Transcripts For CNBC Squawk Box 20140206

Train continues philip morris, kkr are among the names to watch before the bell today. News corp. , activision. The ecb will announce its policy decision later today. The market is hanging on those two reports. Kayla, thank you very much. Weve got some big Corporate News for you this morning. Twitter, that was your top corporate stories. Shares getting slams slammmed. The stock is down big time, about 17 . Wiping out basically a sixth of the companys value. Earnings and revenue did beat the street. That was not the problem. This was. Slowing new user growth and a severe decline in timeline use. Thats when a user refreshes their twitter spaj, being used as one of the key measures of how active users are. Ubs out this morning cutting price targets from 55 to 35. What does this say about twitter . These crazy valuations. I dont want to say they havent revolutionized the world. They have. But is it possible that this is the beginning of the bubble getting ricked . I was thinking about this a lot last night. Twitter has been on my mind a lot lately. What dick said last night in the Conference Call is they wanted to make it more visual, they wanted to make it easier for users to message each other. And i was thinking, that sounds a lot like facebook. They seem to be on ultimately a collision course. Plus youve got snapchat. I think twitters biggest problem, though, is user you er autthentification. Ill give you an example. Two weeks ago, you know how it says soandso followed you and 11 others . Yes. I was on my phone and i noticed that four of the people who followed me in one day have the same picture. So i had a similar experience, but i did it of my own volition. There was all this talk about how do you verify the users . Someones Follower Base jumped up to 100,000 people. There is a way you can see whether it is legitimate or not. I ran my own and sadly i found out about 17 of my followers are either fake or inactive, whatever metric they use. Mine is higher than that. So i ran a number of other things. If advertisers arent convinced that he or she and the numbers they got are real and that kayla tousche is not a real human being, theyre going to be much less interested. Thats a major problem for twitter. And its a problem for this social clout that a lot of people are putting a lot of stock in. Theres a Company Called viral media boost where you can buy twitter followers. I said how easy is this . Did you buy twitter followers . I did. 500 for 5. I wanted to see what it was like. They email me every single day asking me to buy more. And my new feed was completely filled with followers like i love teen girls. And i said, i did not follow those people. Get out of here. I wish i could remember where i read it. There was an article a couple of weeks ago when i got caught up in this how many users are real or fake. There are twitter forums in china, now they have people paying one penny a retweet so they appear active. Except theyre not active engaged users. Theyre getting paid a penny for retweets. Thats a major problem for twitter. I dont disagree. I think the valuation, the longer conversation will have it. We have three hours to do the show, but in the mean time, sony, theres big news out of tokyo overnight. That Company Announcing a major i call it a major re structu structuring. Its an attempt to turn around its structure operations. Sony now selling its pc businesses, spinning off its tv businesses and cutting 5,000 jobs. The Company Warning that it expects steep losses this year. I talked to activist investor dan loeb about sony back in november. Here is what he had to say. We remain bullish on japan. We wouldnt have made the sony investment if we didnt support abe and kuroda and everything that theyre doing. B but, you know, politically, economically, and from a monetary standpoint. So does sony fit into that as a back drop and anything we do has to make sense from a macro perspective. Sony has been and will continue to be a beneficiary of a weaker yen and possibly from some kind of a structural reform. I put the sony move in terms of a baby move. This is an admission of defeat. They were adamant about loebs position not being the right one. Even though theyre not doing exactly what third point wanted, theyre moving in that direction. It was a 50 stock 60 bucks six year ago. Its under 15 today. Theyve tried to weaken the yen. What is sony now . What are they . Are they a commoditized maker . Consumer electronics . No, no, i mentioned this on the show yesterday. The entertainment business is worth more than the whole stupid thing combined. Right now, if you just spin off the entertainment value, you would get more for your company. Theyre laying off 5,000 employees and which is a huge deal. In japan, that doesnt happen. It is slightly amazing that theyre dining it. I wonder where the 5,000 jobs are coming from. We should try to find out. Dan is sold on some of these position of sony . Some of it, i believe, in the last quarter. But there was weak ng in the japanese stock market. Thats the understatement of the morning. Youre welcome for that. Meanwhile, pan done doras year guidance falling below current consensus. Shares right now down fairley sharply. Down nearly 10 . On a call with analysts, pandoras ceo said the company will expand its marketing and manage the costs of licensing music. I dont know which program you guys use to listen to your music. I dont use pandora because its got flames, it has too many ads. For me, its well, try pandora one. 39. 99 a year. But the app isnt as good as and you dont have free choice over your music. I just wonder how they can increase their marketing to win over users that they probably believe is a superior product. Look at the competitors out there for pandora. I pay the annual subscription fee. During the commercial break, can you give me your password . I would, actually. It depends. Well make a deal. The folks at target pandora, spodify, mog, itunes radio google play beats music, songsa. Songsa is fantastic. But beats music is trying to do the same thing where instead of you picking an author or a singer, its what are you doing . Are you cooking, relaxing with friends, sitting by the fire . Whatever it is, theyre going to make a play list for you. So a lot of competition out there. We should publish a play list. I do. Other news this morning, cocacola, now bought a 10 stake in Green Mountain coffee forever about 1. 3 billion. If youre asking what the heck does cocacola have to do with coffee, here is what it is. The maker of the how do you pronounce this . Keurig, saying now coke is going to help them launch its new cold drink machine planned for relief as soon as october. Shares of Green Mountain soaring on that news. What does David Einhorn thing about this . He had a huge short on Green Mountain. In pattis blog, she was talking about how shorts are going to get killed from this trade. It was up as much as 55 in the after hours yesterday. There was a lot of blood on that trade happening. Taking a look at shares of soda stream in all this, the rival is getting hit hard, as well. Meanwhile, were joined by the chief global economist ott did you know brad street and lou is with us, as well. Paul, i want to start with you. At the beginning of the week, no news is bad news. Now it seems that markets are trading a little bit more narrowly, but were all waiting for the jobs report on friday. How are you positioning yourself today if youre investing . So as were looking at the market right now, we think a lot of the news will dissipate as we get into the second quarter. This is pretty unique for this cycle that we get these types of news events and then we get some concerns over the recovery. But then when you look at it, the recovery performs pretty much consistent with expectations. So we saw it in 2010, 2011, 2012, 2013 and again in 2014. We look at the resilient city of the u. S. Economy being pretty high and improving to some degree. That gives us confidence that what well see is return to some stability in the back end of this quarter. Lou, if the recovery is resilient, why is earn worrying so much about weather . We know the weather is bad in january. We know its affecting the indicators that weve seen in the last few weeks. A lot of people are quick to say this recovery is derailed . I dont think you can say anything more about that. Its something a lot of people keep in the back of their mind. The inventory built for those quarters is the last in history. The weather the weather is such that the weather has in the past derailed what may have been a faster recovery. And i think that there remains concern about the strength of the recovery and whether it can sustain a bout of bad data because of the weather. Also, i think as far as the stock market goes, it has a couple of headwinds that it didnt just a couple of months ago. The feds tapering, which we didnt know if the stock market would start to have trouble when the taper began or when they eventually finished with the qe program, but it certainly seems that theyve had trouble as soon as the Program Began because it began at the beginning of january and so, too, was the high in the stock market at the beginning of january. Conversely, the high pick on the yield on the tenyear was the end of the year. Weve been hearing fed Officials Say the hurdles are high for them backtracking on what theyre doing with the taper. What do you think they need to for that . I think a yellen fed would rather depend more on forward gooits guidance and try to get the market to believe fully what they plan to do as far as the future path to the fed funds. The qe is finite and they would rather have something more durable than that. So i do think that what i dont think they would change their mind on the taper with just this jobs report. I think you would need a consistent change on a variety of data, including this jobs report and probably the next one being a stinker, as well, before they meade meet in march for them to consider changing the pace of the taper. Paul, isnt it healthy that were having a bit of a pullback . Absolutely. Id love to get richer in my plan. Thats not realistic. I think, again, we should be concerned about some things in emerging markets. But when you look at the u. S. And look at the u. S. Economy, the restructuring that weve seen in corporate balance sheets, what weve seen in terms of the health of the corporate sector, were far down this path of healing. I think its important that we did on think about that. At the end of the day, the u. S. Is poised to grow close to 3 this year. I worry about getting bit by a rattlesnake, but its not front of mind every day. I wouldnt want it to happen. How big of a worry is this for you . Its a worry, but its not a top five worry. Importantly, i think well get back to the resiliency of the health of the economy driving economic growth. I think thats very important. Yes, we get caught up in the immediacy of the moment and concerns about the fed with regard to the fed, by the way, the fed is on a trajectory to back down in tapering. Probably wont finish it until the end of this year. Once theyre on that trajectory, theyre going to go down that trajectory. So we had a guy on yesterday, a technician who said the markets would fall 43 . How crazy is that to you . I dont know rule anything out that never, ever, ever would it happen. Meanwhile, this technician has been saying this since the beginning of last year. And eventually he may be right, but i think the point being that a 40 correction would have to be driven by a lot of changes. Right now, the fundamentals dont point to that. Lou, im not saying that tom demark, and thats who theyre referring to is right. Demark is one of the few people out there that has a technical indicator named after him. Theres john bollinger. Do you listen to him . Do you poll the demark indicators . No, i did not. But i am familiar with him and have read stuff on and off for years. I remember he was really big in the late 90s, early 2000. He was very, very correct. Some people and to your point, kayla, well taken. He has been taking this for a while. I think the thing with a technician like that is when you get certain indicators that suggests a probability for something, you would be remiss not to bring it up. I was saying that its following the path of the 1929. Im not a big adherence to looking at charts from the past and saying, oh, this is mimicking me. Ive done that a lot in the past and it never seemed to continue to mimic him as a key point. But if he sees a you know, something technical that results to him that a bad market is about to come, its not something that he should soft soap. He should say this indicates to me that the market could trade off significantly. He would be remiss otherwise to his followers if we didnt mention that. Guys, well be talking markets throughout the morning. But for now, paul, lou, well leave it there. Brian was also big in the 90s, but we dont give you a hard time about that. Im still big, physically. Its hard to believe ive been doing this for 17 years. 