Transcripts For CNBC Squawk Box 20160128

32. 52. Well talk about that in a little bit. A couple things on todays watch list. We have a busy day for Economic Data and earnings. Weekly jobless claims come out at 8 30 eastern time. Expected to pull back after last weeks spike above 290,000. December durable goods also coming up at 8 30 eastern. At 10 00 a. M. , were going to get december pending home sales. Today is the heaviest day for earnings for the s p 500 companies. Were going to be hearing from ah l alibaba, caterpillar, under armour, and ford all before the bell. Then amazon and microsoft to close out the day after the bell. Tonight, the final gop debate before the iowa caucus. Donald trump has announced he will not participate. Im not a fan of megyn kelly. I think shes a thirdrate reporter. I think shes frankly not good as what he does. I think they could do a lot better than megyn kelly. Im going to be making a decision with fox, but i probably wont be doing the deba debate. Senator ted cruz taking trump to task for skipping that debate. He proposed a one on one. Donald is frightened by mark and sean and rush. Then well have no moderator whatsoever. A town hall of iowans. Ill tell you what, donald, you can invite half the people and control half the tickets. Well invite half the people and half the tickets. Each of us will alternate questions from the men and women of iowa. Cruz tweeted a link to duckingdonald. Com. The site asks visitors to sign a petition in favor of cruz and trump having a side debate. Still some speculation as to whether trump will somehow magically walk on the stage tonight. I dont think so. Trump tweeted back ab response to that. He said, sure, ill do the debate if we can have it in canada. There have been other people that didnt do debates. I was surprised. I did not remember that. Reagan back in 1980 said forget it. That too weird of a coincidence. This is a brilliant move. Publicity. Wounded warriors, doing it at the same time. He gets huge crowds. I think Rush Limbaugh is right. To not be there and still be the person most people are talking about, youre in control. The whole fox trump relationship is bizarre. I love the washington post. You watched the bill oreilly thing. The headline says fox wants to be king maker, but trump rejects the crown. That appearance was the 133rd appearance of trump. As hes saying stuff about megyn kelly and not appearing thursday night, hes on the orielly show. Its own position on this is changing. I think theyre trying to come to grips with the idea that trump might very well be the republican i did my voice for this. Theyre trying to come to grips with the idea hed be the republican nominee. They were very strident before. Now theyre like, well, you know, his tax plans pretty good. His tax reform outline is not bad. He might work with paul ryan. You know, suddenly theyre like like, wow, this might happen. I know what we said before, but their point is that, look, whether or not they like him, they do see that its a democracy. If people are going to vote for him, theyre going to get behind him. This is what weve seen on our show, right. Six months ago youd ask a ceo about trump, and the response you would not be now, nobody will say you know, this is the way its all gone. I still i know we talk all the time, i still say trump is more mainstream than Bernie Sanders. The dems dont seem to understand that. Oh, by the way, youre not going to get me to disagree with that. The funny part is it for were ever to be bernie and trump, i know democrats who will vote for trump. I dont know republicans who will vote for bernie. The bernie thing is really i dont really get it. Driving me crazy. Anyway, stocks to watch today. Can i just say on the bernie thing, in terms of iowa, very progressive for the democrats in iowa. 47 of them in a recent poll identified themselves as socialists in iowa. In iowa . In iowa. Its the extremes. The republicans are pretty far right in iowa. I love iowa. I love both their teams. Iowa and iowa state. Its weird. Theyre socialists . 47 of democrats in iowa describe themselves as socialists. Im still going to i still like iowa. Sorry. Anyway, stocks to watch today. I dont like socialists. Im sorry. It doesnt work. People end up much worse off. Anyway, qualcomm forecasting earnings for the Current Quarter that are below wall street estimates as command for its chips that are used in mobile devices weaken. That overshadowed the firms better than expected revenue and profit for its first quarter. The shares fell in after hours on that news. Too bad. Just under 3 . In booze news, diageos beer business grew 7 in the quarter. Emerging markets grew 4. 5 . Diageo is the maker of guinness and Johnny Walker whiskey. Takata reportedly preparing for the exit of its chief executive as the companys crisis air bags have been under fire for two years, which can explode. The issues have been linked to at least ten deaths. Ebay failing to grow sales in the critical holiday quarter. The firm guiding lower for the Current Quarter and for the full year. Still have takata up there. The strong dollar has taken a toll on its business. The shares were down, plunging in after hours, down almost 12 . We spoke to the relatively new ceo last week in davos. I feel so much better now. I look better. Back hope, youre feeling better. No, that horrible whatever the hell that was. Anyway, shares of paypal going the other way. This as the ebay spinoff reported strong Earnings Growth and better than expect ed earnings. And alibaba reaching a 900 million deal to sell its stake in chinas Largest Online provider in movie ticketing and services. The move comes as alibaba builds its own competing platform. Company set to report results later this morning. Used to come to our dinner. Now hes got his own stupid dinner on the same night. Ive noticed more and more people are doing dinners in davos. Copying us. Copying cnbc. We still have the best one. All right. Lets get a check on the markets again this morning. We showed you the futures. They are looking a little brighter after yesterdays session. Yesterday at the end of the day, the dow was down by 223 points. That was a decline of about 1. 4 . S p was down but only just over 1 . If youre looking at the dow, right now month to date, it is down 8. 5 . That puts it on pace for its worst monthly performance since february of 2009 when it was down by 11. . Why dont we take a look at the early trade in europe. There are red arrows there. The dax is down by about 1 . Cac is off by 0. 7 . Overnight in asia, the nikkei was down by 0. 7 . The shanghai composite down again by over 2. 8 . 2,657 is the final number there. Lets take a look at oil prices this morning. Oil prices up 22 cents. Yesterday oil was up by 2. 7 to its highest settlement since january 8th. If youre looking at wti over the last week, its up 14 . So things have clearly come well off their lows. Wti this morning at 32. 54. In terms of the tenyear note, yesterday it was yielding above 2 until we heard from the fed. Then it fell back below 2 , just barely. It was down at about 1. 98 . You can see the yield is back above 2 this morning at 2. 011 . The dollar hit a threeweek high versus the yen yesterday. That was trading at 1. 1906. The dollar a little stronger this morning. You can also see the dollar is down against the euro at 109. Finally look at gold prices. Gold hit the highest level it had seen since november yesterday when it was trading at 1128. This morning, its up there are 3. 20 to 1,119. Okay. Now back to the big corporate story of the morning. It is facebook. The company handily beating wall street expectations driven by Strong Performance in mobile and a very big jump in ad sales. Facebook now has, ready for this, more than 1. 5 billion monthly active users and more than a billion daily active users. Heres what coo Sheryl Sandberg told our Julia Boorstin yesterday afternoon. Were really pleased with the growth in the advertiser adoption on instagram. 98 of our top 100 marketers on facebook are now also marketing on instagram. Thats great. Its also the case that facebook growth is really strong. I think what really matters is that with facebook and instagram, we have the two most important mobile platforms out there. We have this common ads infrastructure that enables us to serve the right ad to the right person. And facebook is also spending right now on other big bets, including Virtual Reality, which i dont know if you guys tried, but we talked about it yesterday Artificial Intelligence, and drones to bring the internet to the most remote places on the earth. Heres ceo Mark Zuckerberg. Now 100 million hours of video are watched daily on facebook. Weve been trying now experiences like suggested videos. Were also exploring ways to give people a dedicated place on facebook for when they just want to watch videos. Here to talk us through some of the numbers, a tech and internet analyst. What is the proper valuation for this Company Given the blowout numbers . I think when you look at where they are right now, i think stock is certainly going higher. When we look at the acceleration and revenue growth, as sheryl said, you have two of the most important platforms now, but you have whatsapp and messenger. It is still evolving. I think facebook right now is the place where advertisers can buy reach and frequency on mobile. 130 for the next 12 months, thats your price target . 140. Its the place why you can buy mobile now, but ultimately its because of the reach and frequency that they provide, but they can also provide the measurement too. Theyre the ones making the investments in data targeting and conversion tracking. Ultimately, i think become able to provide that back to the advertisers. So when you look at the other aspects in terms of Virtual Reality and Artificial Intelligence and how those are starting to move into social as well, its where advertisers have to be. You look at the numbers and the profit numbers, forgetting about the revenue, but they also slowed down some of their expens expenses. Expenses definitely came in better, but there was a lot of concern around 2016 and the op ex guide. When you look at the beat on revenues, you have to think 2016 is going to be a stronger revenue growth. Really, your met margins are about the same when you actually bake everything in. I think that gave people a sigh of relief. Twitter. We talk about twitter constantly. One of the things these guys made clear yesterday is theyre going after twitter in a big way. I think so. Theyre the big losers in this. Twitter is a big loser . Twitter. As facebook goes after google to provide the highest roi platform for advertisers, particularly on mobile, and google sets off to do the same, i think what happens is a lot of other platforms just get left in the dust. I think twitter unfortunately would be seen as a third platform, but unable to have that reach and frequency in terms of that daily engagement of users. Twitter is at 16 a share right now. What do you think that stock is worth 12 months from now . We have a 19 target, which i think is among the lowest. The reason is, twitter still does have a lot of optionalty. Youre still seeing how a messenger experience can go transformed in terms of payment. Ultimately, it is an important asset to a lot of other businesses. Final quick question. Even though theyve limited some of their expenses recently, theyre spending a fortune trying to bring the internet to places that have never had access before. Theyre going to spend a lot of money doing this. Theres not a clear way to monetize this, at least just yet. Do you have any concern about that . Well, i think theres a couple of trends. One is that people are doing obviously a lot more through messenger in terms of search. As you see them opening up to Artificial Intelligence and other things, you stand to see these as becoming important commercial platforms. The fact theyre investing in connectivity and messenger and these are the first experiences people are having in remote areas, theyre straight to mobile. I think it makes a lot of sense. I think they can afford to do it right now. Why not take the lead . Final, final, since i already told you final question. Oculus, which i was talking about yesterday. I tried this thing in davos. It blew my mind. Id never seen anything like it in my life. How long will it take them to make money doing that . I think for now maybe im scratching my head a little bit at how the initial price point was on the headset, but generally i would say that it will start with gaming, as mark said on the call last night, and ultimately it will morph into other areas like travel and giving people an experience they may not want to sit in a flight for. It will take a while though. Good question. Thanks. Wait a minute. So youre going to take a vacation at home . It might feel like a vacation at home. Why not . That would be amazing. Those river cruises constantly. Im ready. They almost talked me into it. One of those places is budapest. Sit on your couch and go on a trip to budapest. Not sure i want to do the river cruise. How much is it . 