Transcripts For CNBC Squawk On The Street 20140204 : compare

the roadmap begins with the markets looking to recover after logging their worst february start since 1982 for the dow and for the s&p. michael kors trounces estimates while jcpenney reports its first quarterly same-store beat in years. the parent of kfc, pizza hut and taco bell adds it's recovering from the lingering fallout of food safety concerns in china. and apple is reported lie by "the wall street journal" and quietly laying the groundwork for a vast internet infrastructure capable of delivering a lot of data and content to consumer. the dow tumbled 326 yesterday and growing concerns of a weaker u.s. economy surrounding emerging market worries and the nikkei down 42 overnight and the worst loss in nearly six months. that index is down i think 15% for the year to date, jim. rough, rough. >> terrible. when i see adella, your man might be in there. your man, no one knows him very well. >> exactly. >> we're out of data. we've had nothing but not-so-great data. it's going to snowstorm tonight and this weekend. how long can you go down on the same data. we can go down on japan and japan can go down on japan and then we can go down on japan and japan could have a sudden breakdown because of us. you kind of get into that circle thing and what i'm waiting for is new data, friday's weak, i don't think anybody thinks it could be strong. i'm not excited about the market. i think we're oversold. the s&p oscillator is minus six, at my old hedge fund i never shorted when it was minus five, it's only worked between 2007 and 2009 on a consistent basis and i don't think we're in that era, 2007 and 2009. >> there was this bleak end of the year and a lot of complacency and earnings weren't that good and sentiments bid against you and valuation not that great. and i'm in the sure, "a," it's correct and i'm hearing a lot of people or investors saying i see value now. earnings, by the way, 72% versus 67% usually they came out better than expected. it's a game but they all play it and it wasn't bad. >> previous guest was saying it's a stock picker's market. it's so not a stock picker's market it's just the s&p. i think it will be, but the companies i follow had great numbers they went down almost the exact same percentage as the companies that had bad numbers. now, if we calm down those stocks will start being bought. but, you know, what, this is a pause that doesn't refresh? >> you mentioned microsoft, jim, and, in fact, they have named satya nadella as ceo and john thompson is being named the chairman of the board of directors. >> very controversial. a lot of people want everybody gone from that board of directors in order to really get a clean start. >> they had a chairman whose name was bill gates. and that is no longer going to be the case i guess. >> right. >> haven't seen the release as yet. >> these are flashes now on dow jones. but kara swisher repeatedly on our air yesterday said today was the day we'd get announcement. nadella was executive vice president of cloud and enterprise, a sun microsystems veteran who joined microsoft back in '92 and as a result people have argued this is the safe choice. there's a graphic in "business week" this week that has a coffee cup with the microsoft logo and says world's worst job because of the challenges they have. structurally. the decisions very big decisions that have been made lately as balmer's left. >> guy who plows snow has the world's worst job, if the rich are unhappy, it's their own fault which lenin, my great, great, uncle is spot on. this is a great job if you want to break the company up, it could be worth a lot of piece ofs. do you know what i want to see, i want to see what value act does. >> value act is a part of this decision already having a member on that board. and i think has been very much involved, so you'll see from here in terms of whether he reflects a new strategy in some way. that takes into account their view of the company which is much more focused on the corporate side as opposed to the consumer offerings perhaps. >> right. >> although what i've read about nadella is he believes they both belong together the idea of separating out is not something he embraces according to the reporting of others. i don't know that. >> one wrinkle gates, the company says, will devote more time to the company, supporting nadella in shaping technology and product direction. the notion that gates is simply going away, apparently not true. >> i don't know. geez, you want the deck really shuffled here. the company has just missed social. they missed mobile. they missed cloud other than this gentleman. and i mean, you look at the rise of the salesforce.coms and you recognize this is a company that needs a fundamental change in its orientation. and the fact that bill gates, look, he's a genius, but the fact is that you need to reshuffle the deck here. i mean, they got to start catching one of these moves. >> you said the last quarter was a great quarter. >> last quarter was good. great to build off of. i just want fresh faces. because i need -- you need, you need people -- this gentleman is from the division that has really come on strong. but you need people to re-evaluate. is everything really right there. i mean, does everything belong. we have seen this shrink to grow -- you know, let me just analogize to other great companies. looking to oil companies and they all say almost universally, we should stay together and keep together, microsoft, we should keep together. is that really right? some of these companies have been at the same prices for years. i think it's terrific that they have stability but to think there isn't value to unlocking microsoft, holy cow. >> i think there's a belief there is. there's an idea that the company has become a bureaucracy becoming larger and larger in bellevue, washington. it's enterprise that's the story and it's the business division, it's -- >> i totally agree -- >> how much more they can accomplish there and compound annual growth rates that can be obtained there. i don't know that mr. nadella -- this process didn't go as well as they might have hoped. maybe mulally, people could argue whether that would have been a good thing or not. >> they spent nearly half a year on this process. >> they really did and they end up with somebody who has been at the company since 1992. >> but a good division. cloud is something they kind of caught. and they're trying to do mobile. i bumped into a guy at my college reunion who had a microsoft phone. >> really? oh, yeah, the guy that runs the company or used to. >> steve was in my class. >> every time we have a conversation about them we tend to come back to amy hood, the cfo. >> i love her. >> who more and who are is being talked about as a bridge during this transition. >> please don't make her leave. that's one of the reasons why i love the conference call. amy hood speaks english. she really gets it. she is so important. if she goes, wow. real bad. >> nobody's saying that's the case, though. >> i just, sometimes when you're ceo you want to name your own cfo. but she is a breath of frommer air on that conference call. >> that is true. do we have any -- i have not seen a release of yet. do we have any -- >> microsoft issued it on twitter. not even a release per se from the company. >> this idea that you're still going to have gates and balmer on the board. >> i don't want that. >> that's got to be difficult. >> that's what i'm saying. >> i just want to see it. >> microsoft, i see it on twitter. why didn't you just buy twitter, bozos, geez, you could have owned social. you notice twitter goes up every day and when they report, it doesn't matter. i love it! i love that twitter quarter! it hasn't come out yet, okay, i still love it. >> nadella, by the way, will be the third ceo in the history of the company. and we, again, to revisit the past quarter they beat by a dime. revenue was good. surface revenue doubled quarter or year on year. >> right. a good quarter. >> and offset what they saw the first pc decline for the holiday period in about five years. a lot of headwinds but a lot of execution things appear to be going right. >> what's funny, a little contrast here, you ahave arm holds the semiconductor of the future. stumbling today. there could be a reshuffling going on here. i don't think pcs are as bad as they were. xbox was fantastic and you just do not get any value for xbox within the embedded microsoft. it just can't move the needle. >> so, would you like to see xbox spun off? >> i would love to have an entertainment company that is xbox and skype. i would love that piece of paper. that could be a piece of paper where you could really see some money going that way. i mean, xbox had a great quarter. >> what would you do with nokia? >> that's a tough one. don't put me on the spot like that. i don't -- that was a good deal for nokia. >> yes. you got 3% market share in windows phones. >> not where you want to be right now at least. i mean, maybe there's a vision. you got a little vision going over there? >> it will be interesting to see with the third leader in the history of this great american company with $84 billion in cash, by the way. that never hurts. >> the first thing i would do is move back into seattle. move back into actual seattle. get some brains going this. >> gates and balmer will both be on the board of directors so that's got to be a tiny difficult -- >> trying to save the world. >> but why keep balmer on the board? >> i don't know. it makes no sense to me. i think is when ballmer should go do big things. a big thing do-er in the "wizard of oz" a good deed do-er. >> yes, e pluribus unum. apparently gates is saying there's no better person in his words to lead microsoft than satya nadella and they are crowing about the number of board numbers who will be independent, seven of the ten on the board will be independent. >> that's good, you know, especially if they're smart. right? >> we will see. >> if they're independent and actually good. i like both combo. i mean, we have a lot of board members who are independent. and -- but they're not tough. i mean, that's what you really want. jim stewart had this really great piece this weekend about jamie dimon and who was tough on the pay package, a lot of people didn't like the pay package because it didn't justify his salary but independent board members you have to admit were heavyweight in that thing. >> yeah. lee random. >> he's not owned by anybody. >> and this is a decent board at microsoft, and you are an incoming ceo and you've been there a long period of time and you worked with mr. ballmer and mr. gates and they are still on the board of directors, it will be interesting to see how mr. nadella does. we sat here before and doubted whether you would see significant change of a ceo that came up through the ranks and yet, that in fact happens. bob iger at disney. >> that's a very good point. >> nadella reminds her of iger when he took disney from eisner and he ended up doing very big things. >> big. >> very strong ideas of what needs to be done. i'll never forget iger coming out of the box with the pixar acquisition and never looked back. >> and the cloud division is the one part of the company that has got the thesis of where america's going. again, social media is so powerful. look at facebook. don't you think they just sit there and say ten years later, look, we were in harvard, you know, class of '77 and these new guys came in and they just, like, smoked us. maybe nadella who admits it's a humbling day for him, can make it so that they regain their -- you know, get into social. get into social. because social is so much the future. >> here's an e-mail from nadella to employees on his first day as ceo. he writes, while we have seen great success we're hungry to do more. our industry does not respect tradition. it only respects innovation. this is a critical time for the industry and microsoft, make no mistake we are headed for greater places. that answers some questions about who he is, 46 years old. 3 kids. why he's here. >> young guy. >> and what do we do next. >> he quotes s on car oscar wi. maybe he's an intellectual. microsoft may have been the most squandered company of our era, they had it all. ibm did not have it all. microsoft had it all. they never recovered from the justice department's foray into their company. >> let's not forget it's a $300 billion market value deposit and it generates enormous amount of cash and eight of ten computers run its window software. >> we're in the stock market, right? that's what we do. we look at companies that make viewers money. they need to make viewers more money. they haven't done terribly and they've paid some good dividends. >> right, they returned some capital. >> i think the company is worth 50 bucks, going over with rick sherlin, the company has such great opportunity if they just take over some of these areas where the facebooks of the world which have made you a lot of money -- >> and turns 10 years old today. >> i think that's important and the stock is not done going up. it's still cheap. i think microsoft's inexpensive but it deserves to be a little bit higher but facebook i could say could be much higher because of the earnings momentum. >> family, curiosity and hunger for knowledge define me says mr. nadella. thought it was describing me or carl or you. >> we'll take a quick break. >> family and houses. >> we'll get to all the names we haven't mentioned yet, michael kors and yum! brands and the markets at large and more coverage of microsoft's new ceo satya nadella in just a minute. 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[ male announcer ] so come trade at the place that's all about options and futures. optionsxpress. open an account today and get a $150 amazon.com gift card when you call 1-888-280-0154 now. optionsxpress by charles schwab. if you're just joining us this morning microsoft has named their third ceo since basically the founding of the company back in 1975. his name is satya nadella previously in charge of cloud and enterprise. had been really considered a long shot in the early going of this search. and then suddenly found his legs in the last few weeks has been considered almost the de facto successor to steve ballmer who back in august said he was going to leave. >> no surprises there. i do think that there were -- remember that period -- >> there was a surprise when he said it. out of nowhere. >> but one of the things i thought was incredible we joked about this, like, people's names are being selected, like, you know, it was like when you had at the beginning of a primary, oh, i think that, you know, so-and-so the senator from kentucky, i mean, there were people who had nothing to do with microsoft whose names popped up. i wondered what was that committee like, the search committee. >> i don't know. i know that there were a number of candidates but it quickly wound its way down to, i mean, after mulally sort of -- it was thrown off early. >> thompson was thought about. >> yeah, mulally obviously there was a dalliance with for some time. >> donahoe. >> briefly. >> and then it was down to nadella and another overseas candidate from what i understood. >> right, okay. >> and they had gone -- the board had gone through a number of different meetings. needed to see the other candidate more closely. and clearly made its decision. love to get a little bit more background on how they came to this. but nadella's name had been in there from early on although not perhaps given quite as much credence early on in the process being that he's a microsoft man through and through. >> wouldn't it be someone if they picked someone from google? because they lost search, too. remember, they owned search once. they owned search. kind of like the u.s. army in china, who lost search. who lost mobile. who lost social. well, i mean, the team. and if they put someone from google -- >> bringing an outsider in a company this large and this -- with -- so many -- can you really expect to move them in a significant way or does it just creating enormous conflict? >> that nadella knew the political dynamics between units and where the bodies were buried and having to learn a lot of that would have taken a newcomer a long, long time. >> look at the spawn of ge and mcnerney, a guy like that suddenly he's running bow. he shakes up boeing and makes boeing into a great new american company. the toughest guys in the world, they can come in and do things. it's no