17year overnight sensation. Did you go to disney world . Coming up, were going to talk about the magic kingdom. Frozen. Ive now seen this movie twice with my kids. The hit movie frozen with your kids, sure. And i would go watch it by myself. I found myself listening to this song. I shouldnt admit that. The hit movie helping the bottom line, but what about broadcast tv and the theme parks . Do investors have any big worries with the mouse house . We have that right after the break. Lets see if the nation will remain frozen through the weekend. Alex wallace has the forecast for us. Have you seen this movie . No, i havent. Youre in the weather business and you havent seen frozen . I know. Its sad. Ill catch it when it gets on dvd. How about that . Lets talk about the forecast. On the west coast, were seeing something we havent seen a lot of in a few months. Rain coming on in and snow throughout the sierra. The last time San Francisco saw an inch of rain, christmas day. Not christmas 2013, but christmas 2012. So it has been a long time. This is much needed rain. And were going to keep things unsettled as we bring in these disturbances off the pacific here through the weekend. Much needed moisture coming into an area where the drought has become worse and worse here. So through the weekend, we will take that. Meanwhile in the east, through the weekend, were going to be tracking a couple of disturbances. And theyre going to help to provide us with a little bit of snow. The key word is a little bit. Not looking at big time snowmakers, but snow for saturday in the midatlantic. And then on sunday, weve got the second distemperatures turnance bringing us snow into parts of new england. Thats your national forecast. More squawk box coming back in a bit. Let it go let it go cant hold it back any more let it go let it go disneys hit movie frozen the Walt Disney Company reported a seller Fourth Quarter with strong performances from across the board with Cable Networks and movies. Frozen was the big hit. Bob iger appeared on closing bell and spoke about the disney economy. Were offering product to consumers that they feel not only that they want but that is well priced. Id say as we look at the economy, we dont really you know, we see a relatively decent economy for us today. We dont really have much visibility into the future. Its hard to look ahead and feel overly confident. We just feel that were very, very well positioned in the marketplace. Here to dissect the quarter, tony weibel, the managing director of median entertainment. Good morning to you. Good morning. This frozen was not supposed to be a breakout winner at all. People were worried about this film honestly. Disney animation has done fantastic. You look at tangle, wreck it ralph, freeozen, it helped t it helps infinity. My question is, how sustainable i dont want to say how sustainable a model is because if you do enough of them, it always works. But thats the issue. The studio is trying to hit home runs. Youll talk about frozen and get a garage margin. You talk about avengers. Dallas john carter for that, a lone ranger for that. Theres a mixed quarter here. The tv business was a little weaker, the parks business is a little bit weaker. Those things are a little bit more troubling. Lets talk about parks first. They keep hiking the prices, which seems to be helping them in the shortterm. Can they continue to do that . Yeah. I think the sorkin family will find these my magic plus bracelets as a driver behind that. Basically, its a technology, you use your casino bracelets to pay for things. People will probably go to the parks more often and spend more. But tv broadcasts, not as hot in terms of profits . Yeah. So any the entire tv industry has a lot of pros and cons going for it. One of the biggest things weve been talking about is amazon getting into the cable tv business. That could be a nice positive here. People arent expecting it, but i think they could offer tv at cost. And in doing so what do you mean by that . So what were saying is that amazon, a couple of weeks ago, we wrote a note basically highlighting the fact that amazon could be putting out a box maybe later this year and offer tv at a lower margin structure than at todays system which has to have a 40 margin. Theres a big battle of usage based billing of intriernet dat. They may need this as a Political Tool to fight that. Still, espn, major cash cow. I want to ask you, obviously we have nbc sports network, fox sports 1 with a major push. We saw the ads during the super bowl. Any indication those channels are cutting into espns profitability or wealth . Not yet. These sports deals are long in terms of duration. I think theres room for everybody. What i will say in sports, this year is going to be a painful year. Youre resetting rates on mlb, more importantly the nfl. I think there will be a 50 increase there. For disney, what people may be missing at the beginning of this year and at the beginning of the next fiscal year you mentioned amazon. What is the chance that a netflix or amazon starts bidding for sports rights . What i think is funny is netflix streams their quarter on youtube. They lack the ability to stream live events. Its possible that you see these Companies Adding complimentary channels the same was as nbc. Youre saying disney is going to sell their content over amazon . Because i was going to say, you cant get all the disney movies over netflix. Cable tv packages, you know it. What amazon brings to the table is competition. Ultimately, amazon would have to pay a premium because theyre a new entrant. Thank you for joining us this morning. Sure. Pretty interesting. This whole business sort of well, you look at the story in the journal about apple building out infrastructure for online delivery. Some people surmise maybe thats the beginning of the tv network. Why not just go whole hog . Get did because the Net Neutrality ruling is a concern. You know, i think it changes the margin structure too much for them. They need to scale identity a national and global level. Agreed. But they also need to reach the home. Coming up, will Interest Rates continue to drop despite the taper . Blackrocks bond strategist is here. And the headlines, update on those diabolical twin toilets from russia. Tdd 18886282419 boost your trading iq with the help of tdd 18886282419 our live online workshops tdd 18886282419 like identifying market trends. Tdd 18886282419 now, earn 300 commissionfree online trades. Call 18886282419 or go to schwab. Com trading to learn how. Tdd 18886282419 sharpen your instincts with Market Insight from schwab tdd 18886282419 experts like Liz Ann Sonders and randy frederick. Tdd 18886282419 get support and talk through your ideas with our tdd 18886282419 trading specialists. Tdd 18886282419 all with no trade minimum. And only 8. 95 a trade. Tdd 18886282419 open an account and earn 300 commissionfree online trades. Call 18886282419 to learn more. Tdd 18886282419 so you can take charge of your trading. 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 and welcome back to squawk box right here on cnbc. Were coming up on 6 30 eastern time. Im andrew ross sorkin. Weve got kayla tousche with us this morning along with Brian Sullivan. Joe and becky are joining us live from pebble beach on friday. Becky is making her way out there and joe has been playing a little bit of golf. We will check out how hes been doing. You look like youre taking that news hard. Im taking it very hard. Stocks, shutterfly coming under a bit of pressure this morning. The online photo sharing company posting a loss in the Fourth Quarter and saying it expects operating expenses to rise this year. Yelp was a winner after the bell yesterday. The Consumer Review website, revenues rose more than expected. The company has been working to cash in on the surging demand for local information and mobile phones and tablets. Take a look at shares of kri kima. That internet content delivery provider forecasting better than expected results for the Third Quarter after renegotiating for its client. Akamai didnt name the client. That customer is apple. This goes back to the rumors and speculation we heard earlier this week about what apple is trying to do in terms of building their infrastructure. If, in fact, they are going to be building a tv business, youll need an akamai to effe effectieffec effectively mirror youre being charged by how much data is going across your platform. Its in your best interest to compress as much of it as possible. I thought they mirror it out. They do. They do a lot of things. Okay. Whats going on the in bond world . Lets find out. Lets talk to fed and what else might be on jeff rosenbergs sizable brain. Sizable brain. I like to start off interviews with a compliment and then just beat them down into submission. I appreciate that. Hold on, ill get me lead pipe from underneath the desk. Tenyear bonds, are you surprised by that . Certainly. Nobody expected this start to the year. Its basically the perfect storm for fixed income markets. You had slowing Economic Data. You had the currency issues from em spilling over and, of course, youve got china concerns around the credit bubble. So all three coming together have really led a flight to quality and the flight to quality, finally what youre seeing in fixed income is what you would expect. But do you think, jeff, it is a temporary parking spot for money . Lets wait and see how things shake out, then well go into our investments. Certainly it is a flight to quality. Its temporary in that people are benefitting from fixed income. Thats really the value of fixed income right now. Its offsetting the risk in your portfolio. How have you adjusted your models for janet yellen, if at all . Janet yellen represents a shift towards wanting to keep Interest Rates lower for longer. So the front end of the yooefr yie yield curve. Obviously, tomorrow, the big data print for the shortterm market, if you get Economic Data undermining the low for longer thesis, then theres areas in the fixed income market. Theres been a move for the last couple of days in t bills. A lot of traders are talking about how this is akin to what we saw in october. Not as bad. The curve isnt inverting quite yet. But what do you do with t bills and what do you expect is going to happen on friday . So on the tbill debt ceiling issues is a much, much smaller issue. I think that will solve that issue. Thats not going to be the same kind of problem that we saw back in october. And with regards to friday and the payroll report, the real issue here is we have one negative print in january. The market is expecting a rebound and that will be critical. The risk is clearly to the downside, though. If you dont get that rebound, if you dont get that positive report, then two points determine a line. You start to extrapolate what two negative reports might mean and you have more dineside room, if you will, for yields in that environment. Its not what we expect, but certainly i think the skew is towards that side. Bill gross, 2 00 eastern. Every day. Youre the one. Its my only payment for coming in this early is to plug any own show. I usually try to nap around 2 00. Me, too, actually, every day. Thats what the viewers say. Bill gross said he was buying the short end. Are you . Five years, twos, fives . No. Were actually a little bit worried about the short end. Youre on the other side of that trade . We are definitely on the other side of that trade. Right now, theres not a concern because the Economic Data is weaker than expected. Its going to keep the yield curve earn a lot of pressure. That two to fiveyear part of the curve is a little more out. Most of the viewers of cnbc probably dont trade bonds for a living, but they probably own a home or are thinking about one, maybe a refinance. Do you see Interest Rates and more importantly for our audience Mortgage Rates being significantly higher or lower than they are, say, two years out . Certainly. Two years out. Were looking at higher Interest Rates. Were in a period, a long period of normalization of Interest Rates. So youre looking at gradual increases. Not the kind of increases we saw last year because we were coming off a depressed low level. But gradual increases over the next two years. So on Mortgage Rates, youll expect to see over those two years higher rates. So jump in now is what youre saying. Well, youre going to find better sell the 401 k and buy a house and lever it up for a boat. Well, i think it depends on whether you need the house, but certainly. Dont do that, america. Weve been through that movie. Hasnt the whole country been loaded up on too many bonds to begin with . What kind of bonds . All kinds of bonds. Not straight up bonds. I agree. Have they . I mean, i doubt the fixed income strategists will say yes to that question. Well, no, actually, i will. The biggest asset class in the last year, what did people do . They bought bonds. They didnt buy stocks. Last year was all about are we going to see a great rotation . What we saw was a great rotation out of Long Duration bonds, out of munis, into short duration. Thanks for waking up early. Thanks for having me. Coming up on squawk, going for the golden sochi. Michelle Caruso Cabrera is there. Michelle. All of the press conference seems to be resoundingly negative about whats happening here in sochi. Is it true . Well tell you right after this break when squawk box returns. Heres a word you should keep in mind unbiased. Some Brokerage Firms are but way too many arent. Why . Because selling their funds makes them more money. Which makes you wonder. Isnt that a conflict . Search proprietary mutual funds. Yikes then go to e trade. Weve got over 8,000 mutual funds and not one of them has our name on it. Were in the business of finding the right investments for you. E trade. Less for us, more for you. The funds prospectus contains its investment objectives, risks, charges, expenses and other Important Information and should be read and considered carefully before investing. For a current prospectus visit www. Etrade. Com mutualfunds. Welcome back to squawk box on this thursday morning. U. S. Equity futures at this hour still n green. An implied open for the s p at 6 points, dow 62 points and nasdaq would be up 14 if the markets were to open right now. Those markets have been boosted by positive sentiment in europe ahead of key Interest Rate decisions. Mean wile, a few quarterly reports out this morning, Diamond Offshore declaring revenues, special Cash Dividend of 75 Cents Per Share. That stock is down fairley sharply in the premarket. Et etnas earnings, forecasting an increase in medical customers in its private medicare business in 2014. Etna, aet, up 1. 