Good monday morning. Welcome to squawk alley for a monday. John ford, kayla, as well as myself. Remembering david bowie on a tough morning, loss of a major, major artist. The dows down about 24 opponents. Were watching crude falling below 32 as u. S. Stocks struggle for gains after the bruising start to the year last week for some tech investors at least. Will the blows keep coming . Ali ans Portfolio Manager walter price and lead analyst mark mahaney. Good to have you. Good morning. Mark, in a neighborhood here now where everything seems to pivot upon the price of commodities, on chinese regulators overnight, and in the end, some would argue, really doesnt matter what amazons operating margin is going to be going into earnings season. Do you agree . Amazon is a bit of a bellwether for the internet groups of a whole as is facebook and alphabet. Probably more than any other stocks in the group. Amazon, what people want to see are operating margins rising in the north american retail business. And secondly, is that momentum weve seen in aws sustainable that topline momentum . We think the answers to both of those, we have a bullish bias on answers to both of those questions, so we like the stock, and it will matter for amazon stock and for the sector. Walter, theres been this idea that as some appetite for risk goes away, theres going to be this shift that weve been thinking about and talking about for a long time. The shift from Growth Stocks to stocks that are companies that are very profitable. Is that whats happening now . No, i think its basically people are worried about the expectations for 2016 and the estimates for 2016. So, you know, as we get into the forecasts that come in the First Quarter for 2016, i think people are a little worried that companies are going to take down all the macro conditions going on. I look at how the stocks are doing. Netflix is actually up 4 over the past week. Ebay is down just 2 , outperforming apple. There isnt total rhyme or reason to the direction these stocks have been moving in. I wonder if you think once we get some earnings numbers, some solid numbers and outlooks from some of these companies, maybe some of this will shift to whats real versus whats feared . John, let me just pick off a couple of points. One, netflix, we had very specific news when they announced three, six, nine months ahead of expectations they completed their global rollout with the exception of china, that was faster than expected. In a way, you kind of derisked the netflix earnings number because now were focused on 2016 International Launch story. Hard to know how well theyll do. To date, theyve gone very well in almost every international market. Ebay may be a sign if you want a defensive internet portfolio, its hard to say that, but you can. You could put in low p e, some stocks with dividend yields in there. So expedia, probably an alphabet too. So were going to have a real negative take for the year, ebay would be one of them. Walter, you agree . Are there any spaces or names in which you are more willing to sell a rally than buy a dip . No, i agree with your premise, that as people see the forecast in 2016 and i feel more comfortable about whats real and, you know, i think companies will be conservative in their forecasts. Investors will be a lot more comfortable buying these stocks. So i think you get a bid in these stocks and you get a bottom in these stocks as you get these forecasts come out and as people get comfortable with the growth rates in 2016. The problem from an earnings perspective is that Tech Companies now make up 20 of the s p 500 profits and if you see a correction in tech profits, then the overall s p, the overall earnings picture, doesnt look too good. Wa whats the risk that tech drives everything down this time around . Well, i think there is still very good growth in tech. Techs growth really depends on new markets and lower cost ways of doing things. If you look at whats driving facebook or google or amazon or microsoft, its really new Technologies Associated with the cloud or with video advertising on the internet. Those trends arent going away. Those growth rates arent going away. They may moderate in our Slower Growth economy but i think tech has still got good growth, much better growth than most sectors in the chi. Finally, mark, im thinking of a know that was published middle of december titled fang will end with a dang. It argued mostly stocks that have the outsized gains for any year really in any industry hardly ever repeat the second year. I wonder if that weighs on your models as you head into the first, Second Quarter . It certainly does. You look at stocks that outperform like that, you assume that they cant, you know, continue to perform. What our call has been is were sticking with our fundamental guns. We think were going to see consistent revenue trends, demand trends, especially for the leading internet companies. Those fang names, all four of those, we think will be relatively consistent. Youve got instagram modernization really kicking in. Alphabet, what youve got is a real interesting catalyst coming up. Netflix, its all about the international market. So we stick with them. Youre stubborn, if nothing else, mark. Good to see you, mark and walter price talking tech on this monday morning. When we come back, a lot more coverage on china and its impact on u. S. Markets. Former ambassador to china jon huntsman will join us. Tesla working on a new selfparking car. When you could see one on the road. And more pain at yahoo with reports saying Marissa Mayer could plan significant layoffs. A former ceo and interim ceo at yahoo will join us to break it all down. Americans to take us to break here. What are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. Td ameritrade. Quick news alert here. Wednesdayan Powerball Jackpot n stands at 1. 