different from an nfl team, frankly, you have these culture that are terrible and then you bring in a coach and he decides, i'm getting rid of a lot of the players and i'm bringing in others. pete carroll, three years, bingo. you can do it. you can do it. you can change a culture. i really believe that. marissa mayer is trying to change a culture, that's a very tough thing. but you can bring people in from the outside and change cultures. u.s. army changed cultures in 1940 in time. remember, the defense department was a -- was a ship. a giant navy. general marshall came in and said, you know, we ought to go with airplanes. there are guys you could bring in and they can change a cult e culture. >> that's true. does today make you feel any different from a charitable trust point? do you make a directional move on this stock? >> i would need more info. i never chase an up market. we were buying some stuff yesterday into the down 300. we looked smart but, you know, it was smart. i think you still -- you have this employment number on friday. we don't have enough data. the data's corrupt. i sit here and i think, okay, well, new home sales, is anyone shopping for a new home? again, we have one nice day and it was the super bowl where no one in the country did anything other than watch the super bowl. close the restaurants. >> the most watched television program in the history of the world. >> another moment where the country did nothing, right? they just did nothing. >> it's our one national holiday in a real sense where we actually participate in the same activity. thanksgiving, too. let's get to kara swisher who joins us this morning on the news line to talk more about satya nadella taking over as ceo of microsoft, kara, good morning to you. >> hi, how you doing? >> good. >> you said it would be him first, you said today iffers and now what do we need to know? >> well, i mean, it's really interesting, it's everything everyone thought it would be, gates stepping down as chairman and being the technology adviser to satya and they picked the inside choice of someone who is, you know, very qualified but not sort of as splashy as someone like alan mulally or another outsider. >> how about gates leaving as chairman? ballmer staying on the board? walk us through what's important to know from a board dynamic standpoint. >> i don't think ballmer is going to stay on the board too long, i think he'll serve out his term and be replaced by everyone else. i think that's what everyone thinks and go out quietly eventually, he still owns 4% of the company and he's not going to be too quiet and he's not a quiet person and i think he'll still weigh in on various things. gates stepping down as chairman is symbolic but it's more important that he's seen as standing next to nadella. he's very quiet, self-effacing. i think he's dynamic but he's not seen as dynamic from outsiders and people that don't know him as well and having gates stand next to you is a good thing and internally it's helpful because gates is so -- people have such emotional connection to him inside the company. >> kara, jim cramer. is there any dissent within the company, you know, we missed social, we missed mobile, we lost search? is there anybody that says, maybe we didn't do a good job and it's time that we changed? >> well, it will be interesting if satya says that because he's been there 22 years. he's been part of it. he did a very nice job trying to fix things. google had run away with it so far it was very difficult. but he did a nice job with bing. and they have 18% share now at this point but it's still negligible in comparison to their power. but i think, you know, it will be interesting to see what he says about change since he's been there. i think that -- i don't think he'll go back and slap ballmer around because ballmer is the one responsible for missing the key things around mobile especially, you know, belittling the iphone and belittling tablets and pretty much every important trend going forward. on the plus side they did invest in facebook early on but they didn't create facebook, you know, that's -- those are the raps on him that he rather than embrace change, he belittled it most of the time. so, i doubt you're going to see a lot of sort of backhanded slapping of him by nadella, but they certainly need to start to rethink where they are especially in the business space where there's huge challenges to the pc market which that ship has sailed and in the enterprise space which nadella has been very good at moving microsoft to the cloud. >> where does this leave a would-be activist on microsoft? is this enough to sort of placate those who have had arguments with the company in the past year? >> well, one of them is going to be joining the board very soon. so, you know, i don't know. it will be interesting to see if some of them foundatoin. i've been hearing that some of the hedge funds people will pounce because they didn't make an exciting choice like the ford ceo or someone else who would make more massive changes. i think it will be interesting to see. i've been saying that nadella could be more like bob iger at disney who people weren't expecting much of and he turned out to be a terrific ceo. or he could be passive. it depends what he does. he may surprise people. he's very deliberate as a person but he may rise to the occasion, you know, really push change throughout the company. we'll see. it doesn't seem like in his nature from knowing him but you never know what someone gets in a seat can do. >> finally, xbox, skype, bing, put some odds on whether or not those are ever part of a different spined-off company. >> i think that will -- that's a good question. i think people have called for it. but i think satya's of the belief as are many at microsoft that they all belong together. he's always expressed that to me but -- and others that they belong together and that big data is critically important. i don't think at this point they're going to do that, but, you know, there will certainly be pressure to figure out how to do that. it's a very difficult sort of secular thing within microsoft to split up the company although many have called for it. i don't see him being the change agent for that, but we'll see. >> congratulations on a reporting run, unbelievable. joining us on the news line. opening bell just a few moments away. welcome back. how is everything? 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took up our first half hour. we've not gotten to kors yet, crushes 86 cents. and these comps, jim, 28%, europe up 73%, north america, 24%. >> i think what people are going to say these are problematic numbers, now, wait a second, people were shopping. if you executed really well, then you -- kors executed really well, chipotle with a muss nipl. remarkable number, remarkable. do you buy it up 15. kors and under armour were the two immune to the slowdown. >> north american comps actually accelerated from q-3 when they were up 21. and we knew that coach had weak north american comps down 14, so we know where some of this purchasing is going. >> when you look at kors' number you say, okay, they've just taken a huge share. >> zero sum, then. you could have shorted coach and gone long kors. >> yeah. that would have been a fantastic trade. look, when you look at under armour if people were telling me, if you had the right product, it sold. obviously kors had the right product. this is very different. this is not a rising tide lifting all boats. it's a couple of companies that really got it right and it's calling into question a lot of companies that didn't get it right. >> like jcpenney with comps up two, the first positive comes since the second quarter of 2011. holiday comes up a little bit better than three. >> again, they've not gone under. >> yet. >> you don't know that. >> i don't know that at all. they still have good amount of cash because they raised it, of course, with the controversial sale of stock when they said they weren't. they're still looking for a new ceo let's not forget that. >> alan mulally, let's float a name. >> steve ballmer. >> steve ballmer looking for something to do. >> yeah. >> jcpenney, sears, these are raise on debt. it's kind of like an existential thing, like camu. >> really good writer. >> sart. >> kamu. >> no exit. there's too many. if i worked at these companies, i saw gap was upgraded today. okay, maybe they have a reason for being. but i struggled for the reason for being sor so ining for some companies. >> and being a mall-based retailer, not to mention the weather, whether you believe it's the weather or not, it's something. their comps, of course, as carl said up coming off years that were since '11 is the first time they've had up comps. but what was the comp? it was, again, down 30? >> down 31 a year ago. >> yes. >> when you lower your comps long enough and the comparisons get a little easier. and, look -- >> go from 100 to 69 and then i go up 2% from there. >> right. >> if you lower -- i was not expecting a great quarter from clorox and they lowered guidance and the stock is up today, because people are saying, the worst is over. one that i have on "mad money" tonight eaton. i have sandy cutler on. that number was fine. the guys come in and sell stocks as if they've never been down. eaton was going down, down, down ahead of the number and they give you the number and the quarter's not bad and they send it down again. >> cooper tire integration running ahead of pace. >> the charitable trust owns it and it's an unbelievable stock and you sell it down and a few days later why did i sell that? international paper, they didn't deliver. stock was looking down a dollar and now it's down seven cents. but there's a lot of stocks that have been coming down in anticipation of quarters not being so hot and when you get the quarter and they are not good, they keep selling them, that's not been a smart thing to do. >> emerson electric, $45 billion market cap, emerson electric sometimes a reflection of the industrial comps. >> big china business there. >> and emerging markets. >> emerson is another one i would buy, down to 68 from 63 and you have an employment number on friday so maybe things bounce and they go back down. but the industrials have been killed here. they've been killed. and there's a lot of charters out there. all the charts are hideous. i did a thing on boeing. boeing chart's hideous. you know, so there's a lot of charts that in control. and they say, let's sell boeing. the chart's bad. that's not been a long term thing. >> we can pull it up lmca, liberty media corp, lmca. give me a two, three week on that, if you can. thank you, gives. because you follow it and a lot of your viewers on "mad money" follow it. the ratio is -- they're going to negotiate it. it may go up. spread has stayed the same but the stock is down. zigo deal, perhaps some people wondering what the synergies are. virgin media, just a number of different questions. charter, of course, is the key component here as is importantly, of course, the rest of it. sirius being the most of it. >> right. >> it's been ugly. >> sirius numbers are fine. again, i'm sure that there are algorithmic guys that say this is everest, you're on the north face, it's a real bad chart and they just sell it. you know, honestly, when i did this boeing work i asked a bunch -- i asked four charters what do you think of boeing? it's going lower. it just bad chart. i know that that is not rigorous. i know that i'm a fundamental guy. i don't want to think that's what should happen but i see a lot of guys selling stocks because the charts are bad. >> we haven't gotten to yum i think touched on it just briefly but 86 cents beats by six cents. u.s. comps down two. china down four. u.s. kfc was down five. >> it's 60% china. going over that with the charitable trust name and everyone decided that china was horrendous and when they weren't, they have to upgrade. stocks that have gone down, down, down, heavily shorted and kors was heavily shorted, by the way, and they deliver good numbers. novak has said the fourth quarter would be good and he came on "mad money" and delivered and no one believed and now the stock's coming back because china wasn't horrible. it's the way it goes. >> all right. let's get more on microsoft this morning. by the way our own jon fortt was one of the first to float satya nadella's name as ceo back in october of last year. he sat down with nadella right here on "squawk on the street" and asked about both that prospect and the continuing and sometimes criticized involvement of founder bill gates. >> steve's very much the ceo. i am really, really busy and excited about the enterprise job that i have and i'll leave it at that. bill is, you know, as he said, he's chairman of our board. he's also engaged with us on a part-time basis and, you know, he sort of asked the precision questions on how we're doing on any particular product and technology. there are a lot of areas of the enterprise business that he cares deeply about. >> jon joins us on the news line with more, jon, good morning to you. >> hey, good morning. >> your take? >> this is a really important moment for microsoft. i mean, think about it. usually when you pick an outside ceo, it's seen as a bit of an indictment of previous management and ceos. they picked somebody inside. but they picked somebody with a background in online services doing the r&d for that and in cloud. and a lot of the back-end data center businesses they have that have been growing very fast. also interesting based on the way microsoft recently reorganized, the cloud has been kind of at the core of everything. remember, windows live runs on azure as does bing as does so much of their just core cloud push. so, he was stretching across all of these different microsoft products enabling them with the technology. another thing i would point out, it's not the sort of thing that we tend to mention first. but this is a really important moment for the complexion of leadership in silicon valley. we haven't seen a lot of indian american ceos. we have adobe and now satya nadella. for the longest time there were a lot of engineering heads at companies, but not so many indian-american ceos. so, this is going to be important for the workforce of silicon valley aspirationally. finally i would say this is very good for marissa mayer. we heard some rumblings, she's interested in getting search technically back to yahoo! it would be very difficult to pull off because microsoft would like to keep much of that on azure, on their cloud, i'm sure. i believe it would be possible to pull off something, satya nadella is probably the most likely person at microsoft to understand what marissa mayer would want to do and be able to work out something if there's any way to work anything out. so, good on multiple counts probabliphoria hoo. >> it's david. i know we're focused as we rightly should be on nadella but there's another significant change at this company. you no longer have a founder who is the chairman and, yeah, you do have as chairman thompson who, by the way, has ceo experience, of course, and ran se symantec for several years and i wonder if he'll become as important in this combination as mr. nadella, because he's outside of microsoft and has run a public company and, again, mr. gates is no longer the chairman of microsoft. >> yeah. that's a good question. and, you know, you certainly are steeped in how these board machinations work especially around activist pressure. i think perhaps more important is what steve ballmer and especially bill gates do next. i know satya nadella has a lot of respect for both of them. bill gates on the technical side. i've been expecting over the past couple of years that gates might become a little bit more involved in certain ways in this company. you know, microsoft and bill gates himself have sort of tried to tamp down those expectations. i wonder what the signaling is from here. because it's a really tough diplomacy drop on multiple fronts. satya nadella needs to make people, the board, investors feel like he's moving fast, but at the same time not trash the work of his predecessors. he's got two pretty iconic names who still have a big stake in the company, still going to be active in the company but he's got to chart his own path and convince investors and employees that he's willing to do whatever it takes to bring microsoft to the next level. so, bill gates and steve ballmer, important to watch here, too. >> all right, jon, thank you for