it's a form of taxation, okay? it's an uncertainty and it is not helping. so, why don't we just bring that dialogue to the head one way or the other and get it out of this market. that's a huge problem. >> hey, kevin -- >> environmental regulations in states like california are brutal. they're absolutely brutal. you wouldn't open a business there today from scratch. >> kevin, thank you. we're going to have you back next week. we'll finish this conversation. we appreciate it. >> all right. >> we want to thank walter isaacson for spending his morning with us. thank you for joining us. "squawk on the street" starts right now. ♪ i got to have faith i got to have faith because i got to have faith faith, faith ♪ >> wednesday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer who referenced that song last night. david faber at the new york stock exchange. big morning four the biggest companies in the united states, gm, bank of america, apple and we'll walk you through everything and hear from tim cook in a moment. futures are relatively stable.

ten-year eeled reacting to a ppi number that did run a bit hot, first rise in a few months and europe in the green at least for now. our roadmap begins with a cnbc exclusive. with both apple and china mobile ceos, apple share's rising in early trade on the tech giant's new deal with china mobile. bank of america reporting better-than-expected fourth quarter results. and as new ceo mary barr takes the helm, gm expecting pretax profits to rise modestly this year but margins remain flat until 2015 on the back of news that the automaker will pay its first quarterly dividend in almost six years. and elon musk taking on the government for the proper term for tesla's fixes. first up, though, apple shares rising in the premarket on optimism surrounding the company's deal on china mobile. tim cook saying it will help bolster sales in the biggest smartphone market and china mobile's chairman said the

agreement will entail various cooperative ventures and will not be limited to iphones. cnbc spoke exclusively with both executives and here's what tim cook told her about the china mobile deal. >> it's a watershed day for apple. it's a huge announcement. i'm so honored to be doing business with chairman shi and china mobile. they have the largest network. we're incredibly impressed with them. we have deep respect for them. and have had from the very first discussion that we've had together. we see this as bringing the world's best smartphone to the very largest and now the fastest network in china. >> it's interesting conversation. we're left reading between the lines here a bit. but wide variety of cooperative ventures could mean a lot of different things. >> 3,000 additional locations selling the iphone. i do believe that a lot of analysts had gotten lukewarm

about the china deal. this is coming as kind of a wake-up call for those who have been saying, listen, it's not that big, it's not that additive. it's clearly the biggest thing happened to apple in a very long time. i think this is the takeback from samsung. this has been a continual theme from people that i know which this is apple on the offensive, no longer letting samsung have the high ground. and i think that the analysts are going to come out and be surprised by the news reports after raised numbers. >> although it's not as though this is a low-priced apple product over there. >> no. >> it is, in fact, quite high when you take out the subsidy which i'm not sure they're going to be receiving. you know, you wonder whether android will continue to sell a lot better given the price disparity. >> yes. >> yes, there are a lot of richer chinese people, but we're still talking, what, 800 bucks or more for at least the 5s. >> but i think they are saying this is what they are betting is it's still the prestige offering and now it can be received in many different places, that that

might change. you're totally right. on price basis they're not doing, but that's not their style. >> it's not their stated strategy. >> bmw does not sell as low as gm. >> they took an existing product and put a colorful case on it selling to a billion people without transportation costs across the ocean, how can that be a bad thing? >> well, look, the gross margins everyone seems to think they're under question. even today. someone came out with a logic note and said, hey, geez, apple iphone is slowing. the continual theme about apple iphone slowing versus news announcements like this with watershed event mystifies me. i think this is a very inexpensive stocks sells at 12 times earnings. those involved in charting, i will throw this out. this is the breakout level for it and i wouldn't be surprised to see that the analysts are dragged kicking and screaming say we underestimated the mobile china deal. >> walter isaacson, a great

argument on this morning, said most of the invasion is coming out of google and that the google nest deal is actually a bigger deal than apple in china. >> i spoke to frank blake the ceo of home depot and he's talking about how even there's no store growth for home depot in this country. they're adding one in the williston area. but he was saying, listen, there are specific products really driving traffic. what did he bring on the set? he brought the nest. this is the product that is driving people to home depot. do you know what, i want to own that product that's driving it to the world's large it do it yourself outfit. >> to carl's point, if i think i can expand on it is, when is apple going to come up with something yet again that is going to make us all go, whoa. >> well, i've been waiting for that. it's more than a year ago that isakson said that there weren't any in the pipeline and that. but isn't that why it sells at 12 times earnings and google sells at 20? yes, you know, you get what you pay for. >> right.

right. i mean, listen, but as we've said many times there's not a lot of recurring revenue or cash flow in technology businesses. >> no. >> at least a lot of them. >> there's not. >> you can't necessarily bank to it, you always have to be innovating. not that they aren't, they are certainly. and as you say they're an extraordinarily healthy company generating cash the likes of which we've never seen. we'll see how that goes. we haven't talked about carl icahn in quite some time as we get into annual meeting season, it's still a ways away. >> i had hoped that apple would buy twitter, i had hoped that apple would by netflix and be more social and media. the most seminal event and watershed was the number we got out of a company called burbury, the stock is up overseas why because their digital strategy moved the needle for them. she's going over there to give apple the pizzazz that tim cook can't give it and the burrberry

numbers were very, very impressive but the retail actual mall numbers were bad. it was all done digitally. what does that say about what could happen to apple? very positive. >> very positive. goes to a larger trend in retail, of course, traffic in the malls, traffic in the stores, not great. >> right. >> people buying all this stuff on this. >> right. i wouldn't be surprised if these guys actually come up with a mobile -- this burrberry number was the first number i've seen other than macy's which has said, do you know what, we can sell more digitally particularly in china, by the way, than we can in a mall. that would be remarkable, because we all know the malls are challenged right now. >> right. let's move on to the financials, shall we, bank of america reporting better-than-expected fourth quarter profits, 29 cents a share despite the sizable drop in the loan loss provisions. revenues also conceded consensus. ceo brian moynihan pleased to see the bank's core business continuing to do well --

well, there it is. it was a good quarter. the stock is looking up. >> yeah. >> return on equity better. i mean, really -- >> line by line. >> -- up across the board. >> superior to both wells fargo and jpmorgan. net interest expense down very big. net interest income absolutely terrific. noninterest income, hey, you know what you pay in fees, just amazing. sure, you could say, well, listen, a lot of it was because they reverted and they took back back the bad loans. wait a second. >> the release up 38% over last year. >> there's not a lot of delinquent loans. a regular level. and the franchise being as strong when they used to have a dividend up to $2.40 and the feds will control it and not let the dividend come back. they can still buy stock back because they think even though it's $4 above tangible book, they've got room. equity up 27. the fixed income trading up gigantically. >> 16. >> they're a juggernaut. juggernaut. >> juggernaut? a bank of america juggernaut, i

haven't heard those two in a sentence. >> you were saying this two months ago at least. >> started buying it for the charitable trust, they are going to have the normalized earnings model more than anybody. and this merrill lynch is doing incredibly well. people seem to forget, take a look what you get in your cd. you are getting 0.81, ever since interest rates rose big, what has the cd rate gone? >> nowhere. >> nothing. every day as the higher-priced cds roll over, you go buy a cd, they are making a great deal off the cd. and, by the way, that's the business people like. not mortgages. everyone wants to focus on how mortgages are down 50%. do you know what, i don't think they make any money on mortgages. it's a lousy business. a it's a commodity lousy business. >> expenses are down 46% year over year. >> and they cut expenses there well as, though. >> and down 9%. one thing people talked about legacy exposure, litigation expense pretax. $2 billion. up from just over $1 billion in

q-3. >> i think that will be peak, i don't think 2014 will repeat that. 392 248,000 people will go down again. so, the expense leverage here is rather remarkable. your costs are going down. the deposits have gone up very, very big. this is what had the stock be at, yes, dare i say, 50 bucks before -- >> yeah. >> -- the incredible quarter. >> you talked about the normalized credit environment or perhaps a really favorable one. $20.8 billion were the net charge-offs in 2011. that's down to 7.9 alaba$7.9 bis year. and that gives you a sense there. and then you can, of course, take down your provisions and, therefore, that helps as well. although it was jamie dimon who famously said a couple years ago i don't count that. when we're just doing reversals on loan loss provisions. >> the whole time the mortgage loss was oxurg a lot of people were saying why aren't the bank

stocks moving up. they don't like it. they like the debt interest margin because it's interest free. when it returns which is what happened with jpmorgan and clear what happened with bank of america, they'll start thinking what valuation do you put. there was a note out today that said bank of america and jpmorgan will earn seven bucks. wait a second. the stock is nowhere. >> by the way, gm also in the spotlight on mary barr's first day as the automaker's ceo. gm says it expects pretax profits to rise modestly this year helped by sales in the u.s. and china but margins are seen remaining flat until 2015. the guidance coming one day after gm announced it will pay its first quarterly dividend in almost six years. 30 cents. it was 25 before they went into bankruptcy. a lot of talk today, though, about what mike jackson is telling "the journal." that inventories are bloated. 50/50 chance of a price war, discounts are rising. >> yeah. i think that is really moving the stock down. when you look at the numbers, some people are saying it was kind of a preannouncement,

that's not true. it's a restructuring charge that was 30 cents at literally you back it out. the analysts should be using a four and a quarter number, but obviously jackson has been very straightforward when he comes on, and he did kind of take people's breath away. please remember that gm is a global company and doing a lot better overseas than people think, it's not just the u.s. market. i think the stock going down is just a screaming buy. >> really? even with to jackson's point that inventories are backing up and the japanese are competing ever more fiercely. >> i think there could be price cutting. i want to go back to what kyle bass said, no matter how much you may think they have a price war, what's far more important is the pension headwind going tailwind because that has been a huge problem for gm. one of the reasons i actually thought the u.s. government wanted it off its balance sheet is the pension obligation, but as rates go higher it's a big, big swing. >> true. but it's not nearly the problem it was prior to bankruptcy. >> no? >> they did clean it up.

>> when i see a price war and whatever in the u.s., that will be bad, it's not in keeping with what al mulally has been saying and not what we're hearing at the detroit confab but michael jackson has no reason to say what he did other than he wants to get you in the stores and say, listen, prices are coming down. he does run a business. >> gm on day one has two full-page ads in most of the papers celebrating gm's car of the year and truck of the year for the silverado and i forget which one car. that's a nice way to start. and with a dividend, too. >> right. i think we have a big inferiority complex when it comes to cars, may not be shared, say, with the people in china who seem to like gm cars very much and may not be shared with people in europe. i wish latin america were better. the biggest gaping hole in the economy is brazil. that's a big market for ford, latin america. it's been terrible. >> world cup and the olympics coming there. >> hasn't that been the great dichotomy, that's the charles

dickens' "tale of two cities." when we come back, elon musk has a bone to pick with regulators over the use of the "r" word as in recall. hear what he has to say about it next. also ahead the capitol hill push for a probe of target's data breach. we'll talk to congresswoman maxine waters ranking member of the house financial services committee. taking a look at futures here, we had the best day of the year yesterday which, of course, followed the worst day of the year. the dow is about 200 points from break-even for 2014. more "squawk on the street" live from post nine in a moment. ♪ ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ ♪ stacy's 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

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♪ some more upward momentum for tesla shares a day after the electric carmaker announced fourth quarter deliveries of its model "s" vehicle blew past expectations but ceo elon musk is still smarting over the recall debate. last friday the electric carmaker said it was providing customers with a new adapter and software upgrade to prevent overheating of its charges systems. tesla never used the words recall or fire, but yesterday federal safety regulators classified the move as a recall. here's what elon musk said on "closing bell." >> it's not a word that makes sense in the 21st century for the model "s."

you know, i do -- i think there are cases where a recall, of course, is necessary when there's a mechanical problem with the car and that requires the car to be brought in, but that's simply not the case. >> interesting semantics here, jim. >> yeah. >> it might distract us from a larger point about the stock and what you do. >> and kevens had a great interview, she basically said, listen, your revenue upside is based on what? there's 20% revenue upside. there's a lot of smoke and mirr mirrors. the public doesn't care. they like the tesla and the stock can be bid up, but there's an element of rigor that a ford or gm has to stick to that musk doesn't have to in terms of revenue guidance and -- >> although they are scaling production of the car. >> they are. but i think it's, like, we'll sell few more cars and taking it up 20%. you have to be careful. i don't think his revenue guidance is necessarily the way a ford would give guidance.

