Transcripts For CNBC Squawk Box 20150212

Announcing that russia and ukraine agreed to a ceasefire starting on sunday. Leaders agreeing to with draw heavy weapons from the Eastern Ukraine region. Thats the area between ukrainian and prorussian separatists. The rouble was moving higher and that would be understandable. Higher than more than. 5 . At the bottom we show you the dollar so it had been steadily weakening against the dollar over the last year but strengthening at this point. Lets show you the russian index. This is the rts. Its higher by more than 4 and the major european stock markets right now, across the board they should be higher. Germany is higher by more than 1. 5 . Right now the dow would open higher by more than 12 and nasdaq by more than 30. Much more on this developing story and Market Reaction coming up in just a few minutes. For a few other big stories were watching at this hour, greece unable to finalize a deal within the European Union but the greek finance minister says talks to overhaul the countries current Bailout Program were very good. There will be another meeting on monday. More on that in just a few minutes from now. The house passing the keystone xl pipeline bill 270 to 152. It now heads to president obamas desk where he is expected to veto it. The government rolling out two key piece of data points this morning. Retail sales for january, economists are expecting a decline of half a percent and thursday weekly jobless claims is expected to remain under 300,000. Rate cutting fever reached sweden. Check this out overnight. The countrys central bank launching an unexpected Quantitative Easing Program. Cutting its main Interest Rate into negative territory. That sent the swedish currency to a six year low against the dollar and sent the main equity index to a record high. Just the latest in a string of Central Banks easing and surprising and qeasing. I like that. Theyre fighting the weakness theyre seeing in the economy and shocking the currency market. No wonder were seeing volatility at the highest in two decades. Topping stocks to watch today, the electric car maker reporting Fourth Quarter earnings and revenue that fell well below expectations. Abadjusted loss of 1. 1 million. Delivering just over 9800 vehicles. Thats short of the target of 13,000 model s sedans. The outlook is more optimistic as it delivers about 55,000 model s and x vehicles representing a 70 increase over the prior year. Shares fell sharply on the news and later today well talk to a tesla shareholder still optimistic about the companys future. Cisco beating estimates on the top and bottom line. 53 cents a share on revenues of 11. 94 billion. Giving a better than expected out look and the stock is trading higher on that news. Well break it down in a few minutes. But lets check out shares of whole foods today. The grocery chain with profits of 46 cents a share on revenue. That beat analyst expectations. Sales were pretty much in line 4. 5 . Higher than the estimates out there after the bell. Also Network Security provider fireeye spiking. Beating estimates. A loss of 38 cents a share compared to estimates of 49 cents but revenue coming in at 143 million versus the estimate of 141 million. Theyre picking up a lot of business lately. We are on market cap alert for apple and its last check it is still more than the powerball now topping 795 billion. That would make the Company Worth 1. 3 trillion. They are on their way. Apple shares up this morning. Its a gain of almost 1. 5 . They have a little way to go. Not that long ago he came out and said the stock was worth 206 a share. Now they increase their own earnings estimates. Based on the iphones sales of it. That gets them to the inflated price target. The last one was i think in october. Which was higher than all of wall street. Yeah. By a lot. Yeah. And i think of the south korean gdp. Wait. The greek drama taking another turn after six hours of negotiations. The finance ministers failed to put out a statement which is rare. Greeces finance minister agreed to a statement where greece fully acknowledged its obligations to lenders and committed to reforms and a frame work under which they could ask for an extension to their Bailout Program with room for some of the policies unacceptable. Then the minister walked away at the last second. Statement was nixed by athens. The process resumes on monday. The Financial Times has gotten a leak of the statement which was read to me in part over the phone last night and they made a lot more progress than anybody thought and then a lot of the ministers had left the building thinking they had at least come to an agreement on the statement. Because he called back he went back to athens and there was something in there that didnt sit well with them in terms of how it was going to play with their constituents. I was sitting with a big investor yesterday and i get the headline that theyre close to a deal and im like check this out and half hour later im like check this out. No deal. You shake your head. Youre not sure which side to bet on. Its called burn by brussels because every time you go through these, its the third greek debt negotiation and you have so many people in this room. The late night meetings are back but whats not back is the volatility and market pressure that we saw where they actually had to come out in the morning and deliver it. I wonder if we get closer to this february 28th deadline or monday deadline if the markets start to freak out. Thats the key question and how the markets react is one side leverage verses the other side. Absolutely. Lets show you the markets this morning. The futures higher across the board based on this announcement out of russia that theres a deal on Eastern Ukraine. The dow would open higher by 96 points. Europe is higher across the board. And were showing you greece. Germany is higher than 1. 5 . Well sew you what happened overnight. Its higher across the board. The price of oil which held so much fast nation higher by 1. 5 . Wti retaking 50 this morning. Whats the ten year yield doing in this . This risk off environment or risk on . Higher 2. 04 . So back above 2 and the price of gold this morning, is higher by 3. 70. Greece, sweden russia all big developments for the markets to chew on this morning. Lets get insight on how to trade through all of the uncertainty. Joining us on currencies this morning is bk Asset Management and cnbc contributor. Im looking at the dow for the last three months. Nothing but grinding. When we finally break out is it going to be to the upside or down side . Good morning to you. The dow definitely breaks out to the upside. Weve had three month consolidation. Its digested an awful lot of geo political news and i think the time is now. We see all time highs this month it gives us a slingshot and this is all lead by qeasy. I coined that. You coined a new word. By accident. You coined the new term. Every Major Central Bank except us is really on that stimulus. The pedal is down. Theyre not going to let up. So were in the opposite spot. Were going to reap their rewards but were going to go higher first half of the year. This is all in your world. I was so happy to see him this morning. I said at the end of last year 2015 would be the year of volatility. Ive had enough excitement here to last me a decade. Its been insane and hes the most interesting man in fx right now. Hes the least boring finance minister ive ever dealt with. I saw him gush about him. A lot of people think they look alike. The question is for the United States. Can we afford to deal with the stronger dollar . Can janet yellen and Federal Reserve sit out whats going on around the world. Sweden this morning. Even euro continues to weaken on all of these discussions. Its a great question because the conventional response is were only 14 . Exports. It doesnt matter where closed economy, it doesnt really hurt us but if you look at it from a greater perspective, the strong dollar definitely does hurt them and i think the fed is mindful of not stepping too soon on the stop break to push it around. The thing is that the u. S. Economy seems to be really pulling away from the rest of the world. Its unambiguously good and it seems reasonable that if not june definitely september if everything goes as planned. Theyll maybe do 25 basis points and halt. See what happens . See what happens. More symbolic. I have been arguing all of this is symbolic. Inflation is low but the fed wants to move off this path. They want to go back to normalization and you see the same thing with bank of england. They also want to move toward the last policy. All central bankers want to get away from this zero Interest Rate policy eventually. Some are getting druk on it. They are because they have to. In principle theyll love for the world to go back to normal. Do you think theyre going to raise . A couple of things. They say one thing and do another. They want to go back to normalization normalization. I think they fear it significantly. Especially our fed which after 2014 is now very very dovish. We lost fisher to voting. I was surprised. I looked at the notes here youre one of the few people i have seen in a long time you are bullish longterm treasuries. You would buy longterm treasuries here . I would. Weve been longterm treasury since late 2013. Its been a great trade. Sure has. Its not because i think the u. S. Is spiraling into deflation but its because i think because of whats going on around the world people will end up flowing into the United States. The biggest boost as mentioned earlier is going to be the strong dollar and eventually similar to what happened in 86 and 1987 where the dollar was so strong you have a mass capital flow into our country. First comes in at dollars and then treasuries and then blue chip stocks. So i think there is a whole big cycle happening. Tell me this. Well bring up the ten year yield again and look at the move. Its pretty strong. Is that kicking you in the stomach over the last week or so . Theres absolutely been some pain our arrange in the ten year is 150. 1. 5 on the down side and roughly 230 on the down side. Were a little higher mt. Middle. I think right now they have to step upright now. I dont mean like in a month. Im talking about right now in the next five trading day or the intermediate picture goes from bullish to neutral but im still in the trade and its got some legs to it. Im going to disagree and im going to say unless we see really serious contraction in the u. S. Economy the lows on the yields may have been set. How high do they go . He says 230 max. 250. Its raging. Its raining money. What was the bottom . The last jobs report . Yeah where we were in the 170s i think we have seen the bottom. Maybe we have seen the low in yeels but i dont think were going to go higher any time soon. We could go into this nice long trading range which the markets would absolutely love. I wouldnt disagree with that. Yeah. Gentlemen good to have you on this morning. Great to be with you guys. Thank you. Sad news to tell you about this morning, long time news man and 60 he was killed in a car accident last night in new york city. He won more than 40 major awards including 27 emmys. He covered almost every major conflict around the globe from vietnam to the middle east. He was 73 years old and he will be missed. He certainly will. I was such a huge fan of bob simons work. That guy, incredible writer and amazing story teller and one of the reasons you tuned into 60 minutes simply to see what he had that night. A huge lover of the arts. You could see him frequently at Lincoln Center going to the opera, et cetera. He was captured in iraq by iraqi forces and been to all sorts of war zones and around the country and its a very sad way to end, you know . On the west side highway in new york city. Terrible. Okay. Coming up, cisco beats the street. The stock is moving higher. Should investors jump on the tech giant right now . Carl icahn is never one to hold back. Now he says apple should be worth than a trillion dollars. Is the investor right . And house of cards fans almost got a very surprise from netflix. Those stories when walk returns. But first this day in history. Say youre a finance guy. A farmer. A researcher. You used to depend on experience. The internet. Your gut. Today you can use ibm watson analytics. It can make sense of all kinds of data. Uncover hidden correlations and new opportunities. And give recommendations with more confidence on who will buy. What to make. Where to plant. Which helps you make smarter decisions. Theres a new way to work and its made with ibm. Some house of cards fans got a sneak peek. It debuted three weeks before its actual debut. Well have to see if Frank Underwood had a hand in all of this. Im a big fan but i missed the glitch. The show will be back on february 27th. It was all over twitter. Was it . I havent started watching it yet. I cant wait though. Orange is the new black, my new favorite. The nations busiest ports taking a break. The ports of los angeles and long beach will partially shutdown for four days as the on going labor dispute intensifies. Shipping companies are going to slash dock work so it will cease thursday through monday. Cisco ceo speaking to jim cramer on mad money last night. Listen to his take on the environment in europe. You will see countries in europe move faster than the u. S. In terms of digitizing their whole economy. Digitizing their business. Changing their gdp growth job creation, health care and education. Were right in the sweet spot of all of those. Here to break down the results is stewart jeffrey. Stewart, welcome. Whats your read on the quarter . Chambers is always optimistic. So lets get your view. The quarter was a little bit better than expectations but theyre always good at managing expectations so we dont get too far ahead of ourselves. For the next quarter estimates arent going up very much but we had a bad last year. Theyre back into growth territory. Margins are doing well. Earnings growth is coming through and hes trying to change the conversation toward the areas he thinks hell excel in. I read