that. and jack welch former ceo of general electric did tweet about this a moment ago. said love the microsoft ceo decision. someone who knows the business and has watched the moves for years has the best chance to win. so first outside management guru who weighs in on this move. meanwhile, pretty flimsy open it's been said here, jim. dow's up 15. >> we don't have enough info -- if we can get the up openings, do you mind if we have some reason? you got to have reason. i mean, it's why i'm saying sell the up openings, there's really nothing to them. do you take all stocks up because of kors? do you buy stocks because of yum? >> no. but why are you a seller of stocks just because others have been selling? the data's really turned that much, taper is going to -- >> i don't think you take the market up on that. let's get some new data, but there's nothing very positive to trade off of and people dark the market wants to go down. the data's very weak unless you can prove to me that the data is weak because it's just 100% snow. there's no reason for the market to go higher yet. you need some reason. other than the fact it's oversold and that's not a reason to buy. it's a reason to stop selling and we don't have a stop selling yet. to take the market up? what happened we get up and say, oh, japan is down 4%, let's do some buying, oh, europe's down, hey, what an opportunity to buy american stocks? give us some reason. i mean, if you have a reason. >> you sound like pink. >> also earth wind and fire. >> go back to that. >> that's right. that's right. as jim's been speaking we're losing our gains completely on the dow. let's get to pisani on the floor, hey, bob. >> up 45 points on the open, oversold isn't enough of a reason, and take a look at what's leading. emerging markets and health care and conup seer discretionary and materials all on the up side but not as much as a few moments ago. the european banks are up right now and the ones that trade here are also on the up side. we are very oversold. the arms index is oversold and the percentage of stocks below their 200-day moving average, and the vix closed highest in a year, and vix options record volume in the vix. as for the earnings we're not getting a lot of them. kors was terrific and raised 2014 eps and revenue numbers 10%. yum was all right. i thought same-store sales were a little disappointing but apparently everyone was happy they just reiterated the guidance 20% eps growth and the stock got crushed in january i think that's probably why it's up so much right now. atlowered their 2014 range a little bit. i think the guidance at the lower end of the consensus. it's at a three-month and clorox lowered their 2014 eps. and they mentioned the peso devaluation hurting them. we've got a very busy morning with exchange-traded funds. i-shares is launching three hot products kurns hed s currency e. they are hoping to get more out of the wisdom tree, japan hedge one, it was probably the most successful etf product last year and huge inflows and ishares hoping to capitalize on that. more interestinging is another new etf two of them but the same concept, ishares and wisdom tree are lawn'ing launching a floating rate treasury etf. we talked about it and rick mentioned it, and what this -- what ishares and wisdom tree are launching is an eft of two-year notes that reset the interest rates based off the yields of the 13-year bill auctions. it's a little complicated but it provides some protection against interest rate risk. i think this is going to get a lot of attention. we already have bank notes that are floating rate essentially. now the treasury's getting into the action. obviously this is a lot safer product than bank notes out there because it's backed by the full faith and credit of the government. none of the products i'll keep an eye on that a little later on the 11:00 show and show you how those are trading right now. but both of these products are going to get a lot of attention. right now the dow has slipped into negative territory. let's get over to the bond pits and check in with rick santelli at the cme. good morning, rick. >> good morning, carl. i guess the best chart to start out with first is the longer yen chart. you can see the yen is hovering at the best levels since the dollar yen at the best levels against greenback in about 2 1/2 months. but the main reason is the next chart. this is an intraday. you can see that the color reversed from moving lower to higher. right before we came in our time zone. if that happened, my guess is yields increased about the same time. let's look at intraday ten. it did, indeed, the stencil, the relationship, the shadowboxing and correlation is alive and well and intact. we went from a 2 1/2 month comp on the dollar/yen. and the ten-year a three-plus-month low yields yesterday on its close. it is actually dropping back down a basis point or two because of the other high correlation with the dollar/yen and that, of course, is the stock market. now, if we look at the 30-year it actually wins the award if awards are given for the longest comp on the last time we saw these lower yields. 30-year goes back seven months to the early days of july. last summer. and another trade you need to keep an eye on if you want to keep things simple and that is the dynamic that has been paired joined at the hip with falling rates for 2014 is a flattening yield curve. a chart of tens minus twos and what a surprise this also comps back to early november. carl, back to you. >> thank you so much, rick santelli, at the cme. when we come back as we said earlier michael kors outperforming some of the luxury retailers in the past year. is that trend going to continue? look at that chart. we'll talk about that when "squawk on the street" continues. as we've told you this morning microsoft has named a new ceo satya nadella previously in charge of their cloud and enterprise business and everybody will want the first interview with nadella but the person who got it is actually the company itself, take a listen. >> in a software powered world what's a better place than microsoft in terms of being able to take all of this human potential that we have in the 130,000 and apply it to a world that's rapidly becoming more software driven. and their opportunity is what fundamentally drives me and got me to take this -- you know, raise my hand for this job. >> that is a piece of tape that was released by microsoft this morning along with the announcement, guys. interesting to see how he's going to carry himself and what's going to be a very heady time over the next few weeks. >> geez. look, it's a major opportunity to re -- redo a great american company, big balance sheet. they can buy a lot of companies. >> buy a lot of things. of course, he was referring to the increase in employees that will soon take place to 130,000 because nokia will close which is a company they did buy at the end of mr. ballmer's reign and have questions that transaction. >> you talk about hewlett-packard as a company who i think -- whitman comes in and she's outside and done some good things. >> 330,000 employees when she took over, almost three times the size of microsoft in its current configuration and yet changing the culture, though, takes a long time. >> it takes a very long time. and marissa mayer has been lucky because of the alibaba but she's trying to change the culture versus a fresh culture google, facebook, who takes the number one kid in every private or public school in the country. >> amazon, too. >> that's the magnet that other companies like yahoo! have tried to create, right? get those resumes. >> very early on in the conference call they talked about the increase in resumes but when you are at the companies that are just recruiting machines and they are just hiring the best and the brightest, microsoft has to get, maybe this gentleman can help that. >> one final point don't forget the stock price plays a role in that recruitment. >> yes, it does. >> and facebook or google and amazon may be in a better position than a microsoft. >> great point. >> at least given the previous moves in their stock. >> great point. a big event tonight in new york city, jim cramer's talk and book signing for "get rich carefully." at barnes & noble union square store. >> i'm in a feisty mood! >> you can see what jim's been doing this morning on twitter. and by the way, 6 in 60 is coming up next. >> thank you. fifteen minutes could save you fifteen percent or more on car insurance. everybody knows that parker. well, did you know auctioneers make bad grocery store clerks? that'll be $23.50. now .75, 23.75, hold 'em. hey now do i hear 23.75? 24! hey 24 dollar, 24 and a quarter, quarter, now half, 24 and a half and .75! 25! now a quarter, hey 26 and a quarter, do you wanna pay now, you wanna do it, 25 and a quarter - sold to the man in the khaki jacket! geico. fifteen minutes could save you... well, you know. so ally bank has a that won't trap me in a rate. that's correct. cause i'm really nervous about getting trapped. why's that? uh, mark? go get help! i have my reasons. look, you don't have to feel trapped with our raise your rate cd. if our rate on this cd goes up, yours can too. oh that sounds nice. don't feel trapped with the ally raise your rate cd. ally bank. your money needs an ally. all right. let's get 6 in 60 with jim. 6 stocks in 60 seconds. start with disney. >> interesting thing merrill puts it on the buy list the day before the quarter and they are positioning themselves if it goes down to buy it. >> nice upgrade on pfizer. >> oncology pipeline, it started getting a re-rating. they could use it. good news. >> morgan stanley on apple. >> we mentioned this morgan stanley said wearables will be gigantic. apple's become a defensive stalwart in this market. >> yes. deutsche on starbucks. >> don't worry about coffee prices, again, starbucks the stock was -- hasn't deserve to be at $68 but it sure found itself there. >> we haven't gotten to take-two. >> strauss said we got a billion in cash, that's half the market cap, but he did not guide aggressively and therefore, everybody hates him. >> furx. >> there's an irritable bowel syndrome drug and this is a terrible disease and they apparently have good news this is a little bit too speculative for me, like the pop stocks i'm studying. you go to be a little careful. >> you were doing a lot of home work on that last night. >> i have to because the pot stocks are up every day. i'm not a penny stock guy, but companies are 400, 500, $600 billion that are interesting. >> tonight? >> sandy cutler, let's find out. i know the tax rate was lower and people were disappointed, it will still earn five bucks a share. you get it to 60 $? i don't think so. the ag forward guidance i didn't care for, very inexpensive stock. this is a company that is going to do blackberry, i mean, snapchat that you can't maintain if you are at the justice department, you need legislation to stop them. >> we'll see you tonight, 6:00 and 11:00. >> and at barnes & noble. >> that's right. capital to make it happen? without the thinking that makes it real? what's a vision without the expertise to execute it... and the financing to make it grow? whatever your goal, it can change more than your business. it can change the future. that's why, at barclays, our ambition is to always realize yours. welcome back to "squawk on the street." december factory orders dropped 1 1/2%, a little bigger drop than we were expecting. the expectations were 1.8% to 2% and last month november the exact opposite at up 1.8% now becomes up 1.5%, remember, this is still part of the fourth quarter and about two, three weeks we're going to start to get revisions on our last look at fourth quarter gdp. it still has a three handle. interest rates are slightly elevated and stocks are slightly elevated. and dollar/yen slightly elevated. hobbs, simon hobbs, back to you. >> santelli, rick santelli, thank you very much. let's get reaction from steve liesman. i guess, steve, the big question remains the degree to which the data is temporarily depressed because of the weather. >> that's right. and especially this data here, simon, this is very volatile data. a little bit less of decline than forecast. economists look for minus 1.8 and coming in minus 1.5, you suppose you call it damning with faint praise. a big change in civilian and defense aircraft which really reversed the strength of the prior month. my guess it could lead depending on the shipments estimate to a little bit downward revision to the fourth quarter which was at 3.2. and inventories were up as well that's interesting in the face of lower orders, so that's going to be a question. we're definitely in the middle, guys, of an inventory readjustment and that's why you are looking at sub-2% growth compared to north of 3% in the prior quarter and north of 4% in the third quarter. karl? >> steve, thank you for that. steve liesman back at hq. the big news of the morning that microsoft has named satya nadella as its new ceo replacing steve ballmer, and he's already speaking out on the new job. here's what he had to say. >> in a software-powered world which better -- you know, what's a better place than microsoft in terms of being able to take all of this human potential that we have in the 100, soon to be 130,000 people and apply it to a world that's rapidly becoming more software driven. and the opportunity is what fundamentally drives me and got me to raise my hand for this job. >> short piece of video released by the company. for more on microsoft let's bring in josh lipton in san jose. morning, josh. >> hey, carl. after nearly six months of searching for a new ceo microsoft ultimately finding its man ride in redmond. he's a company man and has worked at the software giant in various roles for 22 years. most recently in charge of the company's cloud and enterprise group. microsoft's last earnings report did show that strong execution in enterprise focused businesses. you saw total commercial cloud revenue, for example, up 107% year over year. the commercial side of the business, a lot less sexy than the consumer side who wants to think about the cloud when you can talk about the xbox, but enterprise ultimately matters a lot more to this company's bottom line. accounting for 65% of gross profits according to citi. the changes at the board were just as fascinating. bill gates stretching down as chairman. analysts say he likely felt more comfortable stepping down with nadella now running the company. the two men, of course, are both technologists and john thompson replacing gates. while at symantec he grew revenue ten-fold but he oversaw a controversial acquisition of veritas and he left symantec in worst shape because of that deal and ballmer remaining on the board and there's worry will nadella have the self-confidence to stand up to ballmer. >> really quickly as we've been speaking this morning bill gates who, of course, is leaving as chairman as you said has put out a brief video clip as well. take a listen to this. >> satya's got the right background to lead the company during this era. there's a challenge in mobile computing. there's an opportunity in the cloud. and the various business groups he's worked in, he's driven innovation, gotten architectures put together that really meet the needs of our customers. >> josh, your reaction to that and what does gates mean he's going to be spending more time at the company on product and development not less? >> yeah. well, i think that, carl, with gates and nadella you have two men share a very common background, both technologists, backgrounds computer science and engineering i was talking to dan ives, he was pointing out likely gates will feel more comfortable nadella in charge. but you had kara swisher on earlier and kara was reporting that a lot of this move was predated on gates stepping in and maybe giving more help to nadella and advice and guidance when it comes to technology problems at the company. >> all right, josh, thank you so much. our josh lipton joining us in san jose. huge story for one of the biggest companies on the planet. for more on this microsoft news we are joined by rina freid, and we are a minority stake in recode and have a partnership sharing agreement. good morning. >> good morning. >> give me a to-do list, what are the first things nadella needs to address? >> windows and mobile would have to be at the top of the list. as you mentioned enterprise is a large part of microsoft's business, but basically their business is still