Transcripts For CNBC Squawk On The Street 20140122

Commuters, but the earnings may be tough this morning. Futures as you can see are mixed as have the averages been over the past several days. The tenyear note a touch higher than it was at this time yesterday. And as for europe some mild weakness in the uk and in spain. Our roadmap this morning goes, well start with coach. Shares of the luxury goods maker down big in the premarket after samestore sales in north america plunges 13 year on year. And ibm is not looking too good. Down on earnings. The tech giant reporting revenue below estimates for the Fourth Quarter in a row and due to weakening demand in part in emerging markets. A lot of people facing a nasty commute after a massive winter storm dumped over a foot of snow across the northeast. Left temperatures hovering near zero. Well go live on the ground to see just how bad things are in a moment. But first up, coach reporting weakerthanexpected fiscal Third Quarter results and comps down 13. 6, and it said its been hurt by substantially lower traffic in its stores and coach has been losing share in the handbag business to rivals including michael kors. The only bright side here was some international up 11 and china up 25 but north america is a source of pain. Really scrambling on this one. Down 14. I hate to ever make an analogy to a company that we all hate. Because they told us that things were fine and then they raised capital. But this has a jcpenney feel to it. Now, its got a much better Balance Sheet to it. But when you start seeing double digit comp declines, those are very hard to stem. When we first saw the double digit comp declines at jcpenney it was the time to go. Im not saying that coach is in trouble. I am saying that this not a buying opportunity. Yeah. Korss, tory burch, kate spade, theres a bevy of competitors who have already begun to eat their lunch and are ready to start doing so. Kors has been a weak stock of late. I actually think that kors is not as bad. Kors has been its this is one of those situations where coach was really bad and we expected bad. I just wonder, we expect great things from kors and maybe its really good. In this market you have to expect bad things and then get blown away by how good things are. Thats whats moving stocks which baker used oddly, i know it doesnt mix with handbags. You can if you want it to. Use coach. Thats the one if you want to look, Norfolk Southern and baker news are the two i expected the least of. They were giddy on the call. Are you optimistic . Im very optimistic Norfolk Southern and baker he r hughes are the templates of what are using. I thought you were screwing up but theyre not. The ceo has not been there that long, right . The new ceo of coach. Coach, lou frankfurt having run the company for so many years. Hes new. I dont know. I wonder, though, if theres something, you know, when you have a change of that significance. I dont know. In leadership. Maybe hes setting the barlow. Yeah. Extremely low. Is it more about coach or is it more about the consumer overall . You mentioned many of the other competitors and carl did that are succeeding it would seem in beating them. Yeah. I think that coach is lets say half of it is traffic. No one really expected, again, thats u. P. S. Call, like, how could u. P. S. Have its peak week the last week and thats because mall traffic is down. Coach has been adept at telling you, listen, were a china story. That aint cutting it anymore. Theres just a lot of u. S. Stores, theyre overstored. They have the wrong price point. The shoe incentive that i thought was working so well a year ago obviously seems to have petered out. I just dont understand how a company could go from first to worst in a rather, you know, kind of an amazing time. It does bring to mind a couple other in this case downgrades of dollar tree, for instance, stern cutting it to a neutral, saying it worked beautifully for a while, but they are looking at some deterioration in trends. Right. Home meet iheats bills that think might hurt Consumer Spending in the spring. Thats a great point you mentioned. Natural gas stocks really exploded yesterday and they exploded because, almost, listen, we accept the fact that theres a change here that the 3 level is no longer the effective level. The 4 level is now effective. It had been a savings of 700 per family when we were down at the 3 level and that money is going somewhere. The cuts have gone somewhere. Family dollar did not have a got quarter and that stays in there but thats activists. Family dollar theres a lot of noise around that name. Not sure what you can point to. All of it around the idea that they would be better off being a part of Dollar General who are considered better operators. Whether or not that happens. Meetings pass, but you cant act by writ consent. Youll see. But you have shareholder basis in Family Dollar nelson peltz, paulson. And lone pine might not be in there. Lone pine. But you got a lot of names in there. Dollar tree is a better operator. But i think theres a big question of where the shoppers are and one of the reasons why identii think theres been Good Movement in the industrial stocks because they have nothing to do with the consumer. Meanwhile, rates have paused. What was that thing they were talking about when the feds done . What was that thing . I dont remember. I dont know. Its not coming to me yet. Ten year in 2. 8. Whats the best performing group . Utilities, the Master Limited partnerships, the ryr, the real estate trust. And they are doing a great job. Its great read. But where whats working isnt supposed to be working. Just not. Alcoa. Especially i. T. Hardware in some occasions. Yes, indeed, a good way to get to ibm. Good segue. Were good here. They missed revenue expectations for a Fourth Quarter in a row. Weakening demand for servers and storage equipment especially in markets such as china and the ceo says she and her senior team will forgo their annual incentive payments for 2013. Not sure thats going to go that far to helping assuage investors. Its a start. Hey, its a start. Its something. You have a focus that the bottom line number was not bad but they beat because of a tax rate, a lower tax rate, i think 70 cents a share. You know, Stan Druckenmiller has been talking about a short on this name with the simple idea being that Big Companies when their Business Model changes, its not easy for them to change as well. Or as quickly as perhaps they need to. They did put out that big 20 and 20. Theyve got this formula, roadmap, i know that Warren Buffett seemed to be attracted to the roadmap. Are you talking about operating net for the year, they are supposed to see 20 bucks . Yes. If people want to understand why companies go down even though the headlines are good, theyve got to go through this transcript of the Conference Call because its really rather remarkable. At one point the analysts didnt turn on the company yet until the research. That will happen next, but at one point theres this, guys, what are you really earning . The strongest point in the call they managed to get the tax rate down and they did well on pensions and then theres a listen, were a mobile, were a social, were a cloud, were a watson company. They didnt do as much as salesforce. Com did. This is a i dont want to say its a disaster, but i am going to say when you make these longterm targets and what david said the business changes, when you make the longterm targets and youre down an astounding amount in china, i mean, you know, at one point they even say, look, china, were being were selling into these stateowned organizations. These companies. And they are the real weakness. This is the cash flows down really badly. This is bad. I dont know if its akin to the personal computer but there is a change going on here and they believe its a seminal change and one theyre going to have to deal with for quite some time and adjust to. The rap you saw on some of the most critical analysts this morning say, the last bad quarter coming up. Theres a hardware cycle and it worked for oracle. The mainframe business, i dont know. Its down in numbers. 15 billion in cash flow. Thats 3 billion lighter than they thought. Yeah. Revenues down five. The roadmap in tatters. The roadmap is in tatters here. The isis out with a report saying they need to do some very large m a even if its dilutive in the first two years and Herb Greenberg has a provocative tweet saying investors are getting tired of managed earnings. I read herbs article. He said when you make the longterm targets you run the risk of making major misses but you do everything you can to make the number. China down 23 . Whats that about . The Stateowned Enterprises they say, like, its in turmoil. Heres my favorite line, we had good performance in our pension plan. Oh. Thats always a good thing. A highlight. A highlight. Thank you, ben bernanke. A real reason to go out and buy the stock. I got to take that. 4. 4 billion in cloud and including 1. 7 billion in software and services. I mean, no, they are not mobile, they are not social, they are not cloud and then theres the watson element. I dont want to pick on them too much but i want to pick on them a lot. But they have Free Cash Flow of 8. 4 billion, an enormous company in the midst of change. On the buyback point, dennis berman, interesting piece about how buybacks have ruled the day at ibm for so long. I think its 60 billion in stock has been bought back. Theyve redued their share count by over half, over not that long a period of time. Buybacks are a key to the strategy for this company. And he posits this theory, do they love it or hate it by doing this because they dont want to reinvest as much. Warren buffett likes the buyback. Buffett is the larkest shareholder here and hes in a tremendous position. Although another piece by jim chanos and how buybacks disguise weak Business Models and thats given him an entree in the shorts this past year. Oppenheimer cuts oracle to neutral because they think in the future the most strategic cloud providers are amazon and red hat. Piper raises the price target. The Charitable Trust owns red hat. Two quarters ago was so hated that Jim Whitehurst was bemoaning onham. Why do they hate me . They were wrong to hate him. It was issue that some of the companies when they do software as service, you have to prorate the billings. Its a subscription model and ibm would kill for that model so people are confused how to value these. Salesforce. Com has been going up, up, up. S. A. P. Pushback and profitable because of cloud. Cloud is eviscerating ibm i believe. But it does have the cash flow and it will continue to buy back. They will make those numbers because they continue to buy back. But if you go over the Conference Call the analysts the tax rate goes down and your pension fund is doing better is not what they want to hear. Very good at matching the tax rate. The analysts are so skeptical. They are talking about how its possible that you get to 13 growth plus earnings per share growth in a normalized tax rate environment . But who knows what a normalized tax rate environment is . I mean, these guys are like the old, im going to say it, ge, which was tax rate. You play the people see through it. This is a bad quarter. With all that in mind, a lot of diggings on tap today for much of the east coast after that winter storm dumped more than a foot of snow in parts of the region which is also dealing with bitter cold temperatures today. Lets check in with jim cantore in washington. Good morning. Reporter good morning, i hear cramer make all these projections. Looking ahead we like to look ahead five, ten, 15 days if you are east of the rockies do not expect much relief from the cold at all. I mean, it is going to last right through the end of the month. Probably right through the super bowl as well especially great lakes and northeast. Theyre just locked in right now with the snowpack and the cold. But heres the first arctic blast. We are not going to touch 45 degrees over the next seven days we wont touch it. We may get to 32, 34 degrees as we get into saturday but thats it. Well just get above freezing a little bit and, of course, anytime you get one of these snowstorms you will have delays with air travel, buses, cars, of course, they usually have four or five lanes to deal with and only a couple to go with and thats the case here today. Delay for the federal offices once again, so thats about 2 1 2 days. We only got twohour delay instead of all closed. City schools are closed as you might imagine and the airlines will take a couple of days to get back up and running because of the cancellations yesterday. Not getting the air traffic in means we have no planes to get out, so a lot of the departure delays and cancellations are what we are dealing with this morning. Surely but surely it will be getting back online the next couple of days but if you are heading up this way, bring a very, very large and thick coat. It is cold and its going to stay that way. Guys, back to you. Thanks a lot, jim cantore. We used to sell the airlines things like that. Printing money. Printing money, delta. Miami 65 degrees and sunny. Getting on a plane. The western part of the country is just fine. Well, i dont know what to say. I was more focused on earnings, but im perfectly willing to go. How about squawk on the street in miami today . Yeah, they got streets. Oh, man, i would do that in a flash. My street was plowed very well. Brooklyn. In brooklyn. Mayor from brooklyn. De blasios new york. When we come back the earnings parade marches on. Well dig deeper into the results from United Technologies and Texas Instruments and a lot more. Also ahead s. A. P. s Bill Mcdermott their big bet on the cloud. One more look at futures as the market tries to wrestle with some of the challenges bits of guidance and earnings from major companies. A lot more squawk on the street from post nine in a moment. [ male announcer ] this is the story of the little room over the pizza place on Chestnut Street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i95. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment tell me what you want tell me what you want a lot more earnings to go through this morning. United technologies and xilinx above estimates. And textron gave a cautious outlook for the First Quarter and txn announcing plans to cut 1,100 jobs in an effort to cut costs. It seems like everyone that beat on the bottom line had some negative piece of news to go along with it. Utx ten quarters of a revenue miss. People looking outside are looking at orders are for utx and extrapolating what boeing was saying, United Technology had great orders and a lot of people feel that commercial real estate is coming back. Otis and hvac, i think the stock will go higher. They did tell you that defense was a problem and United Technologies is the best of the dow stocks that have reported. Look, theres holes everywhere. I mean, yesterday i thought travelers had a really great number, but they mentioned competition at one point in pnc, in property, casualty and that was it. You mentioned competition. If you mention competition your stocks going down. If you dont lets back up a bit from earnings to earnings and a look at the market overall. Does it change your viewpoint . No. Do you start to reassess a bit given what weve been seeing . No. Because i think that its at a certain point the consumer stocks will have overcorrected, at a certain point well be saying, do you know what, this year doesnt look as bad because the banks are doing so well and i always like the banks. I see enough good in the industrials particularly in europe. I keep hearing that europe, the leverage there is going to go over the ppg quarter last week and what he said was basically, that europe has turned up just enough and they fired so many people in europe. Alcoa turned up just enough, they fired so many people, so youll get real leverage out of europe with the industrials and i think thats whats driving a lot. Interesting. Sort of is reminiscent of what Howard Schultz told us about the consumer in europe a very long time ago, right . Right. You think this is the second stage of that . Yes. Look for bargains in europe, but looking for real growth there, you may be looking awfully long and hard. I think its bad versus not as bad. I think you are talking about a company that might have had a 2 decline versus the 2 sales increase because of the firings you get a kind of a v. You get a v up in the earnings. Its not what people want. People want to see amazon. I mean, amazon has something today, they obviously contacted a couple of Media Companies and the next thing you know amazons got a channel and you tick up amazon 10 because it has a channel. They have revenue growth. The story is, right, and actually denialed to a certain extent by an amazon spokesperson that amazon was contacting broadcasters in the broad sense of the word or providers of content about doing an overthetop kind of thing could we have an online version of your channel which is very precarious for those selling the channels to the cable providers, of course, and getting a fee every month. A day where netflix is posting tonight, right . Need to see 33 million. 