something this morning that said the trends are improving but lets not get crazy. Right . Is that fair . Things are improving the rebound continues. The upgrade cycle and switching is helping them. What inning do you think were at on that . They had an awful year last year. They lost like a billion dollars in revenues from one quarter to the next and this right now is the come back period so they got very easy comparisons to build on but again the argument theyre trying to pitch is that disruption was caused by themselves changing for the new technology set up and theyre preparing themselves for growth Going Forward and if you believe that then you can argue maybe there is some reasonable growth in cisco over the next few years. Any clarity as to whether they continue to suffer this issue about china and their products being purchased for fear theyre helping the infiltration of the u. S. Government. They have acknowledged theres not much they can do in that situation. I assume they go eventually close to zero but its less than 4 of total revenue. Its not that meaningful at the end of the day. Thats an incredible statement in a country growing so fast but for you to say you think they go to zero thats dramatic in a world where people expect growth. One of the unique things in particular i dont want to say the chinese cisco plus chinese producers. Its even a bit of qualcomm. On the flip side of that double digit growth in Southern Europe where so many other countries are suffering. What is cisco doing right there . Maybe atsen easy comparison but if youre going to make the move toward cost savings, it is an important way to generate labor cost savings and you ideally would be trying to find ways of mitigating that. Let me ask you a quick question before we move to apple. Do you have a buy on the stock because the comps are so easy or because the fundamental story is getting better. The last six months the stock traded on multiples and the comps are easier. What happens next is things like internet of things havent really shown up from a financial perspective. Sis coe in prime position for that. If it comes through we could start seeing financials bear fruit in the last 12 months. Weve seen a huge increase in complexity in this industry and sis coe is offering to do Hardware Software services and bring it end to end and for Many Companies someone can take some of the risk and complexity away from you its hugely appealing. Better gross margin business than in the past and they can start taking wallet share from some of the key rivals. Well stock is up 6 . You also cover apple of course. Lets dig into carls assertion that apple should be trading at 216 today. What do you make of their own increase in where the stock should be trading right now. Turn the dial to 11 on many of his assumptions so he is assuming theres a tv product coming out next year that does more revenues than the ipad in 2017. That the watch does more revenues than the ipad in 2017. That average selling prices stay at these current levels and youd argue that the next q 1 numbers for the iphone were high. If youre going to see growth longterm typically theyll trade price for volume. Is he wrong . Is that what youre saying . They long maintained that apple is the mercedes of Tech Products that they have been able to maintain that prestige value and plus their average selling prices dont go down. As the ipad has lost a little bit of its luster there theres been other things to pick up the slack. Is he overtoing it or not . One of the statements is uncontestable and i havent done it as long as icahn has been ive been through the 90s and we made assertions in those days and competitive advantage doesnt last forever and hes perhaps asserting that it does. But does apple become the First Trillion Dollar Company in america or the world . It would be like four times or five times sales would be extraordinary. I dont think so but apple has made the impossible happen before. You have the skepticism now that its so large that will hold it back in terms of evaluation. Is that justified . Q4 was such an exceptional quarter it will take time to digest that. Everyone bought one there and then. What happens next . Is that the best quarter they have in two years . Which case the stock may need to consolidate. Youre neutral on it still. How long have you been neutral on it . Too long. So you have to correct, what was your target . 123. Youre going to have to raise it. But forget you can look at all the assumptions that he makes its sort of impossible to argue with the fact that if you look at their valuation if you ex out all the cash they have its cheap relatively speaking correct . Hes saying its going to be worth 20 times which theres nothing else in the tech universe anywhere near 20 times outside of software or internet companies. So i think thats a big statement. Where is it now . At 14 . If you do that were talking 9 or 10. Cisco is trading at 11 times. Microsoft probably comes up with a similar number. All is trading x cash to high single digits. And he would say apple is not cisco or microsoft. Thats why we have these debates. Good to see you. All right. Thanks. Coming up, tesla may be in need of a recharge. No insane button this time around. We have a break down of the quarter coming up after the break next and just minutes from now the man that brought the world the cronut joins us with the host of tasty treats for valentines day. I know the judge here is frothing at the mouth and as we head to break you are arent you . I am. Look at yesterdays s p 500 winners and losers. [ male announcer ] at northrop grumman, we know in the cyber world, threats are always evolving. At first we were protecting networks. Then, we were protecting the transfer of data. And today its evolved to infrastructure. Finance. And military missions. Were constantly innovating to advance the front line in the cyber battle, wherever it takes us. Thats the value of performance. Northrop grumman. Anything . No. You . No. Aflac what are you guys looking for . Claims legend has it these hills are full of em. It can take months for an Insurance Claim to surface. Claimin takes patience. Aflac paid my claim in one day. They got some newfangled kinda one day payin machine . Hehehehe yea, i got aflac at work. Aflac. In just one day, we approve and pay. One day pay, only from aflac. Aflac. Good morning. Welcome back to squawk box here on cnbc. Joe, becky and andrew are off today. Sarah is with us as well. The headlines at this hour two key economic reports ahead. There we go. I was here yesterday and we didnt play the music. So its about time to be back in the saddle you know . About two hours from now initial jobless claims as well as january retail sales. Claims expected to stay below 300,000. Retail sales expected to post a drop. Home foreclosure activity up 5 in january from a year ago according to realty tract. The increase driven by a jump in bank repo sessions. Third time was the charm for spacex rocket after two launches were scrubbed this week. It took off from Cape Canaveral yesterday. What did they say in the rain man . Ten minutes. One minute yeah. You know we just roll with it. Own it. Embrace it. Run with it. By the way, elon musk delayed his Earnings Report because of that spacex launch but he did come out with earnings. The stock was downgraded just this morning to underweight from neutral following last nights numbers. Phil gets behind the wheel. This was a pretty disappointing report, wasnt it . It was. As im looking at why theyre downgrading theyre saying its coming down to execution risk and stronger competition and Lower Oil Prices may be playing a factor as well. It was an interesting Conference Call to say the least when it finally happened last night. Lets go through the numbers for tesla at a loss of 13 Cents Per Share on a nongap basis. Well below what the street was ex expect expecting. Revenue lighter than expected coming in at 1. 1 billion. The estimate was for 1. 23 billion. When you look at what happened in the Fourth Quarter and why tesla fell short, a couple of things stand out. Deliveries came in. 9800. That was short of expectations. Most were expected it to be closer to 11,000 in terms of deliveries. Those were pushed out to the First Quarter. There were also higher costs and stronger dollar impact particularly when youre talking about the vehicles delivered over in europe and then the question last night during the Conference Call because its getting so much attention lately whats going on in china . It was an issue that elon musk for the most part dismissed. I am confident that well be in good shape in china. Im pretty optimistic about it. I dont think theres some sort of unique thing in china. Sales in hong kong are excellent. They eventually hope to build a manufacturing facility in china. That says sales in the Fourth Quarter were lower than expected and theyre still running into the issue of putting these chargers in the homes of chinese buyers as well as in city centers so people can recharge their vehicles in those city centers. Thats a different Business Model than here in the United States. With all of that said shares of tesla which have been under a fair amount of pressure over the last week down to 195. You know j. P. Morgan has them at 175. Ill be curious to see how much further this stock is under pressure today given the 4th quarter that they reported an even though their guidance is for delivering or i should say producing 55,000 vehicles this year a lot of people are k look at saying its fine you have that target but can you meet the target in 2015. You talk about the jp morgan downgrade, its a serious one. Its a sell. Musk, hes optimistic. Hes going to say the right thing. Is he kidding himself in his view of where he thinks china is relatively to the ridiculously bad numbers recently . Part of the problem is you dont know exactly what the numbers are in terps of deliveries right now in china. That question came up on the Conference Call last night. He said were going to get there. We have a few issues but were going to work our way around it. This is a bit of the frustrating part for investors you have to look at it in its totality in terms of overall production globally and deliveries globally and they say we were going to deliver 33,000 in 2014. Didnt come in there. Came in at about 31,000. Still a big improvement over 2013 but didnt meet it. Now 2015. He says if we dont deliver a single vehicle in china well still hit the 55,000 mark. That may be but there is going to be a fair am of questioning for that. Elon musk is obviously incredibly smart and an impressive individual. But did it come up on a call how did you run a Space Company and tesla at any time . Is there any possibility of distraction . That didnt come up on the call. He has indicated its a challenging routine he goes through in term of running both companies but theres no indication on this call that he is losing perspective or losing his drive for running tesla at this point. That question is going to be out there for sometime. Ive seen my share of company excuses for missing on things but did tesla blame missing deliveries because customers were on vacation . Did that sound right . I didnt hear that. There my have been a comment. They talked about Severe Weather in terms of missing on some of their deliveries at the end of the quarter and because people were on vacations. I just thought that was a little odd. Look if youre buying that as an investor i have some land id like to sell you as well. Seriously. Lets be honest about that. I think when you look at their deliveries it is clear theyre going through the growing pains of going from one model to two models with the model x and adding new features into the model s. This is basic manufacturing. You cant snap your fingers and its going to be there instantly. They made a lot of progress but there were costs incurred in the Fourth Quarter and we saw that. Thanks. You bet. All right. Meantime tiger woods is taking a leave from competitive golf. The question is for how long . Woods says his game right now is just not acceptable for tournament golf. He missed the cut at the recent phoenix open after shooting the worst round of his career. He is hoping to be ready for the honda classic on february 26th. Did you miss joe kernen so you can chat about this. Its disappointing for golf fans. He just came back from he had a bad back and he was trying to get back into form. He was clearly not in the form that anybody is used to seeing you know tiger at. You have talked to him in the past. He must feel guess. I think that i dont i think it speaks for itself right you can guess how bad he feels by the fact that hes willing to say im not even going to play. Ill not even at a good enough level in my own mind to get out and play. Missing the cut, i dont know what the stats are in front of me here hes hardly missed any hes hardly missed any cuts over his career. A hand full which means you dont play well enough to get even on to the weekend to even have a run atsawining the tournament. Brutal. Three times in the last 8 tournament mss he missed the cut. Ever since the personal issue he has gone downhill. Hes not been the same. The question is whether hes going to break the record. Thats a big leap at this point. Either him or lebron. Okay. All right. Speaking of young people making money hes under 30 years old and forbes calls him the next mark zuckerburg. What hes doing to disrupt the cloud. Whats next for the bulls. And then we have tesla shareholder who tells us why he is betting on elon musk despite the disappointing numbers. Plus how hacking turned into a full time job. As we head into break check out sales of Victoria Secret parent brand. All time highs. Any kareakar in our future. You never know. Ok, if youre up there, i could use some help. Smart sarah. Seeking guidance. Just like with your investments. That sets you apart. It does . It does. Youre type e. And seeking another perspective is what type e s do. Oh, and your next handhold. Is there. You dont have to go it alone. E trade gives you the support and guidance to make informed decisions. Are you type e . Companies are scrambling to protect their data. Our next guest runs the best Cloud Storage company youve never heard of and is giving the heavy hitters a run for their money. He went from being 80,000 in debt to raking in 100 million in revenues last year and he has been named to the top of this years forbes 30 under 30 list in enterprise technology. Here with us on set is austin mccord. Thats a high compliment. Fords editor here on squawk box called you the next mark zuckerberg. How do you feel about that . Its overwhelming. Im not sure i want to be the mark zuckerberg. Mark zuckerberg set a very high bar. Tell us about what it does. Is it to prevent hack attacks . Do you serve companies or is it to help during natural disasters . Its really to help them during any kind of disaster. The product that we sell basically boils down to almost insurance against down time so were able to restore information and bring them back online so fast its like it never happened. It says you have 5 million klines. Theres 5 million protected by us at this stage. Who are your clients . Businesses. So small businesses. They range from could be your local Dentist Office all the way through to fortune 500 companies. Could you have helped sony . We cant help them if they get hacked. Were more on if data was deleted from sony we could prevent that. Whats your background . So its a bizarre background. I started the company right out of school. I majored in that never heard of it. Its basically the science of using computers to solve biological problems which is not related to data back up but i was a poor student and didnt have many good job offers so i thought i would try my hand at starting a company. I thought for certain i would fail. Im laughing because i dont buy it. Who majors in that and is a bad student. Im sure you were a good student. No, i had a 2. 