>> when you are only producing 22,000, it doesn't take much to move the needle. >> that's true. >> are you skeptical at 171? >> no. it's a cult stock and saying we want to recall the word recall. carl icahn uses terms to move stocks. musk is really the original showman. i thought the recall -- i saw the stock spike on the tweet. we ought to recall the recall. the stock spiked. wow, that's such a clever -- the guy's clever! >> well, it's not. it's a software upgrade. >> right. >> right? >> true. >> that's the new word for it. by the way, that will probably start occurring a lot more i mean the brains of all these cars. >> also people may be reacting to him going more vertical when it comes to batteries. >> yeah, china, too. look, he's got a lot of momentum going. it's funny we were talking about how natural gas is taking over the world. remember, our president really has put a lot of emphasis on the auto companies to do electric. there's a lot of ways to be able to make -- to take advantage of various laws if you are doing an

electric car. i'm sure in china they will love tesla. i think when he starts saying they could produce two cars in china and then he doubles production to four, i'm telling you, you are getting a radical raise in how many cars they're going to be making in china when they go from two to four. >> 100%. >> 100% increase in production in china. >> correct. that will be a good headline. >> in sales. they can put four on a boat. baltic freight is cheap anyway and then they put eight and now i'm really starting to talk about a miraculous increase in revs, china. >> and they all come with ios-7. >> am i being facetious, in this particular case not. i think this is a company that is a press release company with cars that are loved and i'm not going to get in front of this stock and say it should be shorted because they do have a better car. and if they can scale, it's going to be remarkable. but if you want to those numbers, like, divide the number of cars -- >> sure. >> -- ford sells in maybe about seven hours the number of cars he sells in a year.

>> all right, well, you know, kind of reminds me of scale in amazon in 1995 and '96. >> true. >> the book business. not that they are going to sell that much. >> it's a cult, too, and i can get behind it. solar city is a bit of a cult, right? 20% increase. there it is again, hearing the number of people want to put solar panels on their roofs. >> yeah. no, it's an option on the world truly changing over the next few years. >> that's what these are. these are sea change stocks. if you believe in electric cars and you believe in solar, then musk has given you two great stocks. >> right. >> we'll get cramer's "mad dash" counting down to the opening bell. we haven't mentioned action on aeropostale and petsmart. analysts moves. futures look okay as we build on the 115 of the dow yesterday. ♪ could not see you that's correct. cause i'm really nervous about getting trapped. why's that?

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♪ this is how we do it ♪ this is how we do it ♪ la la la all right, we got six minutes to the opening bell, it's hump day. >> hump day. buy, buy, buy. okay. made you look. >> every single time. >> made you look. >> where are we starting? >> let's start with exxon, north huntington, p.a., company, this is the first 3-d printer company that preannounced to the downside. it's a from a buy to a hold on it. when you read the press release, everything is fine, do not worry. you're nuts to worry, it's all good, it's better than you think. but we lost orders to the next quarter. i think the but is more operative, but they are called stocks.

3-d stocks are called stocks. >> don't own it but don't short it? >> people will say buy stratus and 3-d systems because they're doing better than x-1. people are immediately saying, hey, listen, i'm erating my buy in all of 3-d because it's one of those concepts like biotech, david, it's the biotech of hardware. just thought of that. this is a very loved stock. soon the chartists will say, that's k-2 and people can fall off from k-2 when they try to scale that ridge and they end up being like this. >> no good. >> i did that because the telestrator is working so i got very excited about it. >> let's talk a little intel. >> david, you would think that all we need is love, but there's also too much love. still one more. bmo says hold the buy intel. pc trend stabilizing causing pacific crest. talked about western digital doing better than expected. there is a point where i like the stock but don't like to see the spike going into the quarter because they better say something real good --

>> too much love. you can never have enough love. >> come on. >> well, you know what, i went through a period where i didn't have too much love. it was okay. >> yeah. >> i lived to tell about it. >> it is 14.5% three months ain't bad. >> a lot of move. >> we'll be watching a lot more stocks including, of course, the aforementioned intel and 3-d printers as well. opening bell coming up after this. for the new mattress models

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get live squawks right in your trading platform with think or swim from td ameritrade. you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in about a minute's time. you know, jim's point on "mad money" last night we played the song at the very top of the show was "you got to have faith" as george michaels sang, and people might be shaking their head after yesterday's action and monday's action. what's true? was this a good low this week? you're getting that question a lot i imagine. >> i think a lot of stocks did get oversold and a lot of stocks sold at levels that people were surprised at. it looked like there weren't a lot of shorts to break the decline. i was telling you allergan, the stock went down 20, and when

they announce the stuff that people had lost faith in. you know, sometimes they deliver. sometimes they are delivering for you. don't lose faith in them. >> all right. and on that note there's the opening bell. and look at the top of your screen, down here at the big board today, investo power shares celebrating the launch of the power shares nyse century portfolio etf, we'll speak with its ceo and we'll speak with duncan niedraurer at the nasdaq recon capital partners celebrating the 100th covered call etf. >> efts, they hail from the same city. >> trying to get more people involved in trading and the new york stock exchange. it will be interesting to see how they do. investing. it will be interesting to see what they do to be able to bring people back. i still feel as i do my book tour for "get rich carefully" people hate the market.

>> hate? >> yeah. >> that's a strong word. really, still? >> yeah. >> give me an example of a conversation of, you know -- >> 20 city radio/satellite tour. almost all of them to a person started, i don't really know about the market, i don't know about it, i don't care about it, i lost the money in it. the holy trinity of what i think about the market, don't like it, don't care about it and lost a lot of money in it. that's got to change. you say something, look, the s&p was up 30% last year. what's the s&p? i don't care about that. that's the average. the litany of hatred is quite palpab palpable. i believe you are starting to see bank of america's quarter, merrill lynch did well, but it's just considered to be a damaged asset class and to try to bring it back you'll need people to be able to say, listen, this is not an asset class that you should forget about. it's very daunting to talk about the market. >> there's a lot of work, a lot of hard plowing to be done to restore that confidence that you point out. forced people out and have kept them from coming back in.

>> people don't see that twitter made them money and opened at $45 and went to $60. >> we said it might be generational also. you had a period where the s&p had done nothing for over a decade. now, that's not the case any longer when you look back ten years. you obviously went through the dot-com crash and then the -- the exploding of all bubbles so to speak. >> financials. >> and so, you know, how can you not expect that? >> does it help that every day there's another article about some guy being indicted for insider trading. this fellow martoma. have you been following that case? he fabricated his grades at harvard law. >> yes. >> he had to change his criminal law grade from a "b" to an "a." i have to tell you -- >> his name after that. >> i don't know a soul who got a "b" in that class. that was the easiest class i've ever taken. if he got a "b" that's like an "f." i think that in itself is a federal case. "b"! >> that trial which is going on

not far from here continues and that he somehow did not choose in any way to settle or turn somewhat shocking given what seems to be -- i don't want to prejudge. they're also wondering whether he went to stanford and said that he by the way said he'd been thrown out of hard vp vard. >> and doctors sharing they shared information. >> two doctors testifying. >> in terms of people at home they are reading this stuff every day, oh, i see, even the stuff when you read about that such-and-such drug was approved these guys got that ahead of time. there's a lot of reason not to have faith! and i'm saying, have a little faith. martoma. "b" criminal law. >> on that note the empire regional survey was the highest in almost -- well, may of 2012. mortgage apps came back after the biggest increase in ten months. >> right. >> bank of america's growth net on operating net, 866%. is the biggest of the s&p. >> is that true?

>> that's true. that's what i just heard from s&p. >> that's the leverage. look, these bank stocks are very hard to understand. you got to go over line by line, but the line by line other than the litigation expense was really fabulous here. i think litigation expense, remember, peaked for them in 2011. this stock was in the 50s. it's the stock that's still not back to where it was in 2011. i think it's going to do that, my charitable trust owns it. feel very confident in recommending bank of america. >> interesting to know that shares of morgan stanley are up 2.5% this morning talk about a company as well that has certainly taken itself from it's called the bottom so to speak. >> pre-volcker they got out. >> management certainly a key focus there as we've talked about many times under the leadership of james gorman, james fleming running that ever-growing part of the country, the largest brokerage firm in the country we might add. look at that. $60.6 billion market cap. there was a point at which that was bite-sized morgan stanley. bite-sized. we haven't talked about

consolidation in financial services in ages and we may still not be talking about it for some time to come. but as you see things normalize, may become a part of the conversation, again, unclear what regulators would allow. >> we had a rollout of the neutral morgan stanley. charitable owns that one. like that group. they had a lot of problems integrating smith barney with morgan stanley and it was technological problems. one of the reasons i liked workday in to solve it and it's the human capital company going into financial services. it's the most expensive stock i follow on an earnings basis, not including tesla and 3-d brick. >> not including amazon. >> why do you insist that amazon has to make money? why are you limited like that? >> i'm not necessarily limited like that. >> you often mentioned to me that you think amazon has to make money. >> i think it -- no. i actually clearly that's not the case. >> right. >> clearly history would show that this company only needs to continue to grow its top line in a formidable way as it has done.

and it will be afforded the respect of the market in a way that virtually no other company has ever received. >> and i know you're drilling down more than anyone i know on amazon and i guess when i talk to retailing guys, they just say, why? why do we have to play by the rules? why does a costco have to play by the rules? >> you will hear that from a lot of ceos, why can't i walmart trade at -- why don't i get the kind of respect? it's -- if it is a retailer, and it's spending more than it's taking in in terms of at least when you include shipping and everything else. that being said, amazon has powerful trends in its favor. >> yes. >> has done incredible amounts of innovation and innovates at scale. they have aws, of course, amazon web services which is a growing and important business. they have a device business led by kindle and digital. who knows what it will back in so many different ways but i can understand the frustration of retailers. >> not being facetious. i actually wonder sometimes where if they did show a profit people would say this is the

beginning of the end. >> the beginning of the end. >> right, right. >> isn't that incredible? >> just keep reinvesting for the long term, it worked every day since he put it in his first letter to shareholders and he did have tougher times during the dot-com crash but -- >> are there a lot of people at amazon in the executive suite, there's a cfo, we hear, i mean, are you hearing? is it lean? is this, like, just a company with very few people at the top that reminds me of these great american companies where there were a company of real smart guys at the top and everything humed? >> they have a lot of smart people. they do keep things fairly lean and they are known for frugality as well, incredible focus on efficiency and frugality overall. but there are any number of -- his belief is you only -- you take part in hiring somebody who's better than you. they're constantly looking to raise the bar. >> i just think it's so impressive. >> yeah. >> the stock has been a juggernaut. it's been -- every time you read about mall traffic trends being bad, people then come buy and

they buy more amazon. they buy the stock. i'm not fighting that trend. it's too hard. it's too hard. i know that bob olstein will come here and great money manager and huge outperformance and will say amazon is no good and then someone else will come on and say this is the great growth stock of all-time. the minds that are trying to flush out amazon as the kind of psychological issue of our time in terms of valuation are extraordinary. >> yeah. it's a great conversation that we will continue to have. >> have to. >> yes, yes. >> it's amazing. couple of the names that are moving, xliinx is up and morgan stanley in this 55-page report of companies that will benefit, talking about growth at a reasonable price, they referred comcast, directv, liberty, interesting report and, of course, that will be close to a new all-time high for comcast. >> look, comcast, again, parent,

are a profitable growth for all companies. and this is one where it's always confusing for people to look at the profit, they have to look at the cash flow. because cable companies have a lot of cash flow. david, you've taught me that endlessly. but they also have the ability to be able to have a huge dividend and they have the ability to be able to play in m&a which i know is part of the report. >> yeah, well, and the question continues to be as we look at time warner cable shares let's call it flat today whether or not comcast will come to play there even with the potential for a regulatory morass of some type, there's not necessarily an impediment given there are no caps on subscribers. 23 million now at comcast and you add another 11 million with time warner, and you would potentially have to get rid of a few. but you're talking a lot of scale. a lot of scale. for a -- listen, we're homers here, but it is widely regarded as the best run in terms of its cable service. i know there's plenty of customers out there going what? but, yes.