very much dependent on windows and office. the office business has some threats, but windows and mobile is an area that they really need to focus on right away. >> well, let's highlight that. that's exactly what, of course, bill gates just said. he said the challenge is in mobile. it is increasingly a software driven world if you listen to what the new guy is saying but it's a software driven world through smartphones. the mobile strategy has failed, has it not? i mean, they even had to buy nokia in order to make sure there was a mainstream operator that still carried their software. how does he now take those 130,000 people and change the world around them? >> well, the critical part is that all the thousands of people that are working on windows phones have to develop a strategy that works and as you point out especially in the phone arena, so far microsoft has struggled they're in the single digits with the window phone and need to be in the double digits to have a meaningful impact. do they bring office and other parts of the company to the more successful android and ios. they've made baby steps in that direction but i think a lot of people think they need to embrace those rivals that clearly have a foothold. >> what's the reaction in silicon valley in your world to this choice? is it seen as a safe choice going internally instead of some of the splashier candidates that were out there? >> i think it's a pretty safe choice. satya's well liked within the company. i think a lot of people in silicon valley don't know him but certainly this has been out there for a while that he might well be the choice and i don't think there's any big shock or strong negative reaction. i think the question everyone's waiting to see does much change under him or do things continue pretty much as they are. >> and, ina, credit to the man, he has said to have basically emboldened the cloud operation because he went out and listened. he spoke to the start-ups and from in a sense ground zero from the needs of those customers he worked back despite the fact that ballmer was in charge. fair comment? >> he's done a lot of things, so he started out in their small to midsized business. he's worked on things, so he is someone with a lot of experience dealing with customers and companies of all sizes out there. so, he does bring a lot of that technical background. i think a lot of people in the business world probably don't know him, though. >> internally, what does he have to do to change microsoft's culture? we know a lot about the different silo's, steve ballmer already calling one microsoft making an effort to try to get rid of that. what else does he need to do there? >> it's a very siloed company. they've started to try to work to change that but it's very tough. i think one of the reasons that microsoft did go with an insider sort of ironically if you want to change microsoft, you probably have to understand how they work. they work very differently than most companies and i think a lot of outsiders would certainly bring new ideas but have a tough time implementing them. by going with nadella, i think they're hoping to find somebody ideally that can see how microsoft has worked and yet change it and that's going to be still a tall order for anyone including him. >> ina, thanks so much for your insight on that as well. ina freid joining us from recode talking about satya nadella the new ceo at microsoft. >> what a great day it for diversity an african-american a chairman of microsoft. it's been a busy morning, more breaking news at this hour, the congressional budget office out with its annual budget and economic outlook and your john har word is in washington with more. are we seeing a change in the fiscal picture? >> in the immediate term for the 2013 fiscal year they show the deficit coming in less than the last projection had been $514 billion for the current fiscal year. then it goes up a little bit or higher than the previous projections, still under $500 billion, because of the results of that budget deal which relieve part of the sequester. overall as a percentage of gdp, it shows the deficit below 3% for the remainder of president obama's term. that is a major shift from the 10% that it was at the beginning of his term when we had a deep recession and we had the very large stimulus bill. trillion dollar deficits. we don't have those now, but then, of course, when we get into the 2020s and more and more baby boomers start to retire the deficit goes up. the report also has new estimates of the effect of the affordable care act on the labor market and because it includes subsidies for lower-income workers that phase out at higher incomes, the cbo projects that there will be a diminished amount of labor offered for people as they move up that -- or move toward the phase-out of those subsidies. it's an estimate of 2 million people going out of the labor market over the next ten years in the cbo projection as a result of diminished work -- diminished labor effort because of the aca so that's something to watch as well. >> important numbers to watch, john, especially if you are looking for fortitude on reform on the hill, thanks so much or john harwood. target's cfo is heading to capitol hill today. john mulligan will begin his testimony in front of a senate judiciary panel as many as 110 million people, of course, were affected by the credit card breach over the holidays and we'll find out what target's top executives has to say to lawmakers in just a moment. welcome back to "squawk on the street." zynga is on the move, ubs is upgrading from a neutral with a price target of $6 a share citing new growth and margins adding the company's core operations have begun to stable use under the new management team. and the stock is urnt didly up 7% there, again, huge moves and, of course, they are buying natural motion the game maker as well, so keep an eye on those shares. >> now more than 8%. nice pop for zynga. following recent data breaches at major retail efls the senate judiciary commitsy is holding a hearing on cybercrime kicking off on capitol hill and the target vice president and senior vice president will be testifying. is it going to be a pile-on for lawmakers to criticize the retailers. >> that's one thing to watch for. of course, all eyes will be on john mulligan the cfo of target and watch the senators and how they watch the questions, are they more interested in what target did with its data before the breach, that is, were they secure enough, or how did this target handle this breach after it happened in terms of notifying shoppers and consumers around the country, that will give you a sense of where we might be going on capitol hill with a lot of these legislative proposals out there. another interesting piece to watch for today in this hearing is the role of u.s. intelligence in all this. we got a hint yesterday from senator mark warner from virginia who suggested that u.s. intelligence knows a lot more about this hack attack problem than it can say publicly. take a listen to mark warner yesterday -- >> quite honestly, i think we're going to see and i know from my role in the intel community this is a crime that happens daily to financial institutions, retailers at a level that frankly if most americans realized i think would find rather confounding. >> so, warner suggesting there that u.s. intelligence knows more about this than american consumers do. some questions possibly there. and then this interesting fight now that's breaking out between the financial industry on the one hand and the retailers on the other hand. financial industry groups putting out press releases yesterday including the american bankers association saying, hey, wait a second, the financial industry is on the hook here. every time there's one of these major data breaches we're the ones who have to eat the losses. they'd like to see the retailers pick up more of the financial burden, so that's a fight to watch as well. >> all right, plenty of blame to go around, eamon javers, we'll be keeping an eye on the hearing. thanks for briefing us and we'll be speaking to congressman lee terry later on show. the house will have its own hearing on the retailers and cybercrime tomorrow and we'll be speaking to him ahead of that hearing. up next on the show, markets obviously have managed to stand the huge losses we've had so far this year. is this the bottom? more on that after the break. 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[ indistinct talking ] [ male announcer ] right there in their trading platform. ♪ [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a...shell. get live squawks right in your trading platform with think or swim from td ameritrade. cozy or cool "meow" or "woof"? exactly the way you want it ... until boom! your mattress a battleground of thwarted desire. enter the sleep number bed. an innovative design that lets couples sleep together in individualized comfort. he's the softy: his sleep number setting is 35. you're the rock, at 60. as your needs change, you can adjust your sleep number bed, so you can sleep better together. the ultimate sleep number event is on now only at a sleep number store. with queen mattresses as low as $599.99 know better sleep with sleep number. in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. u.s. markets trying to recover some ground this morning following, of course, the big selloff so far this year, notably yesterday all three major averages as we speak are in the green. that's not the case for emerging markets and, in fact, in japan the nikkei is down more than 13% so far this year. let's bring in some analysis, brian bellstein is chief investment strategist with bmo capital markets and jim dunn ig joins us from pnc. is this the bottom of the selloff? >> good morning, simon. we're probably close. i think we can find our way to the 200-day moving average here 1707 so we probably have the potential for a couple more percent but we're certainly in range here where we're starting to see the bottom. >> brian, do you agree? >> yeah. i mean, again, calling bottoms is very difficult. i think a bit of a fool's dame on a near-term basis, but, yeah, we've had a successive -- excessive amount of selling especially into the weekend and on monday and typically and historically when you see those types of moves it usually for trends to a bottom. so, i would say yes. especially if you're looking at the rest of the year, i think this is an excellent time to be looking at stocks. >> yeah. matt malley, brian, put a note out last night when he drew our attention to the leverage in the market being at all-time highs and with the level of liquidity diminishing if you get that unwinding typically you go from he said overvalued to potentially a market that is undervalued, in other words, brian, he is suggesting simply because of the amount of borrowing that brought us to these levels that we have further significant downside to go possibly. would you have some sympathy with that view? >> no. because at the end of the day we could talk about how high leverage are in certain areas of the market, but leverage ratios in terms of the majority of sectors in america actually look quite healthy, number one. remember, simon, that generationally balance sheets have not been this strong from a cash standpoint since the 1950s. in this entire bull cycle quite frankly is all about the redeployment of cash where the prior cycle was all about credit and that's why emerging markets are having so many problems. >> i understand that u.s. companies are sitting on $1.8 trillion of cash. that wasn't the point i was making. the point that malley was making was that market participants have very high levels of borrowing in order to ride a market that seemingly was going in one direction only with very little volatility and that is the unwinding he's talking about. >> well, market participants in terms of institutions, but, remember, private client mom and pop america have not played this rally. institutions have. and that's a completely different story. we haven't even seen the cash come back into the market yet. >> jim, want to get your thoughts on what developed in the last 24 hours. the fear seems to have shifted beyond the emerging markets and china to the united states. real questions about the sustain ability of the recovery or at least the stronger momentum going into 2014. do you have questions or is this just a blip because of the weather? >> i think it's probably a blip because of the weather, maybe because groundhog saw his shadow and we'll get six more weeks of winter. there's no doubt that some of our economic numbers were impacted by the unusually severe weather we've had over the past two months, but u.s. economy is on solid footing. is improving. we continue to have a friendly fed. we'll have a new chairman. she's going to get tested here. but the fundamentals are in place and forgotten in this negative news is positive earnings we saw in the fourth quarter, sara, so a lot of positives that i think will cause this to be a blip as opposed to something more significant. >> i guess, jim, the question we ask ourselves did the market get ahead of where we were on earnings and the economy. that's the chief question, isn't it? >> i think there's no doubt, simon, that we pulled into 2013 some of the returns and certainly higher expectations, so as we ended 2013, expectations about what 2014 would be like were impacted and i think that sets up for some disappointments in that and as you know markets are all about sort of expectations in the levels of surprise or disappointment around that. >> the one comment i will cling to, jim, there's only six weeks of winter left. thanks very much for that and jim dunigan joining us. toyota expects the u.s. auto market to continue to recover this year and is forecasting a record profit. our phil lebeau has more on that in chicago. thanks to the weaker japanese yen. >> the yen has been so helpful to toyota and its investors. if you take a look at the quarterly earnings numbers and the last quarter of last year, remember, they're on the fiscal financial year system, operating profit $5.9 billion easily beat the street five times greater than the same quarter of twif 12 and they've raised their full-year guidance by 9% to a record of $23.7 billion for the full fiscal year. global sales forecasted to come in at 10.32 million vehicles. what's interesting about what toyota reported today is what the company said afterwards during meetings with analysts. it said that they plan no new assembly plants for at least the next three years. and they are close to capacity worldwide. by the way, their profit margins in north america they are feeling some pressure. they've cut their north american sales forecast by 1.1% in part because their sedans are struggling just a little bit and are not selling quite as fast as many thought they would originally. january sales down 7.2% but everybody was down due to the storms that hit the eastern half of the u.s. take a look at shares of toyota in the last year up 13%, trading down, oh, a little more than 1% today. we mentioned the yen. this has been so helpful to them. when i talked to toyota in the past we've talked to them when the yen was down closer to 75 or 80 and he said it's got to be over 90 in order for us to make a profit, manufacturing in china, there you see at 101, this is the real profit driver for them. one other note, fuji heavy reporting huge operating profits because of the yen and it raised its full-year operating profit target and subaru and fuji have been quietly, quietly doing wonders around the world in terms of sales and production. carl, back to you. >> something to think about if you think you figured out japan. still ahead, a lot more on microsoft's ceo and the challenges he faces. "the wall street journal's" dennis bermen will join us in a moment. the dow is up 37. [ male announcer ] here at optionsxpress, our clients really seem to appreciate our powerful, easy-to-use platform. no, thank you. we know you're always looking for the best fill price. and walk limit automatically tries to find it for you. just set your start and end price. and let it do its thing. wow, more fan mail. hey ray, my uncle wanted to say thanks for idea hub. o well tell him i said you're welcome. he loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. yea, and these ideas are across the board -- bullish, bearish and neutral. i think you need a bigger desk, pal. another one? traders love our trading patterns, now with options patterns. what's not to love? they see what others are trading -- like the day's top 10 options trades by volume -- and get ideas! yea i have an idea: how about trading that in for a salad? [ male announcer ] so come trade at the place that's all about options and futures. optionsxpress. open an account today and get a $150 amazon.com gift card when you call 1-888-330-3137 now. optionsxpress by charles schwab. and one hour into trading here are the stories we're squawking about. 