good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. check out today's squawk lineup on the ceo call. we have the head of atlanticer and spirits giant diageo. auto nation and eli lilly. plus we have investing legend and a contend either for the first 25. right now, let's get to the global markets, though. after yesterday's rough right on wall street, stocks in asia fell overnight. the nikkei closing down nearly 2.5%. that was significantly off the lows of the session. and if you look at what happens on wednesday, the stocks there were up by 2.7%. so this is really just a give back. but among the reasons that were listed for this sell-off, you have data showing signs of a contraction in china's economy and the fed's decision to continue with the taper. in europe european trading this morning, you can see there are red heir rows across the board. italy off by more than 0.5%.

in perhaps, germany and spain, some more muted declines. u.s. equity futures are looking a little bit better this morning. at this point, the dow futures are up by about 46 points above fair value. but i don't think how much faith you put in these implied opens at this point. what is indicated now is not necessarily how the day ends up, but it is certainly something to watch and see. the fed did decide to trim bond purchases. it was the central bank's first unanimous vote on policy since june 2011. the fed made no reference to the sell-off in emerging markets. they didn't talk about that, they didn't mention the cold weather. but the fed stood pat and this is an enormonormous decision. joe, you are looking righter and righter on that call.

>> and i'm not happy about it. >> i don't want the globe to slowdown. no, no, no. i just did the math. 75 divided by 1850. we're at the s&p we're at 1774. so it's down from 1850. so 7.5 divided by 1850 is exactly 4%. >> when you put it in those terms, a decline of 4% from the highs, it doesn't look particularly surprising. >> when you do it that way, people usually want to wait for more. usually they wait too long and it goes back up before they can. so we're at a point where it either gives you an opportunity, down 7 or 8, which would be -- we haven't had anything close to that in two years.

>> even with the 10% pullback. >> if it's going to be 15, you don't want to buy when it's down seven. >> dollar cost averaging, right? >> yeah. you can do that, assuming you have enough to do that. it's very difficult to do. the ground shifts under investors. >> turkey's prime minister saying it could be lower. also saying the country is not considering any sort of capital controls as it battles to defend the lira. i want to find out. michelle crusoe cabrera joins us now from istanbul. she has the latest on all of

this. what are they saying, michelle? the tensions here are high, andy. they are angry about the lira. they're angry about the rate hike. and they're especially angry because, take a look at the one-week chart of the lira. it continues to weaken. it's now at the worst levels that we saw earlier in the week for the central bank to call that emergency meeting in the middle of the night. but certainly considering how massive the rate hike was, the business community here expected a better response from the lira than what they have gotten. it has dampened expectations for the market growth. and i have to tell you, this is happening in a lot of places in the world and any of these countries with current account deficit deficits, we are seeing issues with their currency. the prime minister flying back from iran, which by the way, he described when he was there as a place that feels like a second

home. he told reporters that he was planning some kind of d or c in case the economy did not improve. that is what led reuters to speak with an unnamed government official to say this doesn't include capital controls. capital controls is one of those things that if you have to deny it, i think it's right, it's quite possible. they instituted capital controls and they were quite fine with it. now we all seem to be relieved that china has capital controls. let me show you what's going on with newspapers this morning. this is an anti-prime minister newspaper. this is the first morning. because the interest rate hike was announced in the middle of the night. this one says interest rates are higher, 10%, but the lira is lower. this one is supportive of the prime minister and the headline reads, lobby wins, people lose.

that would be a reference to the interest rate lobi. there's the interest rate supporters of the prime minister and the prime minister himt believes there's some kind of conspiracy among the interest rate lobbies of the world. and then this newspaper here, as well. the head of the central bank, early last year, promised that he would break the back of the dollar. of course, he didn't. and they love to remind him of that failure, that he hasn't done it. so that is what the situation is here. guys, back to you. i may have lost ifc. >> look at that shot, though. it's a great shot, but it looks like it's either a cloud that keeps rolling behind you or -- what is behind you? >> it's steam. there's a steam pipe.

>> along with the music that we play, that's -- and that's a very cool -- is that a minoret there? to your camera right. and what i'm sort of -- >> it is, absolutely. there's a mosque back there, yes. >> what i'm sort of impressed with is management that quickly pulled the trigger and sent you over there. there are a couple of times we didn't know, it seems like things were happening. and i thought they were fixing this a little bit. but you're there right when it reaccelerated again. and it worries me that management was so correct about this. you know what i mean, michelle? >> well, you know, we debated. do we go to turkey, should we go to ki argentina? i was in favor of argentina. but this is a much bigger important economy and they had a

big event coming up with the interest rate meeting, so we ended up here. >> i'm going to go ahead and give kudos and say good job, nick. instead of the praise and -- he's awesome. >> our boss is awesome, yes. >> he is. that was smart to send you there. is it cold? it looks cold. >> yes, it is. puerto rico is looking really good right now. >> so she was lobbying for puerto rico again. hey, you know, those bonds are still going down every day. both stories are important. i can just hear you. >> it's summer in argentina. >> we'll check back with you. good job. >> she's on her way to the olympics. >> that, too? >> yeah. that's kind of on the way. >> she's much braver. >> much stronger. >> a much stronger person.

>> i love the olympics. when it was in l.a., we worried about the olympics. not for the same reasons, but we thought it was going to be a disaster. right after 9/11, people were worried about that and it went off really well. putin, you know, i don't know if i'd sell him short on -- >> he has a lot invested in making sure. >> right. and i wouldn't -- i'd be afraid to mess with putin. these guys are -- who knows. >> earnings and the economy on the corporate front, we're going to see quarterly results from dow components exxon mobil, 3m and sri ka, which i forgot was a dow component. other companies reporting before the bell, conclude -- nike is, too, include eli lilly, u.p.s., auto nation, harley davidson and viacom. and after the bell, techs will

take center stage. amazon and google are the two headline names. as for today's economic calendar, at 8:30 been we have weekly jobless claims which may be a little more important after that last tepid report we saw on that first friday or i think it was that second friday, wasn't it? >> yeah. >> and a first read on fourth quarter gdp, pending home sales, forecasters expect a fourth quarter gdp of 3.3% for the -- that we're looking for. and the fed announcing plan toes trim its bond purchases, as you know, joining us is drew mattes, deputy chief u.s. economist at ubs and thomas teaser, director and head of fixed income at strategis. should i ask you whether you're speccing it or, you know, your calls about the last taper, you didn't think -- >> oh, man, we made one mistake

in september and -- >> did you think they were going to taper this time? >> taper the taper? we did think we were going to taper this time. i think if you look at the "wall street journal" report earlier, with the ground shifting beneath the feet, i think that's one thing we've been on top of, which is arguing despite the fact the transition is lining up, fed transitions are rarely seeking events, most people move into a more risk averse mode as you move into a fed transition. >> it's weird, there seems to be some dislotion location ex here now. everybody knew this was going to happen. can they not square the positions beforehand? or do they think it's not going to happen? or it just is inevitable that not everybody is going to be able to get out of the position? >> it's not that people are going from invested to not invested. it's if they have a decision about whether or not they can wait an extra week or two, they're going to wait the extra week or two.

>> let me get you to make a prediction. will there be one of these meepths where they don't taper? because we're at 2.6 now on the ten year. what if it goes to 2.4? what if it looks like there's a slowdown? >> well, honestly, if they're seeing falling yields, they should taper. i would say there's not going to be a slowing in the tapering. i think the economy is doing well enough and the payroll report from last month was a -- >> why are we at 2.69%? >> i think we're at 2.69%, a, because the risk aversion is in the midst of a fed transition. but also i think because of the emerging market story, which may be related to the fed transition. everyone just getting more nervous at exactly the same time and it happens with every fed transition. >> that is what we talked about. six months of the fed transition in the last six, seven years.

>> people all become a little more cautious. >> and that is back. >> then it depends on how will the fed is perceived to be dealing with whatever situation they're dealing with at the time. >> do you think, tom, that this would be -- it's already in -- written in stone that every time they have a chance they do 10 billion and they get to zero by when they said they would or could something throw that off? >> yeah, i would agree with that for the most part. i think the ohm thing that would cause the fed to delay purchase reductions would be, either, one, the economic data changes and that's going to take another one to two months to get that data or you get an escalation of the emerging market scare, it becomes a crisis and it begins to impact u.s. or a western hemisphere credit markets. i think the easiest avenue for a crisis in turkey or brazil or africa, the easiest impact would be through puerto rico. puerto rico has a bond teal they're trying to get off the in the next month.

beyond that, i don't see the fed deviating. credibility is very important to the fed. >> so we talked about if it were a problem in emerging markets, it would take a while. in terms of affecting our economy, it would take a while for slowdowns to hit it. but you're saying the way the contagious could hit us in the credit markets, there is a way and that's through prooek. that is interesting, actually. do you think that would be a big enough issue to where we would have to worry about that? >> as time passes, the risks that puerto rico begin to substantially impair the market probably diminish. much like we saw with greece. the longer a greek resolution took place in europe, the less damage that was done to other issuers, like italy or spain. you're almost certainly to get at least one, maybe a two-notch downgrade from rating agencies.

that could be a catalyst for the fed to say, wait a second, we're counting on the local government to ramp up spending in 2014, 2015. if they don't, that's perhaps another quarter point basis drag that we had in 2014 that we're not expecting. so there is an avenue in emerging markets to impair u.s. growth. and puerto rico is one reservoir with which that can spread. >> you talked about the limited benefits, maybe not qe, but at least qe3. limited benefits and maybe some of the negative consequences. so what did -- why did the u.s. stock market go down 189 yesterday and we went down 300 the other day? is it going down just on general nervousness because it needed to because it's been up so much or is -- are we timely sort of pulling the curtain away from why it was up in the first place, which was maybe qe? >> i think there's an argument to be made for qe having boosted

the equity market. >> so where it shouldn't be? >> i don't know that. i can what qe did was it took away a lot of the risk of investing, rather than -- and the money had to flow somewhere and i think it flew into asset prices. i would say as we look forward, though, one of the things i expect to happen is now ta we have the potential for rate increases at some point, that will prompt ceos to start making decisions. right now, they're getting rewarded for returning money to shareholders and buybacks. i think whether they start getting rewarded for investing in the future, that's when the economy becomes self-sustaining and we see the big push forward in growth. >> gentlemen, thank you. remember the other day i said to you something about you like being famous because you want to be able to call and get a table near a waiter. that was henne youngman, take my wife, please. >> and i had no idea. >> no, you know who henne youngman is -- you've never heard of -- >> of course.