under neil smith. >> it's been -- neil smith, right, doesn't get talked about enough. it's always awkward. it's awkward to talk about this company. when i saw the note, i would put it at the top of what i'm talking about, sheesh -- >> back in the day david and joe played hallelujah. >> when we talked ge. >> so i say no fear. no fear. >> okay, you need to know this is -- if you read through the profit statement of this company, it is immense. and the step function is rather remarkable. how quickly the profits have gone up. at nbc, listen, you go read it. it's been good. as is abc for disney, not as good espn for disney and cbs which is not talked enough as being an amazing company. >> yeah. break even for the s&p this year. 1848. we're not quite there. >> oh, okay. >> bob pisani is on the floor. hey, bob. >> hey, guys, generally an up morning overall. ipo markets starting to heat up again. second one of the year, cypress energy partners this is a master limited partnership. unusual company, they offer

saltwater disposal facilities for energy companies. they price 3.75 million shares at $20 million and they opened a few moments ago at $20. the second ipo of the year and we'll see a lot more of them coming on board right now after a three-week hiatus in ipos. the lovefest for bank of america continues. this is the big mover of the year. bank of america started the year, what, $15.60 or so, a better than 10% move to the upside for bank of america up today on good earnings results. let me give you the theme in the bank earnings. three banks reporting enough to show general theems overall at least that i see. stronger capital and liquidity. lower credit costs for the banks overall. lower expenses in general. lower expenses. net interest margin, i'm calling it okay. a lot of people think obviously it could be better. but okay is where most people are putting it. the trading is not great but it's okay. that's the word i hear a lot. and mortgages are weaker but not so dramatically we didn't expect

it. the bottom line there's a recovery occurring in the financial space. what we need is two things, a little better loan growth and higher rates at the low end. i've said before many of the rates are based on libor that are priced off the low end. that would really help the banks. by the way, why is long growth so modest? i keep asking people and a lot of traders have noted that we've seen an explosion in the corporate bond market in the last year. a lot of companies are going to the corporate bond market to raise money because rates are so low rather than going to banks. it's just a little bit easier. and that may account for one of the reasons why we're seeing some of the loan growth somewhat anemic. meantime, one thing that's interesting is the sector differentiation, it's not everything goes up this year. there's a lot of differentiation been going on based on what's happening in individual sectors. we've noted the retail stocks. weak by markdowns that are extending into january. the energy stocks weak on oil and gas being low. telecom and home builders have had a tough time because initially interest rate sensitive stocks were hurt. that's moderating a little bit. and emerging markets in the

commodity stocks have been hurt by weakness in china. the one weak -- the one great mover this year has been health care across the board not just biotech but hmos and hospitals all been strong. down today but that's a big strong group. finally on apple, while everyone is excited about china mobile a lot of the discussion for the middle of the year is about bigger iphones and bigger ipads. much bigger screens are coming at least that's the belief out there and that's what's got a lot of people talking for helping sales. we'll have duncan niedraurer in a few minutes the ceo of the new york stock exchange. that's the new york stock exchange and he'll be joined by marty flanagan and we'll talk about the century etf and we'll also be talking about the state of the markets. investco is one of the biggest mutual complexes in the country and marty knows a lot about trading activity. we'll talk about that when they join us in just a few minutes. guys, back to you. >> all right, thanks very much, bob pisani. i wanted to come back to a

name i've mentioned a number of times over the past few weeks. mckesson. as you recall mckesson announced a deal to buy solecito, under german takeover law needed what they call a domination agreement. 75% of the -- of the shares needed to be purchased by -- tendered to and taken in by mckesson in order for it to consolidate the operations of this company. you may recall it was back-and-forth. it didn't appear it was going to be there and then they raised the bid for celesio, that would have appeared to have paved the way for mckesson to complete the deal. elliott which owned a significant chunk of the company's shares seemed to be on board. then a funny thing happened on the way to the 75%. there's a look at mr. singer who runs that overall firm. didn't happen. didn't happen. somehow they screwed it up. elliott may have been a part of that because there's also this desire by a number of firms to

own -- still own shares for the back-end where they can go to court and argue for kind of what would be equivalent to our appraisal rights. you can conceivably get more. what happens is elliott bid the stock up beyond $23.50, other shareholders saw that and mckesson was unable to complete the tender for 75%. and so here we are, a day or so later, the stock, as you saw over the last week or over the last couple days, quite weak. at mckesson as you see. it's been a juggernaut over time. and so we're left wondering, well, what are they going to do now? under the merger agreement they have the right to come back within four days i think and try again. and the belief is, if they do, they will most likely succeed. in fact, they'll make sure they are able to exceed the 75%. it does get complicated because elliott apparently does want to hold some stock for the back end. but all mckesson wants to do is get that 75%, jim. so don't rule them out. a lot of talk now will they go

joint venture. the jpmorgan health care conference saying some things that it was fresh right now. they're trying to figure out what they're going to do. so, let's keep an eye on it. just wanted to mention it because i felt like i let it sort of fall off after last week. >> it's worth ten points to the stock. >> yes, could be. if they'd have come back and they are yet again finally successful in orchestrating the purchase of what they need to take them past 75%. >> i didn't think it was possible, david. it's a great call by you. >> i believe it is. i believe it is. we'll be watching it closely. >> the stock is going down. it shouldn't be going down if there's a possibility, that deal's terrific. let's get to rick santelli in the bond pits, cme group in chicago. rick? >> good morning. thanks, david, you know, once again we see that the data, better is a relative term, we are at or near inflation, usually pushes yields up. and guess what, yields were pushed up. remember, we finished off last year at the high closing yield.

going back to july of 2011 at 303 and the monday after the weak unemployment report we get down to 282. you can see the intraday of tens and the year to date of tens and you can see it going back to july. we come back pretty hard on the sell side when we see decent data. and what does it do to the yield curve? the yield curve's so interesting. if you look at how the yield curve responded and how well purchased the five-year was after the weak data but it also came roaring back on the sell side, so as you look at five to ten at 121, we're hovering at the flattest it's been since october. so, we'll call it a little over three months. now, if we really want to get a handle on what's going on, not only should we be looking at yield curve, we should be looking at the foreign exchange side. now, the dollar index historically better rates does better and that seems to be true. look at it intraday. year to date. you can totally see there has been an upside to what was mostly an unchanged dollar index last year and normally at this point i'd show you a chart of

the british pound or the swiss franc or the euro, but the currency that's really caught my attention and is hovering at a 4.5-year low against the greenback is the canadian dollar! our neighbor to the north. why do i show this chart? because they had a horrendously weak report when we had our weak report on friday. remember, with one-tenth the population to shed 45,000 jobs was a big 50 and you can see what their currency is doing. so, no matter how much engineering is going on, we continue to see that the markets do have a semblance of logic and, boy, these rates certainly bounce back quick. carl, david, back to you. >> all right, thanks so much rick santelli in chicago. when we come back, will amazon end up with its first labor union in the u.s.? a key vote taking place today. we'll hear from the machinist union that's behind the organizing effort. also ahead more of the cnbc exclusive with apple's tim cook. and china mobile's chairman on their much-talked-about deal. the dow is up 51. and the nasdaq at 4200, the best two-day gain since october. back in a minute.

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certainly a remedy. but there needs to be a better word than recall to describe. remedy would be certainly an accurate way to describe it. >> that is -- don't call it a recall as we mentioned earlier that's what elon musk is contesting after federal regulators said yesterday that tesla is recalling nearly 30,000 model "s" cars because of chargers that could spark a fire. this recall doesn't require the actual return of the vehicles, only a software update and replacement parts sent to some of the owners. the action by regulators prompted a tweet from elon musk he said, quote, the word recall needs to be recalled. brings us to this morning's "squawk on tweet." if it's not a recall what would you call what tesla is facing? we'll get your responses throughout the morning. stock's up 4%, jim, and mention tesla and you will feel the blowback on twitter either way, positive or negative. >> whoa. i guess maybe recall instead of calling recall how about additional love?

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get 6 in 60 with jim, 6 stocks in 60 seconds. >> bank of america says this is it, the restructuring will make a lot more profit. very cheap stock. >> decker did well. >> doing poorly, doing well. i tweeted pictures of lines at deckers. i agree. >> credit suisse on dks. >> a lot of people thought there was a slowing in apparel allah lululemon. >> petsmart one of the biggest losers. >> management turmoil. this is a very consistent story. it's a bit of a nightmare. >> price target up for uri. >> united rentals is on fire. this is a remarkable company. this is how people decide they want their tractors now. their construction equipment because people are still skittish about longer term. >> and goldman cuts hertz. >> goldman is viewing it as an earnings story. as an earnings basis it's not as attractive. >> what's on "mad money"? >> first, everyone's life

sciences was one of the worst stocks in the market last year. they seemed to be making a comeback. let's find out why. nlink is a combination of cross text and i haven't talked about the stocks lately because they were doing very poorly and interest rates going higher. maybe this is the high level. >> see you tonight. >> thank you very much. i'll be signing books. >> thanks, jim. let's get to simon and see what's coming up at 10:00. good morning, we'll be live in beijing as tim cook does the deal to see iphones in china. we'll also talk to jim o'neil on what he see for the year ahead and we'll also mark the fact that today is the first day that mary berra, mary bar ra, is at the helm of general motors. hour two of "squawk on the street." posal is how he puts it to work for his clients. morning. morning. thanks for meeting so early. come on in.

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mary barra taking over today. find out what's at stake and what barra needs to prove to investors. and a cnbc exclusive about the deal with china mobile. >> it's a watershed day for apple. it's a huge announcement. i'm so honored to be doing xis with chairman xi and china mobile. they have the largest network. we're incredibly impressed with them. >> more on that straight ahead on the program. but we start with bank of america. the stock rising after the bank reported a stronger-than-expected quarterly profit. kayla is back at hq with more on the details. kayla, over to you. >> over the years the bank's gotten tens of billions of dollars in legal expenses out of the way and it's saving over a billion dollars a quarter compared to just a couple of years ago. it's fair to say now bank of america is finally firing on all cylinders. last quarter revenue rose across each business segment, consumer business revenue's up, deposits, loans, credit card balances, all

up. even consumer real estate rising compared to a year ago. asset management is up 7%. merrill lynch brokers now raking in more than a million dollars on average to satisfy the demand for customers investing. investment banking activity soared in q-4 as the fed moved to taper b of a's market division see an outsized portion of that, fixed income division up 16% including adjustments and jpmorgan's by comparison was flat. there are lingering concerns, mortgage litigation remains outstanding and legal costs rising to $2.3 billion last quarter and the potential settlement with the federal government could be in the wings, things we're watching for. all banks are seeing weakness on mortgage underwriting 68%, though, of bank of america's business is still cued to refinancing and that needs to shift as that business is drying up with yields rising. it contributed less to reserves for bad credit this year, so less is going to come out of the reserves starting in 2014.