33 . Domestic . Yes. Goldman today said facebook numbers have upside. Thats another one of these where i think people just say, you know, look we like the growth. We like the growth. We like the growth. And anytime you see that they like the Growth Without any concern, they better have real growth or the stock gets hurt. I think facebook does have it, though. When we come back well get cramer mad dash. Xilinx on mad money, as we count down to the opening bell, one more look at futures and finally getting everybody going in the same direction because 7 out of 13 sessions this month have seen the major averages split directionally. Interesting trend this year. A lot more of squawk from the nyse straight ahead. Mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. 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A lot of people feel the commerce in the country may be slowing because of retail and merchandise orders, really booming. Remember, where they ship to. I think Union Pacifics also probably going to be good a lot is mexican traffic. But Norfolk Southern is a great barometer of how the country is doing and the rails are doing, of course, and this is just a beautiful quarter. Yeah, i mean, in all ways. Chemicals up 21 . Metals construction up 12 , intermodal up 6 , agriculture 10 . Automotive 10 . Everything you just mentioned what is going right in the economy right now and i think thats what people might be missing at home when they focus on coach bags. Think about it. You have so many different autos, obviously this intermodal, these are all of the areas of our country that are on fire. And apropos, but dan loeb talking about the chemical number has directly to do with louisiana, texas, it has to do with cheap ethane and propane and propane going up a lot in the midwest because its so cold. But this is the natural gas world. Yeah. And, of course, the flip side is that coal is bad because of natural gas, but there is an oil boom and a natural gas boom and Norfolk Southern is cashing in on it. Well watch Norfolk Southern and a lot of other names we mentioned this morning and a lot we havent gotten to yet. The opening bells coming up right after this. Female announcer get beautyrest, posturepedic, female announcer even tempurpedic mattress sets, at low clearance prices. Save even more on floor samples, demonstrators, and closeout inventory. The year end Clearance Sale ends sunday at sleep train. Your ticket to a better nights sleep im bethand im michelle. And we own the paper cottage. Its a stationery and gifts store. 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Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Youre watching cnbc squawk on the street live from the Financial Capital of the world. Well get the opening bell in about 30 seconds, and we thing we know for sure is that the dow a lot of discussion about it being price weighted and some of the expensive stocks like ibm are going to make getting out of the gate a little bit tough. Yeah. I think that people should recognize that ibm is not the ibm they think it was. They should focus more on the United Technologies that are doing so well. Thats the new economy is aerospace, its possible nonresidential construction coming back and ibm is kind of it got hurt a lot by the newer technologies. I was looking at an interview by Warren Buffett, you never want to be in companies that can be outmoded. I dont know i think ibm has been outmoded. On the Conference Call they are referring to Business Model issues as they did last night. The opening bell and a look at the s p, city harvest feeding those facing hunger in the new york city. And green corp celebrating its 125th anniversary. With all of that, well continue to watch some of the tech companies. It really is a day for tech when you look at ibm. You have sixilinx comes on toni. I wasnt happy with the guidance and ill have Moshe Gavrielov on tonight. There are a couple charmed stocks, nuance is charmed at last after that siri on your iphone and they sharply better than expected earnings. Also go back to bond tech. Here it is gilead, kind of a theme, biogen, a theme. These dont quit. Gilead is up 3 . Nothing happened in gilead. It has 125 billion market value. Thats correct. 125 billion. Its only 30 billion less than merck. Merck doesnt have 25 billion less than merck. Merck does not have the kind of momentum. I mentioned gilead in get rich carefully my book, its one of the great stocks to watch. I do not think theres cause and effect. It would be like megalomania. And the stocks go up and go up and i search for news and there is none. Because theyre charmed. Speaking of charmed, textron is up 35 since midoctober. They beat by a penny. Revenue nice change in pace was actually above consensus. Although a cautious view for the year theres a sense that this beechcraft deal will add to earnings at least in 2015. Aerospace is so, so red hot. People were critical of Herb Greenberg you mentioned ibm 20 for 20 so to speak, but if you look at boeing, boeings got a 20year plan. And its right. I mean, aerospace has a 20year plan because you cant get planes. And thats theyre not going to be outmoded. Textron, aerospace, ge did not get the love from aerospace because the margins werent that good. Right. As citi said yesterday that promise on that margin improvement took on almost a disproportionate level of importance for investors because the rest of the quarter looked okay. Yeah. We own ge stock in the Charitable Trust, and its a transition quarter. I was upset. I was upset because the oil and gas business should be great. They called the aerospace a little lumpy. They did not have that kind of explosion. Health care orders that i wanted. Its not as pure play as United Technologies. Check out west texas today speaking of oil. The march contract is closing in on a 50 retracement from the december pullback on a day where transcanada is going to start sending oil through the southern leg of keystone. Thats right, todays the day. And youre going to see the tighten, the spreads tighten. Natural gas going completely nuts. And, you know, when i look, i mentioned yesterday capital oil and gas, cog, up again, because theyve got that pipe. But eqt, the old equitable, its doing so well. People are taking up the same stocks day after day. Another theme for 2014. It doesnt seem to discount the good news. Just not effective. To your point earlier delta shares up yet again this morning. Another 1. 6 . Southwest reporting tonight, i think, right . Up 1. 5 . The airlines have a lot of momentum. I think that us airways is now american air that they can tell a very good story for 2014, 15, 16. United, continental not that well run, but like Norfolk Southern, they could materialize. They talk about returning money to the shareholders and employees, delta, its a joyous call. Weve got comedies and tragedies, okay . This is king henry v. The idea of returning capital in the Airline Industry is something that would have been completely foreign for virtually every single year of its existence since deregulation. Right. Until now. But alls well that ends well. Thank you, shakespeare. And history to a comedy. Hey, alas poor europe, ibms really bad. Yes. Walgreens getting a little bit of love as isi upgrades it to neutral, doing a mea culpa on their previous negative view, but thats one of the big gainers and cvs gets an upgrade to buy. I had mr. Wasser on from walgreens and they are just doing remarkably. Standing right over there i questioned the game plan and i mentioned in the book, in get rich carefully how wrong i was. And wasnt hson has pulled it o. And cvs is very good, too. The first retailers and, remember, the front of the store is retail, that have perked their heads up since the year began. Worth watching. A couple of interesting things, sears, if you havent seen it by now, is going to be closing their flagship, single flagship Downtown Chicago store, a store that a spokeswoman says has lost millions since it opened in 2001. Sears, i dont know, theres been a lot of pictures in the web of sloppiness there. David, if they close every store, does it go higher . It may. It may. Thats a good strategy. Just make it lands end . Make it up with volume. Same kind of idea. Do you know who did that . Grants. Grants. You know, sears is a controlled stock lets not forget and it does seem as though even though the fundamentals are deteriorating, we dont know where we are with that plan yet, right . Terms of lands end and the automotive and what theyre going to follow through on or not. But you have to be careful with it because it can get whipsawed. I shop everywhere as you know. I do not shop at kmart. Really . Just making that statement right now. I do not shop at kmart. You know why. Dustin hoffman said it all many years ago. And they never quite recovered from that movie, right . From rain man. Thats right. Judge wapner, though, has his own darn show. Marissa mayer in davos made an announcement, acquiring a small startup and well hear more from her at davos as we will a lot of people at the next couple of days. All she has to say is alibaba and 40 points. That really is. I would just tell her to say nothing. Just listen, you know, breakup value. Dow chemical following through, again, to your point earlier. Another 1. 25 move higher. Geez. Yesterday we told you in an investor letter. Man, its great to be a Hedge Fund Manager with 14 billion and take a 1. 3 billion position and send a letter to your own investors and your position goes up 7. 5 . Nelson peltz stock went down when he joined the board. It did. I was looking at his record and i think youll want to buy mondelez, trying to affect changes indoors and loeb outdoors. Dow has the great businesses that could easily be split and we know from ppg and dupont it does work when you do it, so i think loeb is spot on. Liveris has a plan but obviously its not as aggressive as loeb. They claim theyve engaged with a lot of their shareholders. They believe i think that they know what their Shareholder Base is looking for. The stock had a good year last year but loeb pointed out the beginning of his investor letter and why he took this large position is because the stocks the same price it was in 1999. Wow. They bit off more than they could chew with the roman has hass. They were more late to becoming more proprietary. Its come back from the depths, how is that . Fair enough . Fair enough. Ill take it. Suntrust ups their target to 47 having on the loeb news essentially. Lets get back to headquarters, scott cohn has breaking news on bernie madoff. The latest of the saga, carl, cnbc has learned that the convicted swindler has suffered a heart attack. Hes okay. Hes back in prison but madoff was hospitalized for a time last month at Duke University medical center. He tells cnbc. He also says that he is suffering from stage four Kidney Disease but madoff who is 75 years old is not undergoing dialysis, that is his choice. The bureau of prisons is declining to comment on madoffs condition or his treatment. Again, he is back in the prison after being hospitalized briefly for a time last month after suffering a heart attack. Carl . Scott, thank you for that. Our scott cohn back at hq. Dows down 28. Lets get to bob pisani on the floor. Hey, bob. Good morning, everybody. Earnings holding up things, norfolk, United Technology doing okay. Ibm is the real link. Ibm down about eight bucks, put up the chart on ibm and there you see down seven. Thats 50 points in the dow. The dow would be positive if it wasnt for ibm. Its been a rough quarter and very rough guidance for ibm. Ill put up the full screen and show you very simply what the problem is with ibm. Theyve been trying to become a services and software business. Hows that going . Heres how its going. Global tech services, this is the biggest segment, they run the data centers and the cloud business. Down 4 on the revenues. Year over year. Global Business Services thats the consulting business, thats they are trying to grow that, only up 1 . Software which is the biggest margins and you get 90 margins in software and its only up 3 and hardware down 26 . Very graphically you can see the issue here for ibm. Number one we have hardware declining. Put up the next full screen. Tough emerging markets. They talked about the problems selling into china. And in the services end, the customers now want very low cost, cloudbased solutions. Unfortunately those are low margin businesses. So, theyre really having trouble going into the higher margin businesses, into the software and in the services. Those margins are starting to decline right now. Its amazing the analysts havent abandoned them. I think you mentioned this, jim, i dont know a single analyst thats downgraded ibm today. Every single analyst has a hold on ibm. One out there isi has an underweight rating. Other than that jpmorgans the only one i saw with really negative comments. They said investors should take profits thats as close as you get to a sell but i dont see them downgrading the stock on top of that. Lets move on. Carl you had a very good point about mentioning the ceos comments are kawrgely optimistic but usually have some element they are worried about. Look at allegheny technologies, this is a very good illustration of what you were talking about, the ceo said he is seeing modest growth in demand. This is a Steel Company and customers were cautious, however, heres the important line, we see no significant signs of building inventories in anticipation of a strong recovery. Well, what does this mean . Growth and demand, but no significant signs of building inventories. Again, modestly optimistic, but theyre worried in the same way. A lot of companies are like that. Allegheny technologies and beating expectations down fractionally. As for coach, look, we all know the problem with whats going on in retail. Its pretty simple, they cited substantially lower traffic last quarter. And they limited access to their sales site. They have an eflash factory sales site. They limited access apparently worried so many people are going to it. China wasnt bad. Overall sales were up about 25 but thats not enough. Take a look at the luxury retailers today. They are actually holding up pretty well with coach down about 7 . The bottom line, though, coach is down about 13 year to date. Kors is up today, but its down about 5 . Tumis down maybe 6 , 7 and tiffanys also down about, ooh, 7 on the year. Im trying to factor in the numbers here that youve just seen. Its been a rough start for all the luxury retailers. Finally ive been asked about the biotech names. They are going parabolic again and the nasdaq biotech index which is ibb is up 11 the big winner of the year. A lot of people are asking down here what should we do with this right now. Had a huge run in 2013, and a huge run in 2012. Put up the ibb, one observation ill make is everybody that plays this knows how to do it its about 25 above its 200day moving average and every time its done that back in may, back in october its pulled back. So, right now youre at a sort technical level above the 200day moving average. I know thats not very satisfying. They go up because the Jpmorgan Health care conference drew all the stocks to the upside, carl, but the bottom line is i think right now this things looking a little stretched on a technical basis. David, back to you. Thanks, mr. Pisani. All right, lets go from stocks to bonds and for that we head to Rick Santelli over at the cme group in chicago. Good morning, rick. Good morning. Well, datas a funny thing, sometimes it moves in directions that the central bankers wanted, but really dont want. And i think evidence of that is the dropping Unemployment Rate in both the u. S. And in the uk. Okay . So, the Unemployment Rate in the uk drops close to 7 i think exact number was 17. 