>> it's a -- is it generational? >> it might be generational. so i went in to see a shrink. i said, doc, i think i'm a dog and he says, get down off the coach. this are all henne youngman jokes. someone wrote in on a tweet, i'll bet andrew and becky have no idea who henne youngman is. guess who retweeted it? >> henne youngman? >> no. gary youngman. it's his son. >> it sounds like i need to apologize to the son and -- >> well, you know, i don't expect you to know anything before 1998. >> when was he big? did he also say take any -- >> can you help me here? it's been big for a hundred years. >> i can't talk to people that don't know henne youngman or his jokes. >> i just can't identify with you at all. i was thinking about that guy would wanted to throw someone off -- do you know how many times i wanted to throw you

over? we have wanted to throw each over over the balcony -- >> not over a balcony, no. >> how much just push each other off? >> you don't want to throw me off the -- >> no, i don't like the idea. >> this guy was supposed to talk about the state of the union. and the guy is a former marine. he's been in here a few times. remember? >> you better like him. >> i sometimes think we should be drinking more on the set. as a segue, we're going to be getting liquored up. how about that one? the ceo of diageo is going to joining and tell us if the company is looking to make a deal in the industry. then at 6:30 eastern time, auto nation's mike jackson rolls in with his quarterly results. "squawk box" coming right back. >> announcer: cast your vote tt ford most influential business leaders of the last quarter century. go to cnbc.com/25. make your picks from our list

and submit your vote. you can even write in your own. who will be the cnbc first 25? vote today.

welcome back, everybody. leno know is buying google's motorola union for $2.9 billion. this news comes less than a week

after lenovo announced that it was buying ibm's low end server unit. of course, it raises a lot of questions about google's purchase because it bought that unit for over 12 billion. but we have lenovo's chief technical officer joining us in the next hour. >> here is what people forget when they bought the company, it had $3 billion in cash on hand and $1 billion in tax credits. that brings the total price to 8.5. then they sell for 2.4. then the 2.9 billion is what they were value at. now we're down to $2.9 billion. >> the question is are the patents as embarrassing as they thought. >> correct. but they did put them on the books as a value of 5.5. >> that probably has to be written down. i don't know if you can look at

the patents as a true value on any of those things. >> i wouldn't look at it as one of the best decisions ever. >> correct. >> we're going to talk more about that. we have lenovo joining us at the top of the next hour. facebook has posted better-than-expected earnings at the close. mobile ad sales continue to rise. sales jumping on that news in extended trading. and the microsoft ceo search could end this week. rico says sacha nadella are at the top of the race. >> do you know this guy? i don't and we have spent time with elop? >> you don't know him, joe? >> no. but i know henne youngman.

when i read about the evils of drinking, i gave up reading. do we have any more symbols? >> you want more symbols? i'll do one more. my wife and i went back to the hotel room where we spent our wedding night. only this time -- only this time i stayed in the bathroom and cried. anyway, go on. >> we really do need to drink on the set. diageo, a slowdown in sales growth in the last six months. among the reasons, demand in china, some other important emerging markets dropping sharply and ivan -- is it menendes, the ce of of diageo? >> menedes. >> let's talk about emerging markets. that's the issue du jour right

now given what's going on in the markets. you saw this happening beforehand. >> yes. diageo's strength is in global presence. before i come to the emerging markets, our developed markets are doing rel well. the u.s. is really strong. we have ups and downs. they're not a straight line. in this lake-effect snow last set of results, we've done very well in india, brazil, the south africa, russia. but we've had challenges in places like china, in the buy due sector, where we're doing very well, and in nigeria beer. so there's more volatility in the emerging markets right now. the demographics are good. gdp growth is fast in the emerging markets than it is in the developed world. >> what what is the consolidation play here? or is there a consolidation play? we just saw the deal with beam a

couple of weeks back. it always feels like there's a couple of brands that are still outstanding there. >> well, if you look at the history of our company, and even in the last three years, we've had made some major plays in the emerging markets, spirit and beer worlds. wheelchair spend about $5 billion building positions in turkey, india, brazil, ethiopia, tanzania. our footprint now is much more balanced between the developed and the emerging worlds. however, the company has a strong balance sheet. we intend to retain and extend our leadership position. and we look at everything and clearly as opportunities arise on global brands or in the emerging markets we will look at them very carefully and intend very much to make the strong company even stronger. >> what is the hottest category right now that you don't think you're in? >> well, the good news about

diageo is we play pretty much everywhere in the space. we have a participation in cognac where we have a 334% interest. but ka keel la is hot. we've had two very exciting entries in the ka keel la space. the deleon brand and seli groso. that's hot. whiskey is hot and is our core strength. johnny walker blue is running up 20%. in the u.s., our premium brands are up 19%, brands like the copper run, the finest rum out there. our single malts are doing extremely well. so the overriding trend is people are drinking better and we are doing the best at the highest price points where we're very well positioned. >> ivan, we want to thank you for joining us this morning. we always talk about drinking on the set. what do we have of here?

>> some pale ales and -- >> oh, it's not related. ivan, i apologize. i looked over at the atlanticer and i thought -- >> you need a pint of guinness out there, gentlemen. >> we do need some guinness. by the way, it's not bad for you. if you're going to have beer or beginis, you should always have guinness. is there protein in it? they always less less carbs. is that right? >> same calories as light beer and far more delicious. >> far more delicious. >> brilliant. >> excellent. ivan, thank you for joining us this morning. appreciate it. >> great. thank you. up next, we are going to go from hard licktory beer. the founder of the brewery gets us ready for the big game. we'll find out why he won't sell out to the big boys. plus, the squawk ceo auto nation rolls out its quarterly results. first, though, as we head to a break, take a look at yesterday's winners and losers in the stock market.

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[ coughs ] [ male announcer ] so he can't let a cold keep him up tonight. vicks nyquil. powerful nighttime 6-symptom cold & flu relief. ♪ good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. a survey confirms that chinese

manufacturing did shrink this month. and that is for the first time in half a year. in addition to the data, yesterday's nontaper of the taper added to the global market pressure and asian stocks close lower on the session. as you can see there, those are some significant losses. u.s. equity futures have planned yesterday, up 63 today. but we've got to get through the claims and some housing data and other things. in corporate news, apple didn't help yesterday as far as sentiment. and facebook, still for real? do you still go on it? on your mobile phone? >> on my mobile phone. >> you're walking around and you go on facebook? >> if i'm in subway or a taxi or something like that. >> but you're out. can't you do soishl things

instead of social things through your -- >> i just see what -- >> to see what, people sending you pictures and suv? >> no. you see what friends are doing, you can stalk old girlfriends. >> that's funny that that came out so quickly, wasn't it? that was soaked nature for you. >> what do you think is going on facebook? >> i don't know. >> my wife shares pictures of the children and kids. >> i'm recusing myself from facebook. >> you're not talking to old girlfriends? >> no. i can't comment on it. >> you know heyyy youngman. he knows facebook. >> this is not about you and your couple specifically. it's a joique. you and your couple, you're a fastidious couple. she's fast and you're hideous. anyway, target says that the theft of a vendor's credentials help cyber criminals pull off a

massive theft of customer daes during the holidays. the comments are the first indication of how networks at the rel tailers were beat. >> i don't care it, they said what? >> i'd have to read it again. >> came in for all of the -- >> did you see good fellas? >> yeah. >> they were sitting there watching him in good fellas. >> voivent. >> but just for your institutional knowledge of things like other -- like if you were ever around adults, you should know -- >> if someone brings it up. >> back to that target news, i still don't understand. the theft of a vendor's credentials helped them pull off the massive theft. if you're stealing a vendor's credentials, you would think that would allow you to get into one store. they did this on a nationwide level. it's more complicated than it even seems. this is somebody who stole a

vendor's credentials. and they were able to use it for everything around the country. >> the light is still off up there. >> so you figure -- he's not here yet, but i'm going to do one more. the doctor says, you're crazy. the man says i want a second opinion. he goes, okay, you're ugly, too. >> these are old. >> why are you looking in my direction sflp. >> oh, now we've got this guy playing contino in our ear. yeah. okay. >> let's talk about auto nation. the country's largest auto dealer. reported fourth quarter earnings of 83 cents a share, 7 cents better than the street was expecting. revenue roughly in line at 4.5 billion. joining out right now is the company's ceo and chairman. mike, it is great to see you. congratulations on the earnings. >> thank you, becky. nice to join the conversation this morning. you know, this is the one year anniversary of the launch of our coast to coast brand auto nation. >> oh, it is, really? >> and during this year, we put together four consecutive record

quarters. and in the fourth quarter, which you just called out, that's a 24% improvement in earnings per share. driven by an outstanding performance in our premium luxury business, which was 46% of our profitability. >> wow. >> during the forty quarter and for the year, we achieved revenue of 17.5 billion, an increase of 12% over the prior year. so i would say a perfect year. >> so a perfect year, is that something that you think can be continued? how does the consumer feel to you right now, mike? >> i'm optimistic about 2014. industry sales will continue to grow 3% to 5%. we'll break through 16 million units this year. the powerful drivers are the same in that it's genuine replacement need due to the age of the vehicles on the road. great financing is available and we have the best predict offering from the manufacturers ever. so the industry is going to put up another very good year with

very strong profitability from the suppliers to the manufacturer right through the retailers. >> however, you have been cautious in some of the things you've been saying to the industry. at the auto show this year, you said you think 2014 is a test. you said it was easy the last four years. you could support double digit growth and build for inventory. are you worried that there's too much production at this point? >> i am, indeed. it's sort of like if you had a man who had a perfect life, he's got a beautiful wife, nice kids, great house, great car, and he used to be a fit 200 pounds and now he's walking around at 350 pounds. and you -- i'm just a very friendly constructive way, looking at him and saying, hey, you know, you're really packing it on. we don't need those kind of inventories in this market. and i certainly don't want to wake up with the industry at 400 plus pounds. and so it needs to look at these

inventories and say, we can do this much more efficiently and effectively. so overall, i'm very optimistic. but i see no justification. and these inventories levels are particularly the detroit three, the rest of the industry is in pretty good shape. they should really watch it this year. >> do you think they would listen to you? this is a message they just put out in the last couple of weeks. do you get the sense that they are sponsored, that they agree with you, or do you think they think that you're avoiding a problem they don't think exists? >> yeah, exactly. it's sort of like if they're at the amusement park looking in one of those funny mirrors, they weigh 350 pounds, they look at the mirror and see a very trim 200 pounds. so they have a way of calculating that pretty bizarre to justify these levels of inventory. but if you cut through the bogus calculation and look at dealer inventory for the detroit three, it's over a 100 day supply. and it simply doesn't need to be

there. and i think in good times it doesn't need to be there. >> i can't believe it's been a year. so wayne must be really happy, number one. speaking of wayne, as a huge football fan, i hear we're both pulling for seattle. why? i like sherman. >> i just had lunch with our founder, wayne, the other day. he's as proud as can be of where auto nation is as a company today. it's everything he wanted. i think there's a great human interest story with peyton manning, but i have to tell you, the seahawks are very tough. and, of course, i have a very large shareholder in seattle. so i'm rooting for the seahawks. >> i didn't know that. i don't know, the broncos, i lived out -- i love peyton,

though, so i can't wait for the game. >> you have to love peyton. it should be a great game. >> it should be great. and i'm -- because i'm not going, i'm glad it's in the cold. it's fun to watch as long as people are criticizing. it's four tv now, anyway. i'm sorry, but it's good that it's in new york. and if it's cold, good, suck it up. >> but it's going to be strange to watch the game. >> i have a prediction, joe. i have a prediction. >> go ahead. >> it's going to be a very long time before the super bowl is in a cold climate again. i expect it back in miami in the very near future. >> you're talking b your book again. >> it's 27 degrees down here. that's not talking my book. i'm calling out the temperature. people like to party at the super bowl. it's 72 degrees in florida. down here in miami, come on back. >> we live that every day with you down there. when all our guests are on remote, there's no reason we can't be down there, either. you're preaching to the choir. >> good seeing you, mike. >> coming up, more on the deal

