closing bell. u.s. stocks rallying with emerging markets. is the u.s. recession bound? we will look at consumers, china and credit as profitable alarms the u.s. is headed for a slowdown. u.s. stocks rising, you did end up with nine out of 10 sectors gaining ground. health care is the only sector to close lower on the busiest day of earnings season so far. alix: i want to bring up one stock in the close right now -- xerox is reporting it will be split into two companies. one is a hardware company and this comes as carl icahn got three board seats at the services company. seats, and board

xerox is reporting results tomorrow morning before the markets. xerox looking to split into two. that's been the trend of late. alix: and activist investors are getting more heavily active. the other thing we saw today, a massive rally in some -- facebookes absolutely exploding, amazon likeng today, it seems they are coming back today. fourth: and we have quarter numbers for amazon. let's start with revenue -- $35.7 billion is the number i get for fourth-quarter sales. lower than what analysts had been anticipating, but ready much in line. that's certainly a market

increase from this year at last time. for fourth quarter earnings-per-share, the number i see here is a dollar. last year at this time, it was $.45. it's nowhere near the range analysts were looking for. the range was fairly large, anywhere from $.60 to $2.41. in terms of the outlook for the fiscal first quarter, it's rangeg at a pretty wide with analysts looking for $659 million on average. bigon web services is the part of the business everyone is looking at because it is so much more profitable than the e-commerce business. there we have a beat when the consensus average was $2.37 billion. joining us now is cory

johnson from san francisco and howard linden. we obviously don't have any breakout in terms of the prime users, but the cloud services did have the beat. cory: i think that's the most important business in all of the world right now. you can see how fast it is growing, at a run right now of better than $8 billion a year. their nearest competitor, we are waiting for their -- that's the next best competitor around the world there. sales is rightr in line. it's more a question of on or actualposed to profitability. while it surprised last quarter and suggested they could someday show a profit, the operating

profitability or net income margins are so slim in this business that even with the profitability from amazon web services, it doesn't matter. it's more than 20 years old. very impressive and very big numbers. shares are part of the same groups of stocks everyone was fixated on. what kinds of expectations are priced into the stock right now? 2070.: corey and i will be there. they are going to be the largest company in the world. the question is what are you willing to pay and how much risk

are you willing to take? no metric to measure. amazon web services, probably the most pure growth business of all times. is reading what wall street stocks are just as much as wall street is trying to send a message. right now, it's like we don't care as long as you continue to grow. we will let you keep the stock at $600. it is not a stock for the faint of heart. it is really a proxy for risk. up egg time going right now and i think it is all about that profitability. it is like a victorian age ankle -- who knows where it can lead to do. now it's showing profitability will be hard to get to. scarlet: when a break in with

microsoft earnings which just cross the wire. it's beating consensus estimates by seven cents. revenue,of adjusted they are anticipating a 5.3 the fourth quarter is a seasonably strong quarter. it's a supposedly strong quarter for all of these tech companies. mentioningrs worth are the intelligent cloud revenue, pretty much in line with what analysts were anticipated -- were anticipating. way, it is competing very much so against amazon. the microsoft azure

business is definitely competing with amazon. they are just down the road with each other. they are trying to make a comeback here and it's the second largest cloud business as far as hosting web services. and it's growing at a faster pace. and crunch thegh numbers and figure out how it looks exactly but it is a very important business and one where both companies could compete more on price and they are already. it's almost like a game of chicken. we will see how it goes. joe: for a long time, it seemed like microsoft was doomed to be the tech afterthought that no one cool thought anything of. now the stock is doing well. from your perspective, does microsoft have a relevance that it didn't have a few years ago? it excites me as the place where if i'm at the mall

and the apple store is too crowded, it's a good place to go work. the thing with microsoft right a check on a lot of companies. i think anything but steve ballmer has been a trend there. once steve left, the institutions were so excited to be in with that euro that i think anything was better. microsoft stores are important. they are a check on launching new products and the cloud is one of those mystical things that amazon and microsoft are achieving. but microsoft is executing and they have a lot of smart people there in the stock is doing great. it is hard to argue. unearned revenue for $27.3oft coming in at