600. So what do you think its going to be like . 600 for the hardware. How much do you think youd pay over 1,000 as you stack up everything you need to have. Then youre done. Then you can go as many places as you want. I think facebooks mission its how google approached ann dro android. Really focus on the platform and opening up that software so other oems could start to participate. So you have more content. So they have essentially their app store, et cetera. Joe asked a good question yesterday. Right mow its a little fuzzy. Its not like totally i mean, its very immersive. You cant even believe how immersive. But still not 100 clear. Theyre going to start with touch too. I think theyre making Big Investments in Data Connectivity and transport. A lot of that is speed, in terms of ability to get that resolution. Googles investment in fiber is what gives you that Crystal Clear clarity, even within paintings. Theres potential. Africa. Hey, lion, you think youre tough . Try me. You wouldnt be afraid of lions. I was on the 50th story of a building looking down, and im so scared to take a step that i literally said to the guy next to me, i got to hold on to you. You could climb everest. Do some of those squirrel outfits. I might even do that. As airport lines get longer, too, and. Gets more difficult to travel, this could be the way. Everybody is already in their basement. Now youre not even going to go on vacation. Everyone is just going to stay home. It was a in that pixar flick. What was the name of that . It was where everyone was flying around. Walle. On their cruise together. Whatever it was. Wow. But someone in my ear is saying youre always close to a bathroom, which would have been nice for me. You could actually be on the right . Commode. They first did this on all in the family. The first toilet sound. I prefer al bundy. From facebook to the broader markets, i think youre right. Whats that . I couldnt figure out yesterday. Oil recovered. The markets recovered. Then the fed said didnt raise rates. They sounded dovish, but they still left march on the table. They didnt say were not going to raise three or four times. They left their options open. So were back to not wanting them to raise. Thats what dictates markets. Although, they may have gotten a hangover if they dpot what they wanted. The markets would have rallied, but there would have been this remorse factor. Were still confused. It wasnt because they admitted things arent as good. They did say theyre watching the Global Markets. Joining us now, steve reiss and doug kote. So gentlemen, if the economy was actually doing better and was implying there would definitely be three or four increases this year, would the markets be going down based on that they would follow through with their increases . Dont we want the economy to be better . I think the market wants the fed to increase. Yesterday we saw the markets go up. There wasnt much of a change in their tone. Theyre monitoring the fed or a good economy . We want a good economy. What the fed did is really adapt to what was going on in the market. You look at inflation. Its nonexistent due to collapsing oil prices. You look at the high dollar. Its wreaking havoc across Global Markets, corporate earnings. You have tightening financial conditions. Thats actually doing some of the feds job. But we see that theyre going to go one rate hike increase instead of three or four. I think that really will be a good backdrop for the markets and the economy. So instead of saying we think, whenever you can, youre going to say Voya Investment management. Steven, did you get a cue . Why dont you try it . We at jpmorgan, are also positive on markets. We have a 2,000 price target on the s p 500 for year end. Thats below the highs from last year. Its roughly flat for the year. But from current levels, about 7 upside. What were doing is taking a much more selective approach to the different parts of the market. We started the year underweight industry, underweight materials. Theres this big debate on whether or not the u. S. Is heading for a recession. We dont think it is. More of an impact for the profits. You look at the industrials, materials, energy. Its about 20 of the overall profit picture. Then look at technology, consumer discretionary, health care, and even financials. Thats 65 . So while were likely to see another tough year for profits, were favoring those sectors where the Earnings Growth can come through. Overnight, the Facebook News is a good indicator theres still great secular growth. Amazing thats where it is. Well, its technology. Its bullish, but its so different. We have caterpillar on later. Theres facebook and caterpillar. Were not recommending any industrials. Theres no china, no oil impacting. I think at some point the market wakes up to that and realizes there is good growth out there. Then you see the consumer. Great housing numbers over the past few days. Existing home sales, new home sales. But its really going to come down to jobs. As long as the consumer is at 5 unemployment and we get a good jo jobs number next week, i think that will be a great backdrop. Were looking at we want to make sure whats happening in the manufacturing contraction in oil doesnt spill over to the consumer. We dont think its going to. It should spill over positively to the consumer. It hasnt made any sense yet. Right. It will. It has, but its so disperse, so widespread, that you dont really see it. You cant price it. Ultimately, its a big tail wind. The people that follow me on twitter, you know what theyre like probably. Theyre a certain breed. They say that all the money were saving in oil is going towards health care and premiums and obamacare screwups and things like that. Health care costs have increased if you just look at the raw numbers. Health care costs have gone up. Part of it is, people are saving more, and people are spending very differently today. Look at the ecommerce players, the housing players, the companies with the hot product. Theyve doing well. Everyone else isnt. Its part of the evolution of the consumer. Sorkin, are we going to short marriott and buy the oculus . Not yet. Its going to take five or ten years. By the way, i think it will happen for certain things. Instead of going to a museum. Or maybe going to a movie. Think if it was fully clear hd, and instead of going part of it is the experience of taking your kids to the museum and being there with them, not just being by yourself. 100 , but i think going to the physical museum will be the premium product. Hes got to go to the bathroom, wants to leave. Whats good about that experience . Its fun. Dinosaurs scare him. Dont just look at technology. What else . Mid caps, small caps. Were going to have flying cars. That would be good. Make sure you dont overweight any particular sector too much because youre going to miss out on a rebound when manufacturing ultimately comes. And we like bonds as well. Could i get on facebook if i absolutely dont participate in any of my own yeah. So i can just see. But do i have to friend people . Like a voyeur. But people would accept you. You dont have to put anything on or post anything. I can just see things. Thats basically what i do. I dont even understand. Doug, thank you. Youre welcome. Voya. Yes. Jpmorgan. We should talk. Meaning not you. All right, folks. More trouble for the blood testing startup theranos. We have that story next. Lost shipments, international regulations, security breaches, lost revenue lost respect. Well crafted solutions for todays problems in commerce. Pitney bowes, the craftsmen of commerce. Welcome back, everybody. Some troubles mounting for one of Silicon Valleys highest profile startups, theranos. Their Lab Practices pose immediate safety issues. This is something that is definitely catching peoples attention. It absolutely is. This is the centers for medicare and Medicaid Services, which oversees the certification for testing labs. It sent this letter on the 25th and was just posted late yesterday. Details about five deficiencies. One of those they say poses the immediate jeopardy to Patient Health and safety. That has to do with its hematology testing. The other three were involving personnel. Staffing. The lab director to and other folks. Theranos says at the time it was simultaneously conducting a review of this lab. It processes 90 plus of its tests in arizona. So this is a different lab. It says it already has addressed several of those deficiencies. It says that its still reviewing the report, but it addressed many of the observations during the survey, and theyre act live iively con to take corrective action. A full report will be submitted to cms within days. They have to respond within ten days or they face severe fines or potentially sanctions, losing their ability to get medicare reimbursement. T two things. First of all, this doesnt happen very often. Only one half of 1 of cases do you hear this concern, the Strong Language about actual patient safety, right . So that seems like a big deal. Second of all, they conducted this test back or they conducted this review back in november and waited two months to tell people, by the way, you know, this is something that poses a threat to patient safety. Why did it take the regulators so long to process notes from a visit they made two months ago . These things always take a long im. They said they were doing their review in november. This is from cms. The review wasnt considered final until they received critical information from the lab at the end of december. So they were probably processing it and then they sent this letter. It sounds like theranos says they were looking at it at the same time. They have prepared this very long statement they sent us yesterday as we were reporting this and as others were reporting about the letter. The wall street journal, which has broken the story wide open with their incredible reporting, had come out just a couple days earlier saying this report was coming. They knew this was coming out. Did i misinterpret what they said . I assumed that being dangerous for patients meant that you wouldnt get the accurate readings. I mean, its not physically dangerous. They dont spell that out. They say youd want to know if something you get a false negative or false positive. Thats what i thought they meant, no . Thats possible. With a testing company, youd assume thats maybe what they mean, but they dont spell it out. They say its already causing or is likely to cause serious harm, injury, or death. Why are we so convinced the arizona plant would somehow be managed so much better than this other one . Theres no reason necessarily to believe that, but that is what theranos has said in its statement, that 90 of its tests are not run in this lab, which had these deficiencies cited. They have so much cash they can keep going, right . You have to wonder. They raised 400 million at the 9 billion valuation. I think the question is, how long can they continue to operate . How long will they have the support of their investors . Its such an interesting story. There are some parallels here. You have to think to 23 and me. Not that their technology or science was under question, but the way theyre butting heads with regulators. Once regulators decide to butt in and give you a heart time, its much more difficult. Theranos has said they relish willing closely watched by regulators. And 23 and me figured it out. So Silicon Valley kind of figuring out the Health Care System and all the regulations that go with it. Its a very interesting new world that well probably see a lot more of. Have any of the employees, including the ceo, been able to take money out through this secondary market . I dont know about that. Given the 9 billion valuation. Okay. Thanks, meg. Coming up, if youre looking to increase your happiness, theres a state for that. Were with going to tell you where to book your tickets to the good life or where to adjust your oculus. That story next. As we head to break, heres a look at yesterdays s p 500 winners and losers. Your path to retirement. May not always be clear. But at t. Rowe price, we can help guide your retirement savings. For over 75 years, investors have relied on our disciplined approach to find long term value. So wherever your Retirement Journey takes you, we can help you reach your goals. Call a t. Rowe price retirement specialist or your advisor. To see how we can help make the most of your retirement savings. T. Rowe price. Invest with confidence. I get it now. Welcome back to squawk box. Time now for the executive edge stories that give you a leg up on the day ahead. Stop the presses. A new report says hawaiis pretty nice. Breaking news. Hawaii is the state with the highest overall well being. The worst island in hawaii is better than any place in the country, except for san diego, maybe. So we know this. Anyway, this is according to gallup. States are graded on physical, community, purpose, financial well being, and hawaii had the highest physical well being. Not a shock. Ranked among the top ten in the other categories. This is kind of cool. Alaska came in second in the overall rankings. Wow. This is sad. It always is when we talk about the gulf states. Mississippi, we know its a poor state. It ranked absolute last in financial well being. And for the seventh year in a row, West Virginia had the lowest ranking overall. Some good news, americans considered their lives to be better in 2015 than in previous years. Rightly so. With how long we live and health and technology and everything else. Have you been to hawaii with the fam . Not with family yet. Every island. Lucky enough to go on one of those cruises 30 years ago. I haven i was at the four major both sides of the four major. Theres a winward side and leeward side. Big island is great. Thats the only one ive been to. Im going to all the other islands this afternoon on the oculus. Go to maui. Thats the only place ive been, maui. Great. You cant go wrong. Although, its got a lot of people. Its not a secret thats a nice place anymore. Not at all. So hawaii may not be for everybody. If youre a big sports better, look out. The states attorney general actually issuing a formal advisory opinion arguing that daily Fantasy Sports contests constitute illegal gambling under existing state laws. New york, illinois, texas, and nevada are also challenging their legality on sites like fan duel and draft kings. Coming up, the gop candidates gearing up for another faceoff without the front runner. How does the debate dynamic change without Donald Trump Center stage . We have a live report from iowa next. As we head to break, a quick check with whats happening in european markets right now. Squawk box returns in just a moment. 