4 million. The lack of a winner on saturday. I assume were going to do a pool, right . Bought mine yesterday. Youre on your own, keep the whole thing. The texas news release says its a world record. Unbelievable. Speaking of which, lets bring in john steinberg, former daily mail north america ceo. You already bought your ticket. I have. A few hundred million got won. My wife wanted me to buy 20 worth. I said, if youre not going to win it with 3. You buy everything we talk with on squawk alley. Everything, i buy everything. Apple music now has 10 million paid subs. Half as many as spotify. Which crossed the 20 million mark back in june. A new report from the journal says neither apple nor its Media Partners have any idea how many people are actually Reading Apple news. The Service Launched back in september. Shares still they were arent 98 earlier this morning. Trying to hold that 100 level. Your thoughts . Lets start with the music thing. A service ive been very negative on. I still think is unbelievably confusing. Six months in, theyve got half of spotify. This goes back to my argument of multimilliondollar things buried inside apple they dont get credit for. Apple has something thats half as good as that right now. Another few billion dollars on apples market cap. Half of what spotify was back in june. We got to assume its grown since then, though they havent put out numbers. I think the question is communications insider told the second half of 2015 was our fastest subscriber growth ever. They are saying its the best half for them on record. He reiterated that sort of language to me at ces last week. Is the ground compounding more . Three months from now when the new iphone buyers from the Holiday Season have rolled off their free apple music period, are we going to be closer to 14 million paid subscribers at that point . How much do people love it is the question . Ill back off on the topic because its the apple news thing im really this is arguably a terrible business. Every time you do better, you pay more royalties. Making already a bad margin business for spotify worse. This is a way apple can push more people out of its space. Create more lockin on its platform. I want to get to news because this is really bad. If youre three monthses in and you just have figured out you dont know how many people are reading your news product, i mean, come on, apple has a really bad track record with this type of product when it comes to services. Maybe apple music is turning that around but from the interface perspective theyre getting lots of criticism. I dont love spotify. I dont love amazon music though im using it. This news product, they really need to i think get on top of it, make a number of changes with it. Ive tried it. Its not sticky at all. Its too hard to do things like share effectively in it, like see what other people whose judgment you trust what theyre reading. Those are the sort of features i think would change this game. Right now, you have apple news, facebook instant articles, snap chot discover and google amp, googles effort to accelerate the mobile web. All the news you consume will be inside these platforms. And ultimately as a publisher i can tell you every time we go on to a new platform, either single one, every vendor, there are hick yops so this is part of that apple beta year. They did launch things, were imperfect, but like everybody else in that regard. Overestimating the audience or underestimating it . Clearly overestimating it. A false sense of hope you overinvest where you need to be. Advertising is rife with very poor quality ads. These are high quality platforms. Id rather have one of these top leading social networks monetize what i cant sell myself than rando advertising vendors. Selfdriving tesla can now park itself. The company releasing a Software Update giving its model s the ability to open your garage, drive inside, park and shut down. They unveiled those changes yesterday, and said, quote, i think within two years youll be able to summon your car from across the country. He did qualify that two years might be overoptimistic. The only person youre putting at risk if you decide to do that is yourself. It comes as the company is now restricting autopilot away from residential streets. So you can only use autopilot in a road with a Center Median and certain other qualifications because there are questions about whether this technology is advanced enough to actually put others in danger or whether its something thats safe to use. The beauty is the autopilot. I didnt mean to say the autopilot. The Software Update. Just the fact your car is like your phone. I guess your wifi at home is good enough. Im kidding. The fact that cars can be updated with Software Features this way without having to take them into the deal, it is certainly the future, it is amazing. The problem with elan musk is you dont know what to believe. Half the time he says crazy things hes actually able to achieve. The other half of the time, he makes overly rosy predictions about how quickly he can do something. And its a bit of a strategy. So when he writes in a press release your tesla will be able to drive anywhere across the country to meet you charging itself along the way, if i heard that a year or two ago, maybe i would have believed him. Now i think he says these things and hes just sort of i dont know, its pr, its shock value at this point. Theres no way thats happening any time soon. Fine, amazon topping netflix in this years golden globe. Won two awards for mozart in the jungle and transparent. Netflix came up empty. It did get a ton of nominations but fell short this time around. Amazon got as many globes as any network and theyve only been at this the for a year. I want to talk about usa and mr. Robot. Won in its category. Christian slater got best actor. Very much an over the top geek show. Everybody watched that show streaming, over the