2 gpa. I just never did any homework and picked the one career thats all homework all the time which is bizarre. But got the Company Started and then ended up bringing on really good people and basically had this enormous devotion for our customers because we were promising to keep all of their data safe and secure and from there i had to do it. I couldnt fail. I was just going to say tell us about this 100 million offer that you turned down. Someone offered to buy your company. Yes. Yeah. Who. I cant tell you who. But its somebody that you guys have talked about. You would know them. And yeah about a year and a half ago they came to our company and they offered to purchase the company out right. I was 100 shareholder at the time because i had entirely boot strapped the company to that point. You would have been 100 millionaire. Im not exactly liquid but in a better position. Why did you turn them down . That was a really interesting decision and it came to the fact that they loved the technology that we had but werent particularly excited about our Employee Base and that were located in norwalk, connecticut so they were going to dismantle the company and put the technology to use and while it may be a sound business decision for them it just wasnt right for my employees since they wouldnt have shared in the benefit of selling the business and so it was really hard decision but i said no. I think my lawyer gets the best quote out of the whole thing. He told me that you know i could regret this choice for the rest of my life from the beach of my own private island and i still said no. Go regret it yet. Good for you. You do have 400 employ kweeees. Well keep an eye on you. Come back when youre really famous. Will do. Thank you. Coming up i hope everyone is hungry this morning. The maker of the cronut has arrived at the squawk studio loaded with valentines day treats. Cant wait to come over. Well have a few bites. Well talk some business as well. Yeah. Barry white, thats right. Tminus two until vday. Its time to get your valentine a box of cronuts. A staple of new york city and has a pink menu for the day of love. He predicts that 90 of the line on saturday will be guys waiting to buy a treat for that special someone. Here with us is the chef himself. Dominique ansel. Good to see you. Nice to see you. 90 are going to be guys. Is it going to be a huge line like were used to seeing . Usually in the morning we have long lives. People wait to get their pas pastries. The hype hasnt died down at all . Still very long lines. We sell out of so many things because we keep creating new pastries all the time. The pressure is on then to constantly come up with new hot products. Its more like having fun. I love what i do. Is still the dominant product the cronut . Its not the biggest seller. We actually have the flakey caramelized croissant. Its delicious. It is. Have you tried the Dunkin Donuts version of the cronut . I have not. Have you . I have not. I assume you think its ripping off your product. Our product is the cronut and we respect, of course the quality and the quantity that we sell to our customers. I dont think we should confuse with other products. I dont think people would confuse it. Are you flattered by all of the copty cats . Are you annoyed by it . What do you think of it . When people take your version and do Something Else its flattering. I think when people try to mass market it its not anymore. How about a licensing fee or something . Do you have the name cronut trademarked . Thats right. Good business decision. What have you got here . Thats something good for valentines day. This is the lobster coo kkie. This looks like dynamite. This is a cake. This is a cake . It is a cake. Its a chocolate sponge with caramel. We can cut it open . How do you do that . Im going to cut it. Tell us what the other stuff is. The oyster cake. Yes. Its with two little oysters that you can share on top. Its a chocolate cake with three different chocolates inside. Here you go. Youre upping the ante for yourself. Youve used your success and now youre opening up a full scale made to order bakery downtown in the west village . Were opening a new place in the west village. So the concept is going to be different than the one we have now. Its a different menu. Its a different one. And the idea is to finish desserts to order. I dont want to interrupt you. Saras going crazy for the dynamite. This is so delicious. People love things that are made to order. Even coffee five years ago, people would go to a deli and drink the coffee that was brewed two hours ago. Now people want to wait for a good fresh brews coffee a nice latte. And i think theres a lot of things like this like with sandwiches a product that people want to be made to order. Its the same with desserts. Something that hasnt been explored before. We have to go but chefs are so celebrated. There are so many famous chefs. Are you surprised at the notoriety youve gained as a pastry chef . Is this a new era for the pastry chef . I think in an industry you have to work hard for what you believe. And of course its flattering. And pastry chef needs a little bit more attention. Thank you so much. What is this . Im making a mess. Chocolate and caramel. Im very bullish on this. And next were going to make the bullish case for stocks. Tom lee on the road ahead for investors. Squawk box returns in just a moment. This is so yummy. My gosh. A opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Kid hey dad, who was that man . Dad hes our broker. He helps looks after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at Charles Schwab whats that thing . I moved our old Security System out here to see if it could monitor the front yard. Why dont you switch to xfinity home . I get live video monitoring and 24 7 professional monitoring that i can arm and disarm from anywhere. Hear ye the awkward teenage one has arrived dont be old fashioned. Xfinity customers add xfinity home for 29. 95 a month for 12 months. Plus for a limited time, get a Free Security camera call 1800 xfinity or visit comcast. Com xfinityhome. A ceasefire deal in ukraine. Vladimir putin says a deal is on the table and the fighting should stop this weekend. Markets are on the move. Tesla rolls out results. Its not exactly insane mode. The stock moving in reverse right now. One shareholder tells us why hes sticking with elon musk. And the sharing craze has reached office space. I believe you have my stapler. How turning the cubicle into big money. The second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. All right. Good morning. Welcome to squawk box right here on cnbc. Im scott wagner along with Michelle Cnbc and sara eisen. Joe, becky, and andrew are all on assignment today. A few lucky winners of the power ball are probably not at work today. Three Winning Tickets were sold in texas, north carolina, and puerto rico. Theyre going to split the megaprize. 564 million. It has been nearly a year since the pot in the power ball reached that size when somebody won 425 million. It is the fifth largest lottery prize ever in the u. S. The record is 590 million a couple years back in 2013. Oh i wish. Breaking news out of russia this morning. Vladimir putin announcing that russia and ukraine have agreed to a ceasefire starting on sunday. Putin and ukraine leaders agreeing to withdraw machinery. Lets show you whats going on with the Market Reaction. Right now the rooubl ruble is slightly stronger. This is the index thats in rubles. Its higher by more than 4 this morning. And the major european stock markets also got a boost out of this news. Higher across the board. The german dax higher by 1. 5 . In greece higher by more than 5 . The u. S. Futures are higher across the board as well. Suggesting the dow would open higher by 94 points. The s p by 12 and the nasdaq by 27 points. More on this developing story and the Market Reaction coming up in a few minutes. Speaking of market moves, rate cutting fever has reached sweden. Launched a surprise Quantitative Easing Program and cutting its main Interest Rate into negative territory. That sent the swedish currency to a sixyear low. Also also dropped. The greek drama taking another turn. The finance ministers failed to even put out a statement which is rare. Reporting indicates the finance minister had agreed to a statement in which they agreed committed to reforms and a framework under which they could understand a Bailout Program. To alter some of the policies that greece finds unacceptable. Then minister varoufakis who you see there, we showed you the Greek Stock Market was higher. Could be because the Financial Times had had gotten a copy of the statement leaked to them and made more progress than a lot of people had thought. Lets see if they actually really ever get anywhere. Show the markets so far. Didnt we do that already . Lets do it again. Lets do it. Futures are higher. Europe is higher across the board as well. And were also going to show people i think asia overnight which was mostly in positive territory. Japan was higher by near 2 . The price of oil was actually above 50 which goes to show you that people are getting a little more positive sfwlp. Athens was also up. Theres an sums its going to come together at the last minute . I think when you see this leaked statement, youre surprised by the things they were supposedly ready to agree to. Its a good sign. Now, does that mean that back in athens they actually go along with it . That the constituents will accept it . But from what i heard from people in there, it was better than they thought, actually even after the end that looked so acrimonious. Apple hitting another alltime high yesterday. The phone maker isnt alone. Plenty of Companies Breaking records of their own. Dom chu is mere to take a closer look. If you take a look at whats happening with the overall market, we are trying to get back to those record high levels. We are for the most part over the past year up about 14 for the overall s p 500 and just about well call it flatlining for the year to date in 2015. But as we try to get back towards the record highs, were just a percent or two away from there. There are a number of companies who hit their own milestone. 204 of those stocks have hit 52 week highs. So oneyear highs for about 40 of the companies in the large cap index. Now, among those, take a look at this. 150 of them 149 if you want to be exact so far have set record highs so far at some point in 2015. Were just about a month and a half into it. Among the interesting topics we talk about here those 149 stocks, the most stocks go into these three sectors that have hit record highs in 2015. Health care and consumer industrials. If you look at those sectors, we pulled out a stock from each of them to show the Companies Participating in the whole thing. Cellgene is up about 6 year to date. Its up again, you can see here a nice move higher. And thats a record high for celgene. Then we o move to another one, of course whats happening with retail. Home depot up 5 . Its a big deal. Were in the spring selling season, these guys could get a bump as people go to buy lawn mowers. And then one more industrials. Its a little bit more volatile in terms of the aircraft industry, but still boeing shares are up about 14 year to date. What it comes down to is yes there are signs that the bull market is intact. Some of these record highs are an example of it but it doesnt take away from the fact that despite the record highs, because of greece we have some ideas that maybe this market is at least for now waiting and seeing. Back over to you. Yeah. Thanks, dom, for running through the names. Is it a good sign so many stocks are hitting alltime highs or are investors getting overexcited . Joining us is tom lee. I would take it you say this is a good thing that some of the individual stories, the earnings fundamentals are taking a front seat to these crazy headlines and volatility coming out of greece. I think thats exactly right. Id rather see markets hitting new highs on earnings beats, the oil, guidance raises rather than us worrying hey, look. We cant predict the outcome of greece so we sell everything. What is your feeling on earnings right now . It feels if you take out some of the big misses because of the strong dollar and the energy companies, its actually pretty good in terms of beats. I think thats absolutely right. Whats interesting is if you look at cyclicals, the magnitude of beats for this quarter, i think its the largest in ten years. What happens is i think people have modeled in the dollar you know, lack of visibility. But what theyve forgotten is this drop in oil is providing a big margin lift. The question is what happens to guidance. Thats where its been negative. Already were seeing 2015 revisions starting to go lower. Thats right. I think companies are taking dollar and oil not to cut guidance. Companies have never seen a crisis they dont want to take advantage of by lowering expectations. I think were at a place where expectations creep up throughout the year. Whats your target . We think the s p can produce double digit gains by the end of the year. Is that based on the fed move moving this year . Its believing the fed is going to be patient because of inflation. We think late 2015 or early 2016. Really . Its so hard to game this now because of the job gains in the recent jobs reports. You had some people say i think theyre going to do july. Now youve had some ceos and buffett saying they shouldnt raise rates until 2016. Youve got a model and youve got a strong dollar that could get only stronger, become a bigger headache. I think youre right. The forecast is back towards june. I think theres room to be patient. This is my cronut by the way. I see you eyeing the cronut. All right . Im just wondering what flavor the icing is. Really good man. The ten years back above 2 is that something significant . Have we seen that and does it have any implications here . I think its easing investors minds. I think they were worried about the 10year at 1. 