>> please, god, next year. let's have a better afc outcome. anyway, back to you. it's been fun. we'll see you next week. >> it's going to be great. we've been watching -- >> becky -- >> we want to have fun in new york, stay for the rest of the day. walk around and see what's going on. >> toboggan. >> the futures are a mess right now and it's hard to say what will happen at the end of the day. >> have a great super bowl weekend and we'll see you on walk boston red s"squawk box" o. "squawk on the street" is next. good friday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer at the new york stock exchange, faber is on assignment today. we'll close out the month of january with some fierce selling at the open. walmart is warning for the quarter and the dow is on track for the first losing january in four years. the ten-year yield down to its lowest since october 265. and europe facing more inflation

fears and german retail sales were no good either. the roadmap begins with the market and we're set to open deep in the red with dow futures down triple digits and the stocks are on track for the biggest monthly drop since february of 2009. and walmart set to open in the red after lowering guidance for the current quarter and amazon and google going in different directions. amazon slipping after fourth quarter earnings miss while google moving to the upside after revenue topped those expectations. we'll start, of course, with the markets. signaling a steep drop at the open as stocks aim for their first down january since 2010. investors still worried about the emerging markets after a drop in euro zone inflation shows recovery overseas is still weak. that's not counting walmart, mattel, mastercard saying not such great things about the consumer. >> mastercard had expense issues. i really love that company so i want to separate that. i think walmart's doing poorly. but i think, carl, unless there's some event that we don't

know about over the weekend, this kind of input should not have the futures down this much. so, in other words, unless someone actually knows that there's some chinese number or something that i'm not -- and lunar new year, so there's not much going on there. this seems like an overreaction. i want to say it's much ado about nothing, because if there is something i won't feel that way, that we don't know. >> last day of the month. >> right. >> we know month ends can be different. right? to what degree is that playing a role today? >> i think there may be someone who is going bust or something. but the dow is set to open down 6% for the year so far. and i don't think the stocks that are in the dow deserve an aggregate to be down 6%. there's enough good there that you really want let the futures take stocks down and do some picking. i hope the futures knock down y c chipotle because that was one of the great quarters. >> streets at 165, they're

closing 50 underperforming stores in china, brazil, the reduction of food stamps they say had a bigger impact than they thought. >> yeah. there is a food stamp -- remember, the 40 million people on food stamps and the government made a series of miscues here, i think. the food stamps, unemployment benefits and, by the way, the shutdown. that strikes deep in the heart of america. we keep forgetting when you speak to the ceos who are in retail, they always talk about -- we forget about the shutdown. but i do think there is a definitive stopping of the government, stopping of spending that happened and walmart also had weather. i'm not going to dismiss the weather. i know howard schultz of starbucks said dismiss the weather but there's too many places in the country where business was shut down. i think walmart is uniquely in the wrong space. they've got the wrong demo -- it's unfortunate, because 100 million people shop at walmart, but maybe people are going away from walmart to shop. >> what about those who want to

draw connections between walmart and mattel, fisher-price down 13% in the quarter. the ceo calls it a transformative year in retail. >> look, i think, again, to go back to what howard said, because howard is shifting his whole business at starbucks toward going toward this change to digital retail, i think some companies had the right merchandise. costco is up 5%, macy's up 5%, starbucks up 5%, the guys that have a good culture are doing well. i want to come back, you did a fabulous special on costco. costco's got a lot of members. i mean, i was reading my costco connections last night. >> the cover. >> they went with samsung. you know, they're at war with the big dogs in cupertino and i come back and there's a secular shift in the way people are shopping. certainly shopping, we still -- if you look at the home builders, those companies are making some money but i don't want to get as bearish as the futures are. there's obviously a lot of stuff

wrong but the government really hurts. >> let's get to the big tech movers amazon and google and amazon is trading sharply lower in the premarket, they did miss estimates and the company is considering a $20 to $40 price hike on its prime service and google trading up in the premarket after those results the stock set to open at a new high as earnings and revenue rise. i don't know which one you want to tackle first. operating margin for amazon is at a two-year high. >> but people don't want profit for amazon. i mean, it's really absurd. >> because why? because they're worried that profits mean they see growth slowing down? >> yes. the idea is if you have to raise prime which they talked about as being the same price forever and i think is one of the great bargains in the universe, if you have to raise prime maybe people feel like it slows down and when costco raised the price for their first time 100% people going for it. people in prime will stick boy prime. i don't think amazon is nearly as negative. but it had such a run.

google, on the other hand, google like facebook the question is whether they want to own the world. i'm looking at the money that google has and they hired a procter & gamble guy. very smart guy. they're talking about how we can start monetizing youtube. google if they wanted to could go buy nfl rights and if they figured out the algorithm whether people should pay this much per game, maybe they should pay $24 for the super bowl but only pay $12 for the san francisco/seattle game going to the super bowl. google is a monster. it's a beast. it's a beast. the call's really fabulous. >> you mentioned last night on "mad money" cost per click down 11. continues that trend. but the number of paid clicks up 31. >> yeah. i mean, they own this thing. it's kind of a not really addressed in a formative way in the conference call, but programmatic advertising if you want to advertise on the web, you go to them, if you wa been to get advertising on the web, you go to them and they are like a bookie and no one can avoid them. so, google is -- google's on fire. and i think that when you go

through that, they're very humble on the call. but they're taking a piece of everything. and if they figure out how to monetize youtube then their earnings can double. >> we talked about the google/facebook sophie's choice that some investors are in. which one do i buy? mark zuckerberg made $3 billion on paper yesterday and he'll be on the "today" show next week. >> facebook sells at 35 times 2016 numbers, google's dramatically less than that. these are both really fine companies. i think facebook is a -- if that is -- futures bring down facebook i would buy facebook. i don't like to chase up google like this. but, you know, it's entirely possible that there are two winners here and i don't want to throw out amazon. it's a cult stock. that will bounce. but, carl, google and facebook when i go through the calls i just say, wow, they've got the smartest people in the world. we should stop being so down on ourselves as americans. no one in china has anything like these companies. >> i totally agree. and by the way, the state of the

union this week the first company the president named by name was google which kind of got lost in the shuffle of a lot of other news. >> we should be proud, these young people. i'm in awe. i'm in awe. >> we've got some breaking news here. our steve liesman i think is back at headquarters with some of that, steve? >> carl, thanks very much. the international monetary fund out with a statement saying recent events show a need for coherent macroeconomic and policies and urgent policies are needed to improve fundamentals in some countries and it shows vigilance over liquidity conditions a bit of an interesting comment right there. they say it's difficult to pinpoint a single trigger for the emerging market selloff but the turbulence shows the result of tighter external financing conditions. i think that's the withdrawal of liquidity or tapering on the federal reserve. the emerging macket volatility shows the result of slower growth and softer commodity prices and several emerging markets have taken or responded

and taken forceful actions. so, the imf monitoring the situation and putting out a kind of nonpolicy statement here in terms of what they think people should do. just urging some of the things the imf is already urging saying some have already taken action, carl. >> certainly on a morning like this, steve, people want to hear what their take is on a morning like this, thanks so much, steve liesman. >> sure. >> currencies aren't moving around as much as futures might make you think. >> people see 2.6 on that ten-year and they say, well, there must be a recession brewing or must be something urgent happening this weekend. i come back to the -- look, i only have the work. i just look at the conference calls, you know, i read them and there's a lot of companies that are doing really well and a lot of what i've been addressing the last couple years and thinking about is that the futures take stocks down. they take all stocks down. and then we see about a third of the stocks come back. i'm actually going to be looking at the col colgates and the general mills, and watch simon

properties, they boosted the dividend and had a great quarter. real estate investment trusts have become accidental high yielders versus the ten-year. if you want to see stability, look at simon properties, look at federal realty. >> you have been sushsspicious of futures the past couple of days. >> the guys that trade them, we tend to ascribe great brilliance to them. it's over -- they're not -- they're not necessarily the smartest man in the room but they all think they are. >> okay. got some big news on microsoft maybe. reporting the search for a new ceo could end very soon and that an insider is the front-runner for the position. and reports say that microsoft's board is considering replacing bill gates as chairman. some of the reports suggested an announcement could come as early as today. nadala runs cloud and enterprise, a sun microyvette.