1. Why is that important . Because normally that would dictate a certain type of policy change but trCentral Banks are going to fight that like ours. But nonetheless, the market responded. The gilt in the uk rates moved up close to 290, over half a dozen basis points. We go from four or fiveweek low yields to a couple of week high yields very quickly. I told you, the world is definitely globally connected whether its because of the uk or maybe things like relative value to Southern Europe but today its the former so look at how our tens responsibilitiy e simil similar fashion and you can see the longerterm chart turned up as well. And lets look at spreads five to tens, flattening, it continues. This is something to pay very close attention to once again. Its the markets at odds with Central Banks at odds with interpretation of some data points. Lets switch gears to the same topic but foreign exchange. Okay, australia wakes up and they see a 2. 7 yearoveryear cpi, wow, thats pretty big. Does that mean the next move is happening . Probably. Look what happened with the aussie dollar versus the greenback. It popped. And the aussie dollar was one of the worst performing currency of last year. If i open the chart up to four years you can obviously see the underperformance and you can see the right hand side of that chart and signify some changes ahead. Carl, back to you. All right, rick, thank you very much. Rick san tell hill telli in chi. Who are the most influential players in business over the past 25 years . Cnbc is unveiling a list of 200 nominees and well talk about it after the break. Governor rick perry making his first trip to davos and well get a live interview with the form are gop Vice President ial candidate and well talk to him when we come back on squawk on the street. [ male announcer ] this is the story of the dusty basement at 1406 35th street the old dining table at 25th and hoffman. And the little room above the strip mall off roble avenue. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment oh, oh, oh, oh, hey hey, oh, oh, oh, oh, welcome back, im sharon epperson, this bitter cold that were experiencing in the northeast is expected to last for the better part of the week and were going to see super belowaverage temperatures according to weather forecasters at wsi, thats certainly a big part of the reason why were looking at natural gas futures that are rallying some 4 today, topping 4. 60 and the gains were seeing in the Natural Gas Market are the highest prices weve seen in 2 1 2 years. But this pales in comparison to some of the cash prices that weve seen here in the northeast. When you look at the Transcontinental Gas Pipeline that takes gas from the gulf coast all the way through the southeast to new york, new jersey area, at that new Jersey New York hub we saw cash prices yesterday that have surged some 100. Topping 123. Thats due to what theyre calling pipeline imballances along the line and this cold weather is wreaking havoc throughout. Back to you. Youve had a lot to watch this week for sure, sharon, thanks a lot. Our sharon epperson. In celebration of cnbcs 25th anniversary this year the network is unveiling the nominees for the cnbc first 25, leaders, icons, and rebels. A list of 200 people who have had the greatest influence, sparked the biggest changes and created the most disruption in business over the past quarter century. Well be narrowing this list down to the top 25 over the next few months. Basically, guys, the criteria is this. Person must have been more than a good ceo. Right. Youll see a lot of people who were on this list who were never even a ceo. A person does not need to be alive. He may have had work that predated 1989 but the greatest transformational part of their work has to have come in the past 25 years and then trying to make it as global and as diverse as we can. Interesting list. Provocative list. Steve jobs and then theres the rest. How about that . That may very well be true. Its one thing to be a ceo of a company and have done well, but were you transformational is another sense. You wont end up with as many ceos as there are on the 200 that people have to choose from. Right at this table, costco, amazon, walmart. These are models, bezos. For walmart it would be sam walton. Said it could be someone who is no longer with us. He died in 19 what is it . Its not, like, he is leonardo da vinci. John doar and dick fold. Transformational. Bernie ebbers is on here. Is madoff on this list . No. Madoff is not on the list. Ralph lauren, jack ma. Very international. I like that. Milkens on here. Oprahs on here, anna wintor is on here. Andclendon, you think about the energy. No, he understood ahead of time. He was early. I mean, no, we have to go over this because these are very complicated. Sheldon adelson because he recognized you could make money off of china. People had lost money in china for years. I like this. Its not a parlor game. It is a really interesting thing. John lassiter brought so much joy to so many people. I suggested al dunlap for the way we think of the outsider ceo back in the late 80s. He also made up the numbers with the gas grills in that hidden warehouse. Yeah. But this is andrew young. Wow. I mean, qualitatively some people havent done that well. But thats not the point. I know. Then where is our friend at jcpenney . Bring down a whole company. In a very short amount of time. Eddie lampert, are these people we all elon musk is on here. Is it too early to judge . No. A lot of these spark good debates. Tesla, and edison not as much and musk is affiliated with tesla. Who do you think should be in the top 25 . Head to cnbc. Com to vote for your picks. Leave your comments. Well have the debate over the next few weeks as we celebrate 25 years. So crazy, Warren Buffett. Its a really fun list. Tte o . Cozy or cool . Meow or woof . Everything the way you want it. Until boom, its bedtime and your mattress a battleground of thwarted desire. Enter the sleep number bed. Designed to let couples sleep together in individualized comfort. Hes a softy. His sleep number setting is 35. Youre the rock, at 60. And as your needs change over time you can adjust your bed to sleep better together. 48month financing available through february 2 only at your local sleep number store. Find your sleep number setting and know better sleep. Fifteen minutes could save you fifteen percent or more on Car Insurance. Everybody knows that parker. 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Lets start with sales force. Fbr says its a top pick. They are the opposite of ibm, they are cloud, cloud, cloud. Ibm is trying to get off my cloud. And goldman takes their apple target to 6. 35. We didnt mention apple yet today. Theyve increased confidence that the number will be made. Apple is a little less relevant. We mentioned norfolk earlier. Earlier i mentioned this and listened to some of the comments about natural gas weve had from everybody. They will switch back to coal and thats what this is also reflecting. Natural gas is at four bucks. Amd, Fourth Quarter. Heres one that truly disappointed. Very horrible guide down. This stock had been double over the course of the last year. Upgrade for unilever. Emerging markets coming back. What a ceo pullman is. I like unilever. And wells on j j. Probably wondering what the heck is going on. Wells is saying, listen, they basically underpromise and now they can overdeliver. A Charitable Trust name, i wanted them to do better and think about alcoskcoalcoa. Xilinx tonight. And he didnt do the quarter. He didnt well, you know, people like what he did and thats because he had guided down a little and its coming back and the chinese orders are good and telco equipment spend is one of the great theems so fthemes of 2013. And moshe delivered. I wanted more but everybody else is happy. Well see you tonight. Thank you. 6 00 and 11 00 mad money. And when we come back after a break, many in the windy see many might think it inconceivable, sears closing its Flagship Store in chicago. I always say be the man with the plan but with less energy, moodiness, and a low sex drive, i had to do something. I saw my doctor. A blood test showed it was low testosterone, not age. We talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. 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What im really looking for is i got two words for you rewards. Theres got to be better cards than this. [ male announcer ] theres a better way with creditcards. Com. Compare hundreds of cards from all the major banks to find the one thats right for you. Its simple. Search, compare, and apply at creditcards. Com. First rounds on me. Stacys mom has got it goin on stacys mom has got it goin on stacys mom has got it goin on [ male announcer ] the beautifully practical and practically beautiful cadillac srx. Lease this 2014 cadillac srx for around 319 a month with premium Care Maintenance included. Welcome back to squawk on the street. Our roadmap begins with coach. Shares of the retailer getting bagged today. The company saying its being hurt by substantially lower traffic in its stores. Well dig a little deeper into those numbers. Then the former chief Technology Officer for the u. S. Weighing in on the target breach and telling us what the government could have done differently. Plus, Texas Governor rick perry will join us live, find out what he has to say about the budget and obamacare and the controversy surrounding chris christie. But we start with coach, the shares down sharply after a big earnings miss and down more than 6 at this early hour. Courtney reagan back at hq with more details. We can add another retailer to the ba humbug list, coach posted disappointing Holiday Quarter from the top to the bottom line. The Quarter Ended december 28th coach missed earnings five cents and revenue 1. 42 billion and falling short of forecast and gross margin falling 300 basis points. Sales from north American Stores open at least a year falling by nearly 14 . Perhaps the one bright spot is china where same store sales are up, quote, a double digit rate according to the company. They are undergoing a reinvention at the brand and executive level, the company is working to expand and improve its merchandise offering move more into a lifestyle Brand Strategy under new ceo victor luis after lou frankfurt stepped down in december. In the earnings release, he noted, quote, substantially lower traffic in stores just adding to the broader retail conversation weve been having about the abundance of potentially unproductive Square Footage. Lindsay druckerman thinks the north american sales weakness is reflective of the deeply entrenched brand which will take time to fix and the quarter is difficult for the reinvention but some reiterate the longterm buy rating calling coach a longer work in progress with an inexpensive valuation. Analysts are split whether the holiday weakness at coach will show up in competitor michael kors results which we know have been nearly unbelievably Strong Quarter after quarter since going public. Is this it a Single Company problem or does it spread beyond coach . Well have to wait and see, kelly . Exactly, courtney. This is the question and well explore it right now, in fact, thank you so much. From one retailer under pressure to the next sears Flagship Store closing its doors saying the chicago location has lost millions of dollars since opening in 2001. Turning the dwindling retailer into a reitlike retailer is being debated and john kernen is the retail analyst with cowan and joins us now, good morning. Hey, good morning. Thanks for having me. So, how seriously should a sears explore this transition and what other retailers should take a look at it as well . Yeah, absolutely. Today my colleague and i jim sullivan who covers reits published a theme and thats the theme for the mallbased reits to really need to reanchor and recycle their unproductive Square Footage particularly as it relates to sears, kmart and jcpenney so we think youll see more announcements of store closures for all three of the concepts. I think you dont have to look much further than whats going on in the credit markets to see that both companies have big issues. Their debt is trading at distressed levels and theyvued incredibly accommodative credit markets and the high yield markets to basically fund their operations this year and they both have significant amounts of debt. Both companies have over 8 billion in net debt. Explain if you could why i was just going to say, look, why is it that theyve not just sort of focusing on shoring up the losses on the retail side of the bils but also making the transition to being a reit . Why does that make sense . What is the value that unlocks for shareholders and how does that change the fortunes for these companies . We dont really have much of the way we think about it is both these companies particularly sears and kmart need to close a significant amount of doors. As they do that, the mall reits need to remove them as anchor tenants and bring in more productive retailers. The retailers we look at that could fill the Square Footage particularly in off mall locations are the off his price retailers which include tjx and ross stores and burlington. We think they will be second gain stories from weakness at sears and jcpenney and kmart. We dont have so much of an opinion whether they should turn into a reit or not, we think youll see a lot of store closures based on the situation in credit markets. Sears and jcpenney will have a lot of debt due. I see what youre saying and the retail reits benefit from that transition. Theyll benefit from bringing in more productive retailers. If you look at the rent per square foot that they pay, the leases were signed a long, long time ago and its far below market rent than what other retailers are paying, so everybody will benefit particularly the anchor the mallbased reits that will see higher rents. Youll see more productive retailers coming into those locati locations. You mentioned tjx and ross and the others that are expanding and not contracting, but are they expanding at a rate that would take up some of that excess capacity soon enough for some of these more distressed retailers . They absolutely are. If you combine the unit growth for tjx which moaowns marshallsd ross stores and burlington stores, they want to open 3,000 stores over a long period of time. But they want theyre going to get good locations when a lot of the unproductive retailers start to shut doors and certainly you can look at some of the competitors specifically jcpenney, sears and kmart. We have survey data that suggests 50 of the consumers that shop at jcpenney also shop tjxs concept, ross stores concepts and