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. 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Great job. mandarin cut it out. See you tomorrow. Welcome back, everybody. Right now its time for the squawk planner. It is a busy day for earnings and Economic Data. We have weekly jobless claims out at 8 to a. M. Eastern time. Theyre expected to pullback after last weeks spike above 290,000. December durable goods are also released at 8 30. And at 10 00 a. M. , well be getting home sales. Today is the heaviest day of earnings for s p 500 companies. Among those reporting, alibaba, under armour, and ford. Those are all in the next hour and 15 minutes. Also out before the opening bell those are all before the opening bell. Amazon and microsoft come out after the close. And tonight is the final gop debate for the iowa caucus. Front runner donald trump has announced he will not participate. That is todays squawk planner. And gop president ial hopefuls set to square off tonight in their final debate before the Iowa Caucuses. Front runner donald trump wont be there, as weve been talking about a lot all morning. Hes still fighting with fox news. Now his main rival ted cruz is raising the stakes in his bid to get a oneonone faceoff. John harwood joins us live from a trumpless iowa. Good morning to you. Reporter well, its not a trumpless iowa, andrew. Hes here. Hes going to have an event tonight. We have a fascinating race on both sides. Take a look at these numbers from nbc showing on the democratic side Bernie Sanders is just three points behind hillary clinton. I saw Bernie Sanders speak to 1,000 people in mason city last night. He said hes got the momentum. Now look on the republican side. Youve got donald trump opening up a sevenpoint lead over ted cruz, who at an earlier point was leading him here in iowa. And donald trump has announced hes not going to participate in the last debate tonight. That is a risk aversion move. You could get hurt in a debate like this. Hes of course blaming it on megyn kelly, the moderator, in a sarcastic press release that fox put out. But it led last night to the extraordinary spectacle of one of the leading hosts on fox news pleading with donald trump to show up for the debate. Take a listen to bill orielly. Lets look at it from a broader point of view rather than how you feel. Youre running for president. I believe you want to improve the country. I believe that personally, all right, as an american, that you want to improve the country. By doing this, all right, you lose an opportunity to convince others who may put you into the white house that indeed is true. You have in this debate forma e format the upper hand. You have 60 seconds off the top to tell any of the moderators, youre a pinhead, your question is unfair, and heres why and heres what i want to say. By walking away from it, you lose an opportunity to persuade people that you are a strong leader. Thats my opinion. Reporter now, of course, Donald Trumps response to that was, no, sorry, bill. I understand your opinion, but im having an event with veterans in des moines at the exact same time as the fox debate. What that means is because other networks are going to cover donald trump live, avoiding the debate, he can seriously undercut the impact of this debate, the viewership of this debate. Then he can avoid the potential risk of getting hammered by cruz or rubio or others on the debate stage and undercutting his position heading into those caucuses, which are just on monday. Now, the one thing we can say, guys, is nobodys ruling out the possibility of a dramatic lastminute entrance by trump. This is somebody who knows how to command the spotlight. He would command the spotlight by not showing up. He might get even more attention if he does show up. So well wait and see what he does. That would be something to see. Either way, a welcoming hero. Oh, my god. Its fun. Reporter imagine if he walked in, joe, halfway through the debate. Oh, my god. I know, i know. This is fun. Its fun. Its got other competing networks and drama. There Different Networks are going with other networks. Its classic. God bless him. What if he wasnt running . Wed be sitting we might not even be talking about the president ial race at this point. Oh, god, might be jeb and hillary, right . Reporter it might be two weeks of super bowl buildup. Right. Is there another network that hes trying to is he trying to auction off tonights event . Thats a good question. Reporter well, he says hes going to raise money for veterans. He says that some of the other candidates who are not going to be on the main stage with fox, people like Mike Huckabee and rick santorum, have expressed an interest in showing up. So you could have not just donald trump but a small group of other candidates in what is in essence a competing debate that the republican front runner is leading against the debate of his own party. Its amazing. Reporter its Something Like weve not seen before. John, thank you. We will see you a little later. Of course, well talk a lot tomorrow morning. When we come back, crude volatility this morning. Oil prices now well off the highs of the session. Up next, well be talking to tom petrie. His company has advised saudi arabia on oil and gas issues. Wti down by about 12 cents. Squawk box will be right back. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive checking out the listing on zillyeah, i like it. This place has a great backyard. I cant believe were finally doing this. All of this. Stacey, benjamin. This is daniel. Youre not just looking for a house. Youre looking for a place for your life to happen. Zillow. 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 . Welcome back, everybody. Crude trading near two week highs. Its up more than 15 from its multiyear closing low that it hit last week. Joining us with more on all of this now is tom petre. He advised the saudi government on oil and gas issues. Great to see you. First lets talk about one of the stories that was really boosting oil prices yesterday and thats the idea that saudi arabia and russia were indicating that they might gettogether and talk a little bit more about output, maybe start to cooperate a little bit more. Do you think thats a viable partnership . Well, they do have a common interest in somewhat better prices. Both of them are more in need of improving price picture than i think has generally been recognized. When you load in their social and security costs, it really is quite clear that somewhere around 30 a barrel begins to really pinch them and thats why i think were seeing early signs of a bottoming process. Weve gone into the shoulder months it might take longer but this is a year for the inflex point. So is saudi arabia giving you on its idea of crushing the Oil Producers in the United States and making sure they maintain market share or do they think they already accomplished that goal . I think its the latter. They accomplished a lot. We had a full year of reallocation of capital away from resources and going into our second year. With those two backtoback years they will have accomplished much of what their goal was with respect to that. And they also sent signals to both iran and russia that this is not a great path for any of them on a long term basis. The problem is going to be if russia potentially iran and if saudi arabia all gettogether to do this they are going to have to live with more short term pain by cutting off the numbers because saudi arabia is still making money at 30 a barrel. May be painful, may not be what they need. The only way to solve that is to take in less money in the immediate future. Is that something they could live with . I do. The leverage on a little bit of change here is quite large. The partner they have is the embedded decline thats already been triggered. And so if they they dont have to cutback much its a matter of taking the foot off the pedal just a little. In russias case theyve gone up to 11 Million Barrels a day of liquid petroleum output. And at 10. 5, that makes a big difference on the margin. Same for saudi. Tom, very quickly, the idea of an ipo. They would be selling not the reserves themselves but access to the reserves or something along those lines but its kind of confusing. I think of an oil company ipo you are buying the oil reserves. Whats the value if youre not getting that . Thats a good point. We have to remember that these reserves, these fields were owned in aramco back in the 70s with nationalization that came to saudi. The notion of ownership in sovereign companies internationally is always a bit efemerol. Theres some countries where it may be. Tom, thank you for joining us. Good to see you. You. Coming up its the busiest earning day of the entire season. Ford, alibaba, caterpillar among set to report in the next hour. The fed in a flood of earnings ready to drive todays earning session. First up ford, alibaba and under armour. Nasdaq chief joins us first on cnbc after his numbers cross the tape. His take on the market turmoil and what its telling us about the state of the economy straight ahead. Behind the wheel with auto nation. Is the nations largest auto retailer feeling a sales slow down after last years record breaking year. Record quarter for facebook. Well take a look at the numbers and how facebook has twitter in its cross hair. The second hour of squawk box begins right now. One more time 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 becky quick along with joe kernen and Andrew Ross Sorkin. Weve been watching the futures. After a down day for the markets yesterday where the dow lost 223 points youre now looking at negative futures for the dow and s p 500. Dow futures which had been up earlier this morning, switched roles and are down by 100 points from where we saw earlier. Dow futures down 40 points. S p down by two points. Nasdaq still positive up by 19 point. Energy prices have been bouncing around. They had been trading higher then lower and right now relatively fight. Wti at 32. 33. We have a couple of Big Companies making news right now. Ford hitting the wires as we speak. Alibaba. Phil lebeau joins us now with the details. Reporter ford beat the street in the Fourth Quarter coming in earnings with 58 Cents Per Share. They were at 51 cents. Revenue stronger than expected. No surprise given the strength of the north american market. 37. 9 billion for automotive revenue. About a billion half better than expected. Couple of headlines. Fourth quarter operating margins, 6. 1 . Record profitability overall for the company 10. 8 billion last year and a return to profitability in europe first time ford has seen that since 2011 and most profitable year ever in asia bringing in 440 million in the Fourth Quarter. Record cash flow also dropping down to or best cash flow since 01 at 7. 3 billion. I just got off the cfo from ford. We got color coming up in half an hour about what the auto market looks like at the start of this year in particular, a focus on inventory and incentives. Well talk to you about that in about half an hour. Back to you. Thank you, phil. We got earnings out from alibaba. Beating estimates on top and bottom lines in a big way. This is huge implications for how people are thinking about the chinese economy. Alibaba earned 99 Cents Per Share for the quarter on revenue of 5. 