Are among the Companies Reporting results before the opening bell today. After the close, well be hearing from ebay, facebook, and qualcomm. Take a look at the futures. After a strong day yesterday with the dow up 282 points, you can see theres some giveback today. Dow futures down by about 76 points. The nasdaq down by 35. Oil prices are coming under some pressure too. A lot of people are going to be paying attention to apple this morning. Earnings coming in at 3. 28 a share. That was 5 cents ahead of estimates. Thats sort of the good news. The bad news, revenue came in at 79. 9 billion. Apple sold 74. 8 million iphones, below estimates. Mac and ipad sales also weaker than expected. Apple sitting on a mountain of cash, 216 billion, up 21 from last year. Ceo tim cook spoke about all this on the Conference Call. Our financial position has never been stronger. We have the mother of all Balance Sheets with almost 216 in cash, which translates to nearly 39 per i did lutded share of apple stock. We continue to invest confidently in our future, and we also continue to return capital to our shareholders at a rapid pace. Apple now forecasts Current Quarter revenues below wall street estimates. Cook seeing softness in the critical chinese market. Frankly, if i were to shut off my web and shut off the tv and just look at how many customers are coming in our stores regardless of whether theyre buying, how many people are coming online, and in addition looking at our sales trends, i wouldnt know there was any economic issue at all in china. Apple shares dipping after that may have been what he said months ago. This time around he did say if hes looking at whats happening, he does see weakness n china. I think that was the comments he had made back in october of last year. At that point, not seeing any weakness. The story has changed some since then. Now hes blaming currency, blaming all sorts of different markets. The weakness of the yuan happened since then. The question is i mean, thats a piece of it, but how big a piece . Is that relative to the product issue and relative to the cycle . Anybody who used to be saying that apple was doing very well in china and therefore china was n not as bad as expected is maybe rethinking their macro view. We get alibaba later this week, which will be one of the great signs as to whether china is working or not. The 75 billion was sharply lower than people had thought before too. Estimates had been coming down, down, down, down. It became clearer and clearer. Speaking of the yuan, i love the this is. Why cant we write things like this . I love the way they do it. Cannot possibly succeed about this. There can be no doubt. Then they say, declaring war on chinas currency, haha. I love that. Why cant we ever write things . We do. Donald trump says stuff like this. When he tweets. Is it the translation . Is it lost in translation . I dont think so. This is their view of the markets. But the way they phrase things. We hear from iran, too, when iran says things. I dont think the stuff is lost in translation. I think thats the way they talk. Different cultures. All right. At ts Fourth Quarter revenue grew less than expected. It added fewer wireless customers. Weve been hearing about that. One of the reasons it may have been a good idea to do that big acquisition. Strong competition from rivals, adjusted earnings matched analyst forecasts, at t shares down about 2 late why ed. Well see where they are this morning. U. S. Steel swinging to a Fourth Quarter loss. Revenue falling more than 37 . That was more than the company expected, as it faces significant head wind and uncertainty in 2016. U. S. Steel and its domestic rivals have been hurt by a global glut in supply and competition from less expensive imports. The shares were down 8 . Forde ceo mark fields is going blue. Fields is joining ibms board of directors as technology continues to drive innovation. He takes the position as of march 1st. Remember, this is happening after mark fields already opened a bureau in Silicon Valley to make sure his engineers are kind of cooperating with the technology and bringing it into the cars designs. Also, toyota retaining the number one spot for global sales. The japanese automaker selling 10. 1 million vehicles in 2015. That outpaced both volkswagen and gm. And bill ackman says sorry to investors after it suffered its worst year. Saying, failing to sell shares of valiant pharmaceuticals was a costly mistake. Things arent looking much better this year. Portfolios already down about 14 . Theres a section of that letter with the heading humbled. A word that doesnt often come from bill ackman. Down 14 is rough. If you have the time, its a remarkable letter. I know its floating around. Does false proceed humble . I think its real. I dont guys with billions of dollars he wasnt humbled from target. I think this is different. There are some people when they lo lose, it gets inside their head. They feel it. Thats where bill is at this point. He would be a better person if youre right. Let me tell you about some other news. The heads of some other wellknown firms are expressing bearish views. The comments coming at a closed investme m investment conference. Joe in. Back to the apple story. Joining us now is the managing director in tech, media, and Telecom Research group at fbr Capital Markets. Our own john fort is also with us. Whats your price target now, dan . 130. When did you lower that . What were the highest prices . The high was 185, down to 130. I think part of it you know, a lot of analysts are in the bull camp. A lot . All. You got to take off the rosecolored glasses. This was definitely finally. And this was definitely a bit of a gut punch for the bulls because of that china piece. That was the game changer here. That china commentary is what i think spooked investors. Dan, to finally take off the rosecolored glasses now, what would you tell investors that listen to the analysts as they wore the rosecolored glasses all the way until it was so clear to everyone in the world now so they finally take them off now. An analyst is supposed to be able to sort of anticipate things, not just follow the fundamentals of the company, right . They dont have any culpability in having these poor investors hang on to the bag as the smart money gets out . I think its a great question. I think as anyone thats covered technology for almost 20 years, we view this as more of a nearterm situation for apple from a Growth Perspective because i think ultimately it comes down to iphone 7. Thats really what youre hanging your hat on in terms of you know, we have a 240million unit that could be in the horizon. You look at apple trending seven times x cash. This is one as an analyst its a handholding period. You dont put up the white flag. We view it as similar to two years ago from 5s to 6. Its a turbulent period, but i think brighter days ahead with the iphone 7, as well as what cook does with 200 billion in cash. We were talking, just a couple guys getting makeup together. Right, john . Thats where we have some of our best conversations. We really open up. Its our locker room. It is. Kind of like our locker room. The big question is, you know, maybe they get a car some day. I dont know. A lot of competition. Maybe they get a tv some day. I dont like the watch. I mean, i dont have one. But i dont know if thats going to do it. Is iphone 7 enough to get this to a trilliondollar market cap . Im going to give you the two ends of it and tell you where i think i fall. On the one end, some people are saying this is blackberry all over again. Look, their growth has stalled out. Yes, theyre saying their services and accessories revenue is growing 23 , 24 , but thats got to slow down once that catches up to the slowing hardware sales. So thats sort of the negative take. The china story isnt what it used to be. Its probably going to get worse because tim cook said that china actually Greater China started to look bad this month. So not just in the quarter they reported but in the quarter they about to report. So we dont know how rough thats going to look in the march quarter. But the other side of it is maybe this is just a couple years ago all over again. Maybe when we move into the iphone 7 cycle, you start to see the trends reversing. The Dollar Strength isnt affecting them as much. Some of these emerging markets doing poorly actually start to do better. They grew 8 versus 2 with their current outlook. And you also have to factor in samsung, things that were supposed to slay apple actually didnt this cycle. Those are two extreme stories. The apple is blackberry seems crazy to me. I still have a blackberry. I buy a new one every three years. To joes point, right now were going into this bipolar situation with apple. Youre either core bear, like john is on the blackberry side, which i believe is almost an embarrassing three thesis, or you believe this is similar to 5s to 6. It went from a market cap of maybe 400 billion down to 300. Just ignore big numbers and say its the same. Theres two extremes. Theres a far cry between where now and a trilliondollar market cap. The reason im in between on this one is apple has not been great at services. Theyve already cut off a big potential business for them because theyve said were not going to make a market on user data. Thats why iad didnt work. Thats why they cant move into direct competition with google and facebook. They say, were not going to sell user data. There are a lot of doors you cant open then. Theyre relying still on hardware hits. The thing is, their track record with hardware hits is pretty good. Is this the end of apple in is this the end of the line . I think the question is, what are people going to buy instead . Doesnt look like theyre buying anything else yet. So they still have time to come up with something. Theres a difference between calling it apple and apple stock. Its not going to be the end. This company made 18 billion in a quarter. Thats unreal. The question i keep asking is, okay, assume its not a hyper growth stock anymore. I think thats clear. Where is it fairly valued . About 40 of it is cash. The chart looks like theres people that say its headed to the 70s. But its not valued like a growth stock now. Im looking for a valuation expert to tell me you cant guarantee 18 billion a quarter. If you assume relatively flat hardware growth and 30 to 40 margins Going Forward, how much are those billions of dollars . You said theyve had a lot of hits over the years. This is not a conversation about tim cook, but are we when you think about hits, do you really look did you think theres a steve jobs era and Everything Else era in terms of the hits . I think the time for that, to argue that, has passed. Steve jobs did come up with the ipad, but it did not evolve into a big, longlasting hit, just like the ipod was not a big, longlasting hit as the iphone was. They come up with what by anybody elses standard would be a hit. I think the iphone is like a once in a lifetime effect wheve you corner the profitable part of the market on a product that changes everybodys life. Thats not optimistic. How many lifetimes do they have . Its kind of like microsoft had a once in a lifetime event with the pc, and theyre still trading on it. Never got to a trillion either. True. I think now its really the big question that i was getting last night and this morning is, does cook and apple do they do the 200 billion. Right now, the street is not going to give them credit for that cash unless they do something, whether its a gamechanging acquisition. But to your point, its a proveme situation here. A lot of it was baked into shares. You saw that last night. Now its really iphone 7. If youre bullish on that, thats the opportunity here Going Forward. So the ipad is already passed . Should i not trade in any newton and try this ipad out . You have an ipad. He always pretends he knows nothing about technology, then he puts a little zinger for there with the newton. You know what i mean . What, theres Something Better than a newton . Theres a pager with a keyboard on it. Huh . Rims got a pager with a keyboard on it thatll get your email out faster than anything. So i should trade in any walkman. But i have the big foamy earphones that are great. Youll have to bring back your mustache wearing those things around. John, what i spend on hair spray, you save that, but on powder we spend a lot of money. Does it offset it exactly . I think it does. I like the view. Whats more expensive, powder or hair spray . Were like yin and yang. Powder is much more expensive. Looks bad ass though. Liesman needs to do that. Have you talked to liesman, why he just doesnt do it . We talk about this all the time. Scared. All right. We got to move on. Thank you. Its the shoptalk, the makeup room. Couple of girls. Lets get a check on the markets this morning. Take a look at the futures. Again, the futures are weaker this morning with the dow down by 71 points below fair value. Yesterday the index was up by 1. 7 . That was its biggest gain since december 4th of last year. Despite all those gains we saw yesterday, the dow is still down by about 7. 2 for the month to date. Take a look at whats been happening in the early trade in europe. Youll see l right now that it looks like there are some red arrows there as well. Looks like the dax is one of the biggest decliners of the major markets. Its down by 0. 6 . The cac is almost down by 0. 6 . The ftse down by 0. 4 . Overnight in asia, the nikkei was up by 2. 7 . The cospi up by 1. 4 . The china shares closed, im guessing, since were not showing them here. Also, look at what happened with wti. Yesterday it was up by 3. 