5 . And for all the coffee lovers out there this morning, dukin blank beat the street. The company raising its Quarterly Dividend 21 . How about glazed doughnut lovers . They are increasingly skewed towards coffee rather than doughnuts. Im going to tell you something, herb greenberg, i had a bet with him. I said in a year, coffee, which is at like 30year lows, would be a better investment than almost everything, including gold and gold binders. And coffee futures this year, just in the six weeks, are up 22 . The etf is the best that ive got with herb. Its really just a dinner bet. Theres no money on the line because im going to take him to mcdonald anticipates. You should just quit. Just go drop the mike and open a huj fuedge fund. No, i shouldnt. You should go to russia. To packs of wild dogs and, oh, yes, actual sporting events. They are scrambling in sochi to get everything ready ahead of the opening ceremonies tomorrow night. Lets get down to michelle Caruso Cabrera. She appears to be alive and well despite all the stories weve heard. How are you doing . Were doing great here. Weve been here 24 hours. This is a taste of, on the one hand, on the other hand. Look behind me. Six years ago, there was nothing. Right . So on the one hand, look at everything they got done. The venues are looking good. On the other hand, i can say the vast majority of the hotel rs a mostly done, which says not all of them will are done. The hotel still smells like sawdust and paint. Some of the telephones dont work. We went all the way up to the top of the mountain today to look at all the different venues. Most of the stuff is done. But theres one hotel that we found that was clearly not even close to being done. That is, of course, the one were going to show you the video of because you know how media is journalism is because we all focus on the negative. The photos, a renovated hotel. So this is the bathroom, happens to be on the ground floor so everybody can see you if you happen to be going to the bathroom. Im sorry, i know its breakfast time. What do they do . No curtains. They put a white piece of paper on the window hoping nobody can see you. This is another shot we can show you of a burn in the bedspread, as well. This is not our hotel, by the way. This is a colleagues hotel. I want to show you a funny clip from the newspaper here. Theres something called the moscow times. In honor of jay leno, its his last show coming up, the moscow times, clearly not a friend of putins, theyre talking about one of the companies that was supposed finish some of the workers hotels, they said a total of 3,500 apartments were planned of which only 1,300 were completed. We only missed by a little. We needed another two weeks to do the finishing works, a sound said. Of course the olympics are half over by then. They say that the Olympic Games are extremely secure, no commentary. Theyre looking into this issue about the u. S. Government issuing concerns about whether or not toothpaste is being used to get explosives on planes. They say there is no reason whatsoever to believe that there was vast corruption involved in the building of the olympics. They say all the unpaid workers have finally been paid. And here is the real gem. They claim, the russian government only spent 3 billion out of the 51 billion quoted so frequently and that the rest was paid for by private investors. Hard to know whats true, but they were very defensive today in their press conference before the start of the game. Private investors . Who were private investors . Friends of putin who are russian and wealthy. And it looked like originally when they got these deals, they were going to be very, very good. But theyve turned out in some case toes be painful because when things didnt get done on time, one gentleman even left the country. What keep of a bust . I dont know. All the Media Coverage out of sochi seems to be so negative. Yeah. I think they left a lot of the media hotels until the very end. They focused on the athletes and the sponsors, etcetera, etcetera. On the one hand, you get it. On the other hand, the power of the pen can be really painful and do you really want to upset the journalists so far . And you say the journalists are whiney, but the journalists have paid, a lot of them are up front and theres some basic things we expect in the world, electricity, Running Water and journalists in particular need an Internet Connection as well. If youre curious as to whether or not you get a room when you arrive, thats why theyre rather angry. Michelle, youre on your way, right, brian . Next week. Listen, michelle has been in hot spot after hot spot. I know she can handle herself. And we have to go, michelle, but do you feel there is a little bit of whining here . No offense to everybody else in our occupation, but theyre getting to go to the olympics. As long as you have Drinking Water and a granola bar Drinking Water would be good, but some of the people didnt have Drinking Water. Water is key, from what i understand. I get that. But youre in russia, youre at the olympics. I dont blame russia. I blame the ioc. Dont award the olympics to a country that is promising to buy a new city, right . Yeah. And theyre telling us these hotel res four and five star hotels. Theyre not. Theyre the dorm rooms that you wanted to get into in college because theyre new. Thats the equivalent. Its going to be amaze to go watch at least from here. I think once the sports start and by the way, they start today. They start ahead of the opening ceremony. And curling right here on cnbc. Coming up, from fj services to retail and manufacturing, to a company that provides i. T. Services. We have the ceo of Cognizant Technology solutions joining us right after the break. 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. Welcome back. An early candidate for stock of the day but not for a positive reason. Shares of twitter getting pounded. 3. 8 , thats what its monthly active users were in the last quarter. Previously had it been 6 , 7 , even 8 . 21. 8 to the down side, 52 a share. It went public at 26, though, still double its ipo price. That little twitter bird falling out of the sky. That little bird. Anyway. We have noise. We get bette midler, wind beneath my wings. Anyway, shares of Technology Solutions up almost 30 over the past six months. Joining us now, the companys ceo, frank azusa. We had a terrific year. Fourth quarter came in very, very strong. We grew to 8. 84 billion. We saw a strong pickup over the year. We expect that to continue going into 2014. A lot of it driven by social, mobile and cloud and analytics, what we call s. M. A. C. As far as technology is concerned, we are seeing sort of a once in a decade shift in the technology landscape. Once in a decade, the technology tends to accumulate and through competitor and advantage benefits, we think were in one of those cycles at the moment. In the coming three to four years, youre going to see a big regeneration in terms of Capital Spending right now, other businesses that are then hiring you . It has to be financial services, right . Thats with a segment of revenue that was well above expectations. Retail and Manufacturing Health care were below. Yearonyear basis, we saw strength across all those segments. We typically see retail lockdown in i. T. We see all clients across the industry segment saying how do we take these technologies, drive them for competitive advantage. Are you getting involved in this whole sort of the privacy credit card security issue . Look, you know, as we move into this world of hyperconnectedness, where everything starts to get connected together, were going through the world where 7 billion or 8 billion are connected to 50 to 100 billion devices connected to the internet, privacy and security become central issues. We have a practice in digital security. Were helping our clients think about how they secure themselves as they move into this new world. You play a role go ahead. I was going to ask you about the emerging markets. Youve done a lot of acquisitions and thats given you a presence over there. We talked about the weakness were seeing there and whether this is a temporary slowdown of something that will be affected in the long term from a consumer and corporate standpoint. Interested in your thoughts on that. You have to look at the emerging markets in the long run. If you think about technology and the emerging markets driven by two things. An emerging markets company is looking to become Global Company champion. Global multinational looking to enter the emerging markets and build their presence there. Both of those trends remain intact. If you play it for the long run, its a great opportunity. Are you splitting . Were splitting. Why . We think something weve done over the years. We think its a representation of the strength does that help the equity . Its psychological, you look at a stock price, 45 is much cheaper than 90, even though its two shares. Does it help cognizant shares to do this . I think it signals our confidence in the Business Model over the long run. We talk to aol boss armstrong about Quarterly Results and Industry Outlook for ad spending. Hightech to high speed, General Motors cfo pulls into auto central. How about that pun . And they shift into overdrive as squawk box comes back. Its the cheesesteak shuffle huh every day, all day, cheesesteak, cheesesteak every night, all night cheesesteak, cheesesteak 9 a. M. Cheesesteak 2 p. M. Cheesesteak 4 a. M. Cheesesteak any time ruh geico. Fifteen minutes could save you fifteen percent or more on car insurance. If yand youre talking toevere rheuyour rheumatologistike me, about trying or adding a biologic. 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. The market is in wait and see mode. Will tomorrows numbers accelerate a correction . That discussion straight ahead. And gm, the ceo, Chuck Stevens to report to us. Squawk box begins right now. Good morning and welcome back to squawk box, right here on cnbc. Im andrew ross sorkin. Joe and becky will join us tomorrow live from pebble beach. How did you get here, bob . I got here in the cnbc provided limousine which as usual was a lincoln. What are you driving right now . Right now im driving the new cadillac ctsvsport. 430 horse power. I think youd be a zo6 man. I have a zr1. You have the zr1 at home. Yes. This fall when the new zo6 comes out it will be traded. For the zo6. The minute you get the zo6, out comes the new zr1, which will probably have over 700 horsepouer. We have to get to the futures right now. Take a look and see whats going on. We have green arrows across the board. Should also note as youre looking at the screen, the bank of england has left its key Interest Rate unchanged at 0. 5 . Lets get through some of the big Morning Headlines if we could. Investors are looking ahead to tomorrows january jobs report, theres plenty of Economic Data all at the same time. 8 30 eastern time, we get a weekly initial jobless claims, Fourth Quarter productivity and the december trade deficit. If thats not enough, the bottom of the hour, expecting Fourth Quarter numbers from General Motors. That will make an expected report profit of 88 Cents Per Share. Fill phil lebeau will have the numbers as soon as they cross. Shares of twitter sinking, twitter stock down 20 . Earnings and revenue beat the street. That was not the problem. Investor they are using a key measure of user engagement. Twitter down, coffee is up big. Cocacola, buying a 10 stake in Green Mountain coffee roasters. Gmcr for 1. 3 billion coke will help launch a new cold drink machine. Planned reless for october. If you own gmcr this morning, celebrate, take the day off work. The stock is up 42 right now. 42 from gmcr. Herb greenberg, im going to rouse him out of bed with a wakeup call. Hes been a critic of gmcr. Rival soda stream are down 8 . The fact that coke will be doing this could change the whole business. They have machines at these places, too, in addition to big soda machines where you get the can. Maybe you wont need the can anymore. The expectation for the market is this could become even more of a partnership. Think about the Distribution Network that gmcr is now gaining. Right. I assume theyll get all of the power of cocacolas distribution or at least some of that. Thats massive for gmcr. Minutemaid coffee, i can see it already. News out of tokyo overnight on sony, the Company Announced a restructuring in an attempt to turn around its unprofitable electronics operations. Sony selling its pc business, spinning off a tv business and cutting 5,000 jobs. The Company Warning it expects steep losses this year. I talked to activist investor dan loeb about sony back in november. You remained bullish on japan. We wouldnt have made the sony investment if we didnt support abe and kuroda and everything theyre doing but politically, economically and from a monetary stanpoint. We started to get into that as a backdrop and anything we do has to make sense from a macro perspective and it did, because sony has been and will continue to be a beneficiary of a weaker yen. And possibly from some kind of structural reform. This is a big win for dan loeb in terms of him walking in the door saying i want to change the place. He didnt get exactly what he wanted but hes a lot closer than the initial move by sony. Its not that often that you get a firm no from a ceo who months later backtracks on that. Right. Atlanta fed president Dennis Lockhart says hes not surprised about a selloff but the dip is a dip, a buying opportunity for investors. Joining us now, david bianco, chief equity strategist for deutsche bank. We also have mark patterson. Where do you think that does for europe and the Global Markets . People were expecting a cut maybe this time around. Yes. We think that more on the policy front that will help europe grow. Europe is stable. Europe is growing. The uss growing. These things i think are well known and