33 billion. Key metric was up 23 from the year earlier. Let me give you a couple of other things. Revenue is up 32 which substantially beats the street which had it at 26 . Core business china retail was stronger showing 35 revenue growth. Chinese consumption economy, a big number that people have been focused on and trying to understand whats going on in china. Sales growth up. Mobile which has been the other big question whether alibaba can convert all of that, 393 million monthly users. Then on the profits those went up 11 . Well be seeing. They have a Conference Call later. Hopefully well hear from others about the Macro Economy and whether this is a great operation story on alibabas part or if this says something larger. Its weird they convert the earnings back into dollars when all the sales are done in yuan and local currency. Funny. All their customers are in china all their investors are here. They want the dollar figures. The Federal Reserve opting not to raise Interest Rates at its january meeting but is a march hike still on the table. Steve liesman is here. A lot of sharply divergent opinions whether march is on or off. Goldman sachs riding in the wake of the meeting assuming a modest improvement in market conditions. We expect the committee to follow through with a march hike. Morgan stanley on the other side of the street, literally, the bar for a march rate hike looks increasingly inis your mountsable and our expectation for a march skip to be sure with the next meeting still more than six weeks away, markets could stabilize. The market could rebound from a weak Fourth Quarter. March would seem a long shot. It would seem difficult for the fed to jump from its inability to assess the balance of risk to saying risks are balanced enough to warrant a rate hike. Second the fed would remove its phrase reasonably confident inflation is moving towards 2 target. Hard to jump from no confidence to total confidence or sufficient confidence for a rate hike in the span of a meeting. Heres the question. Why werent Market Expectations more finely tuned going into the meeting. Why are we arguing whether the fed hit the right chord or what the guidance is. It could also be an argument that the chair isnt talking enough to set expectations ahead of the meeting. This is great. Talk february 10th. One other thing markets are just uncertain. The economy is uncertain. The outlook is uncertain. Nobody really likes it when the most powerful Financial Institution in the world is uncertain. Thats why people arent happy. They are not they havent done that since 2003 on the eve of the iraq war. So guys are saying is it that bad . They are criticized by the hawks and doves. Got very little commentary last night that said the fed hit it just right. 1. 5 down, we do that on any given day at this point. Thats nothing. Just background noise and it didnt mean anything. The thing i have a couple of questions. What is the probability now indicated for march . Down below 20 the last i looked. 10 or 15 . Again, here we are, micromanaging the idea of whether they have assessed the risks enough, do they know where we stand in terms of the economy, were talking about another quarter point to half a percent. Look what happened. Its coincident. I agree with that. I kind of agree with you on that but thats not way the market feels about it. What do you say to guys who get up there and say the fed will be humiliated by markets in backing off its rate hikes. How do you respond to that . The kind of guys that have investments dont know how to ever interpret because i dont know how much it is about positions. I think if the market were moving on Economic Data or earnings which it is somewhat 49 . Thats not enough Economic Data . If the market were moving on at any time fed would have a better beat on how to react to it. When you come in the day and the market goes up because oil went up or goes down because oil goes down thats almost inexplicable is my point. So let me get your advice. Ill write it down and write to it the fed. Ignore the markets here. Keep going with your rate hikes. Yes. Okay. Do you want to sign that . Thank you. You have been wanting this for a while. Its my kids, joe. Another touching moment on squawk box. Well talk about the nasdaq right now reporting Quarterly Results moments ago. Beating estimates by a penny with quarterly profit of 89 Cents Per Share. Revenue beating forecast. Nasdaq announcing the retirement of the companys chief financial officer, shares of nasdaq are bucking the trend, up almost 30 last year and within striking distance of its 52 week high. Well talk about the recent market volatility. Hes the ceo of nasdaq. Good morning. So help us through what just happened last quarter but try to look out a little bit of where were all going. I imagine the ipo market will slow. The volatility. I dont know that may help you. It does. It helps and hurts. Last quarter was a record quarter last year. Record year. Were proud of our performance. We hit on all cylinders. With respect to market volatility, we do well because theres more trading when theres higher volatility and we obviously get paid per trading activity. On the other side of the coin ipo activity tends to slow down or stop during times of elevated volatility. So we have a good and bad. Where do you make more . In the short term we make more on the trading volume. Ipo revenue we recognize over time. We take initial listing, we recognize that over six years. Rise in machines. How much of volatility is real, humans are actually making decisions, how much is computers . I would say 90 something percent of the activity coming into the market is governed by a computer in some fashion. You have to realize theres a man behind the computer making rules in terms how the computer should act. The computer automates the mans decision. Not the other way around yet. One of the comments that was made last week is the idea theres no middle man. The volatility in large part is being legislated to this point. I think you see across all industries, technology really takes the intermediate person out of the market. You have the ability for more natural buyers and sellers to directly interact. Is that a good thing . I think it is. You know, you have a period of adjustment. You have to under that for actively traded stocks, the role of the intermediate person is diminus. You need somebody there. A willing buyer and willing certainly on a thinly traded stock doesnt always happen at the same time. How abo what are the big Institutional Investors doing. Our customers are the south side so we see them. Certainly we have some indication with respect to retail versus institutional activity and i think youre in a normal set of balance right now. Retail tends to be late to the party and tends to be early to leave. You acquired Second Market in the fall. Yes. Just as it feels like this Unicorn World is moving, what is your sense of whats happening in that space and whether youll be able to leverage those relationships to ever get them to ipos. We think its then a safe for itself for companies to decide stay private. When you say stay private you have to offer liquidity to employees and early stage investors. Thats what we do now, acquiring Second Market. We have over hundred companies signed up with us justin last 18 months sore. Quite proud of that. We think thats an enduring value. Independent of valuations of unicorns which are different than Public Company valuations you will have a large number of companies, early stage, later stage private, needs similar to what a company needs. Well leave it there. Good to see you. Coming up, qualcomm forecasting earnings for the Current Quarter below wall street estimates as shares falling at the hour on that news. Also our newest portfolio member, likes the stock. Well kind out if this is the perfect opportunity to buy it. Auto nation mike jackson joins us with their latest earnings numbers. Well talk oil prices state of the economy and whether or not theres an auto loan bubble boom. Squawk returns in just a moment. Every insurance policy has a number. But not every Insurance Company understands the life behind it. For those whove served and the families whove supported them, we offer our best service in return. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. A few stocks to watch this morning. Shares of under armour soaring results beating the street. Also growth in the direct to consumer channel. Full year guidance for revenue was upbeat. Ebay failed to grow sales in the critical holiday quarter, the firm for the Current Quarter. Strong greenback took a toll on its base. Shares were lower after hours and this mornings premarket. Shares of paypal headed the other way as the ebay spin off reported strong Earnings Growth as new customer addition surged. The Company Announced 2 million stock buy back. Federal reserve officials expressing worry about Financial Market turbulence and Economic Growth abroad stocks falling yesterday on the comments. Take a look where futures are trading right now. As you can see down 16 point or so. Joining us now is our newest platinum Portfolio Manager member, sarah ketterer, ceo and Portfolio Manager. Good morning. Good morning. Stanford grad. Got a lot going on. And an mba too. I know a lot. Your going to introduce some stocks right now . Should we talk macro first . Should we buy any stocks . Dont buy any. Causeway value manager, go for the value stocks because value moves in cycles. Investors tend to forget but the value stocks are now at extreme lows versus their growth peers. Sure you can buy facebook but what about owning some of those great high dividend yield be stocks with great balance sheets. You have to wait six, 12, 18 months for some sort of reward. We always need to see the difference between, you know, stocks that are at lows, just in my experience in the past, they always look great, they hit these new loss. Stocks that hit new highs hit a lot of new highs. Not just one of these things if it hits 40 how many as. I agree. Thats why you have research. Thats what i bring to the table. My colleagues and i are researching these companies. The whole idea is when the market is sort of tired of the business, qualcomm, for example you mentioned earnings disappointing. But heres a business thats so well situated for the next decade. Are you recommending qualcomm . Are you working with us or is this a coincidence . This is one of my platinum four. Great we get to play off our sound track of qualcomm. Thats been a great stock for years, obviously. It hasnt been lately thats why its interesting. What do hundred of billions of dollars. They invented cma. They were revolutionary in the mobile phone business. Got a piece of action through royalties. Chinese have been unwilling to pay those royalties. That has been renegotiated. 4 dividend yield. Net cash on the balance sheet. How about income . Were in a very low interest environment. Plus increases. Not to mention the whole increase in mobile usage half the world has a mobile subscription. Half the worlds population. That will go up over a billion in the next ten years. You got to pick four . You gave me four. Four. Okay. Theres barclays. Thats out of favor. You can get that at 60 of its book value exits goodwill or what we call tangible book value. Thats as cheap as it was in the 2008 Global Financial crisis. Why . Were not in a financial crisis. Investors just arent interested. But all of that capital thats been built up and as the regulators in the uk become more lacks that comes to shareholders in dividends. So youll get paid. Sk telecom . What is that. South korean telecom. Largest mobile operator in south korea. 50 million population in that country. Why bother . Because you got 5 dividend yield. Thats my safety stock in the four. Nobody likes that one. Either there wont be 5 dividend. You feel safe that 5 dividend will stick around. When you see dividends get up like that. 25 pay out ratio. Asian average if you look across all the telcos in that region is like 60. They have a lot of room to reward shareholders further. We talk to them all the time. What was your last one, quickly . This one is most interesting. This one is super charged. So why do we think oil prices will rise. If you think oil prices will remain in the 30s, forget sm energy which is small relatively to some of those. Your viewers would have heard it its an 800 billion market kidnap. Great assets. The eagle four the largest for them. Very geared to oil price increase. You can own any of these stocks and were convinced that opec will see a reduction in supply. Well see vince begin to turn the corner as we start to diminish. 13 stock. Should be. 60 stock. Should be three times that. Great. Thank you. Quick reminder go to cnbc pro on cnbc. Com for the latest on the platinum portfolio and for additional announcements from our managers. Still to come, a lab in california under scrutiny from the government. We have the details right after the break. Auto nation Quarterly Results. A sales update for what hes seeing in the auto industry. Squawk box will be right back. Announcer time now for todays aflac trivia quiz. What is the worlds most populated city . The answer when cnbc squawk box continues. 