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welcome back to "squawk box." take a look at u.s. equity futures. see how things are setting

themselves up this morning. the dow looks like it would open up higher. about 68 points higher. the nasdaq would open about 30 points higher and the s&p would open a little over 9.5 points higher. quarterly results just hitting the tape, eli lilly posting earns of 74 cents a share. revenues coming in better than expected. we'll be talking to the ceo of that company in the next half an hour. also in the housing industry, earnings beating the street by 13 cents a share, revenues matching consensus. coming up, it's the busiest day of earnings season of all of them. exxon, 3m .visa, all of that still ahead. first, it's 5:00 somewhere and our next guest is brewing up a successful business story to mark the occasion. the founder of dog fish head, he joins us over beer, next. fifteen percent or more on car insurance. yeah. everybody knows that. did you know there is an oldest trick in the book?

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we did diageo. craft beer brewer, dogfish head, production numbers soaring, rising 17% in 2013. here to talk about the boom demand for craft beer is sam calagionni. president and founder of

dossfish head brewery. >> are we allowed -- >> we're going to. >> i'm good with it. >> dog fish head. it means a place to me, like hilton head in the carolinas. i grew up off of booth bay harbor, maine. >> called dog fish head. it doesn't taste like dog fish head. >> not most of our beers. >> india pale ale is the faster growing beer w. yes, there's 2700 microbreweries across the country. it started in england, the americans are putting a more intense hoppy focus on. the craft breweries have grown this style 40% last year. the best selling style of beer is the light lager. collectively that style is down 3%, ipa up 40%. >> i'm known, i think, as a debonair, urban guy.

with wine i'd never look at the year. i just look at the alcohol content, usually. md or thunderbird, for me, that's what you're drinking it for. why look at the year. it doesn't really matter. this is 9%? >> that is 9%. >> to me that's a big selling point. >> this is 6.5. >> this is 9. >> what does heinekin have. >> 4.9%. you get filled up. >> the other ones are like 3 -- >> with craft beer, the whole idea is quality over quantity. some of these beers do tend to be more wine-like. >> if you pour it like that all the gas will go in and you'll have a problem. >> you might have a problem with gas but you'll have a wonderful drinking experience. >> how time you get the fancy cups? my beer is in a coffee cup. >> are you drinking coffee or beer. >> beer in a coffee cup. >> this is liquid courage right here.

>> in switzerland, they were able to start a brewery there. there are places in europe you can't start a brewery. there are too many. labor has it totally locked in or regulations. you didn't have a problem starting this. >> no. i started dog fish as the smallest commercial brewery in the corner of a restaurant in rural delaware. now we're about i think the 14th biggest brewery in the country out of about 2700. there's an explosion, americans have discovered that beer has all the diversity, the complexity, the food compatibility of wine but it's an affordable luxury. >> how many bottles a year will you sell. >> somewhere around 25 million cases of beer. >> you're kidding. at do at dogfish? >> are there people who think you get too big in the craft beer world you sold out? >> it's a good point. for context, our brewery represents less than 1% of the

beer market. even sad adams in america they seem ubiquitous. they have 1% of domestic market share. >> do you look fondly or negatively upon a sam adams. >> we have each other's back. frankly, all of us share 7% market share, two national companies that sell beer in america, they combine, have about 85% market share. >> you feel lucky punk? >> are you fighting me. >> no. it said punk on top. >> it does? i'm not sure about that one. that's a different beer. >> i was watching the video. not yours? >> no, not ours. we do a beer called punk and ale. seasonal beers are popular from the small breweries today. >> i have one drink and i start picking a fight. it's 9%. i start calling people punks. >> that's why it's called liquid

courage. >> what's that? >> i'm not sure. >> punk and ale. for example, we're doing a dinner tonight at the james beard house, famous culinary world. proved that beer has earned its place at a white table cloth. we're serving a beer that's 8 years old, 15% alcohol. >> higher alcohol content does that necessarily imply higher calorie content, too? >> there is some correlation there but it also is usually also tells you basically that the beer will age well. if you want to lay down a beer and put it in your cellar, usually the beers stronger in alcohol will improve over age. >> my problem right now, hard liquor, maybe a margarita once in a while, hard liquor in general, not a good idea. beer you get too full. the first six go down smooth for me. >> craft beer is supposed to be more flavorful and less of it. >> if you're going to drink

wine, i drink chardonnay. i'm at a party, i hide it. red wine, do you smell people's breath with red wine? >> it gets on your lips, your teeth. i need a beer that's like a wine. >> this is a segue, ipa made with serra grape nuts. >> cheers. >> we appreciate it, gentlemen. coming up in the next hour, huey lewis isn't the only one looking for a new drug. we have eli lilly's ceo john lechleiter. first, investors are facing a world of uncertainty. we are turning to the man behind fidelity's global strategy fund for guidance. we welcome our guest home this morning, miriam timer when "squawk box" comes right back.

the fed sticks with its taper plans and the markets tumble. is this just overreaction or should investors start to brace for a correction? google getting out of its mobile hand set business and lenovo is writing the check. a first on cnbc interview about that multibillion dollar deal. and eli lilly's ceo john lechleiter talks to us about the companies results. ♪ i want a new drug one that won't make me sick ♪ ♪ one that won't make me crash my car or make me feel thicking this thick ♪ >> good morning. welcome back to "squawk box," right here on cnbc, i'm andrew ross sorkin, along with joe kernen and becky quick. we have green arrows across the board. things looking up today. the s&p 500 up over 8 points.

the ten-year, take a look at this, 2.7. okay. i don't know, you're right. you're right. >> 2.9. 2.873. >> that's your number. >> that's where it was. >> right. >> i just thought -- people say it's absolutely just headed to 3.5 and 4 and it's going to be like clock work. >> we spent five years saying that and it never happened, liesman. >> we have a lot to get to, including headlines. a busy day for earnings, visa, 3m and exxonmobil ahead. this morning, earnings reports all out, including time warner cable. the company earning 1.82, beating estimates by 9 cents. it raised its quarterly dividend to 15 cents by 75 cents per share. a mixed quarter for appliancemaker whirlpool. missed estimates by 6 cents but its revenue was slightly above consensus on stronger sales in north and south america. there's starbucks. starbucks is promoting chief

financial officer troy alstead to the newly created chief operating officer position. there's facebook, its shares look to be a major winner today. the company posting better than expected earnings and revenue after the close. the social networking site's mobile ad sales continuing to rise. you didn't believe anyone was using facebook. >> no. i saw it yesterday. 61 now. >> in its first unanimous decision since 2011, the fed decided how to trim its bond purchases by another $10 billion. steve liesman joins us on set. there was one guy that was really surprising. who is that? one that did his. >> he hasn't voted but he's more of a dove. >> was he a big surprise? someone voted no last time, i think. they went to yes this time. >> rosengram lost the vote because of the rotation. that was boston.

people thought another member might. >> maybe this was a last vote for bernanke and they might have wanted to show solidarity. >> it might have been there. but i think a lot people agree. >> for a while, they agree, yes, we have to do it. now they all agree they don't have to do it? it's that much different? they want out now. >> they found this slope by which they can bring it down in a way that's measured and will ultimately not impact the economy in a negative way. >> i think they finally realized we have to get out of this. they heard some of the criticism of normalizing policy in our lifetime at some point, right? >> i think that's a piece of it, joe. the idea that we don't have the rationale for what are essentially emergency measures any longer when the economy prints a 4% gdp growth in the third quarter, looks likely to

accommodate a gdp print in last quarter and unemployment ticks down towards this level that they have said previously would be the one they begin to think about raising rates. >> you don't have a hit. >> i do. >> you don't read the teleprompter? you're not an eagles fan. we've been playing "hotel california." >> you can check in but you can check out. >> you can't check in any time you want but you can never leave. >> we have the version in spanish. >> yes, i do. >> remember that. >> yes, i do. >> we're going to start playing that. >> right. can i do a small piece? >> can you do it with this? >> do the first two full screens, the economics. i want to give people who might have missed yesterday what the fed said and the outlook. on the economic outlook growth -- you can keep the music playing. >> you like it. >> i love it. >> it makes it more interesting. jobs were mixed but improving

inflation, will still come back to the target of 2%. the risks are balanced. here's the policy outlook. the taper, $10 billion down to 65. further taper likely. zero rates, well past 6.5% unemployment. this was a record statement i think in terms of number of words. 790 words. there's what greenspan did average in '05, 167. bernanke up to 426 in 2012 now averaging something like 650 for this year. >> although he never mentioned polar vortex or emerging markets. >> no turkish lira, no polar vortex. i'll be back at 8:30. this is a big day. 55 companies, finally economic data. maybe the turkish lira and the polar vortex come off the headlines and things like economic data and earnings become a focus.

it's a big day today. >> you couldn't mention those things. they're data dependent. you have to use data. >> i would pay good money to see the fed -- >> they don't want to look like they'll be swayed, like you, they take no responsibility for the emerging market issues. they're not going to mention them. >> or the weather. or the weather. if the fed got around to saying it could change the weather, that could be -- the proof of the conspiracy theory. >> a little beer and -- >> a couple sips of that beer. it's a heavy duty beer. i feel a little -- >> this is your opportunity, andrew. you feeling in a weakened state suddenly. >> no. >> what are you suggesting? >> steve, thank you. we'll sue you in just a little bit. our guest host, the director of global macro and co-portfolio manager of fidelity global

management fund. do you think there's more for this correction? could this be as much as 10% or do you think we're reaching the lows at this point right now? >> well, good morning and thanks for having me. that's a hard question to answer. we rallied 32% last year on a 5% earnings growth. so the market discounted, escape philosophy to exit qe. they all probably gru they need to get out of the qe business. >> you said a mouth. by saying the market discounted escape velocity. you said it is -- then it was justified? >> it was based on liquidity obviously as well. 5% earnings growth versus 32% s&p total return. >> i'm either worried or feel good about the economy, one or the other.