would that make you happy? >> two weeks ago, no, because i wanted an outsider to shake up the company and the last quarter was picture perfect. i want an insider to continue greatness. this guy is doing part of what's right at microsoft. is he going to break up microsoft? clearly that would not be. the idea you want an outsider you want a company xbox and skype, you want to have a company that is enterprise and a company that is basically windows. what i see from this man is a continuation of what i think is actually a company that's gotten back on track, surface is pretty good. windows is pretty good. so, steady as she goes, maybe? >> interesting a lot of people now saying i'm glad it's not going to become a car company under mulally. i'm glad it's not going to be run by nokia. there's some relief it's turned out to be nadella and not somebody else? >> microsoft has a lot of good things going, but they missed social and mobile and they caught cloud. they got one out of three. when you go -- i had last night

i had a company -- i have work day. i talk to these guys and i always think that microsoft could have owned all, all of this -- this cloud platform for human resources. they could have owned it for travel and entertainment. they just didn't move. and i wonder whether this man who is cloud oriented can finally challenge the bennyoff solution to so many businesses because the cloud is the way that everyone's been able to reduce their costs and become more efficient and microsoft missed that. they missed mobile, too. they missed mobile. >> and people might forget it was august when ballmer said he would leave. it has been a long time coming this decision. what about the gates' bit? >> i think it's time for every -- i think that bill gates, look, he created this company and i did work with them when i was at goldman sachs and it's a great company, but one of the strong signs of companies is when the chairman, founder, they move on and they become more global. he says he wants to do the charity work.

he's been extraordinary at that. it's time to move on. don't look over the shoulder these people because they can't operate the way they want to. >> right. a lot to cover and we'll see. we'll keep our eyes open for any announcement if it is forthcoming today. when we come back a very bright spot in a very down market chipotle seeing a huge move to the upside after a strong order and now it wants to raise prices, will the customers coming, why they are paying so much more for things like avocados. >> i am paying a fortune for avocados for my restaurant i get it. >> the dow is up two out of the last eight sessions. more "squawk on the street" from post nine in a moment. ♪ i know one thing that i love you ♪

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[ male announcer ] don't wait. call today to request your free decision guide and find the aarp medicare supplement plan to go the distance with you. go long. if there is a bright spot in the market this morning it is chipotle, the stock is up more than 10% premarket as the company reports a bigger-than-expected growth in quarterly sales thanks to an increase in customer visits. it is considering raising prices later this year, jim. comps up nine three and most of that traffic. not bad. >> this is a great quarter. >> you don't see numbers like that. >> one of the things i love about chipotle they do the broader ethos call and they tell you what america likes.

you should watch, they hate gmos, believes it is farmed and dangerous. he's about the ethos, and then you have one of the best cfos. the co-ceo martin brandt comes on and then they say, look, the traffic's great, the through-put the whole notion of can we get people through, is fantastic. they can raise prices without any resistance. a 9% comp, are you kidding? they are rolling out pizza. we want to see how that goes, asian kitchen, taking their time and making it right. remarkable. this is a conference call that is about my kids. this is about how we like vegetarian food more than we like beef and chicken, how we despise the food chain. this is the anti-mcdonald's conference call and, of course, they are spawned by mcdonald's. >> yes. the irony on that will never be lost. >> one of the great ones. one of the great conference calls and it's just beautifully scripted. >> they do see comps for the year in the low to mid single

digits. does that -- >> i'm not worried. this is a seasonally weak quarter and they still blew the numbers away. a lot of people -- you know, there's group of companies, star burks, costco, chicago pelt lay, whole foods. they all talk. they're all winners. they all figured out the american consumer and the things they have in common are they recognize that organic and natural are what we want. when i look at walmart's numbers and mcdonald's numbers, i do not relate those to being organic and natural. this is a much larger theme than people realize and those four companies that have it right are in a position to take ascendance here. >> you don't think it's ephemeral? you don't think it's a fad or a craze? >> the ceo of costco told me, i said, listen, what do you think about organic and natural? jim, i thought it was a fad. and it isn't. and i'm all in. walmart's struggling. walmart brings in hain celestial

and they are scrambling and mcdonald's doesn't know what to do they are a great american company with great management. but farmed and dangerous. this conference call is about the food chain being corrupt and america believes it. >> dairy costs are coming in, but before the break we said tomatoes and avocados and food prices are rising even though the marketing leverage is also rising. >> i think that's true. look, i make no secret, i own a mexican restaurant and, you know, it's -- get the fresh gauc is important, but you can raise prices at chipotle, i can't raise prices. but they are making $2 million per store. i've been doing the square footage thing, it's just phenomenal! that's a phenomenal number and they don't serve liquor and tequila and that's where the margins are! >> they got beer. >> they are not making the margies and getting 12 bucks per, they are just making burritos! >> that a lot of people want. when we come back we'll get

cramer's help to set up your portfolio for the weekend. and we'll get the "mad dash" next. one more look at futures. we'll close owl january the way most of the month has gone. we'll be right back. mine was earned in korea in 1953. 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.

♪ ♪ call the ladies out a few moments before the opening bell on this friday let's get cramer's "mad dash" ahead of the open, got a mea culpa from a netflix bear. >> nice person. he's actually been very right. morgan stanley goes sell to

hold. the guy really caught the most part of the movement and thought it was over and now admitted it isn't. i like to find stocks that are upgraded on a big futures down day because that's where the money gravitates quick. watch netflix. and jpmorgan has been against the airlines and united airlines sell to hold. i like the whole group. i like delta, i like united continental but american is really the best i think because of the merger with us airways. again, the airlines have been very strong. that's a natural place to go. there's nothing in the news that makes me feel the airlines should be weaker. the futures pull everything down and then people look around and say what works here. >> yeah. >> we had the big futures down earlier this week and i thought that the kelloggs and general million mills would get money but they didn't. watch those two. but it's really important for people to recognize the futures take everything down but someone will come in and buy american air today. you want to be that person. >> and pull up jetblue or southwest which are getting a lot of slots out of reagan national. >> southwest.

i know. american airlines skipped everybody. southwest is a very good situation. remember, all these of good. delta is flush with cash. the futures do not control these guys. union pacific and norfolk southern doing so much better than people expected. another place those stocks are elevated. but just beware the transports may be another tell that we're not falling off the cliff. >> on a final note you don't think the rails are cloudy given what kansas city and southern said. >> i couldn't believe they missed as bad but they are supposed to be making 500,000 vehicles in mexico and move up here and they didn't. and southern had a route down to the oil and the refineries and it's being shifted to the eastern balkans. brutal. brutal. they had two things go wrong. >> state department may issue a ruling on keystone and whether or not it will be negative. >> watch conoco phillips have been here. they are accidental high yielders and they'll be yielding

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all right. we're watching "squawk on the street" live from the financial capital of the world. starting this half hour with a song called "happy" which some investors might not be given where futures indicate. the opening bell set to ring in a couple minutes here. >> i saw him in concert. it was just a fabulous little concert. >> it's a great tune. it's a great tune. hopefully the mood can swing that way. obviously first losing january in four years, jim. you mentioned the ten year at 264, 265, that's what people are watching. >> they feel there's no way that can be where it is without some crisis they don't see. when you see that, i usually don't even like to rumor that there could be something. because i don't know. i don't know what could happen. but europe is down unnecessarily i believe versus some of the numbers we saw and i just come back to, all right, what stocks had fantastic quarters, you know, if united technologies comes down that's one of the best stocks in the dow, an

amazing quarter. watch at&t, they weren't happy with the cash flow and they had to spend a lot, but if yields six, at&t is fine and verizon yielding five. watch the yield of stocks that have done okay as another place to go. use accidental high yielders as a place to put money to work today. >> what about the big momentum question names like the under armours and the facebooks? that have seen them lose and then regain and then lose again their mojo. >> i think that's absolutely right. i was with kevin plank last night and magnificent quarter he's opening 13 stores in china and he's got really without a doubt the best technological edge. he regards himself as a great engineer of shirts, he is, all right, that stock was up 18 points a lot of bears who thought the gross margins would go down. they didn't. it comes in five six, you're getting a chance, guys. you have to view of it like that. the only place where i'm not -- i don't want to take the chance is in the banks because they -- they needed the yield curve. they needed it to go with smart inflection. they needed the ten year to go

to three. that's where they thought. banks are not a place to go. >> all right. with that, let's get this final day of january under way. we should mention, too, it's chinese new year. mention some of the closings around the world, year of the horse begins. and bernanke's final day at the federal reserve. >> wish him well. >> there's a look at the opening bell. and the s&p over at the top of your screen. at the big board intrawest resorts a mountain resort and adventure company based in denver celebrating its ipo today. >> congratulations. >> and papa john's international the official pizza sponsor of the nfl and super bowl xlviii. game time forecast 48 degrees only the eighth time the two best teams have met in the super bowl, jim. >> take seattle. >> i know you take seattle. and we should mention nate silver of espn also taking seattle today. >> i think byron maxwell is the man because r. sherman 25 one of my favorite tweets they're not going to throw to his side.