billion. that's above where consensus was. that is the biggest part of the business, even with excitement about the cloud. and the numbers show they are executing. another company that seems to be executing fantastically is facebook. they had a monster day after blowing up earnings yesterday. you said you thought amazon was going to be the biggest company in the world. are they on a collision course with facebook question mark it seems like those are the two companies that seem to be unstoppable. i think google has realized they are the berkshire hathaway of this generation. they have such a huge start in terms of being the next humongous conglomerate. hard to rule google out of those three. i would put those three in my favorite three. but facebook and amazon seem to

engines of growth. every time i go to facebook, we make fun of it, but the facebook experience, now that i have hit 50, i definitely say they're mobile product for a person my age and women above 30 is still great. people deny they use it. instagram and whatsapp have a bigger group and facebook is the best consumer product company out there. has is that daily knock on your door. if you are a startup, you'd the aws brand. you can wind it down of things are not working, but you can grow forever using those products. they're gtting you at your first start up and keeping you at the lifecycle. where they get you

from eight until 80, that is why those companies are winning. they own the consumer. afterim cook commenting apple's earnings, saying our results are impressive given the challenging global croeconomic. about what wasy once a rapidly growing tech company that suddenly the global macroeconomic conditions are starting to drag it down? heard the two big to fail. apple has stretched the imagination where we are getting too big to succeed. they are struggling with just mathematical growth problems of being the size that they are. there are still people living in -- onsh in china or india

bullish days, people project those people will be on the internet. on bearish days, there like everything we have built is going to fall into the ocean. is happening, he have to stick with the purest growth companies. now they are sitting on so much cash. alix: thank you so much for joining us. ahead, if the u.s. is heading toward a recession, you would not know it from consumers. a quick check on amazon shares -- down 11% after missing analyst estimates by $.55. primempany did say membership increased in 2015, but that fourth quarter mrs. dragging on the stock. ♪

alix: let's get right to mark crumpton with first word news. mark: the world health organization estimates there can between 3 million and 4 million cases of the zika virus in the next year. it's based on estimates of dengue fever which is also carried by mosquitoes. it is expected to be behind the birth of babies with abnormally small heads. judge has agreed to delay the sentencing of dennis hastert. scheduled fornow april 8. hastert pleaded guilty to working banking laws as he

sought to pay someone to cover up higher misconduct. the michigan legislature has inroved 28 million dollars additional funding to address the lead contamination in flint's water. the bill now goes to the governor who is expected to sign it. democrats on capitol hill introduced a measure to provide up to $400 million in new federal funding to replace and fix led contaminated pipes in flint. donald trump is maintaining his big lead among republican primary voters across the nation. trump lead with 34%. marco rubio is 14% and senator ted cruz is at 12%. no other republican candidate is in double digits. "with all due respect" is live from iowa this week ahead of next week's iowa caucuses. coverage begins at 5:00 p.m. new york time. news 24 hours a day

powered by our twitter for hundred journalists and more than 150 news bureau's around the world. back to you. miss -- "what'd you miss?" we are taking a date look and to whether the u.s. is recession bound. if you look at all the consumer confidence measures, they all seem to be holding up, but the big question is how long can at last and when might they rollover? of the tricks is you don't need to see it making new highs. mid-or late expansion economy whether we are close to recession or not. but you do not see an economy on or precipice of a recession entering a recession have stable consumer confidence numbers. they tend to move sideways and that is the modern pattern.

michigan and bloomberg's own consumer confidence survey are in agreement that the consumer is confident at this point. scarlet: what are the characteristics of a mid-to late consumer expansion? two cycles,he last especially in the mid-2000, we saw a lot of vulnerability will do because of debt. people were taking on more housing debt than they could afford. lots of consumer debt and consumer debt has fallen dramatically in terms of out put relative to income over the past several years since that recession started. that service costs are basically at 30 year lows right now and that's very uncharacteristic of -- very uncharacteristic of a consumer that has to cut back and reduce their final demand. joe: it's great to say consumer