7:30 on the west coast and the 10:30 on wall street. yum! brands up 9%. the parent company of kfc and pizza hut and taco bell reporting better-than-expected fourth quarter earnings and saying it's making progress reversing the sales decline in china yum's largest market. and mcdonald's has fallen to new 52-week lows and it's since recouped earlier losses. and data from the commerce department showing factory orders fell 1.5% in december but if you exclude transportation there orders were up 0.2 percent. carl, every data point matters. >> yes. the big news, of course, is microsoft this morning the company naming its third ceo ever thattia nadella and dennis berman is from "the wall street journal" and join us this morning. hey, dennis. >> hey, carl. >> what is the take away that we saw coming? >> a bit of an unproven quality right now, no one knows much about him or his strategy. if i were to say what the real story is or narrative for satya nadella, it's not about satya nadella, it's about bill gates, what's he's going to do and is he going to truly step back. if he does not, i would say there will be problems ahead of microsoft. they have to let go of the past and let the new ceo do his thing. i don't know if that's truly the case right now so far. >> unproven quantity and yet you want him to be left alone. there needs to be some carryover from the old regime. >> that's a very fair point. unproven quantity, but there's some real strategic questions for microsoft. what is this company. is it a consumer company, an intenterprising company, is it gaming company. if you were to ask them in a tweet i don't think they could answer in that few number of characters. so they have to make some choices but i think letting go of some of the past is a part of what has to happen with microsoft and having bill gates there in an undefined but sort of jedi role in the background i think could be distracting. >> yeah. i mean, i think, dennis, a lot of insiders will point to the fact that perhaps the biggest thing here is that steve ballmer is out. a lot of people are quite negative about his leadership when they -- when they speak off the record. they talk about him blocking ideas, being quite a difficult man for a lot of people to deal with, a lot of talent has left microsoft that perhaps might not have done. do you think that's fair comment? >> it's probably a fair comment. even steve ballmer himself in the story we had in "the wall street journal" described himself as sort of being out of touch and not with the times. so, by steve ballmer's admission i think it's probably time for him to go. john thompson the new chairman i think -- himself the nokia deal an unproven quantity, certainly a big investment and a big move into mobile devices. right now when i was speaking to some microsoft folks a few weeks ago they are expecting microsoft o/s mobile volume to be 10% to 15% of global sales. that's a bit of a push right now based on where things are. >> that's global sales. that's not smartphone sales. smartphone sales is about 4%. >> no. but they want to it be over the next few years, they want to get it to 10% to 15%. the investment and management challenge of putting together nokia is going to be a huge headache. figuring out the cloud when amazon web services is eating the lunch of a lot of big, established companies. i don't think nadella is necessarily a bad choice but there are a lot of real questions about what this company is, what it's going to be, what its vision is and i look forward to hear what he has to say in the webcast coming up later today. >> do you think we'll see sales of the consumer you've it ins like xbox and bing? >> this has come up a lot. and i don't know. i don't know the answer to that. but if i had to guess, my guess would be in the next -- sometime over the next five years xbox is not a part of microsoft. it's a high-growth company. you could get a lot of investment into it. it would trade at a much higher multiple than regular microsoft does today, so that would be my guess just on the realm of the activist investors who seem to be prowling and going after any prey they can. >> yeah. and speaking of which, it does sound like john thompson will be a bigger voice obviously. aside from just being chairman, dennis, he now has license to push for change even faster than he did before. >> yeah. of course, john thompson sima c symant symantec, a decent leader, i don't know a visionary leader at the scale of microsoft, but, again, there's really only one microsoft. i would say qualified, decent choices overall. but lots of -- lots of big questions here and i guess the stock moved yesterday. i guess it's moving a little bit today. >> yeah. >> but -- >> the tape's a little strange this week but your point's well taken. we'll see if nadella tweets, if nadella tweets what microsoft is about, dennis, that will be a response to your challenge. >> maybe this should be a "squawk on the tweet" question which is microsoft. >> not bad. >> and the characters allowed in a tweet. can you do it? i don't know. i think it tries to be too many things to too many people and that will be the challenge, what is this company. >> dennis, thanks a lot. we'll see you soon. >> thank you, carl. >> dennis berman from "the journal." while the major indices here are not near correction territory some sectors on the market are inching closer to that classic decline. sheila's back at hq with more on that this tuesday morning. hi, sheila. >> hey there, simon, and that's right, several sectors in the u.s. are getting close to the 10% pullback for the year and more than half of the s&p sectors like consumer discretionary, consumer staples and also energy are down more than 7% year to date. and when you're actually looking at things on a subsector basis we're already there in some cases. just take a look at retailing. got hit really hard after the lackluster holiday season. the s&p specialty retailing index down 11% this year, so solidly in correction territory. also the insurance sector. one you may not have thought of. also in correction mode. down more than 10%. led by names like chubb and progressive. now, of course, the one area everyone is watching very closely is the small caps within striking distance of that correction territories from its high in december 23rd. so, that's the picture in the u.s. we are definitely in correction watch for the overall indices here in the market, but, of course, as you know very well, it is a different story around the world. just take a look at what's happening in japan, nikkei in correction mode, down more than 13% year to date. also russia down more than 10%. take a look at turkey. this is interesting because we're definitely in correction watch here. down 8%. similar story in south america, brazil and chile also in correction mark. and, of course, this is the big question here with all of these emerging markets under pressure, what are we seeing here in the u.s.? is it just a pullback? is it the start of something deeper? that, of course, is the big question, carl. >> all right, sheila, thank you very much. let's get across the room over to dominick chu and get a market flash. dom? >> how about furx pharmaceuticals on a strong run after its experimental diarrhea drug was successful in a pair of large clinical trials, it alleviates diarrhea and abdominal pain associated with ibs or irritable bowel syndrome, up 140% in 25 times its average tradie ining volume, maybe a ch for some, but over to you, sara. >> i got the pun. simon shaking his head. coming up on "squawk on the street," michael kors shares up. should you be a buyer with this one? when we come back. mine was earned in korea in 1953. afghanistan, in 2009. orbiting the moon in 1971. 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>> the company has a great brand right now, it's the leading brand in the marketplace and they are taking share from coach, so we're not surprised by the numbers. our real concern is where do you go from here. if you look at coach, they have $5 billion in revenue and michael kors is almost at $4 billion today, excuse me, about $4 billion at the end of next year, we think that's a bit of an issue with current valuation and expecting the numbers to continue to move. we'd be cautious on the run-up and actually look to move into some cheaper names like actually a fossil where fossil has the license for michael kors. >> interesting. a lot of it's baked in. on this victory lap that michael kors should be taking on this quarter, who is their customer? is it luxury enough to sort of in this bifurcation of the low-end market and the luxury market be protected and to continue to see strength? >> well, sara, do you know what's really interesting is that the true luxury brands, you know, the thousand dollar and up brands think lvmh, thing the other luxury brands, they've are raising their prices 20%. it left this hole in the middle of the market for aspirational bags for the $200, $300, $400 bags and that's what they are capturing and the coach bags were up 14% and the luxury market was up 10% and you add those two together and that's kors comp, the 24% this quarter, so that tells the story. >> you know, i'm fascinated about the role that michael kors has here. if he wasn't a billionaire before today, with today's rise he is. it's a hugely successful ipo. wall street has made kors a very rich man. and then i see, randy, that last week he actually unveiled a collection for fall of 2014 which he gleefully told style.com would crush wall street in its design. the suits are made of cashmere and flannel. but they have drawstring waists. so, the suits look like pajamas and everybody has a beanie. randy, do you think that this is what they will be wearing in the trading room of jeffries in the fall of 2014? >> no. i don't, actually. look, i think michael kors is doing a good job of expanding into the men's business. coach has paved the way to bring women's type brands into the men's arena. they work very well in the asian market. but, look, i think the major driver of kors from here has to be its women handbag business and as i said earlier, it's more about a market share game. it's more about where can the numbers go in north america. i think that's where we really have to see, you know, kors from here. it's not going to be an extra driver for the stock with the men's business but it's more about the women's business which we think is limited. >> would you agree with that? can men's wear do it for them or is it more of a sidebar? >> you hear of the brands, whether it's kors our coach going into the men's business and that's a big driver but as randy said, it's about the women's business, that's the driver and the bulk of it. the men's is incremental. kors is launching a fragrance this fall but, you know, certainly the meat of the business is the women. they drive the handbags. they spend more and more every year on their handbags and accessories, so that's really what you want to focus on. >> given that's the full story, randy, and i know you think shares are looking expensive, but how much more market share can they steal, can michael kors steal from coach? >> i think it's a pretty simple math equation. if you look at coach, they have a 30% market share and it's a $5 billion business, a billion of which is, you know, ground in japan. if you think about the math equation and you apply it to kors, kors is already a $3 billion business. i think the market share in the u.s., in the united states, is obviously moving higher for michal kors. i think you have another couple years left in terms of market share gains in the stock and you'll be thinking about how does this company grow outside the u.s. into asia and then into europe which is actually a very bullish area for them. however, it's all captured we think in valuation today. >> all right. well, thank you both for joining us on this high flier today. stacy, randy joining us on michael kors. carl, are you attempted by suits that are just starting with a drawstring? >> i'm tempted by that video we saw there the jacket being worn by the microsoft communications chief interviewing satya nadella. >> what a way to commune comate communicate to the rest of the world, get your own pr guru to interview? microsoft is selecting someone within its ranks to ask satya nadella to be its next ceo, can he gain the same respect and instill more inspiration into microsoft? we'll find out in our boss of all segments next on cnbc. 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[ male announcer ] truth is that won't relieve all your symptoms. new alka seltzer plus-d relieves more symptoms than any other behind the counter liquid gel. oh what a relief it is. back on "squawk on the street." let's get to the cme group and rick santelli is here with the santelli exchange. good morning, rick. >> well, good morning. you know, when we went through was kind of needed a defibrillator so to speak, so it's all about code green, okay? the fed basically got out the paddles and tried to joeltd tlt economy to life. at this point creating lots of capital, leveraged capital, you end up with several categories. and in the beginning, especially it's hard to differentiate. i'll give you an example. if we have the type of capital that's only seeking aggressive leveraged returns you may have issues like the whale and jpmorgan chase or you may have entities like various institutions that normally do more traditional type finance and structured finance just basically looking at that thinking about all the effort, the work, and just looking at a position. mark it up 10, 1520, times on leverage. the old model for long-term capital. we all know how that ended and how it began. so it really is in many ways when it comes to capital about the good, the bad, and the dusty. i'll give you another example. if you look at the following charts. we are starting to see a difference yags from the paddles to try to get the economy going from the lack of sustainable good things happening when you shock the economy with boatloads of capital and it's not just the u.s. anymore, of course. there's lots of central banks in that game. some at various points in the cycle. what tends to happen on the charts is this time around the hyg is going down and the lqd is going up. the lqd is a proxy for more investment grade approaches. the hyg more leveraged, high yield approaches. this is a good thing. when you see treasuries en vogue and yields going down, usually both charts, usually hyg goes more because you want bigger outside returns. okay. now, let's look at the good, the bad, and the dusty and look at the dusty in particular. at the end of last year according to financial times and irish financial news, you have companies that have a boatload of capital getting dusty. apple's numbers are 150 billion. microsoft, 80 million. they're in the news big time today. you look at google, mid to upper 50s. verizon kind of in the low to mid 50s. now, is this a bad thing? no, it's not a bad thing. but you don't like the whale trade is bad end for leverage capital this is a dusty end for it. we want to see companies built, new technologies p that is the good side. when will that occur? i can't tell you but i can tell you one thing, the price of using those paddles over and over and over is getting old. you know, initially it was all about the big reflation trade. but the reflation trade is pretty late. and if you're looking for any type of inflation, it's when those piles of dusty capital move, you'll get it, at least that's my feeling on this subject. back to you. >> rick, thank you so much. rick santelli. well, the markets overall are not yet in correction territory, some of their main equity components already are. we're going the find out which and what that might signal later on. when you order the works you want everything. an expert ford technician knows your car's health depends on a full, complete checkup. the works. because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. get our multi-point