>> yeah. >> he's not -- he's not sherman island. he's sherman continent. >> so with all that in mind, to what degree are amazon and google going to set a pace? >> well, i think that google is going to be sanity here. i think that people recognize that this is a company that if they wanted to, could be a -- the stock exchange. one of the things when you talk about their ad exchange where everyone use them, everybody here -- i don't want to -- google and nasdaq, if google decided they wanted to be the exchange for stocks in the next six months they could do it because they are such an incredible and efficient algorithms there. a terrific company, one to watch. i know that people are bored by yield. but what this is about today is a flight to quality and there are a lot of companies that i trust more than i trust the federal government's full faith. >> yeah. tyson foods not doing too badly. they came in 72 cents, 9 cents above. they do say the beef segment may see profitability drop in fiscal 2014. >> it's funny buffalo wild wings

is doing well and tyson doing well. the dow down 6% now and i think it's from the beginning of the year. you want to look at the high quality stocks that recorded good numbers and really decide i'm going to make my stand so to speak. you don't start aggressively and say, i'll buy mastercard because it's down four because there might be issues obviously in the call but you can go buy visa which had an amazing number and they are giving you a chance to get in. you have to view it as they are giving you a chance to get in and look at your shopping list for the companies that delivered fantastic numbers and sink your teeth into them. >> you mentioned mastercard, 52 cents is a miss. volume up 13. why is that not a comment on the consumer? >> well, because, you know, they're spending to win. and a lot of people don't want to see that. amazon's spending to win. >> sure. >> i don't know. look, i don't want to -- mastercard i'm not on the call. i've been one of these things i've been possessed by the conference calls and i really need to hear their explanations. but i do feel i've sat through visa's conference call and that was magnificent. >> yeah. check in on walmart as well as

we mentioned earlier. they do see q-4 coming in at the low end of the range. 160 to 170, the street is at 175, but will be a big broad consumer company written about today. >> take a look at mcdonald's they did not report a good quarter but the stock yield is north of three and you start getting that money coming in the north of three money is another place where people should look. we did have some bad quarters. exxon was a bad quarter, okay? so, people want to go there, like, they need warren buffett to come out and say, listen, i like it right here. ibm. ibm is absolutely a big, big problem to this market. these companies that kind of really reported bad quarters and i got to stay away from the ones that reported bad ones and buy the ones that recoported good. pfizer really good and ibm, no, okay. >> you seen gave them grades. >> yes, microsoft really good. intel which i like because of the yield but i have to admit not that strong. go with -- go with what is

working, that had great quarters, and i think you'll be fine today. >> some of these names that have been long been punished like a zenga up 22%, 23% today. >> they have a good management and made a terrific $500 million acquisition. i'm a believer in zenga now, i believe they've addressed -- they were hurting on a management side and they reminded me of groupon. >> jdsu beat estimates, revenue above consensus. >> optical doing well when you are spending out on your network which a lot of different companies are in telco, jdsu gets their share of the bid. they get their share of business there. >> tyson 72 cents, 9 cents above as we mentioned earlier and wynn not doing too bad. >> the wynn conference call was so good! >> yeah? >> geez, we all believe china is falling off a cliff but if you listen to the las vegas sands conference call and the wynn

conference call you certainly wouldn't feel that way. by the waugh, the lunar new year is a big deal. to give you a sense, my father worked for a chinese company, they don't make anything. you can't get a bag. you can't. like, china shuts down, so you're going to see numbers, oh, my god, what happened to china? well, they shut down. >> does amazon -- at what level do you like it at 70, 369 here? >> the futures weren't down amazon would probably be trading down 15. >> that's going to take you back, though, to late november or so. >> right. >> that price. >> amazon there was this belief that how could they have not done really fabulous because of the weather and they themselves had some weather issues. i'm not that worried about amazon. the coldest will come back and they'll start buying again. they can't resist buying amazon. they love the growth. they raise prime, whatever. >> you want to explain the new class of shares at google and whether investors should look at goog or googl. >> the split will bring in new money and it wasn't clear to me

and i don't think they made it that clear on the call frankly, what the difference is between the two. the call is a spartan call. did not have the great arc that i like to hear on a conference call. but google, the split will bring in new money. you got to be careful obviously, mastercard the split brought in a lot of money and the quarter wasn't that good but we just saw google's quarter and it was excellent. >> you went into the week saying, look, be prepared for a 2% to is ex% decline. >> here it is. >> nicely done for the week. what happens now? what's the narrative for the next couple of weeks? >> i think that we got to take a look, again, about whether we get further and further away from the government shutdown. like we just had this bad weather again in the southeast is going to play havoc with the numbers, but we got to watch for pmi, all right? we got to see some industrial pick-up. we got to see that ford is right about inventories and not michael jackson at autonation. we need autos. we need housing to pick back up. we need the banks to continue to look good, story about banks lending. we need the yield curve, i don't want -- i need the fed -- okay, here's something that is -- the fed should be selling bonds.

>> as opposed to -- >> the whole taper thing, i heard someone say, it's the taper. are you kidding me? do you even trade bonds? have you ever traded a bond? the fed needs to unload their bonds! >> yeah. >> we got to get more inflection in the yield curve. >> yeah. in the meantime, people will start to pay more attention to the jobs number that is coming on friday. some argue the confidence numbers lately show or suggest that december was a one-off. it was just an outlier on the weak side. >> government shutdown. food stamps. boy, the government killed us, carl. the federal government was just terrible. really the biggest impediment to business in the -- i think people worried about health care. i don't know if people are trying to figure out what is their health care. the federal government killed this economy, republicans and democrats. >> hopefully in d.c. they've decided that that's not going to happen again. >> yes. >> so we are down 204 on the dow. and let's get to pisani to find out what's moving on the floor. >> nobody believes the weakness is due to drop of euro zone inflation it's the ongoing

effects from emerging markets. we're weak across the board. it doesn't really matter, for example, consumer discretionary among the weakest, weak right across the board. i want to get to some of the earnings just comment on what's going on because the picture is rather mixed. we overall had good numbers, jds uniphase was good, telecom, and their guidance in line. and broadcom earnings were good. they were higher end of guidance, the revenue outlook for the current quarter was good as well. both of them are trading to the upside, chevron was in line but the downstream earnings were weak and you had the same problem you had with exxon, there's really no growth in that particular group. that stock's down. pacar which is the truck company in theory it's a good story because the truck fleet has been aging dramatically and that's good news for them and they beat by a small amount but not enough to impress people and they are trading down. and amazon with the higher costs and the revenue still up 20%, revenues still pretty good here but not good enough and the higher cost an issue. you can see that's a big move to the downside and walmart, of

course, cutting guidance that's also hurting things as well. credit card, mastercard up 12% more transactions but they missed on the top and bottom line. that stock was up 50% last year, remember that, though, you can see it to the downside bringing down the credit card companies like visa and amex as well. i want to talk about retail because there's been a lot of concern with the weak retail numbers that the mall is dead. did you read simon property group's report? this is my old beat. i love the simon property group. biggest mall operator. look at the metrics, occupancy was up, it was 95% a year ago it's now 96%. and the average rent per square foot is up 4%! the represent is up! the guidance for the quarter is above consensus. and they beat, too, on the top and bottom line. and the dividend, they just raisedet today, 8%, it's nearing 3.4%, i got to see the price here to get the can rat dividend but that's a great dividend for this company. there's simon property group. obviously all the reits got killed last year because of the yields going up on the ten year.