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. Announcer now the answer to todays aflac trivia question what is the worlds most populated city . The answer tokyo. U. S. Health inspectors found the practices of theranos lab pose an immediate jeopardy to Patients Health and safety. Letter from the center for medicare and Medicaid Services says an inspection in november uncovered five major violations of federal law governing clinical labs. Cms could revoke the labs certification to test specimens and fine the lab 10,000 a day. It was one of the highest profile start ups in Silicon Valley. The company say inspection results dont reflect the current state of lab. Inspection took place all the way back in november. When we return ceo of auto nation, our friend mike jackson is our guest. Well talk earnings and why sales have hit a plateau. Take a look at u. S. Equity futures. I am the future. I provide for my family. I will use my education to help my community. I will inspire our next generation of leaders. I am a college student, but i am only 1 . Only 1 of College Students are american indian. Donate now, and help our numbers grow. Facebook building up steam and looking to take on twitter. Stock sharply higher after Quarterly Results. Is donald trump ducking tonights debate. President ial candidate ted cruz seems to think so. Well have more on his one on one challenge straight ahead. Is wall street high on the hog . Closer look at Harley Davidsons Quarterly Results. Its january 28th and youre watching cnbc first in business worldwide. Welcome back to squawk box, everybody. This is cnbc opinion earnings front and center this hour. Alibaba beating forecast on the top and bottom line and registering a huge jump in the key metric of gross merchandise volume. That stock getting a nice premarket bump. Its up by 5 . Under armour beating estimates by two cents quarterly profit of 48 Cents Per Share. Revenue beasting the forecast and rising 31 from a year earlier on increasing depanned for its apparel and shoes and that stock super11 . Time warner cable earning 1. 80 per share. Revenue also beating the forecast as the Company Reported upbeat subscriber additions and Stanley Black and decker reporting 1. 25 a share. Two cents better than the street expecting. Revenue was below forecast. Company says it sees challenging Macro Economic conditions continuing in 2016. The stock is down by ten cents. Eli lily, revenue above forecast. It should go forward after six approvals in 2015 and a number of late stage positive drug trials. Ford, reporting earlier. Phil lebeau just spoke with the ceo. As you take a look at fords earnings for the Fourth Quarter and ford beat the street by an easy margin. When i talked with the cfo we talked about where this company is positioned right now as it heads into 2016. Specifically on two issues getting a lot of attention. Inventory levels as well as incentives. With regard to incentives, hes pretty comfortable about where the industry is. He says there has not been a dramatic increase in terms of one particular automaker saying look well go all in in term of jacking up incentives and therefore throw everybody elses incentives off and in terms of inventory, ford is fairly comfortable with where its positioned right now. A little bit elevated coming into ten of the year. He said its not in a bad position. Most people believe ford as well as the other automakers are in good shape. Ford coming off its most profitable year ever. First profitable year since 2011. When you look at shares of ford they are now at the same level they were at in december of 2012 trading under 12 a share. Back to you. Much better position, a lot of positive things have happened. You never can figure how the stock price matches up with the underlying theres no faith in the auto stocks right now. None at all. From investors. Their belief is look these guys is to a certain extent and out dated industry which is absurd in many regard. Thats the way many investors look at it. Well have mike jackson on to talk about it. Phil, meanwhile okay terrify pill jar was up. It was adjusted to 75 cents. Company sees 2016 earnings per share of 3. 50 which is in line where the street is. 3. 48 is where street is. But the Company Earned about 4. 63, 64 cents this year. 3. 50 next year is down from 4. 62. 2014, 6. 38. 6. 38 to 4. 60 something to 3. 50 next year. Thats just a reflection of what it feels like when earnings are declining. Its a stock thats down from well above 100 to under 60. At this point. Wait second. Adjusted. How do you see the sales a little light. 11. 4. We have doug oberhelm and join us in a bit to talk about the results. You can see the dow component up by 2. 8 . Auto nation is releasing its Fourth Quarter earnings for the full year. Mike jackson is the chairman and ceo of auto nation. He joins us now. The last time we talked to you you said you were a little worried about the quality of sales that were taking place and sure enough the earnings are a little below what the street has been expected. Look like you reported 96 cents versus 1. 03 and revenue came in less than what the street was expecting. Is that because of the quality of sales taking place . Yes, becky. You know we spoke earlier in the month of january and i made it quite clear that the Fourth Quarter had been challenging and not a great sales success that we had all hoped for. So while we had 5. 3 billion in revenue up 6 it took significant discounts to achieve that revenue. About 200 a car more from us and about 250 a car more from the manufacturer on the incentive side. Since we were structured for a profitable growth, that led to our results. Now of 96 cents is still our second best Fourth Quarter ever and for the year were proud its an alltime record of 3. 98 up 14 for the year. But weve made the decision to adjust to more difficult environment where sales have plateaued. Well do that during the Fourth Quarter. And then the challenge is to find a way to grow earnings a new vehicle market. In that you had four results. Our domestic business is on fire. The American People have stampeded to trucks of all kinds and thats a strength of the domestic manufacturers and its very profitable for the domestic manufacturers as phil has pointed out. However, our asian business which is primarily fuel efficiency is level and very interesting in the Fourth Quarter our premium luxury business was under pressure and our profitability is down there almost 10 . And i think whats happening is the domestics offer jeeps and tahoes and even ram pickup trucks that are now offering an alternative to the premium luxury buyer in this stampede to anything thats a truck. Its a very different dynamic than what we usually have in the Fourth Quarter for premium luxury sales. You know, yesterday sergio at Fiat Chrysler started to talk about how they are getting rid of dodge dart and other small cars they produce. They are making more jeeps and trucks. As they see it ate situation where low gas prices are a permanent condition. Is that what you see too . That absolutely. The American People have observed over the past decade, whenever theres unrest or volatility in the middle east gasoline prices go up. Solo and behold the smeemiddle is a bigger mess than ever and gas is going down. American people decided something has changed and well have low gasoline prices for a long time. The American People left to their own desires really enjoy big comfortable luxurious vehicles. Thats the american spirit. Weve gone from, with gasoline at 3 a gallon we had a mix of 45 trucks. Were now at 60 trucks in the move december and sergio is right. If we could have produced more we would have sold even more trucks. So they are going to switch over plants strategically from producing cars to trucks. Mike, when were you on last . It wasnt a whole month ago, was it . It was the first week of january where we discussed december sales. We need to look at that chart again because people should listen to you when you say things. Did you see your chart . Im sorry. Im sorry i have to show you your chart again. But thats too long. Lets do a new chart. You can see what im talking about here. So in january you told us things had plateaued, and your stock was at 67, 52 week high. It looks like it was in the mid50s, mid to high 50s. Thats incredible, mike. Women would best served to listen. Why doesnt anyone else know what was going on, mike . Well, thats not for me to say, joe. We had a relationship, joe, that goes back over a decade. Im on this show in good times and bad. I call them as i see them. I try to give real insight and if theres consequences to my remarks on the price of our stock, so be it. I rather be straightforward, cards on the table and over time you let us know what was going on and then the stock market figured it out as you were already, you know, sort of just highlighting what was happening. I certainly wasnt saying that was the cause i was saying thank you for telling us the state of the industry before it was obvious. If you listen to the Federal Reserve report from yesterday, i mean they have just confirmed what i told you in early january that the Fourth Quarter for the u. S. Economy on the macro level, the consumer pulled back and their real income is improving they are not spending it. Ate debate whether its good or bad that they are saving it because i know becky is a saver. She sees the Silver Lining in that. Even though real incomes are improving, even though they have a dividend from gasoline, they are not spending it. And i think the Federal Reserves remark from yesterday confirms what i said in early january. We love having you on to tell us about this stuff. I do feel youre telling us exactly what youre seeing. Im so sad you wont be doing Monthly Sales any more. Why is that . Well theres two issues there, becky. First, you know, the industry reports on its own specific calendar thats really obsolete from when we have to mail in our sales reports. Were in the digital age and i which the industry would adjust their calendar to reflect that. The calendar is obsolete. That creates distortions like we had for december sales where they moved 9 more days into december reporting period and everybody is celebrating that and im looking if you adjust for the calendar things are flat. The second issue is that when i use a single metric, it can be misleading as to what really happened in the quarter and we had that situation when i sfoik in early january. I said hey listen we did have nice Sales Numbers but we had to put significant discounts to get there. So now that its clear that a single metric can be misleading, combine that with the calendar, were not going to give a Monthly Sales report. Mike, i know all these guys are customers so maybe hard to tell, ford out with their earnings. Given everything thats going on, is there one or two companies you think that are clearly winning just watching whats going on the lot . And potentially others that are losing . Well i think i already described it. The domestics are in a terrific position. All you have to do is look at what percent of their business is trucks and you can figure out how strong they are going to be. I cant tell you how high demand is for trucks. So, i think the domestics are in a good position and if they dont over produce this year and really run the business for quality they can have a very successful year. By the way im still saying the industry will sell over 17 million vehicles this year. Its just this six years of growth of over a million new unit as year will not happen again in 2016 unless you put major incentives and discounts against it which im not advocating at all. I think the asians have their challenges because their strength is fuel efficiency. And the new challenge for premium luxury is that consumers with their truck mania are now looking at choices they want traditionally have. But the germans have a great Product Pipeline coming in. That business will be fine. I think if everybody just adjusts to this new environment and look at quality rather than just driving for growth at any cost i think the industry could have a very successful year. Mike, we always appreciate seeing you. I hope we see you more than four times a year right now. You will. Call me ill be there. Thank you, sir. Coming up, Mark Zuckerberg can do no wrong after taking a few months off to spend time with his daughter. The numbers have the stock up sharply this morning. Well do inside the social networks Quarterly Results when we return. 