66 . Just since the 21st of this month, wti up about 11 . You can see this morning its giving back some of those gains once again. Its down a dollar. Thats a decline of over 3 . As crude oil goes, that has really dictated which direction equities will head. If you take a look at what happened with the tenyear note, right now it is yielding just at 2 , 2. 005 . Gop front runerer donald trump says hes skipping tomorrows Republican Debate. Mr. Trump is boycotting this final debate ahead of the Iowa Caucuses because of a fight with fox news. Trumps chief rival ted cruz is now challenging him to a oneonone showdown. Here to help us break down this latest development in the race for the white house is politicos ben white. He joins us this morning from naples, florida. So he doesnt get to present his case like a couple days before the iowa caucus, but he was going to be everybody was going to go after him again. If he does something with wounded warriors, here we are talking about him again. Were going to be talking about him until thursday. Is this just another cue dee that . Another brilliant move to keep mr. Trumps name in the news again . Can it backfire, do you think . It can definitely backfire. I go back and forth on whether this is genius or a form of political suicide. You know, its not going to hurt him nationally. Hes said himself he could go shoot one on fifth avenue and not see his numbers go down. I think he could go on stage and slaughter goats and bathe in their blood, and his numbers wouldnt go down. But this is iowa, where its very close between him and ted cruz. A couple points separates them. Iowa decides late. They take this thing very seriously. You basically telling iowa voters, im knot goinot going t you one more chance to listen to me on issues, to talk about positions, to go head to head with cruz. Theres going to be an empty podium there. He risks latedeciding, undecided iowa voters. Ben, i even take shots at politico and the media, as you know. I know you do. Have you merged with huff post yet . Get it over with. You have all the same content. Were working on that. Just put it together. Synergies and overlap. We couldnt be any further from huff post, not that i dont love huff post. Please, the hill makes you look you make the hill look conservative. Heres the question. The media is always ripe for criticism. It plays to voters. Look at the history of the debates weve seen. Dont want to go there. In this case, if you saw that note roger is really crafty. Maybe he finally got fed up, but that was a pretty snarky piece about the ayatollah and get your twitter thats weird for a News Organization unless they really do want to pick a fight. The fox news press release. Kind of taunting him. And megyn kelly couldnt back down this debate. You knew there was going to be a cur fufl there, probably. I think theres a method to all of trumps madness. I think there is a method to a degree. I agree with you, that press release, it was a little funny, but it was a bit over the top and clearly was taunting him. He said himself that thats the straw that broke the camels back and made him decide not to do the debate. Maybe they wanted that to happen. I cant imagine that because hes right when he says the debate ratings will plunge without him in there. And beating up on the media always plays well, but megyn kelly is viewed very positively by a lot of republicans. She was perfectly fair. She asked him about various comments about women that were negative and derogatory. Going into a race where shes likely to be facing the possible first female president , perfectly legitimate question. Hes been whining about it ever since then, which is ridiculous. You just dont skip the last debate before iowa when youre tried in the polls. Its not going to hurt him in New Hampshire. Hell still win there. Its not going to knock him out of the race. Could it cost him iowa . Its conceivable it could. Ben, it was interesting. I think your piece was the one that laid out the history for this. The last time weve seen debates skipped. I didnt remember any. You pointed out that Ronald Reagan chose not to debate in 1980 before the iowa caucus. Yeah, there was that and the reagan moment where he said he paid for this microphone. Its not unprecedented for this to be this jockeying over debates. You remember in 1992 there was a guy in a chicken costume who went around following george bush, saying is chicken george wont debate because the Clinton Campaign wanted more debates. This is a tradition in politics but hasnt happened in a while. Hasnt happened this close to a vote in iowa that is on a knifes edge. With all things donald trump, we all have absolutely no idea how its actually going to play out. Were clueless. I think its not a real smart move for him when its this close in iowa. It could cost him some independents who arent going to be happy about an empty podium. There was a time when a clinton actually wanted a debate where people were watching and people tuned into . Like not during an nfc championship game or sunday night in a snowstorm . Really . Exactly. There was a day when an upstart bill clinton in New Hampshire wanted more debates and wanted more debates against george bush. This was a very different era. Are you at the winter solstice home . Where are you . Do you drive over from the estate down there . I did. I drove over from my vast plantation down here in naples to this studio at 5 00 in the morning just to be with you. Thank you. Thank you for doing that. Pleasure to be with you guys. Have a good day. Coming up when we return, should the markets expect a dovish tone from the fed today . Well have that discussion straight ahead. First, this day in history. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Thats why i switched from uverse to xfinity. Now i can download my dvr recordings and take them anywhere. Ready or not, here i come whispers now hideandseek time can also be catchuponmyshows time. Here i come cant find you anywhere dont settle for uverse. X1 from xfinity will change the way you experience tv. The feds first policy meeting of the year taking place in the midst of lots of instability in the markets and the economy. That has many second guessing the Central Banks decision to raise rates last month. Joining us right now is the global head of fixed income strategy at jpmorgan private bank. Also, phil orlando, a senior portfol portfolio manager. Welcome to both of you. You did it again. Phil and phil. How do you find two phils . You have to try to do that. Who wants to be philip . Ill be philip. Phil is fine with me. Let me start with this. Before we get to the fed, phil, lets talk about oil. Its crazy house tightly the equities market has been tied to oil. I guess the dollar kind of blends into that too. How do you figure out what youre going to do on a daytoday basis . You have a correlation over the last couple months close to one. This blip we saw yesterday was rumors of some production cuts maybe over the summer. Were not buying that just yet. We still think crude is going to work down towards 20 over the course of, you know, these winter months. Meaning that equities will come down from here too . Weve got a very defensive position on the equity market in part because we think crude is going to work down to 20. When you think of the analysis you do, check out stock by stock, and realize you can throw it out the window and look at oil . Right now it makes no difference. A couple key things driving the markets. Certainly the pressure on the oil market is a key one. The fed is the other issue. Philip, well talk about this. If the fed comings out today, what with they say in their statement that would make the markets feel much better or worse . What do you think the more likely scenario is . I think youre absolutely right, betty becky. Now im getting confused. They have to make a reconciliation here. The market is saying one hike. Theyre still saying four hikes. They really have to kind of close that gap. Are they going to do that today though . I think they have to. I think one of the things thats going on is were talking about a rate rise. But credit costs have already risen dramatically since the Third Quarter of last year. So when youre looking at high yield costs, where its 10 now on average yield, and in fact Capital Markets are kind of closed for very many highyield companies now, theyve got to do something i think to loosen that up. Can i ask you a question about how you play this . I was talking to some Hedge Fund Managers yesterday who think were going to hear what you said is going to happen this afternoon. Therefore, the market is going to go on a little bit of a rocketship briefly. And their view is to sell into it because the way weve seen this movie play out, any time the fed has eased so if we see stocks pop today yes, theyre going to sell out because their view is ultimately the bad muse is bad news and that by the end of the week, you know, we go on a were on a roller coaster ride the opposite way. So weve seen a 5 rally here in stocks in the last four or five days, in part on this expectation. We think the expectation is the fed has got to come off this four hikes in the calendar year that fisher sort of set an expectation earlier in the year. So the rally may have already happened. It may completely be a buy the rumor, sell the news kind of deal. Draghi just we figured the fed would have to follow suit. Not diverge too much. Thats what everybody is whining about, were diverging from everyone else, and that causes currency fluctuations, which are hard to manage, and theres people on the wrong side of them and Everything Else. But weve rallied on the perception that it could be one and done. He thinks were going back to qe. Another issue to consider is this coming friday, were going to get the flash report for the Fourth Quarter gdp. Were at 1 . Bloomberg consensus is at 0. 8. Theres no way the fed can tighten in march off of a 1 gdp number. They have to wait for some improvement in the data, which is going to push them out into september, june, whenever the data begins to improve. Philip, your point is a good one though. Thats looking beyond just the equities market, trying to find out whats happening in these credit markets, particularly in the highyield situation. Its a much more dire situation. It is because its companies costs of capital. Then look at things like bank lending as well, the surveys of senior loan officers. Theyre actually starting to tighten after a long time of loosening up. So for instance, where were positioned in terms of fixed income, its fairly defensive. Our biggest recommendations coming into this year have been muni bonds, investmentgrade bonds, and bankpreferred stock. We think banks are outside of this cycle. But thats a very defensive posture. Sure. And phil, you said youre defensive when it comes to equities. What would you tell people to do . Weve raised some cash. A neutral equity allocation for us is 60 . Were a couple ticks below that. At various points over the last few years, we were up around 70 or 80 . For us to be sitting here at 57 , 58 equities is signaling that were very nervous about whats going on right here. All right. Phil, philip, thank you both for coming in. Great to see you. Thank you. Coming up, oprahs gain, not weight, but wealth. A tweet by oprah sends Weight Watchers shares higher again. That story straight ahead. Squawk returns in a moment. So if i wanna go to jersey and check out shotsy tuccerellis portfolio, whats it to you . Or im a scottish mason whose assets are made of stone like me heart. Papa youre no son of mine or perhaps its time to seize the day. Dont just see opportunity, seize it applause seize it sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back to squawk box. Time now for the executive edge and the midas touch of a billionaire media mogul. Oprah winfrey posting a video saying she lost 26 pounds on Weight Watchers while still eating bread every day. Her stake in the company rose by 12 million virtually in just a couple minutes. The stock climbed more than 20 , closing above 13 a share. Oprah owns more than 6. 4 million shares, which is 10 of the companys stock. Just look back at that stock. You see the day she got involved was late october. Look at the jump just on that day. Now were talking about the huge jump from last night. Compare that to when she first got involved. Worth noting the stock had been as high as 26 a couple months ago. Li life it relative. Im still trying to figure out how to lose the weight and still eat bread. It was a quarter slice she had. She toasted it. I mean, anything anything in moderation. Everything in moderation. Im trying again. I dont know. Its tough. Its tough with the carbs. Its all carbs. Its the only thing that works that makes you feel like youve eaten. Especially in the cold winter weather. I dont mind not eating bread in the summer. Coming up, hack attacks in foc focus. Well be joined by the head of a Data Security company. Hell talk to us about what to do to protect yourself and your business. Well talk about that and a lot more. Cyber in focus when we return. So youre a Small Business expert from at t . Yeah, give me a problem and ive got the solution. Well, we have 30 years of customer records. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep it all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberry apple scones smell about done. Ahh, youre good. I like to bake. Get expert advice for your Small Business at att. Com Small Business. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . Welcome back to squawk box. Sad news from the world of the godfather. The actor that played sal, the smarter one, he was always the smart one in the mob classic, has died. He was 94. Also known as fish in the 70s sitcom barney miller. That was one of my growing up shows. You too . Loved it. It was a spinoff. He had his own spinoff for like a year. He did. I loved him. Well miss him. I would never say anything bad about him, but he was 94. Its like hes been 94 for like 30 years. People magazine killed him off about 30 years ago. They printed thats right. 30 years ago, he looked he didnt age because he was always the same age. That was where but that was a running joke. He even had a twitter page, a Facebook Page and twitter page saying im still alive. Thats right. They always you know, tom thought he was always smart. He said, you know, michael, i always liked you, mike. Strictly business. Were going to talk a little cybersecurity right now. The cybersecurity threats continue to grow. As that happens, so does security spending. The u. S. Federal budget for 2016 included 14 billion towards cybersecurity. According to Research Firm markets and markets, worldwide Cyber Defense spending set to hit 170 billion by 2020. Joining us now is the v armor ceo. How are you . Good, how are you . Good. What does your company do specifically, so were all on the same page . Sure. So were an Enterprise Cloud security company. The traditional Security Companies today, if you like, protect the mote of the castle. They provide rings around the perimeter. We think that security should be moved inside in addition to the outside. So protecting your patients records, your financial records, your databases all separately. As you do them separately, we call that microsegmentation. What kind of companies are you working with . So we work with most of the large banks in the world, most of the Large Service providers in the world. We worked with large parts of the u. S. Government. Were seeing a massive transformation in healthcare right now. All around the world, but primarily people that have regulatory issues and have big, you know, concerns around cybersecurity. Those two combined is where we hit well. Given that you are an Enterprise Business and you do sell product to the government and youre also selling product to u. S. And other businesses, how has it been negotiating some of these deals with the u. S. Government . Im sort of just curious the distinction in terms of how the u. S. Government pays for these products relative to everybody else. So we work with three divisions of the u. S. Government today. We work with the governments around the world in the same way. But they pay the same as everybody else, to be really honest. Its been fascinating over the last 10 to 15 years that ive been in cybersecurity. Personally, you look at dealing with some of these u. S. Governments or other governments as a time stock. Do they spend money, are they adopting it quickly . It has been an incredible change over the last two years. People are moving faster and quicker than ever before to secure the nations assets. Like i said, ive been in it 15 years. Theyre moving quicker now than ever before, which is great. Tim, no question that Cybersecurity Spending is going to continue to increase. Companies, governments seeing it as a much bigger pryty, but why varmour over all the other competitors out there . What do you do thats different . Like i said, the Traditional Companies are very much focused on the perimeter. Theyre hardware based. Theyre old fashioned. When youre software, you can really latch on to the new wave. Amazon is not just repricing i. T. With amazon web services, its redefining i. T. Its making people engage with products faster, cheaper, easier. So as youre trying to secure these new assets where data is everywhere, if you can build a product that people can install very quickly, get visible assets, and segment them very, very fast, you can move quickly. Its software, its moving and protecting these assets, your financial records, your patient records, and youre doing it in little segments. So this microsegmentation, this is going to be the year of that for data centers. One of the things i wonder about all the time is we hear about certain breaches, but i assume for every breach we hear about, there are ten others we dont. Ive never heard about a breach, for example, at amazon. Ive never heard about a breach at google. I have to imagine that somebody, somewhere inside these Large Companies with millions of customers have some sort of breaches, no . So your ratio is probably for every one breach announced, theres probably 50 that arent announced. So if you look at the cost of Cyber Breaches today, its about 500 billion. By 2019, that number goes to 2 trillion. So the cost of breaches are skyrocketing and will continue to skyrocket. I do think some of these clouds, amazon, microsoft, offer kind of a Silver Lining because as they embrace new technology, you can make them for secure as you do it. Tim, thanks for joining us. When youre in new york, id love to continue this conversation. Great. Thank you. Coming up, Facebook Status update. The social media giant getting ready to unveil its Fourth Quarter earnings report. Will its numbers get a like from the street . Squawk box will be right back after this quick break. Ill introduce this segment and then andrew is taking over. Welcome back, everybody. Lets take a look at the markets. Yesterday was a huge day of gains for the markets. Biggest day for gains since december 4th. This morning giving back some gains. Dow is down by 96 points. S p futures off by 14. Also take a look at the price of crude oil because thats whats been driving all the equity prices. You can see crude oil is back down by 3. 6 . A decline of over 1 to 30. 30. Where crude oil prices go thats where equity prices go. Facebook set to report results after the bell. Ive been studying up. I got some good questions. While the street is paying attention, they will fob cussed on growth from a number of companys other products. Instagram, and messenger. Here to help us todays handicap the report senior internet media analyst. 220 million market cap company. I get a little bit confounded by how everything works. The big thing is mobile which means people actually are out of their house where they can actually have face to face contacts with friends and yet they are still looking at their stupid mobile device and going on facebook to have relationships when they are out in the world . They still do it that way . They do it at home as well. On their mobile device. On a small stupid screen. I seen it on bus rides. Sitting in the stands at kids sporting games. I see it every where. Advertising, its billions of dollars. Its like 5 million a year. And these are videos that people who is advertising and how does it indues a millennial to do something . Just about all of the large brand advertisers are on facebook. Does it work . It works. When i conduct checks with advertisers on the platform, they say that it has been increasing as time goes. Because of that they are spending a lot more allocating a lot more dollars. Return on investment they want to see tangible results. They see tangible results. Ones focused on conversion are seeing it directly because those conversions lead they see something, click on it and buy it. Its happening. Go to a website, make a purchase. The brand lift as well. These are questions from five years ago. What do you think about instagram. Anywhere between 125 to 150 Million Dollars in revenue in this quarter. Why do they call it a 3 billion company. I think its, you know, i think its more a 20 billion valuation. We were in dallas last week. I ended up doing the demonstrati demonstration, which is mind blowing. I really thought i saw the future in a way we never could articulate on turns v. I was explaining to them i was on a 50story building looking down and the guy says you want to step forward and i said only if i could literally hold your hand. It was that immersive. When will we see that have a meaningful impact on the company. This year youll just see the impact will be just from the Product Sales and more so entertainment and video, video games. But longer term youll get the previews, real estate previews, travel previews. I also think theres an education component to it as well. Those are all longer term impacts, i think for facebook over the next several years. This year it will be okular sales, device sales and video game sales. Do you see facebook as a potential buyer for twitter. That stock has come down so drastically. They are replicating some of the same features as twitter. I dont see it. I see google as a potential buyer. Where do you see on twitter . Im optimistic, the catalyst ongoing could potentially work to drive user growth and advertiser Revenue Growth. This guy, i dont know hes different than you. I thought he meant valuation of instagram. You said 150 million revenue. This guy says 730. Nobody knows what revenues are. The Fourth Quarter they will do anywhere between 125 and 150. This guy says 3. 2 billion for the year for instagram. 5. 3 Credit Suisse in revenue. That sound more like 2016 numbers not for 15. They just started mon ed moneti instagram in earnest in the Fourth Quarter. Nobody knows. Do they report . Hope some color. Well press them with some color but theres ways you can estimate, you know, what the potential revenue impact from instagram is. I thought instagram when they first bought it it was something you could take photos and make them antique looking photos. Thats still kind of what it is. Photos and videos with a little bit of antiquing. Teens are loving it. Influence purchasers. Go to their parents and tell them to buy things. Thank you. Well see you in a little bit. When we return more earnings results. Boeing expected in the next hour. Apple story should investors bet on tim cook and the companys mound of cash. Thats next actions. They speak louder. We like that. Not just because were doers. Because were changing. Big things. Small things. Spur of the moment things. Changes youll notice. Wherever you are in the world. Sheraton. These are the hands that plow the data, dig up clues, create opportunity, and weave messages that lead to sales. These are the hands of pitney bowes, the craftsmen of commerce. These are the hands, the hands that drive commerce, that build business across borders. These are the hands of pitney bowes, the craftsmen of commerce. Apple ceo tim cooks warning. We began to see some signs ever economic softness in Greater China earlier this month, most notably in hong kong. Company predicts a revenue slip next quarter, its first drop in years. Should investors view apple as a value stock not a growth play . Well go inside the numbers straight ahead. Is the fed getting soft . After a slew of poor economic reports and signs of more Global Economic turmoil will the fed signal a rate hike stall. Well look at todays decision and talk Market Expectations. Its time to tee off. The ceo of taylor made joins us to talk about the business of golf live from the pga golf show in orlando. Its in the hole. As the second hour of squawk box begins right now. Announcer live from the beating heart of business, new york city. This is squawk box. Welcome back to squawk box here on cnbc first in business worldwide. Im joe kernen along with becky quick and Andrew Ross Sorkin. The futures at this hour are giving back not all of yesterdays gain. It was weird. Yesterday down ended up over 200 points. Oil at this hour was back down when i came in, back down about 3 . Down over 3 now but of 30, 30. 37. Ten year below two but now it was thats United Technologies. Well talk about United Technologies next but ten year was trading at 2. 05. Earlier it was below 2 again. Theres united tech. Earnings just out from the dow component. 1. 53 share estimates were 1. 52. Revenue came up short of forecast, only in part surprise, surprise, due to the negative impact of the dollar. The company affirmed its full year 2016 earnings outlook and not a whole lot of action. Thats a pretty good reflection of an industrial stock right there. Pretty representative chart down from 120. In our headlines, Fiat Chrysler will take a 96 million charge. Details will be announced in a Conference Call. That stock you can see down by 2 . Also Federal Reserve policymakers will conclude their two day meeting today with their latest Rate Decision and policy statement coming at 2 00 p. M. Eastern time. Well have more on what the fed might say coming up. Latest reed on the u. S. Housing market comes at 10 00 a. M. Economists are looking for a 2. 4 increase after a rise in november. Apple shares whipsawed after the well. Their quarterly estimates beat experts analysts. They posted 3. 28 per share on 79 billion in sales. Iphone sales came in below estimates. Heres ceo tim cook on the Conference Call. We began to see some signs of economic softness in Greater China earlier this month, most notably in hong kong. Beyond the short term volatility, we remain very confident about the long term potential of the china market and large opportunities ahead of us and were maintaining our investment plans. Heres the analyst at susquehanna financial group. Didnt they make 18 million in profit. 18 billion in revenue. That was the revenue . You guys are analyst. Let me talk. This is you, recently lowered your price target from 155 to 140. Hes the editorinchief of the verge. Good morning to both of you. You look at these numbers and you think to yourself about the stock. 