confidence is up but actual consumer spending and retail .ales were just kind of eh what is the prospect for actual spending? retail spending is tricky because it's measured in nominal dollars. if you look at real spending, if it looks much more robust, it doesn't look like it's going to investors and we would not expect it to. but we don't see the kind of demand collapse we would see in aal terms as you would see in recession. the concern i hear percolating in the market is if the stock market rolls over enough, you will get really rich people who want to save more and spend less and this number is going to get a lot worse and that's the tipping point. what do you think of that? george: i think that is more of

a concern than it may have been in the past. but the superrich who are the most levered to the equity market don't really spend much of their income. can dropsavings rate theira lot and not affect total consumption. i wouldn't make the case that is what is going to happen but at the end of the day, americans have a lot more wealth in their houses. there is no reason to think they won't. the housing market is really quite strong and is going to continue to roll along. joe: what would you see to make you say i'm changing my view? one thing that's not worrisome yet but something i'm watching closely as initial jobless claims. have spikes -- spiked is probably too strong a

description, but those have risen off what have effectively been 30 year lows. we are not at the level that would signal a recession now but to riseless claims tend off the lows of the previous expansion, we tend to be close to a recession. and they can move in a range. it's hard to be worried about that. something else you have been looking at as an interesting way to measure the economy are the state leading indicators. what do you see when you look at the breakdown by each state? george: this is a great chart. percentagews is the of stat or the number of states whose leading indicator index at the state level is above zero. we see the state leading indicator index tens to rollover and the number of states in expansion mode tend to rollover tend tobut you don't

see that until you hit 40 or so states in that condition. now and thereight is precedent for midcycle pullback with a lot of impact on a few states. a coincidence that in 1986 we saw a collapse in oil prices. a complete destruction of the texas oil patch and mid expansion behavi from an under levered u.s. consumer. back to thet goes chart you were showing us earlier. thank you for joining us today. up, which emerging market will be the first to need a bailout? ♪

alix: do you think the u.s. is headed for a recession? scarlet: be sure to share your thoughts with us on twitter. votes, we have had 1652 and 44% of those voting say yes, we are headed toward a recession and 56% say no. i guess that so far, based on the people who have come on the show, it's just been a 1% margin of change. alix: it is unscientific, but

nonetheless, interesting to pull. we were talking about facebook knocking it out of the park today. here's an interesting way of showing it. this is a chart that shows the daily percentage move and the blue shaded area is the trading upperpe which shows an standard deviation based on trading. over 15%,ee a move of just absolutely destroying anything else we have seen in terms of a normal move. it's just incredible. cap stocka mega having a move like that is absolutely extraordinary. speaking of dislocation, we know falling oil are affecting emerging oil market economies. azerbaijan is its -- is an extreme example.

thewhite line here is dollar versus the measure by john -- azerbaijan currency. tumbled of late but the point i want to make is in december, the company abandoned its dollar peg and resorted to capital controls. now the world bank and imf are considering making an emergency loan of $4 billion to the country. alix: i'm also taking a look at arabia this is saudi reserves -- we just got the new data out today and you can see how much they have dropped recently. is quantitative tightening. this and china are putting a lot of pressure on the markets and this is what we have been seeing last couple of weeks. up, we areming

looking at whether the u.s. is recession-browned -- recession-bound. will china pull the u.s. into a recession? ♪

scarlet: i'm scarlet fu. "what'd you miss?" we will get you caught up on the close of trading in just a moment, at first we want to head over to mark crumpton with the first word. mark: thank you. the brazilian president has invited all nations in latin america and the caribbean to discuss ways to cope with the rapid spread of the zika virus. a summit meeting i s set for next week's oratory. tragedy ago today, struck the american space station, challenger, when exploded 76 seconds after liftoff. they were remembered today at

cape canaveral. nasa also held memorial services in houston and at arlington national cemetery. don't expect president obama to want up on the u.s. supreme court that she doesn't want the job. the white house says his post-presidency plans don't include becoming a supreme court justice. press secretary josh earnest says he would prefer to spend widerst office handling a range of issues than what the courts can deal with. donald trump is standing by his decision to skip tonight's republican presidential debate. he claims he is treated unfairly by the sponsor, foxnews. the latest poll shows mr. trump with a wide national league. senators marco rubio and ted cruz are the only other candidates and double-digit. coming up in about 30 minutes, "with all due respect," live from iowa ahead of next week's caucuses. coverage begins at 5:00 p.m. new york time.