burlingtons concepts. We have survey data that says over 40 of the consumers we shopped tjxs concept, ross concepts and burlington concept also shopped sears, so theres a big market share opportunity for the offprice retailers, too, its not just about opening doors. Theres a big top line opportunity in the core, home and apparel categories where sears, kmart and jcpenney generate close to 20 billion in total sales in those categories. Right. This rotation, exactly, as youre saying, it both matches what shoppers are looking for and potential the reit operators. John, thank you so much. A fascinating piece this morning. Thank you. Meantime, a lot of the northeast digging out after a winter storm dumps more than a foot of snow in some areas and to make matters worse its now bitterly cold in the northeast. Weather channels mike seidel has more on that live this morning from plymouth, massachusetts, good morning. Reporter good morning, carl, out here where it is still snowing. In fact, the only snowflakes left is here in southeast mass from boston to the south shore out on the cape. Heavy snow combined with winds gusting over 40 miles an hour near blizzard conditions and behind me you can now make out the houses down here about an hour ago you couldnt barely see across the street as the snow was coming down harder. And weve had a lot of it. Here in plymouth county, 18 inches of snow and its very dry and powdery. So what happens it blows and drifts around. Let me show you right here. A couple of inches because of all the blowing and drifting. You got some bare spots on the lot and then you walk over here and youve got this huge drift. And this is what weve seen all over the area. Look at this. Look at that. Down to my waist. So, weve got a big issue with the wind. This is going to continue to be a problem here. South of boston through the afternoon into this evening. The snows will eventually back off this afternoon. Lastly out on the cape, over nearby Logan Airport theyve canceled 300 departures a third of their schedule today. But ive not seen that number come up since 4 00 a. M. This morning, otherwise all the new york city hubs, hundreds of Flights Canceled down there to philadelphia. The snow has ended there, but as you mentioned, bitterly cold air tomorrow morning in boston well take it down to 2 degrees. Thats 20 degrees below average but still warmer than the record low of 6 below. And for most folks not quite as cold as we saw with that the infamous polar vortex of a couple weeks ago. So, carl, out here in the snow and the blowing snow, i wont have it any other way. Back to you. Mike, are you going to need help getting out of there . Reporter well, do you know what, earlier, its tough to get out, because okay, all right. Reporter you get down in here and you im just making sure. Reporter oh, my god. God. You are still on cam, my man. Reporter there you go. Very nicely done. Reporter whoo. Only the Weather Channel gives you that. Reporter thank you, carl. Mike, thanks. When we come back the government releasing details to other retailers about the methods used by those target hackers. Is it too little, too late . Well talk to the former u. S. Chief Technology Officer about what else can be done to prevent another breach like that one when we come back. Ry of the little room over the pizza place on Chestnut Street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i95. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment this magic moment thmortgage didnt start here. It began on her vacation in europe. Someone stole her identity and opened some credit cards in her name. Checking her experian Credit Report and score allowed her to better address the issue. And move right in. Experian. Itbut sleep trains huge foryeais ending soon. Models for a short time, save hundreds on tempurpedic mattresses. Get the most highlyrecommended bed in america at closeout prices. Plus, get interestfree financing and free sameday delivery. Why wait for the new models . Sleep trains year end clearance is ending soon. Superior service, best selection, lowest price, guaranteed. Sleep train your ticket to a better nights sleep welcome back to squawk on the street. Check out share of brinker international, this is the owner of chiles and the little italian restaurants. Posting betterthanexpected Second Quarter profits on higher sales. Revenues road 2 to 704 million and well have more where you join us for our earnings segment. And more on brinker and chiles strength over there. Thank you very much. Too little, too late. The u. S. Government recently released confidential information to merchants describing the methods that were used by target hackers to help them identify and stop an attack from happening. Here to give us his take on tech policy Aneesh Chopra former u. S. Chief Technology Officer joins us this morning from washington. Good to have you back. Good morning. Thanks for having me. Why in the world are we just getting this now . Were in a world where cybersecurity policy is still an open question for the country. The president through executive action has done his part to try to identify best practices and share them with the private sector, but we need action from congress and that action is to make sure that weve got a set of policies that allow companies in the public and private sectors to come together and share those information threats better and to make sure that weve got a stronger cyberdefense. How valuable was the information that the government turned in so some of these merchants . I havent read the confidential report. But generally speaking our cybersecurity posture is basically built around the idea that we identify the threats that come in and we expand our moat and posture so we can protect against it in the future. Its asymmetrical warfare, the threats are small pieces of code that a kid, maybe a 17yearold, can put together and they can do so relatively cheaply and quickly. Yet the Defense Systems we have can be 14, 15, 16 million lines of code and weve got a bit of a challenge here and well need to do more to identify new models of defense posture around these cyberthreats. What can Congress Really do here . Well, we need to create a Legal Framework so our companys allowed to share private information from the government while protecting individual privacy. A lot of the threat vectors are on individual items maybe email and other things. You take a look at these kind of data breaches the most common problem is that an individual in the corporation, target in this case, probably clicked on an errant link which set off this unfortunate turn of events. And so that kind of information sharing has individual information and we want to protect privacy while creating a Legal Framework and i think this is one of the issues why congress is having a tough time balancing these aspects. But the president s policy has been out since 2011. And since then we still havent come up with anything. This is one part of the debate. The other, though, for example, cyberespionage, perhaps a much greater toll on the u. S. Economy and yet the sharing idea runs up against a lot of resistance. What gives you the confidence that at some point its really going to be something that becomes law . The good news about this particular topic, it really cuts across both parties. Its not an ideological war between left and right. Good people are getting around the table and theyre working hard. We got close a couple years back. I think circumstances like were seeing now might elevate the importance of this issue for more action. I mean, the president isnt waiting. Thats why hes taken executive action to do what he can, most specifically around the Defense Industrial base, making sure that the Immediate Group of companies that work with the dod have an extended sharing relationship thats legally permissible and as well on our Critical Infrastructure infrastructure, especially the electrical grid and those processes are moving forward. But certainly we need congressional action. Aneesh, i know youre not a retail analysts per se, but theres been some reports that target has had some internal debates in the past few years, the store executives versus the credit card executives, and they may have backed away from plans that might have prevented this. Do you think thats true . Well, let me just say this, i think its fire to say as could the board we dont practice good cyberhygiene. One of the questions that will come out are organizations storing information they dont need to be storing which makes it vulnerable to these kind of attacks. Are they practicing good practices internally in terms of sharing with employees tips about making sure that they dont fall victim to these kind of fishing attacks if that may be the source of what happened here and that we make sure that were paying more attention to this problem in general. You know, my biggest concern and the reason why i think that legislation matters is it will hopefully set the standard for what we want organizations to meet. Right now if youre a ceo, youre looking at your tech team and you are saying, youre a bottomless pit, youre asking me for money forever and ever, i dont know if im getting any better security so i got to cut you off at some point but theres not a real standard. So thats the problem. Finally, i know you know we at krcnbc are whittling down a business of the most influential ceos in the past 25 years. Youve got something about tech. I would think that Marc Andreessens leadership, and jobs has to be at the top of democratizing internet in your hands and Cloud Computing and jeff bezos if i could add a fourth Cheryl Sandberg has done more to scale social. If i had a chance to add my fourth, that would be it. Even though weve had some might argue on some of those a limited amount of time to judge their impact long term. I think certainly the most recent phenomenon are there. But, look, the Cloud Computing, mobile broadband, and democratizing access to the broadband, those have proven themselves absolutely significant in terms of our economic growth. We hope the next generation is doing something about security and privacy. Thank you so much, Aneesh Chopra, joining us for reflections. Thank you for that one. Thank you. Governor rick perry joining us from the World Economic forum, yes, in davos, what he has to say about the budget fight and a controversy surrounding new jersey governor chris christie. 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S. Face is making his first foray on to the global stage that is the World Economic forum, governor rick perry is live in davos where hes been invited to join a Panel Discussion on Illegal Drugs and Health Care Policy later this week. Governor, good morning, good to have you with us. Good morning. Good to be with you. Its a beautiful place in davos. I was going to say, what is a nice texan like you doing with the swiss . A good invitation that was hard to turn down to talk about issues that was important to the global community, obviously the impact of legalizing drugs and which i may be one of the only people on that panel tomorrow that does not think thats a good idea. And obviously the Health Care Debate thats going on in the United States and then theres a third panel that ill be involved with, the next state. Now, what that means, youll have to wait and see, whats the next state in america thats going to try to compete against texas for job creation or whatever that might be. But it will be an interesting and stimulating conversation i know that. Thats interesting. Walk me through where you see the Health Care Debate taking shape in davos. Is this a debate as to whether or not the law should actually survive in this country or is it about our options now that the law has passed and some might argue is here to stay . Well, ill suggest to you that the law will be changed. It will be changed substantively just on the fact that it does not have the substance to be a powerful influence in this country. People understand it cost too much. There are people losing their health care. So, the idea that this Affordable Care act, obamacare, whatever you want to call it, is going to stick around is just not reality. Reality is the states will be i think where the ideas bubble up from, innovation historically come from the states. Being able to give the states the flexibility on the funding of those programs is where i think well end up going as a country. Now, at davos and the discussion about Health Care May be a substantially broader discussion and if it is well be more than intrigued with participating with it. Well, speaking of innovation, governor, Energy Innovation has got to be one of the big themes there, of course, in your home state. And it was interesting to see you tweeting a picture of yourself with the head of saudi aramco because there are plenty of people saying production out of the u. S. And north america is generally an existential threat for opec and for some of the nations that could reshape u. S. Foreign policy even, and i wonder how that has played into some of the discussions and the people that youre speaking with over there. Well, that picture with me and khalid is a little bit of aggie gatherdom, if you will. Hes the class of 1982 from texas a m, and we obviously did talk about the hydraulic fracturing and the saudis are actually looking at some of those techniques themselves. I think the issue for america is George Mitchell which i think will go down as one of the most influential men in the world history. The man who developed hydraulic fracturing. We havent given him enough credit for that. Changing the dynamic of the energy world in a big way. Saudi arabias going to continue to be a huge player in that role. The growth of the world and the growth of the worlds economy and the ability to create jobs is going to be i think very directly connected to our ability to produce energy in the world. So, for the world to continue to grow, for job creation, for inequality of wages to close and for all the shift ships in the harbor to be raised, if you will, energy is a very important part of that. And saudi arabia will continue to be a major player. Finally, governor, obviously, 2016 not that far away, seeing you in davos is going to lead some viewers to say hes off collecting some bona fides in advance of another president ial run. Is that true . Well, certainly people want to talk to the governor of texas because of whats being created there from a job standpoint, you know, 27 of all the jobs created in america in the last ten years were created in texas. Folks want to know how that happened and why that happened. But more importantly, thats not as much the story anymore is people want to come to texas, be involved in that very powerful economy. So, well try to help anyone participate in that that would love to. Thewell try to read betweene lines on that answer. Enjoy the snow. Stay warm, governor, thanks for beefing with us. Godspeed, so long. Governor rick perry join us from davos today. Straight ahead big problems for big blue. Ibm missing revenue expectations for its Fourth Quarter in a row thanks to problems from china. Can the company get back on track . It is weighing on the dow today. Well have plenty more on this right after a short break. One hour into trading some of the stories were talking about, 7 30 on the west coast, 10 30 on wall street. Shares of United Technologies rising to new alltime highs, reporting betterthanexpected Fourth Quarter numbers backing its outlook for the current year. Northern suffolk up 6 , handily peting expectation as strong intermodal shipment volume offset weak coal demand and raising its Quarterly Dividend by 4 and Texas Instruments hitting new multiyear highs, posting Fourth Quarter results above forecast and apounnnounci plans to cut jobs. Ibm taking a hit after Fourth Quarter revenue missed estimates. A falling demand for servers and storage products