priced into the u. S. Equity market. The whole focus is on the emerging parts of the world economy. And everything from turkey to china, thats the focus of investors, trying to figure out how much exposure the s p has in terms of its current earnings and growth potential. I think what it comes down to, we were just reminded as to how Monetary Policy can affect everything from economy, u. S. , foreign economies, currency, commodity, Interest Rate. I think the dip is justified. I do think the s p is providing a fair and true point for investors. This is probably not the lowest price but very fair entry point. Its not the lowest price. Mark, were still 500 points on the dow away from what we would call a technical correction. Do you think thats within reach or do you think this is a buying opportunity and well just go up . I think it will be a better buying opportunity before all is said and done. I do think that we have the probability of seeing another 3 to 5 decline from todays levels. I think yesterday, maybe even today, countertrend rally. The selling has been so intense here over the last several weeks. Were all down about 6 from the peak. I do think theres more room to go. I encourage investors to layer into the equity markets at this juncture. Obviously you dont know exactly where the bottom is going to be. If we do grind a little bit lower before ultimately we think we move higher on the bank of synchroni synchronized economic global kbangs, if were a buyer at 1700 of the s p 500 by the end of the year, that ill with be an extremely rewarding experience. You say that Global Growth will trump this. Whats your take on the Overall Economic picture . Gdp good, Consumer Spending bad, personal income bad, manufacturing bad. We have data points that have led to us a point where we say, look, maybe the economy isnt a healthy place that we thought it was in december. You know, its interesting if you look at citigroup economic surprise index over the last couple of months leading up to months ago, we went parabolic. It was a comparative analysis of data point that will be coming out in january, early february. What were seeing is weaker sequential data but nonetheless, not necessarily bad. We thought that would be the trigger, the catalyst for a pull back in equity prices, not bad news, just less than expected news. I think weve been seeing that at the moment. I dont look at it as particularly worrisome. I want to clear up something, too. Its been a source of confusion for me, bob. I disagree a little bit. I talked to ceos of department stores. When people buy homes and cars they dont shop with us. Car sales were strong in 2013. Youre probably putting 2,000 to 6,000 down on it plus you have a new payment or higher payment. Do car sales in your mind eat into other buying jeans or buying other types of stuff . Because they are such a huge purchase . Ive never really thought of it that way and i kind of doubt it. Because today automobile purchases, its really a deferrable purchase because almost all cars will last 150 or 200,000 miles. So people dont buy cars because the old one is worn out and they desperately need a new one. They buy a new one because they want a trade. Generally when Consumer Sentiment is up and people feel relatively secure as they do now, theyll purchase cars. Is housing rebounding and 16 million cars sold, it seems hard to say the consumer is dead. The consumer is not dead. The consumer has been in the same hole as the whats the name of the animal that comes out in march . That little rat. Punxsutawney paul. Mole. What is that thing . Groundhog. Right now, you should see ann arbor where temperatures are between minus 5 and plus 4. The roads are icy. Nobody goes shopping for anything. People tend to stay home. Im not surprised that consumer purchase data or retail data is down a little bit. To me, thats going to be part of this supposed First Quarter weakness. David, we have to go to break. Well give you the final word here. Weather is a factor. Service consumption is better which is good for jobs. Business spending is picking up. Its going in the right direction but its going in the right direction in a slow way. To your point earlier, people got too excited about the potential for rapid acceleration. Right. Thats why we have this dip. Mark and david, thanks so much. We have a squawk ceo call with a man i want to talk to, the ceo of aol, Tim Armstrong. We talk about the companys Quarterly Results, ad revenue and the sale of its local website. The controversy around the program, well talk about that. Then in the next half hour, General Motors, pulling into earnings central. Quarterly results and the outlook from the companys cfo. Thats first on cnbc. Back in a moment. Tomorrow, squawk box hits the west coast. We are live from the at t proam with special guests all morning long. Randall stephenson, pgas ceo Dick Sullivan and a special interview with clint eastwood. Squawk box west coast edition is friday, only on cnbc. Profit from it. Welcome back. How is everything . 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. Welcome back to squawk box. Checking the futures right now at 7 15en the east coast. Were off of the highs of the morning. The dow opens up to the upside are 55 points, s p 500 and nasdaq would be up slightly as well. Manufacture the nations retailers report january samestore sales. Pay attention to commentary about weather having an impact. Thats something weve been expecting after all the snowstorms hitting the east coast. Cost costco, they beat Market Expectations even as it recorded Lower International sales in dollar terms. Shares have been rising on the news costco up 1 . Aol just out with Fourth Quarter earnings, beating estimates by 4 Cents Per Share. Those are the best numbers theyve had in years. Our first on cnbc, Tim Armstrong, aol chairman and ceo. Good morning. How are you doing . Great. Sounds like youre doing better. Lets walk through the numbers. I want to understand where all of the money is coming from this quarter. Sure. The olympics are starting. Aols employees are wishing our politic athletes the best luck, next week in the olympics we had an olympic performance in q4, the best results we put in in the last decade. We had double digit Revenue Growth and Profit Growth overall. We announced our sixth consecutive quarter consumer traffic growth overall. If you look at where our business is improving, its the investments we made a few years ago looking forward which are in video, mobile, programatic advertising. Real quickly, in terms of percentage, break down where the ad revenue comes from, programatic versus state up banners. At a high level, the way to think about our company is basically half of it comes from the display advertising on our owned and operated properties and half of it comes from our network properties. Percentages are a little bit off, but at a high level you can think about that. The power of our advertising business, weve taken it from a singular nonplatform business and turned it into a platform business. We serve roughly not only ourselves but about 40,000 other publishers with content or advertising. Aol probably has the second Largest Technology platform in advertising right now. Youre seeing that in the numbers. Aol from what the Company People thought about a few years ago to what it is today, were at the forefront of the most important parts of the internet right now and were growing and growing. You own a stake in jettison patch. This is a huge stake for you. Its lost several hundred million dollars. Big mistake . Its not a exact. Thats 150 billion marketplace. Aol still has a significant Minority Stake in patch. Were not giving up on patch. As a matter of fact, were working with a hail group we partnered with to rebuild the patch platform and the Community Platform around patch. The reports that we basically have jettison patch is exactly the opposite. We basically want to restructure patch. Weve had five main strategies, four of them worked well. Patch needed to be worked on or restructured. Its a big market. We have 20 million users on that product. What youll see from us in the hail group is continued investment in patch on the platform side and growing it out to more the company said it spent about 200 million on that thus far, 200 million in losses. Do you see a path toward getting that money back and earning a return . You know, our goal is to basically not just get the money back we invested but also to get a significant return on that. And we took that project really seriously. Were taking it seriously. The community editor, anybody who worked in that product did a great job for three years building up a Large Consumer base. We have product work to do that. What were doing. You know this better than anybody, turning around the worst merger in history has taken us the ability to bat on white space. Were doing well in video, well in mobile, Huffington Post with 20 million users in one country. Were on five continents now with 90 million users. Aol is a very good company at making bets and following through on the bets those are our results today. Tim, theres a theory overnight about aol restructuring its 401 k program. This is farther afield from earnings but cash flow is up 30 . This story says the company is changing the way that it matches employees, that its doing so at the end of the year and employees that leave are basically forfeiting the match altogether. Talk about the rationale for doing that. Why does that make sense . Sure. One, were in probably the most intense talent space in the world. We have to look at our benefits programs seriously. As in the ceo chair, let me give you an example, the decisions we have to make as a company, obamacare is an additional 7. 1 million expense for us as a company. We have to decide whether to pass that expense to employees or cut other benefits. 401 k matching programs are an added benefit above and beyond all of our current employees have that. The current employees who stay with us will have that. Its a 3 match, a Great Program in general. Do we pass the 7. 1 million of obamacare cost to our employees or do we try to eat as much of that as possible and cut other benefits . For employees that are leaving to go to other employers, not matching those programs was probably the last thing on the list for us in terms of Employee Benefits that we wanted to keep. And i have a meeting with the employees today. If i go to work for you, and in december you decide to fire me, i not only i not only get fired, ive lost whatever benefits otherwise i would have accrued anywhere else. How hard is that going to do you think it will change the dynamic in terms of your ability to find and hire talent . I think its going to do the exact opposite. If you look at our results as a company and the benefits we offer employees right now, aol is one of the most competitive places in terms of attracting a tall en. We gain more talent the last four years than almost any other internet company. You guys are looking at one microscopic area of our benefits package. Our total benefits package for employees is excellent. Were continuing to invest in it. We do free yoga classes, gyms. Two quick issues before you go. One is twit out with its earnings but more importantly, sort of this trend that does not look good. What is your take on that business . This is a giant tail wind area of the economy, of consumer usage. I sent dick a note saying great job on earnings. I think they did a great job. Same thing with mark and cheryl at safebook last week. Youre seeing massive adoption. Were in the first inning of this overall game. If you dont think consumers will adopt more social services with be video content, thats why were excited. Youve seen us turn not a good situation into a Growth Company because of these massive trends. Final, final, we have to go. Speculation among analysts you may at some point decide to spin off mapquest . Were going from a company that is growing to being a Growth Company. Were investing mapquest by the way had its best year in many, many years. Aol ended 2013 with decadelong best results. Were looking at basically where do we grow, how do we grow . And spinning things off and Financial Engineering has taken a back seat to how do we focus on our strength area. Tim armstrong, thanks for joining us this morning. Thanks. It is spectacular. Its my goto map program already. General motors, they make cars. Also, breaking news on the jobs front. Stick around. Time now for todays aflac trivia question. How did the name jeep come about . The answer wednesday cnbc squawk box continues. I have ae that met with, uh, an unfortunate accident. While hes been incapacitated, somebodys been paying him cash. Now, is this your doing . Aflac . Now, if i met with some such accident, would aflac pay me . Nice. This is your stop. 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The answer, it comes from an abbreviation used in the army for a government Purpose Vehicle or gp. The number of stooks s the number of stooks tocks move, including twitter. Down 20 in premarket trading today. Much different story at Green Mountain coffee which weve been looking at all morning, sharply to the upside, up 32 right now. Cocacola has bought a 10 stake in the company, can buy up to 16 of the company. Coke plans to help Green Mountain launch its new cold drink machine planned for release as soon as october. Coming up, a lot of earnings to get to. Quarterly from General Motors. The automaker expecting modest improvements this year. Phil lebeau will sit down with the ceo. And challengers monthly reading on job cuts, all that and more when squawk box comes 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. Welcome back to squawk box. Were waiting on gm earnings. In the meantime, some other headlines. The bank of england who left its key Interest Rate unchanged at half a percent. The attention turns to the European Central bank. We have General Motors earnings crossing right now. Phil lebeau, you know everything and are ready to go here. This is a miss and a miss by a wide margin. General motors in the Fourth Quarter earning 67 Cents Per Share, well bow low what the street was expecting. They were expecting gm to earn 88 Cents Per Share. Revenue coming in below expectations. The street was expecting gm to bring in 47. 