but the bottom line is this, the high-quality malls are not standing still, jim. you know as well as i do they're trying to change how these malls are run. they've become mini theme parks. they're using a lot of them to create new outlet malls where a lot of business is going toward the outlet centers and the three-prong approach is the outlet stores and the online sales, my opinion the well-managed malls are not dead yet. guys, back to you. >> thank you for that, bob pisani. let's check out the bond pits and got to pay attention to what's happening in chicago. rick santelli is at the cme. hi, rick. >> hi, carl. you have a lot of futures guys that would like to have a sit-down with you and the one comment was when it comes to futures nobody complained when the stock index futures were helping goose all the liquidity on the way up and, as a matter of fact, they're getting more bearish after your comments. because when you pick sides on how a market impacts, it's kind of normal style to the -- to the downside, makes everybody get a

bit more nervous. listen, when i look at what's going on in the world, all's you had to do is focus on treasuries, seriously, okay? you look at the 303 close on new year's eve's half-day session and it's all down yields after that. as we look at an intraday chart, closed down half a dozen. and a weak chart down to close to ten basis points on a ten-year note and these are the potentially lowest yield closes since the first week of november. another chart that augers what is going on here is kind of draining liquidity, with a little extra horsepower to the reverse of the carry trade is the flattening yield curve, five the and tens flattest since early september. and look at the market for the handy. kaers for the super bowl on sunday, look at the dollar/yen and the euro/yen and pound/yen year to date, i can hear the sucking sound of liquidity just looking at those charts! back to you. >> he's got a good point there as always. as you know, markets are

deep in the red, we'll get more on today's big move after the break. later it's bernanke's last day at the federal reserve. what is he leaving for janet yellen to inherit? we'll talk more about that when "squawk on the street" continues. ♪ ♪ [ male announcer ] when seconds count, the experience of adt matters. the alarm initially went off at 12:06.

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welcome back to "squawk box," hands me the envelope, please. january chicago purchasing managers survey down 1.2 to 59.6 that's now down three months in a row. inventories popped 7.3, prices paid up 3.3, employment minus 5.1 the 49.2 lowest since april of 2012. alice, it's your restaurant. give me the highlights especially inventory and employment. >> down three months in a row i normally would be very concerned about this, but, rick, the bottom line is we're still

oscillating around 60, we consider that a very solid report. the bottom line here is we are being supported by orders and backlog and new proction a little bit but up. inventories up 7.3 this is driven by demand. this is not the environment where you would be accumulating inventories if you didn't think you could sell them, indicators are that sales are going to be strong. also there was good planning on the -- ahead of the chicago -- or the chinese new year, so that was good. other things, prices are up 3.3, highest since november 12, because of demand. purchasers are -- >> money or demand, it usually follows, right? >> right. >> carry on. >> the only negative i really saw was this unemployment down 5.1 lowest since april, but the fact of the matter is we have a very flexible workforce here. we have callbacks from layoffs. you can lay back people relatively quickly, temporary workers and interns and all of that working and it makes the

employment level very, very flexible. if dee mannmand is there, it wi up next month. >> according to what you're saying it's going to fee a good thing and maybe it won't be that there aren't any customers buying the widgets. but on the employment scene the meager number last time combined with this one week from today we'll know the answer. one final thought on the data series before we go? >> going forward we'll have strength in chicago. >> thanks, alice. carl and james, back to you. >> he makes it exciting. he also does. >> your reaction to pmi, down three months? >> not that bad. you know, look, again, i'm a case by case, i'm looking at the chevron quarter and why the dow is down so much. horrendous, horrendous. the pmi ain't going to influence that. but overall you should be thinking, again, there's -- i'm watching the conoco go right through the support level that i thought you should be buying at,

focused on yield, focused on yield, focused on yield because that's the trick to buying in the big declines that are not based on bonds interest rates going higher. >> to reiterate the playbook you gave us earlier in the week, yield that reported and company that beat. >> caterpillar should be down big. caterpillar is up big. you know, you got to notice these things. you can't just say, wow, things are awful. look at the big industrials. the big industrials aren't getting hurt. the banks are. >> right. >> because the yield curve is wrong for them. >> we were talking during the break how you said dow was in for a 6% slide. >> here we are. >> you said, now i -- >> i got to go 8%? hey, wait for a pullback, no, not this pullback, i'm talking about the super duper pullback. citigroup, do i want to own citigroup, that was not a good quarter. maybe the banks get overdone. a lot of the drug companies reported really good quarters those are very interesting and

remember the transports were good. and i wish the transports would come in because they don't come in. union pacific only down a dollar. come on, give me a chance to get in there. american airlines, please let me in, no, it's unchanged. the good ones aren't letting you in. you want to buy chipotle as much as i love the price of guac, it's up 69. the good ones aren't coming in. the bad ones sold to you. >> big event next week by the way, right here in the big apple, jim cramer's talk and book signs for "get rich carefully" tuesday night at barnes & noble union square store. details about your earliest days and the earliest lessons you learned including the first day you set foot on a goldman store. >> trying to figure out why a stock went from nine to ten and someone bought a big order of 100,000 shares. it's about supply and demand. and bigger things come into play today, natural and organic where you want to go, biotech is

interesting and oil, and partnerships should shine. long-term themes, don't bail. and been remember, supply and demand and demand can pick up at a certain level. thank you so much and i hope everybody comes to the book signings. >> take the top off. >> stride rite is probably thinking is it a takeover? no, it was some guy trying to prove to me -- look, i'll move the stock from nine to ten. go ahead. >> great stuff. >> thank you. here's what's coming up next on "squawk on the street" -- >> coming up, it doesn't matter who you want to win the super bowl. it's all about offense and defense. and the same goes with your portfolio. so, let coach cramer give you some plays. with 6 stocks in 60 seconds when "squawk on the street" returns. huh, fifteen minutes could save you fifteen percent or more on car insurance. yeah. everybody knows that. did you know there is an oldest trick in the book? what? trick number one. look-est over there.

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there's a look at metlife stadium, super bowl xlviii just 72 hours away, jim. >> can't wait to be there. it's going to be big. >> unbelievable and, of course, the buildup will continue all through the day. we had a bunch of players, eli manning, closing bell "last night. csc. >> how about they did better-than-expected numbers?

sell to hold jpmorgan i agree. >> pulte. >> they are saying buy it. interest rates are going down that's great for pulte another place not to panic. >> chevron was no good. >> it was bad. and it drives me crazy because chevron should not be missing this badly pulling down the whole group. >> raytheon. >> raytheon reported one of the fabulous quarters and people keep buying it and buying it and buying it and we're upgrading. >> citrix. >> yes. i bring this out because the social, mobile cloud, this was the weakest cloud and someone upgrades it jpmorgan but the cloud is another great place to be. >> and manitowac. >> and i've been saying the company ought to split up. this is food service company, it's real america, guys, but they have cranes in asia. this is the market. this is the market. don't panic if it's finally getting their numbers together. >> you say of all the keys to the market one might be gileagi.