especially in china is being blamed for the miss. Weve got the managing director and senior tech analyst from jeffries join us now. Is it a china story . Its not just a china story its a story of cloud players like amazon coming into the market and disrupting and ibm not having the appropriate products in the market. So, right now we think that ibm has to do a lot better on their hardware side. The executions been poor. And we think that thats a key issue. And it sounds like thats exactly what theyre trying to do here, peter, with the 12 billion investment in data centers and so forth. When you have established players like amazon in this space, how much and how nimble can they be and how quickly can they get up to scale in a bi business that everyone is going for . They are really trying to retool underneath the surface here theyve done a big investment in watson and the smarter analytics initiatives but they will take time to bear fruit. And we look at the transition before, they have less time to effect the turnaround here. Peter, it was suggested this morning on our show that if it had been any other company, there would have been a wave of downgrades today, but thats not happening because the street is somewhat afraid of buffett or at least trying to ride cautiously in the wake of his investment. Is that true . I think theres some truth to that. I think its very also true that in the i. T. World theres a great adage no one ever gets fired for selecting ibm. And certainly on wall street there is a deep concern of being too negative on a company thats got such tremendous assets. Great r d, huge patent portfolio, but frankly has underperformed and their managers have really underperformed especially in asia and they have been hitting, you know, on only two of their four potential cylinders, so the challenges, can they turn the other cylinders around. What about asia . Because there was some hope after a tough quarter that piece might stabilize, even improve. Is there a sense that this is some sort of execution problem or is it really a pr problem that goes back to whats been happening with obama trying to change the nsa but not necessarily overhauling its practices . Theres no question theres been an nsa echo around the world. Theres no question that thats having an impact on American Business and american multinationals. And thats a shame because frankly, you know, theyve had nothing to do with that. But ibms also had its own execution issues. Their local managers specifically in china have really missed expectations on the product cycle side, their x series and p sear riries missed a lot of beats there, but the echo is certainly there and it will impact other large multinationals. Real quick as they still look to somehow improve the top line while getting rid of those lower margin businesses, do you think this potential sale of the lowend server business to a lenovo makes sense . It makes a ton of sense. They should have sold it years ago. Its one of the first times in 15 years ive seen ibm not effect a sale at a great time. The price theyre getting for this is significantly lower than they could have had they done it a few years ago. This is absolutely the right thing for them to do. All right, peter, interesting perspective. Thanks so much for joining us. Thanks for having me. Mohamed el erian is resigning from pimco and our chief International Correspondent Michelle Caruso cabrera has more on it back at hq. An incredibly prominent figure in the financial world, a frequent guest on our air, particularly during the financial crisis and now hes out at pimco as the ceo. His departure will be effective midmarch and after that hell continue to be involved with the parent company. From the statement put out by pimco its not entirely clear what led to the departure. The statement says he decided to step down but in Corporate America its never clear whether or not thats true. We do know it hasnt been a stellar year at pimco. Heres some of what went wrong. Bill gross suffered industry record outflows and a tough year for bonds. And funds comanaged by el erian lost money. And high profile investments went south and their stock business perhaps not meeting expectations either. As carl mentioned i interviewed el erian many times and hes written four our website and several others. Though we have reached out to him since the news broke, we have not gotten any comment. Our viewers may be unaware that el erian is a controversial figure on wall street. Wall street journal ran a front page story several years ago about not only his prom nenls but also his unpopularity with bankers perhaps because he gained a tough reputation but he broke the mold and started talking to issuers directly and went around the underwriters on wall street. I asked him about that when i interviewed him when he briefly ran the harvard endowment back in 2006. Theres a lot of bankers out there who dont like you. They say you push your weight around. At pimco we have absolutely no doubt as to what comes first and thats the client. And we have an implicit contract with our client that we are going to maximize returns on the products they invest in. And if that means at times one has to be unpopular because one is trying to do that, thats part of the job. Yeah, he clearly didnt care about that, carl, he just wanted to do what he thought he said was right. Back to you. Interesting. Thank you very much, Michelle Caruso cabrera on the el erian business. Cnbc is putting together a list of nominees in honor of our 25year anniversary. When we come back, well talk about the Game Changers from Mark Zuckerberg to Marissa Mayer, who do you think should be on top of the list when squawk on the street continues. The dow currently down some 30 points. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. With the mobile trader app. That its given me time toabout reflect on some of lifeseen biggest questions. Like, if you could save hundreds on Car Insurance by making one simple call, why wouldnt you make that call . See, the only thing i can think of is that you cant get any. Bars. Ah, thats better. Its a beautiful view. I wonder if i can see mt. Rushmore from here. Geico. Fifteen minutes could save you fifteen percent or more on Car Insurance. If you have a business idea, we have a personalized legal solution thats right for you. With easy stepbystep guidance, were here to help you turn your dream into a reality. Start your Business Today with legalzoom. [ car alarm chirps ] [ male announcer ] we dont just certify our preowned vehicles. We inspect, analyze, and recondition each one, until its nothing short of a genuine certified preowned mercedesbenz for the next new owner. [ car alarm chirps ] hurry in to your authorized mercedesbenz dealer for 1. 99 financing during our certified preowned sales event through february 28th. In celebration of cnbcs 25th anniversary our network is unveiling the nominees for the cnbc first 25, leaders and icons and rebels. A list of 200 people who have had the greatest influence, sparked the biggest changes and created the most disruption in business over the past quarter century. Well narrow the list to the top 25 over the next few months and you can weigh in by voting for your favorites at cnbc. Com. We want to talk about which the biggest tech dynamos to make the top 25, Mark Zuckerberg, Marissa Mayer and elon musk. Interesting the way youve constructed the list 200 first and foremost. Thats exactly right, carl. We did it a little bit here within cnbc, the product of our own noodling with folks who have covered business over much like yourself over the past 25 years but we also assembled an outside Advisory Panel of three individuals, paul steiger the former longtime managing editor of the wall street journal, associate dean senior associate dean Jeffrey Sonnenfeld of the yale school of management, a familiar face to many of you who watch cnbc and a less familiar face but someone that added an international deliberations the senior professor from a Business School in paris. The list isnt the usual suspects of American Business but it really has a global reach. From hong kong to bernard hinot in paris to lord brown of bp and some of our choices for the list of finalists the 200 top names that well whittle down to the top 25 some are bound to be controversial. To get it of all the areas in which you have to whittle it down, tyler, tech is going to be i think probably sparking the most heated debate. It has both the most sort of contentious nominees and the most obvious nominees, if you look at jobs versus bezos versus gates, those guys will be hard to argue against including maybe even all three of them in the top 25. Maybe even in the top five. But then you get to other levels of debate, jack dorsey at twitter. Mark zuckerberg. Who do you choose there or do you put them both in . Marissa mayer at yahoo , long career sort of a below the radar screen to many at google. Now very much on the radar screen at yahoo if you were only to evaluate her on her yahoo years, i could argue i suppose and many might that its way too early to decide whether she deserves to be in the top 25 or not. But certainly if you go back and look at her days as employee number 20 at google, instrumental in the development of their search tools, youd have to say that maybe she deserves a very serious look. But there are lots of interesting choices here, carl. Tyler, i was just going to jump in and say, too, whats so interesting about this is its its a snapshot in time. Inevitably. You know, there are companies, people on that list today that didnt even really exist, there are services especially in the tech world that we didnt even use just, you know, four or five years ago that have become so influential as to disrupt the entire phalanx of people who were previously seen as the tech thought leaders and are now kind of relegated to try to reinvent the Old Companies to keep up with the pace and it makes it interesting to pick the people who have surpassed or guided the companies throughout that period. Its a beautiful point, kelly. We have old media in Rupert Murdoch and john malone and two disrupters and ted turner is on the list and reid hastings, the current ceo of netflix so you get a sense of the span and the disruption in the media industry. We have how do you choose between bob iger and Michael Eisner at disney . Who deserves creating the modern megalith in the entertainment business . But you hit on a key point, its disrupters in various ways at various times. I argued strenuously for the inclusion of Michael Milken even though he is by many measures a scoundrel is some of his work took place earlier, but what he left and created certainly has defined the financial universe as we know and cover it today. And milken is on the list, at least the last i checked. Tyler, it will be a lot of fun to make this list of the top 25. Go and vote, everybody. Go and vote on cnbc. Com. Yes. Absolutely. Tyler mathisen, back at hq, tyler, thanks. David, carl ichan, has taken to twitter yet again. He has. Been a while since we heard from the very large activist investor, mr. Icahn, the largest position of, of course, which he is in apple and, in fact, that has gotten even larger. A series of tweets from mr. Icahn moments ago indicating that hes bought at half a billion of apple shares over the last two weeks. He said our investment has crossed the 3 billion mark over yesterday. Calling this a nobrainer. There you see it right there. As of yesterday. And pointing out that when we first started to buy the stock back in the middle of august it was up 468 a share. But we keep on buying. Most importantly, perhaps, though, he is weighing in if you recall it was december 4th when he put out a filing saying that he was going to seek a proposal at the annual meeting on a buyback of 50 billion. It actually wasnt in the filing, but i told you it whats in the letter. Give billion in the course of the fiscal year that will end lets call it next october for apple. That was december 4th we got the back and forth. This is the first statement that weve gotten since then. We feel apples board is doing a great disservice for to shareholders by not having markedly increased its buyback and leaves us with this. Indepth letter to follow soon. For its part if you want to go back to december 4th it was then that we got a statement from apple, more or less what i can tell you right now because very little has changed where they say, hey, we doubled our Capital Return Program to 100 billion. Lets call it may of 2013. Including the largest Share Repurchase or reauthorization in history. And they said we will announce any changes to our Current Program in the first part of calendar 2014. So, well see. Remember, icahn came way back in his ask from 150 billion right away to 50 billion over time in that buyback. We have not heard anything more from apple since that december 4th interchange. But hes on twitter again. I was looking to see if twitter shares move every time he tweets because it does seem to reinforce this idea, carl, if youre an investor you cant afford to miss a tweet by carl icahn. That and those on twitter saying carl has made a trip to the virtual bank by bringing apple look at the intraday on that single tweet or those couple of tweets. It would be hard to stay away from the twitter box if you knew every time you hit it, you were going to make some money. Not going to say it will sustain itself. Or everyone in finance that tweets moves the market, its a reflection of your standing and its built outside and independently of twitter. Without a doubt. I should add, by the way, apple as you might expect is waiting for the next foray from mr. Icahn. Whats his strategy here as we move into this year and the annual meeting sometime down the road. Nonetheless, hell make a strong argument for what hes telling us right now. Hey, more on the buyback. Lets do it. Well see what that letter has to say. All right. Still ahead, a major deal for Cloud Software company vm ware, its got blackberry shares on the move, by the way, as well. And well get all the details on the deal. Squawk on the street will be right back. Okay, here comes airplane. [ imitates airplane ] [ crying ] [ door opens, closes ] okay, heres choochoo. Chugga, chugga, chugga, chugga. Hi. Let me give it a shot. Great. [ imitates car engine revving ] wonder where he got that idea. [ male announcer ] like father, like son. 259 horsepower. Available allwheel drive. Yeah, it flies. Introducing the new regal. From buick. Over the pizza place on Chestnut Street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i95. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment this magic moment abbott labs has disappointing sales of generic drugs. It spun off the branded business last year into a separate publicly traded company. That stock is down 3 over the course of the past year. Still abt shares very much a focus for investors, carl, in todays trade. Back over to you. Thank you, dom. Lets check in with Rick Santelli and get the Santelli Exchange today. Rick . Carl, good morning. It was an interesting article today in the wall street journal titled banks without risk yer deals, regulatory pressures push lenders to get lucrative deals go. I find this fascinating because as t. Lack of transparency in many of the rules of the fallout of doddfrank have been very low. The amount of meeting, anybodys eyeballs can view into this group has been minimal. I think more important i dont really recall how some of the types of loans that are being overregulated and micromanaged, pick any term you like, play into the credit crisis at all. It was about housing. It was about not enforcing very simple rules. Have you ever this article points out some of the guidelines for these loans. It really is. The u. S. Economy is like an engine. We have this big huge engine. The power of that engine goes into the tranny just like your car. Okay . It ends up doing some type of work or a task. They call that the power takeoff. What problem i see the transmission. If you want better jobs, a tighter spread between the rich and poor, i dont understand why blocking off cylinders of the engine is going to accomplish that. Its half, you no what backwards. Makes no sense. But even more important to the notion of the big banks that this article described, lets look at the 7,000 Small Community banks in this country. Last i looked, and most of the information that im quoting is as of the end of 2012 when records were accumulating, 2013 is going to be coming out shortly. Out of the 7,000 Community Banks they represent about 14 to 15 of all the assets in the financial industry. More importantly they deal with a lot of Small Businesses. You know, 50 employee or less making loans to Small Businesses, farms. That small group hires and employs roughly 50 million americans. So it makes so new orleans sense to me when we talk about Interest Rates and places like spain and we look at how low their rate is or even in the u. S. And we look at all the programs like the feds buying of securities keep rates low, who can actually deal in those rates . Call up a Small Business in italy or spain or even in the u. S. S. The advertised rates are great and we use them all the time. Thats all theyre talking about in davos. But listen, if youre watching me now, can you interact with those rates . No. Lets not wipe off the engine. That isnt going to make the spread of wealth and poor or create jobs. Its about how you transmit the horsepower of the u. S. Economy to its final task that needs a bit of tweaking. Kelly, kelly, kelly, back to you. Thank you very much, Rick Santelli. A programming note. Scott wapner will be joined by carl icahn on the halftime show coming up in just an hours time with more on what carl icahn potentially would like to see from apple. Coming up next, immediate the college grad who is managing 60 million from his dorm room. Theres always a story like this. Weve got more when we come back. vo you are a business pro. Seeker of the sublime. You can separate runway ridiculousness. From fashion that flies off the shelves. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. Soaring prices for fine art helped christies auction house get 7 billion last year. 30 of the wail think buyers last year were new. Speaking of the new rich tonight is the premier of the season two of the secret lives of is rich. Tonight were going to take you inside one of the most expensive events in all of horse racing. Its the 27 million breeders cup. Were about to meet someone who manages 60 million worth of thoroughbred horses from his dorm room at nyu. Lets take a look. Welcome to the vip section at the super bowl of horse racing. These are the best of the best running in the biggest race. This is lebron james winning the nba finals. Reporter justin manages 60 million worth of thoroughbreds for his fathers stable out of his doorm room at nyu. His horse painter will be running in the 58 million breeders cup classic. Youre horse of the year, youre beating the best. This is the best of the best. Yes all you. Were not going to tell you whether he won or not but this was an amazing story. You know, a comeback on two levels. One, this horse had a fatal illness. People thought this hor horse was going to die because it had a bad disease. And the family had to put their stables in bankruptcy during the crisis. So you had their financial comeback, the horse come dals back. Its their final race of the life. Well, youll see it tonight. The breeders cup happened earlier this fall. How old is justin . Justin is 21. He manages 60 million of horses from his dorm room. Theyve been very successful. Its easy to say hes a spoiled rich kid but theyve been smart buyer, smart racers. You will see tonight they win a Million Dollars just on bets while theyre at this race. Ichesz lucky when i made it to class on time. Exactly. Unbelievable. See you tonight on tv. Robert frank. David, see you later on as we continue to watch icahn and a until. Yes, indeed, proposal number ten from mr. Icahn is the key with a proxy in terms of apples buyback. Or tenth variation . Proposal number ten is what it says on the proxy. If youre just joining us this morning, heres what you missed early on. Welcome to squawk on the street. Heres whats happened so far. I think that the most important thick is that you look at perspective rump returns, not what the market did last. The biggest mistake of investing is that people think good investment is that which did well recently. Okay. Not that its a more expensive investment. We have gone through tremendous change. Management has to figure out what is the right strategy for them. We sit down with our board, we dont say, what is the other guy or girls doing. We focus on what is Morgan Stanley doing, what is our core dna, what do we want to do and what do we have the capabilities to full still . I hate to ever make an analogy to a company that we all hate because they told us things were fine and then they raised capital. But this is jcpenney feel to it. Im not saying that coach is in trouble. Im saying this is not a buying opportunity. Stanley numbers, 15 billion in cash flow. 3 million lailt lighter than they thought . Down five. The road map is in tatters. For the world to continue to grow, for job creation, no inequality of wages, to close, youre going to see energy is a very important part of that. Series of tweets from mr. Icahn just moments ago indicating that he has bought another half billion dollars of apple shares over the last two weeks. Good wednesday morning. Were live here at post 9 at the New York Stock Exchange checking on the markets. Close to the lows of the day here within the dow down. A lot of earnings and guidance were getting today continues to be challenging information. First up, shares of coach taking a big hit this morning after Fourth Quarter numbers were below estimates. Things were especially bad in north america. Samestore sales down 13 year over year. And then theres ibm, also slipping today. The tech giant missed on revenues for the Fourth Quarter in a row. Largely thanks to weak demand in emerging markets. And, of course, continued challenges in the cloud business. Our road map starts with the clouds. 1. 5 billion deal. The ceo is joining us shortly. Plus, in the wake of the mass ive Security Breach at target, how do you know where its safe to shop. Todays squawk breakthrough says it can help, calling itself the moodys of Cyber Security. Well tell you how that works. And move over, shark tank. Theyre putting a dozen applicants in a room with High Net Worth inve vesters, and the goal, to find the best Legal Marijuana startups. Who is pitching and who is buying . We start with a major deal in the software space. Vmware acquiring airwatch for more than 1. 5 million. Jon fortt is here with us and patrick gelsinger. Good morning, pat. Good to see you. Thanks for joining us. Good morning, jon. Great to see you again. Thank you. And congratulations on the acquisition. I want to dig into that. Airwatch is kind of a security layer on top of mobile devices, all sorts of applications there. United airlines and wall green, i believe, are among the customers. But moving into mobile device management, youve got a lot of competition. Microsoft, blackberry, ibm, and point manager, mobile iron, good telk. You talk about scale this morning as something that benefits you here. But how exactly are you going to break through in that crowded field and how much is it going to cost you to do it . Well, you know, this overall category is emerging very rapidly and were just excited about the Growth Potential. Our business customers, cios are struggling with the challenge in these mobile devices and how they manage them and enable them. In that environment, airwatch has emerged as the Fastest Growing Leadership Company for those multidevice worlds, for ios, android, and microsoft and all other devices. Today some 10,000 customers that they have, a few of them that you mentioned, jon, like walgreens, united, delta, and best buy. What we see is the combination of the clear leader with the innovation disruptive and Growth Potential of the mware, bring those two together in unbeatable category. Were excited about the deal. You moved up your growth targets a bit with this announcement. I believe you went from 15 to 20 growth range a couple years out to a 16 to 20 range. Is that based on selling airwatch to existing vmware customers . I believe youve got Something Like 50 times the number of customers that airwatch has. Yes. Today they have about 10,000 kusz h customer. Vmware has 5,000 customers. We see this opportunity to take that growth that theyve experienced and bring it to all 500,000 customers to leverage our channels. The cio relationships, the geographic reits that we have, to further accelerate their xwro groetd. As a result, we see this opportunity to grow faster than the market and really make this unquestion combination for the future, jon. Now, pat, got to talk about the broader enterprise space. So morning after ibm earnings disappointment, particularly on hardware. We saw intel, your alma mater there, have a little bit of a rough quaur in data center. What is happening with Data Center Hardware . Is it just the hardware space or should we be concerned about the enterprise in general . You preannounced your results look solid but hardware, its looking ugly out there. Yeah. I think the environment is one where the world is shifting from the highend server era to the mobile cloud era. Everybody in the i. T. Industry needs to make that shift. All the vendorses need to align themselves to that new future and theres tectonic shifts occurring as the entire industry moves there. Thats why this deal we announced today is so powerful, jon. It further solidifies vmwares position to be the player in delivering mobile, cloud, infrastructure for that broad set of customers that were trying to reach. And i think every player in the industry is going to struggle making that transition and with airwatchs growth, the turbochargers that vmware is going to bring to it, were excited that this further accentuates the unique position that vmware has for the future. At the same time there are anecdotally some financial services, companies, legal firms who are so concerned about the potential breaches of their privacy as theyve moved all of the back office to the cloud, that theyre now saying, you know what, maybe we have to protect ourselves, turn away from the public cloud and start to bring some of this back inhouse. Is this movement to address some of those security concerns that enterprise will increasingly have . Yeah, absolutely. And, you know, weve laid out our strategy, the Software Defined data center, the hybrid cloud, and end user computing of which this deal is a key piece. The idea of the hybrid cloud is to be able to mix and match in the seamless way between on and off premise because exactly like you say, hey, some of my most secure things i want to keep on premise and some other things im happy to use in the cloud. And were seeing big customers who are really embracing that strategy overall because everybody sees that the knit go ahead, jon. Quickly, i want to get your take. How serious a competitor is blackberry . You know john, he just took over there. This airwatch acquisition puts you squarely in competition with him. Yeah. You know, blackberry has been a phenomenal company for the early rounds of mail management. But the environment for the future is a multidevice world where its ios and Android Devices for the future. Thats where airwatch has been the leader for this category. Theres a broad set of players participating but airwatch has attributed. Clearly the number one and were now going to turbocharge their growth. We think customers are responding to that in a very powerful way. Tough fight it will be. Pat, thanks a lot for joining us in this exclusive interview. Thank you so much, jon. Its always a plea sure to be able to chat with you. When we come back, you just heard a lot about the cloud in our interview, of course, with vmware. Next guest has already made a big bet on the cloud. Investing more money than ever in Cloud Computing technology. Sapp ceo bill mcdermot will talk about how that is paiing off from dra vau davos in a moment. Ceo, president of the American Bankers Association, so were going to stick with your theme. As you heard on the Santelli Exchange, regulation banks, who can interact at these rates and were have our own little debate with the journalism school. They dont necessary li see it the way i do. Isnt that what makes the world go around . Make sure you see it bottom of the hour. [woman]ask me. [announcer]. If you think the best bed for one of you might be a compromise for the other one. [woman]ask me about our tempurpedic. [announcer] theyre sleeping on the newest tempurpedic bed. The new tempur choice. [man]two people. Two remotes. [announcer] firmness settings for the head,legs,and back. And with tempur on top,that famous tempurpedic comfort comes any way you like it [woman]ask me about the lumbar button. [man]shes got her side. And ive got my side. [announcer] tempurpedic. The most highly recommended bed in america. [woman]dont touch my side welcome back. Look at the utility sector. Its up for the second straight day. One of the winners this morning, dominic chu back at headquarters with more on this one. Hanging on by a thread. Out performer for the rest of the market. Utilities had been hit hard at the end of the year last year. Today marks the second day in a row the sector has moved higher. Exelon, Agl Resources moving the way higher. You can see utilities perhaps catching more of that defensive bid even though the entire market is pretty much down on the day overall. Carl, back over to you. Dom, thank you. Meantime, bitter cold is hanging over most of the northeast after a winter storm dumped a foot of snow in areas philly, new york, and boston. Mike seidel is live in plymouth, massachusetts, with some more. Hey, mike. Hey, carl. Still snowing out here. About the only spot the storm is still dumping snow is on the south shore, south of boston by 40 minutes. Out on the cape where theyve had seven inches. Here in plymouth county, upwards of 18 inches. Thats a foot and a half of snow. And its still adding up. Weve had wind gusts of 40 miles an hour. Near blizzard conditions. Behind me we can make out the town now. Early this morning an hour or so ago carl we can barely see the buildings. The plows are getting into act in their act together because theres so much snow to get out of the way. Now the snowfall rate is backing off, just about done with the serious snow. They can work it. Out another Logan Airport, 300, i should say 330 Flights Canceled. Thats a third of their departure schedule for today. Hundreds of Flights Canceled between laguardia and newark and philadelphia and boston. Those are the four hardest hit airports as far as departures and arrivals. Temperatures mid teens so its a very dry powdery snow. It drifts very easily. Over here weve got a few inches in the lot but then you hike over here and, carl, you did this earlier and i was able to get myself pride out in time to do it again. Let me show you how deep this particular drift is. Its about up to my waist. This is the kind of stuff theyre dealing with out here on the south coast, the south shore areas of massachusetts, carl. So it wraps up a bitter cold air like you were seeing in new york and down philadelphia, temperatures tomorrow morning in boston will drop down to about two. Thats 20 degrees belower average for this date. And it looks like colder than average temperatures lasting for the rest of the month may be in early february in the northeast and mid atlantic. Carl, back to you. Mike seidel, so its not over yet, the brutal cold, anyway. You