1 million. Profit margin of 47. 1 . When you divide out the Company North America Versus International operations, a couple of numbers stand out. In north america, General Motors made 1. 9 billion in the Fourth Quarter. Overseas, not as strong. International operations, a prot of 200 million, below 800 million, which is what they made in the Fourth Quarter of last year. In europe, General Motors losing 300 million in the Fourth Quarter. Well be talking with cfo Chuck Stevens in 20 minutes, guys. Well talk to him about this miss. Gm missing by a wide marge, 67 Cents Per Share versus 88 cents, which is what the street was expecting. Longtime gm executive, 345 million loss, how do you fix this . This is an anchor that gm is pulling down the road. Its not just gm. Its a general situation that hits exports. The reason bmw, volkswagen and merced mercedes, the classic german producers, they do a lot of business outside of europe. They ship vehicles that are north american produced in low dollars, shipping them into europe and the high eurozone and capture the margins. Whereas General Motors, europe and ford europe do not export cars out of europe. Theyre stuck in europe, just exactly the way is. For the straight european producers, its not a profitable market right now. It wont be for quite some time. Will it be again . I think so but you just have to wait for capacity to be boiled out of the system. Thats hard in europe because with all of the social legislation, its very, very hard to close plants and lay off workers but ultimately, it will get done. People will take the writeoffs for the plant. Dont you have more automakers in europe than you do here . Fiat, scoda. Volkswagen, lamborghini, its all one company. But for the consumer choice. I hear you. [ talking at once ] jump in. I hear what youre saying about europe an i understand, you and i talked about this many times. Im sorry, this is beyond a broken record. Were now going on 15 straight years where General Motors has lost money in europe. I know over the last four what weve heard is trust us, by 2015 well be back to break even. Theyve improved but it feels like the same thing. Its like coming out of quick sand, they make a little progress, theyre right back into it. I know theyre going to say today were doing better in europe but the question remains if youre an investor, why do you believe these guys when they say they will fix europe . I think steve ghirskey came out strongly and said they i shouldnt be talking for gms operating management. I understand that. Look, its not just gm and ford. Its all of the european producers who depend primarily on the european market, are in deep trouble right now. Its just going to europe is in the process of gradually recovering. I think as the general economy improves and the vehicle park ages and excess capacity is gradually boiled out of the system, europe will return to a semblance of profitability. I dont think they have too many grants or too much choice in europe. Again, were not asking you to speak for gm management. It doesnt matter what company i am, if i have the upside opportunity of only a semblance of profitability, best case, im losing money year after year, why be here at all . Why not just pack it up, say europe, its been nice, were going home . Youll recall thats the strategy we had. And what happened . Then well, the new board the new board overrode Fritz Anderson which ultimately resulted in Fritz Henderson having to leave. That was the strategy we had, sell off the european operation and the board decided, no, europe was strategically too important for General Motors and that it could be turned around and i still think on the ally board, they bought the european operations of, theyre committed to that. One automaker you love right now, given everything . If you had to pick one automaker that you love, andys question. That i love . In this environment, given all the things you just said. I love General Motors. And i think theyre doing by and large doing the best product lineup of any manufacturer globally right now. In terms of value for the customer. But when you look at whos doing a great job, whos the worlds bigge biggest, whos the most profitable . Whos expanding everywhere . It has to be volkswagen theyre hitting on all cylinders and operating out of a european environment. Well get more input from you on that. Thats an interesting point. Viewers will want you to weigh in on that, you love volkswagen right now. We have more breaking news on jobs from Challenger Gray and christmas. Joining us with the breaking details, john challenger. Im looking at a read of the numbers that just came out, more than 45,000 layoffs in january. I know we often times see this at the end of the holiday season. Put this into context. We saw structural cuts out of the retail sector, a number of companies, sams club, jcpenney, sears, best buy, target, all announced cuts. These are happening, i think, as the Retail Industry reacts to the ongoing onslaught from eretail, from more and more consumers using smartphones and their tablets to purchase their holiday goods. So many of these cuts now are store closings. Theyre not just the seasonal cuts that occur year in and year out. We saw heavy ones there. That always happens. Just to be clear, these are fulltime employees, these are not seasonal employees. These are fulltime employees that are being laid off . Exactly right. We saw about 750,000 Seasonal Workers come on in october through december. Those by the end of february will be out of the system. These are more now announcements by Companies Set to change their operations, to rethink how theyre going to do retail in the future. I think well see move of this to come in the next few years as retail changes more to clicks and clicks and bricks type strategies. The retailers are being forced to close down the stores that arent profitable. Will people stage this by retail sales being so bad, because of the online effect during this last season. Youve been crunching the numbers down for a long time. What do you think what type of industry, environment are we in right now . You mention retail being weak. Should we have seen that keep going in the same direction . I think were in a period where the cuts that are coming are mostly structural cuts. They arent Just Companies doing poorly and having to cut workers because the economy is down. For example, technology we saw big cuts come from intel and emc. They react to mobile technology, to different ways of storage that companies are using. We saw big banking cuts. That was the third 4e6iest industry this month. Those were occurring because of structural changes to banking. The economy own the company thats losing jobs are changing due to structural reasons in our economy. A lot of replacement with humans as machines is the trend we keep seeing. For now, john challenger, thanks for joining us. Were waiting on the ecb announcement that could move the markets. Plus, more warnings about hitting the debt ceiling. Is congress due to repeat history . And what will it mean for your future taxes . Well open up that can of worms, next. First, an antisocial morning for investors. Shares of the microbloging site continuing to decline. The biggest concern, slowing new user growth. Twitter down almost 21 . Pay my bill. Phone your account is already paid in full. Oh, well in that case, back to vacation mode. Boots and pants and boots and pants and boots and pants and boots and pants and boots and pants. Voiceenabled bill pay. Just a tap away on the geico app. Huh, 15 minutes could save you 15 or more on car insurance. Yup, Everybody Knows that. Well, did you know that some owls arent that wise. Dont forget about im having brunch with meagan tomorrow. Who . Seriously, you met her like three times. Who . Geico. A shot at the white house right there. Were back here on squawk box. Treasury secretary, time running out for the Government Debt ceiling options. Will last years mess be a lesson for lawmakers . Joining us now to disarm the debt bomb, mark patterson. He served as Tim Geithners chief of staff in treasury and is also partner at perkins. Jack lew has been making several proclamations. How should we interpret these. I think what jack was trying to convey to the public and especially to congress, at this time of year, the debt limit gain is different. Thats because were in the middle of tax refund season. Money is going out from the treasury in a big way, billions and billions every day in tax refunds. Right. The treasury has much more ability to predict and control how long those extraordinary measures can last. What is the likelihood that congress has to act . Look, its always hard to tell because that depends on Human Behavior and politics obviously. What worries me is every time you take it to the brink on one of these occasions, they may screw it up. Congress has the capability to not get things done on the schedule they intend. Right now theres no plain in the house of representatives i can see to get the debt limit increased. The big news is, the Republican Leadership is trying to convey to members that they shouldnt take it to the brink. Question is when will the numbers come along . The gop leadership is saying if you go down into the rank and file, if you will, do you think the message is being heard . I dont think theyre there yet. I dont think the membership is there yet. They have not coalesced around any particular idea. Look, at the end of the day, the only way this gets done is the way it got done last time, which is the speaker will have to use a lot of democratic votes to get the debt limit across the finish line. He doesnt like to do that. He doesnt like to foreshadow that hes going to do that and the members really dont like it. Well have to see. Right now, the majority has not come to terms with how theyll get the debt limit raised. The deadline is not far away. Were already almost a week into the month. The congress was scheduled to take a weaklong recess this month. Theres probably about two working weeks, roughly speaking, to get this done. Every time we have this conversation, its like groundhog day, its constant. Theres a new trick up the sleeve, the treasury, can they mint a coin, can they sell gold or do something we havent thought of . Right. Is there something we havent thought of . There really isnt. Treasury has looked at all those ideas, even the goofiest ones theyve looked at. If there were a good idea out there i have to cut you off. Breaking news from steve. Well come back to you . Just a second. The central bank leaving Interest Rates unchanged. There was some expectation they could cut rates this morning. Some analysts were looking at a 10 to 15point basis cut. They are not doing that at this point. There are two other options. One is to actually begin engaging in quantitative easing, which is to buy bond and not offset them with sales, which is how the European Central bank does it. The third idea is a negative deposit rate. Both of those i believe would not show up in this announcement, since this announcement is xhuf exclusivel about rates. There were some increase in stocks ahead of the potential change here. Also there will be a rally in bonds. I dont know if they will be giving it up as a result of that. Guys like barclays, a bunch of the analysts were looking for some action by the European Central bank. Thank you, steve. Well be coming back to you on that. 345shg, real quickly on one issue. Were talking about tricks and things up peoples sleeves. You said there isnt one. Dont you think after all this time weve had this happen over and over again, its incumbent upon the Treasury Department to figure out different ways it actually could prioritize gaming or do something proactively on its own . That idea has been looked at inside and out from every direction. And it really just does not work. Theres no way to prioritize. Every time this happens, treasury will haves to say technically we cant do this. Maybe techniqcally we cant do this, i dont disagree. Thats only because they decided they cant do this. Now weve had a lot of time to figure out how to technically do it and they dont. The you cannot cut the budget or impose a budget regime through the debt lit. You just cant do that. You cannot start picking and choosing among millions of payments that the treasury makes every month. Thats a totally unworkable idea. By the way, it would be looked at as a form of default anyway, by most people. If we stop paying some payments, thats a form of default. The u. S. Government makes all payments on time every day, always has, always must. Mark patterson, well leave the conversation there. Thank you for joining us this morning. Thank you. Coming up, we are revved up and maybe some are getting fed up with General Motors. Cfo Chuck Stevens joins us to talk about earnings and why they continue to lose hundreds of millions in europe while doing well here. Former chairman Alan Greenspan, hell talk about everything from the taper to Janet Yellens appearance on capitol hill. A lot more to do. Big morning. Were back on squawk box, right after this. Ly use helps you be Ready Anytime the moments right. Use you can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. 