6 and oil in the 40s. Isnt that crazy to say out loud . Investors were worried that rates were too low. That oil was too low. Historically when rate gos up finally oil recovers. The whole world is upside down. Thats right. I think theres sort of this buffer zone where a range of rates makes people comfortable. 1. 6 is probably below where they thought it should be. Oil was probably the same. I think both were sending a deflation signal or massive crisis signal. Now were at levels that are reflation reflationary supportive. Theyve been beaten up in the last two sessions. I do think that february marked a return for different types of styles. I think the riskfree trade basically stopped working. I think you have to take note of that. I think thats great news. You know one of the things weve been pleased to see is our active manager clients are having a better year. I think theyve sort of taken the advantage of january and bought on the dip. You know its a much better year. Consensus is stronger dollar. But whenever theres such a strong consensus and it is tremendous, are you part of the consensus . Its interesting. The consensus is stronger dollar, lower oil, lower Interest Rates. And i think the two of the three have sort of defied consensus views. I think, you know strong dollar is a consensus view. Are you in it . Its difficult to forecast. If youre going to buy a multinational or not, right . Sure. And what were forgetting is the strong dollar is weaker euro. Weaker oil has helped europe. And now were seeing momentum pick up in europe. Maybe it should be a case of nonu. S. Currency strength. And sometimes the consensus is right. So it can actually pan out if the u. S. Recovers fasters. Want to ask a quick question about cash. Right now were seeing under pressure from actavis. Share buyback. Thats been a big driver of stocks in this recovery. Correct. You expect that to continue through 2015 or should companies be starting to use on this growth spurt their money to invest in their companies and to buy other companies . Well its a great question. I think one of the positive signs weve seen is capacity creeping up. As you know thats a leading indicator for capx. And i do think strong dollar historically leads to inbound m a into the u. S. I think thats another reason we might see corporate activity pick up. All right. Thank you. Thanks. Always good to see you. Tom lee. Thanks. Dont touch the cronut on the way out. Im reaching for it. Protective. We do have some unfortunately sad news to tell you about this morning. Longtime news man and 60 minutes correspondent bob simon has died. Simon was killed in a car accident last night in new york city. He had a 47year career at cbs as a foreign correspondent. He won more than 40 major awards including 27 emmys. He covered almost every major conflict around the globe from vietnam to the middle east. He was 73 years old and he will certainly be missed. An extraordinary talented journalist, story teller all of the above. Industrys devastated. So well liked. So well respected. He knew how to tell a story. As you said he had everything. He had the delivery. His cadence was good. He was a good writer. You could sense that his hands were all over the story. He just knew how to sell a story to viewers. Loved watching him. And did up until the end. He had a report last week for 60 minutes. He will be missed. Coming up is tesla in need of a recharge . The stock taking a big hit after rolling out less than stellar results. The shareholder will tell us if he will stick with elon musk. Plus amy pascal speaking out for the first time. Her candid take about the hack attack and the less than flattering emails that leaked out. Thats later this hour. Sticking with Cyber Security is that dating app on your phone going to get you in big trouble . Could it put your identity at risk . Thats coming up when squawk box returns. Welcome back to squawk box. The futures now suggesting a positive open because of the situation with ukraine. Putin announcing in russia theres some kind of ceasefire deal going into effect this weekend. Big jump for cisco. Beat on the top and bot top line. Company also raised dividend by two cents to 21 Cents Per Share. You can see its higher by 6. 5 . General electric also in the news. Ge will begin allowing to nominate candidates for the companys board. That will be allowed if theyve owned at least 3 of ges shares for three years. Such proxy access is relatively rare mong big companies. Tesla reporting a loss. They also missed Quarterly Sales targets delivering 9,834 vehicles versus elon musks goal of 13,000 model s sedans. Shares of the company fell hard on the news. You can see theyre down sharply again. Joining us now to talk all things tesla. Chief the firm happens to own 40,000 shares of tesla. Welcome. Its good to talk to you this morning, andrew. What do you thank you. Good to be here. So whats your takeaway from the report . Jpmorgan says to sell. Yeah. I think it feels a lot to me about like it did two years ago. It feels like sort of chapter two or phase two. I think theres been many more chapters in tesla than that. But here we are again, now its a real company, real deliveries billions of dollars of revenue. But theres an analogy back to a couple years ago when the stock price was 30 or 50 and they were just delivering those first products. And the proof point was could they produce that model s in any type of volume. And here we are, theyre now doing that in spades and were right in front of their second release. And i think this is a much bigger story than were they on or off a few thousand cars. Its a bigger picture, its a journey that elon musk has been pretty good about laying out for us and hes delivered. And so you can choose to believe that hes on course or off course. To me there were many more data points suggesting theyre on course rather than off. I mean you have to make that bet that they are on track. There certainly are data points that a bear could hang on to say no. In fact, theyre not on track and theyre not nearly as optimistic as mr. Musk would have us all believe. Yes. Thats a very good point. I think thats been true all the way along. This has been this is a growth story. And in growth stories, there are always opportunities to take the other side. And it continues to be here. You can focus on deliveries rather than production. You can focus on china rather than north america. You can focus on the delay rather than the upcoming of the x. This is a market. Theres buyers and sellers. We think that the concept here is still that tesla has the pace of advancement that so overshadows the rest of the industry that their opportunity continues to be enormous. This is a trilliondollarplus business. This is a Company Selling 30somethousand cars with ambitions to sell a half a million and maybe a million beyond that. And theyve shown the ability to outmaneuver the rest of the industry. And so that really is the question. Do they still have that capability or do they not . It depends by what you mean and who youre exactly talking about when you say outmaneuver the rest of the industry. Because the other, you know luxury players in the industry, the bmws the audis are all trying to get some of what teslas got. And theyre not going to stop and theyre already obviously more well established selling multiples upon multiples of the number of vehicles that tesla is. Isnt competition an issue at all . I think competition is always something that needs to be addressed, today, tomorrow beyond that. However, theres today, here we are a couple three years into the life of tesla with bmw and mercedes and everyone else having had their cross hairs on the company for quite a while. And nobody has a headtohead product that compares very well to what tesla has. Sure. Not yet. The cost of internal conduction engines are rising. The battery costs are falling. Teslas in a pretty good position in a headtohead comparison. Got ya. Thanks. My pleasure. Coming up can the swim suit edition save time inc. . Leaving little to the imagination, but well go inside the numbers when squawk box returns. No. You . No. Aflac what are you guys looking for . Claims legend has it these hills are full of em. It can take months for an Insurance Claim to surface. Claimin takes patience. Aflac paid my claim in one day. They got some newfangled kinda one day payin machine . Hehehehe yea, i got aflac at work. Aflac. In just one day, we approve and pay. One day pay, only from aflac. Aflac. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Few things get more buzz than the Sports Illustrated swim suit issue. Its the kind of buzz you think would generate expanding sales, but looks like time inc. The publisher behind the magazine results will be as skimpy as those swim suits. Their revenue will drop 3 to 6 this year more than analysts were expecting. This as speculation and newsstand sales fall. I had the opportunity to interview the cover model hannah davis. She was quite charming and she told me this year is the year of the torso. The year of the torso. Thats what she said when we asked her whether the bathing suit was too skimpy. Its getting a lot of heat. I believe it. That its the year of the torso . Why not . Orange is the new black . That kind of thing . Youre into that . Who knows. Thats the first thing you look at a woman, the torso. Absolutely. Read the prompter. Its on the inside that counts. Scott, you cant get out of that. Really . All right. Really . Tiger woods is taking a leave from competitive golf. The question is for how long. Woods says his game right now is not acceptable for tournament golf. He missed the cut at the recent phoenix open after shooting the worst round of his career. He is hoping to be ready for the honda classic on february the 26th if of course hes ready the masters in april not that far away. Still chasing jack. Well see if he can get there. Coming up are hackers invading your dating happen . If it doesnt go well you could get hacked. And we have toy items to look at and seeing if the company is looking to strike more deals. Squawk returns in a moment. Always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. [ male announcer ] your love for trading never stops. So if you get a trade idea about, say organic food stocks schwab can help. With a trading specialist just a tap away. Whats on your mind lisa . Id like to talk about a trade idea. Lets hear it. [ male announcer ] see how schwab can help light a way forward. So you can make your move wherever you are. And start working on your next big idea. Corporate news front and center this morning. We are watching shares of tesla, the electric car makers reporting Fourth Quarter earnings and revenue that fell well below street estimates. The company delivered just over 9800 vehicles short of musks target of 13,000 model s sedans. Cisco systems beating both on top and bottom lines. Company also raised its dividend gave a better than expected outlook and were watching the shares in the premarket getting a nice lift. Nearly 7 . Fireeye spiking after beating estimates. Reporting a loss of 38 Cents Per Share compared to estimates of 49 cents. Gaining some momentum this morning after word of a ceasefire in ukraine reported in the Early Morning hours. Theres a look at the market picture, a couple hours from the opening bell in implied open for the dow, s p, and nasdaq. Also looking pretty good right now at 7 31 a. M. Eastern time. And listen to this. A state lawmaker in montana wants to ban yoga pants. They want to tighten the indecent exposures so it would prohibit nipple exposure by women or men as well as any clothing that simulates a buttocks or genital area. And wearing yoga pants in public should be illegal. Is that constitutional . I dont know where to begin with that. He certainly does not think it is the year of the torso. For sure. Im just not even going to comment on this story at all. Ill be back. It reminds me of the lululemon founders. Saying some were too big to wear yoga pants. I guess there would be agreement on that, right . It does seem conservative to go after people wearing yoga pants as someone who likes to wear them. I wear them all the time out on the street. Just dont be indecent about it. Freedom of expression. Okay. No comment from scott. Hes already dug himself in a hole this morning. Ibm releasing results of