day,l news, 24 hours a powered by 2400 journalists and 150 news bureaus around the world. you.et: thank let's get a quick recap of how markets closed. an up and down day. the s&p closed up 6/10 of 1%. 9 out of 10 sectors were gaining, led by energy. earnings, something companies reporting after the bell. downll start with amazon, 13% after fourth-quarter profit and sales missed analyst estimates. the most important quarter of the year for amazon. meantime, microsoft coming up with the beat on profit and sales thanks to its cloud services, gaining 5.3% in after-hours. alix: i want to touch on xerox as well. "the wall street journal" is reporting that it will split

into two companies -- services and hardware. given two will be seats on the services company. they're unraveling his latest there.ion, a big shiftg artset: electronic going down in extended trading. alix: "what'd you miss?" is the u.s. recession bound? the stock market is down 25% so far this year, and the currency is under pressure. does a slowdown in china have the power to push the u.s. into a recession? we want to ask alan ruskin. good to see you. >> high. . alix: the big-ticket items we tend to look at are the ticket china. what do you see -- is that there is? -- is that the risk?

>> i think it is a restraining factor to global growth. it's a factor in terms of u.s. rose, but i uldn't make too much of it. the u.s. ultimately will be dependent on the u.s. consumer. does the u.s. consumer hold up? and i think they will. joe: should china just do a real devaluation and end with all this uncertainty, the policy causing people to try and run run this slow drip devaluation? >> is a difficult choice they are faced with. it's possible that the market would drive the currency down very sharp andly, and it would e e destabilizing. they don't want to go down that path. scarlet: what does china really want? on one hand they devalue the current in august, did it again, been supported the currency by intervening.

do they want a stronger currency or uighur currency? >> i inc. they also want the market determined exchange rate. it is very difficult to have both of those things at the same time. in the past, when it had a propensity to be strong, it was more plausible to market the exchange rate and have the currenciey stable. but they are fighting now that they are seeing his capital of low, it's hard to keep the currency stable when the pressures are very much with uighur currencies. scarlet: it's easy to write it off as weakness in china. but at what point, what is the tipping point, when china's intervention with the u.n. does winding up having negative feedback into the u.s.? >> the big back loop we are looking at is related to commodities and oil and the knock on effect, in particular

to high-yield credit. i think the question for the u.s. economy is, is this high-yield problem something which will be curtailed to a high-yield story, or is it something that will become mainstream in terms of a credit problem? so far you worth being the credit problem being quite contained. if that changes, there's something different going on. if investment-grade credit has to go up, that is a problem. joe: the entire global fx market is defined by this dollar bull market. deutsche bank came out with research speculating that there could be some of yonew global intervention all of the laws of court. plaza accord. what do you think economi that could look like? >> you need a backup plan here.

apropos the earlier question, the chinese exchange rate could actually weaken quite substantially. case, theto be the flipside of that would be the u.s. dollar would be extraordinarily strong, way stronger than is in the interest of anybody, let alone the united states. it's there where you've got this coalescence of interest to intervene. joe: what would that look like today? the had a very central banks try to engineer something like that, or -- >> yes, everything the point is they should be getting together now in that eventuality. but the possibility that were to happen, they should be talking and thinking about that right now. joe: people have talked about the u.s. dollar as shooter of last resort. everybody gets to devalue against the dollar.

what is the incentive for others to try to rein the dollar in? don't countries like having their countries weak? >> they liked it for a while, but it is a little too much of a good thing. you're seeing a lot of pressure from the dollar on to commodity prices. you have these huge terms of trade stock very negative, and the other element is that with all countries weakening, you're not actually getting any net trade gains. that's a big problem as well. scarlet: one of the reasons we are also concerned about china's devaluation of the currency is because japan, south korea got hit by a weaker chinese currency. to what extent does that get full it into what the boj have to consider when they come out with their announcement tomorrow? it is one of the most widely anticipated gatherings. >> i think the boj will be looking at the trade weighted index, which was very weak, and anis now strengthening.