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. Futures right now indicated up just 11 points. Thats less than where we were early morning, up a little bit more up 50 or so. Its positive. Nasdaq doing really well. Shares of under armour are soaring, results beating the street by Strong Demand for its Sports Apparel and running and basketball shoes. Under armours full Year Revenue Guidance was up. Jordan spieth had a good tournament in dubai. Ricky fowler, this is turning into really developing into whats going to be a great year with these young guns. Competitor nike also getting a boost this morning based on strong results from under armour. New air jordans coming out. 650. Lines out the door for these limited edition jordans. Only one reason to pay 650. Ill give you one word. Flubber. Do they have flubber. You remember. What . What . I cant go on. Flubber. Flubber, the disney movie. You can bounce. These are not there are the shoes. Not fluffer. Oh, my god. Take it away. Well talk about facebook right now. Move to another issue. Please, please, please. We should tell you facebook is matching wall street estimates on virtually every metric with its Fourth Quarter earnings. Lets get more on the companys blowout. Michael graham joins us right now senior internet equity analyst. Good morning to you. How are you . Whats your target on this company as you wake up this morning . It was 135. Still 135. We didnt change our earnings estimates too much but it was a really good quarter. New didnt change them because this was not such a blowout . It was exactly what you thought would happen . A couple of thing. One we were already a little bit higher than where consensus was going into this quarter but revenue really dood. They raised their operating ein expense. They have had a history the last two years of sort of over promising and investors understand they might invest a throat deep business growing. You think they will do this. Give themselves a margin of safety. One of the conversations wreerp having earlier is just how much facebook is trying to get into the twitter business and what that does to twitter. Will you look at twitter now relative to what they were saying last night are your saying they cant compete twitter has its own issues to sort out. Really they dont that have balance growth that facebook does. Facebook has got user growth. You know, engagement, expansion and improvements and it all works together to keep things working in the right direction. Twitters problem is revamp the product to make sure people flight and use it more. Do you think facebook will put twitter out of business . I dont think so. I think twitter will get its act together as we go through the year. They made a bunch of changes. I want will get worse before it gets better. I think twitter is a good take out target. Googletwitter combination might make a lot of scene before the end of the year. Lets go there for a second. Why would google give twitter given they have access to api. In your google results you can see twitter. Thats been ramping up. Why buy the cow when you can get the milk. Google has almost no revenue coming from social advertising. If you look at the landscape and how much market share facebook is taking, advertisers want their message placed in social media. Google doesnt have an offering for them. Its a way for them to leg into the fast evident growing part of the market. The partnership youre referencing which was rekindled halfway through last year is possibly a first step. Great to see you, michael. Robin williams did the remake of flubber. Fred mcmurray did the original. One of the disney kids. When you were a kid and see people that are able to jump like 10, 15, 20 feet in the air from flubber, i mean it was a great you remember flubber, right and Fred Mcmurray was the wealthiest star. I remember other movies he was in. Harry the big dog. And son of flubber. I guess my twitter people they are old too because they said you guys are too young. I was thinking fluffer nutter. Take it from you to go from flubber to family oriented theme. A marshmallo nut sandwich. When we come back will new models help Harley Davidson ride into the sunset. Can the motorcycle maker rev up sales in 2016. Well find out after the break. Harley davidson out earlier this hour with Quarterly Results. I think thats the music played. They announced two new models for 2016. Margaret brennan is here to take us through the numbers. The stock going pretty wild in premarket up 5 . Mixed results for the motorcycle manufacturering, earnings per share beat three cents. Adjusted revenue of billion was less than expected. Shipment of bikes. Those totalled over 48,000. Better than guidance with higher numbers domestic ially and internationally. Analysts expected that dropped 2. 1 . For 2016 the Company Expects to ship 274,000 motorcycles a 1 to 3 increase with 78 to 83,000 move in the Current Quarter. The ceo saying in the release u. S. Market share has stabilized. Harley had been losing ground competitors like polaris and yamaha. Macro economic environment remains challenging. Call starts at 9 00 a. M. Eastern. Expect to hear more about the companys aggressive marketing push. Take a look at shares of harley they are down 30 but up 5 right now. Back to you. Morgan brennan. Caterpillar ceo will join us. China, oil and state of business around the globe. King of the jungle amazon ready to report after the bell. We got a preview of whats to come and what they may say about the holiday sales season. Well be back in just a moment. 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. Back up the truck. Caterpillar delivering Quarterly Results. Our news maker this hour, the dow component doug oberhelm. Facebook posts its first 1 billion quarterly profit ever. Chills to our neighbor to the north. Final hour of squawk box begins right now. Some day i will some day somehow right now i know you 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. Its canadian. Im Andrew Ross Sorkin along with becky quick, joe kernen and 90 minutes away from opening bell. Wall street dow looks like it will open up higher. S p up five and nasdaq up 40 points. Lets tell you whats going on the oil boards. Wti crude is up to 32. 70. Thats saying something. Coming thunder hour two key economic reports. Weekly jobless claims and durable goods. Becky has some headlines. It is a officially the busiest day of earning seasons. Lets give you a quick recap. It was a mixed quarter for caterpillar. Earnings fell a little short. Shares up nicely up over 5 . The ceo of cater pill already doug oberhelm is standing by. Hell be joining us live in just a moment. Also facebook shares soaring the company beating wall streets expectations driven by a Strong Performance moynihan bill and a big jump in ad sales. Facebook is spending right now on other big betts including Virtual Reality, Artificial Intelligence and bringing drones to the most remote places in the world. Heres Mark Zuckerberg on the Conference Call. 100 million hours of video are watched daily on facebook. Weve been testing new experiences like watching videos for people watching new videos. Were exploring ways to give people a dedicated place on facebook for when they want to watch videos. Under armour results beating the street helped by Strong Demand for Sports Apparel and running and basketball shoes. Under armours full Year Revenue Guidance was upbeat. That stock was up 11. 5 . Competitor nike getting a boost this morning. That stock is up by over 2. 25 . Caterpillar chairs rising. The 2016 earnings forecast is 50 cents above estimates. Ceo doug oberhelm joins us now first on cnbc. You never know, doug the light at the end of the tunnel could be an oncoming train ready to slam. Do you feel like maybe things are lifting a little bit for caterpillar after a couple of rough years . Good morning, joe. 16 will be rough and challenging again, i think. Given all the things going around us. Im happy with our performance in 15. I hope the light at the end of the tunnel is one of our locomotives coming across track. We started out in 2015 looking for 50 billion in sales. And 4. 75 before we get to restructuring. We ended up 11 cents short of that with all the puts and takes and currency issues and ups and downs on 47 billion. A lot of hard work by our team here and around the world. I hope, you know, some day wish we love the big heavy earth moving equipment. You cant do that with a facebook application. You cant build a dam or anything or move that much earth. Theres always, obviously, always going to be a place for heavy industry and caterpillar, i dont know, Economic Times make it difficult to see when the next cycle turns up and its all about this crazy stuff now, Virtual Reality. I guess you just have to stick with it and stay the course. Well, were going to stay the course and we got some exciting things going around our digital and Data Analytics innovation that will help us change the world as well. We formed a join venture, work with our partners to really kind of smother our customers with the data they need to lower their operating costs. If we do that well be in good shape Going Forward and be here another 90 years. A lot of cycles in the future like weve seen in the past as well. One of the things rear trying to do is make sure were strong at this bottom part of the cycle so when we do emerge and there will be growth at some point in the future. Strong and ready to go. Our market share superfive years in a row. Were happy about that. Inside we got a lot of good things to talk about. We have soft markets in a lot of countries and commodities in oil. We used to use caterpillar to get insight into china. No reason why we still cant do that. Whats it like over that . How would you characterize it with your experience . I would characterize it like i always have and like most of us do, long term tremendous market. We have to be there. We have to be a leader there over time. And thats one of our goals. Short term pretty painful. Our numbers are do u7b plus yearoveryear but theres still infrastructure building going on and a lot of activity. Just a lot of over supply from Construction Equipment to you name it. They are pouring a lot of concrete and doing a lot of things. Once that imbalance works out it should be a nice market. We kind of led that as they reduced Infrastructure Spending from what were double digit increases five, six years ago. We saw that compared to other industries. So, you on a daily basis can feel the over capacity in china right now. Just as clear for the eye to see if youre there. I think theres an overhang from commodities you name it. They are still growing 6 to 7 a year. Granted they are moving to a more consumer nation. They have lots of transformation to go through. Im hopeful that will all work itself through and well see a fairly good economy there over time and one that will be good for all of us. Weve all got to play and participate in. Second largest economy in the world. Do you think that the fed is on the right track and should they do four this year. Does it matter to you what the Federal Reserve does . It matters a lot to us and i was very happy to see no action yesterday. I see no inflation anywhere. I see a very anemic u. S. Economy, 1 growth or so, maybe to 2. I just dont see the need for much more increase if any at all. But, again, well see how that works out throughout the year. Right now things are pretty soft in terms of the demand for money. For your wish list, i guess you would like Corporate Tax reform from the next administration. And probably im thinking on one side and then on the other side you would be all in on infrastructure that all the democrats want. Which way do you go. Which candidate, which party fits the bill . Well, we were delighted to see the infrastructure bill, the transportation bill pass in december. First time weve had a multiyear plan in a decade. We view that more as a 2017 event. Maybe late 16 well see some of that. Many of our states are passing tax increases, issuing bonds for infrastructure. Were seeing great road programs coming on. That could be a tail wind later in 16 and certainly into 17. Tax reform. Everybody knows we need it. We would like to see it. Were pushing for it. Were waiting for the right political movement. Im sure it will be into 17 and beyond. We under oil, i think. In terms of horizontal drilling and fracking and things like that. I dont know if we understand the rest of the commodities complex but theres some similarities in terms of how much production was built up and when you guys were investing in more Mining Equipment and operations, we were always going to need it, obviously, but you cant figure these cyclical swings. How over supplied are metals like copper just across the board . I think you got to take it almost commodity by commodity. And, you know, gold is a little better right now. And copper is tough to mine in some places. Actually iron ore is well over supplied. Coal is another one thats lost all of its tail wind for that matter. Were in a position in oil, theres oil every where in the world and that will take probably a while to work out. I dont know where the price will be. We looked at 16 and said lets just hold Commodity Prices where they are over supply situation and work through it. A little Economic Growth will turn that around pretty quickly either half a point or a full percentage point can change things fairly quickly connected with some kind of event. We just have to get through this. Keep working on our internal operations and strength of our company, maintain our balance sheet, protect our dividend, do all we can because there will be a bottom. It will happen, joe. You know, at times like this maybe its a time to double down on some