a study showing that 26 of 41 dating apps they analyzed expose smartphone users to hacking, spying, and theft. After we reported the story yesterday, Media Company iac responded with the following statement. Ibm tested iacs dating apps including match, okcupid, and tinder. And they were not amongst apps to found as a result neshlts. We are confident in the measures we take to make sure our products meet the highest security standards. Joining us now on the vulnerabilities that Companies Face ibms security vice president. Good to have you here. Good to be here thank you. I take iac at its word that theyre correct, that they did not have the vulnerabilityiesvulnerabilities . Well, what we looked at in this study is we went out and looked at just over 40 of the most popular mobile dating applications. And what we found in that study was 60 of them demonstrated medium to high areas of vulnerability. What is a vulnerability . Well think of it this way. Its kind of like you go on vacation and you leave the doors unlocked and the windows open in your house. It doesnt necessarily mean someone is going to come in and take your jewels. But it certainly makes it a whole lot easier for that to happen. And again, we found these in 63 of the top 40plus mobile dating applications. You didnt answer any question, but ill take iac at their word here. Why did you look at dating apps . Is there something about dating apps that makes them more vulnerable or is it because theyre just so super popular thats where you wanted to start . Honestly we did this our Security Research team spends a lot of their time looking at things like banking applications to ensure that your transactions can be integral. And this was a little bit of fun for our Security Research coming up on valentines day. But we also wanted to really emphasize a lot of the challenges that we see with mobile applications in general. These vulnerabilities, they demonstrate poor coding practices. We see these problems quite frankly pervasively across mobile applications. So this was an opportunity to have a little fun, but also demonstrate an ongoing problem that we see for enterprises and for individuals. Let me ask you, it looks from this story here that you analyzed the apps on android, on googles android mobile platform. We did. Does that same something about android in and of itself. The comparisons with ios and things like that . Whats the significance if any . There actually isnt any significance there other than the tools that we happen to be using, it was a little bit easier for us to run these tests on android. The reality is this isnt a platform issue. This is actually an application issue. And, you know what we really want to do is make sure were focusing on the integrity of those applications and how theyre being built and that organizations building these applications think about security by design as theyre building the application. Was there one app more than another that was more susceptible to being hacked . You know depending on the application, we found all kinds of different vulnerabilityiesvulnerabilities. What this ultimately means is as people are using these applications they need to be thinking about what information theyre sharing. In some cases we saw that gps information was being used and being tracked even when you werent using the application. Also we see instances where things like the address book are being traded off. Now, sometimes thats being done for marketing purposes. If thats your corporate address book, what kind of information is in there . And are you aware that this is occurring . 50 of the organizations we looked at had these class of applications installed on their phones. Its worrisome, no question about it. I see president obama is going to be holding a summit for cyber at large here on friday. Hes gathering Silicon Valley executives a lot of wall street executive spps this the sort of encouraging sign to you as the u. S. Deals with this growing threat of cyber warfare . This growing partnership between the white house and between executives . Or does this just have to be taken into the private sector . The facebooks and the goggles and the ibms of the world to confront . I think the reality is that as an industry we all need to be focused on this. At ibm, we formed a Security Division three years ago. Were the Fastest Growing Enterprise Security program on the country right now. We grew 19 year over year in the security space. And, you know i think this is an opportunity not only for innovation, for new companies to emerge, but frankly also for jobs and people. I mean the need for skills in the security space is significant. So to see these type of issues reach the level at the white house and in Many Companies is very encouraging to see. All good points. Thanks for joining us. Thank you. Coming up a real estate disrupter. Its like bike sharing be u for the office space. The ceo of wework joins us next. And then the first comments from amy pascal since she was ousted at sony. Stick around for that. Im looking forward to. For some every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Start investing with as little as fifty dollars. The latest craze in the sharing economy is changing how we work. Similar to uber and city bike the Office Rental business sublets to freelancers and startups. And its latest funding values app the company at nearly 5 billion. Lets get an inside look with adam newman cofounder and ceo of wework. A nearly 5 billion company that many people havent heard of. Whats the model . Because you dont actually own the real estate, do you . We dont own the real estate. Were not a real estate company. We are a community of creators. We take space and through dividing it up through sharing it up we give creators all around the world opportunity to change the way they work. So if i log on i can do what . I can get what . Or if i have space, what do i you can work in two ways. You can be a virtual member. 45 a month and youre part of the community. Then you have access to the services. This is about work space. If i need a desk somewhere . This is much bigger than work space. This is changing the way you work. Independent workers dont fit the old way of working. They dont have credit. They cant go into these big spaces and they want to work through the sharing economy. They understand that collaboration is the future of innovation. And through collaboration they can become more successful. Doesnt regis do this . Thats a big company and it leases office space. If you look at some of the pictures, you see everything we have is built of glass. We have a lot of Community Space in it. We spend a lot on bringing people together. How fast are you growing . Very. What kind of numbers are we talking about . Probably one of the fastest physical expansions that has been seen for the past ten years. We are we just added in the past three months in israel tel aviv london so youre not just office space. Oh, no. Were going into amsterdam next month. When i read about you, it says you are a provider of shared office space. Thats okay. But thats not big enough for you. Its not what we do. Weve stayed quiet because the world is changing. The way people work is changing. If youre 22 today and out of college, youre facing 11 to 17 of unemployment rates, youre facing 45 of underemployment. You cant go and work for Corporate America in the old way. You need a new solution. The new solution is you go into a space, you share it with another thousand entrepreneurs. Everyone is in different categories. And they all trade with each other. Im going to give you some of my time you give me some of yours. And we understand that through helping each other we can become more successful. Youre certainly being valued like a tech company at 5 billion. Any plans to go public . No plans on public. For now the focus is on growing the business. We have so many cities were not in. The more members we have the more business. We provide them health care. Thats between 150 cheaper a month than anything they can get. And we also save a lot of hassle. Its like startup in a box. We give you the space, the services, the community, and we do everything we can to make you more successful. Are you actually turning a profit . We are definitely turning a profit. This is my fifth business. Im bored of the businesses that dont turn a profit. This is your fifth business. What did you do before . Other similar. Serial entrepreneur . Didnt succeed the first three. Did okay in the fourth. And by the fifth one, decided i needed a cash flow positive business that has a potential audience how much do people have to pay to rent the space . Dont you have to have a viable business to do this . Virtual member 45 a month. If youre a little bit of a larger business 600 per person. Youve got fees every month. When they buy Health Insurance through you, you get a piece of that . We try to actually not take a piece. Whats more important for us is to make the best for the customers. We try to get the best in the community and the best price. Its our job to find it and make them work. We also give them advice. This is the lawyer you should take this is where you print your business cards. Theres so many things a young entrepreneur needs to know. We say do what you love and well take care of the rest. Whos your biggest client . We dont have clients. We have members. Whos your biggest member . Microsoft and large Corporate America companies in our buildings, but we have a member that has about 300 members with us. And a lot of we usually dont name them. But a lot of the biggest startups in the city have their headquarters inside our space and a lot of Companies Just grow with us all over the world. Cool. Thanks for coming in and sharing the story. Adam neuman is the ceo of wework. Coming up it is valentines week and were talking flowers. Taking a beating as retailers pick away at their market share. Kate rogers will have more on that next. Tomorrow on squawk box, were live from the at t pro am at pebble beach. Special guests include at t ceo randall stevenson, cvs executive, and chairman glen hutchins. Squawk box tees off from pebble beach at 6 00 a. M. Eastern right here on cnbc. The real question that needs to be asked is what is it that we can do that is impactful . What the cloud enables is computing to empower cancer researchers. It used to take two weeks to sequence and analyze a genome; with the microsoft cloud we can analyze 100 per day. Whatever i can do to help compute a cure for cancer, thats what id like to do. My guy right . And neil diamond. Thats right. They did this for you. All the things coming out this morning. Rumors. All right. It is a tough time to be a florist as competition from Online Flower delivery takes market share. Kate rogers joins us now with more. Kate . Hey, thats right. This year 2. 1 billion will be spent on valentines day weekend flowers alone. But some great places like caldwell new jersey florists have seen great competition from pro flowers and ftd. But in fact local florists have seen revenues slide 40 across the board from 9. 4 billion in 2006 to 5. 9 billion last year according to ibis. Now, frank delesante here says even though his business has take an hit, there has been a silver lining. It took a little dip. But it also weeded out a lot of competitors too. Theres also a new crop of startups thats blooming in the space. 30 of them named including bloom that and urban stems which will deliver Fresh Flowers on demand in select cities for about 35. This year whole foods is getting in on the action partnering with grocery delivery startup instacart. They will deliver for about 25. Now, frank tells us flowerland is definitely hanging in there. They will deliver about 10,000 red roses this valentines day weekend alone. But in fact hes seen some of his local competitors actually shut their doors. Back over to you. All right. Good stuff, kate. Bring some flowers to your favorite one this weekend, okay . Yes. Sounds good. Tomorrower sony exec amy pascal speaking out for the first type since her emails were leaked out during the hacking scandal. Very interesting to hear from amy. And getting a lot of play this morning. Her names been everywhere in hollywood and beyond the i said is the hack attack. She was speaking at a world summit in san francisco. She didnt hold back. She addressed everything from the movie that triggered the hack to how women in the industry are and should be paid. Nagging in e the back of my mind saying they dont have our emails right . Amy pascal speaking for the first time stepping down as head of sony pictures. There was this horrible moment where i realized there was absolutely nothing at all that i could do about whether id hurt people whether id betrayed people whether id said things that i didnt mean. Emails leaked by the cyber attackers revealed insensitive comments about president obama and Angelina Jolie as well as a pay gap that undervalued many of sonys biggest female stars. Her response . I run a business. People want to work for less money, ill pay them less money. I dont call them up and go could i give you some more . Thats not what you do when you run a business. The truth is what women have to do is not work for less money. They have to walk away. People shouldnt be so grateful for jobs. As for any friction her comments may have caused with celebrityies sometimes people think celebrities have big egos. A lot of times theyre vulnerable. Theyre bottomless pits of need. Youve never seen anything like them. But theyre so great. Because they are this magical thing that no one else can be. Pascal adds in that interview as horrible as it was to have the emails revealed it was also strangely freeing. She says shes a little bit scared about starting over, but her comments this morning definitely getting a lot of play particularly the one about women walking away from jobs not being so grateful for those. Did she address any of the emails about president obama . You know, shes already apologized about those. She talked generally saying she never intended to hurt people. She talked about the support, too, she got