$1.25 billion contributed to the bottom line from reserves just in the last quarter, and finally bank of america bought back $3.2 billion in stock last year. but the big question is will the fed this year let it boost its one cent dividend. investors, though, in the meantime are cheering the work flow for its businesses. in 2013, guys, the 90 cent per share eps the bank posted is its highest earnings for the year since 2007. back to you. >> yeah, nice to circle back to that year, before all the trouble began. thanks so much, kayla. back at hq. despite a choppy start to 2014, former goldman sachs asset management share jim o'neil is fu bullish for the year. as well as the new economic giants, the m.i.n.t.s. jim o'neill is the former

chairman of goldman sachs asset management and he joins us from london. it's a pleasure to have you back. good morning. >> happy new year to you all. >> same to you. it's not so new anymore, some of the old wall street maxims about the first few trading days of the year are confusing to you? you say you are in the bullish camp with the technical indicators that convinced you. >> i am learning to pay some respect to it certainly over the years. it all suggests a minimum to me that this year's not going to be as straightforward as many paths of last were, so it adds to my mind as i try to study this year, trying to explore different views from ones that aren't the core of your own belief. when i look at things generally, it looks to me the u.s. is making quite a decent effort at

a private sector-driven recovery and there's a few things going on or better things going on elsewhere in the world, but that does concern me a little bit along with a couple of other issues. >> dive down on that a little bit. you do say that world gdp growth could exceed 4% for the year. what clouds that view? >> well, i think certainly if you look at most of the so-called developed world, u.s. in particular, but the uk as well, and interestingly some parts of europe, particularly battered peripheral europe, spain perhaps the highlight, showing quite a lot of better signs. so, all of these places together with the ongoing huge contribution of china, might mean a positive surprise in terms of gd. the flip side of that, of course, at the margin it probably adds to the perennial seemingly never-ending fear of

fed tapering and other central banks becoming perhaps less generous and rising bond yields aren't usually that good for -- happens so rarely, but i've been around so long that i know they're not normally a sort of eyes closed, no brain for all markets, certainly not bond markets, and could have some negative consequences. the other big thing that's in my head, in which i to be honest, i look to see you guys and others talk about it more, guests on, there's this massive improvement going on in the u.s. trade and current account balance. this is not the same u.s. as before the crisis. the current account deficit's, what, 2% of gdp, before the crisis it was heading towards 7%. all of which is also, of course, good news for rebalancing the u.s. however, if you believed any sort of this bernanke savings glut kind of idea, or some of the things that greenspan even before him used to argue why real rates were so low, if this is ongoing, then we may be at

the early stages of real interest rates starting to rise in the u.s. and the developed world, and there may be some consequences about that that aren't so pleasant either, but i'm trying to keep an open mind. nothing is ever straight line, and last year was pretty easy. >> let me just double back on the trade deficit and the fact that you point out it's heading down towards 2%. what does that actually mean in practice? because for many, many years, of course, that was the great driver of growth around the world that the united states would continue to suck in exports from everybody else. the change that we've got now is based a lot around oil, isn't it? sovereign wealth funds in the middle east may be getting less money but the united states is still pulling in an awful lot of manufactured goods surely. >> well, clearly, clearly, the change in the oil situation is having a massive influence already on the import balance. but i think there is ongoing evidence that's been creeping along now for the past couple of years that the u.s. has become a lot more successful and more

competitive at exporting. in the days when i was getting raised in this business in the early '80s, i was trained to believe that whatever the hell was going on, the u.s. would always import twice as much as it exported. and it is no longer anything close to that. and i think -- the point you raise is a really important challenge for the rest of the world. the u.s. is not going to be the same driver on a recovery for the rest of the world, because it's not sucking in quite anything like the same degree of imports that it once did. and that's partly i think it sounds like you've read a piece i've written. that's why i think in terms of getting better global equity markets and better balance of equity leadership, i think a lot depends on china and within eu, germany, this year. because i don't think the u.s. can do the same for the world as it's done in the past. >> just before we let you go, one of the major themes that you have picked out is the fact that we're going through a change in global wealth distribution. and how we react to that change

in global wealth distribution is key. what does that mean? >> well, there's so many angles to it, many of which dive into deep social and political issues, ranging from here in the uk it's so de jure amongst the political classes to be talking about despite the fact that we've got a recovery, most people aren't feeling any benefit from it because they aren't getting any income growth. and the elitist part of the world is still benefiting. in chile i noticed they are talking about raising taxes linked to the same issue. and i wonder whether we could be in the very early stages of a redistribution of wealth, throwing capital back to sort of mass income as such through government policies whether it be taxes or things being done to boost minimum wages. but obviously this is something else just as human beings, never mind investors, we've all got to watch really closely. >> when you have the pope in a debate like that you know it's a conversation the whole world is

having. jim, please come back. you mentioned getting guests on, we'd like to have you back as soon as possible. jim o'neill former of goldman on today. apple ceo tim cook speaking out about his deal with china mobile. hear what the ceo of apple had to say in a cnbc exclusive interview when "squawk on the street" comes right back. came b? ♪ like, really big... then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. afghanistan, in 2009. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance

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welcome back to "squawk on the street." check out shares of chelsea

therapeutics up triple digits. it's a double for this stock after an fda advisory panel concluded the company's drug to treat a rare form of low blood pressure is effective enough to receive regulatory approval. we want to point out the market cap of this stock is currently around $355 million but it's already trading at nearly ten times its normal average daily volume, so chelsea therapeutics certainly one of those biotechs smaller cap to watch, carl, back over to you. >> thank you very much. apple ceo tim cook speaking out in a cnbc exclusive calling the deal with china mobile a watershed moment for that company. cnbc's eunice eun joins us live from beijing with more of that interview. hi, eunice. >> reporter: hi, carl. well, the long courtship between the two companies has finally come to a close. both men did sit down with me and they had a very good rapport going. they said they were very confident and optimistic about the release of the iphone in china mobile stores which is

going to happen this friday. this is what tim cook had to say -- >> it's a watershed day for apple. it's a huge announcement. i'm so honored to be doing business with chairman xi and china mobile. they have the largest network. we're incredibly impressed with them. we have deep respect for them and have had from the very first discussion that we've had together. we see this as bringing the world's best smartphone to the very largest and now the fastest network in china. >> reporter: now, this deal has been a long time coming. both companies are set to benefit. china mobile has been wanting to have a deal with the iphone because they are now rolling out new data services, 4g services and so they're hoping to really change their reputation so they don't rely so much on voice calls and instead are known for

their data. and for apple, of course, apple's going to get access to china mobile's huge network of 760 million subscribers, and tim cook said that one of the reasons why this is such a special deal is because it really builds on the momentum that the company has been building here in china. this is what he had to say -- >> you know, for us, for apple, it's always been about making the best products, not making the most. and so we want people to have incredible -- have an incredible user experience with our products to empower them to do things they couldn't do before. this is what's important for us. and if you look at last quarter, i saw these numbers just in the last few days, in the december quarter, these are numbers coming from a third party. 57% of the mobile browsing traffic in china was on an ios

device. i think you can see from this regardless of what you might hear about unit market share, our products are being used a lot more. >> reporter: mr. xi, will you now use an iphone? >> translator: good question, before china mobile and apple joined hands i used a cell phone of another brand. now i've decided to switch to an iphone. i'm thankful to tim cook this morning he gave me one of the first iphones made for china mobile. and it's gold, the most popular color amongst youngsters. >> reporter: and, carl, that gold color is popular with youngsters. is popular with a lot of different chinese people. and basically there's just generally a lot of excitement, even though we didn't get the subsidy figures from china mobile which is something that we are waiting for. we're going to be hearing from china mobile about those figures in the breakdown at their annual results in march. >> have to wait for that, eunice. thank you so much.

and, apple, by the way, almost positive year to date, not quite there. another high-profile ceo making headlines, tesla's elon musk speaking to cnbc about the model "s" and its charging station fix. our phil lebeau is live in chicago with that. morning, phil. >> good morning, carl. we'll talk about the comments in a bit. but have you seen what's happening with tesla shares? up again today. we'll talk about how much they've been up the past 24 hours. as for what mr. musk had to say about the recall, should it be a recall, should it not be a recall, all of it stems from yesterday with the announcement that went out that news that tesla announced back on friday it was listed on the federal recall website and he blasted that they are portraying the fix for the charging stations as a recall. look, he said it's not a recall. it's a remedy. the new charging adapter will be sent to tesla model "s" owners over the next few weeks and here's what mr. musk had to say yesterday on the closing belle,

whether it should be called a recall at all. >> it's certainly a remedy. there needs to be a better word than recall to describe. remedy would certainly be an accurate way to describe it. but i really think that that's the sort of -- that's the least important thing that was announced today. i think the most important by far is the fact that the demand for our cars in the fourth quarter was very high. and we actually exceeded our guidance by almost 20%. >> and that news sent shares of tesla soaring yesterday. the stock was up almost 20% yesterday. and musk believes that this is one of those years that sets the company up for 2014 later this year and into 2015. >> i'm very optimistic about 2014. you know, our rough aspirations as i've said before are to be somewhere in excess of 800 vehicles a week by the end of the year. obviously we'll try to exceed that. but i'm confident we can meet

that number at a very minimum. >> with tesla targeting 800 vehicles a week as production for the end of this year, a lot of people are saying where are all those vehicles going? are they primarily here in the u.s. and maybe a few to europe? guys, coming up at 11:00 we'll talk about how tesla is starting to get ready to put some of the model "s" vehicles on a boat and ship them to china and when sales there will begin and we'll also talk about his outlook for bringing the model "s" into showrooms, when we'll see that. that's coming up next hour. simon, back to you. >> complete with charging stations. phil, thank you very much. next, the new york stock exchange is teaming up with investco to come up with a new etf for companies that have been incorporated for nearly 100 years. duncan niedraurer will join us to talk about the invesco to tell us about it right after this break. [ male announcer ] the new new york is open.

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the new york stock exchange is launching a new etf with invesco that is made up of companies that have been incorporated at least 100 years. bob pisani is on the floor with duncan niederaurer and invesco's ceo. we are trying to think about what companies those would be that have been around for a century in the making. >> general electric and some companies on the nasdaq are on it. we'll talk with duncan niederaurer about it and marty flanagan who is the head of invesco one of the top mutual fund companies in the united states. what's this all about? i love etfs, we talk about it all the time here, but companies around 100 years it seems unusual. what's the rationale >> the rationale is look back and say it's great that we celebrate what's new. there are a lot of great companies listed that much to our surprise were founded more than 100 years ago. we found there were more than

300 companies encorporated over 100 years ago and have market caps at least a billion dollars today and listed in the u.s. capital markets either on the nyse or the nasdaq and we worked with marty and his team to put together an index of those companies that we thought gave investors and particularly retail investors a chance to participate in what is really a who's who of what's made america great the last century or two. >> give us a few examples of the names. and i was quite surprised when you back-tested it, it actually outperformed the s&p the last couple of years. i was surprised to hear it but apparently it was the case. >> when duncan called it was a great, great idea and people do want to celebrate longevity and success, but what's most importantly is the investment rationale and you look at the performance any time you tested the results, it's been fantastic. >> why is that, just because a company is old it doesn't outperform? it doesn't intuitively make sense. >> it doesn't. until we had the conversation and did all the work, you think about it, it makes a lot of

sense. you're not in existence over 100 years, if you've not been thoughtful, if you've not innovated and worked through management transitions and it just created something very obvious that's come out of it and it's a great investment opportunity. >> a couple of the companies in it, some of the railroads and some of the utilities. >> in new york, celebrating with us. >> a lot of the big banks, you've got ge, you've got ford, you've got, you know, companies that have -- you've got ibm, you've got companies that go back, think about, you know, ford would be one of the youngest companies in the index because it's barely over 100 years old, right? so, i think marty's point's a good one. these companies to be alive and thriving in the 21st century, they have gone through cycles of reinvention and just gotten smarter and better and expanded their businesses and no matter how we cut the back-test, the indexes outperformed. >> you are one of the top ten mutual funds in the united states and you see a lot of fund flows. unusual start to the year. what can you tell us about the

you what are seeing at invesco? >> still too early but i think there was some excitement last year. you started to see minds change and confidence coming into the market and people moving into equities, what we're hearing from clients and what we're still seeing is some caution before the run-up but if you look out one years, two years, there's real still appetite in the equity market. international investing. people see emerging markets pulled back quite a bit. rate evaluations there and the european market. >> a lot of people have etfs mutual funds in emerging markets. are they continuing to pull out? >> yes. but i think the real opportunity is the time frame that you have. when you look at the valuations and you look at the growth in those companies, if you are looking out two, three years it's an important part to have in your portfolio and a wise thing to pay attention to. >> bond funds continue to be outflows but we're seeing a lot of movement into things like bank loans, a lot of real estate generating income, so people still seeking income very, very

much but looking more to the credit markets. >> let me move on, duncan, nasdaq announced recently they're terminating their agreement to run the securities information processor that consolidates the trade data for nasdaq. do you have any insight into that and who might be willing to run it? might the nyse, for example, bid on that contract? >> first of all, i believe they're obliged to do it for a couple more years. second of all we do it for the nyse stocks and i think the challenge nasdaq will have in the wake of some of the issues they've had, and i'm not familiar with their thinking is, do you reinvest in the technology that we did here to make it more robust or do you hand that responsibility off to someone else? we said to the s.e.c. from the beginning if you want us to back each other up, we're all for that as long as are both are at a comparable standard and i think there's work on the other side to match our standard and we're happy to take it over at an appropriate time. >> all of you had an agreement to strengthen the backup systems in light of the nasdaq outage

that occurred in august. >> yes. >> duncan niederaurer, good to see you and marty flanagan from invesco, good luck as well. good luck on that. >> guys back to you. >> thank you very much. when we come back, bank of america trading higher following results this morning and, in fact, a lot of banks going up and the conference kawls are wrap i calls are starting to wrap up and we'll talk to two of them about what brian moynihan had to say. "squawk on the street" is back in a moment. [ male announcer ] we could say a lot