70 what . At this point the expectations had come down significantly coming into the call. So, you know, my view at this point was that at 130, 140 where the stock was months ago you did actually need to see year end Revenue Growth from the phone. At this point peoples expectations had come down. When you look at this particular print its kind of in line with what the buy side had been expecting coming in. What kind of multiples should be on this call . If you look at it on a cash flow basis, youre getting in excess of 10 free cash from apple. My view at the stock at around 100. It kind of transitions from being a growth stock to a value stock at this point with a call option on do we see growth from my fund Going Forward and what else that might come out that drives growth. What else that we should be excited about. I think they are going to have, next quarter will be hard. I think it really comes down the iphone 7, next version of the watch. If you look at the Balance Sheet the watch has hit in other products. The apple turns v has hit in other products. Its hard to know how those products are doing. Everybody expects the watch to do well over the holiday. They announced it two septembers ago. Got a ways to go. The next version of this cant be much better than this. Their last big trick was making the screen big. That was a great trick. Sell them a lot of phones. If you look at the numbers, 40 , only 40 of their customers upgraded the iphone 6, 6s. They have more devices to sell. Every carrier has a yearly update program. They are trying to get the person from going to a two year buying cycle to every year buying cycle. Do you think that works . People are interested in getting a phone every year. That might be their base and their base may be whats driving that service revenue. Its hard for them to claim were a Service Company when all of their services are best in class. You have to come up with a much cooler phone for me to switch and put up with the changes every year. The reason i went to the 6 i liked the camera. You got to couple with a cool gimmick if you want me to switch it. That friction is that they have talked about. Their upgrade friction is harder than it should be. Across the board apple put out a lot of new products. They werent all fully formed. The tv didnt have the streaming component that they talked about. The watch really needs is there a game changer in here . It doesnt matter. I think they will sell a lot of phones. While they sell a lot of phone they will search for that game changer and people will keep looking for it from apple. Thats what they expect. I think thats their big challenge is to tell a compelling holistic product story. Remember also that as time goes on they also add Software Features as which requires a phone. If you look back to the pc era where new features came out and you had to upgrade your pc every few years whether you wanted to or not thats like the iphone. The eco system is sufficiently sticky and the iphone upgrade makes it more sticky where its tough to get out of the eco system. Youre on a treadmill in terms of upgrades whether you want to or not. Is there any other company out there that you look at whether google or somebody else you think is making a product that will overtake this one . I think google will make a play this year to come up with a more or less strategy on android. Thats me talking. You can see that opportunity. You can see them advertise their nexus phones. Put them in retail stores. Thats a big moment for them. They got to get back in the game at the high end. Low end of the markets google has to try. I dont think that i think the lock in is real. If youre texting somebody and see green bubbles you wish they had an iphone. Thats a big mountain for everybody else to get over. It will protect apple for a long time. But it wont protect them forever and i think the moment right them is for them to say we addressed the entire market, were in china, were doing it all. Now we need to take this and boot strap it. Did they bring up the quote. The last trade i saw was 95. 80. Down from 99. 99. A few shares outstanding too. Anyone want to ventura market gap guess on what were losing today . Thats hard. Harsh. Whats the overall market cap. 554. I sent one to andrew, i sent you a 526. Its been lower. Part of that is the commentary they made about markets as well china. Back in august, cook came out with that statement that said our business in china is fine. Dechange that on the last call and specifically said Greater China they started to see slowing in january. December quarter was better and they had a couple of extra weeks of iphone sales this december versus last. But that was a change in tone. That change in tone is very important because its a change thats playing out right now. Well see what happens over the next couple of months. They did see it with the other merging markets. We know about currency and such. Gentlemen thank you. Appreciate it very much. We are following the latest developments in politics this morning. Donald trump saying hes skipping tomorrows Republican Debate just days before the iowa caucus. Is he going to show up at the last second . This is drama, debate drama and donald trump is really good at reality tv tactics including creating some drama getting all the cameras focused on you and then dominating the news cycle and thats what hes been doing with these late developments yesterday. He said hes not going to go to the debate because he doesnt like the fox news moderator megyn kelly, doesnt think shes good at her job. Heres the statement that the Donald Trump Campaign put out last night. Take a look at this language being saying unlike the very stupid, highly incompetent people running our country into the ground, mr. Frump knows when to walk away. Roger ailes and fox news think they can toy with him but mr. Trump doesnt play games. Heres what fox news had to say in response. They said they are going to go on with their debate. They said okay pit the late to politicians ultimatums about a debate moderator violates all journalistic standards as do threats, including the one levelled by trumps and Campaign Manager towards megyn kelly. They said megyn kelly would have a rough couple of days if this all continued. So trump for now, andrew as you say is out of it. Ted cruz trying to make the most of it saying he would debate donald trump one on one and the Cruz Campaign trying to get the twitter donaldduck to trend on twitter overnight. Well see whether this benefits trump or cruz or anybody in the republican party, guys. Thank you. Well see whether trump shows or not. Appreciate it. All right. I dont want to watch those two guys. Do you . Will the fed soften its message on rate cut hikes and how will the market react. Centraling bank is n i central bank is not expected to raise signs but the market is looking at their body language or stance may change. Later transportation stocks stalling. Lower oil prices not helping. Also a slow down in shipments weighing on many rails, truckers and shippers find out if these stocks can get back on track in 2016. Squawk box will be right back. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Iall across the state belthe economy is growing,day. With creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. Like in the hudson valley, with world class biotech. And on long island, where great universities are creating next generation technologies. Let us help grow your companys tomorrow, today at business. Ny. Gov take a look at the futures. Were waiting to see what the Federal Reserve will do. The market may move on that at 2 00 p. M. The dow looks like it will open up down. Nasdaq looks to open up off four and s p opening up 12 points down. Federal reserve wrapping up its first two day meeting of the year and while no surprises are expected in terms much rate moves, investors will be keeping a close eye on how rates react to any headlines. Joseph rosenburg joins us. We had a guest on earlier who said the fed needs to recalibrate and figure out whats happening. We laid out this expectation for rate hikes. The market doesnt believe it. Theres a lot of chaos out there. What they can do with that statement is shorten that gap. Is that what will happen . The fed has to thread the needle here today to address some of the market moves that are certainly making people wonder about their outlook and wonder about the four hikes that they have been signalling. The bond market is barely one hike. So theres a bigger gap here. But the fed has to be careful about how much it acknowledges that dovish sentiment because they just gave you confidence and were validating their normalization plans. They cant be seen to lose credibility on normalization by so quickly going back against that. Its going to be a tricky communication and theres not a lot of room for error because all they have is a statement. Theres no press conference, no statement of economic rejection. Site will be very fine wording in their characterization of the economy in the first paragraph. People will be very focused on it, obviously. Obviously we changed our expectations after we heard from mario draghi last week when stocks started to pick up, markets reacting to this. So is there a chance that no matter what they say the markets will be disappointed . Thats exactly the point in terms of Market Expectations coming off a dovish ecb, coming in an environment where in the boj case whether we get more accommodation there. Will the fed be more dovish. The expectations they will deliver every opportunity they had an opportunity to be dovish they have been dovish. This is trickier. This is first time where we look in the environment where the fed told us they dont want to be dovish they want to be optimistic on the economy. They want to be more hawkish or start normalization. This meeting usually doesnt have a lot of attention. I want has more market significance because of the difficult communication challenge they have to lead the that ne thread the needle. High yields are getting more expensive. Yes. What weve seen is for companies. Certainly. The story has been the commodity and the energy space. Whats really should be investors focus, our focus, is whether were starting to see that spread outside of those commodity oil related sectors into the safehavens. What weve seen we did see that at the beginning of the year. That was the big story. Retail moving on from there. Other areas are starting to get impacted. Nowhere near to the degree weve seen in the commodity space. What youve seen in Commodity Markets you have bifurcation, haves and have notes. What you see in the headline levels is very misleading. What you have is two very different markets. The key is to focus on the safe stuff. How is the safe stuff performing. You saw weakening of that in january. Well watch that area very closely because if you see the spill over there then you know the credit cycle is expanding beyond just this commodity focus. As an investor if youre looking at the have notes, the companies that arent able to get investors feeling very confident with them, are there places where things have gotten out of whack where you think look this is a good buying opportunity. The prices have adjusted and that makes the entry moreno attractive. The problem sue dont know where the floor is. When you dont know where the floor is and talking about lenning the companies where asset value is so heavy and novice built with regards to the stability and ultimate end point for Commodity Prices its very hard to know what that ultimate value of the i set is. If your cash flow is collapsed and end up having to go into a bankruptcy you want to know where your recovery values are. For the most Distressed Companies the bond prices arent trading off of current values they are trading off of prospective recovery values. Im talking about the other sect jobs that started to bleed over. Do you see some bargains . Not so much because the bifurcation has really forced a lot of liquidity, a lot of safe money went into the nonaffected sectors. It held their prices up quite significantly. When you look at the high yield, yield level at 9 . It doesnt exist. The safe stuff thats trading 5. 5 , 6 not that much lower than where it was at the peak. Certainly theres been some price adjustments there but the big yield increases is coming from averaging in the 15 and 20 stuff where its a much bigger sort. Stand pat, hold some cash and look for opportunities. Absolutely. Were playing this more from the defensive side and holding our guns with regards to is this really the bottom or the opportunity. Very hard to call that. Certainly not calling that here. Jeff good to see you. When we come back. Phil ackman said he made some mistakes. Find out what he told investors about last years performance. As we head to a break we got todays affleck try aflac tr question. In what year was the Company Apple founded . Ohh ah ah aflac aaaaflac tadaa hes not a very good magician. He paid my claim in just one day. One day . shh how does he do it . In just one day, we process, approve and pay. One day pay, only from aflac. Thanks. [ male announcer ] fedex® has solutions to enable Global Commerce that can help your company grow steadily and quickly. Great job. mandarin cut it out. See you tomorrow. Theres no one road out there. No one surface. No one speed. No one way of driving on each and every road. But there is one car that can conquer them all. The mercedesbenz cclass. Five driving modes let you customize the steering, shift points, and suspension to fit the mood youre in. And the road youre on. The 2016 cclass. Lease the c300 for 399 a month at your local mercedesbenz dealer. Bill ackman is saying sorry to investors in his Pershing Square hedge funds. He said failing to sell shares of valeant shares was a costly mistake. Things arent looking much better this year. Ackmans portfolio already is down about 14 . No word yet on whether hes willing to absorb 20 of the losses out of his own pocket like when you get 20, when you make profits do, they ever theres a high watermark. Right. Going to take him a long time to get back there. Share 20 of the losses. No word yet on whether that not likely . Probably wont share in the losses. But will take him a very long time to get back. Shut that one down and start another one. You could do that. I dont think thats likely. Hedge funds, heads of some wellknown firms expressing bearish market views on energy, china and stocks. Those comments coming at a closed investment conference. Reuters reporting Paul Tudor Jones is negative. When we return dow component boeing down 5 in the year. Aircraft maker said to release earnings. The results are up after the break. Well bring them to you in a couple of minutes. Later ceo of taylor made will join us live from the pga golf show. Well talk business, tech and the upcoming golf season. Take a look at equity futures. Dow is off by 71 points. Back in a moment. As more of a control. Enthusiast. Mmm, a perfect 177degrees. And thats why this road warrior rents from national. I can bypass the counter and go straight to my car. And i dont have to talk to any humans, unless i want to. And i dont. And national lets me choose any car in the aisle. Control. Its so, whats the word . Sexy. Go national. Go like a pro. Can a a subconscious. Mind . A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Bears on a train, the dow transports having trouble staying on the profit track. A look at whats driving the sector lower. Mark fields new gig why hes joining the board of big blue. And is there a remedy for biotech fallout. Well take a close are look at the sector its wednesday, january 27th and youre watching cnbc first in business worldwide. Welcome back to squawk box right here on cnbc. Among the stories front and center, Mortgage Applications jumping 8. 