for china to all of a sudden devalue, you have the yen strengthening on a trade weighted basis, which is not seen as desirable. in terms of devaluations, the yen was ahead of the game so they can't complain a great deal. scarlet: thank you very much. alan ruskin. alix: coming up, the chances of the u.s. slipping into recession may be higher than you inc., according to -- higher than you think, according to our next guest. ♪

alix: earlier this week we asked

our guest that they thought a u.s. was headed toward recession. here's what they had to say. >> more than 80% of the economy says it is -- >> we are seeing pressure on the dow, the s&p, and nasdaq -- >> investors are running to the exit. say andthing that we people look at is colored by what happened 6, 7 years ago. >> what do you say to people who immediately start thinking, this is a downturn, this is a huge crisis. >> are we in a 2008 scenario? are we going to enter a recession? >> absolutely no chance whatsoever. by credit are caused problems or by inventory overhangs or by policy error. >> i don't think we are back to 2008 for a couple reasons. one is that the amount of and they at that time financial imbalances are small. and a global recession needs a

hard landing for china. >> nowhere near. nowhere near. this is a market volatility to remember, betas is induced by leadership prices in china. we don't know what's going on in china, and it feeds into the equity markets around the world. the economy is bigger than the fed. this expansion is seven years old. surprised.ld be >> the leverage just isn't there. nowhere,aying it is and if you look at china's particular case in point, you've got a huge leverage problem there. is not nearly the same as it was in 2008. scarlet: we are joined now by dan alpert. he's got the distinction of

having one of the most negative outlooks among our guest. [laughter] true madison ubs tells us the we get a recession every seven years. 14% per year over three years. or someone is says the odds of recession are 50-50, that is not that daring. what do you quantify the probability as? >> i would put it at lower, notwithstanding my reputation. what we have got going on in the world is far more dangerous than the fact that we might be in low growth or even in recession. we have a lot of global competition. the u.s. is experiencing enormous impact of three of the regions that have slowed. europe has been in this basket for a long time. europe is not only a basket case fo for competing with the united states, that they have also deprived china of the market.

china doesn't export much to europe anymore. what you have is now a slowing in the chinese economy. the authorities in the aftermath of abenomics, not a whole lot of growth. we have three major regions of andworld -- asia, japan, europe, -- lined up to devalue their currencies, which they will be forced to do more in order to maintain any form of growth. that will be difficult for the united states to buck during 2016. alix: you say that the probability of the -- what do you put it at? >> flip a coin -- 40%. alix: but you think, who cares? you are really looking at the deficit the u.s. has racked up as the dollar has drained and as we see the other competitive currencies. >> the big inflection point was at the end of 2013. we had a real recovery up until that point. it was tough, but it was a

recovery. it was a recovery in our current account deficit. we saw huge benefits from energy. we are no longer importing much energy, and within a couple years will be importing any. but as a practical matter, the deficit and everything else increased, and increased substantially over the last year. we're looking now at current account deficit levels for the everything else category. it's at the height of the bubble. alix: you can see that line move with the energy deficit relative to our economy getting smaller. i amlooking at this chart, thinking about the fact that prior to the crisis the story was the dollar is so weak, we don't make anything, now it feels like the dlar is strong, there is no global demand, we have this big trade deficit. but in the end, people would argue that it's really about the strength of u.s. domestic demand, household consumers that

will define which way the u.s. economy -- >> there are two ways of looking at it. you can say that it is u.s. domestic demand that matters but i prefer to look at global demand. someone is going to grab that. in the tradable sector, it is easy. you know if the chinese are on the rocks, they will go so far as to lower prices at the factory gate. certainly they are going to be incentivized to reduce the value of their currency against the dollar. that's the bigger picture. but then you start looking at this whole notion of the u.s. having morphed into anothe the economyr, but as a practical matter i think that is why. if you look at the services sector in start to slice and dice it, you have sectors -- i will give you an example. let's say you are the payroll manager for a large manufacturing company. now you're no longer working there, but at adp.