inspection with a a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup. only at your ford dealer. in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. fifteen minutes could save you fifteen percent or more on car insurance. yeah. everybody knows that. did you know there is an oldest trick in the book? what? trick number one. look-est over there. ha ha. made-est thou look. so end-eth the trick. hey.... yes.... geico. fifteen minutes could save you... well, you know. welcome back. big news of the morning. new ceo at microsoft immediately, satya nadella. get an opportunity to get off the set and talk to a fairly large holders of the stock in the community. of course, this is not as though it came as shock to many people. nadella's name has been around for months now at the key insider candidate. none the less, would say a middling response, if you will, from the shareholders and those looking for near term catalysts perhaps disappointed that there wasn't something that accompanied the release of his new appointee as ceo with a capital plan of some kind. perhaps something unexpected or at least there seemed to be some expectation that you might get something on the allocation of capital from a company that has $84 billion in capital. still some word out there that from people who would like to see the company split in terms of consumer or getting out of businesses where they're spend aggregate deal of money with very little return. statemen at the same time, one might expect the larger shareholder are encouraged by the focus on enterprise that seemingly will continue here under the leadership of thnadella and the appointment of mr. thompson as the chairman taking over from the founder bill gates. yes, gates is going to perhaps move into some new role where he conceivably for a time will be busier with microsoft business. but one would anticipate his foundation will continue to take the bulk of his time. so middling response to something that was not fully unexpected but perhaps not completely embraced by the shareholders. >> i'm wondering what the potential here is for an activist to get more active in a company like microsoft when you talk about spinning off consumer businesses. i know jim cramer talking about xbox and skype and the businesses that potentially have other kind of growth opportunities outside microsoft or have been losers like bing. >> yeah. right, bing and nokia coming into the fold and many people wondering why that's the case. i don't know that you're going to see an activist presence at this point. value act is a large shareholder here. it's hard to mix it up although we talk so off about mega cap companies play a role despite small percentage ownerships. in big cap tech there are probably other names we might focus on and activists are probably focusing on the likes of a cisco, for example, that may be easier prey. >> better target, yeah. >> i'm very mindful of the commentary we got from google on the earnings call about why it was selling out of motorola. they see handsets as a bulk purchasing side of the business and they need to concentrate on high investments of the market. and you then can trust that to microsoft which is buying up here and now two tech companies going in very different directions. >> ceo of box just tweeted on microsoft aaron levy writes, microsoft has one final shop to reboot the empire. this is going to be a very interesting decade. and by the way, for those wondering about the pro nunks yags of the same, it's saktya nadella is how you pro do you understand his name from a source who would know. >> i've been pronouncing it wrong. >> as have i. we've got to say it right. satya. we've been hanging on moderate gains. david, i'll see you in a couple of weeks. >> carl m a great trip. stay safe. if you're just joining us this morning, here's what you missed earlier on. >> welcome to "squawk on the street." here's what's happened so far. >> if you want to participate in the profit pools of the future and greatest amount of growth in the future, you need to be committed and you need to ride through the volatility in order to enjoy the benefits. >> just as in 2013 the 30% gain in stocks was driven by the qe, reversal is taking a lot of that qe fluff and i do expect us to continue if the fed continues on an air path to taper. >> they have named satya nadella as ceo and john thompson is named the chairman of the board of directors. >> very controversial. a lot of people want everybody gone from that board of directors. >> gates, the company says, will devote more time to the t company. >> really? >> supporting nadella in shaping technology and product direction. so the notion that gates is simply going away apparently not true. >> it's everything everyone thought it was going to be. gates stepping down as being the technology adviser to satya and picked the inside choice. >> a lot of outsiders would certainly bring new ideas but have a tough time implementing them. by going with nadella they're hoping to find somebody ideally who can see how microsoft has worked and yet change it. >> we've had success of amount of excessive amount of selling especially end of the weekend and then on monday. typically historically when you see those types of moves it usually portends to a bottom. good morning. we are live here at post 9 at the new york stock exchange. let's get a check on markets. bouncing back a bit here after yesterday's brutal sell-off. the dow yesterday had the worst day in months. now, recovering just slightly. up 39 points. s&p and nasdaq up in green by half a percent. shares of gap are rallying this morning. ubs upgrading the retailer to buy saying gap should deliver earnings growth 15% or more over the next three years. meantime, shares of take two interactive are down big time this morning. even though the third quarter revenue and profit did top analyst estimates the video game maker did give a disappointing 2014 outlook. probably the main reason behind today's decline. road map begins with what else but microsoft after a long six-month search. satya that at the time la is the ceo replacing steve bammer. we'll tell you what this means for the stock and the future of microsoft. from microsoft to the markets, stocks are menti s ars are mixe. tom lee, the chief equity strategist at jpmorgan is here to tell us what happens next. target's ceo on capitol hill this morning taking questions from congress about that massive breach of customer information. we will ask one congressman what he wants to hear from target later this hour. but back to the news of the morning. that would be microsoft announce that it has named satya nadella as the new ceo. nadella will be the third ever person to hold that post at the company. let's listen to what he had to say about why he was interested in the job. >> in a software powered world what's a better place than microsoft in terms of being able to take all of this human potential that we have in the 100, soon to be 130,000 people, and apply it to a world that's rapidly becoming more software driven. and the opportunity is what fundamentally drives me and got me to take this -- raise my hand for this job. >> there he is in the video put out by microsoft speaking to the senior communications director. brett is the senior analyst with ubs. brett, looking at the internal memo here, our job is to ensure that microsoft thrives in a mobile and cloud first world. that is going to be his job. do you have faith in he's going to be able to deliver? >> satya delivered the last two decades. he's turned the server business around to fight oracle and others in the database space. and the cloud space he's revolutionized what microsoft has done there and we think he can make the move. it's definitely going to be a huge challenge. it's definitely has and continues to be the biggest challenge that microsoft faces. my kids continue to put apple devices in their pocket, not microsoft devices. so he's got to change that. i think it's going to take some time for this to play out the p nokia acquisition is going to be huge undertaking. we think it's not going to be an easy transaction. so we think that satya, we've been saying all along that he's the best pick and now that gates is back, we think that's also very encouraging. when you look at other technology leaders like mark at sales force, mark said the only guy who can turn around microsoft was bill gates. here we go now, bill gates is going to be reengaged a third of his time back at microsoft. that's encouraging and satya has got a wing man. he needs a copilot and we any that there's probably no better copilot than bill gates. >> all right. interesting take. i want to bring in also kristina warren, senior tech analyst at mash. kristina, clearly there are a number of challenges for mr. nadella. what's your take on picking a 22-year insider of microsoft to take these challenges on? >> well, i mean, i think it really signifies that microsoft is very much going to want to continue to position itself more as an enterprise company and less of a consumer company. i think it was interest that he said several times in the memo we are a mobile and cloud first company, rather than saying mobile first. putting an emphasis on cloud. they really want to be more like ibm rather than apple. so for investors who are looking for more consumer oriented microsoft, this isn't really that sort of bic. >> what does it mean about hardware in general? >> i think that's interesting. i'm not sure yet. i think that right now the big focus at least it seems is going to be on the software side. hardware was menged little. that's interesting, especially since some of the most innova innovative things that microsoft has done frankly in the last ten years has been on the hardware side. >> wouldn't it be weird, brent, to have your surface revenue doubled and impress everyone in the last quarter but to back off of hardware, where it be consumer or enterprise? >> i agree. this is a software focused story. hardware is part of the name. the problem with microsoft and hardware eco system is the current hardware is not as good as when you go into an apple store and look at the experience that you get software and hardware integrated. i think microsoft is going to have to take on that role. that's why they're doing the nokia acquisition. that's why they built surface. that's why xbox is doing so well is that integration. so we don't think they necessarily back off. i don't want them to focus entirely on it. we do think it will be an important component of the story going forward. >> kristina, he has to redefine the purpose and mission statement at microsoft. how much time does he have to turn that around and to start to see results from the pr business? >> i think that's going to depend on what investors and board members say. i think having gates as kind of his wing man will give him some time but he needs to start making moves within the next couple of quarters towards making big inroads in the cloud business, especially against some of their primary competitors. and really showing that they can build a business that can survive perhaps, you know, the death of window or office of some of these traditional cash cows. really i'm looking at the next three quarters to see real moves from him. >> brent, do you see any big moves in the next three quarters? >> no big moves. we don't think he's going to solve the xbox business. we don't think he's going to sell bing. bing is the big data engine for microsoft. so i continue to hear they're going to sell off bing and sell off these other businesses. i don't think you're going of see dramatic moves. that's only issue with the stock now is we talked to investors, last year was a big run in the stock. we're not forecasting as big a run this year. we think it's going to be more of a steady climb than the 40 plus percent return that you saw last year. so if you want to take one negative away, it's probably now all of the systems stock and evans looking for the next catalyst which will probably most likely be earnings out in april. >> all right, thank you both for joining us here on the top story of the morning on microsoft's new ceo. our own jon fortt was one of the first to float nadella's name as ceo in october of last year. jon sat down with nadella right here on "squawk on the street" and asked about both that prospect and the continuing and sometimes criticized involvement of bill gates. >> steve's very much the ceo, i am really, really busy and excited about the enterprise job that i have. and i'll leave it at that. bill is, you know, as you said, he's general of our board, engaged with us on a part-time basis and, you know, he's sort of asked the precision questions on how we are doing on any particular product and technology. there are a lot of areas of the enterprise business that he cares deeply about. >> and on that let's switch over to the markets. there's a look at the dow intraday. you can see we lost some gains from this morning. stocks trying to make a comeback. is it time for you to start thinking about or at least thinking about buying the dip? tom lee of jpmorgan has some answers when we come back. first though, rick santelli, what are you watching this morning. >> i'm going to be watching three topics. all of them involve japan. we're going to try to dig down under the kerry trade, the grand plan to a nbonomics. bottom of the hour. ♪ ♪ ♪ ♪ [ tires screech ] chewley's finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. get the most extensive charting wherever you are with the mobile trader app from td ameritrade. little bit back from yesterday. look at consumer discretionary. one of the better performers on the s&p today. dom chu has more on that. >> a lot of news in that consumer discretionary sector. you got, of course, michael kors on the luxury side, big winner after knocking the ball out of the park. fossil is higher. young brands also on the rise beating street estimates with fourth quarter profits. meanwhile, gannett is reporting lower quarterly revenue and profit. tv revenues were expected to jump 100% this quarter following its acquisition of belo. a good day for consumer discretionaries. quite the gamut if you look at the companies being represented. back over the you. >> thank you, dominic chu. stocks in general are back in the green this morning following yesterday's massive sell-off. look at the economy a little bit closer. there are some major red flags out there right now. steve liesman is back at hq with the latest on that. 2014 was supposed to be a good year for the economy. >> that's right. and the question now whether the slowdown we've seen in the data and profit reports is just normal give back that ended 2013. whether it's weather related or the beginning of something worse. after a steep decline in '09 we've been expecting a strong rebound. instead, growth averaged a lackluster 2 1/4 percent. not strong enough to put millions of americans back to work. every time it seems the xi is taking off it seems to find a way to pull back. now come these weak reports. december jobs, 74,000. the backdrop, three of month average, 182. december factory orders, down 1 1/2%. three-month average, almost 1%. ism, 51.3 against a backdrop of nearly 57. the weather was colder than normal in december and january. that could mean people didn't shop for cars or houses. and that some houses weren't build especially in places like the south where cold and snow isn't normal and it's normal to follow strong quarters with a pullback. another worrisome signed of what's happening to the earnings outlook. this could have the markets spooked more so than the data or what's going on at the federal reserve. the consensus forecast for both the first and second quarters for s&p profits have declined sharply. especially big markdown to just 4 1/2% for the first quarter. profit growth still seen accelerating next quarter but optimism is decline from july when the consensus look for nearly 14% growth. now, it's just at 9.2%. those profit forecasts could be a key to the direction of the market. as for the economy, it's going to take some time to figure out what's the trend and what's the cycle. sarah? >> the other concern, steve, and i know there's been a lot of talk about this is inventory adjustments and how that could hurt the economy. how is that playing out? >> at the end of the day almost all resgss and slow downs are inventory related. to much stuff on the shelves relative to what's being bought. we have to have an inventory correction. question