i'm worried that it's a bubble because of the liquidity or justified by the economy. do you have a feel for which is more powerful. >> the market rallied on a combination of both. easy money plus the expectation. we were going to get out of this 1.5, 2% growth environment plus a 3, 3 plus growth environment. the sentiment was off the charts as of the end of last year. you have a catalyst now in emerging markets in china. everyone is on one side of the boat, now trying to get to the other side of the boat. we're down 4%. em is down, obviously more. it was down last year. the index was down 2% or 3% in a 30% of market. >> despite that, you have a good idea of what investors are doing. you have so many invested with you. they're not stopping, putting money into emerging market stocks at this point. >> one of the things i find remarkable is emerging market equities have underperformed the u.s. and global market since

2010. three, four years now. and money has not stopped pouring in. i mean, some of it has come out lately but there's been a pretty good turn of money flowing in since '07. it's barley reversed. it's long term, institutional money. em has always been a favorite asset class. from a flow basis i don't see signs of capitulation there. >> jurrien will be with us for the rest of the show. china's lenovo, making a second big acquisition in just over a week. the company announced the purchase of google's motorola handset business just last night. joining us now to talk about the company's plans is lenovo's incoming chief technology officer, peter hortensia. good morning to you. >> good morning. >> here's the question i have. you guys over the past decade, frankly, but then think about the past week, have seemed to pick up the pieces of all sorts of people's businesses that

either they couldn't make work or didn't want. i'm trying to figure out what it is that you're able to do with these businesses that these other folks can't. >> well, i think what it shows is basically our focus to the device business. we're a hardware company. we know how to operate in that segment of the market. if you look at the acquisitions, these were primarily companies that were focused in other areas and had those businesses. frankly, they ended up in a position where they didn't focus as much on those. by focusing on them, bringing our cost and scale and basically leveraging the team that's there that knows those businesses really well have been able to make them successful. we've done this several times. >> you look at the google's purchase of mobility for over $12 million. we can all do the math. would you say that was a success or failure for them? >> i wouldn't postulate on that. from our per spektative lines up

perfectly with our strategy. we want to get bigger in mobile devices, bigger in x-86 servers and in the last week we've made two announcements that line up perfectly with that. that's what we're focused on. >> are you wetted through these hand sets? if it looked like it would take off, the next operating system, would you also support that. >> we support a variety of operating systems throughout our business. we will continue to do that going forward. obviously android on phones is a big piece of the market. it's one we intend to support very well. and working partner closely with google on. there are others. we'll continue to work with everyone. >> the name motorola, what's ultimately going to happen to it? >> we intend to keep that. that's a great brand for us to use in the marketplace, absolutely we'll continue to use that. >> you kept the thinkpad brand but not the ibm piece.

does it become lenovo moto-x? >> we haven't decided the exact go to market. ibm is obviously ibm. we had a transition agreement with them. with the exact branding on the device, we haven't decided. definitely the motorola name will be prominent the. >> strategically it seemed for the past year or two that the software guys had to get into the hardware business if they wanted to compete against apple. that was the argument. that's what google was looking like they were doing. it looked like microsoft was trying to do with its latest purchase of nokia. and now, this is sort of reversing course. how important do you think it is for software guy to literally be under the same roof of the hardware guy? i'm assuming you'll say it doesn't matter. i'm curious how you think about that issue. >> first off, if you look at this acquisition, there's a large number of software engineers that are part of the

motorola business. they will be joining us. we know the hardware business and know how to excel as those devices become more commoditized. that's where those businesses are heading. that's exactly where we think we can play well and be a great partner to those companies. >> thank you for joining us this morning. >> appreciate it. thank you. >> good luck with it. coming up -- andrew? >> yes. >> sochi, caviar. >> they have caviar there? >> caviar. >> like davos. they're more of a capitalist over there than -- >> than your brand here. >> i didn't say it. >> big pharma checking into -- >> the caviar is better over there, that is true. >> it is. next eli lilly chairman and ceo john lechleiter talks to us first about the company's results, first, though, a newly named dow component, visa, out with quarterly results, earning

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we want to talk to eli lilly, posting fourth quarter results this morning. revenue was above consensus, as the company has been dealing with patent expirations for

several key drugs. in this quarter, john lechleiter, ceo of eli lilly. this quarter was cymbalta. when did that go off, john. >> that went off patent in early december. this has obviously been one of lilly's most successful products. when you lose a patent in the united states you see a rapid decline of revenue. that brought sales for the quarter down 2%. looking beyond that if you take cymbalta, in the united states off, our revenue growth was 9%. we feel good about that. that was a contribution from a range of other products. >> what is cymbalta? >> cymbalta is called an snri, created for the treatment of depression and other conditions. >> it used to be re-up take. what's the n? >> nurepinephrine.

>> osteo, that goes off two months from now. >> we lose the avista patent in march of this year, in about six weeks. we saw these things coming. we've been planning for this. we've been investing in our pipeline. we have four medicines under regulatory review currently. we could launch as many as three of those this year. this is really the inflection year for us. we hope those launches will put us back on a growth track starting next year and beyond. >> a unique business model to have to navigate. for years where you have the protection, you can't be regular innovation by someone else can't come into play. all of a sudden you hit a wall where you can -- your best product can go down 80% in sales. it's unique that way, isn't it? >> i think it's a unique business.

obviously the fact that many of our formerly patented medicine are available as low-cost generics, something we're proud of, we're just not in the generics business. our job is to go back and find new medicines to treat diabetes or depression or alzheimer's disease. our labs have never been more productive. we're excited about what sits in the pipeline today. >> john, how much was cymbalta and how much was avista annually? >> cymbalta finished the year at just over $5 billion in sales. joe, it was one of only 20 products in pharma history to exceed that single-year sales figure. avista sales are roughly in excess of $1 billion. we're going to lose the u.s. portion of that in march, in effect. >> drug companies in the past have been criticized for just doing add-on products, sustained release. do you have novel products in the pipeline, not just trying to

extend it by sort of sleight of hand? >> all of the products in our pipeline are what we call new molecular entities, new chemical or biological products that hold great promise in terms of treating disease, cancer, diabetes, alzheimer's and others. >> as far as price pressures, things like that, any comments on how the affordable care act rolled out, how it's affecting you? whether that's going into your planning for 2014 and '15? >> well, i think so far in terms of what i would call our day-to-day business we've not seen a big impact. i've said many times, at fordable care act and the implication of health care reform is a multiyear process. keep in mind, back in 2010 when this was signed into law, this industry began paying a fee. this we're, all tolled, lilly

will pay about $500 million in the form of rebates and other things to the affordable care act. >> do you live in indianapolis or louisville. >> i loved to indianapolis a long time ago, joe. it's home. >> you are going to watch tonight. you know what's tonight. the bearcats versus the cardinals. you know that's tonight, 7:00. >> i know that's tonight. >> you're not -- i don't know whether -- even though louisville won last year i think you'll have problems tonight. >> no. the cardinals are tough. my xavier guys have beaten the bearcats. >> yes, you're right. all right, john. we'll see you later. good luck navigating -- i don't envy you. how does that happen? you lose 90% of a product. there's no other business like that. we appreciate it. see you. >> thanks, joe. we're looking forward to the years ahead and confident with our pipeline. >> okay. good. thank you. coming up, big news coming out of ford this morning as the automaker puts more people to work. we also have news out of black stone, they're beating earnings. that news after the break. at 8:00 eastern time, a cnbc

first 25 contender. mutual fund pioneer jack bogle will be our special guest. find out why he doesn't worry about the emerging market sell-off. back in a moment. time now for today's aflac trivia question. which country installed the most solar panels in 2013? the answer when cnbc "squawk box" continues. ♪ yeah, he's clean, boss. now listen to me, duck. i have an associate that met with, uh, an unfortunate accident. while he's been incapacitated, somebody's been paying him cash. now, is this your doing? aflac? now, if i met with some such accident, would aflac pay me? ♪ nice. this is your stop. [ male announcer ] find out what aflac can do for you and your family... aflac? [ male announcer ] ...at aflac.com. for you and your family... aflac? sometimes they just drop in. always obvious.

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♪ walking on sunshine now the answer to today's aflac trivia question. which country installed the most solar panels in 2013? the answer, china. >> aflac. >> welcome back, everybody. take a look at the futures this morning. yesterday, the markets ended down sharply once again. in fact, yesterday the dow was at its lowest level since november 7th and the nasdaq was at the lowest level since december 17th. you are seeing a bounce-back this morning. s&p futures up by 8, the nasdaq up by 29, the dow up by 73.

blackstone, the press release chairman and ceo stephen schwartz m schwartzman saying the results topped performance. you look at 1.35 versus 86 cents. the up 1% in after-hours was yesterday, not today. we'll see where that opens a little bit later. >> you should have known that when they sold, that's what they do for a living, right? they sell high and buy low? what was the ipo price? you remember? >> yes. that was in the middle of a mess, remember? >> i no he. it was the high, wasn't it? is it back to the ipo price how many years later. >> that's a good question. where are they now? i think they're back. >> i don't know. it's close. i don't remember where it was. here's the chart. in '07. we're back to should trade

somewhere above 32 today. but it was somewhere in the 30s. >>. up next, first on cnbc with ford. the company rolling out new plans to envest in america. and with the big game just days away, cnbc's home series checks out real estate in the city of past super bowl winners. "squawk box" is back after this quick time-out.

welcome back to "squawk box," everyone. let's catch up with some of the earnings reports that have been crossing the wire. visa earning $2.20, 4 cents better than the street was expecting. revenue also slightly above consensus. the stock is up over 3% this morning. pulte group was helped by higher selling prices for its home, that stock is up close to 5%. and under armour beating estimates by 6 cents. it had especially strong sales of its fleece apparel as well as cold gear infrared line. that's up 9.7% this morning, $93.49.