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welcome back to "squawk on

the street," i'm reporting from the nymex. the eia releasing its weekly report on energy supplies. we're watching crude prices spiking right now because that number coming in at a draw of 7.7 million barrels for the week ending january 10th. a much bigger draw than expected. of course, we're watching crude prices around $93.50 spiking 25 cents on the back of this number and watching nat gas seeing a build of 6.2 billion gallons a much bigger build than expected and the distillates in line as well. the crude prices this morning, we had selling pressure yesterday and seeing traders buy on the dip but also the world bank coming out with its forecast for 2014 economic growth and they are expecting to see more growth than previously forecast and that was boosting up prices this morning as well, but, again, this report much more of a drawdown than expected 7.7 million barrels, back to you. >> thank you very much, jackie.

we now have a triple digit gain on the dow, one of the major reasons for that is it's a very important morning for the banks. bank of america is one of the top gainers up over 3%. dragging citigroup,i morgan stanley higher in its weight. and the conference call with analysts has just finished. fresh from that jason goldberg managing director and senior equity analyst at barclays and eric uger who is u.s. bank's equity analyst with s&p capital iq. welcome to the program. eric, let me kick off from you. what did you get on the conference call that's notable for viewers now? >> well, we think the outlook is very strong for bank of america. we think that they could grow revenues at 4% this year about twice that appears. and we're looking past the fourth quarter, which had many moving parts to it. i mean, the fourth quarter a lot of it was driven by reserve releases. we think 13 cents of the 29

cents that they earned just came from reserve releases. and we saw some negatives in terms of higher representation and warranty claims for legacy mortgages. but some of the positives were that the net interest margin increased 13 basis points which is very, very strong, and could bode well for 2014. >> yeah. and investment banking and the trading business, capital markets business, was also a standout, jason. we should note, of course, that you've had this stunning share price performance from bank of america over the last six months. it has already outpaced its peers by 15% to 20%. how much further upside do you think there is from here, jason, on what you saw and heard today? >> certainly i think generally speaking we do look for bank stocks to outperform in 2014 just benefiting from improving economic outlook, and you're starting to see end results pretty good capital market results and a pick-up in kind of core commercial loan growth categories.

you know, bank of america certainly had outpaced jpmorgan and citigroup particularly even on a year-to-date basis and we'd expect all three to go higher but certainly it lags those two. >> what does this year look like at the headline level? i mean, obviously, they are coming in the wake of jpmorgan. they still have to settle with the fa, they still have to settle with the federal government, they still have private investors, mortgage-backed securities investors to settle with. and you're talking about $24 billion, $25 billion there. against the prospect of what is it still, $9 billion of cost savings, erik, that they hope to pull through? >> yes, yes. i mean, the legacy mortgage issues have not gone away at all. in the fourth quarter they reported that their claims, potential claims, for representation and warranty for legacy mortgages went up to $3.8 billion. and a lot of that comes from the private label investors.

they seem to brush that off, saying that those mortgages have not even been checked for accuracy. but i would be very cautious with that. the countrywide issue is not going away quickly at all. >> jason, a lot of people have tried to write the obituary for vick tra vic trading, and that surprised, to what is it going to be a headwind for 2014 on that? >> certainly you had strength mortgage and credit outpace some weakness on the commodity front. revenues while down from the third quarter did outperform some of the peers that have reported so far. looking out, clearly there's some uncertainties you look at 2014 with respect to vic whether it's the local rule, the reform, tapering and the impact and all that, you know, but the end of the day and you kind of heard jpmorgan talk to it yesterday on their earnings call, you know, dema demand for global instruments continues to grow and they look

for volume to improve and widen over time. you are additionally seeing a lot of other banks exit different portions of that space. and you're seeing banks particularly in the u.s. pick up some market share. >> as volcker's codified, are we beyond the sort of balloon of uncertainty, or is that still ahead of us, jason? >> no. i think we got a lot of clarity the latter part of last year, you know, it looked like banks had been adapting to a lot of the final rules. and, you know, while it could have some impact it's, you know, not expected to be material from here. >> erik, just finally bott bottom-line it for us if you would. where does bank of america fit for you in the investment possibilities within banking? >> well, we have a hold recommendation and an $18 target price. we think a lot of what they reported today in terms of top-line growth. for this year and the expectations it's already priced into the stock. and its forward multiple is higher than that of its peers

citigroup and jpmorgan chase. so, we would be cautious right here. and another point that i'd like to make is that bank of america is asset sensitive, meaning that they see the growth of their balance sheet and net interest income as dependent on short-term interest rates. so, if short-term interest rates stay low, that's going to be a negative effect. so, it's a good play on short-term interest rates. >> okay. guys, thank you very much for the analysis, erik from s&p and jason from barclays. do want to draw your attention to the s&p at 1847. we are now positive for the year. not quite at a record high. that's 1849, but we have seen some acceleration in shares especially among the banks and some momentum stocks. dow was up triple digits but pulling back a bit to 97. let's check out the market flash. >> nuskin has taken a hit due to

a circulation of a story from a chinese newspaper which seems to question the company's direct selling strategy. the article is supposedly from the "people's daily" run by china's communist party it's not available on the english language website but it's circulating. they are telling cnbc that the article contains inaccuracies and exaggerations and is not representative of nuskin's business in china, it's one of the companies that herb greenberg has been focusing on for quite some time as well, watch the shares they are down 17% trading so far. back to you. >> thanks a lot. mary barra takes the reins effective today, so what's at stake for general motors and for barra herself? fiend out what she has to prove, after the break. [ male announcer ] legalzoom has helped start over 1 million businesses.

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interesting morning setting up today. a lot of corporate news, of course, the bank of america earnings were impressive. got good number out of empire. mortgage apps were up or the biggest in ten months, all of it led to a triple digit gain on the dow and the s&p going positive for the year, not quite a record high, but we are seeing a pullback now. the biggest gainer year to date so far? >> tas esla? >> jim beam. not far behind that is delta air lines. on a day where the transport, simon, have hit another record and a lot of the airlines and the drug stocks are the ones that have assumed some leadership this year. >> yeah. a lot of relief that the four-day losing streak was ultimately broken with all the voodoo magic about the first five days of the year being so important. which even jim o'neill subscribed to. i would have thought it was an old wives tale, but 75% of the time it leads you forward. >> you would think a fundamental

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i am honored and humbled to be able to lead the team as i've said. the men and women of general motors work so hard, i really believe we have the most talented team on the field, so i'm very excited. we're aligned. we know what we want to do, again, it's about great cars and trucks and building strong brands and delivering quality and value. >> that was general motors ceo mary barra talking to phil lebeau on monday. she takes the reins today and the new leadership team has issued new guidance. gm expects profits this year to modestly improve whilst margins it says will remain flat until next year. the company is also announcing it will pay its first quarterly dividend, of course, in six years. let's bring in joanne mulla, detroit bureau chief for "forbes" where she's been covering the auto industry and mary barra for 20 years and our

own phil lebeau who is no slouch in that department either. joanne, good morning to you. you obviously know mary barra quite well, i would imagine. how would you describe her? >> good morning. well, you know, mary is a gm loyal soldier for a long time. but what's great about her is that she really finds a way to get things done. she has this knack for instead of dividing people, making them nervous about their future, bringing them together. and i think that's really important and really what gm needs right now. >> yeah, you've described her as soft-spoken, math loving, a nerd with a passion for problem solving. how do you feel about the fact that gm has named her ceo? >> well, i actually did believe that she would be the one they'd pick after dan ackerson left the company. because i feel like they've really singled her out as somebody who can really move the company forward. and, of course, it's fabulous news for the auto industry, as a

woman myself covering the auto industry, it's great to see that happening. but more importantly, i think she's got the skills and the talent to make it happen and that's really what gm needs and what its investors want. >> hey, phil, i mean, akerson obviously has done a huge amount and he capped that off last night with the announcement of the dividend for the first time in six years. >> right. >> what does she now have to do from your point of view particularly, of course, they've taken the edge off of it slightly by guiding off perhaps of expectations for the next year? >> i think what we saw from their announcement is what we'll see from mary barra as ceo is pretty steady upward trajectory for the company in terms of financials as well as sales. she's not the type of person that will make a huge forecast and put herself over the skis so to speak and make a statement that is going to be tough to back up. she believes in slow and steady progress. and, simon, we were talking about, you know, what a difference maker she is in terms

of perceptions out there. i want to show you some video from sunday night at the detroit auto show. now, there are media scrums after all of the unveilings of different vehicles. it's been going on like this for years and usually you get a decent crowd around a particular executive. look at the crowd around mary barra. this is what we saw sunday. we saw it monday, we were attending the car and truck of the year announcements. after we did the interview with her, there was also a crowd following her there. it was huge. unlike everything i've seen ever. joanne, you've been covering the industry as long as i have. i don't think we've ever seen crowds like this in terms of reporters trying to get some kind of access to mary barra. >> you're right, phil, and it is incredible. but the one thing i wonder about is how will she handle the spotlight. because she has been in the trenches, in the factories, in the engineering areas working very hard, doing the blocking and tackling that gm needs to do. >> right. >> all of a sudden she's thrust

into the limelight and i really wonder how she'll handle it. she's a very graceful woman, and so i think she'll probably do fine. but, man, it's got to be unnerving to be in the center of all that. >> i think what we're going to others take the spotlight. she has no problem with that, which is fairly refreshing in this industry. it's an industry of big egos, simon, and here is something not afraid to let other executives, other leaders to take the applause. car and truck of the year were announced, she didn't go up on stage. i think we might see more of that from her. >> joanne, it happens on a day where mike jackson of auto nation is warning about bloated inventories, rising discounts, in his view, a 50/50 chance of a price war. what's your view of detroit of whether or not that's going to happen? >> that's besti interesting bec i've been talking to executives about that, too, at the auto show. what i do sense is a great promise of discipline on the part, especially, of the detroit

automakers, who were the ones always leading the price war in the past. and it's really going to be a gut check for them to see if they can stand up to the fact that the japanese or the koreans are the ones lowering prices. >> you know, phil, we had this conversation with the ceo of toyota, north america, earlier in the week. >> and he says we hear about this every year, that we're going to come in here and start cutting prices. basically made the analogy, kind of like a boy who cried wolf, that you hear this year after year after year. i'm like joanne. i'm starting to wonder how long can this industry day displained? at some point as sales slows down, somebody blinks. somebody says, it's time to go to the pricing. >> we're out of time. thank you both. let's hop over to the cme in chicago. rick santelli with the santelli exchange. hey, rick.

