, after a rare positive day for the month for the year yesterday, lets take a look at the