>> checking out one of the dow components we've been waiting for, 3m, which just moments ago reported $1.62 a share. that at this point, i can't tell what that's going to do to the share price. they haven't responded yet. hopefully the machine at this point doesn't have the actual for the fourth quarter. >> it's in line at 1.62 you said. >> 1.62 is in line exactly with expectations. and then -- i don't have a 2014 estimate but they do see 7.30 to 7.55. and the sales in the current quarter, 7.57, going in, which looks like it's a couple hundred million shy, it looks like 7.7 is what people were looking for as far as the sales numbers. that's not a couple hundred but it looks a little bit shy, 7.57

versus 7.7 is what is expected. 3m, is it a tv company now? >> they make everything. >> remember when we had the ceo on, he showed us the sponges, post-its. >> display and graphic sales, 1.43 billion. consumer and office sales, 1.1, health care sales, 1.36 billion and industrial and transportation sales, that looks like the biggest unit, 2.57 billion. post-its. >> they skill make post-its? scotch tape? >> they do. >> the last trade is up, 131.01. our guest host is jurrien timmer, portfolio manager. fidelity, i've watched it for

years. everybody remembers peter lynch, trying to replace him, vinick, who was the next guy. >> stanski. contra fund and low-price stock have taken over as the flagship funds as well as blue chip growth, other funds as well. >> the founder is still alive. >> yes, still there. >> a great american success story, based out of boston obviously. what do you do, breathe sort of wisdom into the guys that run the funds? what's your role. >> i'm a resource. i'm considered what's called a thought leader. i will give macro perspectives on the markets. they can take it or leave it. >> that's a mackenzie term. >> are we thought leaders. >> yes. >> did you see the david brooks piece? >> did i not. >> you don't want to see that. >> in our own minds we think

that. >> what we've seen in emerging markets, mark mobius was on last week. he said nothing comes close to the growth potential still ahead of these areas of the world. so you'll have these periods but you've got to be there. is that, in your view, the same? >> i think the long-term bull case that you hear from consultants and other experts is that they beat us on demographics, right? the populations are younger, the developed market populations are older. the growth differentials are clearly positive for em. em is sensitive to capital flows, money going in, money coming out. >> the fed can affect it. a consultant is a guy from out of town who doesn't have a job, like a mackenzie guy. >> consultants who advice pension funds, endowment funds. >> those type of funds.

>> yes, very long-term oriented folks who advise endowments. >> how should we watch what turkey tries to do? that was going to be a test case for whether raising interest rates could defend the currency. we don't know whether it will work at this point. >> i suspect it will not work. rising rates will slow growth. in turkey you have an election coming up wither. it remains to be seen whether this will be an effective strategy. >> is this a side show or should we be watching carefully? you said the fed has engineered a higher growth rate in the u.s. you think that that's -- >> i think the fed is hoping that escape velocity has finally reached us and thattive goods them the free option to exit qe. that's the hope.

whether it happens remains to be seen. >> phil's with us. if he's with us, either ford or boeing. >> ford. >> ford will invest $80 million and add 350 jobs at its plan the in louisville, kentucky. phil joins us now with a special guest. phil? >> thank you, joe. let's bring in joe henricks, head of the ford of the americas. he jones us from the ford louisville plant where today they are announcing the addition of 350 jobs. that's how many they'll be bringing on. this is with bringing up capacity there in terms of adding the f-series superduty. how much capacity do you have left in the system after you make this move, joe? >> we're stretching everything we can out of our truck plants, all of our plants, actually. it's all part of the plan the to sweat the assets we have to get everything to meet capacity. we'll increase by 55,000 units, our production kmaft here in kentucky. >> do you have much wiggle room

left overall for the entire north american region? >> there's a few plans left. like flat rock, ohio, some of the other plants. we're running most of our plants full out which is why we're getting such great results in the profits of our business. >> joe, you just reported your fourth quarter earnings. during the conference call there were a number of questions about whether or not you will have a smooth launch of the new f-series, the aluminum version. you'll be bringing on the f-series plants for several weeks. how do you convince investors that this will be a smooth launch, that you will not trip up and have problems later this year? >> you're right, phil. it's quite a magnitude when you look at what we're trying to do with the launch and changing the game in the truck industry with the f-150s. that's what leaders do. we're confident the product will be great and our manufacturing team is ready. we're having reviews every month of where we are with aluminum

suppliers and manufacturing team. i'm confident we'll have a good launch and have great trucks for our customers. zblf becky? >> thanks, phil. this morning we had mike jackson from autonation on. he said he's been warning the three big automakers in the united states that he thinks inventory levels are getting dangerously high. he's concerned about that. what would you say about that. >> we have been cutting production in the fourth quarter of last year and the first quarter of this year. the industry is different now. with our capacity running max out, we actually grow an inventory in the winter and come down in the spring and summer because we run our plants full all year round. in the old days when we had excess capacity we'd take the plants down in the winter and work overtime in the spring/summer to match supply to demand. today all our plants are running full out. we increase inventory in the winter and bring it down in the

spring and summer. that's been happening the last couple years. we're watching it carefully. i think we'll be okay. >> joe, all the recalls have been added up, a big surge, 18.8 million recalls, an increase of about 3 %. a lot of people are looking at all of the vehicles you and other automakers are cranking out and say you're running too fast and this is why we're seeing more problems. what do you say to the car buyer out there going into the lot who is worried they'll see more problems with their cars? >> i think the whole industry is showing progress when it comes to quality. we've addressed a couple of the issues we had with our my 4 touch system when we first launched it. our belief is very simple, we're committed to serving our customers, we're making progress in all of our plants, including this one on the quality and reliability of our products. all this new product we have coming in with 16 launches this year, we're very confident we have the processes in place to have successful launches. customers are continuing to love

ford motor company vehicles. we'll continue to serve them. our business is growing and our new products are doing very well in the marketplace. >> joe hinrichs, joining us from the company's plan in the louisville where joe, becky and andrew, they are indiana creasing the production of the f-series superduty, another 55,000 units coming online because of the demand that's out there. back to you. >> phil, thank you. when we come back, finding a safe haven in market turmoil. the ceo of private equity power house, evercorps partners will talk to us about deal making and emerging markets right after this. it's time to play million dollar homes, big game edition, two houses located near a super bowl winning city. only one can be kround as the victor. we'll reveal which home will move on to the next round with real estate agent to the stars, dolly lentz. "squawk box" will be right back.

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let's talk about the emerging markets and this idea of contagion. where are you on how bad or systemic this can be? >> this is a classic flight from risk that we see many times in the markets and when that happens, it's relatively undifferentiated. all countries in the emerging markets initially will be affected. but first of all, the emerging markets enter this situation in a much stronger position than they have been historically. less external debt, less dependent on imports versus exports. and second, this is not a one size fits all emerging market investment issue. you have countries such as argentina, venezuela, which have weaker external debt and trade positions. you have countries that have certain amounts of political uncertainty like turkey and

south africa. you have countries that have strong cash reserves, low external debt issues like mexico or poland. very quickly, i believe they will be differentiated from a larger situation. >> ralph, beyond mexico and poland, help differentiate. are there any other winners that are getting thrown under the bus unfairly? >> first, i believe this is a correctible market sell-off. we've had a strong winds at the back of all risk assets from the federal reserve, from the european central bank. and from investors generally. we're now starting to get a little bit of head winds. we'll have a little bit of risk off. i believe this may go a little bit further but where we sit in april or may we'll look at this as a buying opportunity. >> help me with this. i was thinking evercorps as a

deal machine. i think of deals as a great small. sometimes behind the curve but in terms of how much confidence there is in the real economy as opposed to necessarily the markets. it has been slow going in the world of m & a for quite some time. this was supposed to be the year of the big deal. what happens now? >> waiting for the big deals has been a bit like waiting for gado. look at the last 16 quarters, trailing 12 months activity which is the way to look aat it over a longer term period. the deal market has essentially been flat, very little up, very little down. the thing that has been holding, we believe, deal activity back is the fear of certain events, that the government will derail the economy through budget

shenanigans, the fear they fail to extend the debt ceiling and fear concerning growth in the emerging markets. if we get the fears of events behind us, which i think in large measure we will, then we will start, we believe, to see more of a pickup in deal activity. >> what role does china play in the debacle we're seeing in emerging markets? >> first of all, china is a big source of demand for the emerging markets. growth there is heavily focused on by all economies because it's been a fuel for global growth. it's big economy, the second largest in the world. it's at a very high growth rate. its contribution marginally to

global economic growth has been the highest or the second highest in the world. so it's very important. >> ralph, the other night you saw the -- gave a little bit about corporate tax reform. i'm sure you're a free trader. your guy harry reid will block that. as a businessman, don't you wish we'd do some stuff for the private sector? if you can't do infrastructure and you're going to get blocked on those things, why can't the president work with the right on maybe doing tax reform? wouldn't you like that as a businessman? >> i certainly would. i'm a free trader, corporate tax reformer. i want to see more investment in infrastructure. and i think harry reid is a -- >> go ahead, say it. he's a what? >> he's a strong democrat. trade is a difficult issue in the democratic party. >> all right. >> there are people in the party like myself who are strongly for

it. >> i didn't give you enough time. >> ralph schlosstein, thank you. i need proof of insurance. that's my geico digital insurance id card - gots all my pertinents on it and such. works for me. turn to the camera. ah, actually i think my eyes might ha... next! digital insurance id cards. just a tap away on the geico app. could save you fifteen percent or more on car insurance. everybody knows that. well, did you know that when a tree falls in the forest and no one's around, it does make a sound? ohhh...ugh. geico. little help here.

. welcome back to "squawk box," cnbc's popular million dollar home competition is back. because we have the big game coming up this weekend, we sent seven reporters out to seven

super bowl winning cities. in each show, two $1 million homes will face off and the winners will then advance to the playoffs. the champion will be announced on the closing bell. the teams in play in the first round, the green bay packers versus the baltimore ravens. to make it more fun, the reporters won't say where they are. we'll have to figure that out. take a look. >> reporter: nestled on a half acre of frozen tundra, this mansion has a short driveway, a heated four-car garage and inside, a nook to take off your boots and snow gear. >> this sits on a half acre with a fully landscaped yard. it has a roomy two-car garage and plenty of street making. >> some 6,700 feet is chalk full of natural light. this has a kitchening and

outdoor kitchen as well. >> this two-story foyer welcomes your game day guests to more than 6,000 square feet of living space. this spacious gourmet kitchen isn't perfect prep spot for your super feast. >> the master suite has an office, a walk-in closet and a bathroom with custom mixtures like this spa from kohler. 4 1/2 bathrooms, 5 bedrooms, including one for guests downstairs. >> the main floor master suite has one of the home's two gas fireplaces but the real draw is this stadium sized master bathroom, one of four in the home. >> this basement was built for parties and prime time. a full bar, foosball, pool table and a pub style bathroom. hold a private showing in your movie theater. total package, $49,000. >> the real entertainment value of this home is the lower level

theater. it's just off the rec room with a wet bar and right by a large mirrored exercise room where you'll need to work off those wings, all for the asking price of $1 million. >> joining us now is real estate super broker dolly lancz. who's in green bay and who's in baltimore? so obvious. >> the heated garage is the wisconsin one. >> i want that the house. that's the better value. >> because of the urinal. >> the other house, we thought it might be on an on-spec. there's something chintzy about it. >> the other house was built in 2005. they're both terrific houses. you have to consider if you want to live in green bay, the average low temperature this time of year is 9 degrees. >> not for long. >> it comes with that hat that

kayla was wearing. >> yes. >> is there a hot tub in the back. >> hot tub, it has got really hot. taxes are high in green bay. the taxes -- they're equivalent size lots. taxes in green bay, almost $18,000 a year, in baltimore, they're $12,000. we're talking 50% higher. that's huge on a per-month basis. >> you have a choice of baltimore or green bay. i can't distinguish between those two. i'm sorry. >> unemployment rates are about the same, median income though is much higher in baltimore. >> she's steering us away from green bay. i'll tell you what's happening here. >> i don't know. the green bay house, because it appeals to my aesthetics sensibility. >> i'm going with andrew. >> taxes 50% higher. >> that's a huge thing. look at the end of the day aesthetics are one thing.

we can fix the house if you don't love it but i have to tell you, for a long-term investment, i'm in baltimore. and ravens win. >> i don't know about that. you say you can fix the house. >> yes. >> i like the owners. to me i'd have to demolish the house. >> in green bay, there's seven demand, supply and demand. seven houses in direct competition. >> lakes, fishing, stuff to do outside in wisconsin f. you can go outside. >> there's seven houses in direct competition. >> you're near the wire. >> it's the next house that's going to sell. >> did kayla do that in one take? did you see what she did with the popcorn. >> kayla really is a star. >> you can't do that in one take? >> let's just announce, baltimore winning round one. we lost on that. >> we did.