8 last week according to new figures. Both new home purchase applications and refinancing rose. Average 30 year Mortgage Rates fell slightly to just above 4 . Toyota retained its spot as the worlds best selling automaker. Toyota sold 10. 2 million vehicles keeping ahead of volkswagen and General Motors. Forward chief executive officer joining ibms board of directors. His appointment is effective march 1st. Boeings earnings are just hitting the wires. Guys, i have not phil lebeau will take a look at this. Well get to phil lebeau in just second. Dow transports falling almost 30 from the most recent highs placing them well into the bear market territory. Research. Are analyst covering transportation. Someone should have told us its not that all these companies have vehicles that use oil its that they are moving oil and thats what you need to, i guess thats the key thing to understand. Well that certainly is part of it, joe. You and i have bern talking about it for years, its the heart beat of the economy, what is getting moved. And theres a lot more getting moved than just oil but fracking led the First Industrial led recovery the United States has had since 1961. And now its on the verge of leading the First Industrial recession weve had in quite some time. How are we going to how does this finally bounce, recover . If we stay here at 30, can they move enough product at 30 to get back to more, you know what they are capable of, full potential of earnings per share . No, i think thats putting the cart before the horse. We had such a surge in activity throughout the economy, because oil was higher and there was a return to go out and frack a field. That return is just not there any more certainly not at 30 a barrel, even at 40 a barrel its not there. As a result you see a decline in that activity. Also you had natural gas get so inexpensive. Practically free. So coal is negative on top of negative on top of negative. Coal mines running down possible 6r , 32 and thats on top of a big negative last year. Hold on for a second well go to, its not a transport, boeing earnings just hitting the wires. Phil lebeau has them. For the Fourth Quarter boeing beating the street earning 1. 60 per share well above street estimates of 1. 28 per share. Revenue coming in at 23. 5 billion roughly in line with expectations. For the full year boeing earned 7. 72. That again well above expectations at 7. 38. Revenue up 6 to 96. 1 billion. Free cash flow is what investors are focused on in the Fourth Quarter, boeings Free Cash Flow was 2. 5 billion. Operating cash flow of 3. 1. A sn a smidge under expectations. Operating cash flow of 9. 4 billion. Guidance for 2016 will get a lot of attention. Boeing expecting to earn between 8. 15 and 8. 35 a share with revenue between 93 and 95 billion and operating cash flow of about 10 billion dollars. Now there might be a little bit of depression you will. This year you have the max transition and slightly lower revenue. Boeing is confident for the story for 2016 and again when you look at the earnings for today boeing beating the street, 1. 60 per share compared to the estimate of 1. 28 and revenue coming in line with that expectation. Should we be going with the adjusted number 8. 15 to 8. 35 . Remember you got the 8. 85, you got that 885 Million Dollar charge. I dont know if its been adjusted on the 2016 estimates. We went with the adjusted 1. 60, great quarter but not helping at all. Thaflts havent put in the raw number . Still below. Revenue number is down by at least 2 to 4 billion what the street was expecting. The street, becky you have people on the street who are saying look if you earned this year what 96. 1 billion why are your guiding next years revenue of coming in between 93 and 95 billion. Boeings answer is you have slightly lower revenue on the defers side of the business. You got a few project theres, the c17 no longer making the c17 and you got the 737 max transition. That will get some questions during the Conference Call. The other question is okay so you got that. Why arent you growing revenues by 6 next year. If youre at 96 billion shouldnt you have 6 Revenue Growth next year. Their guidance will be coming in between 93 and 95 billion. And thats below this years revenue. That number is not 15. Its fiscal year 16 is the one right. Why having 2015. Its 2016. 2016 fiscal. They are looking this year is done. This is the Fourth Quarter and they earned a buck 60. Puts them above 740. Next year it will be below. Back to don broughton. How much of the slump in the transports is just as uneven economy or industrial recession and you look at baltic freight, you look at all these things and nothing looks like were going gang busters globally, does it . No. If you look through all the different segments, lets take petroleum out of it. Lets take ag out of it. If i look at just Core Industrial car loadings in the u. S. , via railroad they are down 8 . Overall rail cars have been negative 45 weeks in a row. Thats a very sick patient, sick economy. I move to truck. Truck tonnage have been negative three out of the last five months. Truckload volume has been down 2 . Thats just not a very positive picture. You know, joe, you and becky and i have been talking about this for years. I dont want to date myself. But i go back and remember mark haines and i used to and erin burnett used to have arguments about this very topic. Freight flow just predicts the economy. It does a great job telling us whats happening realtime. Its telling us right now the patient is in ill health. Clip me like two seconds. Thats really good. I dont want to date myself that would make me omni sexual. Thats good, don. Im going to use that. Mix things up along the way. Sflie aupply and demand is wm hearing. If everything were talking about here the input, if it uses fuel to move all this stuff and fuel is half costs half as much it just seems more logical that things would be at least offset some of this other stuff. That should be good but its not. It should be. But understand that fuel is just one of the expenses. Equipment costs money. People to drive the trucks and trains cost money. Infrastructure, sales people. Theres plenty of other costs that are out there that are ongoing for the asset base. Thats really one of the reasons that is driving our investment decisions. Weve been negative on the rail industry. Had it sell since last march almost a year now. Weve been increasingly negative on truck. Only bright spot we see is go to the free folders who dont have those assets so they are selling at contract market prices. May be doing fewer transactions but selling at contract market prices and buying at spot prices. Thank you. Appreciate it. My pleasure as always. Recommend that omni thing. Dating yourself you can glow blind. Get vision problems. Too much of that. Yeah. When we come back this morning you need a little when your swing . Maybe your short game isnt quite up to par. Taylor made have the answer. The companys ceo joins us after the break to talk about the upcoming golf season. In the meantime take a look at the futures. We just heard from boeing the dow component issuing a big warning on earnings and revenue numbers for 2016. Dow futures now 92 points below fair value. S p futures down by ten and nasdaq off by 30. Squawk box will be right back. Ford ceo mark fields is going blue. Hes joining ibms board of directors as Technology Drives the sector. Fields used to work at ibm in sales and marketing after graduating. Hes come a long way. He graduated from rutgers. Then attending Harvard Business school. Started at rutgers, undergrad there. I love rutgers. Like the oldest school. 1776. An ivy league school. State funded. Henry rutgers used to be old queens college. Henry rutgers paid 25 and donate ad bell and changed the name of the college. Tony soprano went there. Hes a fictional character. Or james yes. Lets turn to golf. You got to help me with this. I can help you with the interview. Weve played. I cant help you with the swing. Its called the major of the golf business the pga merchandise show in orlando, florida is where golfs biggest names are gathering each year to set the stage for the new year. Dominic chu drew the shortest straw and joined by tayloremades ceo. Good morning. Good morning, guys. For the record im a cornell guy along with andrew and my father went to rutgers. Were here in orlando. David abeles right next to me. Ceo of tayloremade adidas golf. The real question is why is this such a big deal for the Golf Community and how big of a commitment is it for a company like tayloremade to be here . Good to be back first of all. Love it. Its a big commitment and an important commitment. The show is really the one time during the year where the entire industry comes together under one roof which is very, very special. It isnt solely about new Product Introduction but its about an industry coming together to project on the future, to think about where golf can go and project the energy at the beginning of the year. How many folks do you have here from tayloremade adidas at this facility. Its a large commitment. We have 250 people in total that comes from kals bad and around the world to the pga show. Uk, asia, latin america, very important show for us. As we talk about tayloremade adidas golf its part of a larger golf unit. Its one of the biggest Sports Apparel companies in the world. What is tayloremade adidas role in that bigger unit of adidas and where do you see that Going Forward very simple. Our role is to drive the golf business. Were fortunate. We have an incredible Parent Company that has incredible global reach. It reaches every market around the world. We run the golf business. So taylor head is our equipment brand, adidas is our apparel brand. Its the most progressive brands in golf and our goal is to drive the business. Do you see tayloremade still being part of adidas Going Forward. We have never had more support than we had from our Parent Company. Were here to launch the m1 back in october which became the number one driver on tour and has taken over the world of golf. Its been fantastic for us. Yesterday we completed the m family with the launch of the m2 driver and the m2 irons. A very exciting week and very exciting start to the week for us. We never had more strength and momentum than we have right now coming into january and february. The economy is a big focus right now for the entire business community. Its a fed decision day on interest rates. Is the economy, in your eyes, as a golf ceo, as good or as bad as some are making it out to be . Where do you see this economy saint as healthy as elm say it is. Every company, every leader has a responsibility to look at the economy. Were excited about this year. Avid golfers buy advance technology. When you bring advance technology to market products that really perform and out perform your previous products you create energy in this marketplace and we do very well. So were optimistic about our growth plan as we move into 2016. Its the most discretionary of Discretionary Spending items. From one ceos perspective things are Getting Better for the golfing economy. For that well send it back to joe, andrew and becky. Im here not sunny but still a fun time at the pga tour merchandise show here in orlando. Back to you. Do you know anyone . Are you going to get out at all . Its raining cats and dogs out here right now so im going to be inside the entire time. We got a whole bunch of ceos lined up all day. How old are your irons . My irons are a year old and without going into who makes them i did have a very, very big commitment in making golf equipment purchases last year. Well have to see whether or not that translates in to this years purchases. I have some tayloremade. I have the kind that youre supposed to be good. Thats what i got first. I had to go back and get the kind where youre just okay. Im telling you, david i h talking about. We do. We got even better. Really . They had steel shafts. Like the one out of ten times i have a really good swing it feels amazing on the ones that are really good but better to have the ones where, you know, it doesnt have to be the perfect swing to have it go okay because its the bad shots that kill you. A man of your talent never a doubt youre playing great. 