top. I think if anything, its showing how a very Traditional Network like usa can be an amazon or netflix with a show or two. The exciting thing we learned from last night is you break out now on these over the top platforms. As the threat rises from the amazons, from the netflix, do you think the networks and these Cable Companies are going to start rising to the occasion . Look, i just came back from ces and there were two conversations going on. One was the hardware that everybody was doing and the other was over the top, over the top, over the top. Every telecom company, every media company, every Hardware Company is talking about how to deliver contact to people over broadband and when you see usa win doing that. Netflix had a rough night but still obviously things going well. Futures happening more quickly than ever. When it comes down to it, the Traditional Networks, they have a lot of wins. We dont talk about them as much here because theyre not as connected to new technology but maybe last night was a reminder. When people are watching i dont know its in the nbc family, the voice, thats a lot of people, okay, and its counted. So we cant act like everything is just happening on netflix and amazon. You know how many awards went to broadcast television . Right. None. But people are still watching it. My argument is the big cable winner was not even a cable winner, it was an over the top winner. I think its much worse. When you look at the number of new entries. Amazon, jeff bezos kind of running the table. A guy who sells discounted toilet paper and wasnt even in the entertainment business a few years ago. Thats scary if youre an incumbent, better get moving. Perhaps one of the reasons we care so much is we dont have any other metrix to judge amazon and netflix by. So all we can really talk about are the awards. The ratings are so far down. Theres an article in new york times, theyre not even replacing tv shows now because whats the point, the ratings arent better for the replacement show. So soon there wont be ratings. Youve got some news. I joined a board of a leading millennial site. It was founded by Brian Goldberg who was the founder of Bleacher Report and ive joined their board. 40 million uniques. They grew their revenue from 1 to 10 million in the past year. So one of the very exciting Media Companies out of new york. Youre not a millennial woman for the record. But im a parent. Not even a millennial parent. Your purchase of buzz feed and purchase of elite daily. Im just there to help sell ads and do video stuff. I may ask to guest blog on romper because i have lots of parents and crafttype things id like to advise other parents on. Not altogether though, not drone flying with the kids. Congratulations, john steinberg. Another quick news break. Making some executive changes and a change in its guidance as well. Bob huggen is the ceo now. Hes going to continue with the company but he will be the executive chairman. Theres a new ceo that is coming in. His name is mark ellis. He will be the the new ceo. In terms of guidance for celgene, theyre predicting the full fiscal year 2015 will come in below estimates. Down now almost 5 . Kayla, back to you. Thanks for that update, sue herrera, back at news headquarters. Another exclusive interview from the Health Care Conference, the ceo will join us live in just a minute. Shares of fit bit having a rough day, down 13 and falling below its ipo price of 20 a share for the first time. A big news week for the Health Care Industry with jpmorgan hosting its annual Health Care Conference in san francisco. Lets go back to meg at the conference who is live with another special guest, the ceo of novartis. Thank you for joining us. Theres a lot of questions about drug pricing. Theres a lot of uncertainty in the industry. I want to ask you about cancer specifically. Novartis sells a transformational drug. Youre working on immunotherapy. Where would you say we stand in the fight against cancer now . Its an amazing time in Cancer Research because the explosion of data and deep sequencing of the human genome has allowed us now to target cancers in ways that were never possible before. So youre seeing a tremendous explosion of new technologies like the pd1 Checkpoint Inhibitors or like our program in tcell technology. I think were on the verge of really getting after some cancers that historically have not been addressable. As were there, theres also this tremendous focus now on drug pricing. Im curious to know how that is changing if at all, how you do your business. Is that affecting the way you are pricing new drugs . It is changing. If you look at oncology, where its going is going to be combinationer therepies. As we start to identify which of these tumors are there, combinations are going to be important. We have to think about a different kind of future pricing environment. And one of the things were looking at is how do we start to move away from the transaction of selling the pill towards one of outcomes . Where were all looking at the value of that drug and getting reimbursed, at least partly, on the outcome we deliver. I have to ask you about glevak because its expected to go generic this year. That has been a drug that just has transformed the lives of patients with chronic Myeloid Leukemia from a death sentence to a chronic disease. It has been singled out by doctors for its price, tripling over a decade after it was approved. How do you speak to that . How do you justify a tripling in price . One of the things is that remember when we first launched glevak, it was just for one indication, chronic Myeloid Leukemia. We continued to study the drug. We continued to show that the drug was valuable in other indications within cancer. And so that we needed to be reward for that innovation and we were pricing according to that. So i think if you think about cancer pricing, you think abo