>> they have the hep-c drugs and it's been the bellwether biotech name if this bounces and is up you got to be careful if you're short. >> all right, on that note let's send it out to chicago and rick santelli get some confidence numbers in just a few seconds. >> we're waiting for the january final, i have all the traders -- 81.2. 81.2 is the january final read and that, of course, follows the preliminary read of 80.4. it is very, very close to the 81 we were expecting to give you some kind of context to this number. we're at 82.5. knocking out the final read for december. so, you know, it kind of fits in. it's definitely with an 80 handle. 81 handle which isn't bad considering the recent high going back to '07 was 85.1 and that, of course, was july of last year, so we'll continue to monitor what obviously is a positive sentiment number against the backdrop of some

weakness but still an overall pretty decent report on chicago. if you look past employment. and by the way, one week from today we'll be looking directly at it. back to you. >> all right, rick, thank so much. >> rick sounds like he's in agreement with me. i don't know, rick. >> what's coming up on "mad" tonight? >> i always talk about yield, all right? yield, yield, yield. american electric power is a high yield, and they have big coal presses because we are the saudi arabia of coal. but that's a great yielder and i think that nick is a -- this is a very good solid company for retirement accounts. >> all right. >> and then rocket fuel, well, they have rocket fuel. that is a company that is deeply involved with ad exchanges and internet advertising. maybe we can also talk about google in that context because, remember, google, if they want to own the world i guess they could. >> yes. one final note as bad as today might feel to some we've not hit the lows of the week which on the s&p was 1770. >> that's very important because, remember, everyone's

keying off the average, the 200 day for the dow. just remember it's a very technically driven market when we don't know why the market is going down. we should do some balancing, if there's nothing on the weekend and when the seahawks have won, the markets will open higher. >> we'll see about that monday morning, my man. >> i want the broncos to win for you, how that? >> sounds good. good weekend, jim. simon is here to tell you what's coming up. >> we've erased on the dow the gains we had for november and december. do you double down or do you take profits from here? buzzfeed john's steinberg is going to join us. he said you shouldn't be worried about the fact that ad rates may be falling at google and rich sherwin the microsoft analyst joins as it appears they go for an internal candidate. can happe. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price,

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volatility continues. >> the stocks are down a couple of big tech names stand out this morning. amazon is slipping after its earnings missed estimates but google is rallying and hitting new record highs. >> chipotle another big mover surging after earnings easily beat estimates. >> and is the search over at microsoft? according to reports they could soon name an internal cand date as its new ceo we'll tell you what that could mean for the stock ahead. >> start with the markets the stocks down big in trading, a lot of losses this month have been fears over currencies and the emerging markets. and sier . ? >> it's a painful day across emerging markets, the ones in the firing line the hungarian forint and the russian rouble and the mexican peso and the polish vlade and they are pouring money into the u.s. dollar and like the japanese yen. there's also new signs, in fact, that the panic is spreading outside of emerging markets into

emerging market stocks, outside of those currencies stocks and bonds. acco according to bank of america investors yanked $6.4 billion out of emerging markets and almost $3 million out of emerging market bond funds. what will stop the bleeding from these currencies and bonds and stocks. pros we were talking to today said it will take structural reforms and better economic policies in these countries but, of course, that takes time. so, it's really on the central banks to come in quickly to stop the pain. and the key here is they have to move together. india's central bank governor in an interview overnight warned of a breakdown in global policy coordination after the federal reserve cut stimulus this week. he went the other way this week, raised interest rates along with turkey and south africa. the idea behind coordination central bankers would come in and send a powerful message that

they're there and they won't let the spiral out of control. the international monetary fund which has a history of experience in these crisis says to us today, the turbulence here underscores the need for vigilance among central banks over liquidity conditions in international capital markets. trying to soothe things a bit but also calling for vigilance and saying central banks, not just emerging market central banks, the imf has warned in the past the fed needs to be aware of the rest of the world and has called for this type of coordination perhaps that is what the word vigilance here means in that. next week is going to be key i want to point out because 32 are a slew of central bank meetings, the european central bank and the bank of england and australia, poland, czech republic and romania have meetings. watch for the moves and the type of coordinated action moves to raise interest rates or backstop liquidity, but the problem is we're seeing contagion is alive and well and we'll have to see

what the central banks do to respond to it carl or simon. >> thank you very much for that. let's look at how the dow has traded so far this year. it's down almost 6%. essentially we've now erased much of the gains we got on that index through november and december. let's bring in david katz chief investment officer with matrix asset advisers. david, good morning. >> good morning. >> what are people to do here? what in your view is going on in this market? >> we think that 2014 is going to be a good year for the stock market up by 10% or 11% you've had a 5% or 6% correction, if you want to own stocks we think now is a good time to increase your position in stocks to market or sell off another 2% or 3%, we'd even be more aggressive buying. 72% of companies beat expectations this quarter, it's been a good quarterly earnings season. we think that the dust is going to settle down. the world will get a little bit quieter. this will run its course and we don't believe the "emerging

markets" will derail the global economy or the u.s. economy so we'd be a buyer into significant weakness. >> that is the central question in many senses, david, how important are the emerging markets to what we see and trade here? you know, goldman overnight said the industrial and the commodity businesses that are exposed to emerging markets have not yet rerated downwards as they may have to do. goldman also says that it could take many quarters for emerging markets to shake out and if you look at what we had back in the '90s, you know, you've really got to get a meaningful improvement in structural in current accounts before everything settles down, so this turbulence according to goldman could go on for a long time. >> we don't think it is. we think that you have a short-term panic going on right now. they're always uncertainties during a panic, but we think the global economy -- >> very good. >> okay. let me bring in john lonsky chief economist with moody's capital markets research group.

john, i'm not sure how much of the conversation you heard but i see from the interview notes that you are a bit more skeptical. you are more negative in your messaging than we're getting from david. >> there's a lot of downward pressure on commodity prices and there's always downward pressure on wanels. look at today's report on wage and salary income. unchanged from the previous month. wages and salaries for the entire year overall grew by only 3% annually. and previous recoveries that growth rate is 5%. slow growth by wage and salary income, limits the upside for consumer spending. and it definitely restricts the pricing power of businesses. commodity front is a mess for year to date industrial commodity prices down. down 14% from year go. >> let me just add to that, david. i want to put some analysis that's come through from monument securities on the gdp data we had earlier this week

which looked good on the face of because of exports. to pick up what john is saying there you're not getting according to them the rise in domestic demand in this economy that you might expect at this stage, and if anything that might deteriorate going into the next quarter and i wonder if that, john -- david, forgive me, is one reason why, again, the market is selling off today. >> the gdp data is historic. we think if you look at what companies have been saying in about 200, 100 ceos have spoken in the last few weeks. what we're hearing across the board they're optimistic about the u.s. economy this year. we think actually things will pick up this year in terms of the economy. earnings are going to be okay. we think this is a short-term blip and we would not get caught up in the panic. >> john, let me leave you with one last comment as you joned us late. >> what i would point out thus far fourth quarter earnings show sales growth of less than 3.5%. profits are growing by something in excess of 10%. the reason why profits are growing so much more rapidly than sales is because.

companies are emphasizing cost controls. among which are limitations on wage growth and as long as wages are growing slowly, we are going to be disappointed with the pace of consumer spending in the united states and as well as home sales in 2014 in the united states. that ten-year treasury yield if nothing else has to go lower. it's got to stay in the range 2.25 to 2.5%. >> we'll have to leave it there. have a great weekend. let's get a market flash and check out the movers. >> hey, carl, check out mattel, down over 10% this morning. the toy maker posting weaker-than-expected fourth quarter earnings as sales fell 10% in north america. international sales were flat. sales of its barbee aie and fisher-price fell. and clearly the street the stock one of the biggest losers down

9%. back over to you. meanwhile amazon and google making big moves in today's market. amazon slipping after missing earnings estimates yesterday, while google is rallying after its revenue top expectations and we'll tell you what to expect when "squawk on the street" comes back.

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joining us on the cnbc news line is robert peck internet analyst and managing director at suntrust robinson humphrey and with us on set is jonathan steinberg, president and ceo of buzzfeed as well as a cnbc contributor. >> some of the cynics want to look at the downward trend and people are looking past it. >> the key metric is the paid clicks. that's the volume, the units of what they sell and that's accelerating to 31% is pretty impressive there. driven by their new products as well. the product listing as we heard all quarter long were very successful and with the pricing being down 10% or 11% when you see it revert, that's where you'll get further acceleration on the top line. >> what do you make of this argument that mobile is a problem, john? >> it's not a problem. we went through with it with facebook. google will figure it out and they make it up on volume. there's more interactions, the price goes down and net net you pass along the savings to the

customer and the company ends doing better. if you interact on mobile and you don't buy which is the big concern the bears have, they see that, then, you went to the desktop and purchased it. there are rolling out products to solve for this. >> executives are talking b-l toing the consumer throughout the day and not just mobile but in their home, on their pc, in their car, wearable devices. do you worry they are losing focus or do you think they'll be successful in doing it. >> i think they are a next generation conglomerate they want to own your whole entire life in the digital world. >> the world conglomerate scare moose scares me to death. and they'll trade separately. there is an acquisition risk here that they get to, you know, too into their own kind of knitting if you like. >> the control shares are one thing but ultimately you're not going to push larry and sergei out of the company. they run the company and do what they want. >> made $9 billion on motorola.