2016 make no mistake is the year of m. Year of m. M technology will take over the world in 2016 in the world of golf equipment. Unless somehow it allows someone to hit a sand wedge without skulling it i dont care what m stands for. I need a piece, a psychiatrist. Thank you. Thanks, dom and david. You need to peek . I do. When we come back is there a remedy for beaten down biotech stocks. Theres some key earnings reports this morning. Take a look at the futures. They have been under pressure all morning long. Off the weakest levels but the dew fouchs down by 83 points below fair value. S p futures down by eight and nasdaq down by 26. Squawk box will be right back. Welcome back, folks. Take a look at shares of bogey. The stock down this morning after the company warned earnings for 2016 will be below what the street was expecting. They are now saying 8. 15 to 8. 30. They beat their earnings expectations for the most recent quarter but warning for the full yearer and thats what is putting this stock down by close to 5 this morning. About flat, i think, for earnings per share because they were supposed to earn 7. 70 and beat by 50 cents, right . So they are earn about 8. 10. 8. 15 at the low end. Basically flat. No growth for earnings per share. Revenue looks like it will be below where it is. They are looking at 93 to 95 billion dollars. Street was looking for 97. Phil was explaining it has to do with deliveries and how quickly they make the planes. Defense contracts. Its where do you sell the stock based on timing issues. Same company. We have some biotech names in the news this morning and meg terrell joins us. Biotech had a tough year. They are hoping earnings will turn that around. Biogen this morning looks like it will be doing that. The stock is up 6 after they put out their Fourth Quarter results. Beating eps and coming in short on revenue. Sorry beating on revenue as well. What people are watching is their guidance for the year. They bracketed what the street was expecting so youre seeing the stock go up this morning. People are nervous about the health of their multiple sclerosis franchise. That one beat expectations. People pretty happy with biogen hoping that continues throughout biotech the stock trading up. Novartis, much bigger european company. That coming in under expectations. Company really trying to restructure its eye care business. Thats a big thing for them. This year they will face generic competition to their leukemia drug and than Heart Failure drug that they are just launching. Those are things people are watching with novartis but stock is trading down after the Fourth Quarter numbers. Meg, thank you very much. When we come back will apple set the stage for todays trading session. Well talk about the companys results right after this break. Later, the green show on grass, David Steiner joins us to talk about the Worlds Largest zero waste event. Every Auto Insurance policy has a number. But not every Insurance Company understands the life behind it. Those who have served our nation have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. Today, were seeing new technologies make healthcare more personal with patientcentric, digital innovations; from selfmonitoring devices that can interpret personal data and enable targeted care, to Cloud Platforms that invite providers to collaborate with the patients they serve. Thats why over 90 of the top 25 Global Pharmaceutical Companies are turning to cognizant. Our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way Clinical Research sites collaborate with pharmaceutical companies, and enhancing Patient Engagement with innovative platforms and solutions. Our populations growing healthcare needs present growing opportunities for our clients to advance the future of medicine with digital, and improve the quality of lives. Apple posted the largest quarterly profit in the companys history but 18 billion isnt enough for wall street. Well talk iphone weak naens chi weakness straight ahead. Will janet yellen and Company Deliver what investors want to hear. A squawk masterpiece. The story of one man changing the art business. One bird, butterfly and bunny at a time. The final hour of squawk box begins right now. Announcer live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box right here on cnbc first in business worldwide. Im Andrew Ross Sorkin along with joe kernen and becky quick. Were less than oet minutes from the opening bell on wall street. Futures look like they will open down. Dow opens off by 90 points. Nasdaq off by 25 and s p 500 off by 8. 5 points. All of this can change at 2 00 when we hear from the fed. In the meantime here are the stories investors are talking about. Fed decision that andrew just mentioned is out at 2 00 p. M. Eastern time. They are widely expected to keep rates unchanged. Will it offer i had any hints on future hikes. Oil is under pressure although off their worst levels. Oil prices were down lose to 4 but now down 62 cents to 30. 82. At 10 cohn 30 eastern time when the latest Oil Inventory will be released. Housing news today Mortgage Applications rising nearly 9 in the latest wave as rates drop during the period. Stocks to watch. Bogey had a good quarter as far as earnings per share. Much better than expected. Revenue as well. Its outlook is light. Stock is down 5 and thats affecting the dow. Mixed quarter for another dow component United Technologies, earnings topped expectations. Revenue fell short. That stock is unchanged. Sales were hurt by a strong dollar. The other big dow mover shares of apple are under pressure today. Right now the company realizing its not immune to the slow down in china and Global Economic headwinds and people realizing to the law of large numbers. Josh lipton has that story. Joe thats right. Tim cook kicking off yesterdays Conference Call highlighting a challenging global Macro Economic environment and while apple reported its best results ever in china, cook now sees headwinds. Not with standing these record results we began to see some signs of economic softness in Greater China earlier this month most notably in hong kong. Now that is a notable change in tone from cook. In q4 remember he shrugged off concerns about weakness in china. He stressed to me while he sees short term volatility he remains bullish on china over the long haul. As china slows other parts of apple business are going strong namely services which includes the app store, apple pay and itunes. There are now 1 billion active apple devices driving 5. 5 billion dollars in Services Revenue in the First Quarter and that was a new record. I spoke with some analysts, those who did question whether the company touted the Services Business in light of a slowing iphone business. But piper disagrees saying apple benefits by showing off an exciting growth area. Now from april told the broader markets. Our guest host this morning is rebecca patterson. And joe sullivan. He joins us fresh off of ink three large deals in the last week and great to see both of you. Let me throw this question out. I want seems that for the last month or so weve been tossing around the idea of china, the oil, the fed, which is most important, which is directing where equities are headed. I would say oil for the last couple of sessions but maybe today the fed takes over . I think so. I think it will be as joe mentioned earlier very, very much a focus on the outlook and on the statement. The market has not the market and the economy hasnt really moved in the direction that i think the fed anticipated six weeks ago. Consequently theyve consistently been very measured, very cautious. They lean a little bit to the dovish side in our opinion and continue to be very, very data dependent and need to see a clear outlook before they move again. Thats probably the case, rebecca. At this point the market is expecting that dovishness. What happens today at 2 00. Thats my concern too that you do get their acknowledgment that oil prices have fallen faster than they or pretty much anyone expected and that could affect Inflation Expectations and their inflation outlook. Can you get an acknowledgment of weaker data especially the manufacturing sector. At the same time they learned from last autumn they dont want to overreact. A little bit dovish but not uber dovish and given the market is reducing its expectations for fed hikes if you dont get more than that, does it help equities . What we got from the European Central bank earlier this year, what we might get from the bank of japan later this week is a surprise. At this point to see market support you want a surprise in the amount of dovish and possible additional easing. So it doesnt look like were so sharply diverging. Dont forget the move they made was a measured move. It was only 20 basis points. If you look back in history they raised at times 50 or a full percentage points. They have taken a very measured approach and will continue to do that. Volcker went up 200 basis points. Overnight. So theyve taken a very measured they wont do that today. Not my forecast. I think thats a safe bet. Probably wont. Your expectation is the market will rally off this but then fall later in the week when people say the bad news is really bad news. We had good Consumer Confidence data this week. We had great Mortgage Applications this morning. So the consumer in the United States is not rolling over. So in my mind that tells me that recession fears baked in to the market are overdone at least for now. But s p, the equity market is different than gdp. Gdp is about the consumer, the s p is much more international, much more energy and manufacturing focused and so even though i dont think theres a recession you get these feedback loops that affect the equity market in a different way. We took steps earlier this year, this month, long month, long year, just to take a little of the voiflatility of the equitie we own. Getting less risky. We think we can get a positive return this year. We think well have a bumpy ride. The oil data last night, inventories in the u. S. Continue to build. Its very hard for me to see a bottom in oil until we get major producers crying uncle which isnt happening yet or some signs that the cut in regs in the u. S. Is leading to an inventory decline. Were not there yet. With that volatility in oil the question mark on oil, question mark on china, investors will stay nervous. It will be choppy. We were talking back in the waiting room about the fact that the Economic Data has really been uneven. So you saw soft retail sales coming out of december but yet as rebecca pointed out do we know how people are shopping. We know they are shopping differently. How do we know about that data. Consumer confidence comes out, terrific number. Three month high. Its very uneven. The interesting thing is as you walk around new york, as you walk around any city in the u. S. You dont really get the feeling maybe the oil patch a little different fair enough. Other than that you dont get the scene that were going into a recession here. Restaurants are busy, travel is busy. Everything feels anything but a recession. Anything but negative. Everyone who watches cnbc and everyone who is involved with the equity markets, were so focused on this. If you think about the hit to the average americans wealth from the fall in equities which has been a big one, for the average american this is offset by the rise in their home values and the benefit they are getting from lower energy prices. So the average american isnt feeling anything like what we feel emotionally watching this roller coaster. Not like it was in 08 or 09. We talked to, i forget who it was one of the major ceos, maybe larry fink from blackrock they are not seeing Retail Investors sell, the institutional traders are making big moves. They are more tactical. Weve seen redemptions pick up a little bit. Not extraordinary so. Our retail sales have held up a little bit comparatively well. Thats encouraging. People taking a longer view. Redemptions have picked up a little bit but not extraordinarily so. What do you look for next, joe . You know, i think what were working on is continue to encourage all investors, be they institutional or retail to diversify. Its clear diversification can smooth out this enormous volatility. You can diversify into different asset classes. Thats why we acquired a real estate manager, added to our hedge funds capability to offer more choice for investors to diversify and to smooth, you know, smooth volatility. Weve gotten over the last several years with all the qe in the market weve gotten very accustomed to low volatility as rates will move up a little bit, were returning to normal, to normal types of volatility in the markets. Maybe its a little extreme recent leadership but volatility is back in the market. We can smooth that. Investors can smooth that through diversification. Youre not talking about diversifying into cash. Youre still not earning anything in cash. I guess if youre nervous or a little bit more. I would be more invested than less. Our Municipal Bonds last year the portfolio we manage was up 2. 5 . Very conservative. No puerto rico, no leverage that sort of thing. But youre thinking cash versus fixed income its hard like bonds. When bonds were strengthening 30 some years and very highly valued right now. But if youre thinking about diversification, you want defensiveness in your portfolio, tiny bit of cash, little bit of conservative fixed income and i know hedge funds remember getting a lot of bad preand some of it very justified. I do think hedge funds if you pick the right hand gears and put that together can help smooth through this too. The Capital Appreciation of the muni fund, 2. 