trampled the path to make it a little easier to get it out of that waist high. Those are good. Thats true. Clear the whole area. Mike seidel in plymouth, massachusetts, this morning. Talking to you, buddy. Youre welcome. All right. Sapp is one of the largest Software Providers in world. The company now making a big bet on the cloud saying Cloud Solution served 29 Million People and joining us with a World Economic forum in davos this morning is Bill Mcdermott, ceo of sap. Its great to see you. I wonder you would summarize your philosophy here as better late than never . Absolutely. Its better to innovate and its better to be courageous and change Business Models ahead of schedule. So we really want to make sap the cloud xan and we made a bold move yesterday to do that because our customers are looking for innovation and if we can collapse the i. T. Stack and put it in the cloud, give them simplicity and fastest database in the world, well make a difference for them. Jon fortt here. Vmware snapping up airwatch. Looks like a hot area. Blackberry stock up in response to that. What more is sap going to do to compete in that area . We are as measured by gardners market share the number one mobile Software Company in the world with a 49 market share. Frankly, mobile is total lly in Business Today, develop Software Based on the mobile consumer and the mobile device. Thats why we have the unwired platform to run application in a secure way to provision our applications on an endtoend basis for our customers. So its not surprise that others will try to get into this base and, you know, i certainly wish them well and vmware is a good partner of the company and i hope they do good with it. Hey, bill, when you think about the competition and youre never shy about addressing exactly who you have in your sights, is it a classic sap, oracle battle shaping up here or sap versus a universe of the vmwares, the amazons, the red hats, and the crms . Well, frankly, you know, carl, were going to stay true to the Business Software category. So if you think about our company we run the Biggest Companies in the world on our Business Software. What we realized quickly is a point Solution Providers like salesforce. Com, like workday, like others, do one thing . We do that one thing well. What we want to do is that one thing even better but, more importantly, heres the problem that ceos have, carl. They have an integration problem. For every company that has a billion in revenue they average 50 applications per enterprise. This has created enormous complexity and most attractable issue of our sim the complexity. Sap will bring the integrated enterprise to the cloud so you can run your entire company on hannah, the worlds fastest database, to collapse the i. T. Stack or you can run sap sales, sap procurement, sap hcm as a point solution in the cloud. But ours all integrate on one common platform and one data model at the lowest possible cost and the best productivity. And thats what ceos want. Were taking on the Companies Like saelsz forles force in a b thats similar to the argument that ibm has been making with its software, gra granted its quarter was largely damaged by a hardware but some concerns out there in general about big enterprise names like an ibm, perhaps even like an sap. Why arent you going to run into the same kinds of headwinds on the software and Services Side that ibm might be . If you read their earnings, their issue was mostly hardware. We went out of our way never to go into the hardware business. We partner with other Companies Like ibm for hardware. We stay true to our core which is software. Software is growing as a category faster than any other category in i. T. But heres kind of the big idea. The big idea is sap is the Fastest Growing mega cap i. T. Company in the world. Sap is also the Fastest Growing mega cap company in the cloud of any company in the world. So i want to run sap and i want my 67,000 colleagues in sap to move like were a startup. Were not moving like a big company. Were moving like a startup company. Thats whats going to keep us growing. Bill, we are at cnbc are, of course, selecting the 25 most influential executives, thought leaders from the last 25 years here to mark our anniversary. I wonder, given this discussion, if you would put, say, a jeff base, who would be at top of your list whether its directly related to sap or more broadly . The founder of sap is the most inno vative Technology Genius of our time. You put them in the category of gates and job. Platner is right there. The reason i recommend Hasso Plattner is constantly looking around corners for the next innovation. When you look at hanna, it is the most disruptive Database Technology in the world which is the Fastest Growing. It would have never happened without Hasso Plattner. Hes always on the right side of the customer and on the right side of innovation. Hes my number one pick. Making the case for sap, bill, its great to see you. Thank you so much. Enjoy the rest of your time in davos. Thank you very much. When we come back, in the wake of that target data breach a lot of people are wondering exactly how safe it is to shop at any given store. Todays breakthrough looks to make that easier rating how Safe Companies actually are. Think like a moodys for Cyber Security. I always say be the man with the plan but with less energy, moodiness, and a low sex drive, i had to do something. I saw my doctor. A blood test showed it was low testosterone, not age. We talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. 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Get the most extensive charting wherever you are with the mobile trader app from td ameritrade. The recent data breach at target and neimanmarcus highlights the growing vulnerabilities the companies are facing. Todays squawk breakthrough developed metrics to measure a companys security risk. Think like a moodys or s p rating but for a Company Cyber security. Bit site rates company on a daily basis and can tell how vulnerable it is to fraud, hacking, and Security Breaches. Joining us this morning from washington, d. C. , steven, good to see you. Thank you. I think every viewer understands why this would be great to have, but with no access to internal data, how does it work . So bit site rates the Companies Based on Cyber Security performance. We do the same thing for businesses on the Cyber Security. So there is evidence of traffic in and out of these businesses thats connected to the internet that gives us some sense for the outcomes or the behaviors happening on their networks that gives us some way to rate them and how they are performing from a Cyber Security perspective. Interesting. Its literally the range from 250 to 900 almost sounds like a fico score. Fico has been the number one best risk metric we know of of all time that help slend lenders make better decisions. We pattern after that so people dont have to learn and understand. When i say an organization has an 800 bitsite rating they understand roughly what that means. I guess a question a lot of people are going to have is were you rating retailers including target before this breach and, if so, where were they rates . Absolutely. So talk specifically about the Retail Sector. Weve been rating these companies and published some of our researchers and understood the Retail Sector had this in 2013. And as we look at the seconder there were certainly issues going in the Fourth Quarter specifically for target we saw an increase in the amount of malicious activity which is to say that machines inside target network communicating out to hackers. Now, investigation and forensics analysis is still on going as to the exact cause but we saw indications of issues that led us to believe there were issues inside of target. That tells you that the retailers are kind of sick in a sense that they might be trying to fight off some kind of attacker but doesnt necessarily tell how vulnerable they are to Something Like the point of sale type breach that they experienced, right . Exactly. So from our per expect ive we wouldnt know the exact methodology of attacker. Were just looking at the symptoms and similar to the Credit Scores you dont know necessarily their budget or plan. Youre just seeing the outward evidence of the behaviors. So for, in particular for target, you saw machines inside of target and other retailers communicating out to attack our machines that give us some evidence that those machines were under the control of an external adversary. Just real quick. The companies themselves are paying for this because thats obviously been an issue with regard to mod difficults and s p in the past where it says that they are conflicted because their clients are the very ones who theyre supposed to be independently valevaluating . The way our customer conversations sum, is principally for Third Party Risk management, those who want the ratings pay for it. Everyone is rated without really any charge. We rate really over 7,000 companies today. And those are just generated and calculated daily. For those who want to use the tool for Risk Management purposes would subscribe to that rate and be able to receive it. We try to avoid that conflict that way. You will speak again, steven. Yes. Cofounder, chief Technology Officer of bitsite technologies. Simon hobbs isnt here but we will get you details of whats been happening across europes trading day. Thats coming up right after a short break. Dont go anywhere. Squawk on the street is back in two. [ male announcer ] there is no substitute for experience. For what reality teaches you firsthand. In the face of danger, and under the most demanding circumstances. Experience builds character. Experience builds confidence. And experience. Has built this. Introducing the 2014 glk. The engineering and the experience of mercedesbenz. See your authorized dealer for exceptional offers through mercedesbenz financial services. Of the dusty basement at 1406 35th street the old dining table at 25th and hoffman. And the little room above the strip mall off roble avenue. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment marketing are closing in the uk, more of a mixed day today. Stocks did give up earlier gains as we get these mixed Earnings Report and steeper than expected drops in the unemployment. 71 in the three months to november. Slightly above the bank of england 7 threshold for considering an Interest Rate hike. Look at the major european markets. London, paris, germany, italy, and spain. Bright spots, asml leading the tech sector higher. The dutch chip equipment maker posting better than expected numbers for the Fourth Quarter and upbeat first half guidance, stronger demand for tablets and smartphones. Moodys says the french automakers planned 3 billion euro Capital Increase for the credit rating. Not all of that on the continent today. Lets look at the energy and commodities. Sharon pepper son is live at the nymex with more amid the cold snap. A lot of action in the energy markets. Lets start by looking at the u. S. Oil price which are rising here near the highs of the session. In traders are attributing it to the fact that we are starting to see shipping on trans canadas southern leg of the Gulf Coast Pipeline beginning today. That is relieving some of the glut of oil in curbing, oklahoma, which is depressed u. S. Oil prices and the wti oil contract and we are seeing as a result the spread there, the narrowing of the spread between the brent crude contract and the wti contract, as well. Brent crude though also getting a lift approaching 108 a barrel. Were watching whats happening in natural gas. Yes, this cold spell is lingering and in fact were seeing temperatures some 30 degrees below normal in many parts of the country. That is having an impact on natural gas demand and thats having an i pact on national gas prices. Also near the highs of the session up 4 or so today and even into the stock markets were seeing prices that while futures are 2. 5 year high were seeing highest price on record in the northeast in the cash market. Weve had some difficulty with some pipeline and balances and thats caused prices and cash market to spike up some 100 above where they normally trade right about now. Thank you very much, sharon epperson. What a day in the energy complex. What a day here. Some of our normal tools for gauging the markeds are a little how would you describe, it bob . Youre very political. The dow is a problem. The dow is not accurately reflecting the stock market. It didnt yesterday. Dow is down 0. 5 at one point. The markets, the s p was flat. Today its down 0. 4 . Thats not the way the market is. 43 advancing to declining stocks right now. Look at the dow you just say, oh, this is a terrible day for the stock market but its not really. Of course, the problem as we keep talking about is two things about the dow. Number one, it is a price weighted and there are a lot more expensive stocks in the dow these days. Its a narrow index. Only 30 stocks in it. Theres the dow just coming off the lows for the day. Ibm is down 7. So 50 of the down points that we got here is due to a single stock, ibm a highpriced stock thats influencing the markets. Enough about that. Let me move on and talk about things. Real stock pickers, mark. I dont like that word. It really is true in 2014. So put up multiindustry. Usually the stocks sell different products across many Different Countries move in line. Theyre t not at all. Theyre splitting. So text tron had good earnings and good moves. Parker, they narrowed their outlook. 10 percentage point difference in multiindustry group here. Very unusual. Stocks are diverging nowadays. Look at the rails. Generally very good news on the rails. Norfolk southern had a good day. You can see thats differentiating. Theyre all up. Doing much better than the overall group. Not so can retail where everything is just kind of lousy. Did you see what coach said this morning overall here . First off, substantially lower traffic. Samestore sales down 13. 6 . 7 in december. Those are very, very large. 