>> they didn't lose that much. when you look at the cash and the patents the loss was more around a few billion dollars. we want the companies taking risk for growth. chris dixon was an investor in buzzfeed, which strategy wins the future robots and ai or stock buybacks. that's basically your choice in this new world. >> cash hoard of $58 billion. we know what they paid for nest. where are they going to start spending their money now? >> it's a great question. i think you've seen some rumors in the press social areas things like snapchat et cetera and now with the class "c" shares they can do a combination of stock or cash. i think there's a lot of optionality going forward. imagine if they had bought a facebook back in the 2007 where that could be now. i like the optionality. >> what happens on april 2nd when you see the class "c" shares come to the market? we've been expecting them for three years and they hit some

snappings, b snapping gs, are t disclosed? >> they have been fully disclosed for over a year so, it's a nonevent for them and if anything it gets you to that point where they can now make acquisiti acquisitions. >> your target is 1360 unless it's changed. i think the street high's around 1,400. would you call them expensive or getting in the neighborhood of expensive? >> not really, no. if you look how we got to that target, the central tendency of value but it's predated on 11 times ebita, we think it's pretty reasonable. >> i don't even think it's close to the multiples you see on linkedin or twitter or something like that and i love youtube. i wish they spun out youtube. i wish people could own youtube, it will do $5.6 billion last year and 8 or $9 billion this year. >> how likely is it? >> i wish, i wish. >> i know. as he says, are they going to conglomerate or start to spin

off some of the divisions and do sum of the parts? >> i don't expect any spinoff. i agree with john to get more gran granularity. but i don't see it happening in the near term. >> you have said, youtube is an underappreciated asset. >> i think that true view which is their ad product is the second great ad on product that came after paid search. it's the number two ad product out there. >> robert, what a day for that company. interesting quarter and a lot of interesting metrics in there. thanks for your time. >> thanks for having me. let's talk about the other big tech mover of this morning, amazon taking a hit after it missed on fourth quarter earnings last night despite revenue last year rising an amazing 20%. jordan rohan has joined us here and a senior analyst. what are you telling investors about amazon now? >> let's step back and look at this. amazon along with google and a handful of others are clearly companies that are built for the long term.

amazon's further ahead of their peers in retail now than they were a year ago, two years ago, three years ago, the number of new people going to sign up for amazon prime went up so fast in the fourth quarter they had to kind of shut it off for a little bit to take on new sign-ups and the company's been telegraphing at least yesterday it would likely increase the price of amazon prime. all of this sounds to me -- >> let me interrupt. because that is a game changer, isn't it? i think the cfo was talking about 20 or $40 more on that $79 subscription at the moment. that's a game change r, isn't i, turning up the margins. >> that's what i think people may have been missing, $600 million if you have 20 million prime members and a $30 increase. it starts to feel more like costco than it does walmart and there's a big difference in multiple between those two. that's what amazon is becoming. and not surprisingly costco is

based in seattle, too. is it all that surprising that retailers had a tough fourth quarter? obviously not. you've seen the headlines all over the place. the fact that amazon would be less than what people are looking for, not entirely surprising. europe was more disappointing than the u.s. u.s. was fine. >> pile in here, john, what's your view? >> the one thing i would add to it the amazon web service business is very interesting. most people are looking at the other line item on amazon but that includes a lot of different things. heath terry e-mailed with me this morning they did $720 million of amazon web services. >> hosting for other people? >> yes, buzzfeed uses it and every web company uses amazon to some extent and they put the receive new at 3$3.7 billion. and the conglomerate, something different than selling products to people. >> when you look at the transcript of the call, it's surprising how many different ventures get cited but not really cited on elaboration.

he talks about how amazon is still very early, expansion internationally, still very early. they are trifeing to build more fulfillment centers and warning about a possible q-1 loss. how much investment in some of these various business lines does amazon need to keep doing and should investors start getting angry at this point? >> they said every so often they take down the investment level and flex their profitability, they said they'd be doing it fairly soon. you've seen it as the operating profit estimates have gone down. when they start to flex, this stock goes nuts to the upside. we like amazon here. we think it's one of those names like google and facebook and a handful of others are that are dominant. >> what's your target? >> we went to $440 today. >> and you are in a unique space to understand that because the whole notion, oh, they swing to profitability. >> yeah. >> that must mean the top line, they see it slowing down the road. is that necessarily true? >> i think that you want to go in one direction. i think you want to get

increasingly profitable and that is one thing about amazon i don't love. i don't know why the companies don't disclose more and aren't completely transparent with wall street, why can't we know how many kindles they sell. >> because they're conglomerates. >> they can be but should disclose the different line items as well. i don't get that. >> one last question do you think they may be about to flex as you put it their ability to make profits by bringing the expenditure down or the investment down because they anticipate the market may be about to lose faith with the very strong rally they've had from maybe what we're seeing today? >> i'm not so sure if they have such a short-term view on what the stock's about to do. i'll tell you as the transportation costs and full fulfillment comments go up and up and up and they don't raise the cost of subscription price at amazon prime, at some point they say we've added a lot of value and people are good and addicted we have an opportunity to flex through that. >> they're making lots, 2, $3 billion on amazon prime at the moment. >> they are shipping subsidiary

in that neighborhood. >> we haven't talked about the video business. amazon prime video on demand is a real competitor to netflix. the original series i wouldn't say they've been at the quality of the netflix ones, but they'll get there. the first netflix one wasn't near-as good as the kevin spacey one, it's another business line and set top box manufacturing they might get into as well. >> i don't like the amazon prime and video service, i think it's a waste. that's a 600, $800 million waste that they will eventually wind their way out of and probably do a strategic deal with netflix. >> completely disagree. why can't they deliver it directly onto their kindles the same way as e-commerce and they'll do the same thing with the video. >> if they did a deal with netflix all the content costs would go way down. >> the question whether netflix wants to do a deal with them. >> they've talked extensively. the companies, google, facebook, a few others they are part of what we call the dominant digital dozen. 12 companies that are well

positioned in mobile and have an excellent use of big data to target advertising and commerce. they have a dominant position within their audience or the consumer base. >> right. >> they are well positioned and they'll be here five years, ten years, 20 years. >> amazon was rumored at looking at hulu, do you see them moving in that direction? >> hulu and netflix are two different beasts and i don't think amazon would be interested in hulu. >> nice to see you. >> thank you. >> good to have you on the program. you add huge value. >> identify was so upset when you were on the boat. >> why? >> you looked cold on the boat. >> it was cold. >> i watch cramer at night. >> can you sleep after that? >> of course. i sleep like a baby. >> well done. john, jordan, for the moment. thanks for being with us. >> thank you. >> we're watching another big mover chipotle surging 13.7% after estimait beat estimates.

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today's market selloff, chipotle surging after its fourth quarter profit rose 30% much better than expected, that stock adding $66 or $2 billion in market cap based on this report. steve anderson, is a market analyst, it's interesting to see a 9.3% same-store sales jump in a quarter where holiday sales were very lackluster. how did they do this? >> i have to say they've been doing very well on execution. and one thing we note is that the through-put, that is to say the number of customers coming in the door and being served during peak periods, that's been increasing and we think that's added as much as a point and a half to same restaurant sales. but the thing to know is that chipotle's been pulling that 9.3% comp without resorting to menu price increases. but when you go to menu price increases we think there's room for them to do so without having customers go away. >> they've been one of the leaders in this fast casual

segment experimenting in different offerings. i know that their pizza investment got some real estate on last night's call. but do you think that we're in a point in the fast casual cycle where some of the gains will start to taper off or do you think there will be a lot more strength for them to capture? >> what we see is more of a change in leadership. as we've seen in the last 12 months, panera which also competes in the fast casual segment has seen same store restaurants trail off and the reason for that they've had their own issues with through-put. and they're in the early stagesphismplemestages of implementing their own initiatives to get more customers in the peak periods. >> you are recommending that investors who are in chipotle rotate into panera and you have and if chipotle can add the one basis point of comp store sales why do you think it will correct