5 or was that the total return . Total return. Think about fixed income. Our view would be is that growth will be consistent over a period of time. It will be Slower Growth but kind of consistent over a long period of time. That does not autograger for a significant rise in rates. Credit spread are extremely wide right now. So we have been actually in a bear market for credit. You get excess return over and above. There is a cost to waiting. If you sit in cash versus what you can get even out in the three, four, five year area of the curve theres a cost to waiting to investors. Joe, thank you for coming in today. My pleasure. Rebecca will be with us for the rest of the program. We have a lot to talk about. Anyway, just real quickly, if you know im not is going mention the name of this outfit. But its A David Brock sort of pseudo superp. A. C. For hillary clinton, media type outlet, you know what im talking about. Yeah. Hideous. Between donald trump and fox news whose side do they take. Ill read you the headline. My guess is fox. With donald trump abandoning its debate fox news scorched by its own chicanery. Then i went into it. Fox news created donald trump. And now by enabling him, putting him on so much getting burned. They are sort of i wont mention names. Its scary, andrew. You let sleeping dogs lie with these clowns. I make no comments. Smart man. I didnt mention the name. I could be talk become some other david brock. Im already anxious my no comment is making the website. A check on the economy with the trash indicator. Well find out what our garbage says about americas bottom line. Box will be right back after this quick break. Random . No. Its all about understanding patterns. Like the mail guy at 3 12pm every day or jerry getting dumped every third tuesday. Jerry every third tuesday. We have Pattern Recognition Technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. Td ameritrade. Welcome back to squawk box, everyone. Take a look at the u. S. Equity futures. The dow is down by triple digits. Decline of 112 points below fair value. Of this about 80 points are coming from the losses that weve seen in apple after it reported its earnings last night and bogey the dow component that reported its earnings this morning. It was bogeys outlook that really hurt that stock. You can see, though, again 112 points below fair value. S p futures is down by nine, nasdaq down by 25. Check out oil prices which believe it or not even though they are down 2. 5 havent been hurting when they were down further, when they were down close to 4 . We saw a bigger impact on the dow but its the apple bogey combination. Capital resources is trying to preserve cash amid plunging oil prices. Herald continental says it wont be profitable until oil prices return to 37 a barrel. Were counting down to todays fed decision and trying to get a good read on the real World Economy and one way to track how things are going is the garbage indicator. One mans trash is another economists treasure. Joining us David Steiner, ceo of Waste Management. Hes getting ready to host the big Waste Management open next week. Thats in phoenix, isnt it . Yes, absolutely. What is that, number 16 . Yeah. Absolutely. 16th hole where well have about 50,000 fans in a totally enclosed stadium most unique hole in golf. Nobody has any alcohol there either during the when those guys tee off. Its so amazing. Its almost like being in a stadium and sometimes people cheer as they are hitting at that par 3, right . Absolutely. When you talk to the players they will tell you theres nothing like it on the pga tour. Waste management made a lot of money because last year we had a hole in one and those nonalcoholic beverages went flying out on to the greens. You had to clean up all the garbage. David, you guest hosted not too long ago and we figured out a lot about how we can correlate the strength of the economy from the trash. Has it gotten worse or is about it the same . Yeah for us its actually, im going very well. You know, we dont see tremendous double digit type growth in waste volumes but what were seeing is good steady growth in that sort of 1 to 3 range. We expect that to continue through 2016 and on into 2017 as we see Housing Starts and new business starts continue to improve, we see our volumes continue to improve. Weve talked a couple of times and ive given you can you identify kudos getting out of that waste energy, you lessened your Financial Impact 30 oil, steiner. What are those facilities worth as 30 oil trying to make money by converting waste energy. What kind of oil price do you need where thats profitable. We can take all the waste we collect which is over 100 million ton as year. We can turn all of it into energy at the right oil price. Thats really about 150 a barrel back in 2007 we made some plans to say thats going to be the environment were going to be in. 130 to 150 oil that sure seems a long way off now doesnt it. Sure does. Were going to need some serious government subsidys for that one. Well find a way. We got to do it. Just seems like we got to do it. Ridiculous. In the meantime we can do a lot of Different Things with your waste. We can recycle 30 240 of it. We would like to find a way to take the rest of that waste and really turn our companys businesses, our customers businesses into what we got at the phoenix open a zero waste event. Thats interesting. How does that what goes into getting a net net zero. How does that work . We have 500,000 fans at the Waste Management phoenix open. They generate nearly a Million Pounds of waste. You wont see one single waste receiptc receptacle. Youll see compost bins and recycle bins. We recycle it and compost it. We take the gray water we generate and use it to run the portable toilets at the facility. So everything that they generate at the Waste Management phoenix open will be reused a Million Pounds of waste zero into a landfill. Wow. So it can to be done. Obviously youre showing the way. How long are you going to be doing the phoenix open . Did you sign a long term deal . We did. Just this year we signed a ten year extension. So when you think about the city of phoenix, since the Waste Management phoenix open has been in place, we generated over 100 million that we given back to local charities and 225 million of Economic Impact a year. Well generate over 2 billion of Economic Impact into the phoenix area. Ten years. Any proam things out there at the phoenix open . We absolutely have a proam and, joe, you got a standing invitation to come on out. Cant play in them all. But thats a great event and great course, m. Donald trump challenging ted cruz to a debate. Thats coming up. Announcer youre watching squawk box on cnbc. First in business worldwide. You were shown to be quite skilled at fraud. Times change. Now i help catch the bad guys. Me too. I help banks detect fraud by applying cognitive analytics to public financial records and social media. So if somebody said, catch me if you can. . We can. Lets do a sequel. It could be a buddy movie. I would like to have a buddy. They speak louder. We like that. Not just because were doers. Because were changing. Big things. Small things. Spur of the moment things. Changes youll notice. Wherever you are in the world. Sheraton. Donald trump sitting out thursdays debate. Gop frontrunner said he wont be participating in fox debate escalating the feud with the network. Trump holds an event in iowa raising money for wounded warriors. Senator ted cruz is using the opportunity to challenge his arch rival. Now if mr. Trump is scared to face megyn kelly, then i would ask that he at least show the respect thats owed to the men and women of iowa. If hes unwilling to stand on the debate stage wither to candidates then i would like to invite donald right now to engaging a one on one debate with me any time between now and the Iowa Caucuses. Still no word if the trump camp will accept that challenge. Also in Corporate News a win for lyft a California Court ruling that drivers are contractors and not employees. The Ride Sharing Company will pay dolla 2 million fines. Universities are bringing in big donations, record 40. 3 billion was raised by colleges and verse. Council for aid for education 18 of that amount went to just ten institutions. Stanford university raised 1. 6 billion and harvard raised 1. 1 million. Two schools held the top spots in the survey for 14 of the past 16 years. Meantime endowments in 2015 earned an average return of 2. 4 . Thats nearly 16 drop from the prior year but still beats averages. Up. A new study finds schools in the u. S. Put more than half of their investments in as we just said socalled alternative strategies including vc, venture capital, equity and hedge fund. Harvard with 36. 4 billion followed by yale and then the university of texas system. The important thing there is not down 15 from the year before that its still up versus the major averages. When we come back todays top stories plus its the final countdown. Well get ready for the big fed decision. As we head to a break heres what the head of global vanguards fixed income is expecting. We pebt to dial back the rhetoric in terms ever doing three or four rate hikes and continue on that pace for next year. The market and Economic Conditions are not supportive of that type of aggressive move over the course of the next year or so. Welcome back to squawk box, everyone. Heres whats making headlines this morning. Weve been watching shares of Fiat Chrysler. The automaker is taking a 9056 million charge against earnings related to changes in north american production. Details on those changes will released later this morning but that stock is down by almost 4. 9 . The fcc is expected to propose new rules regarding Television Sets boxes. It would give customers more access to boxes than from ones than their satellite or cable companies. Its to provide lower prices. Check out the futures right now. They have been lower all morning long. Started out because of weakness in oil but right now you can see things are down in large part at this point dow futures down by 82 points, s p futures down by five, nasdaq down by 16. A lot of these losses from the dow throes 80 points in losses is coming simply from bogey and apple alone. Some big stock movers right now. Bogey posting better than expected earns and revenue but its outlook is light and the took is strayeding lower. United technologies, revenue fell short. Apples earnings beating the street but bad news. Revenues fell slightly short maybe more than slightly short among the biggest drags they sold fewer iphones than expected slowest ever growth in shipments. It is decision day at the fed and were more than five hours away from a big policy announcement at 2 00 earn time. Steve liesman joins us now. The fed will recognize that its the financial and economic world has changed pretty dramatically. The question is whether they think collectively the rate hike they did in december and their projections for further hikes are the cause of what happened. It has to figure out whether keeping to that forecast will make things worse. Heres whats happened since the fed last met. Its been a lot. Stocks sank, volatility surged. Oil plunged. Inflation outlook reduced. Economic data weakened Dollar Strengthened. Jobs numbers a bit softer. All of this suggests the fed will offer different assessment of the outlook for the economy and policy. It could, for example, no longer be quote reasonably confident that inflation will rise as it was at the last meeting. If that comes out thats a pretty big change for investors to watch for. Heres how the fed could potentially respond. Note the weaker growth in the first paragraph of the statement and note the weaker inflation data. Mention these Global Growth troubles although it did get in trouble in august when they did that. Overall it should support the market view of no march rate hike. But do not expect, i dont think, a wholesale retreat from the fed that would suggest a change in policy direction only a timeout it tells the market what it knows now is not the time to raise rates and march is unlikely too. But june remains possible if the data cooperates. One caveat is the fed does not want to appear reactive to daily or weekly market swings that arent based on fundamentals even though it sort of is. Okay. Steve stay with us. Our guest host this our is rebecca patterson. Shes a cnbc contributor. You expect i mean i think you disagree with steve. Am i wrong . No i think you are going to get a relatively more dovish fed today but they have to thread a needle. Last automaker they got pummelled for reacting to short terminus and china and financial markets. They dont want to look reactive. At the same time they know very well that what happens in the market can affect the real economy. Oil falling affects inflation view. Stock market falling over time can affect confidence and consumer and business activity. So, they have to figure out how to say that without appearing overly market sensitive and reactive. Thats a tough job. I am really interested in this question about how they think about what the rate hike has done. The initial reaction of the market was really hohum. The market rallied in the first couple ever days. Then decided it didnt like this at all. If the fed beefs or comes to believe the rate hike and projections for rate hike caused the market to decline and ultimately undermining the economy thats when you get a reversal in policy. I dont think they are there yet. But thats the discussion im most interested in. I do agree. I think well have some other markers coming up. We have janet yellen giving congressional testimony early in february which hard to believe is next week and then we also have her giving a speech at the Economic Club here in new york city. Well have a couple of opportunities if this is just a Statement Today for her to elaborate on that and guide the market. Expect more volatility as people parse the statement. Im sure this isnt a new phrase even this year. But i think it will be a whackamole year. We have china concerns and then they go away. Oil concerns. Even if the economy is not on the verge of recession if we have these constant concerns it will be a bumpy ride and that will limit how much risk people want to take. I think our gentleman from legg mason there talking about diversification thats absolutely right. You do want to have diversification to smooth through this ride. Okay. Thank you. Appreciate it. Steve, thank you, sir. See you guys later this afternoon. We will. Thanks for the warning. Up next youll meet an artist whose paintings hang in galleries around the world and they are owned by whos who from hollywood all the way to washington. Hes hoping to create an elm pyre beyond the can versus for his iconic bunnies and birds. Well explain when the masterpiece thats squawk box returns. Welcome back to squawk box. The futures right now they are down, of course well see where they end up later today but right now dow will open up 70 points opinion nasdaq off by 15 points and s p off by four points. Better than they were. They were down well over 100. 