>> good morning, carl. we all know after friday's jobs report, we know the economy is doing better. what we can't predict is will it be in a straight line, a nice even glide path? will it be a 25-degree upward glide path, 30 degree or continue to be somewhat bumpy as some of the strength we observed in 2011 with gdp later to be followed by weakness. i can't answer that. governments can't keep spending like it's 1999. now, comments made before this first cabinet meeting for 2014, president obama said the following. and this was in regard to unemployment benefits. he said, put it on the screen. i think we all know that there are a lot of hardworking americans out there who are desperately looking for a job. and it's also good for our economy as a whole and will actually accelerate our growth. okay. let's take a couple of points there. first of all, we understand it's not only in america.

there are a lot of hardworking people around the globe who would like to work who are having problems finding work. it seems to be a skill mismatch but maybe that oversimplifies. no matter how you slice it, the main issue is, after five years, it's pretty hard to call these programs emergency spending programs and if we're going to extend the amount of benefit you get with regard to unemployment insurance to be a new entitlement, we need to be more honest about it. i understand. but it really isn't and shouldn't be a stop gap measure. maybe it's something we need to put in the budget as whole and change everything. why? because if what the president said is true, just throwing money at this is good for the economy, then i challenge him to look at the extreme viewpoint in this regard from the president of france, a socialist, who is trying everything the president is talking a and now is throwing up the red flag.

the journal story today, here's what president t. president of france said. how can we run the country if entrepreneurs don't hire? how can we redistribute wealth if there is no wealth? think about it. i understand their issues, employment issues everywhere. spain, greece, you're up, france, the united states, canada. but the problem is how do we alleviate it? because in the end i can't help but think of margaret thatcher's comments. it's not that conservatives or people that look at these programs are mean. but if the money machine can't afford the programs, that's the worst case scenario. evidence by his comments. simon, back to you. >> lessons from the french. ahead of the program, don't call it a recall. that's what musk is saying after federal regulators saying a tesla is recalling nearly 30,000 model s sedans because of charges that could spark a fire if recall, however, does not require the physical return of

the vehicles, only a software update and replacement parts. this from a tweet from elan musk that says the recall need to be recalled. so we're asking if it's not a recall, what would you call what tesla is facing? tweet us at squawk street. we'll read you the answers. [ male announcer ] once, there was a man who found a magic seashell. it told him what was happening on the trading floor in real time. ♪ the shell brought him great fame. ♪ but then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their trading platform. ♪ [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a...shell. get live squawks right in your trading platform with think or swim from td ameritrade. get live squawks right in your trading platform it's been that way since the day you met. but your erectile dysfunction - it could be a question of blood flow. cialis tadalafil for daily use

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not happy with the word recall which a federal regulators used about the charge that can spark a fire. we asked you if it's not a recall, what would you call what tesla is facing? to be writes, a model "s" reboot. a tweak. a tesla p.e., product enhancement. and dennis writes, if a software upgrade is a recall, my iphone has been recalled four times. actually we got a lot of good responses to this. john steinberg says a charger swap, but leave it to musk to make this thing a point of contention and debate. >> and if you do it often, people will think it's on the cutting edge like apple.

this isn't a recall, this is great. i'm right at the edge of where i need to be. >> yes. as cramer pointed out today, a call like that is -- shipments were more what got investor's attention. >> and china, building out charging stations in china. >> sourcing some of their batteries, increasing their production of batteries. that's all interesting news. man, what a power stock it's been, tesla. meantime, right just a hair below triple digit action on the dow as we have gone positive on the s&p for the year. we talked about some of the year to date gainers but earning season, simon, we've got a long way to go before we know how they did in the fourth quarter. >> i think banks are interesting. clearly we've got a strong running now on bank of america which is already out performed over the last six months against jpmorgan. some 20%. european banks have rallied incredibly strongly. they're up about 7%, 8% so far this year. and that is an indication of confidence about where we're going with the economy, more broadly in europe's case, it has to do with the regulators.

i'll do that in half an hour. >> dow is almost exactly 100 points away from breaking even for the year. see you in a few. >> if you're just joining us this morning, here's what you missed. welcome to "squawk on the street." here's what's happened so far. >> it's a watershed for a. it's a huge announcement. i i'm so honored to be doing business with china mobile. they have the largest network. incredibly impressed with them. >> steve jobs in his whole life never went to china and never wanted to go to china. there are a lot of reasons to go. tim cook wanted to go to china. and this someone of the big marks that tim is making on this company. >> i do believe a lot of analysts had gotten luke warm about the china deal. this is coming as kind of a wake-up call for those who have been saying this, it not that big, it's not that additive. it's clearly the biggest thing

that's happened for a until a very long time. >> if this is on going, we may be at the early stages of real interest rates starting to rise in the u.s. on the developed world. and there may be some consequences about the surplus. i'm trying to keep an open mind. last year was pretty easy. >> these companies to be alive and thriving in the 21st century, they have gone through cycles of every invention and just gotten smarter and better and expanded their businesses. no matter how we cut the back test -- good wednesday morning. we're live here at post 9 at the new york stock exchange. the s&p is just about at break even for 2014. the dow needs about 100 more points to get there. meantime, shares of bank of america are rallying this morning after earnings beat estimates.

profits at bac had a big drop in bad loan provisions. and shares of comcast rallying. they upgraded to overweight at morgan stanley saying that comcast has the best student to benefit either under consolidation or fundamentals sent their row. road map begins with apple. ceo tim cook speaking to us just a couple days before apple's deal for china mobile kicks in. we'll tell you why he's so excited for business in a moment. elon musk has an issue with recall. we'll tell you my musk is so upset over the "r" word. the group at amazon, looking to establish the first ever union shop inside an amazon facility in this country. we'll hear directly from that union later in this hour. and democrats calling for answers and hearings from a massive breach of customer data at target. one of the democrats leading the charge here, congresswoman maxine waters, will join us.

it's a big week for apple as the iphone actually launches in china. here's what they had to say. >> it's a watershed day for apple. it's a huge announcement. i'm so honored to be doing business with chairman shi and china mobile. they have the largest network. we're incredibly impressed with them. we have deep respect for them. and have had from the very first discussion that we've had together. we see this as bringing the world's best smartphone to the very largest and now the fastest network in china. last year we were able to work with the government authorities to be able to launch china at the same time that we launched every other country. and the result of doing that, i'm pleased to tell you, although we haven't released our

total results, we sold more iphone units last quarter in greater china than ever before. and so we see that momentum and the announcement with china mobile today is just being able to, you know, continue -- continuing the momentum that we've really been building for the last three or four years or so in china. it is a very key market for us. >> mr. cook, i've seen ranges from between $10 million to $30 million in additional new iphones that could be sold because of this deal just this year. what estimate sounds fair to you? >> i look -- we play for the long term. and i see this announcement today as being one of those very key milestones in doing great stuff over the long-term for our customers and our shareholders

and our employees. and that's the way i look at it. so i'll let others predict the numbers. >> how competitive is your pricing compared to your rivals like china telecom and china unicome? >> translator: it's new so our pricing is a bit more expensive than our competitors but i still believe it's very attractive. you asked a very important question to tim cook on numbers. i cannot tell you completely, of course, but since december 23rd when people don't know the pricing we had millions of preorders. this is very encouraging. >> let's bring in john steinberg and jon fortt for their reactions to this. john steinberg, let me begin with you. a wide variety of cooperative ventures. what would that mean? >> i think this whole announcement is what i would call socks for christmas. you need socks but it's not that exciting. we wanted a television. we wanted a wearable. and instead we got a distribution deal that they had to do any way to make up the fact that smartphones are

penetrated in much of the developing world. it's not that exciting and the stock is showing that. >> are you that cynical, jon? >> maybe i like socks. i don't know. there are a few things in here that i think are interesting. one as part of this announcement, tim cook made the point, 3,000 additional locations in china. that's more than just an opportunity to sell more iphones. it's more of everything else, the apple brand. significant that the head of china mobile is carrying a gold ipho iphone. he's important. >> hoins person. >> on his person. it's now his primary phone, he told eunice. that's important because he's more than just an executive. he's also a very important person in china. and the sort of trouble that apple has had over the past few months, year and a half, complaints about customer service, things like this that seem to bubble up from the chinese establishment, once you start having somebody like that carrying the phone, maybe apple becomes cool again. >> although to steinberg's point, jon, i mean, the early take on cook when he was first

named was that he was a supply chain guy. right? this is a supply chain story. then you get walter isakson on today, jobs biographer saying on "squawk box" the real innovation of this company comes from google. >> that's how i would put it. i watched him this morning on "squawk box." this is great. in is great operations. this is great execution. this is great steady growth. we wanted nest. we wanted something game changing. the stock went up on the 22nd when they announced the deal to 570. it's back at the prerun level because everybody basically realizes this is just going to make up for the slowing growth in the other markets. they need to do game changing acquisiti acquisitions. we need to get the other products out the door. to jon's point, great stuff they need to do for the core business to be successful but we need more growth here. >> i don't know about all of this kind of apple innovation bashing. yes, google is a very innovative company that came out with the moto x. and now they just bought the

company over former apple employee. innovation, yes. but come on, people, let's wait to see what these folks have next that actually sells a lot and makes a lot of money. and then we'll put the crown on it. >> jon, you're in the business of unveiling new things. >> yes. >> at buzzfeed. where is the line between keeping your cards close, being coy, not letting things leak, and running out of market patience? >> i completely agree with that. the questions that eunice asked in the interview they could have given some answers to it. just saying it's watershed doesn't really work. what is the subsud difficult going to be on the device? if they're launching this let's get that news out there door. how many incremental units? 10 to po 30 million more units? why not tell us this stuff. the shareholders deserve to know this information. >> well, a key number also that came out of this interview, at least that cook emphasized, already sort of out there. 57% of mobile traffic in china is coming from ios devices.

it's this narrative is shifting a little bit apple's favor now. holiday numbers, people are not buying as much using android devices. people are not surfing as much in china on android devices. now the head of china mobile is using an ios device. >> that's a really fair point, jon. actually we see this at buzzfeed as well. the usage on ios even though there are more android devices people do use the ios devices for much more than apps and web browsi browsing. >> jon, wish you were down here onset. see you next time. >> next time. >> jon steinberg and jon fortt here at post 9. let's get to dom chu at hq. >> a mover going in the opposite direction is netflix. now at session lows here after a federal appeals court struck down the fcc commission rules on the delivery of internet content. something referred to as net neutrality. analysts at web bush are saying

if this ruling stands internet service providers will force them to pay for unrestricted use for content, forcing the cost to rise. if netflix has to pay more in costs it may hurt profitability down the line. that concern is helping force those shares lower on today's trade. >> interesting the s&p's managing to do what it's doing today without the help of one of its star players in netflix. thanks, dom. e lon musk was not happy when regulators described the new adapter and software upgrade of the model "s" as a recall. rick santelli is watching europe and the emerging markets today. rick? >> love musk, new meaning to small simple words. we're going to talk to newton. one of those phrases is emerging market. we're going to discuss emerging markets, china, the imf, and things we may learn from denmark in its currency pay.

mike is my global guy. you don't want to miss this. bottom of the hour. [ female announcer ] who are we? we are the thinkers. the job jugglers. the up all-nighters. and the ones who turn ideas into action. we've made our passions our life's work. we strive for the moments where we can say, "i did it!" ♪ we are entrepreneurs who started it all... with a signature. legalzoom has helped start over 1 million businesses, turning dreamers into business owners. and we're here to help start yours.

ask me what it's like into business owners. to get your best night's sleep every night. [announcer] why not talk to someone who's sleeping on the most highly recommended bed in america? ask me about my tempur-pedic. ask me how fast i fall asleep. ask me about staying asleep. [announcer] tempur-pedic owners are more satisfied than owners of any traditional mattress brand. tempur-pedic. the most highly recommended bed in america. now sleep cooler with extra cooling comfort on our bestselling tempur-breeze beds. visit tempurpedic.com to learn more, and find a retailer near you. just posted its first all-time high of the year at 18.50. one big reason is the financials. s&p 500 is hitting a all new-time hi. dom? >> that's right, carl.