>> the owners should be proud of their house. i just want to say that. more with the playoffs and the power lunch. let us know if you agree with all this. tweet us using #milli using #milliondollarhome. back in a moment. you are gonna need a wingman. and with my cash back, you are money. forget him. my airline miles will take your game worldwide. what i'm really looking for is -- i got two words for you -- re-wards. ♪ there's got to be better cards than this. [ male announcer ] there's a better way with creditcards.com. compare hundreds of cards from all the major banks to find the one that's right for you. it's simple. search, compare, and apply at creditcards.com. first round's on me.

stocks get smacked. the fed stays the course with its taper program and investors get another case of emerging market jitters. why this market is screaming by, long-time money manager louie navellier shares his stock picks. ♪ 5150 somebody call the po-po. i'm going crazy thinking about you baby ♪ >> welcome back to "squawk box," here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin.

our guest host, jurrien timmer, co-portfolio manager of fidelity global strategies funds. he's a thought leader. >> he's sad about being called a thought leader. >> you read him. >> david brooks is one of my favorite columnists. >> he's a "new york times" conservative. he's like a texas democrat. he wears a bow tie. >> he doesn't. >> he doesn't? >> i don't think so anymore. u.s. equity futures are indicated higher this morning after -- i've been going back and forth. we had the 300 down day, up 40, we thought we were okay, then yesterday all hell broke loose. >> 180 yesterday. >> almost 190. all the fed did was what it said it was going to do. turkey doubled interest rates with be that still didn't really

help that much. today we've got a lot of earnings, a lot of dow components and things have, for the most part, been pretty good, pretty solid. we'll get the claims number at 8:30 and other economic data about housing, so things can change. so far, we'll rebound. >> one of those components is exxon. it looks like earnings per share when you assume delusion, we're $1.91. the street was looking for $1.92. they say that was a deese crease of 13%. and cap exwere 9.9 billion. down 20% from the fourth quarter of 2012. oil equivalent product was down by 1 .8%. when you exclude the impacts of entitlement values, product was essentially flat with liquid volumes up 3%. the company does say that the dividends per share will be 63 cents. i think that news was out yesterday, increase of 11 3rers

compared to the fourth quarter of 2012. again, that number coming in just about a penny below what the street had been anticipating, a drop of 13% for the fourth quarter of 2012 and the cap exnumber, 9.9 billion, down 20%. that stock at this point looks like it is down just about 11 cents. we'll continue to see what happens. that's one of a number of dow components out today. >> the fed continuing on its taper course, what people thought, distressed emerging markets have investors struggling to find safe havens. joining us now is jack bogle, founder of vanguard. i'm looking at some of the stuff you're going to tell us, jack, it's so simple and clean and elegant, i kind of like it. you forever -- you forever have been the bane of stock pickers because you're saying anyone can do this, just stay long in index funds and you get surprises on the upside like last year, which you probably weren't expecting. this year will probably be more typical of what you expect.

the market will rise about the same level as earnings, right? >> well, i think that's not a bad guess. i mean, i don't do much for the annual changes in the dow jones or the s&p, whatever it is. they're problematically depends so much on investors attitudes and not so much invest in what american business is doing, which is, of course, the source of all returns. i look at basic value, a 2% dividend yield. earnings should grow at 4% or 5% per year. that's 6% or 7% internal rate of return. it all depends on what kind of valuation we get. i'd say the valuations are a little high but not extremely high. >> so price to earnings, the multiple goes up, it fluctuates, it goes above certain standard deviations. it goes below. but if you can look at american business and be confident that it's going to grow its earnings at a certain level, then you don't even have to -- you don't have to worry about the monthly

or quarterly emerging market angst, any of that won't matter long term. >> in the long term, that is exactly right. in the long term, it's all value created by corporations, which means in an odd way, that stocks are derivatives. they're derivatives of the value created by our corporation. we want to make sure we understand that the derivatives sometimes get out of line with the fundamentals. >> it also, since we're so dependent for our wealth creation, on corporations, hopefully they behave well and hopefully, you know, being called a corporatist doesn't construe a negative connotation, which is does right now, which is unfortunate. >> well, it's unfortunate but well earned. >> right. >> its reputation. corporations do some things that are pretty bad. i won't even get into the issues surrounding corporate accounting. but they're kind of in a league with their own public accountants. earnings don't mean what they

used to mean. in particular, if you look back at last year's reported earnings, after all the write-offs, the p/e is about 20 times. if you look ahead, which is what wall street does on this year's operating earnings, not the reported earnings but the operated earnings about all those bad things in them, the p/e goes down to 15. that's why i think the p/e is somewhat on the high side. >> all right. someone on the high side, what do you -- you know, in hindsight i don't expect you to forecast but what do you attribute the 30% gain from last year to? that the economy was indeed improving or was it a fed-induced sort of sugar high? >> well, first of all, we've had ever since the great dividend disaster of 2007, 2009 when the financial stocks pretty much eliminated dividends, we've had dividend increases year after year. we don't pay nearly enough

attention to dividend which is are fundamental to the investment equation as i look at it. the continued dividend growth men the that the market could go up about what it did and still not get dividends out of the range of 2%. that's a very low yield historically. the historic one was 4.5, but still double what it was in the lunatic days of 2000 when the dividend got down to 1%. >> it has to be viewed in the context of where global interest rates are anyway, right? >> there's some correlation between the two but not nearly as much as you'd think. a lot of things we take for granted, when we put pen to paper they don't did the look quite as persuasive. sometimes yes, sometimes no on that. >> john -- >> we never know the difference. >> john, i don't know if you heard it, when we were promoting your appearance we talked about you being a contender for what we're calling the cnbc 25.

it's our 25 anniversary this year. we're trying to pick the top 25 people that transformed business over the last 25 years. you're on that list. the world of finance, the world of stocks and everything else out there, who would you put on that list? >> well, i mean, you've got a huge list. i did take the liberty at looking at it. if you're looking for a great industrialist, businessman, if you will outside of finance, i don't know how anybody is going to compete with steve jobs or anybody will compete with bill gates. those are great men of american business. when you get over to finance, i don't see many great men all over the place. warren buffett is a great investor. there's not much question about that. i should add, as andrew knows better than anybody, a great phrasemaker. he can articulate so well at what he wants to communicate. he would be up there as an accomplisher. if i'm on there, i think it's

because -- i think it's fair to say, actually, that i've created a revolution. vanguard is now by far the largest mutual fund organization in the world, 2.5 trillion or so. not that i like being that much but that's where we are. our market share has never been of the industry assets about 18%. no one's ever been above 13% or 14%. and index funds are totally dominant in mutual fund cash flow. it's like i think $900 billion in the index funds in the last five or six years and $300 billion out of actively managed funds for that 600 billion inflow. it's totally dominant, low cost is sweeping the table. and there's not really anything anybody can do with it because no one else wants to run a mutual company like vanguard. all the darn money goes to the clients. >> it's too easy, jack. keep it simple, too.

we're talking about an iphone versus just investing in the market overall. >> he's transformed the way people invest. >> i know, i know. it's too easy. too simple. >> arguably, you look at warren buffett, he's been a great investor, great industrialist. >> he was saying it doesn't matter what you buy. >> i go argue that it transformed the way the country and the world invests which is transformative. >> but it's boring as an investment. >> i think you were born in 1929, which i don't think that's the last 25 years. >> i think warren transformed things in the way of buy and hold strategy. >> go ahead. >> let me just say, if i have one way to put a dollar measure on this. we calculate here each year how much investors spend on our services and how much they would

spend on the services of our clients. it's roughly a gap of 15 basis points to 100 basis points. i don't know the exact number. that's very close. if you go back over our history, that's like $250 billion of extra return to people that have done the low-cost indexing kind of route. that's a big financial contribution. >> warren is much younger than you. he was born in 1930. >> those young guys are troubling me. >> all right. thanks, john. >> good to be with you all. >> thank you, jack. when we come back, turkey slipping in the emerging markets danger zone. we head to istanbul and find out what the government may or may not do about its government crisis. joseph a. bank drama, in a letter to its rival, men's warehouse says it is prepared to increase its offer for joseph a. bank if additional value is

discovered. it's urging the board to form a special committee to reconsider that proposal. right now as we head to a break, check out the "squawk box" market indicator. at this point, there are still green arrows for futures. welcome back. how is everything?

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welcome back to "squawk box." the emerging market continues to be a throat for global investors. turkish prime minister is saying out of the ordinary economic package could be announced very soon. a senior government official tells us the country is not considering capital controls as it battles to defend the lira. >> you were laughing because he told a joke. i still don't know who henne youngman is except he carries a violin. >> that was a good one. >> small violin. michelle caruso-cabrera jones us now from istanbul with the latest.

michelle? >> reporter: hey there, andrew. we're waiting to see what the prime minister's extraordinary plan might be, if anything. he said there would be a plan b or a plan c if the massive interest rate hike didn't work to defend the currency. let's show you the one-week chart of the turkish lira. even though it hasn't gone back to the lows we saw early in the week that prompted the central bank to act, it still isn't acting as well as many businesses here wanted it to act in the wake of the interest rate hike. that's what prompted the questions to the government officials with whether or not there's a possibility of capital controls, saying you know what, we're not going to let dollars lead the country. that would be the capital control we're talking about. the stock market continues to get hammered. we'll see how the close goes as we approach the end of business here today in turkey. it's about 3:15 in the afternoon. we spent a good chunk of the morning speaking with local business owners who are just beside themselves and extremely frustrated.

we spoke to a man in the old part of town. he got out the calculator to talk about how much more swiss watches cost because of the decline in the turkish lira. an appliance store owner was extremely angry about the decline in the currency and the situation. right now, he says ever since political trouble developed in december, that's what caused this dig decline in the first place he's had to lay off 5 people out of 23 because business is down 50% and the decline in the lira means at the same time he has to raise prices, 10% two weeks ago, another 10% hike coming on february 1st because he has to cover his costs as his import costs start to rise because of the declean in the currency. the other currency is the currency in hungary. there's humors about whether or not that country will miss a bond payment. another explanation about why that country could get hit.