that much? >> what we see is more of a valuation story and momentum story at chipotle. typically as you saw last quarter, you know, when you have a surge in same restaurant sales even though earnings were pretty much in line the street's willing to overlook that with the fact that same restaurant sales increased more than expected and in an environment when the rest of the sector has seen sales trail off. >> executives mention that they might be interested in buying a majority stake in their pizza venture in denver. they might be expanding that and they also are getting into content. how do you find them building value in some of these other areas that are not their core business? can they do it? >> i think with regard to the pizza venture, it's similar to this what chipotle has done in its own concept shop house which is the fast casual asian concept which is just starting to gain traction in the l.a. and washington, d.c., markets, i think pizza locale, i wouldn't be surprised if they took a majority ownership. that could be a several hundred unit growth story going forward

but in the next two years i think both smaller concepts will be very small contributors to growth. with regards to the content business, i think it says more continuation of the -- of the brand leadership story at chipotle. >> finally, steven, on the gmo issue, should we be on the lookout for them to surprise us with rapidly rising food costs or at least some logistics issues about trying to source some of these ingredients? >> excellent question. that's part of the reason why the food costs actually came in above our estimates. is that and they have been warning about this for the last couple of quarters the implementation of non-gmo food sourcing would be contributing to higher costs and that's why the company's plan to implement a menu price increase in the second half of this year. >> all right, steven, we'll leave it there. we'll keep watching on that issue and many more, but thanks for being here this morning. >> thanks for having me on. >> the dow is down 224 close to

the lows of the session and the s&p at 1774 as we mentioned earlier is not quite the low of the week. that's 1770. but this is three days in a row where the s&p has moved a percentage point one way or the other. first time that's happened since the boston marathon bombings last spring, simon. >> big news coming from microsoft, microsoft ceo search could finally be over with this insider, satya nadella the front-runner for the new job. who is satya nadella and if he gets the job what does it meanwhile for mike crosofmicros? the answer next. you can separate runway ridiculousness... from fashion that flies off the shelves. and you...rent from national. because only national lets you choose any car in the aisle... and go. and only national is ranked highest in car rental customer satisfaction by j.d. power. (natalie) ooooh, i like your style.

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good morning. if you've just joined us we're just over an hour in trading. here are the stories we're squawking about at 7:33 on the west coast and 10:33 on wall street. netflix is getting an upgrade to equ equal weight, and the strengthening of its international business. yesterday was a good day for facebook ceo mark zuckerberg, the facebook chief made $3.2 billion because of that major rally in facebook stock. and the online storage company box has quietly filed for an ipo one that could value the company we're told at more than $2 billion. this could set box up to go public before its chief rival drop box which is you'll probably be aware is also expected to file for an ipo

later this year. microsoft might be very close to tapping satya nadella as the new ceo, but nadella may not be the only move we see at the company. some new reports indicate bill gates may be out as chairman. rick sherlin joins this morning at post nine. it's good to see you. good morning. >> good morning, carl. >> what should people know about nadella? >> he's got a good background and very technical. he'll take some time to grow into this position. he's complemented by a very good cfo and i think amy hood will do a lot to manage the cost structure and together with some influence on the board i think will focus on the shareholder value creation that we would wanted more immediate gratification for if alan mulally would have come in, i think you'll get both. you're going to fix the company probably working with someone like satya, develop him over the next couple years and then hand the company to him. but we're going to go right to

satya. i think he's going to probably grow into that position. i don't think you get immediate gratification as far as the enhancement of shareholder value by cost cutting and share repurchase. >> does that mean we're in for a rough ride in the early going? >> i think the stock's probably going to be in a holding pattern here a little bit. initially it traded up probably on the relief that it wasn't some of the other people that people feared might get that job. >> yes. i'll say for you some were saying it would be some from nokia or others. >> that's right. i think you've got a good technical person that will grow into the job and complemented by a good cfo. >> when you say he's going to grow into the job, does that mean he's not up to the job at the moment? >> i think it's a new role for him to run a company that's about to become a 130,000 employees with the nokia acquisition is big. he has enormous job. there's new people he's going to have to bring in. i think there's probably a need for some new board members to

help i'm out as well. so many things -- >> would you see the board as weak? >> yeah, this board has not done a very good job looking after shareholder value in the last decade and a lot of people on the board that don't really have a lot of experience in the tech field. and this is a tech company. they are going to be run by somebody with a tech background and i think that they have to allow him to make the changes that are necessary, so i wouldn't be surprised if steve ballmer leaves the board. i'm not sure that bill gates is going to hand over the chairmanship right away, i think he's probably going to have to be involved from a product stand point for a while, there's so much to be done in the company. >> the search exposed pretty distinct rifts among the board and we saw the process bumble along for several months and even if you have ballmer step down and possibly gates step down, would that give you more confidence about the board that is singular focused and ready to lead the company? >> i think the dynamics on this board are about to change pretty radically. i suspect that if -- i think there's a lot of tension on the

board probably right now. a lot of disagreement. so i think that you've got a lot of people on the board that don't have a particularity complementary background for this company so i expect you would see some changes at the board level as well. and i think you've got to make sure that satya has the ability to make radical change. and that means reversing a lot of the policies that are put in place already. >> i mean, how do you have characterize -- you know microsoft really well. you're one of the top analysts at this. how would you characterize what microsoft is like inside? is it an organization that is just bursting with ideas that this internal candidate will be able to grab hold of and transform the company, or is it bereft of ideas and it needs an outsider to come in and inject life into it? >> i think that steve balmer's been a particularly difficult manager for product people to work with. >> does he kill ideas? >> i don't think that you are, like, apple a company that encourages creativity. and i think that's a culture particularly as you address the

consumer market that needs to be reinstilled in the company. so, i think you need to bring in a very different orientation, it probably means changing out some of the people in the company as well as kind of the influence that you have from the board here. >> we'll see if we get something today, rick, as some reports suggest. thanks for the insight as always. rick sherlin. let's send it over for a quick market flash. >> check out arrive, they are reporting their hepatitis "c" drug moving up to a potential launch and sales could reach $2 billion by 2017. this setting up a battle with rival gilead sciences for oral hepa "c" drugs. we are watching shares of chevron, cvx slipping towards trading lows this morning. we'll tell you why when "squawk

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dow's down a couple hundred points and check out shares of mastercard, falling sharply after an earnings miss. mary thompson is back at hq with more. >> the electronic payments giant certainly disappointing investors with that miss. payments volumes they were pretty much in line with expectations but the firm paid out more in rebates and incentives and that hurt its results. earnings three cents below estimates and revenue was in line with expectations at $2.14 billion. and on the call the ceo saying the fourth quarter results were pretty much in line with the company's expectations. he also made some comments about the economy around the world. he says he feels like the u.s. economy is showing forward momentum while europe's overall growth is subdued. he said the north is showing strength and the south south is recovering. on asia-pacific and mexico it showed an impact from china's growth slowing but overall the trens in these emerging markets

are in mastercard's favor because more people are moving from comash to electronic payments. on the call they warned the firm's revenue this year is likely to come in at the lower end of its long-term range of 11% growth. the reason? a decline in its consumer portfolio due to a big deal that its rival visa struck with jpmorgan. master card expects to offset this loss of customers with the number of new and renewed deals like its partnership with citi on the american airlines card, the company did say it may not make up for all of that lost business. some other highlights from the call. company ceos saying that the data breach has not hurt its business, but bonga said future breaches could impact consumer confidence and mastercard is renewing its commitment to start transferring to a chip card by october of 2014. also on january they say the trends were pretty much consistent with what they saw in the fourth quarter with the slight pick-up in u.s. transactions from the fourth quarter. back to you. >> all right, thanks so much, mary. after quite a rally for those credit card stocks a

little bit of a correction after the fourth quarter. thank you for that. meanwhile, shares of chevron are down this morning contributing roughly 30 points to the dow's loss right now. the company saying its fourth quarter profit dropped by 32% as refining margins and production fell around the world. joining us now on the cnbc news line is fadel gheit, a senior analyst with oppenheimer and he has $140 price target. thanks for being with us. >> good morning. >> at quite a bad day for chevron. there's really other way to say it. i know investors had been expecting profit to be down, but is this worse than expected? >> yes, in a way. they had preearnings warning a couple weeks ago. and if we look at the earning estimate as a few weeks ago, actually today, the numbers are 30% lower than what we -- what