banks are leaving them higher. bank of america is the biggest gainer in the index so far. it reported a quarterly profit of 29 cents a share. we three cents above average. sales also coming in better than expect it as well for b of a. profit helped by the bad loan provisions. wells fargo reported better than expected earnings on tuesday. citigroup among the leaders. it's the big banks this time around. perhaps no surprise, they're the ones reporting earnings this week. carl, back over to you. when is a recall not a recall? well, when tesla ceoe lon musk is involved. musk speaking to cnbc about the fix for the tesla model s and took issue of the use of the world recall. phil lebeau is live in chicago with more on that. >> basically what it comes down to is that tesla had a remedy, a fix for the charging station. basically sending a new adapter to model s owners and it was listed on the government website for all recalls, therefore, it's

considered a recall. musk is saying, look, we're not telling people to bring the vehicle is, in model s. it shouldn't have been called a recall. that was part of the news yesterday when he joined us on the "closing bell." another part of the news is he said tesla is on track to build 800 cars per week by the end of this year. he sees model s demand growing in europe and china sales are just beginning. >> we expect to start shipping -- putting cars on a boat essentially in about a month. and then we're hoping to make our first deliveries in china in march. not 100% certain but hoping to do that. i think towards the end of this year we'll see very significant sales in china. we're seeing a tremendous amount of enthusiasm for the product. >> also tremendous enthusiasm from a lot of tesla watchers about this vehicle. this is the model x. some are calling it acrossover utility vehicle, not necessarily an suv. it will be priced this fall.

model x according to people who have been tracking where tesla is in terms of its thinking, believe the price will somewhere starting around $65,000. again, we'll hear the exact price this fall. tesla's ceo elon musk has big plans for the "x". >> we expect volume production of the model x to be basically in the first half of next year. so we'll have, as with the model s, the initial production start is very slowly and grows exponentially. so we're about a year away from the first model x deliveries. >> and as they build up model x that's one thing that will be pushing up volume as far as production later this year. take a look at shares of tesla up once again today. carl, over the last month we'll really rebound. big gains have come up over the last two days. up 20% yesterday. a lot of people are saying there's a bullish out there out there what they're doing here. and of course there's always the

short squeeze component. >> oh, yes, long way from 130. thanks so much, phil. phil lebeau doing a busy morning's work today. brings us to this morning's squawk on the tweet. if it's not a recall what you cow call what tesla is facing? tweet us at squawk street and we'll get your answers later this hour. in the meantime, an operating system for drones. one of the big next steps for commercial drones may be a universal os similar to window or android. our jane wells explains live in los angeles. good morning, jane. >> hey, carl. for a defense it's hard to believe but with all the unmanned aircraft out there each one has a separate operating system. there's no common platform. even as billions are spent each year on drones the pentagon is pushing for a common system so that asp and upgrades can be added. it wants of course the costs to come down. start-up called dream ham cher comes from a defense background has developed after four years just such a system which has started selling last summer, both to small companies and

drone space and partnering with major defense firms like lockheed martin to layer the software security under their uavs. one plus it allows buyers whether the pentagon or foreign government or company to come in on their own and customize the program. that's another first. >> there's going to be billions of devices real hardware systems tied to this global network, right? and so we chose unmanned systems, drone technologies, first one because, a, it was the hardest problem to solve. no one solved that problem. they didn't solve the defense they've been trying to do over there. and definitely in the commercial world it was starting to show signs that it was going to be big. >> now, both lockheed martin and general atomics tell me a simulator tested the software. plan to do field tests. the key censuring it works and it is not vulnerable to hacking. both tell me they know of no other company right now providing an off the shelf solution so easy to use. and relatively cheap basically

50 grand. the senate is holding hearings today on the commercial use of drones over u.s., guys. other countries like australia are way ahead of us. later on "street signs" we talk to an unusual company hoping to use dream hammer in the ocean. back to you. >> oh, my gosh. i mean, so many questions. i'm struck, jane, quickly how quickly our conversation -- which is on any new technology switches to privacy and hacking. it would be a huge concern for drones. >> yes. and in fact what the defense companies are telling me as they are merely using dream hamner this case for monitoring although the software can control, backups in their own security systems to prevent that. once you have the internet of things that is always the fear that it will be vulnerable and constantly have to work to maintain security. >> jane, i'm wondering, if this is something that the government is mandating, might people in the commercial space worry that the government itself is hacking it? so if i'm using a drone out there and this becomes standard not just for government but for all drones, is this something

where they can peek in on my monitoring or whatever else i mike doing? >> wow, the government spying on you. well, jon, the government is mandating a common system for a variety of reasons. i'm not sure so that it's can spy on the commercial sector but it's doing this because it needs to have that inner operatibility. i think what's key for dream hammer is in the end, is it the preferred platform? is it the yone because otherwis it's just an early starter and somebody else comes in and takes over. anybody remember netscape. >> absolutely. that first strike advantage is not always the best. jane, great fascinating piece. >> thanks. >> jane wells in los angeles. the dow is now at 16,5 on the nose. 75 points away from breaking even for the year. one big reason we should mention if you can give me bank of america here, guys. interesting. 29 cents did beat by 3 cents today. revenue up 15%. since being taken out of the

dow, bank of america is up 22%. goldman, which replaced it, is up only 8%. s classic index management there for those who run the dow jones industrial average. when we return, home modeling is going global. how is the company that lets you remodel your house online is announcing new plans for international growth and expansion. the ce oerks of house will tell us exactly where the future lies when we come back. mine was earned orbiting the moon in 1971.

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today squawk breakthrough, house has been transforming the $300 billion home remodelling and design industry in the u.s. since it was founded in 2010. the house platform has grown to more than 16 million users, over 12 million app downloads. today houzz is announcing international growth and expansi expansion. the ceo is joining us here at post 9.

great to see you again. welcome back. >> thank you. >> we've watched you grow. it seems like it's been since 2010. big new step. what does it mean? it. >> means, as always, we build the houzz platform based on demand from our community and feedback we get from our community and in the last year we've seen a tremendous groetd p internationally. and a community really wanted us to be locally in different markets. we're excited to do it now. open up new offices around the world. >> 35%. >> 35% of our users are already coming from other countries, outside of the u.s. >> and that's up from, what, would you say a year ago? >> we started just in the u.s., and it grew -- it was single digit number the first year and then it grew dramatically in the last year to 35%. >> how do we think about your potential. i think of pinterest and angie's list. it's redesigned in a way for people who are just really into the possibilities. where is your growth potential?

>> we already have the largest database of -- for home design and remodeling around the world. think of a great service that connects everybody in the industry and makes the whole process a modern process not like the primitive one it used to be. so the global piece is very, very interesting for us because there is a strong cinergy between users, whether they are professals or homeowners around the world. >> you would have to be redesign or decoration also? >> everything. from a small tiny decoration piece to building a multimillion dollar home and everything in between. >> some of our viewers might think it's a mom and pop industry. contractors are sole pro priority ships. if you live in greece you might be interested in what people are doing when it comes to design in, i don't know, latin america, in the united states. >> absolutely. we had an architect from milan uploading a beautiful loft he built in milan.

that started a whole new discussion between professionals and users and homeowners in the u.s. and europe in terms of trends and what we're developing first and what europeans are developing first and how we can learn from each other. it's truly interesting to see that synergy. >> what are you seeing in terms of mobile? is it a lot of tablet use? is your growth and engagement there? is it on smartphones and pc snz. >> mobiles are growing dramatically. 12 million downloads of the app. people love using the tablet, love using the iphone. they take it anywhere and everywhere. >> finally, dual revenue channel, advertising and the premium model. which is needing growth right now and do you see strength in advertising this year? >> it's definitely growing dramatically. 69% of the professionals are expecting tremendous growth in their business this year and definitely houzz is a great dha channel for them. >> we'll see how it plays around the world. thanks for coming in. >> thank you for having me over. good to see you.

>> joining us from houzz. when we come back, our unions coming to amazon, a group of amazon workers will vote today in an election that could lead to the first ever unions of that company. we'll tell you what it could mean for the future of amazon in just a moment. the bells are about to bring across europe. green arrows mostly over there. simon will wrap up their trading day in two minutes. yourselves p. because this hotel has some amazing.... footwear. and how about the 5 pound barbell at this resort? in to soap? this lodge has some! ...and this hostel has ice cubes! and this hotel has eggs! if you're into it.... we know a place that booking has it. liquid! recreational sand! electric wind! aggressive relaxation! that guy! round things.... tanning apparatus... whatever is going on in here!

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european markets are closing now. >> let's bring in simon hobbs

and count you down to the close which happened already. we talked about the declining bond yields and the banks. >> this is a very fascinating map. just focus down on the detail and understand that not all stock markets in europe are we equ equal. some are much more valuable than others. notably london, paris, frankfurt. you will see in particular the french and german markets have rallied strongly today. that's a very positive sign, particularly germany, gdp data slightly disappointing. the dax, people buy into that german engineering and locomotive stocks and they out perform today. i want to slice what is happening in europe. just a couple ways because it's a very strong rally coming into the new year. and you will see here a stark out performance so far this year from what we've experienced in this country which sk is a reversal of what happened last year. we spoke about that at the end of the year coming into it that europe might out perform. peripheral europe, i spoke about

france and germany. the real gainers at the national level is southern europe. you can see greece up so%, spain up 6%, italy up 5.6%. what's driving that in the main is a surge in bank stocks. in particular, weaker bank stocks in addition to the big ones. look at this. the banks index in europe so far this year is up almost 8% versus a 1% gain on the banks in this country. it's to do with economic optimism maybe but remember that the regulators are softening the rules. they did it in barcelona over the weekend and now we learn when they go through the stress test in europe they won't have to mark the sovereign debt portfolio to market. they can help it to maturity and it will stay at the valuations. i want to mention one stock to you, angela ahrendts at burberry, she's going off to retail at apple later in the year. but she's up 14% on the third

quarter. big focus, of course, on digital wear and indeed on home store pickup. burberry outperformed well over the last year against coach, a stunning outperformance over the last five years. for example, coach, again, 666. carl, back to you. >> nice way to go out. we'll see if she can carry that momentum over the apple. let's bring in bob pisani and see what is moving here at the big board. >> new highs. s&p 500, mid cap index, the transports, historic highs on an intraday basis. we'll see if we can get it on a closing basis. i think we have to go over 1848 for a closing high that was december 31st. banks strong. it's been three days of decent bank earnings. that's the bottom line. bank of america. $15.60 around december 31st. we're up 10% in bank of america so far on the year. one of the big winners so far. we've had three bank earnings so far. enough to give us an idea of what's going on. here's what i see.

stronger liquidity from the banks. lower expenses, too. net interest margin, okay, not great. trading is okay. maybe a little lower than expected but not out of the ballpark numbers are lower than expected. that was expected. what we need right now, the banks need is two things. number one, better loan growth and higher rates at the low end. that will really enable some of the profits to come up. we haven't gotten yet but so far definitely improvements in the bank. commodities stocks are up. the world bank said they see global economic growth picking up. what's the record of the world bank in predicting economic growth? it's terrible. never mind, imf is terrible, too. we report it. what's not helping, oil stocks. anythinging energy related, upstream, downstream, it doesn't matter. all year long these companies have had a tough day today. it's refiners that are to the downside. what we are seeing this year that's very interesting, carl, is sector difference yags. there are some winners and losers. here are some of the losers.

retail steel, emerging markets, telecom. big winner, some semiconductor stocks and health care right across the board no malter what sector, carl. biotech, hospital, hmos doing better. that phrase, carl, stock picker's market, it's a cliche. i hate using it. but it really does apply to the stock market so far in 2014. >> carl, start getting this industry correlation to break down a little bit. that's for sure. thanks, bob. let's get to rick santelli in chicago. risk? >> if we really want to figure out how to invest on a global basis or national basis you have to know what the players are doing. i'd like to welcome my guest today, mike newton. he's my global guy and we're going to talk about some of the big global players. i guess china is a good place to start, mike. thanks for taking the time. let's talk about the deleveraging, the performance of their equities. what does it all mean for investors for 2014? >> thank you, rick.