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Were in the business of finding the right investments for you. E trade. Less for us, more for you. The funds prospectus contains its investment objectives, risks, charges, expenses and other Important Information and should be read and considered carefully before investing. For a current prospectus visit www. Etrade. Com mutualfunds. All right. Welcome back, everybody. By the way, stock futures are higher. Twitter, the big story, that stock down 20 . The other big story, Green Mountain coffee roasters. They make the kuerig kcup coffee. Green mountain shares are up 40 . Soda stream, the big competitor, down about 9 . A lot of individual stories out there yesterday. Today, General Motors, a big story as well. We just hit the numbers basically. It was a huge eps miss. We got all hot and bothered, bob lutz is with us, our guest host. We got all fired up about europe, 335 million loss. The u. S. Continues to perform well. Yes. In fact, its up substantially over last year and theres a little email i got from the gm guys. Im not an active executive anymore but the miss is more than explained by tax and other special items. If you take the special items out, the situation is really pretty good. Again if i tookmy Credit Card Debt and mortgage debt off the books id look like a millionaire. You cant selectively remove stuff. If youre interested in how the ongoing business is doing, i think its legitimate to adjust out for one kind. Arent we going to listen to the chief Financial Officer . Hes the guy with the answers, im not. I know. But the point is, you said to us a few minutes ago that you were dealing with the europe problem when you were an active executive there. Fritz henderson and i had a strategy to basically sell the european operation to a combination of magna and russias spearback. It was going to be gone at one point. To your point, why dont we hear from an active gm executive, cfo Chuck Stevens. You were fired up earlier, phil. Sorry about that. Lets find out whats exactly behind this miss. Joining us on the squawk news line is Chuck Stevens, the cfo of General Motors. Chuck, what went wrong in the Fourth Quarter . Why was the earnings so far below what the street was expecting . Lets start out with overall results. I think very, very solid results in the quarter. Overall earnings were at 1. 9 billion, up 50 yearoveryear. Included in that result was 2 20 million in restructuring, primarily related to planned actions taken in germany. Which set a Stronger Foundation Going Forward from a cost standpoint and is part of our plan to drive that business to a break even by middecade. I dont dispute that. You had a profitable quarter, nobody is disputing that. Why are you so far off from what the street was expecting . From wall street south side perspective, i think two things. One, book tax rate were higher than our actual results than what was expanded. That was about a third of the miss. The other twothirds, fundamentally related to the restructuring in germany with the belkin closure. Thats less than what you lost in the Fourth Quarter of last year and your overall yearend losses in europe are less than what they were in 2012. As weve been discussing, a loot of people are looking at your numbers and saying, when do we truly believe these guys will be back to break even . They tell us 2015. Do we have faith thats going to happen . Were actually keeping to the plan we laid out in 2012. Weve really got significant traction in 2013 on the car side of the business we narrowed losses by 1. 1 billion. On the market side, were starting to see positive traction there. We grew share for the first time in 14 careers. We had improved revenue the second half of the year. Were fully committed to our middecade break even objective. I was in europe last week. Im confident with the discipline and the focus of team to drive towards that. Were executing those things we can control. I would say were on plan. Chuck, your inventory stands at 111 days here in north america. Thats much higher than most people are expect. Whats the problem here . Is it that you have a buildup in inventory as you usually do in january and february . Or is this a case where were seeing softness when it comes to people coming into the showroom and the economy . Part of inventory, obviously was the Sales Results in january which were largely weather related. Normally youll see an inventory selldown reduction of inventory as we go into the spring selling season. We expect that to play out as well. I would say we closely monitor industry and our own inventory and well continue to apply the disciplined approach to balanc balancing supply and demand weve seen over the last three, four years. You arent seeing decline in terms of people coming into the showroom. Obviously, the traffic in january were severely impacted by the weather. We expect to see that bounce back. We expect the industry will be in the 16 to 16. 5 million range for 2014. We havent changed our view on that. Chuck stevens, cfo for General Motors. Not in the job very long and he has to explain the numbers, was this a 21 cents miss or can you explain this with what we heard from chuck . Investors getting antisocial, especially with twitter. The stock getting slammed. And more wicked weather on the way. Now its becoming a problem for the nations economy. How will the fed deal with the frostbite . The econ forecast, coming up right after the break. Mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. 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. Sometimes they just drop in. Always obvious. 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. We get another peek at the labor puzzle. The jobless claims report is on the way. Twitter shares are trending lower. A big tumble on declining user growth. Should investors be antisocial right now . Old man winter messing with the nations growth. We check out how much economic frostbite the markets can take before spring arrives. Squawk box begins right now. It gets too cold for you here good morning. Welcome back to squawk box, right here on cnbc along with kayla tauche and andrew ross sorkin. Former General Motors bob lutz will be with us for the next hour. And two key Interest Rate decisions out of europe, the boe and ecb announcing in changes in policy. There might still be news to come this hour because mario dragic wi draghi will be holdg a news conference. Twitter lost nearly a fifth of its value, investors were troubled by slowing new user growth. And a severe decline in time line views. You know what a time line is if you hang on twitter. A time line of key engagement. He told us that Tim Armstrong told us that 2013 was the companys most successful year in a decade. Also, sony selling its pc business, spinning off its tv business and cutting 5,000 jobs. Dab loeb, a happy guy on this one. The Company Warning it would expect steep losses. And cocacola, now a 10 stake in Green Mountain coffee. The kuerig one cup coffee brewer will launch a cold drink machine that will have coke and diet coke in your house. The single worst business in america to be in is probably a vending machine owner. Overnight. Doesnt coke own a lot of vending machines themselves . Who knows. Im just saying. If theyre going to distribute at work with that kcup. Theres now going to be soda. As of october we should see shares of Green Mountain. Coke stock also getting a bit of a boost. Meantime, i had mentioned soda stream, the big rival. They had a big ad during the super bowl with scarlett johansson. It didnt actually run, right . I think it might have ran later in the game. Nobody was watching later in game. Soda stream coming under a bit of pressure this morning. Amazon as well, a lot of single stock stories out there today. Amazon buying a Video Game Company last night. Double helix games, one of the coproducers of a popular xbox game. Some are suggesting, hey, wait a minute, is this amazons entry salvo into making a video game cons consol . Will amazon getting into distribution of content . Analysts starting to say they will. I dont remember the 6 00 hour. I heard it was excellent. You were here. I any. Fed speak yesterday, mixed Economic Data. All ahead of tomorrows big i think we say in the media, the allimportant monthly payroll report. Hotly anticipated. Joining us now is senior advis adviser, a cnbc contributor, all the way from ja jegeneva, switzerland. Do you expect surprises out of the payroll report tomorrow . Whats your expectation . What were looking for is our point estimate is 195,000 on payrolls. Unemployment rate could come down as low as 6. 5. If we print that, i think that would come as a surprise to markets, particularly the Unemployment Rate part of it. I think it would put to rest some of the worries raised by the pmi numbers earlier this week. It will be an important report. This one is allimportant. They are going to verify real economic weakness uncovered in january, well put that to bed. If we put it to bed, theres no reason we should have tenyear treasury rates in the 2. 6 range. I think youll see rates and stocks move higher if we get a strong report tomorrow. I know its an important number. It always is. Im not making light of it, david. Why do you believe this one honest to goodness is indeed more important . Because the jobs number unfortunately has not been a big market mover in the last couple of years because weve lived in this weird bad news is good news because of fed market but good news is also good news. Theres really been no bad news. Yes, but the point is, the correction that weve seen in january and early february has really been centered around the idea that emerging markets are weak. Maybe that means the u. S. Economy will also be weak. If we actual let get back to the forecast we had at the start of the year of about 3 economic growth, decent earnings growth, then Interest Rates are in the wrong place. The biggest danger for investors is getting whiplash by this emerging market stuff and not recognizing that the u. S. Economy is strengthening enough to push unemployment down and Interest Rates up. In america we import so much more than we export. Including to europe. Right . In fact, european exports from the United States are really about 1 , 1. 5 of our gdp. Im not saying theres not jobs and Economic Impact there but why are we reacting strongly to whats happening in turkey and argentina . The entire argentinean stock market, every company has less than a market cap than yahoo they shouldnt. Its an overreaction. I think we went into this looking for a reason to sell. In january after such a big rise last year. And emerging markets became that reason. I like that. Blow me honest. We completely agree with it. Im not saying currencies. How closely are you watching theres three themes. Tell me if you think these are key or complete garbage . Which is where the yen is. The smaller emerging market, where the yen is, increased margin and leverage by u. S. And International Stock owners, right . And a china slowdown . Whats key to you . Or Something Else if not those . The only one of those im concerned about is the chinese slowdown. We dont have a good handle on whats going on in china. The official gdp numbers are untrustworthy. Its hard to figure out how much of a bubble they have and how aggressively theyll deal with those. On the other issue, japan is capable of printing enough yen to push the yen down as they wish. And i think i dont think theres cash in the system as well as leverage. I think you have to look at the stack of cash that isnt in markets to balance out the leverage by some investors. I think this is not leverage, this is liquidity. Thank you very much for joining us on squawk box as well. Were walking through the wall of worry with david. If you look out at the yen, u. S. , china, what is front and center for you right now, allison . My sense is after such a strong market last year, people were a little concerned that maybe the market is ahead of itself and the positive momentum was Getting Better, things that were Getting Better are coming into question right now. I think we have to start seeing improving data. Were probably out to see great u. S. Economic data. I think we need to start seeing the reality of whats been in the optimism. At least in the developed markets economically. Define not great Economic Data. Does that mean bad or just less good . It feels more than less good. Some of the trends in manufacturing are less good than expected. Employment numbers are weak. But if you look back on the past couple of years weve not had a steady trend up in employment. Weve had a couple of soft spots and some pretty strong spots. Its been sort of back and forth. My sense is when youre coming out of the deep recession weve had, as well as deleveraging and governments and households, youre not going to have a steady uptick. Youre seeing a way of adjusting and correcting from the errors of the past. In your mind, less good, does that justify a 6 to 7 drop in the dow of the first six trading weeks of the year . Youll want to start seeing good to better. The mark set trading 16 times earnings. That technically is in fair valuation territory. Unless you see good numbers, youre going to question whether or not corporate profitability will continue to improve to generate momentum in the market . I think some of it is caution, that makes me feel good with the markets being healthy and its not money plowing into the market where were overdoing what is going on. My sense is what made the data less good had to do with shortterm things like the weather and probably overconcern about whats going on in a handful of selected emerging markets. Allison deans, david kelly, thank you for joining us. Safe travels. Were stuck here in the myopia of the east coast, the new york left wing media. Youre sort of in the midwest, michigan. Still on eastern time. Exactly. How do you read the economy right now . The way i read it is basically on a steady, slow upward trend. Were not going to have a rapid expansion because theres too much distrust of government policy, too much worry about who do you invest in . Would you invest in the stock market . Sure. Heavy into equities right now, far less on fixed income. Fixed income has really slowed down. I think if you want to preserve your wealth or even hold on. Preserve your wealth, you want to be an equity. Im going to take off my shoe and put it in my mouth. This is one of the most difficult questions ive asked because i respect and like you a lot, bob. You are a man of elegance and grace but youre a man of advanced, fairly advanced age, in a polite way. How old are you . 