from folks who looked beyond the emails and realized this was bigger than emails. It was a Cyber Security and national security. Hallie thanks for that. Of course interesting to hear from amy pascal. She did the conference it was a highprofile conference but obviously felt the timing was good at this point away from the sony hacking scandal. All right. Fitness tracker fitbit is advising wearers to quote, take a break, end quote, if it causes skin irritation. The company says skin reactions arent common among those who wear jewelry or wristbands and likely come from wearing the band too tight or from sweat, water, or soap being trapped under the band. Taking a break from the fit bit is a problem because the device is designed to be worn at all times. Of course it tracks steps and feet patterns. I wear one. Do you get a rash . No i dont. Its the second time theyve come out. There was one they discontinued. No. I wear bracelets. Sometimes when you get water under them its itchy. Maybe apple ahead of the release of the apple watch will take note. What . Noing. Its a whole new problem. All right. Youre planning on doesnt wear brace lets i guess. Torsos yoga pants, bracelets. Its been a morning. Girl talk here on squawk box. All right. If youre planning on visiting a museum in new york city you may want to leave that selfie stick in the bag. Museums are taking precautions because art can be damaged when visitors raise those selfie sticks in exhibition spaces. It can happen. Coming up with ab lot of highprofile talks overnight. Russia and ukraine agreeing to a ceasefire. Well get reaction to the market as well. Plus the ceo of rio tinto on the Companies Just announced stock buyback not to mention the collapse. Ceasefire in ukraine. Roger altman tells us if it will halt putins ood advance or if more sanctions are needed. Teslas numbers fell well short of expectations. And squawk box gets the next big toys before they hit store shelves. Where do you get those wonderful toys . The ceo of hasbro is here to talk movie tieins and the toys your kids wont be able to live without. The third hour of squawk box starts right now. Live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box here on cnbc first in business worldwide. Im sara eisen along with Michelle Cnbc and scott wagner. Netflix fans got a sneak peek of the upcoming third season of house of cards. They accidentally released the two new episodes two weeks early. Among our top stories at this hour greece unable to finalize a deal with the European Union. After six hours of negotiations the finance ministers failed to even put out a statement which is rare. There will be another meeting on monday. Qe fever hitting sweden. The countrys central bank cutting its main Interest Rate into negative territory and launching an unexpected easing boom. And two key data points at 8 30 a. M. This morning. January retail sales, weekly jobless claims as well. Well bring you those numbers as well and of course the instant reaction. Lets show you whats going on with u. S. Equity futures at this hour. Theyre getting a boost out of the news coming from ukraine and russia. The dow would open roughly higher 90 points. Word out this morning that russia and ukraine have agreed to a ceasefire. Roger altman has been pushing for tighter financial sanctions on russia and he joins us now. Good to have you here on this day. This is particularly fortuitous. Youve written pieces where youve said give the sanctions more time to work. What do you think . Putin coming to the table and doing this deal is that evidence that maybe hes finally starting to feel some financial pressure . Well, two things. First, at least as of right this minute, we dont know the details of the agreement including the territorial side of it. And whether putin has achieved most of his territorial ambitions in Eastern Ukraine. In other words, that the deal is concessionary to him or not. We have to find out how good or bad this deal is. We should say Angela Merkel did say it wasnt all we wished for. But secondly it would be surprising to me if this is the last we see of russian adventurism relative to the baltics, relative to other areas that putin has his eye on. And the point that i tried to make was i think a lot of people misunderstood, number one, how much damage in economic and financial terms already has been done to the russian economy by a combination of the sanctions and the Capital Market themselves against russia. And number two, how profoundly weak russia is to begin with. Its remarkable how few people appreciate this. And to give you a flavor of it just in the last three or four months rubles fallen 50 against the dollar. Capital is flying out of the country at 150 billion annual rate. Gdp has projected imf and others to decline 3. 5 to 4 this year. Thats precipitous. Oil prices obviously have fallen in half. Thats injured their one strong sector. Youre so right. A year ago when i was leaving for sochi i started reading an intense amount about the russian economy. Negative about it before anything happened in ukraine. They said too dependent on oil, the price ever falls theyve never diversified the economy. They havent liberalized. So they were vulnerable. In addition just even before this crisis, russia has a relatively small population. 140 Million People. Think about that. In the United States we have more than twice that. Its gdp is equivalent to italys in size. Its like its population is shrinking. More than a Million People have lift the country over the past few years. Its Life Expectancy is falling. The oil fields are mature. They require infusions of capital and Technology Just to keep production flat. So you have a country which is very weak to begin with much weaker now on account of the sanctions. And especially the Capital Markets. And theyve got an inflation problem. While theres a point of view, yes, that the russian people have a sad and deep capacity for suffering and the putins Approval Rating is 30 . Therefore none of this will influence russia. I dont believe that for any country thats integrated into the modern global Capital Markets that if your currency is collapsing capital is flying out at unlimited rates and so forth, you cant continue to function. So itll be interesting to see whether this agreement, if its actually any good and if it actually sticks, ultimately is seen as having been influenced by these sanctions. Including we have the option of tightening them if urt. Because the politics of this whole thing are striktricky. You still have the issue of the president considering arming ukraine. You have Merkel Hollande and others suggesting that we need to do diplomacy to all end. So its uncertain how the whole thing plays out. Putin has a history of not abiding by any sort of ceasefires. Yes. This isnt the first cessation of hostilities. And lets hope it is the last. But one would have to be an optimist to think that. If youre advising the president , what do you do . There are people who know more about the specific ins and outs of supplying defensive arms, so forth, to kiev than i do. If you step back and look at it from a wide lens you say to yourself, id rather tighten the sanctions because russia has no defense against that whereas theres obviously a risk if you supply defensive arms to kiev that itll widen the conflict. Because it will antagonize russia further. And the world view is that we broke our word that we said we wouldnt expand nato onto russias doorstep. And now were doing that and supplying defensive arms to kiev is just another example of it. So theres real risk in doing that. And so if you could wave a wand i think you would say to europe and the u. S. Lets tighten the sanctions further. For example, prohibit holdings of russian sovereign debt now. Ultimately if you wanted to unleash your Nuclear Weapon you could block from access to the Swift International that would be brutal. That would be crippling. That has a lot of downside. But you have the capacity to cripple russia. And i just think our economic and financial weapons are more powerful than our are they already working . Are you suggesting economic pain is so severe in russia that this time will be different and they will stick to the ceasefire . Well they are working because of the damage to russia ive already mentioned. Most basically the most powerful force on earth today is not stores of weapons or even Nuclear Weapons, its the Capital Market. But the question is will putin change his calculus and stop trying to get into ukraine . And my point is if you tighten the sanctions enough and then rely on the Capital Markets which have been turned wholly against russia to continue to do so which they will there will come a point even though some russia defenders say they wont, there will be a point they cant take it. Neither can europe. Youve seen the damage its inflicted on europes economy. Its trying to avoid another recession and deflation. How much more pain can it take . I dont think the linkage between russian squeeze and europes problems is very close. I think europes problem is the four or five top reasons europe is in the condition theyre in dont have to do with russia. Just making it a little worse. Little worse. What do you say, roger, there are people within the u. S. Financial system that say we get it that you want to use financial sanctions. But every time you do that you actually over the longterm destabilize the idea as the dollar being the worlds reserve currency. Because you start to incentiveize others to say, gosh the United States just by virtue of the dollar can do anything to us which is true and therefore they work very hard to. Russias tried to come up with a different system for credit cards. China wants to try to diversify away from the dollar. I dont buy that, michelle. Weve heard that type of argument for a long long time. I mean ive been hearing that for 25 or 30 years that the dollar is at risk of losing its reserve currency status. And that will hurt the United States. Everybody wants to dollars right now. Exactly. Over all these years, that just hasnt taken place. And i dont think this is going to make any change in that fundamental equation. China does not want its currency to be the reserve currency of the world. The world has its own issues which we could spend a lot of time on. So i dont see the status of the dollar in terms of reserve currency condition that way be diminished by whatever happens in russia. All right. Great. Thank you for joining us on the story. Thanks for having me. A couple other stories to tell you about. The busiest ports of the country taking a break. Shut down for four days as the ongoing labor dispute intensifyings. Shipping companies are now going to flash dock work so that unloading with cease thursday through monday. And we are on market cap alert for apple. The companys valuation has now topped 725 billion. Carl icahn thinks the stock is worth 216. Its already at a record high. There you can see it. And carl icahns version, that would make the Company Worth roughly 1. 3 trillion. And it looks like shares of apple are set to open even higher today. Another 1 . All right. Coming up, hasbro is here and the ceo is bringing some toys that arent yet in stores. Like this nerf gun. A look at the companys he finally gets his boy toy. And later the ce rks of rio tinto. Plus the snl writer behind movies like happy gilmore and the water boy. Sometimes the present looked bright. Sometimes romantic. There were tears in my eyes. And tears in my eyes. And so many Little Things that we learned were really the biggest things. Through it all, we saved and had a retirement plan. And someone who listened and helped us along the way. Because we always knew that someday the future would be the present. Every someday needs a plan. Talk with us about your retirement today. [ male announcer ] your love for trading never stops. So open an account with schwab. And when a market move affects, say a Cloud Computing stock youre holding, we can help you decide what to do. With tools that help you see how market activity is affecting your positions. So when the time comes to decide whether to scale in or scale out. You can make your move wherever you are. And start working on your next big idea. Whats that thing . I moved our old Security System out here to see if it could monitor the front yard. Why dont you switch to xfinity home . I get live video monitoring and 24 7 professional monitoring that i can arm and disarm from anywhere. Hear ye the awkward teenage one has arrived dont be old fashioned. Xfinity customers add xfinity home for 29. 95 a month for 12 months. Plus for a limited time, get a Free Security camera call 1800 xfinity or visit comcast. Com xfinityhome. Welcome back this morning for some breaking news. Expedia is to buy orbitz. The deal valued at about 1. 6 billion. The companies will be holding a Conference Call to talk about that deal in just a few moments. Well bring you all of the highlights. But that is a big, big story at nearly 8 15 eastern time. Expedia buying orbitz for 12 a share in cash. Wow. And it looks like investors like it for expedia too. Shares 3u7. 5 on the news. Meantime hasbro is giving us an exclusive look at brand new toys that arent even on the market yet. The ceo is in town for the toy fair. He is here this morning. We have hasbros ceo and president. This is your super bowl i guess, your big week. How were the earnings . Good . Good. Our revenues are up. Our operating returns were up. All Major Regions up. Our Franchise Brands grew 30 last year. Weve seen growth all around the world even in the emerging markets. Your Global Presence means youre dealing with currency issues that so many others are. Thats right. Not just Foreign Exchange as one umbrella. Theres been three factors. The other is the side of the change. So over time we can begin to address those issues. But in the shortterm it hasnt you have the growth area for you . International . Because i know you had been expanding and bringing the revenue figure up more than half of revenue. Right. Now revenues have but certainly has had an impact. Most of the impact in the quarter. 