6 or 7 . Look at the numbers year to day. The luxury retailers are having a tough time. Coach is down 12 . Ralph lawyer went, michael kors a superstar in this group, being dragged down by the weakness in the retail group. Elsewhere, were getting a little bit of a bounce in a beaten up group. Homebuilders today. We had Mortgage Applications subsequently a little bit better than expected. Theyre balancing. Restaura restaurants, again, okay. Eats numbers were not that bad. These stocks are bouncing. This group has been under pressure for a while. Theres nothing we can do with the dow. Its price weighted index. It is what it is. Its just a little narrow. You have to be careful sometimes, particularly in earning season. Thats for sure. Bob pisani, thank you, sir. Lets get over to Rick Santelli in chicago with a look at the impact of rising rates on the financials here, rick. Yes, thank you very much. I want to welcome in my guest, currently ceo and president of American Bankers Association but in previous lives, twoterm governor of oklahoma. Im going to call him governor. Thank you, rick. I appreciate getting out of the snow and the cold here in the northeast. So d. C. Is very cold and its great to be out. Well, im glad that you were able to get to the location. Listen, im being quite specific, governor. You know, today is a story about big banks taking a pass on certain types of loans in the journal. The undertone of the story is micromanagement and overregulation. Specifically i want to look at the other side of the street. Your organization pretty much is trying to help 7,000 Community Banks. My question to you is. Why do you let them boss you around . Why cant these 7,000 banks maybe pay more lobbyists, whatever it takes. It certainly seems like theres less and less pickings for those 7,000 banks, consider that they help employ through loans to Small Business and farms, about 50,000 americans. It seems like a dumb idea when not everybody is getting credit that needs credit. Your thoughts . Well, rick, i come from a Community Bank background. The aba represents banks of all sizes from the largest to the smallest. But 90 of our members are a billion and less in assets. And i had Community Bankers tell me that because of the uncertainty in the economy, obviously health care costs, obviously the fear of taxes and just the general uncertainty, a lot of people are hiring on a temporary basis, a lot less fulltime hiring. Obviously you know around you talked about it. The issue of Labor Force Participation should really worry us as americans. The reality is the fed policy, a very, very low Interest Rates, in terms of the margins trying to afford to make a Small Business a fragile Small Business loan. And also for those of us on the gray side of life. If you have that kind of money mays 335 a year, so the bread and butter of Community Banks, Mortgage Loans are helped certainly by fed policy. Housing has improved. In terms of saving and in terms of Small Business loans you are correct. It has been a rough road. Lets look at the Community Banks. You represent all banks. My question to you is, lets say a client walks in and cant get credit anywhere. You do Due Diligence and you decide, well, i cant lend them at these rates that are managed but maybe its 6 , 7 , 8 , 9 , i can do something for this man, listen, i dont have a problem with that Interest Rate. Seems to me that relationship isnt going to be consummated because the bank is scared of the regulation and somebody secondguessing their decision. Is that accurate . It is accurate. Right now the Community Banks of america and the average Community Bank has 37 employees. Theyre looking at 11,000 pages of proposed and final rules. I mean, how many Danielle Steele novels is that . They avoid it . Basically its avoidance of what they were chartered to do in the fist place. Governor, were out of time. I appreciate your honesty in this regard. Unless these banks are put to better use i think were going to continue to see an employment picture that doesnt incorporate all that it can be. Thank you for showing up today. I agree totally. Thanks, rick. Kelly and the gang, back to you. Rick santelli in chicago. Shark tank has nothing on this. Later this week, 12 companies will have about ten minutes apiece to persuade a room full of investors to invest millions of dollars in the business of Legal Marijuana. What does it take to convince nervous investors to put their money in that business . Stay tuned to find out. 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If theres something that creates more jobs, and grows more businesses. Were open to it. Start a taxfree business at startupny. Com. Coming up at the top of the hour, carl icahn revealing he invested 500 million more in apple in the past couple of weeks. Were going to talk to him and find out what is big bet is now when the joins us at 12 15. Talking to guy who literally wrote the book on writing the market as good. He is here with his magic formula of 2014. Changing face of retail has investors looking hard at their investments in that space. Were going to bracket down when we see you at the top of the hour, carl. Its going to be a show, scott, see you soon. Theres a weed war stirring in las vegas. Legal marijuana startups will hash it out before a group of High Net Worth investors tomorrow at an event organized by the art view investor group. Who are these investors . Steve cofounder and president of the art View Investment Group and executive director, a Cannabis Retail xwroirp might recognize him from the discovery series weed wars as well. Steve, good to have you with us. Good morning. Great to be here. You know, they say that money follows growth. And clearly when youre building an industry out of nothing some money is going to follow it. How is this all going to work . Well, we will be pulling together about 140 investors who are going to hear pitches from a dozen Different Companies who are seeking either startup financing or growth financing for products that are cannabis related. Is it strictly just your run of the mill retailer or is it ancillary goods and services that cater to that industry . We are going to be presenting projects that fall both into the ancillary Services Area and directly into the distribution and cultivation of cannabis. Steve, there are a lot of people here eager to invest in this space and unfortunately not a lot of vehicles to do so safely. I mean, there are agencies that have warned about investigating a lot of penny stocks. I wonder if you can talk a little bit about the kind of Investment Opportunities either publicly listed or newer disrupters in this space where you see the most opportunity. Sure, well, i personally think theyre a little bit early for Public Offerings and the cannabis sector. There have been a dpi of them but not very many. Theres not a lot of selection out there. I think most of the opportunities are private investments now and thats i think going to change in the future but right now i think thats where the best investments to be had. No terms of security and safety, james cole from the Justice Department just testified before this Senate Judiciary committee and specifically assured investors that they would not be prosecuted or subject to any Enforcement Actions for investing in cannabis related business or cannabis businesses in states that had appropriate systems of regulation. So from a legal point of view investors no longer have anything to worry about for investing in this sector. By the way, theres a moral point of view here as well. One in which president obamas recent interview with the new yorker where he seems to suggest this view that marijuana was safer to some extent than alcohol. You said was evidence that or you said calls into question why this remains illegal across most of the country. I suppose the jury is still out though and whether in fact it is safer. I dont think the jury is any longer out. Anybody who wants to take an hour or two and google around the internet and find an abu abundance of evidence of the safety of cannabis. I dont think theres any question about the safety of cannabis. Its interesting. You know, because we get obviously a lot of feedback on twitter among other platforms criticizing us as a network for promoting what some still consider an illegitimate business sector even though we know what the law is in various states. When do you think that is feeb r finally going to give, that point of view . Well, i think that that point of view is rapidly changing. As sanjay gupta said in his recent special on cannabis, the American People have been subject to a 70year campaign of deliberate misinformation by Drug Enforcement agencies. So its no wonder that many people are confused. I think that more and more Accurate Information comes out every day. Clearly the president has been convinced. You know, my question is if cannabis is safer than alcohol, then whats the moral basis for keeping it illegal . Steve, if it becomes a question of more states making it legal, perhaps even nationwide, then just to go back to this point, too, about the Investment Opportunities, what are the most exciting things then that you see on the landscape . Well, you know, i think different investors are going to be excited by different opportunities. Theres just a huge range of opportunities that are available now in everything from real estate to technology to packaging to software. The cannabis industry has been underground for almost the entire time that modern business techniques and products and technologies have existed. So theres opportunities to create software for cannabis businesses. Theres opportunities to create better ways of cultivating and packaging cannabis. Theres opportunities in the real estate sector to provide real estate to cannabis related businesses. Theres financing opportunities. Theres just about everywhere you look, theres an opportunity to be found depending on an investors tolerance for risk and their particular area of interest. Thats a key point. Steve, thanks so much. Well watch it closely. Steve deangelo today talking cannabis from las vegas. My pleasure. Thanks. Take a quick look at brinker and Norfolk Southern both making moves on earnings this morning, moves to the upside, we should add, by 6 . The earning squad here to breakdown the numbers and plenty more earnings news coming up next. Tte or au lait . Cozy or cool . Meow or woof . Everything the way you want it. Until boom, its bedtime and your mattress a battleground of thwarted desire. Enter the sleep number bed. Designed to let couples sleep together in individualized comfort. Hes a softy. His sleep number setting is 35. Youre the rock, at 60. And as your needs change over time you can adjust your bed to sleep better together. 48month financing available through february 2 only at your local sleep number store. Find your sleep number setting and know better sleep. Welcome to the earnings squad, the earnings stories everyone is talking about. Im melissa lee. Joining me today is dominic chu and the dr. John najarian. Lets get to Norfolk Southern here, posting better than expected Fourth Quarter earnings. Its all about recovery in the auto sector. Yes. Its not just autos. Its general merchandise overall. Thats everything from auto parts to cars to Agricultural Products group name it. Theyre shipping more. The big thing here investors love this idea because we know coal has been a headwind. We heard it csx. This time around they got better results despite the fact theyre shipping less coal. Thats why investors are liking this stock today. We also have to wonder whether or not they have to upgrade the railcars because of all the accidents that have been happening with the transport of screwed which has also been a booming business. That could be a big thing going forward. As you transport more oil, without pipelines, you could be seeing the Eastern Railway companies do that kind of volume. Theyre shipping more of Everything Else but coal sglets talk scx. It was a clear mix. Its all about a drop its seeing year on year and the price of gold and copper. One big overhang on the stock that a lot of investors are listening for with clarity on the grass berg mines, the mines in indo neisha. More than 20 tax right now and its going go up progressively through 2017 when exports out of indonesia will be stopped entirely. The stock has been down about 8 so far this year. About flat for the past 12 months. Doc . This is one of the real outliers in that space, too, because a lot of gold stocks if you can define them down to a pure play like that, have done much better than Freeport Mcmorran has done. With gold stabilizing and, in fact, moving up from there, i like it as play going forward. Freeport has the issues with the mine you just mentioned. Doc, youve been watching brinkers, parent of chilis. Chilis and maggianos, little italy, they did fabulous numbers. This stock was up better than 55 over the last year. Also competitors like Buffalo Wild Wings as well as character barrel up between 70 and 55 as well. People are spending at these types of places a lot more than they are at darden right now. Nice pop on eats today. Thats it. If you want to join the kong conversation, tweet us. Coming up on squawk on the street, the machines are taking over but theyre not alone. We go live to one plant where robots and people are working side by side to try and change the way many factories operate across the country. Thats next when squawk on the street comes right back. I hav. When i first felt the diabetic nerve pain, of course i had no idea what it was. I felt like my feet were going to sleep. It progressed from there to burning like i was walking on hot coals. To like 1,000 bees that were just stinging my feet. I have a great relationship with my doctor. He found lyrica for me. [ female announcer ] its known that diabetes damages nerves. Lyrica is fda approved to treat diabetic nerve pain. Lyrica is not for everyone. It may cause serious allergic reactions or suicidal thoughts or actions. Tell your doctor right away if you have these, new or worsening depression, or unusual changes in mood or behavior. Or swelling, trouble breathing, rash, hives, blisters, changes in eyesight including blurry vision, muscle pain with fever, tired feeling, or skin sores from diabetes. Common side effects are dizziness, sleepiness, weight gain and swelling of hands, legs and feet. Dont drink alcohol while taking lyrica. Dont drive or use machinery until you know how lyrica affects you. Those who have had a drug or alcohol problem may be more likely to misuse lyrica. Having less pain its a wonderful feeling. [ female announcer ] ask your doctor about lyrica today. Its specific treatment for diabetic nerve pain. To hear more of phylliss story, visit lyrica. Com. If you have a business idea, we have a personalized legal solution thats right for you. With easy stepbystep guidance, were here to help you turn your dream into a reality. Start your Business Today with legalzoom. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. Call it the rise of the machines. The next wave of robots are moving into plants across the country. Dramatically changing how manufacturers operate for ever. Phil lebeau is live at a plant in connecticut and joins us with more. Hey, phil. Hey, carl. Want to sbintroduce you to baxt. What baxter is doing is using one of his two arms to take plastic cups coming out of this direct injection machine. It will bring them over. Its do this 24 7. So they can make this robot continue to work nonstop after it drops them into this tray here. The other arm of baxter will come down. It will lift up a mechanism here which then will allow these little plastic red cups to slide down into a plastic bag. From the plastic bag they are then pushed out. This is what baxter job is here on the floor of vanguard plastics in connecticut. So the question becomes what about ro bout bots and how they might be changing employment in the u. S. Look at this graphic. This says it all. Over the last 15 years a big drop in manufacturing jobs while global and Industrial Robotics have increased. In fact, one professor says this is part of what people are concerned about when they look at robots in the future. Were already seeing some of it in the employment data. Employment is falling off a cliff. Median income is lower than the 1990s. There are definitely some troubling trends. Guys, this is all about increasing productive ty and here at vanguard they say baxter has done that. Well show you how i can actually program baxter a little bit later on today on the closing bell. You dont want to miss what this pro ro bot can do. Just a taste of the future when it comes to robotics. Back to you. Those eyes kind of freak me out on that display, kelly, dont you think . Yes. Phil, we want to see more of that this afternoon. Looking forward. We saw the employment rate come down even though productivity down the road we never know. Must take a leap higher on the machines. Meantime, a big hour is coming up here beginning in a few seconds with scott wapner, by the way, scott, has carl icahn . We do. Off the news of his most recent tweet, carl. Just a short time ago saying that hes upped his apple stake now worth 3 billion. Also were going to talk to him about his intepgss. As you know, hes called for the buyback. First 150 billion. Now 50. Were going to find out exactly what he thinks is going to happen and what happens if he doesnt get his way . Maybe thats the most interesting thing. I could think of other questions he might get to. Take it away. Thanks so much. Welcome to the halftime show, following the biggest stories on the street today. The secret to beating the market. The man who wrote the book is here. Joel greenblatt reveals the latest. We are