>> continuing that conversation on emerging markets, joining us is jemaah godfrey, head of investment strategy at brooks mcdonald asset management. she's also a cnbc contributor. how big of a problem is this with the emerging markets right now? >> we want to look at the broader story. what emerging markets are highlighting for us is that running off of the back of easy money is unsustainable. lumping all of emerging markets together, in longer term you'll see these differentiating factors. the way i would look at it is the same way i'd like at stocks. that focuses on management and financial strength. there are countries, the likes of argentina, hungary, turkey, with struggling with social unrest. political and management missteps. also at the same time, current account deficits. any changes to the interest rate

environment will make them struggle to be able to service their debts. as we saw in europe, the contagion from europe to the u.s. markets could be felt from emerging markets to the u.s. markets. >> which markets are getting unfairly caught up in this rush? >> the likes of china or brazil, they're in a much stronger fiscal situation as well as obviously from the management perspective as well. they're putting policies in place, reigning in credit where they need to as well. they're in a much stronger position. they're opening up for business, the likes of mexico that signed a deal recently to try to strengthen their infrastructure as well. those countries are a much more stronger, stable play. the turmoil is providing attractive entry points to these types of markets. >> jurrien timmer is here with us too. he's from fidelity. if you are looking at what investors are doing, they continue to invest in emerging markets overall.

is there a differentiation between the markets that they like and they don't? gemma was saying some of these guys are getting unfairly tarnished. >> there's the investment grade side of em. mexico is not argentina or venezuela. you have to discriminate between the investment grade side, about 70% of em. when you look at the bond side versus venezuela, argentina, et cetera. >> i know a lot of these are individual factors on the ground for each of these nations. the taper, how much impact does that have on the emerging markets, too. >> very much. the fed is winding down, not withdrawing support. i think markets are starting to realize. this winding down, nevertheless, it's causing concerns, liquidity concerns. a lot of countries that are reatlanta on foreign funding are going to be squeezed. that's the differentiating factor. that's where you could see the

pain play out. if you're looking at it from an investment standpoint, the beginning of the year, volatility was at a seven-year low. this is a healthy correction. there are multinational firms out there as well. now we're looking at attractive entry points as well to these attractive companies. >> gemma, thank you. great talking to you. >> thank you. >> we have to run. mark zuckerberg, do you see the market cap, up nine points? he's not 30. >> he's not 30. >> is he turning 30 this year? >> i don't think so. you know the market cap before the nine points is 135 billion. i mean, we'll have that story next. >> he's 29. >> is that $160 billion? >> birthday is in may. >> coming up, jobless claims, data, gdp numbers and we'll talk facebook when we return. tomorrow, joe kernen walks down super bowl boulevard with the biggest names in business.

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welcome back, everybody. we do have headlines to talk about this morning, some moving stocks. the newly named dow component, visa out with quarterly results this morning. it came in with $2.20 a share. that beat the street by 4 cents. revenue was better than expected, that stock is up by 3.4%. 3m's results matching consensus. it's a higher profit across most of its business lines. that stock is up by 1.3%. u.p.s. earning 1.25 per share. the tech name to watch today, facebook. shares soaring after results beat the street on rising mobile ad sales. that stock is up 18% now. a gain of almost 10 bucks. >> another 20 billion in market cap. above 150 billion. he has to be on the list.

>> zuck >> jessie eisenburg should be the mark zuckerberg. he's the actor in your movie, the movie you wrote. what was the name of that? social network. >> i did not write social network. >> who wrote it. >> aaron sorkin. >> you didn't write -- >> he wrote the west wing, he also writes a show called the newsroom. >> that's not you? >> i don't know what you're talking about. >> when we come back, we'll talk about weekly jobless claims. a first read on fourth quarter gdp as well. these are important numbers, especially what's going on in the labor market lately. as we head to a break, take a look at the u.s. equity futures, they are still indicated higher after a rough day yesterday. a drop of better than 180 points for the dow. this morning, most dow future you up 58 points above fair value. ♪

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welcome back to "squawk box," everyone. we are just a few seconds away from the fourth quarter gdp numbers and jobless claims. rick santelli is standing by, steve liesman is in studio with us. what's the expectation, 3.30.

>> 3.4, 3.3, depending on the news organization you read the forecast from. high 3s would be a better sign. low 3s -- there's a lot of new squishy numbers in there. >> i'm taking the under. >> rick, take it away. we have the numbers right now. >> and the survey says, 3.2. well, i guess that's kind of the under. it's kind of splitting the difference. 3.2, that follows 4.1. just to give everybody a read, if we look at the first quarter, 1.1, second quarter with 2.5, third quarter, 4.1. here we go, first look at the last quarter, fourth quarter, 3.2. let's look at the internals, consumption, 3.3. that's hotter than the last look at 2.0, light versus expectations. the pricing index, many will look at this, 1.3 on the price index. that was versus our last look at 2.0. pce, q over q, quarter over

quarter, up 1.1 as expected. about 0.3 cooler. initial jobless claims moved from 329 up to 348,000. so up 19,000. that's slightly upwardly revised, that number last week was originally 326. continuing claims, a witness kerr under 3 million. so i guess as we step back, you know, you're not seeing the pricing pressures here. you're seeing drops on some of the inflation numbers in europe. i'm sure lagarde will call it deflation because they want to whip out the sword, jump on the horse and ride to the rescue, maybe it's more deleveraging. how is the market digested this? we're slipping. we're back under 270 in the ten, we're approaching 360 in the 30-year. here's the interesting thing. as i look at 9 foreign exchange futures markets, there's only two currencies doing better against the dollar today. probably who you might not guess, the mexico peso and the

aussie dollar. >> what's wrong, steve, what happened here? >> a lot of interesting things going on here. the first thing i see, which was not expected, is a pretty sharp decline in government spending. down 4.9% with a 12.6% decline in federal spending. i'm pretty sure most of the economists that did this -- >> 12.9 on federal. >> 12.6 on federal. >> wow. >> most of the economists were expecting a slight down on federal. maybe this is the catch up showing up in the numbers here. what's interesting, this is pretty much the economy that the fed described. if you look at their statement, they talked about how the economy did well despite the underlying undertow of what's going on on the fiscal side. we had a bump up in consumer spending. that's important. real final sales increased to 2.8 to 2.5 in the third quarter.

consumer spending overall up from 3.3 from 2. with a pretty good increase in nondurables and big one in services. investment fell by a percentage point, still 3.8, but an increase in equipment. a bigger story which is also going to be talked about is this near 10% decline in housing investment. i don't think that was expected, joe. i think there was a flat-to-slightly down -- >> we didn't get to enjoy the 4.2 because everyone said it would be 1.5 in the next quarter. it wasn't. it was 3.2. a 4 and a 3 is not bad. >> 3.5, i can do the math on air. >> what is this one going to be. >> current quarter? >> yes. >> right now, the trackings are 1.8 to 2%. >> 4, 3, 2 is not good. >> it depends on inventory. what's interesting, to me this is a good report given the drag from the federal government. i have to see what the contribution was. i would not be surprised if the federal government took away, for example, a percentage point here. i can get that number.

>> let's bring bob in. >> co-director of the john's hopkins center for financial economics. bob, your take on this issue that i think steve is raising which is the big one in terms of how much government spending has gone down. >> yes, i think steve was absolutely right. the fed said perhaps having had a look that notwithstanding the fiscal drag, the economy did relatively well. i would like to write those. i think that straight forwardly is true. if you put 0.7 back in -- >> bob, i got the number. it's 0.9. the government took off nearly a percentage point. >> when i say 0.7 and it's 0.9, for an economist, that's awfully close. >> we demand precision on "squawk box." most of all, a guy like you has delivered nothing but precision over many years. johns hopkins no less.

>> ex the government, near 4% both times. that's reasonably good numbers. superimposed on this you have insane weather. the weather explains the claims this morning. probably explains a part of the residential investment, disappointment in the fourth quarter. you know, the seasonals expect a global warming kind of weather. instead we've been getting a brutal winter. >> rick -- >> i don't expect -- >> nothing. >> federal spending, i think we should all celebrate. we go get the gdp number up for more federal spending but the fact of the matter is, as that comes down, those numbers aren't adding to the red ink will show up in a much more positive way into the economy in other areas. i think this is good. let's not lose sight over the fact that bill gross was tweeting early in the week that since the budget deficit has

definitely dropped over the last several years from the high water marks of 2008 through 2010, that the treasury has to issue a bit less, so that explains part of the taper. it all fits together. now, definitely do not get confused with the national debt versus the budget deficit. because in order to impact one you have to get the other below zero. which isn't going to happen. the omb predicted this kind of perfect point here where the budget deficits will be smaller but they're going to kick up again in several years. i think that this number is good. but for slightly different reasons than steve. >> when you raise your minimum wage on government workers and contractors -- >> did i not raise the minimum wage. >> is that a material number for federal spending when you raise it on government workers and then also on the contractors that do government work? >> the government doesn't directly pay it necessarily. you have to pay the contractor. >> i think there's about 100,000 or so government workers who will be affected by that

directly. >> you think that would be material, right? >> it could affect it. that assumes there's no offset any place else. the total amount is capital. one other figure i want to give you. >> do you agree with anything rick just said. >> no. bob doesn't. >> bob doesn't. >> i want to make a point, the housing number, being minus 10%, i'm looking at action economics, our friend mike england was looking for a 5% increase. that's a 15-point swing there. i don't know what your number was for housing but that's another place, perhaps -- >> i do think weather is a reasonable explanation there. in terms of rick's notion, you've got to believe the fall in government lowers interest rates and you get the stimulus and avoid the crowding out. we're not in a world where interest rates are a binding constraint. it doesn't add up. >> i'll say one thing about what rick said, down the road, there is a bit of pain that's experienced right now but maybe 15 years from now or ten years

from now or five years from now if we get around to thinking about what we have to do to get our entitlements in order, it will have been nice there was less of a deficit now. i'm in a do no harm on federal -- >> ask francois hollande, the socialist hollande. he sounds more like a free market than anybody at the desk today. >> rick has an important point. rick said ask francois hollande and his point is that we should all invoke the law which we all agreed was nonsense about 30 years ago. >> i'm glad you disagree with many he. that means i'm on the right side on this one. >> rick, you and i have disagreed for so long that it warms my cockles to know we still disagree. >> all i know the government shutdown seemed the best turning point in sustainable growth of the economy in the last five years.