75 million in the Fourth Quarter. So are you going to spend money on the hedging or on the toys . We hedge out about 67 . Its on our business. And weve done that over the next couple of years. But still you have some impact because you dont hedge all the way. Lets talk a little bit more business before we do the fun stuff we the toys. You guys looking to do a deal with anybody . I mean the dreamworks thing, i think, was a surprise to many. Did not happen. You want to make movies now . Whats going on . That was a rumor and speculation. Were really onto 2015. We want to talk about innovation and building our business. We have great teams focused on innovation. And of course youre saying there were no conversations at all . We wouldnt comment on rumors. I have another question. What about the idea of having a content company in house like that . I mean is that a plausible idea given that so much of the money and growth in this industry is taking some of the disney movies. I know youre making toys out of that. Every kid is on digital and watching the movies. For the last several years, weve built out animation. We have over 1250 episodes. We have our tv shows around the world. My little pony transformers littlest pet shop. So weve been doing that. We recognize you have to tell stories around your brand and combine that with innovation. Its great to see our shows on the air in russia and in brazil and of course the u. S. When you woke up that morning and saw what the stock was doing as a result of the rumors and the speculation, whatd you think . You know obviously there are lots of things that go on in stock price, but we focus on superior shareholder return. Told shareholder return. Thats where the focus has been. We continue to focus on innovation. You see what the results can be. Growing 30 , focused on differentiating based on great story telling and the innovation that goes along with that. We believe in story, we believe in content and we think thats differentiating the company. The stock has recovered since. Kids are interested in toys and new and exciting things. Theyre not just you know holding their ipads playing all their new apps. Im talking ages 5 and up. They still want the physical fun stuff . Absolutely. What were seeing with kids is that theyre bending time. Theyre consuming more media than ever before and doing it simultaneously. They consume about 12 hours of media in eight hours. That includes plenty of play. Hold on. They consume 12 hours of media within 8 hours . Thats correct. They can watch eight episodes of 60 minutes in six hours . Theyre online playing a game playing with our toys, could be playing with back flip studios which is our gaming studio game. And of course playing with the tois and games. And the toy industry that is grown. It grew about 3 last year. When i saw your results, i turned to carl next to me and said who knew my little pony was killed it compared to barbie. Why is my little pony where barbie is not . We spent time seeing what consumers wanted. Then we built stories. We think the story behind my little pony resonates. Weve not only seen little girls get into the brand. And were launching the brand even younger because its so rez gnat with moms. The idea of friendship is great. And were also seeing great adult fans get into it. You have one here. They used to be able to just stick your hands in these. Now i can give you a fit bump and it works. Weve got a great lineup. The avenge chers comes into theaters in may. Does anybody play a game like this anymore . Do kids want to play monopoly . Yes. And blue haired dolls. This looks like katy perry. This is based on a brand new brand. This goes back to the idea of showing you guys some things first. This is a new brand for us that comes out this fall. Its from disney. So its a Disney Channel original movie. This is called the descendants. These are all the children of some of the most bad and good characters that exist in the disney universe. Its going to be hard to top frozen. Scott loves this nerf gun here. This is great. This is for the prepaint ball crowd. Thats brand new for us this year. Hes shooting crew members. So this is for that more intense play age 14 and up. This is for those, again, the teens. Prepaint ball. Great intense play. Love it. Thanks for coming in. Good soo toto see you. Recapping the news we told you about moments ago. Expedia buying orbitz. Those Companies Holding a Conference Call in just a few moments. Well bring you certainly the highlights there. But you can see the activity in both of those names on this breaking news this morning. And just a continuation of the consolidation in that industry. Coming up rio tinto announcing a share buyback. Well dig through the earnings with the ceo next. You just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. Because youre not you youre a whole airline. And its not a ticket youre upgrading its your entire operations, from domestic to international. Which means you need help from a whole team of advisors. From workforce strategies to Tech Solutions and a thousand other things. So you call pwc. The right people to get the extraordinary done. Know that chasing performance can mean lower returns and fewer choices in retirement. Know that proper allocation could help increase returns so you can enjoy that second home sooner. Know the right Financial Planning can help you save for college and retirement. Know where you stand with pnc total insight. A new investing and Banking Experience with personalized guidance and online tools. Visit a branch, call or go online today. What does an apron have to do with Car Insurance . An apron is hard work. An apron is pride in what you do. An apron is not quitting until youve made something a little better. What does an apron have to do with Car Insurance . For us, everything. Rio tinto reporting a short increase in full year net profit despite the fact that slumping iron ore prices are hurting the company. Here to break down the numbers with us sam walsh, ceo of rio tinto. Good to see you begin. Good morning. Talk a bit about the results. It pretty much everything you produced in the mining world including iron ore which is a big one for you has seen its price absolutely collapse. What did you see over the quarter and how did you manage to exceed expectations given that . I think we surprised the market. Earnings at 9. 3 billion. 12 increase in dividend. As you mentioned, a 2 billion buyback. And weve achieved that in tough Market Conditions through cost reduction, trimming our capital, trimming our working capital, and very focused on taking advantage of our tier one low cost assets. Its a good story. Its a great business. There were some concerns maybe it would be difficult to shore up cash flow given the environment for some of these mining commodities. Clearly that wasnt a problem. Will it be Going Forward . Can you offer hope for a buyback in this kind of environment . We focus very much on strengthening our balance sheet. Weve taken 9. 5 billion of debt out of the business since its peak in june 2013. That with low debt and low gearing ratio of debt to equity of 19 has enabled us dividend. The buyback has increased our pro forma debt to equity ratio to 21 . Which is still very low in the range weve indicated is that preferred operating range of 20 to 30 . It does bode well in terms of the options that it provides to make decisions around this Time Next Year about our shareholder returns. We are strongly committed to shareholder returns. Its interesting you say that, because i was going to ask you in a comment this morning, citi turned your buyback a bit small. Thats what they say. But theyre confident that they are going to continue. And youre essentially telling us that that in fact, is the case. Im trying to comment that 2 billion is a substantial amount by anybodys book. Importantly the worlds a very fragile place. I dont need to tell you that. Its very volatile. And we need to see how 2015 pans out. Weve taken early action this year to reduce our debt further, to improve our capital, to improve our operating costs. And were working on the basis that that will position the business well for the future. Do you need sara alluded to the iron ore. 20 of your cash flow comes from that area. There are questions whether you need to be more diverseityeifyied and that leads into m a. Can you comment . Were very focused on profit. And profitability. And with our low cost iron ore business, we have cash costs at 17 if you take into account the current price and Energy Prices versus a sales price of 62 a ton. 17 to 62. Thats a pretty good margin by anybodys book. Yes, we look at build versus buy. Of course every business does. And right now, nows not the time for us to be rushing out and buying distressed assets. Distressed high cost assets. More importantly were focusing on the very Significant Growth options we have. All right. Thanks for joining us on those results and of course the buybacks and the investors are paying attention to. Sam walsh, ceo of rio tinto. Coming up, were minutes a i wa i from the latest job claims and retail sales. Well have the latest and reaction next. Welcome back to squawk box. Breaking news january retail sales doubled down on a negative. 4 expectation. Shows up as down. 8 . Last months down. 9 , unrevised. If we strip out autos, its actually a bit worse. At down. 9 . Strip out autos and gas, we get a positive number up. 2 . But thats also half the expectations about. 4 . If we look at whats known as the control group, the control group is up. 1 . We were expecting. 4 . So we now have kind of backtoback softness here. Jobless claims of the most recent week move from 279 up to 304. So up 25,000 on jobless claims. Havent been above 300k for awhile. Of course we have to ponder if theres any seasonal issues here. And continuing claims it moved from 2. 405 million down a bit to 2. 35 million. Interest rates were on the way up. We were roughly at what . 203 before the data came out. What caused that in large part is equity markets righted themselves, maybe the ceasefire. We could argue about all of those issues. But the reality is this data is now putting it back at the 2 level as it bobs slightly above and below. The important part if youre looking at rates, we settle at 2. 17 at the end of last year. Many traders think we may get a glimpse of this. Weve moved up quite a bit considering at the end of january rates were at 1. 64 . Thanks so much. For more on the data lets join Steve Leisman from dallas. Let me ask you, steve, which number and yet when you take out gasoline, sales were up. What do you make of all that . Well you know weve been looking for where consumers are putting their money. Ive got this 9. 3 decline in gasoline station sales. Ive got electric and Appliance Stores up 0. 3 . Building materials up 0. 6 . Thats a good sign there happening in housing. Department store sales down. January obviously is a weird month. I dont have the core number. If you have that core number, thats the number that would feed into gdp. Thats the one id be looking for. But obviously the bigger decline is going to be consequential for the First Quarter gdp and what economists will look for is that number that feeds directly into the growth number for the First Quarter and obviously business inventories later today. The claims number im not too worried about. Because thats been up and down inside this range of 275 to 300. That bump up is not going to be consequential amid what is widely regarded to be a strong jobs market. So were still looking for where consumers are spending their money and if theyre spending it with this big decline in gasoline prices. It hasnt been clear in what weve seen is maybe theyre putting it in the envelope to visa mastercard, American Express to pay down credit cards. I dont understand why theyre not shopping. Spending a ton less on gasoline. Huge decline. I dont understand why were not seeing it filter through into more robust retail sales from this bump that everybodys gotten from the drop in oil. Im going to give you three theories that are out there, scott. You can pick your favorite one. The first one is savings. You can put that along with what you just said. Savings and or paying down debt. The second one is that they are perhaps spending it more in services. And the third one is its yet to come because its still seen as a temporary change. And in general with wha the theories say is people make permanent changes based on wages and salaries more than they will on a temporary change in gasoline price. We had one on this morning because consumers dont believe its permanent yet so theyre not acting on it. I think thats right. Now, one thing were going to be watching a obviously people might be driving a little bit more. It could be theres less of a decline in sales than you might otherwise think. And i think by the way we do not have the good data on services that we have on retail sales. So thats done on a quarterly basis. There are also other things soaking up. You might have had an increase in heating oil and other heating expenses because the weather did get colder in the month of january. And also health care might be soaking up more of what people might be saving from gasoline. All right. We saw the futures come off a little bit but not much. Saw rates come up but just a little bit. Not much. Thank you, steve. Sure. Make sure you tune into power lunch today to see steve interview dallas fed president richard fisher. Get his reaction to the 234ur78s. Lets get back to the deal we were telling you about. Expedia buying orbitz. Its a deal worth 12 a share in cash value. The whole deal at 1. 