82. Youre investing in equities. Every Financial Adviser says you have to buy bonds when youre 60 plus. 82 years old and youre confident enough good investment adviser, my father lived well into his mid90s. Im healthier at this point than my dad was. You know what i mean by the question. Youre not afraid of the capital risk. No, hell no. Nothing ventured, nothing gained. I have a fairly expensive lifestyle. I own airplanes and a lot of cars and stuff like that. Ive got to keep the money flowing. To answer your question, i think were on a gradual upward rise. Theres some distrust in business with obamacare and attitudes of part of the administration. Fundamentally, i think its onward and upward and this is merely a slight hiccup. Im going to rip my shirt off and paint an American Flag on my chest right now. Thats great. Time to take a commercial break, obviously. We are counting down the weekly jobless claims. First, a negative trend for twitter. The share is getting crushed after rolling out results. Are the concerns about user growth overblown or is it time to get antisocial . Were coming back with that and a lot more in just a moment. announcer scottrade knows our clients trade and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Welcome back to squawk box, everybody. Good thursday morning. The futures are indeed higher. A lot of negative individual stock stories, a lot of positive ones as well. Overall it looks like we recovered. Yesterday was a nonday for the markets. Tomorrow we have the big monthly payroll numbers. That could leave today on hold. Kellogg trading lower this morning. Earnings, yes, beating the street by a penny at revenue. Yield top line, falling just a bit short. A Company Getting a boost this morning is perrigo. They are raising its profit outlook. That is a great michigan company. Forgive me, andrew. I want to call an audible. Cocacola investment, Green Mountain, people at home say who cares about that. You care if youre a bottler. You care if youre an aluminum company. Maybe every can of coke is not going away. Nobody is saying that. If youre going to be able to make actual cocacola at home, i have a soda stream. They say cola, ginger ale, root beer. They do not sell cocacola. If youre able to make coal ka cola at home or office, what does that mean for bottlers or a the aluminum industry . The aluminum will go into ford trucks that. Was a slam on ford. Yes, it was. I could be wrong. Over the next 20 or 30 years, i think thats probably right. Over the next ten, i believe its probably not accurate. You told me earlier you thought wed distribute coke to the internet. Keep in mind, they operate the majority of their business abroad. Kayla, an atlanta girl. I love coke. Cce, they did this Financial Engineering a couple years ago and cocacola beat the majority of cces u. S. Business. Almost in that publicly traded company is in europe. And is in some of the other emerging markets. When you think about where keurig is most popular, its really here. It may have an affect but maybe not yet. Soda sales in the u. S. , not exactly a thriving business. Its a Good Business but not exactly going like this. No, its not. But andrew not thriving is different than falling dramatically. Right . This is an Annuity Business for cocacola. Bob lutz, still running numerous businesses for gm. We have to go. Theyre saying we have to go. Im sure well do more of it on street signs at 3 00 p. M. Eastern. What time is that show . I have to schedule my nap. I really dont think aluminum will suffer. I wasnt kidding. 5 of soda sells drop off because now i can make it at home. We dont know that. We dont know that. I single handedly stopped buying club soda when i bought a soda stream. Done. Three years. How long do you think it will take coke to develop the actual pod that goes were getting yelled at, screamed at. We are. Were watching shares of twitter this morning, the company out with its First Quarter report since going public. Declining user growth, joining us now from new york is a Senior Analyst whos moved over from twitter, should we be all weve been sort of jumping out of our bodies over this for the past two hours. Yes. I think theres three key drivers of twitter. One is users, two is engagement and three is monitorization. I think investors are disappointed with the first two. Really the question is does twitter mature to be a more mainstream utility of the internet . Like facebook, which has about five times the users. Or does it stay within this sort of whats your answer then . I think what they need to do is make the language the scaffolding of the language of twitter as the ceo put it less complicated. Either make that user interface simpler for folks like the baby boomers. I think the company is working on that. At this point with user growth were you surprised by this, anthony . I was surprised by a little bit of the slowdown in the user growth. I think investors were surprised as well. You know, im not surprised that the stock is taking a hit, given the loftymultiple. What do you think the company is actually worth . I think that basically with the valuation multiple where it is, we would prefer shares of facebook because we have profitability to value it off of. When do you think well see twitter actually show a profit of some sort . I mean, they are, theyre profitable right now and theyre guiding towards profitable, adjusting ebitda for the full year, they beat on profits. The key is users in engagement. With a multiple like this, investors want to see theres a huge runway on growth. A time line use of growth, how people measure the amount of interaction with that platform. Weve are is sequentially down. Well leave the conversation there. Thank you for joining us this morning. Thanks. Appreciate it. My feed just went out. It says coming up it has your name there. Im so lost. All right. It says big chill for the economy. The movie, man. Guys, well talk weather. Unfortunately the worst is not over yet, a big chill for the economy, canceled flights, traffic jams, sleet, hail, we have it all. Its all throttling economic growth. How big is this impact . Well get a forecast in just a few minutes. Check out soda stream sales. Its higher by 7 now. All that on squawk box, coming up next. So ally bank really has no hidden fees on savings accounts . Thats right, no hidden fees. Its just that im worried about, you know, hidden things. Ok, whys that . Well uhhh. Surprise um. Well, its true. At ally there are no hidden fees. Not one. Thats nice. No hidden fees, no worries. Ally bank. Your money needs an ally. We are into the soda wars. Weve been literally arguing about this in the commercial breaks. We have a different point of view. I completely disagree with you. Soda stream has boomed. If you can make actual cocacola, not coal or dr. Pibb, i think theres a percentage of the population, , 5 hes not a doctor. Only dr. Pepper is a doctor. If you dont have to carry out a case of coke to your car and drag the recycling to the car, theres a portion of the population that would go that route. Just a portion. Thats what im saying. Soda stream is down 9 or 10 this morning. Now its popped. And your guess is that pepsi is going to become im not saying that. That was speculation. Bob lutz, save me here. Its a little bit outside of my field of expertise. If you would do speculation, its a competitor your number one competitor in the marketplace just made a significant move, then the other company would look for the other big Industry Player for a partnership. I dont think its illogical at all. We have to run. We have weekly jobless claims, that number after this short break. When you order the works you want everything. 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. Olets say you pay your tguy around 2 percent to manage your money. Thats not much, you think except its 2 percent every year. Does that make a difference . Search cost of Financial Advisors ouch over time it really adds up. Then go to e trade and find out how much our advice costs. Spoiler alert. Its low. Really . Yes, really. E trade offers Investment Advice and guidance from dedicated professional financial consultants. Its guidance on your terms not ours thats how our system works. E trade. Less for us, more for you. Welcome back to squawk box. We are seconds away from the weekly jobless claims. International claim and productivity reports. Its standing by in chicago. The numbers, sir . Survey says, lets start out with the trade balance and the balance is a deficit, we know that. 38. 7 billion, thats a minus sign. A larger deficit than the 39. 6 we had last month, the best since october of 09. Nonfarm productivity moved higher. 3. 2. This is an important metric we need to Pay Attention to. Our last look was upgraded from 3 to 3. 6 . Usually when productivity goes up, labor costs go down. No exception in this case. Minus 1. 6. Much bigger drop than we anticipated. And if you look at last month, minus 1. 4. Now down 2 . 331,000 on jobless claims. We continue to see continuing claims a bit under 2. 97 million. And, of course, after the cbo report earlier in the week and the jobs number from adp yesterday, all of those issues, people choosing not to work, Unemployment Rate dropping because we dont couldnt the unemployed, all the issues should probably come en vogue in a join the vortex tomorrow for the big number. Back to you guys. Okay. Lets get the reaction to those numbers. Steve liesman standing by. Crunching numbers with a pen. Computer error here. Rick is right to point to productivity number. Hes right, the labor costs. It also makes hiring more challenging. The stronger productivity number could help explain, perhaps, why we had stronger growth in the third and Fourth Quarters, but not necessarily stronger job growth. Job growth remained at 180 to 200. Now we know why. The economy was more efficient than it had been at 3. 6 . Over time, the theory is, i underline it, underscore it, put it in quotations that higher productivity leads to more job growth, more wealth, better standard of living. In the short run it creates dislocation, trouble finding jobs for people. With trade deficit up my computer just came up, its going to detract a touch from the Fourth Quarter growth because there was an expectation of slightly higher trade deficit number. I think higher than that. 331 on the jobless takes. Not much worse than its been, not much better than its been. At 330 we could still be 180 to 200, depending upon whats going on with the other situations and some of the other factors out there. However, i dont know if our next guest is there. Are you going to introduce our next guest . Our next guest will talk about the only week that matters s f jobs tomorrow is the week of 12 january. Thats the one weak job we had. Why does that week matter. What were you doing in that week . That week that included ed the 12th. It was the one mild week we had weatherwise. All the data we have says theres been more snow, its been colder than normal. Brian sullivan was talking about the Upper Peninsula of michigan. Minus five degrees, whatever it was well get a revision. It wouldnt be a revision. Its a reality over time. You see it with some of the Economic Activity data but not necessarily in the jobs data. Is it doesnt show up there. Am i supposed to do this . Ill give it to you. Ill take it right here. Joining us now, tom porcelli. Ive talked long enough. Give me your take. Steve, youve stole my thunder. Go for it. You hit the nail on the head. You can look at the noaa maps, the government Weather Agency and you can break down the weather by temperature deviation from normal and look at precipitation deviation from normal. When we do that for the specific week that the Payroll Service is captured over, it was much warmer across basically an entire nation over that period. Were not looking for weather impact come this friday. However, thats not to say this will be a totally clean report. We actually are looking for potentially some messyness related to the folks that fell off the federal Unemployment Insurance benefits. Thats an important issue. They ended the benefits of the end of the year. These 99week benefits and the issue is this, ill just see if i can summarize this correctly, the thinking is that if you get unemployment benefits, you have to be looking for work or at least say youre looking for work. If you end these benefits, youre more likely to drop out of the work force. Walk us through, tom, what happened after the Unemployment Rate if these people who lost their benefits drop out of the work force . Right. First of all, thats one of the assumptions you have to make in this event. Right. 1. 35 Million People who are now lo longer receiving these benefits say im not looking for work. That means they would all pull out of the labor force. If they all fell out of the labor force in one fail swoop, that would subtract 0. 8 from the Unemployment Rate. I dont think its totally fair sort of example to say theyre all going to say im not looking for work. Clearly thats not the case. However, they put out a series and show the probability of someone currently unemployed and the probability of that person falling out of labor force. That currently is around 25 . So we take that and apply that to this 1. 35 Million People, it suggests you could see 0. 