just by coincidence, i'm sure. >> just to end it -- >> one other question. didn't john paul sorkin write "the stranger"? >> yes, that's right. he wrote "the stranger." it was a made for tv movie? it wasn't the big academy award. >> you have the wrong guy. >> hey, barbera, i pick green bay instead of baltimore and people are mad at me. i like baltimore. it's just we don't stop there on the acela. it doesn't go through the best -- there is a nice part of baltimore, right? not where you are, i don't think, though, hopkins. >> no, hopkins is actually in a spectacular part of baltimore. you should come visit. come watch a lacrosse game. >> that's why they call it the wrong side of the track. philly doesn't look too good from the train, either. baltimore on the harbor -- >> philly looks great from all sides. >> you're right, you're right. >> thank you, rick, thank you, steve. thank you. up next, keep be your money

safe, louie navellier tells us why names like apple and southwest can weather this latest market storm. "squawk box" coming right back. afghanistan, in 2009. orbiting the moon in 1971. [ 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. in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

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it's guidance on your terms not ours that's how our system works. e*trade. less for us, more for you. welcome back to "squawk box." the futures right now have given up some of their -- let's see, we were up 80, now we're up 69. that's not too bad after the .2 on the gdp, the 3.2.

the claims number, you can attribute anything to weather. >> weather bob was saying was part of that. >> the microsoft ceo search reportedly could end this week. tony bates and steven elop are not out of the running yet. nadella is the top runner. turner still in the runner? maritz is in the running. >> i don't know. you wouldn't want the job, right? you weren't approached. >> i'd have to talk to the nbc universal people. it would be complicated. >> it's a hard -- it's a cash cow. >> i do believe it's fixable. >> really? what would they need to do. >> we can talk about that. >> i'm sure the company will be asking you. >> i have to do those interviews. recent emerging market turmoil may have many investors scratching their heads but louie navellier says this type of

turmoil makes stocks a screaming buy. he's the chief investment officer of navellier and associates. why? right now, just give us the explanation. you say you're buying like crazy. >> sure. these are the best earnings in almost three years. you know the s&p had almost no earnings until the third quarter. we had a five-quarter earnings drought. so now earnings have suddenly materialized in the third quarter, they're accelerating in the fourth quarter, they're going to go up every quarter this year. one of the catalysts of the stock buy backs and the news is the weak dollar. the dollar hit a two-year against the euro. it's at a one-year low against 15 major currencies. that creates a wind fall for most of corporate america. anytime the dollar gets weak it really helps large cap multinationals. >> for you to be right you really have to believe that this was not a -- last year was not a fed-induced rally, is that right? >> no, last year was definitely

a fed-induced rally. last year was an odd rally because in the first six months of the year, low price, low quality crap did the best. actually the stocks with the biggest short interest, the most negative analyst revisions, that was all caused by people buying index funds or broadly based etfs. the money was flown in and everything was going up. as any market rallies with be it gets more narrow. it's like a race. we have fewer winners today, the market has fewer winners than it did last year but if you own the creme de la creme, like visa today, it's great. >> let's go through some of the stuff you like. apple is at the top of your list. >> i should clarify. my wife owns it. we were discussing apple. apple does have real sales in earnings for a change. and you know, obviously the china mobile deal will really drive it going forward. i'll add it to the dividend -- i'm more likely to add it to my dividend management where we

like to have dividends double every six, seven years than growth management. it doesn't have enough growth to be in the growth portfolios right now. >> southwest airlines. >> they're hedging their future costs, ticket prices are high. they dominate hubs. if another competitor comes in and competes with it, it will abandon that hub. they're very, very well managed. >> any other airline you like or southwest? >> delta's fine. delta's good, too. i know it had a problem with the snow but delta's fine. >> thermal instruments you say you love. >> yes. that's disposable medical devices. hospitals have infections like crazy. they had very good earnings announced this morning. so that's one of my core holdings. >> and google, you say is a sneaky way of getting into china. what do you mean? >> i like it for qihu, a chinese internet company that dominates mobile devices. google is behind this theme. i own a lot of qihu.

>> vrx pharmaceuticals. >> it's one of many pharmaceuticals i have, act, activist, jazz pharmaceuticals. it's cheaper to take a pill than have a procedure. and this is a worldwide phenomena. it has nothing to do with health care in general. as we get older it's easier to take a pill and there's a lot of innovation going on out there. >> thank you for the bullish outlook. we'll leave it there. thank you. >> thank you. within wep come back, jim cramer is ready to rock 'n' roll at post nine of the new york stock exchange. he'll join us after the break with a look at what he's watching at the open of trading. "squawk box" will be right back. tomorrow, joe kernen walks down super bowl boulevard with the biggest names in business. bob kraft, owner of the patriots, woody johnson, owner of the jets and jonathan tisch, treasurer of the giants. plus, the ceos of jetblue and

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welcome back to "squawk box" this morning. take a look at futures, they were up in a big way earlier and they're still up and they've come back and the dow has opened 92 points higher and nasdaq up 36.5 points and the s&p 500 up almost 12 points. joe? all right. let's get down to the new york stock exchange. jim cramer joins us now. i said we got to put zuckerberg in there, jim, after last night, i mean, is anyone at 29 years old ever had $160 billion company? >> no. this is an amazing quarter. this is one of those quarters where it is still, i know this will sound -- it is still very inexpensive on what i record as the out years on 2016. i can tell you that this is probably one of the least expensive on the out year stocks that i follow versus the growth rate. this has the most earnings leverage of any company that i know right now. the expenses are really not keeping pace with the revenues. they're making a lot of money and not only that the quality of the product hasn't been enhanced

meaning that people like their advertisements. instagram's on fire. this one's it. this was the quarter, like the quarter when it went from 20 to 40, this was a breakthrough quarter, this is social, mobile cloud. it's the best we have so far this year. >> you hear them talking about visa, you've talked about visa, haven't you? >> it's amazing. we talk about apple and whether apple is doing the right thing. if you look at visa they bought back stock hand over fist after a quarter that people didn't think was that good. it's a secular story of paper to plastic and it's a terrific and inexpensive stock. >> do you care about emerging markets and whether they infect us, jim, or you just -- you look at this as a time to buy stocks you like? >> well, i mean, look, i think you can go through the quarters we have. we've had 21 of the dow jones stocks report. i see ten of them got "as" basically meaning better than expected with good guidance and i know you could say that boeing

has to argue when the emerging market will help last night, i had honeywell, and boeing is the most linked with emerging markets. i know if you look at the four big squalls, you look at turkey in ''into and mexico in '94 and south korea and thailand in '97 and russia in '98 and one year later markets up dramatically in every single case. >> go ahead. >> jim, exxonmobil, that was the one i was hoping to get a little more from on it. you are good at looking at the numbers, what do you think? >> it's one of those companies the second quarter i kind of like. there's a lot of negativity toward the oil patch. i was talking to core labs last night and core labs is probably the single biggest explorer for everybody else but exxon. exxon is good. the stock jumped five points because warren buffett got in. remember when ibm went up. you remember warren buffett, when he says he's bought

something people go crazy for it. exxon's good. but buffett took it to that peak. ibm's okay, not great. buffett took it to that peak. i think people are just saying why did i buy it again? and, oh, yeah, that's right, buffett liked it. you got to have a little more. >> all right, jim. we'll talk -- i don't know if we'll get to talk to you tomorrow. so, you got computer models are predicting seattle. but i don't know. >> the money's all going broncos' way. i mean, i never -- >> what does watson say? >> by the way, i've seen kevin plankton in terms of quarters unbelievable, underarmor, incredible. fantastic, cold weather gear, it's whole new twist on how to make money on the cold. kevin plank. >> they have some infrastructure line, too. >> they have they're a technology company masquerading as a clothing and power company. >> all right. >> thank you, guys. coming up we'll get final thoughts from our guest host and we'll get our stock of the day and here's a hint, it's a brain

buster. we're going to talk about it with jim cramer and it's a social media stock that investors have been liking this morning. do you know what it? i bet you do. and make sure you stick around for "squawk on the street," denver broncos president joe ellis huddles up with the "squawk on the street" team. we're going to be right back. quick look at the weather. nice day, beautiful tomorrow. tomorrow is full of promise. we can come back tomorrrow. and we promise to keep it that way. driven to preserve the environment, csx moves a ton of freight nearly 450 miles on one gallon of fuel. what a day. can't wait til tomorrow.

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stock of the day, facebook company delivering strongest revenue growth in two years, mobile ad sales continue to accelerate. you could sell facebook for $160 billion and you can buy boeing and eli lilly for the price of facebook. does that scare you? boeing is $97 billion. >> and boeing -- it's not under pressure. >> and facebook's over $150 billion. for people who like looking at pictures. >> what's the p/e of boeing versus facebook? >> that's below my pay grade. you can do that. >> thank you. >> let's get back to our guest host from fidelity investments and if you were to leave us with steady as she goes, is that the -- even when everyone's losing their head around you? >> yeah. i mean, there's a storm out

there. it affects china. it affects emerging markets and because our market got ahead of itself last year a little bit on improving fundamentals but it got a little bit overbelieved and that's why it's infecting us right now. and maybe it's down six or seven or maybe this is low. i think the message is if you are a typical investor and you are putting money away every month, stick with your plan and ride it out. >> compared to '99, multiples are still especially for the big blue chip stocks they're still not that high. we do have maybe someday interest rates go up, but if we get no expansion we go up on dividends and earnings. >> in the mid single digits maybe upper single digits and the p/e is 18 and on the forward basis it's about 15. the outer earnings estimates tend to be too high. they'll tend to come down and the 15 will probably go up to maybe 16 or so.

but that's still not unreasonable with, you know, 3% interest rates. >> yesterday. yesterday, before these gains the p/e for facebook was 127 versus 23 for boeing. forward p/e, again, this is before the gains 47 -- >> you didn't get to say it but fidelity is a much bigger factor in everything than that stupid vanguard, you wanted to mention that, too. >> thank you. that does it for us. right now it's time for "squawk on the street." a look at the new york stock exchange as owners of the super bowl-bound broncos and seahawks ring the bell this morning. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange. faber is on assignment. futures look stable after the post-fed meeting drubbing. facebook far and away the most impressive report, surging in the premarket. ten-year yield as gdp