>> the chine nas have got to attempt to land a carrier in bad weather. they have to deflate the credit bubble before it deflates them. incredibly difficult task. it would be difficult enough if china had fully functioning capital markets and efficient bank and financial regulator system. rule of law. and it had a democratic safety valve. but it doesn't. i think that it's going to be a very long and difficult process. if you look at how the chinese equity markets a done, particularly with the shares in hong kong, the mostly quid, they've had a lousy start to the year. i'm concerned about the prognosis for china. i don't want to sound too gloomy among all of this equity bullishness. i think china could surprise to the downside this year and that's going to have some nasty implications for a number of markets. particularly emerging markets have have been big suppliers to china. >> let's go to merging markets. you laid the groundwork with respect to china. we no we that central banks

specifically are fed. are making a lot of waves in the liquidity of the emerging markets and what they have to deal with. what do you see on the emerging market front? >> yeah, i mean, i spoke to a fed official recently. i feel more confident than ever they'ring looing to get out of the qe business earlier rather than later. i don't think it's any more complicated than that as long as the u.s. dollar doesn't implode. one thing worth pointing out as well as the progress we've made, the current accounts and fiscal deficit, ands that going to give some tail winds to the dollar over the coast of this year. a lot of our surplus dollars went into emerging markets. now they're coming out for obvious reasons. >> let me stop you, mike, because you're spot on. the budget deficit is getting smaller though the national debt front, we keep adding to it. it is good news. now, let's take all of that and look towards europe and what we can learn from europe and may be one of the more prosperous

currencies is denmark. >> good investment opportunity. euro against the danish krona. it's effectively had the same fixed exchanges rate since 1967. i was a junior in high school back then. you know? it's time for the value of the danish krona to change. >> anything looking at that, there may be a lot of trades. next time we conn come back we're going to concentrate on denmark. >> thank you, rick. >> carl, back to you. >> rick, thank you very much. let's send it over to dominic chu and get a market flash. >> carl, this is kiwi. the pay pal of russia. it's down 1%. the stock is getting hit. following reports that russia may place new restrictions on online payments. this stock currently has a market cap of $2.3 billion. it's pretty decently sized. still a very large move in that russian payments company, carl. back over to you. >> all right.

thanks, dom. it's on important day for the future of amazon. today a group of worker also vote on whether or not to join a union. if they vote yes, it would establish the first ever union shop inside an amazon facility in the u.s. we'll tell you what a unionized amazon might look like when we come back. [ male announcer ] the new new york is open. open to innovation. open to ambition. open to bold ideas. that's why new york has a new plan -- dozens of tax free zones all across the state. move here, expand here, or start a new business here and pay no taxes for ten years... we're new york. if there's something that creates more jobs,

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amazon could be getting the

first union shop in the u.s. today. a group of 30 technicians in delaware are getting a chance to choose whether or not to join the international association of machinist and aerospace workers. john karr carr is a spokesman fe machinist. john carr, good to have you with us. >> thanks for having me. >> walk me through what is going to happen? we're talking about 30 employees at a facility that has 1,000. they contacted them? >> yes. a group of workers had grown concern about their working conditions. got together and reached out to us. >> john, you say this isn't really about money so much as it's about vacation, some other things. tell me, where does this go if they do, in fact, vote to join the union? how many other amazon employees do you think might also across the country join up and have any contact with you? >> well, you know, that remains to be determined.

you know, that's the main fact is right there in that facility there are at least another 1500 workers doing different work, the picking and the packing as it's referred to. >> you know, across the country work groups similar are in these other facilities for amazon so a strategic plan would probably come together and we would start looking at what other location or within the location on how to go forward. >> statement from amazon we were given, john, reads like this. median pay inside our fa fullment centers is 30% higher than that of people who work in traditional retail stores. in addition to highly competitive wage, comprehensive benefit on day one, bonuses, and stock, awards that we offer innovative benefits such as the career choice program where we pre-pay 95% of tuition fees so so associates can pursue their aspirations whether at amazon or elsewhere. if it's not about wages per se,

has amazon responded to the concerns these technicians do have? >> well, until now they really haven't. but since the workers here in in facility have been involved with us, it seems they're listening a little closer now anyway. >> amazon has an interesting point about how much they offer compared to other retailers. why focus on amazon? there are so many other companies out there with workforces that have concerns about pay, about benefits? why is this happening with amazon now in particular? >> well, absolutely. you know, that's the point. it's not so much this was a target for our organization or other unions, although i think certainly it's considered. but these workers, you know, like i said, they got together and they reached out to us about other concerns they had, that didn't exactly involve, you know, the bottom line for them today. >> you got an interesting opportunity here, too, it seems,

to maybe change the way the whole country looks at unions, union membership is down despite the fact that fundamentally it might seem that people would be embracing unions more than ever. that doesn't seem to be happening. amazon is a well-known company. what can you do with the spotlight on you now to perhaps change the way people look at organizations like yours? >> well, that's an interesting point, as well. you it's an educational process. that's certainly what all labor organizations are doing these days. we're certainly putting a different face on us out on the front line and the workforce and going to some really nontraditional workplaces that are considered typical for unionization. >> you know, we have had headlines about amazon's workers in germany. they've organized some strikes and protests over the past year. there was this documentary on the bbc, talked about worker conditions.

are you saying the iam does not see amazon as a target? >> no, no. that's not what i'm saying. technically though we didn't target this location. this is an instance of where employees actually reached out to us for help. i do believe, however, that organizations in the labor movement are looking at places like amazon where there are warehouse workers and a large volume of work and a large volume of workers for that matter. >> and finally, is there the votes, are there the votes among the 30 today? is that going to pass? >> that remains to be seen. it's an up hill battle for workers in the workplace all across this country any time. and amazon's made no bones about it. you know, over their anti-union stance and what they're willing to do to stave off unions in their workplaces. and that's certainly been the case here in this location and

it's been that case with amazon in the past. so it's a struggle and we'll see at the end of the day. >> john, appreciate you coming to the phone ahead of that very much. john carr, spokesman with the iaa in delaware today. meantime, lawmakers on capitol hill setting their sights on target after the massive data breach that impacted, as you know, over 100 million people. congresswoman maxine waters, one of the top democrats, calling for a hearing into the breaches. she will here to give us an update in just a moment. (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.

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welcome back. i'm eamon javers in new jersey. we're awaiting a press conference here from the federal trade commission which has been scheduled for exactly noon in washington. the federal trade commission says it's going to announce a settlement with a major technology company. what technology company that is, fdc has not said but cnbc obtained a letter obtained by apple ceo tim cook to his employees. i'm going to read you this letter from cook to the employee explaining that the company has entered into a consent decree with the u.s. federal trade commission. here's what cook says in the e-mail which cnbc has obtained. we have been negotiating with the ftc for several months over disclosures about the inapp purchase feature of the app store because younger consumers have been able to make purchases without their parent's consent. he says, i know this

announcement will come to a surprise to many of you since apple has led the i have by making the app store a safe place for customers of all ages. now, there have been some controversy over the question f whether or not children could rack up huge bills without their parents knowing and who is responsible for those bills when they are racked up. there have been issues with apple in the past on that. apple says it has been moving to address those issues. i want to also read you this paragraph because it appears here that apples is taking a little bit of an objection here to the action that the ftc is is taking today. cook writing, it doesn't feel right tort ftc to sue over a face that had already been settled. to us it's smack of double jeopardy. however, the dissent decree, we decided to accept it rather than take on a long and distracting legal fight. clearly some news here for apple on watching the ftc at the top of noon to see exactly what it is they have to see about this

but this coming now from tip cook's letter to his employees obtained by cnbc. >> interesting coming from a company that certainly is not afraid of long and protracted legal battles in other venue, eamon. it looks like the consent decree is the exsent of it. there's no penalty mentioned? >> that's going to be one of the questions. what is the penalty? what cook says here is the ftc proposal does not require us to do anything we weren't already going to do. so i'm extrapolating a little bit from that to theorize that maybe apple will have to make restitution here but that was already in apple's plan in ahead of time any why. they said, okay, fine, we'll do that. we'll have to find out what the ftc says. we expect when the ftc announces they will have a settlement there's a dollar attachment and we'll have to figure out how that is parsed because that will key here. >> eamon, are we seeing a trend here? kept help but notice we have the e-book monitor appointed by the court, apple is in a bit of a

tussle with the court over that monitor. thinking it's too intrusive. now they've got this concert decree they're saying is a big too onerous but they're going to go along with it. is washington cranking up the heat on apple a bit here? >> clearly washington is cranking up the heat across the board. i think one of the interesting reasons for that might be the difference between the cfp, consumer protection financial bureau, consumer financial protection bureau, and the creation maybe sort of spurring the ftc along to take a little bit more aggressive action here in terms of protecting customers. but what we're not seeing here is an issue of privacy which has been such a hot button issue. what we're seeing here is a question of whether or not people are running up bills and who should be accountable for those if the bills are incurred by children. as a parent who has an ipad in the house, you know, you can relate to that. and say, wait a second, if a 2-year-old gets ahold of ipad who is responsible for that bill. >> we know that of which you speak, eamon, thank you for that. speaking of washington, turning up the heat, the massive

target data breach that impacted up to 110 million people is getting attention on capitol hill. top democrats are calling for a full hearing sbhoo the issue. one of those representative leading the charge maxine waters, a democrat from california. ranking member of the house financial services committee. congresswoman, good to have you back. good morning. >> thank you. good morning. i'm delighted to be with you. >> what does congress expect to find out that regulators and the secret service and everyone else, the company itself, hasn't already? >> well, first of all, when we learned that the credit card and debit card accounts of these customers at target had been compromised, we were alarmed. added to that they came back in january and said that a 17 million of their customers had had their personal information stolen from that databanks. so we really do have to try and get to the bottom of this. we're learning that there are other companies like knee neiman-marcus and perhaps three others who have not been named yet have had these kinds of

problems. democrats got together. we asked the chair of that committee to hold these hearings. we want to find out as much as we can about how this happened, why did it happen, and what are the companies going to do to try and prevent this from continuing to happen? this is a problem -- congresswoman, do you have anything in mind to do in light of these things occurring? do the companies need to disclose it sooner that they've had these breaches? does there need to be some sort of new regulation about how they need to set up security? do you have any of that in mind already? >> well, ve some of that in mind. certainly early notification, we need to know as quickly as possible and the customers need to do exactly what has happened and when did it happen. we know that target came forth about four days after it occurred. and they did share this information. but we're thinking it can be done even sooner and we need to look at what we can do with oversight and regulations to protect all of the consumers.

we need to know what to do to help consumers understand how they can protect themselves, how they can follow up with credit information and make sure that they're doing everything possible to keep from having their identities stolen. >> congresswoman, you mentioned target, you mentioned neiman-marcus and the three others that we don't know the name of. you're on financial services. do you know, can you say? >> we know num man marcus has come forward and we know ability target. we don't know exactly how many other companies have experienced this kind of problem. we do know that there are three others who i cannot name at this point but we are going to get that information and we are going to have everything available at this hearing that we possibly can to help consumers know what has been taken place, what has happened, how they can protect against it, but more than that, we want the companies to tell us about the security systems and what they're going to do to ensure that their customers are protected.

>> congresswoman, big story obviously impacting so many people. thanks for your time today. congresswoman maxine waters of california. stocks seeing a nice gain. the dow trading up 116 off the highs. we'll tell you what's leading the markets higher in just a moment. mine was earned orbiting the moon in 1971. afghanistan, in 2009. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection. and because usaa's 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. you stand behind what you say. there's a saying around here, around here you don't make excuses. you make commitments. and when you can't live up to them, you own up, and make it right.

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interesting morning session, john, as we watched the banks take leadership early in the day. but now apple this morn and what appears to be some sort of deal with the ftc. that's going to be an interesting story to watch in the afternoon. >> strikes me as good news, bad news. we'll see where it goes. >> scott wapner, you're going to have a lot to watch and the banks leading the charge today. >> no doubt. the apple news is a big news and that's going to have more developments at the top of the hour where the ftc will hold the news conference. what's interesting in the market today, the apple is helping the nasdaq 100 having the best two-day run in some time. >> take it away, man. >> all right. see you soon. welcome to the "halftime" report. tesla's turbulent ride, apple's watershed moment, and the latest story regarding the ftc. contrarian call today from the