is does it take us one quarter or longer and a little bit deeper than that? that's something we're watching closely. >> big questions and all ahead of friday's all important government jobs report. steve liesman, our economics reporter live at hq. take a look at all the major averages. all in the green following the big sell-off on monday. and big question on the minds of investors is, of course, what happens noi now. let's go to tom lee, chief u.s. equities strategist. good morning. >> carl, how are you? >> i'm not bad. i don't know if you have a monitor there, tom, but this is how it's playing in the papers. worst day in more than half a year. here's the front of "usa today." they put a bunch of red arrows on top of it. in front of the business section, fear reigns on wall street. is psychology here over done? >> well, you know, i think it's always good to be a bit contrarian when you see a lot of headlines like that. i think it's pretty encouraging. what we are telling clients right now is, this is a pretty painful pullback. it could be, you know, some data related but it really looks like a lot of position squaring and that means we want to be buying that dip. i don't know if that means you buy the dip here you don't have a risk of losing 2%. if we're in a bull market, this pullback is giving us a good entry market, something we haven't seen in months. i'm pretty encouraged. i do think people have to be careful because, you know, doesn't mean we're at a turning point here but i do like the market here. >> right. do you like it at the 200 day which is sort of where we are appearing to boubs here, tom, short term or do we -- would you rather see something cleaner, more fushlgs something that takes us down 10%. >> i don't think we need to go down 10%. i know there's a lot of people calling for that. one reason is i think rates, when you look at corporate bond yields. they've been behaving a lot better than equities have and i think the fact that gasoline is down means the data is going to start looking better for consumers in coming weeks. i think the 200 days might be an entry point but as you know, a lot of people when markets are down they have a hard time buying. so i think what you have to be willing to do is buy it and be willing to take a bit of a drawdown or some sell-off here. >> tom, should american investors and u.s. equities be spooked about what's happening in places like japan which has seen a correction of 14% now off of the peak at the end of december and other places like the emerging markets? russia is also in correction mode. >> sarah, it's a really fair point. i think it's a little scary in japan. down double digits. in some ways the japanese market is high beta to the u.s. i think you almost want to say if the u.s. is down five you probably expect japan don to be down ten. em broadly as much as we can say it is i'd you sin kratic for each country, a broader pattern of currency and risk adjustment taking place and i think -- i know a lot of investors are worried about china. what matters more to american households who really ultimately drive the u.s. economy is gasoline and interest rates. and both are actually moving in the right direction. they're important now. i'm not trying to ignore it but what's more important is the u.s. gdp story. >> with that in mind, tom, do we want to be buying names that have more emerging market exposure or less? >> now, this is where it's going to sound contradictory. i think stocks with em exposure, we wrote about this last week, actual little corrected a lot more. trading at almost a three pe discount. if you look at the s&p 500 today, the cheapest way to buy it is to buy stocks with a lot of sales to emerging markets. i think it's the largest in ten years. and it makes sense if the markets are going to rebound and it leads to a beta recovery those sold off hardest will bounce the most. >> that's putting some faith in currencies working for you, right? and these economies not imploding with higher rates. >> that's right. that's assuming -- this is really believing that it's not going to turn into a larger crisis. you don't see the pieces in place to really suggest a much larger issue is at work here. if it does, obviously the thesis is going to change. >> tom, always good to get your take after a pretty good year last year on your calls. we'll see you next time. >> great. speak to you soon. >> tom lee. coming up here on "squawk on the street," target's chief financial officer on capitol hill facing congressional questions about the biggest data breach in u.s. history. congressman lee terry will get his turn to take questions. he will question the target cfo tomorrow but first he will appear here to tell us what he wants to learn. 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why are they there? are the industry standards too weak? is that where we blame is the industry standards? there's lots of things we need to find out in this hearing tomorrow. >> why aren't the credit card companies present? >> we want to find out what the holes were. how were they able to exploit these individual -- had different smls and different malware was used. we need to figure out why. why are almost 50% of the hacks and data breaches in the united states? so figuring out why is the first part of finding the right solution. >> yeah, i mean, figuring out why is a good step but finding the solution requires legislation here. how heated of an issue is this going to be and do you think these hearings are going to move the need to get these passed? >> i do think the hearings will move the needle, particularly agent is is like with homeland security where they need additional clearer authorities on when and how they can protect retailers when they find out about these malicious malwares being used. there is an area for us to be legislatively active. what i'm concerned about is whether or not congress should set the standards for security for our retailers and hotels and other businesses. at that point in time i think we have to worry about whether we're providing a road map to these criminals, sophisticated criminals and teaching them or giving them the map to exploiting our systems. so we got to really figure out the right way to protect consumers. >> congressman, you know, there's been a lot of reporting about target's history with all this, saying that back in the day they could have instituted more protections but there was a fight between the store guys and the credit guys. how interested is the committee in that and are you more going to go where we are now and how to fix the problem from this point forward? >> well, how to fix the problems our first issue. bealso want to find out if those industry standards, whether it's the chip, the credit card with the chip and use of a pin over a signature. target tried that, gave up on it, geez, a decade ago. the rest of the world is moving in that direction. it does seem to add an additional layer. they're undoubtedly there will be discussions whether we need to move to that level of -- by the way, the payment industry is already moving there. they set a deadline of october 1st, 2015. do we need to speed that up? >> and i know target and neiman-marcus are the poster children here. what's your understanding of how wide spread this is happeningnd other we retailors which don't by law have to disclose those kinds of attacks? >> much wider than being advertised. we're going to go in that with the secret service and fbi in tomorrow's hearing. they probably aren't going to be able to disclose the names but just in the last 48 hours all the hotel chains that have been explosioned, too. their customers data. there's a reason why these hackers are focusing on the united states. >> all right. thanks for briefing us. good of you to join us ahead of the hearing. congressman terry joining us here on "squawk on the street." we're going to get the closing bells in europe in a few minutes time. we're going to talk about the kind of session they've had there and what it might mean for our afternoon session here in just a moment. here's a word you should keep in mind "unbiased". some brokerage firms are but way too many aren't. why? 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[ male announcer ] live a full life. the new lexus ct hybrid with an epa estimated 42 mpg. ♪ the further you go, the more interesting it gets. this is the pursuit of perfection. let's bring in simon hobbs as we count you down from the close on the uk and across continental europe. flattish, simon. >> yes. those markets overall, if you took away, flat. down 1%. the gain wes had here on this side of the atlantic have -- the losses have been cut there. jpmorgan saying the excitement is building towards thursday's ecb meeting. however, all the choices they're thinking about is only marginal on the impact of the economy and the ecb will undershoot if inflation target for many years to come. on that note, let me show you how we're trading now. europe, the united states, clearly you see the that january has been worse on this side of the atlantic than europe so far. but the earnings are really quite poor in europe at the moment. reuters is reporting that of the roughly one quarter of top companies reporting, 45% have disappointed on their earnings. today the arm holdings that makes -- designs the chips for apple. dutch telecom carrier cutting 14% of its national workforce. oil and telecom, say reuters, those have disappointed the most. today bp disappointed, raising $200 million provisions for the gulf of mexico disaster. premier oil bounced partly because the ceo is leaving. ubs is a standout today. wealth management really doing the business for ubs, particularly with the inflows from asia and the pacific region. up now 8% as you can see, sorry, that's the year to date trade. up 5% on the session so far. interesting comments from the ceo. he did an interview somewhere else suggest that the emerging markets sell-off had been over done but on the interview of record with cnbc, he was a little bit more sanguin. take a look. >> i do think make a prediction about stabilization of this environment is quite hard, so we are not counteding on markets to address our targets. we are working very hard on that. and clients' confidence, we come back only over time. >> the ceo of ubs there knocking it out of the park in terms of earnings. >> we await the ecb and boe meetings on thursday. let's bring in now bob pisani here on the floor of the big board, see what's moving. >> we talked about this morning, oversold conditions. we talked this morning about the arms index, the vix being at the highest level in over a year. 200 day moving average for new york stock exchange, down around 60% the the lowest it's been in a long time. being over sold is not enough but at least it's a start. look at the s&p 500. it's been very steady. german close, the european close was also fairly steady. not far from the highs for the day. we mentioned yesterday the vix, historic high activity on the vix option level. i mean, all-time high levels in terms of the options there. vix is now down below 20. as general rule of thumb i pay attention to the vix when it's over 20 but it's below 20, historically, i have not seen it be that significant for the over whaul markets. what's moving most is the stuff that's over sold. that makes sense on a bounce. all of our beloved etfs around emerging markets, indonesia, turkey, russia, mexico, everyone's beloved poland. that's all moving on the upside. these are the ones that got hurt the most, moving the most. also moving the most in commodity etfs. they've had a rough year. there's a broad index one. djp commodities. base metals, coal is coal stocks, kol, this also had a rough year. bouncing as well. kors incredible numbers. not only the beat but the raising of the 2014, raising the revenue numbers 10%. that's a new high. yum brands was disappointing on the u.s. sales but everybody thought the guidance was good enough. 20% groetd. eaton corp., same situation with clorox. clorox talked very specifically about currency effects. so bottom line here is the merely being oversold isn't good enough but for the moment watch that nonfarm payrolls on friday. that december print, that could be revised upward and could be a major factor on friday. >> let's hope it's revised upward. let's get more on the markets from rick santelli this morning. rick? >> carl, when it comes to japan, i have the guy, i always have the guy. trey, what's the name of your fund? >> i own kanai capital management. they're going to have a default. >> whoa. so you're the man. all right. let's go down that road. what do you see going on in japan? i knee know that there's the kerry trade and we talk a about that a lot and it's a wonderful chart. let's go more from 245 that invr level to the capital lel on the homeland. >> people are trying to talk about how the yen is seeing a massive bounce. it's bouncing because of a capital flow if japanese investors, interest rates are so zero. when the other world shows some signs of weakness, they run home. the yen is rallying a little bit. in the long term the yen has no hope. i see the yen going 2 to 300 to the dollar. >> interest rates remaining low is something that's true. their ten year is in the 60 basis point area. do you see any risk? what's the risk that that moves higher which which you think the trades hurt when the yen moves. what about when the rates move? >> here's a common "discovery" misconception. the misconception is that they have weaken the yen to guard themselves against the bond crisis. it doesn't work that way. think of what a bond is. iou. if i land you money in yen and i hold this piece of paper, and you're dropping the value, what you're doing to pay me back in, no way am i going to hold that security. it accelerates the debt crisis, it doesn't prevent it. >> how many countries -- you visited a lot of countries in the last year. >> mexico, cambodia, colombia, argentina, a lot of different places. >> a lot of emerging markets. what observations firsthand did you have? >> i met the government officials in mexico city. you know who beat me there? japanese investors. do you know what they were doing? buying upland. they're buying up sources of energy. anything they can to get their money out of yen. they don't want to sit there and hold yen. they want to try to diversify around the world. they beat me by two weeks. and the tone of the conversation when i presented what was going on in japan, the mexican government officials were saying, oh, this makes perfect sense now except they said it in spanish. >> sounds like the '80s in pebble beach has moved south. the demographics are no secret. i heard david faber say many times it's the whole kind of depends generation there. what is going to occur and what trigger is that going to make on the ownership of their debt? population of ages and sell it. >> talk about productivity. by 2030 there will be three retired people for every one person in the workforce. how in the world is that sustainable? it just isn't. >> that's not just a question for japan. that's a question for a lot of developed economies. one of which we're standing in the middle of. thanks, trey. good man. back to you, carl, sarah, simon, the whole gang. got some interesting obamacare numbers coming out of the cbo's number released today. john harwood has that in washington. john? >> hey, carl. this is going to fuel the arguments on both sides of the obamacare debate. for the critics of obamacare, what they project, congressional budget office, is that in 2017 there will be 2 million fewer workers than there would otherwise have been. they say that decline in labor supply will slow economic growth. they didn't break out exactly how much it will slow economic growth. for the supporters of obamacare, they will point out that the decline in work, the 2 million fewer workers i just mentioned, is almost entirely because workers will choose to work less, not because employers will hire less. why will they choose to work less that's because the subsidies under obamacare phase out as you make more money so it reduces your incentive to keep working if you're going to lose your subsidies. on the other hand, premiums came in, have come in 15% lower than cbo previously estimated. they also find no compelling evidence that the obamacare law has increased part-time work. so it's going to reduce the debate on both sides and continue at pace, carl. >> all right, john harwood, political football, indeed. coming