they call that a services job but it is providing the same function in support of a manufacturing company. i can think of zillions of examples. scarlet: tim alpert, thank you for joining us. alix: coming up, corporate leverages that a 12 year high as companies go on a toy $5 a $25on -- go on trillion buy-in. ♪

alix: i'm alix steele. "what'd you miss?" credit might be signaling a lot of alarm bells of a potential recession ahead, an unprecedented $29 trillion of corporate bonds have left many copies more indebted than ever. a plunging oil prices is setting high-yield -- is sending high-yield soaring. now it's infecting

investment-grade debt. premium they demand is approaching levels seen in the last two recessions. here to discuss credit is brian gibbons, senior oil and gas analyst at credit site. is the credit market seeing recession? >> if we look at it right now, in terms of investment grade and high-yield, the high-yield market is at 9%. that's a level we last saw in the last two recessions, and it tilts more toward crisis levels than recession levels. joe: that's nice. [laughter] >> i think the market is pricing in something worse, conceivably, then what will turn out here. when we look at the market, we think we are more in a growth stall than a crisis or recession. scarlet: are we done overshooting or is there more to come? >> look, there are a lot of factors in the market.

you still have the oil markets are two for a bottom, the metals still in a lot of trouble, and these are big parts of the high yield investment grade credit market. joe: one of the big concerns when it comes to office is exposure to banks, how much risk is the financial system, how well-prepared -- we just had a lot of bank earnings. how well-prepared are the banks for deterioration? >> i think that banks are taking a long-term approach to this. if you look at $100 billion in high-yield loans in these banks on the borrowing sites, if we out 1%-5%hat, it's ab of below book for any of these banks, on average. let's pick 3%. the original banks will be more in trouble, then north dakota and so forth. alix: is there a tipping point in high-yield markets, or in the investment grade market, where

we have one big energy player that gets downgraded to junk, and that ruins it for everybody else? what do you see is that tipping point? >> when we look at potential fallen angels going down, we see that right now as about the upper end of that could be $150 billion plus. in the market for high-yield energy, it's about $200 billion at face value. i think we will see a faced approach, and we will probably wind up with the first phase of $30 billion to $40 billion that gets moves down. that will put selling pressure on high-yield, but we are already seeing the high-yield accounts buy so that debt at these price levels. space,investment grade the fallen angel candidates, where you have players now yielding 5%, 10%, the traditional high-yield buyers attractive. these are companies that will be

survivors, even in the $35 to $40 oil price environment. scarlet: is now a good time to be tapping the capital market? >> no. not at all. if you look at where credit spreads are in the investment-grade space, you are looking at yield of 7.5% or so, 500 basis point spread for those companies. last time these companies tapped the market in 2014, you are looking at sprint and 125 basis points. you're considerably higher there. i think you wait until this gets better. we get a floor on oil, may be some upward traction, then they can come back to the market. alix: you are very calm. thank you very much. scarlet: coming up, what you need to know her tomorrow's trading day. ♪

scarlet: i'm scarlet fu. "what'd you miss?" are we recession and? it is the question we have been digging into throughout the program, and it might be best summed up by the first guest we had. here's what he had to say about the on the u.s. was getting into recession. >> i am not saying we will never had a recession or that we can't, but current data does not support the idea of a recession. there's a whole bunch of data points you normally look at that don't support it. there is fear in the markets, and as a result, any piece of information is a narrative. --x: and do not miss this chevron earnings come out before the bell. what you have to watch. can capex cuts be enough to cover its dividend? it's going to be huge.

scarlet: everyone will be a credit analyst tomorrow. something i will be looking at tomorrow -- q4 u.s. gdp is out at 8:30 p.m. numbers from that came way down in terms of expectations. -- i meant a.m. a cold 30 a.m. jpmorgan says it could be a zero, after that horrible business number people are talking about could we have negative growth in qf4. everyone will be picking that apart. scarlet: and the bank of japan makes its policy decision. haruhiko kuroda will be speaking to the public at 1:30 p.m. he has a history of surprising the markets. but analysts expect using, they do not expect to be move tomorrow. alix: and the question is what they will say about things like oil prices, inflation, the slowdown -- that will be

interesting. that's all for "what'd you miss?" ♪

john: i'm john heilemann. mark: and i'm mark halperin. and with all due respect there is a new sweater in town. hello again from our bloomberg politics studio. four days until the iowa caucuses. and there is a new early state pull out today in iowa for donald trump leading with 32%, of eight point for the same poll earlier this month. senator ted cruz is in second. marco