6 billion. The Conference Call about that deal is going on right now. We will bring you the details as we get them. Interesting stuff. Yeah. And we were talking about some of the consolidation in the industry. Travelocity getting bought. Clearly investors like this news. So obviously well be watching that. Expedias been spending to increase their business. Growing organically is more difficult. Do you build it or do you buy it . Sometimes and here theyre buying pit. And by the way the travelocity deal was expedia. After tesla posted a loss in the Fourth Quarter that was well short of what analysts were looking for, phil lebeau joins us with more. Also disappointing were the dlirrydlir ry delivery numbers. Yeah. They were coming in shy. You will hear the bulls trying to come out saying look at the future for tesla. Thats what you want to be focused on. When you look at 2015 tesla gave its guidance of 55,000 vehicles being delivered this year. A little bit more than people were expecting. By the way, if they delivered nothing in china, theyll still hit 55,000 this year. Thats a 70 increase compared to last year. Were going to get the model x in about late summer. I want to show a chart comparing tesla shares versus apple shares in the last four years. The reason i want to show you this is last night during the Conference Call, one of the questions raised was how do you value tesla five years, ten years down the road. And elon musk said i can see us getting to apples current valuation which is 700 billion. Heres what he had to say. Listen closely to his justification. If you take this years revenue around 6 billion or thereabouts and if were able to maintain the growth rate for ten years, add to the profitability number and have a 20 pe our market cap would be basically the same as apples is today. Now, hes not saying its going to be what happenapples is today, but hes saying it could be. But there are a lot of things that have to go right in order for any of that to happen. A 20 pe a 30 growth rate for ten years. I mean thats tough to do in any industry let alone the auto industry. And a 10 profitability number over the next ten years. That gives a taste of what was discussed last night. It will be at the heart of this debate amongst investors. Is there a premium that needs to come off the stock right now . Or do you say this is the adjustment you go there u. Jpmorgan weighed in this morning cutting tesla to underweight from a neutral. The forecast is what . 55,000 deliveries for cars in 2015 . I guess the question for investors is can they believe that . Can they believe and trust elon musk that that will be a reality given the fact theyve fallen so short on the production side of things on the deliveries . Well the production was there this year in terms of 35,000. The deliveries came in at 31,500 or 32,000. Which was shy of their expected 33,000. They have the model x coming online later this year. Basically youre looking at something in the Fourth Quarter. How much can you gain into confidence of what we expect from model x deliveries . Model s deliveries most believe it will ramp up at the pace its been at right now. Its the model x question out there in terms of a, how quickly can they start delivering this . And will there be any slippage between now and then . Well have to see shares set to open. Coming up the writer behind comedy classics like this. Why didnt you just go home . Thats your home are you too good for your home . Answer me former snl head writer tim hurly joins us and he was Adam Sandlers College Roommate. Tomorrow on squawk box, were live from the at t proam at pebble beach. Special guests include at t ceo randall stevenson, cvs executive chairman dave dorrman, and glen hutchins. Squawk box tees off from pebble beach at 6 00 a. M. Eastern right here on cnbc. Profit from it. When the moments spontaneous, why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision or any symptoms of an allergic reaction stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. This sunday on our Parent Network nbc, saturday night live celebrates 40 years of that show being live from new york. Our next guest was the brains behind some of the big snl classics like this. No youre not hes an imposter because im brian fellow. Im brian fellow. Take him away. This is my show. That bird is not funny and i better not see him again. Hopefully we will fix this is editing. Joining us this morning with a look behind the scenes of snl, tim hurley. He was the head writer from 1996 to 1998. Hes also the cowriter and producer of many of Adam Sandlers biggest movies. And he was your College Roommate roommate. Welcome. Thank you. Thanks for having me. Was that the greatest job youve ever had . I mean i got to think that being a writer for snl must have been just incredible. It kind of was. I was an accountant before that. So better than that for sure. You know, writing movies is fun, but live tv it was incredible. I think anybody you ask would say the same thing. And was it lucky chance that adam sandler was your roommate . Yes. The nyu Housing Office put us together. What was that like . It was fun. It was pretty crazy. Canteen boy was yours also . That was my neighbor in queens growing up. That was a real person . Not totally. But based on a real person. How much do you rely on the concept youve come up with and the sheer ability of the comedians performing the sketch . Sometimes you see towards the end of the show where its less dependent on the cast. And sometimes you just kind of harnessing some of the stuff. With farley you were just trying to catch a right on the freight train. Everybodys coming together for this. Yeah. Who are you most looking forward to seeing in person again you havent seen in a long time. You know ive never met eddie murphy but he was a guy who i idolized growing up. Id be excited to see him. And i hope tracy shows up too. Tracy morgan, yes, who was injured. We hope he shows up. Have you heard in ig . Im not sure if hes going to be there. Was eddie the big standout for you . Definitely in terms of dominating his era. I mean the first cast obviously danny and billy and chevy and everyone was so strong. And then coming on with dana and john lovitz and that era i was there. But eddie kind of was when he came out, it was took your breath away. Who was the best guest host . There have been so many. I dont want to hurt anybodys feelings but greg kinnear was here and bought me a bottle of scotch for writing his open. Snl, you know were a financial network, the billions of dollars that have been produced by the Creative Content that starts there that almost is incubated there, its really just astounding. Do you ever marvel at that . Just the offshoots . Theres nothing comparable to the way its dominated comedy over the last 40 years. It dominates comedy in this country to an everything virtually anything you see any comedy movie or anything you see, some dna there. What was it like to work with lorne . Hes been the constant there throughout. Intimidating at first, but he is a great guy and a sharp mind. Youve got to stay sharp to hang with him. But, you know just the best instincts ever. Do you know right away when you got it . When something that youve come up with is a home run . No. Sometimes you find out the hard way. You think something is going to be a home run and its not. I read something funny. You became the head writer because everybody else got fired or quit that year . Yeah. I was there for the end of kind of the farley sandler, mike meyers era. Then they came in next year with will ferrell and the new crew. I was one of the few writers who stuck around. So i went from a very junior guy to a senior guy very quickly. Over the summer. So you still watch, im sure . Yes. What do you think of some of their new theyre experimenting with digital shorts. I think theyre pretty funny. More preproduced stuff. Yeah. I think theres some funny stuff coming up for this weekend too. I know theyre working on stuff. Did you write anything for the show . No. Just going to enjoy it. What are you writing now . I shoot a western in ten days. A comedy western . Yes. With adam sandler. The ridiculous six. Hes your muse. Yes. And College Roommate. You have lived a cool life. Enjoy the party this weekend. Saturday night live turning 40. Hard to believe. Yeah. You must have some crazy stories about the afterparties from back in the day. Not many i can tell on tv. Stick around. Theres only ten minutes left in the show. You can catch snl live 40th Anniversary Special this sunday on nbc. When we come back well head down to the Stock Exchange and check in with jim cramer. And tomorrow a huge lineup from pebble beach. The ceos of waste management, and celgene. Well be right back. Boy, busy morning. A lot of stocks on the move. Two of them. Orbitz and expedia. 1. 3 billion in cash. More on that in just a moment. Kellogg is taking a hit after missing on both the top and bottom lines. That company hurt by a decline in u. S. Cereal sales and shares of online retailers zulily skidding. An outlook weaker than analysts expected and the chief Financial Officer has resigned. Lets get down to the new york Stock Exchange. Jim cramer joins us now. Expedia, orbitz start there. Riff. Just taking numbers up expedia. These deals that we have been seeing, spirit or expedia deal take out a competitor or you take out someone doing better than we thought. An interview earlier this week the acquisitions are making so much sense and almost like acquiring and looking at the books well ahead and two and two you get about nine so expedia, trip adviser, priceline, they dont all compete but they will. 400 billion travel industry. Great deal. Great deal. The cease fire trying to get our hands around. Nasty kind of disappointing retail sales report and hows it mix into the market today . Im not using the aggregate retail sales reports. Theyre not working. Just like black friday didnt work. Theyre really a full of sound and fury and signify nothing. I cannot make any sense of them. Maybe theyre just talking to zulily. I know you spoke to John Chambers last night. Clearly a positive report. John is back. Especially good numbers out of europe. What did he tell you . Southern europe extraordinary. Vintage John Chambers 199495. Realize if you want the internet in the company you had to go to chambers. Now if you want the do cloud and security, you must go to chambers. Fire eye was a great number and this was the best this was John Chambers in the days you recognize its the most Important Information Technology Company on earth. Hes back. Great to hear. He is so back. The guys at whole foods are back. Guys at tesla not so much. Not clear. On tesla, if tesla wasnt tesla, how bad would that stock be getting it . I dont know. Wheres delorian trading . They got plenty they have gold wing cars. I mean really. That was i dont even know. Animal house. You just had saturday night live. That call was a spoof of a call that will be done on the 40th anniversary. The funniest thing they do. All right, jim. And they have to theres expletives in both. Live. Live tv. They blame the weather and people going on vacation. It was a comedy. Like something for everyone. Funny thing happened on the way to the tesla forum. All right, jim. Sonheim wrote that call. When we come back a deal in the travel space. It is a big deal and an analyst who just got off that call with the ceos. Both stocks indicated sharply higher. Well be right back. And i get a lot in return with ink plus from chase. Like 60,000 bonus points when i spent 5,000 in the first 3 months after i opened my account. And i earn 5 times the rewards on internet, phone services and at Office Supply stores. With ink plus i can choose how to redeem my points. Travel, gift cards even cash back. And my rewards points wont expire. So you can make owning a business even more rewarding. Ink from chase. So you can. Startupny. Its working for new york state. Already 55 companies are investing over 98 Million Dollars and creating over 2100 jobs. From long island to all across upstate new york, more businesses are coming to new york. They are paying no property taxes no corporate taxes no sales taxes. 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Does it make sense to you . Yeah. It continue the spree across the sector and the internet space, as well with expedias Team Announced on the Earnings Call is it should add 75 cents in earnings. This is a value buy by expedia. They bought an average, okay asset but at a cheap price. Good for expedia and the stock. Investors agree. Trip adviser is getting a bounce out of this and priceline. Whos next . That was really kind of a last of the independent plays. Over time we have seen hotels. Com be acquired. Kayak be acquired. Theres really been a massive consolidation in the space. Management teams talk about how competitive it is and it is interesting to us of fewer largescale players left. Expedia and priceline are left. Trip adviser is separate asset. Theyre all interesting plays off of the online travel. No regulatory issues whatsoever . There may be. But orbitz is a very small player in the space and frankly its been a deteriorating asset. The share in thest and international has been declining for three or four years. This was actually kind of the life vest that orbitz shareholders have been holding on to for years. They got it now. They should be thrilled. When they buy them whens going on here . Buying customers or integrate the back offices or the platforms so that you get synergies there . Where do you make the money . I think the synergies are almost probably solely on the cost side. Get rid of Company Costs for orbitz. You can probably better integrate some of the marketing systems, maybe some back End Technology integration. Theyll create multiple brands and execution risk here for expedia. This company now running 15 global brands. Thats a lot and had execution errors in the past and the stock relatively rocky for three years. A great performing stock but had issues integrating the acquisitions. We have to run. This could trip them up. Thank you. Thank you. Back tomorrow. Time for squawk on the street. Good thursday morning. Im Carl Quintanilla la with Jim Cramer Carl Faber at the new york Stock Exchange. Stocks are set for a bounce. Greek deal falling apart for now. The socalled cease fire in ukraine. More earnings than we can count. The dow might see the highs for the quarter this morning. And then the 10year around 2 . Retail sales this morning were a disappointment. Our road map begins with tesla. An unexpected Fourth Quarter loss