of the stuff you know will come back. Is that something that are attractive acquisition candidates or are your gun shy at this point . Will do you that . Were looking every day for thing. We dont have anything big on our radar screen. We did 400 million of acquisition on things. Thats more of our type of growth. What were looking for is lean manufacturing areas intern zwrool ointernal to our company. Maintain our r and d in 16 and third year in the row for that. We did that back in 2009. We didnt cut r and d as much as our sales went down and were enjoying the benefits of that now with high quality products, great engineering and design. Were doing that now for products that are coming out in 17 and 18 and lots of benefit all the way through. Well keep that going. We need to move quicker and you dont need excuses to move as fast. Thats what were after. I think the Fourth Quarter kind of showed that because he moved so quickly with restructuring and in 90 days time. Laying anybody else off . How is the workforce compared to the business you have right now . Well, were positioned about where we think we need to be for our outlook in 2016. But if we see a downturn in the u. S. Or downturn in europe or something were ready to move quickly if we have to. Right now were positioned pretty well. Seven caterpillars in facebooks market gap. We used to do these annoying comparisons all the time during the dotcom, how many boeings you could fit in aols market cap. I have a feeling we need some big yellow tractors. Still need those things, i think. Were going to theres a lot of dirt to be pushed. Weve been here 90 years. Well be here another 90 years. As always thanks. Thanks for coming on, regardless of the economy. You know dirt, if you move it like snow is bad enough. When is the last time you tried to move dirt. I see people on tv shows got to dig a grave. Lets dig a grave. Theres no way. No way. Just when you go out to do anything in the yard. Just to get the slightest bit of, to put in like a seed or a flower. Earth is dense. You need earth moving equipment. Its illegal to start digging in central park. Really . Is it . You cant start digging up the ground. Something you never even tried. Its my backyard. Coming up the looneyest hovering near 13 year loss. Is r word in sight for our neighbor to the north. First as we head to a break. Take a look where futures are headed that hour. Stay with us youre watching squawk box on cnbc, first in business worldwide. 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. Light piano today i saw a giant. It had no arms, but it welcomed me. crow cawing it had no heart, but it was alive. train wheels on tracks it had no mouth, but it spoke to me. It said, rocky mountaineer all aboard amazing. I like canada. Our Great Northern neighbor. Where the Canadian Dollar now it over shot itself. That was blackrock Ceo Larry Fink speaking with us in davos last week. The question today is how many others are ready to invest in our neighbor to the north. Cnbc has a report from vancouver. Reporter good morning. Here in canada the r word is back and some say it never really left. Im talking of course about recession. The looney hovering around 13 year lows. Saw its biggest declines since it was unpegged from the u. S. Dollar. It could stay that way for a while. I would like to see the lonie increase, the Canadian Dollar. I dont see that happening in the immediate future. Ultimately it will. Reporter and that may mean more expensive groceries for a while. Canada imports 80 of its produce. Take cauliflower. I have one right here. The humble cauliflower has become a National Talking points. It can be seen in the ails as high as 8 Canadian Dollars, thats 6 u. S. For a head of cauliflower. Over 2 for celery, triple the price a year ago. The loonies weakness is due to oil. A lesson, of course, dont put all of your economic eggs in one basket. Some parts of the country have done so and are today probably regretting that. Reporter now, guys, he has the difficult task of ref balancing, diversifying its economy after being so resource dependent. Can the country do it quickly enough and will that affect business south of the border where you guys are. Fundamental disclosure, this head of cauliflower when i bought it yesterday cost about 6 canadian but a friend was bragging about finding a head of cauliflower that cost less than 4 can januaadian. I have a solution dont eat cauliflower. Thank you. Reporter it may be the new super food. Restaurants are talking about taking it off their menu. Threw have it. Thank you. Lets talk about stocks to watch. Ford earnings and revenues beating the street. Automaker says its European Business returned to profitability for the full year 2015 with the asiapacific region posting its best ever annual profit. E eli lillys earning beat expectations. A number of successful large stage trials. Time warner cable beating the street upbeat subscriber numbers helped that cable operator. Home builder pulte topping forecast and top and bottom lines. Orders rose 24 with average sale prices up 6 . Coming when you we come back, breaking Economic News. Well get jobless claims and durable goods at 8 lone 30 eastern time. First, jamie dimon and nba star steph curry have in common . Well tell you when we return. Announcer youre watching squawk box on cnbc. First in business worldwide. Today is a somber anniversary in american history. 30 years ago the Space Shuttle challenger exploded less than two minutes from take off. All seven crew members were killed. It was determined the o rings inside the rocket boosters failed. Nasa will pay tribute to all of its fallen crew members during a reflying ceremony today. Do earth of you remember this like i was in the fourth grade watching. I was in the classroom. I was driving to work on the pasadena freeway. Ricky broke the news to me. I was in science class. I remember watching it over and over on repeat on my living room that night. I remember they had rolled the television into the classroom. They turned it off and pushed it out and then we just waited to hear what happened. We had so many successes and first time we decided to send a civilian and it was a teacher involved. We were all so excited. I remember when they rolled the tvs on the roller with a big strap so it wouldnt fall off. I remember people at the launch site. The confusion. Did it separate. Did the booster separate. I want became clear. It was just horrible. So many thing have changed in 30 years. Lets talk about political news this morning. The countdown clock four days until the Iowa Caucuses and gop president ial hopeful hope to square off tonight. The frontrunner wont thereabout, donald trump boycotting the debate as his feud with fox news take center stage. Ted cruz raising the stakes to tackle trump on a one on one debate. Super p. A. C. Supporting cruz offering 1 million to charities. Sports and business collide today. If i was trump i would say so youre devotion to veterans depends entirely on me showing up giving 1. 5 million. Its trump story. You cant horn in on the foxtrump this isnt about ted. Im surprised the television didnt offer to broadcast it. A television broadcast. Called squawk box. Called cnbc. Somebody could. Will you cover it . I would go on a plane right now to cover it. Were talking about sports and business colliding. Jpmorgan buying the name rights to warriors an in san francisco. The venue set to open in 2019 might be a bit surprising. The arena will be named after a new york base. The owner is a partner at Venture Capital firm and the teams board includes youtube founder. So interesting. Thats it. Jpmorgan is doing more business in Silicon Valley. Did you see the article about nickle back. A lot of people rolled their eyes but they have these fans they are going back on tour again. They would do anything to see nickle back. You either love them or hate them for some reason. I dont know why. Maybe end up on the other side. Tennis channel is getting a new owner. Sinclair is buying the cable channel for 350 million. The tennis channel which has been owned by a slew of private equity firms is currently in 30 million homes. Coming up breaking Economic News with weekly jobless claims and durable goods. U. S. Futures are up. A whopping 40 on the nasdaq. Youre watching cnbc first in business worldwide. 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 futures have been positive. Not getting back to what we lost yesterday after that 2 00 im not sure what the heck happened. The ten year note a little bit above 2 . Rick santelli standing by at the cme with numbers. Rick . Reporter all right. Initial claims looking for 281ish. And, of course, not quite out yet. Durable goods not quite out yet. Boy a little snow, huh. As for what happened yesterday, listen we all Pay Attention to the fed. We have to. In the end whats built into the system is not exactly matching expectations in the marketplace. All right. 278,000. So thats down 3,000. From expectations. But it is down from 294 to revised i take that back down 16,000, 278 from 294. Lets look at durable goods. December preliminary. Were looking for a number a little bit below zero. We got a lot below zero. Minus 5. 1. Lets strip out transportation down 1. 2. Looking foreclose to unchanged. We always like to look at durable good orders nondefense aircraft, business investing, capital investing gives us a clue in that direction. Were looking for. 2. Down 4. 3. If we look at the order side of that, of course, sometimes you get or shipments is a different picture, this one actually is a little better. Only down. 2. We were expecting a lot more. Expecting anywhere from up. 7 to 1 . The preliminary read on december is not very good. Yields were slipping below 2 a bit and yesterday were toying with 2 after the statement wasnt dovish. The dollar is still really softer than before the expectations of the statement. Of course unfolded in front of our eyes. Maybe the most important thing and i dont talk about it a lot, dollar futures and options 90day forward rate. Today its up. Yesterday got back close unchanged after having a lot of selling prior to the statement. When that rallies, of course less fed when it breaks. More similar in psychology in fed fund futures. Back to you. Okay, rick. Im just doing what im told. Ill do this. Steve liesman is here. Reporter you never do what youre told, joe. Ill do it here. It says Steve Liesman is here and i guess, is that news or do you have something to say . What would you like to do, joe . Whats the thing you would like to do. I hope you have something. It would be good. I want to just say quickly we dodged a bullet in claims. A lot of concern that the jobs market was starting to soften, a little bit of sense from the fed statement that they were less upbeat on jobs than they had previously been. This idea that lebron james came back down i dont know if were still involved in the postholiday season adjustment where we hire a bunch of people and then let them go and that tends to retail some problems. The idea its not going up any more, again were back in that range where claims suggest couple hundred thousand jobs to be created. Is it something compelling to look at or not. Durable goods is not okay. Next thing i was going to get to. Wouldnt you want to get to that first. I dont want to tell you how to do things. Did you want to bury the lead. Most of the economists say im more worried on claims than manufacturing. Its a very bad number. It suggest as couple of things. One the manufacturing contra contraction continues. The Manufacturing Sector is beleaguered by a strong dollar and decline in the oil patch. You saw a piece yesterday from torstton slock. They didnt tell you to bury that durable goods number. How would you answer that, andrew if you were next to joe with a question with an implication in it. I would get under the table. I dont duck. I would go right after him and ask him the Republican Party told him to ask me that question. Yes. Thats the way i would respond. But i wouldnt respond that way. You know. Durable goods number is not good. A sign of contraction. What we havent seen is trouble in the Manufacturing Sector bleed over into the broader economy. Service sector seems to be doing reasonably well. The bigger question weather the consumer, weather the windfall from gasoline prices. I think ive given up the ghost. Im looking for that gasoline price led consumption boom that i thought would happen. Its not happening. Hasnt happened. Im not sure where it is. The best piece of data i saw was from richard who talked about the idea when gasoline prices go down people buy premium. Weather . Premium gasoline. Where would you come up wither. Yesterday i used the word mimeograph. Reading chauser . Identify just been told no more, joe so ill follow what ive been told unlike you. Steve thank you. My pleasure. Joining us now is the senior Portfolio Manager of blackrock. Paul, lets talk about what see was just pointing out. Weve seen this weakness in manufacturing, durable good numbers weak again. What does that tell you about the economy and does that give you