up, it is the news of the morning. satya nadella will succeed steve ballmer as ceo but who really nadella? we'll introduce you to the man to be the next ceo of microsoft, next. in today's market, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price, maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. open to innovation. open to ambition. open to bold ideas. that's why new york has a new plan -- dozens of tax free zones all across the state. move here, expand here, or start a new business here and pay no taxes for ten years... we're new york. if there's something that creates more jobs, and grows more businesses... we're open to it. start a tax-free business at startup-ny.com. we're open to it. and it feels like your lifeate revolves around your symptoms, ask your gastroenterologist about humira adalimumab. humira has been proven to work for adults who have tried other medications but still experience the symptoms of moderate to severe crohn's disease. in clinical studies, the majority of patients on humira saw significant symptom relief, and many achieved remission. humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. blood, liver and nervous system problems, serious allergic reactions, and new or worsening heart failure have occurred. before starting humira, your doctor should test you for tb. ask your doctor if you live in or have been to a region where certain fungal infections are common. tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. you should not start humira if you have any kind of infection. ask your gastroenterologist about humira today. remission is possible. coming up, the worst starts of february for the market since 1933. no need to panic though. we have your correction protection trade coming up. the battle for trader of the year getting interesting. two of our competitors are making big moves in their playbooks today. find out what they are. we're also going to talk to a hedge fund manage whole always has a correction day in his back pocket. he is here with his latest shorts. all straight ahead, carl, at the top of the hour. >> scott, thanks so much. as we've been reporting, microsoft has now named satya nadella as ceo. bill gates will step down as chairman and become a technology adviser to nadella. let's listen to what gates had to say this morning about the transition. >> satya has the right background to lead the company during this era. there's a talent in mobile computing. there's an opportunity in the cloud. the various business groups he's worked in he's driven innovation, gotten architectures put together that really meet the needs of our customers. >> joining us this morning to talk about the management change, bill george, the former met tron anythings ceo and harvard business school professor. bill, it's great to sew yoe you. good morning. >> good to be with you, carl. >> i went back and looked at what you wrote in office when ballmer sat down, it's not an technology problem, it's an organizal one. you said, don't make ap's mistake of repeatedly going outside. is this a good move? >> well, i don't know. i think we have a triumph run in the company now between bill gates, satya nadella and john thompson. it's not clear who is going to call the shots here. microsoft has got to go through a major transformation, carl. much like ibm did 20 years ago, as that go from the old world of pcs and desktops into the new world of mobile and ipads and all the other things that are going to come behind it. they've missed so many of those things under the ballmer era. they made a lot of money but they haven't gotten there. i think nadella is very well qualified for the job. the question is will he be tceo who calls the shots. bill gates said that he was 100% going to work on his foundation which i think has been wonderful. now he says he's going to be a third of his time on this working with nadella and helping on product decisions. i think if the jury is still out and we'll have to see what happens here if they can cross that chasm between the old and the new. >> bill, we're joined this morning as well by jeff, professor and manager in practice at the yale school of management. of course, cnbc contributor. jeff, i don't know if you heard what bill just said, but are we going to have a collision of visions here and who drives it? >> yeah, thanks a lot. good to see you, carl. and, bill, i usually agree with you. in this case i agree with you, 50%, the old bill, what you courageously wrote before and not what you've moved away from now. before, the insiders make the most profound change. that is the right answer. that's the overwhelming research out there is that the drama of these outside messionic board fasz nations with some outside savior rarely work. it worked with you at metronic and mulally at ford. we saw it happen at ibm. mainly those were distressed situations. melissa mayer and the jury is still out. p&g, howard shultsz, the upsers, engenerj ingenuity at pepsico. he knows his business well. not some interchangeable part. highly ccharismatic, unusual fo engine engineers. >> good point, jeff. bill do, you agree? the insider benefit here? >> i agree with his points about satya nadella. i question jeff, is he going to call the shots. i think they need clarity of tiger making in the same way that you've had from steve jobs at apple, you have from mark zuckerberg at facebook and from larry page at google. i think they need that sense of clarity. and if nadella has the freedom to do it, i think he's an inspired choice. i think the jury is out to see if he's going to have that opportunity to make the painful decisions, frankly, to make some changes in people, jeff, where they need to move away from the old guard and move to the new guard at microsoft and thompson needs to do the same thing on the board of directors, i think. >> well, before -- jeff, i just want -- before we get too much into the right choice. the choice has already been made. we'll see how the three of them play out together. i want to get from both of you, which is really, we have a pair of corporate giants here. how do you go about making these kind of drastic, dramatic changes, changing a company's culture, a vision, a mission statement,and ultimately bringing back revenues and excitement to this company? >> well, right now you have an opportunity for an inside guy to start up. the taking charge process is twice as long for somebody from the outside. he needs to make a pronouncements about the future progression. are they going to let go of the consumer business? of course their not going to. as we heard this morning on cnbc, bing is a big feeder for the rest of the business for big data. they've been doing well. xbox, especially well this past quarter. there's a future for skype, of course, but we have to figure out how to hold on to key players. in addition to making announcementn't the integration of these different parts of the business is what key players are going to stay on the team? gm did not do a good job of bringing in steve royce. >> that's true. >> in this case they've got to figure out how to make sure we hold on to the guy who is running skype and make sure we hold on to two or three of other key players in there. i'm not sure about the nokia piece. almost a third of their workforce added if you take all 33,000 of those people from nokia. that's going to be a big challenge. but what you do know is that thompson who is revered in terms of building his own business and satya who is a sun guy before and things, he knows how to build from the outside. but you can have a guy who can basically gates is mentor ain chief on the product side. gets away from administrative confusion with him as chairman. >> true. >> bill clinton once told me he woke up at 3:00 in the morning, rumbled around the kich cherch in the white house and he said, any bananas here? at the horizon, suddenly a caravan of bananas. >> good points, all of them, jeff. >> jeff just laid out the complexity of the task. my question is is nadella going to have the freedom to carry it out. >> you guys keep talking. we're going to go to commercial. take a look at shares on the way out. surging after fourth quarter earnings beat estimates. yum, the earning squad has that answer in just a moment. pay my bill. phone: your account is already paid in full. oh, well in that case, back to vacation mode. ♪boots and pants and boots and pants♪ ♪and boots and pants and boots and pants♪ ♪and boots and pants... voice-enabled bill pay. just a tap away on the geico app. ♪ huh, 15 minutes could save you 15% or more on car insurance. yup, everybody knows that. well, did you know that some owls aren't that wise. don't forget about i'm having brunch with meagan tomorrow. who? seriously, you met her like three times. who? geico. the annual company retreat. planned, as usual, by this guy. nature lover... people person. ♪ and you put up with it all... because he also booked you a room... at this place. planet earth's number one accomodation site: booking.com booking.yeah! squad. let's start it off with yum brands, a company frayeding higher by more than 5% by posting fourth quarter earnings. steph, they affirmed the full year. >> that's the headline. they beat the whisper number. the real story was china operating leverage. we've been talking about this for a couple of -- i feel like years now. we're starting to see it. we got the comps. when are comps going to be met. boat on t beat on the margin. you saw better profitability as a result of the they can just -- if they can continue to do the margins and improve the margins and see better on the top line that's where your leverage is going to be. that's what people have r. excited about. >> do you think that would be enough to offset the weakness in north america? taco bell could have been the victim of the industry softness overall. >> the u.s. is not bok going to break out of taco bell in the u.s. they feel like it's not getting the credit because it's getting dragged down by kfc and pizza hut. i think taco bell, they've got the new products and new menu. >> positive headline for underperforming stock overall. so that's one of the big perks. >> is this one to buy here? >> i think you can. i really do. you don't want to buy it today but on that day with this market the way they're giving us chances, it should be on your radar list. >> toyota, most profitable car company in the year. this morning they're saying they're going to see record profit in this fiscal year. the thing is that they are cautious on the emerging markets and specifically they said that financial markets in emerging economies are becoming stable untriggered by the fed's taper. they see an improvement when it comes to developing markets like the u.s. and north america but it is the emerging markets but specifically, interestingly, they cite thailand. they're seeing the visits to the showrooms really tapering off here because of the political unrest. and also the slow decline in the japanese yen because 40% of their global out spput is from japan to produce domestically. today it is down 1%. it has been caught up in the down draft of the japan stocks here. so it's hard to separate. but u.s. or international, steph, where would you go? >> it's hard. i want u.s., new products. i want international where you have market share gain. i prefer gm. >> you do? >> i do. i think it's much cheaper. >> let's talk about arm holdings. this is, of course, mobile. how are they diverse faying away from mobile? >> the bottom line is slowing demand for high-end smartphones. the chips going into them like the iphone 5 and galaxy from samsung. if it starts to slow down, what does it say about the global market? not a great story for smartphones. >> ever core just put this on their conviction buy list. that does it for us. back later today on "street signs" with your earnings preview. coming up next on "squawk on the street," it's been ten years since the facebook launched. find out what mark zuckerberg is most proud of in the last decade and what he sees next for facebook. that's next. [ male announcer ] the new new york is open. open to innovation. open to ambition. open to bold ideas. that's why new york has a new plan -- dozens of tax free zones all across the state. move here, expand here, or start a new business here and pay no taxes for ten years... we're new york. if there's something that creates more jobs, and grows more businesses... we're open to it. start a tax-free business at startup-ny.com. ♪ we asked people a question, how much money do you think you'll need when you retire? $500,000. maybe half-million. say a million dollars. [ dan ] then we gave each person a ribbon to show how many years that amount might last. ♪ i was trying to like pull it a little further. you know, i was trying to stretch it a little bit more. [ woman ] got me to 70 years old. i'm going to have to rethink this thing. [ man ] i looked around at everybody else and i was like, "are you kidding me?" [ dan ] it's just human nature to focus on the here and now. so it's hard to imagine how much we'll need for a retirement that could last 30 years or more. so maybe we need to approach things differently, if we want to be ready for a longer retirement. ♪ ♪ but when we start worrying about tomorrow, we miss out on the things that matter today. ♪ at axa, we offer advice and help you break down your insurance goals into small, manageable steps. because when you plan for tomorrow, it helps you live for today. can we help you take a small step? for advice, retirement, and life insurance, connect with axa. welcome back to "squawk on the street." i'm julia boorstin. face book turns ten years old today and ceo mark zuckerberg said what he's most proud of is the fact that he's helped connect 1.25 billion people. looking to the next ten years, zuckerberg says he's focused on helping people connect and communicate in new and different ways with a series of stand alone apps like facebook's instagram and its paper news reader app which launched just yesterday. >> there are all of these different things that people want to do. and you know, i think increasingly people aren't going to get them all from just one app which is why a lot of what we're trying to do is build new experiences for people. there's going to be the core facebook experience that you've gotten to know over the last ten years and we're going to continually focus on improving that. a lot of the next few years is also going to be building new great experiences for people that help people share and consume content in new ways as well. >> facebook has transformed into a mobile advertising giant, seemingly overnight to set the stocks soaring. zumer berg admits the company went through a rough spot when the mobile product and mobile profits were both lagging. the solution, focusing on the product and consumers first. >> most companies i think probably would have made sure their business was in good shape first. we decided, we care most ability building the best service we can. we're going to focus on doing that first. the result of that was that we improved the product but we went through this year where our business wasn't as good as people wanted it to be. but, you know, i really think we did the right thing. this is our values. we want to serve people first. and if i had to do it again i would make the same designatures all over again. >> we'll have more from savannah guthr guthrie's "today" show interview coming up. and, carl, we should say this is the last time we're going to see you here at post 9 because you're heading out to sochi for the olympics to cover this. see you live broadcasting there starting on friday. >> yeah, can't wait. they are almost there and we'll get there just in time time for the opening ceremony. >> i hear it's tropical there. >> great week of coverage. it's going to be a great hour of coverage for the "fast money half time". >> trying to build steam here into the snow. nice snap back after that huge sell-off yesterday. people were looking for more than what we're seeing. as i said, things seem to be picking up a little bit. >> highs of the day right now. take it away. >> have a great trip, carl. be safe. look forward to seeing you on the tube. welcome, here's what wore following today. small cap, big problem. with the russell close to a correction is that the most om nousz sign of further pain to come? liesman versus hilsenrath. the short story, where are the best bets against stocks right now?

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