115 at one point. They will change five more times before tend of the day today. In terms of up or down. In our headlines bill ackman said hes sorry to investors and his hedge fund suffered its worse year in history. The activist manager said failing to sell shares of valeant pharmaceutical when its price rose to over 200 a share was a costly mistake. Pershing lost between 15 and 20 . Ackmans portfolio is down by 14 . The art Business Today is about more than just framing masterpieces on can versus. Today artists are big time brands and their paintings are part of what they are known for. Our reporter is here with the story of a man whose paintings have made him fap mouse the world over. Reporter hunt slonems famous images of bunnies, birds, butterflies hang in museums and galerries around the world. His clients are sharon stone, Whoopi Goldberg and bill clinton. But yet where fashion, design and art are merging, hunt slonem is moving beyond the canvas to become a luxury brand. He has a deal to sell hunt slonem fabric, carpet. Art is the new gold. You know, the new standard of wealth in the world. Its just taken off in a form that surpasses a lot of other industries. How are you doing . Good girl. Reporter slonems 30,000squierfoot studio in brooklyn is like a won eder emporium. He celebrities real estate, old real estate. He bought and restored two plantations in louisiana, a gilded age mansion in kingston new york and a castle in scranton, Pennsylvania Opinion his goal is to buy and save an old house in every city of america. I was trying to figure out what would it take me to be happy for the rest of my life. Robert frank joins us now along with world renowned artist hunt slonem. Ive been to the studio. Its wonderful out there. Filled with things i would love to have but cant afford. Thanks. What is it. How do you get the old houses finally to restoring them . Its almost they find you. Is that the way it works . Yes. Absolutely. The ultimate sort of expression i guess might be surroundings, architecture. Its just one of those miracles of destiny. I was having a show in new orleans and somebody from dubai bought my show out and the realtor said get in the car, miss emily died were going to albania. How many piece . You told me you sold 72 paintings in one opening in dubai. Then you were in moscow. I mean youre all over the world. People underestimate how global a brand youve become. What is it like overseas for your art. What is the reception lining . I like what they said in moscow. I had the a show in the museum of art and given an award by the Royal Academy of arts, merit of honor by the World Academy by peter the great. The words that they used were monumental and uplifting and i really like that. Theres fr that theres that. Noncategory i like that. I hate being pinned down. Yeah. To one. We tend to talk about the art market on this show and others with auctions. Thats like judging the auto market by ferrari sales. Youre in the broader market. Some of your paintings are under 10,000, relatively infomercial. Whats that market like right now . The gallery. Very good. I think there was a little bit of a well i had a goodyear last year. But we do notice in some regional areas of america as i travel that people are less likely to buy in some years than others. Right now its pretty good. Last year was pretty exceptional. But theres just people clamoring for the work all over the place. Whats the price of one of your prices of work . My little bunnies start about 5,000. I sold up to 450,000. How quickly do you see whether theres market volatility like in the last few weeks its created chaos. How quickly does that show up in the art market. Im talking about my world. I could pop in here and i know robert could too. In new york theres this winter antique show which theyve been trying to get more modern and more eclectic. They tend to see the higher end of the market follow stocks with a six month lag. When we look at publicly available art prices we tend to find theres a positive relationship with equities which makes sense, it affects peoples perception of wealth. Not a perfect correlation. Stock market matters for art and art auctions can influence upper earned sentment which affects stocks. The great thing about your pieces they are famous. They are iconic. Everybody knows them. They are affordable. You can get one of your pieces for 5,000, 10,000. Thats great. You can buy almost anybody in some form for that price. Picasso pilates. Damien hurst has shops all over the place. What does it take to move the top number for you. Meaning the 450 number. 450,000 the most . Yes. That was a large commission. I do large commissions and they do go up into nil loans occasionally. How do you push you know im a painter. Im not completely immersed in the business of art. I work and collect birds and houses and im the purpose what i do is pursuit my desires of saving these national treasures. So im not focused on that. I could speak for a week about that and i dont think we have time right now. There are certain, you know, 50 key players in the world that could turn that around in three seconds. But im revving up to it. I have seen jerry garcia and ties. Ive done a few. Up have . They werent marketed in a big way. Very interesting. I should have worn one today. Great package. Thank you. He makes a great tv. Th that studio should be a tv. You should see our armory. It was built by the robber barons of scranton for the private armies. 20 miles of tunnels. You just bought the wool worth mansion in scranton as well. Yes, f. W. Wool worth. How many houses do you have im up to six. Not really all houses per se. Plantations. But ive saved them. They were all like this close to being bulldozed. Have you been on the today show . I have not. Okay, good. Thank you. When we return jim cramers take on apples iphone weakness. Biogen stock trading higher. Stay tuned, squawk returns in just a moment. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back to squawk box. In our headlines, investment firms are slashing mutual fund and etf fees. Blackrock, Charles Schwab and vanguard are cutting the annual expenses that customers pay. An article in the wall street journal cites tati s statisti morningstar. Shares of Bed Bath Beyond are under pressure now, the stock downgraded from underweight to sector weight, the price target 35. Lets get down to the new york stock exchange, jim cramer joins us now. Jim, boeing was surprising, i think. I dont know if you had a chance to other than twitter comment on apple. Ive been looking at apple all morning. I think the big conundrum how do you value it. Boeing, i have to hear more from them. The aerospace sector, people were positive about it. United technologies, pretty good. Apple, the issue is do you value it like General Motors where it gets a low multiple and may peak, or value it like intel with a higher multiple. You will not value it near any other technology companies. I think thats all wrong. We sit back, 90 to 100, as if it were a supplier of apple. Theyre in a little more control of their own destiny. If you give it an 8 number for this year, i can make a case that it should be bought if it gets to 90 it looks like it might go there. I think the stock is worth about 110 based on comparable analysis to other companies in a similar boat that they are. Jim, guys that have a 200 price target, do they wait until people are not paying attention and then quietly bring it down . I understand what theyre doing. Theyre looking at a market multiple on a 10 number and saying, geez, how can we possibly get away from a stretch valuation if next year is going to be 11. Those numbers are no longer in synch. The caterpillar downgrade from friday evening from goldman, you should look at where the price target was, realize that guy is wrong, but he may not be as negative as he should be. His story is not panning out. The story that im saying is panning out, everything is going bad. We cant value this company like General Motors. We cant, then its selling at two times earnings. But its valued the analysts are looking at this like General Motors valuation, peak 2015, 2016 down. Balance sheet doesnt matter. These guys ought to think if the fed does raise rates four times and they can repatriate the cash, the numbers would go up higher. Right. Right. It may not be the best case scenario, but its not the worst. Its hard to analyze. Ill give all the analysts that. Its hard to analyze. You have to use another prism away from tech, thats what i will do this morning. All right, jim. Thanks. See you in a couple minutes. Before we go to break a bit of deal news crossing the tape. You might recall that media general had been in a tieup with meredith, that deal has been terminated. Media general is being sold instead to next Star Broadcasting Group for 17. 70 a share. In total, nexstar is paying 10. 55 in cash and 0. 1249 of a share of nexstar for that deal. When we come back, a market call from our guest host, rebecca paterson. And later this morning, sprints ceo on squawk on the street. In new york state, we believe tomorrow starts today. All across the state the economy is growing, with creative new business incentives, the lowest taxes in decades, and university partnerships, attracting the talent and companies of tomorrow. Like in utica, where a new kind of workforce is being trained. And in albany, the nanotechnology capital of the world. Let us help grow your companys tomorrow, today at business. Ny. Gov theand to help you accelerate,. Weve created a new company. One totally focused on whats next for your business. The True Partnership where people,technology and ideas push everyone forward. Accelerating innovation. Accelerating transformation. Accelerating next. Hewlett packard enterprise. Welcome back, everybody, our guest host this hour, rebecca paterson. The fed has the statement coming out at 2 00 p. M. Today. We havent touched on what this means for the dollar. More than a year ago you were warning us that the dollar could significantly strengthen. What do you think will happen now. We dont think the dollar appreciation is over, but a lot of it is behind us. Dollar gains from here should come more slowly. Japan doesnt want dollar yen above 1. 25 in our view. The Euro Dollar Exchange rate around 1. 08. We are getting near the end of that. The Dollar Strength here is against emerging market currencies, especially if Oil Keeps Falling and china fears persist. If the dollar headwinds can slow down, thats our best case view this year, over the course of the year youll see better numbers and better guidance from some of the u. S. Multinationals like we saw from apple last night. To us, the dollar will fade as a problem and as a focal point, but what i keep coming back to, the u. S. Government has said we want a strong dollar since the 1980s. Jack lewis said it on our set last week. Its hard to turn that aaround. Todays world, different from the 80s, the u. S. Needs a stable dollar, maybe even a slightly weaker dollar. Main street loves a strong dollar, wall street a weaker dollar. If its too weak that could push up oil prices which hurts the consumer. A stable dollar, slightly weaker dollar is not a big headwind for the consumer. Maybe the next thing is to find a way to change the dollar story. Talk about threading a needle. We complain about how the chinese have been so hamhanded in their responses. Were stuck. Were stuck to change that tone would be such a market shift, it could be incredibly disruptive. I loved the chinese comments in the Financial Times today. I talked about that earlier. Brilliant. But theyre desperate. Theyll have reserve numbers coming out february 7th, and it will show more capital outflows. They have to stop the capital outflows so haha. We have go. Join us tomorrow. Squawk on the street is next. Good wednesday morning. Welcome to squawk on the street, im Carl Quintanilla with jim cramer, david faber at t the new york stock eck exchange. Boeing and apple are taking a chunk of the guidance. Oil is down 2 as we await an expected inventory build at 10 30 eastern. The road map this morning begins with apple. Shares shrinking after yesterdays revenue