pause . For the u. S. We have seen a dehe isleration in the economic momentum especially relative to other parts of the world. Manufacturing is part it. That weakness in the consumer that you mentioned earlier weve been negative on the u. S. Consumer now for over a year. I think on this show ive talked about that a couple of times. When we look at the Internet Activity we track other than housing and cars we dont see any signs of people looking for durable goods like washers and dryers. On the manufacturing side, thats definitely a disappointment. Its a pretty poor number. The strong dollar there is probably one of the biggest head winds, and, you know, i think were starting to see the point where the dollar disparity is coming, maybe not to its peak but probably pretty close there. Does that mean you think the fed stops . Were listening to the ecb talking about additional stimulus, additional measures that could be coming through, same thing with some of the other central banks. If our fed goes ahead with another three or four rate hikes the markets are suggesting thats not going to happen. And if you look at the fed fund futures implying now maybe june one hike and nothing for the rest of the year. I would agree with that. The last time i was on your show i said i disagreed with the markets. This time im fully in agreement. I think youll see the dollar start to soften again and you have seen that in the last couple of days Nuclear Weapon tell people to buy stocks at this point . If you have a long term its a good entry point. Long term being what five, ten years. Over lets say one two year period for the broader markets. I do see the markets higher from where they started the year. So even with this correction coming back and then some. Tactically weve seen we added beta to our portfolio about two weeks ago. We started to fade that into month end. So i think we might see well see more volatility in the next couple of months. This year will be a more volatile year all around. Adding beta to the portfolio how . Our portfolio is market mutual. We can arrange that between 40 net long and 10 short. We took it up 120 , 20 net long two weeks ago. So you dont believe the rally thats here for the short term. We have a tactical view in the short term. We have a long bias. Were not net short. We do like equity beta exposure relative to short income. What did you do yesterday . We didnt moderate the beta yesterday. So we tend to have theres certain things in the model that will trigger a buy or sell. Youre going to start using that. Moderate data. Get another cocktail. Yeah. I like that. Thats good. Thank you. Thank you very much. When we come back were going to talk about bob be alibaba beating the in the street big way. Plus well look into another etail giant amazon and then barbie. Barbie getting a big makeover. Well show you how mattel is changing its iconic doll. It will surprise you. Welcome back to squawk box everyone. The futures this morning at this point, well it looks like the dow futures are just below fair value about ten points bloe. S p up 1. 5. Check out shares of harley david sopranos. Companys earnings topping estimates. Although the motorcycle maker saw weaker demands in the United States which is its biggest market. Stocks are up. Check this out. Mattel is transforming its iconic barbie with, i dont know if i would say new body shapes but skin tones and hair. They are make being a tall barbie, a petite barbie, a short barbie and then a curvy version of the best selling doll. All will be sold alongside the original model of barbie. The new body shapes follow the addition of new skin tones and hair texture, thats from last year. New barbies are making their debut on this weeks cover of time magazine. They will be sold online starting today. Will hit shelves and Retail Stores later this year. I think when we talk about how hasboro has suddenly been better than mattel a lot had to do with weak barbie. Also they went into all sorts of other businesses that had video and other licensing fields. Right. Played a video game, my son loved it. About three or four barbie video games we would play on the computer. I liked them. Not because i dont do the bronie stuff. They are compelling. You know what that . What do you mean never mind. I dont know what it is. Never mind. My daughter had a lot of them, had minty and razzle woo. You havent heard about howard stern. Thats right. Im missing out. Lets go to break. Well talk about alibaba. Chinese e commerce alibaba posting better than expected earnings. Those shares now trading up. Were looking ahead to result from the next big etail Company Amazon hitting the tape after the bell. We have global head of internet media research. Do you cover alibaba. Have you seen these numbers that have come out in the past hour . Yes. Yes, i do. We were on the call just a few minutes back. So to the extent these numbers were blowout numbers relative to what the market seemed to think would happen. Do you like at this and say great for alibaba or something broader going on in china that were missing . I think its great for alibaba. Im not sure its china. Its pretty difficult backdrop. And alibaba, because their pure play online, because they are the largest player with 85 market share they are disproportionately benefiting from two things. One is migration of people online and then people are spending more and investing less. That was kind of the key takeaway from what management of talking this morning about the call. Lastly theres this trend of people just, you know, even in the remost villages starting to use massacre net. Alibaba is dramatically impacting that. Do you care about the profit number or just impressed by revenue at this point . No. For alibaba the profit numbers are very important but youre talking about a company which is generating in excess of 50 on the dow margin. This isnt amazon on the bottom line. We do care about the profit margin. They did well on revenues. So were going to get amazon this afternoon. Heres the question. Do you want to own amazon or alibaba. Im giving you a choice to only own one. I would go with amazon. Because . Well, again, because the u. S. Economy is doing better. The u. S. Consumer is doing better. Yes, the market is much more penetrating in the u. S. Relative to china for obvious reasons but we do think that the propensity of americans to spend will continue to outlast anybody out there and for amazon if you look at the quarter they all point to a vvery strong quarter. They added over 10 million prime users and thats a good indicator for how good things are going. What your going focused on this afternoon. Is at any time web Services Business which has generated so much income recently or it is really the Retail Business and how much cap x to spend against it. Not as much the cap x. Well be focused in on the Retail Business and the top line. Were hoping for an acceleration. Were not models for it. Last inquiry they showed nice acceleration. He in do that again the stock will rip. The consensus is that business will grow north of 70 . Profitability there is, we dont have a great read on it. But we think its highly profitable somewhere in the mid to high 20s which is what they did last quarter. Retail is the first thing ill be focused on. Thanks so much. Thanks, andrew. Coming up, jim cramer will join us from the new york stock exchange. Well look at caterpillar. First as we head to break heres a bit of what caterpillar ceo doug oberhelm said. One thing we want to do strong at the bottom part of the cycle when we do emerge and there will be growth in the future. Our mash sharp five years in a row. Were happy about that. Inside we got lots of good things to talk about. We just have soft markets in a lot of countries and commodities in oil. York stock exchange. Almost did a lets get ready to rumble, jim. Jim crime other joins us now. You can talk about so many things. When you were a kid, and you confirmed how great Fred Mcmurray was. My four sons. I wanted to be the fourth son there when i watched that show, i always thought i was in the peanut gallery. Its not about money, is it . Its a labor of love. We hosted last night. In walks the spanish voice of the miami heat. Why . Because he said i want to have a beer with you. A lot of people want to have nice quick food and a beer. It is a labor of love, not unlike your wifes gallery, which may i add is two blocks from my house and we are seeing the name up top and im very excited. You know what . Not to belabor the point, but there are people that borrow money and scrape things and they are are living daytoday hoping it works. We are very fortunate we get to, you have your restaurant and were lucky we are not sweating every you know, jim . Joe, let me tell you what you and penelope are going to find out, the government is not your friend. Wait until the government comes by your place. Wait till they start inspecting you. They found my door was 1 8 inch too small. I love our town. But you know what . They are going to look and say, wait a second. What are they doing here instead of what they should be saying, theyre hiring, filling up the space, the space looks better than ever. You will discover what i discovered, there are people who are your friends. Theyre called the customers. And people want to be your friends and arent, and theyre called the government. Im just glad its not a, like Edible Arrangements or something. My life passed before my eyes. The melon getting delivered and leaking all over. Thank god we found something that any way. It will be very exciting. Youre putting people to work, giving people jobs, putting foot on the table. Its a tremendous feeling when you realize when you own a business, you put people to work. I just wish more people realized thats what you do when things get better. You hire people, you start something. The government should say lets get you a tax break your first six months. Who taught you how to use the mastercard thing in your iphone . They come in with the square. They come in with the american express. Could you play cash . Please pay cash. The real world is a tough world. Jimmy, did you see ob oberhelben . Its great. A lot of companies in his business would tell you they are going to do x. The fed is getting tight erb, they raise rates and make the dollar go up. He didnt say that. My hats off to him. Goldman recommended a sell last friday. The fact is that he was only off by a couple of billion. That sounds strange, but he could have been off by 10 billion and he wasnt. Caterpillar is the best in that sector. Facebook, im taking back everything i said. Facebook, geez, my applications in. My resume is in. They are taking the number one guy in cal tech and stanford. That was the best quarter so far of 2016. Was a magnificent story. Its heartening to hear an American Company killing it worldwide. Constant currency, doesnt matter. There is growth there. Superb. Jimbo, thank you. Peanut gallery. Peanut gallery. This is a huge new art gallery. Yeah. Its good. I think its exciting. Open today. Tomorrow. Tomorrow for the party. Then everyone is going to rush to go. Do you have to get appointment . By appointment only . Coming up next, the stories to watch later this morning including two key reads on the housing market. Stocks on the move. Squawk box returns. Its intelligent drive is msystems. Ng. Paradigmshifting. Its technologyfilled cabin. Jawdropping. Its performance. Breathtaking. Its selfparking. And selfbraking. Showstopping. The allnew glc. Mercedesbenz resets the bar for the luxury suv. Starting at 38,950. Rootmetrics, in the nations largest independent study, tested wireless performance across the country. Verizon, won big with one hundred fifty three state wins. A t and t got thirtyeight, sprint got two, and t mobile got, zero. Verizon also won first in the us for data, call speed, and reliability. A t and t got, text. Stuck on an average network . Join verizon and well cover your costs to switch. Welcome back to squawk box. Weve gone through a ton of earnings report. Jobless claims and durable goods. Still to come today, december pending home sales. Thats at 10 00 eastern time. Thats expected to rise by 0. 6 . Freddie mac will be releasing Weekly Mortgage rates. In earnings central, wait till this afternoon. Amazon, microsoft and visa among the names set to post Quarterly Results after the bell. Stocks on the move. Under armour shares sharply higher on better than expected results as well as upbeat guidance. Nike is also up. With flubber. Kinder morgan upgraded outperform to neutral. Stock trading higher. Jetblue better than expected earnings and revenue. It is trading higher. That does it for us today. Join us tomorrow. Time for squawk on the street. Good thursday morning. Welcome to squawk on the street. Im carl quintanilla, jim cramer and david faber. S p company reporting from cat, alibaba, ford. Futures holding up despite red arrows in europe today. Feds out of the way. Tenyear below 2 and oil knocking on the door of 33. Our road map begins with the busiest day of the quarter. Facebook knocking the cover off the ball. Stock is