2 downward pressure on the Unemployment Rate. The Unemployment Rate will be falling for the wrong reasons, people dropping out of the wrong reason. I have to switch gears. Draghi is holding a press conference. They did not cut rates this morning. Some expectations say they could engage in outright quantitative easing. Im scanning the headlines with that computer thats now working, thankfully, im not seeing anything. Are you surprised that the inflation rate in europe which is well below 2 target that theyre not reacting to it over there . I think there will be reaction to see what the market is doing right now with that information. For myself, yes, i would be surprised by that. It seems to us Going Forward that the ecb will be extremely accommodative and we thought that could have started today. Clearly theres Something Else that theyre waiting to see but, no, we are definitely surprised by that. You would expect i think we had a slight selloff in european bonds. I dont know how european stocks reacted. Because i dont think it was fully priced in. I think the expectations that they will go that route. It wasnt fully priced . Lets talk about the Federal Reserve if you dont mind here. Sure. Were hearing in no Uncertain Terms that whatever happened to this point, the emerging market chaos we had in the currencies, the u. S. Economic data was not enough to get over the threshold. Whats your expectation for tapering at the meeting in march and the rest of the year . I think its striking when you have one of the most dovish members of the foc, troy evans, basically say by the way, em just better get used to this. I think thats almost a quote from him. After that comment, the fed would reduce purchases by 10 million meeting, getting back to zeier roy by the end of the year. Nothing has changed in that regard. You have an interesting theory. Its a complicated theory. Thats why we have you on. You can make this easy for us. Ill try. There are into a tightening. That was the requirement, the potential requirement that banks have to reserve against excess reserves which sounds crazy when it comes out of my mouth. Yes. No, its true. I mean, part of the new regulation new regulations that are coming out is this idea that excess reserves may not be excluded from the leverage ratios. If theyre not excluded from the leverage ratios, that means youre effectively tieing up about 150 billion in money that would otherwise get used toward lending. Instead that money is tied up in the regulatory framework. Heres another number, to stick in your back pocket. Thats 250 billion thats also tied up into the regulatory all of a sudden go ahead. I have to go. The trade, is that going to take away from Fourth Quarter growth. Modestly. Over the course of 2014 were looking for trade to add very modestly. Thanks for joining us and covering all this ground with us. Thank you very much. Sure. I can be on camera and not talk. Coming up, its electric. The man behind via motors, electric trucks, vans and suvs. Thats also bob lutz by the way. We are monitoring ecb president Mario Draghis press conference. He said he was experiencing a prolonged rate of inflation. He said theyll be accommodative as long as possible. Where we heard that before. 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. 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. Hi, are we still on for tomorrow . Tomorrow. Quick look at the weather. Nice day, beautiful tomorrow. Tomorrow is full of promise. We can come back tomorrrow. And we promise to keep it that way. Driven to preserve the environment, csx moves a ton of freight nearly 450 miles on one gallon of fuel. What a day. Cant wait til tomorrow. Welcome back to squawk box. Futures in the equity market right now, weve been green all morning. If we were to open the markets right now wed be off 6 the highs, dow opening up 46 and s p and nasdaq would also be in the green. January sales were significantly lower than kohls had expected. We see the middle class retailers not doing well. Kohls falling as well. Stock down 1. 5 right now. How to make your gas guzzling truck a little more Cost Effective by making it electric. Key is, will it catch on . Joining us now is john weaver, chief executive officer of via motors. Take the chevy product and convert it to electric. Bob, you were also on the website. You are involved. Im a board member. There you go. John, i have a chevy silverado. I want to convert. I buy it at a chevy dealership, i bring it to you, say make it electric. What do you do . Why are you doing it and how much does it cost. We fundamentally remove the transmission, gas tank and exhaust system, put up a motor generator set, a battery pack, exhaust system and inject Magic Software and make it all work and drives like the vehicle you have today. Except you get about 100 miles per gallon. How long is the range then . You get about 40 miles on batteries. It sort of has the volt model. Exactly. Its the volt model of 40 to 50 miles preelectricty and then the small General Motors sourced v6 engine acts as a generator, keeps the battery at minimum charge for another 300 to 400 miles. The range sun limited. Whats your competitor here . We talk about tesla but thats range limited. Exactly. We dont see a competitor. Tesla, number one, electric, very limited. Number two, if you look at volt, prius, were in a different weight class. The largest selling vehicles in north america are the pickup trucks. If you combine gms pickup sales, fords pickup sales, largest classification of vehicles sold in north america and most energy efficient. Were attacking the biggest segment and making it the most efficient. When she said the word tesla, it was almost like you wrote it off. No, i didnt write it off. Theres really no similarity. Tesla is an interesting technological exercise. Its a great car but its a little expensive. Wow. But its very expensive and it has limited utility. And the savings in gasoline never pay for themselves. Were now long tesla. Tesla at this point, maybe ten years from now, but right now, it is not cost efficient. But where it does become cost efficient is what via is going. Youre replacing the vehicle that normally gets 11 miles per gallon in an urban environment and youre replacing it with a vehicle that goes to 100 miles per gallon. Now youre getting the owners get a genuine economic benefit. Thats why theres so much interest from the big fleets. How do automakers feel about you stripping out their engine . We leave the engine in to be clear. Its a great opportunity for General Motors. Were using litmus technology. Were able to conquest accounts that General Motors has not been able to conquest. Traditional ford accounts are looking at fleet accounts, the economics of this technology and saying we want that. Its a win for General Motors, its a win for us. One of the big wins for the fleets, if i may contrast this with tesla, one can get this vehicle serviced at a chevy dealer. If you break down, no problem. Theres a Company Called smith electric vehicles. We spoke to the ceo, the president of the facility is in kansas. Is there a reason you didnt go all electric . Is it because youre seeing consumers and companies saying i dont know where were going to charge. Limited range. Its limited range. Do you think electric will never work . Its going to take i think everybody is in agreement that 15 to 20 years from now, we will have lithium ion batteries or other chemistries that will store eight to ten times as much energy as today. When you get a medium sized battery pack that every morning when you remove the plug you have 400 reliable electric miles in the tank, at that point you can forget the gasoline, andrew. Now all electric vehicles are around 80 miles range, 100 miles range. On cold days that goes down by about 25 to 30 . Its scary out there. Theres a thing called anxiety. Thats why we are wisely adopted the same strategy as the volt, which is a medium size battery pack, 40 to 50 miles electric and then unlimited range when the gasoline engine is operating. Who ends up with the liability if something goes wrong, though . The standard automobile parts will be the General Motors warranty. For our parts, our warranty. Great relationship with gm, by the way. We have a big advantage. When we looked at our target market, fleets, they recognize total cost of ownership. Understand the economic gain. For people like best western, they get all the economics plus they can say we are heading the initiative. Why not nat gas . You could use that in addition to this technology. It provides industrial conduction and ours. Coming up, the soda wars, coming to a kitchen near you. The deal between coke and Green Mountain could be a game changer. Well talk about the impact on quality control, brand protection when squawk box comes right back. I think well talk to jim cramer. Back in a moment. Mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. Welcome back to squawk box, take a look at futures how things are setting up this morning. Dow looks like it will open 17 points higher after data earlier. Nasdaq up about six points and the s p 500 well call it unch feels unbetter. Weve been varying from the futures in the markets recently this week, so well see how it opens. We want to talk soda, it may be breakfast time and coke buying a stake in Green Mountain coffee. Jim cramer is at the nyse, hail mary or game changer, where are you . I dont know why it would be a hail mary. Obviously the number is x cocacola no longer matter. Its a game changer i think its interesting that cocacola is taking a radical move here. They had lost the notion of innovation. Go through the call, people who want to talk about coffee and its kind of meaningless. People want to talk about keurig, it was a heavily shorted stock and people were betting the quarter would be weak, it was, big deal. Cocacola comes in, its a different company. The stock had to go higher. I want to under one thing. You said its a game changer. I want to understand the context of this phrase is in the context of this specific company and Green Mountain or in the beverages world completely because my friend Brian Sullivan is trying to convince me that this will affect aluminum production, it will affect truckers. It will affect i said there are possible and im sitting here saying i have a brita and yet the bottled water business seems to be doing just fine. Alcoa 1. 5 . Really doesnt matter. Its a game changer for Green Mountain because people 100 . Suddenly you have unlimited firepower and International Distribution and you have a company who were very prominent people shorting it telling you it was breaking down and co cocacola deny care. Brian is talking much more broadly about being a remarkable industry transformation. People dont like to carry 12 packs of coke to their car, thats all i said, right, jim . Its not a big deal for them. I think they wanted to if soda stream was cutting into the business this would pretty much end that. This is a company that was Green Mountain was a onedimensional company and now theyre a twodimensional company. They felt that the whole process was peaking and suddenly they have no short whatsoever so they have to really cover it. They will come on. The shorts will come and say the trends were bad in coffee. Every time ive seen cocacola make an investment the Company Changed forever. Stop thinking of it was a Coffee Company and start thinking of it as a soda company. Gm is down five and you are mary barra, what are you thinking . It was a good quarter and i question whether the stock will be down today. The facts i heard on gm were quite wrong. Ebita, and i am buying before the market opens because its the best yield and well ahead where i thought the quarter would be. Are sales where they want them . No. But is the company being run correctly right and on plan. The cfo did not blow smoke. He was absolutely right on the call. The headlines numbers are stupid as wood. The headline numbers this quarter have been so wrong for so Many Companies and people keep trading on them its remarkable. Twitter was up six points when the headline came out. We have until 2015 to see if they hit the benchmarks. Balance sheet is great. Well see you in a few minutes. The stock of the day. Weve had several big candidates to pick from this morning. Can you guess which one it will be . Tomorrow you do not want to miss this weve got former fed chairman Alan Greenspan will join squawk for jobs friday and weve got all that and a lot more in a just a moment. Welcome back. How is everything . 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. Stock of the day is going to be twitter and it will be twitter all day long. The losses accelerating down 22. 5 the stock to 51. 19 people disappointed in the user growth and the timeline view number. Andrew . You knew that would be the stock of the day. Lets get back to bob lutz, weve all been admiring your watch. Thank you. And it apparently, you make it yourself each one of them by hand. I wish that were true. But id mess it up pretty badly. These are actually assembled in auburn hills, called vl. My partner and i make these. This is a prototype of our crone know gra chronograph. Crystal backed. This is not exactly the ladies edition. You have one with a stainless band. You can have any band you want but i like this combination of the black ribs and the red stitching and i think it goes well with the black face. Whats the price tag . The this is around 3,000. Thank you for being here. Appreciate it. Make sure you join us tomorrow. Squawk on the street begins right now. Good morning. Welcome to squawk on the street im david faber with jim cramer. We are live from the new york stock exchange. Carl quintanilla is on assignment in sochi. Theres the music. Its a little late this morning at least in my earpiece. Lets look at futures as you can see were listening to the music. The s p and the dow and the nasdaq, how is the tenyear yield looking. Higher than yesterday. 268 and well check as we always do, europe. Almost all in the green