the street had expected. so, there is weakness. there is weakness in the sector. there is weakness in the company. chevron is one of the highly leveraged companies for oil prices and oil prices obviously coming down and bring the profitability as well as the earnings out of chevron down. they also have cost overrun and that is not only for chevron but most of the other companies, so cost pressure is on. and then you have declining oil and gas prices and that means there's marginal squeeze, so for all practical purposes most of these companies including chevron will probably see flat to declining earnings this year and also probably next year. >> yeah, there's been a lot of wa weakness in this sector and when they twarned a couple weeks ago they said production was down 6.3% in october and november and we you a shell and exxon post lower production, but when does that turn around? you seem to be saying not at all this year. >> well, these companies keeps

talking about production growth. they can't even maintain production level let alone grow production, so growing production for the major integrated oil company is really very monumental task. and they have not been able to achieve it for the last 10 or 15 years, and i have no confidence that that will change any time soon. >> fadel, we are potentially looking for a ruling out of state today regarding the keystone pipeline, environmental impact and so forth, to what degree does chevron or any of other big integrateds trade around that if it comes out today? >> well, that would be good news for all the refining companies, the refining stocks, because it will bring in additional volume of crude that is selling at a discount, and give them competitive advantage. all refining stocks have done so well last year and the last two years, and even today with the

market down sharply, this is the only energy group that is up today. >> fadel, can you just give us names there? which ones do you like in particular? >> for example, the largest refining company and obviously and also has the largest volume in the xl pipeline. i think you have 20% to 30% of the total volume of the -- of the oil that is going to be moved in the xl pipeline which is 850,000 barrel per day, obviously they will benefit from sourcing much discounted crude than brent. brent basically dictate the price of refined products. >> right. >> so, that will give the company an uptick here in earnings and cash flow. >> fadel, one last quick word on chevron before we let you go and that is you mentioned cost overrun before. the company spending a lot on exploration. should they be spending that money on buybacks or increasing returns for shareholders instead? >> well, they are -- they are actually are buying back stock.

but it's so small, it's hardly moves the needle for them. >> $5 billion, i mean, that's not that much. >> correct. it's very small, about $5 billion a year for a company that has a market value of $220 billion it's really not much. >> right. all right, we'll leave it there, thanks for being with us. okay. let's check back on the markets. the dow and the s&p having their biggest monthly percentage loss since may of 2012. rick santelli is here with the one thing you need to know when "squawk on the street" returns. customizable charts, powerful screening tools, and guaranteed one-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and e-trade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity.

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welcome back to "squawk on the street". yes, it's friday. i never met a friday i didn't love, especially with the big super bowl, the commercials. i tell you what, when it comes to the marketplace i think the best way to proceed and that's after kind of rubbing shoulders with traders since the late '70 sz keep it simple. the old k.i.s.s., keep it simple stupid. the harder that become, it's usually for an agenda purpose. people fighting the market. truly, there's only one, the one chart, one chart you need to

lock at. i'll shoal you two time frames, only one chart. substitute a couple of things. let's throw it on. the dow jones industrial average overlayed with the dollar/yen. as you look at it year to date, boy, it's pretty much right on top of each other. you open it up to one year it's pretty much right on top of each other. people out there like to read different -- i think they threw the same chart up with the s&ps. you can pick whatever you want and you can go globally to stock that you want and use the dollar cl dollar/yen, you could see the pound/yen. the same is true. why is it simple? if we try to be objective a bit and don't try to defend or not defend policies, what it looks to be is that we definitely, for various reasons and various programs and various central banking strategies, we build something up. on the back of a carry trade and it's reversing.

now it's not as simple as that. we could get into all the grandular about we had a four handle on third quarter gdp. we had a three handle on the last look for fourth quarter, third quarter and fourth quarter. but what's interesting is as good as those two numbers are, they are good. there is an inventory issue there. let's look at that objectively. take everything away. sequentially it's less activity. the third quarter number causing inventories to build and even with a 3.2 number on fourth quarter, is it sustainable? are these inventories going to be purchases? is there a consumer issue here? we saw the spending numbers today. what you really want to remember is, don't get carried away and asymmetric kinnard, don't treat the fundamentals different on the way up as you do on the way down. kayla, back to you. have a good weekend. >> same to you, rick. i hope zero hedges site doesn't crash from your mention there. his time is almost up. believe it or not, today is ben

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well, the day is finally here. today marks the last day of ben bernanke's term as chairman of the federal reserve. stocks are down big so far this year. what is the state of the economy as janet yellen is getting ready to take over. steve? >> carl, the name plate is coming off the office. the office is being cleaned out. here are the numbers that fit chairman ben bernankes leaves behind his successor janet yellen. growth over the bernanke period, 4.9% before the recession. hit one afterwards. here's the story. the average is 1.3. we divide it up. the recession time, 2.8%. expansion, 2.3. that's the disappointment, that it wasn't higher after this big decline. let's look at other key metrics. bernanke and unemployment. what you see here is the average of 7.3% over that period. last 12 months, pretty much unchanged. the last report, 6.7% coming down. but the issue is, the

participation rate, people dropping out of the workforce along with retirees. a high of 10%. that was after the recession ended and a low of 4.4% seven months before the recession. looking at inflation here. another key indicator. the average of 2.2% but the last 12 months that's where the disappointment is, 1 1/2%, looking at headline cpi. high of 5.5% in july '08 and low up negative 2% in july '09. one more thing to look at, stocks. what about stocks in the bernanke era? up 40% over the whole period of time time here. trough to peak, if you bought down here and you're up here at what was the very high, you're up 135%. but if you bought up here and ended up selling down here, you're down 51%. carl, all these numbers are important. probably the most important thing about the bernanke legacy is yet to come. how he gets out of the massive stimulus to the economy and maybe we're seeing is t.

volatility around that right now in the emerging market turbulence. carl? >> that was exactly what i was going to ask you, steve. we can debate the positive aspects and i see academics suggesting the qe is the equivalent of minus 2% on the main brenench rate but it's the cost we don't know. we don't know how getting out of this is going to upset everybody. >> that's right. the lags of monetary policy are long and variable. what ben nabernanke has done, t forward guidance, all of that is yet to play out in the economy. i think in general though history has judged the early parts of qe better. history judgment for the latter parts, yet to come. >> steve, thank you so much. steve liesman at hq. interesting figures. 40%, but that trough to peak, if you had bought, if you had been smart enough to buy, 135%. not much good action today as steve pointed out. dow is down 170. getting headlines out of the bank, i'm not sure that's what caused this to come off the low.

simon? >> the headlines are they might not -- it's technical. the ecb might not sterilize their actions in the market. big news from europe today is there is a deflationary forces at work and ecb has huge pressure to act or say something next week inflation is running at 0.7%, carl. it may not be deflation but it's not the inflation that will lift you out of trouble. >> you're a lot more from you at 11:30 when the european market closes. we'll look forward to that. thanks for joining us. >> the jyen is just a shade belw 102. if you're just joining us this morning, here's what you missed earlier on. >> welcome to "squawk on the street." here's what's happened so far. >> the sense that we get, people are thrilled at super bowl is new york and new jersey. there is a buzz in the area. you walk around the area last night, it was electric. >> today the global markets, they are under a lot of pressure. i want you to look right now, we

have red arrows across the board. dow look like we open off close to 100 points down. >> it seems like an over areaction. i want to say it's much to do about nothing. right now the inputs don't make it so you should be selling, you should buy. microsoft has a lot of good things going but they miss social, they missed mobile and caught cloud. they got one out of here. >> there's the look at the opening bell. >> what are your viewers going on in this market? >> we think that 2014 is going to be a good year for the stock market. up like 10% or 11%. you've had a 5% or 6% correction. if you want own stock, now is a good time. >> if you're worried google is not going to figure it out, they're going to figure it out. they make it up on volume the price goes down and net net and pass along some of the savings to the customer and the company ends up better. >> what should people know about

wh madella. >> good background, technical. it will take time to grow into this position. he's complimented by a very good cfo. good friday morning. live here at post 9 of the new york stock exchange as we sell out the close of january. first losing january in four years. and we're on track for our biggest monthly drop since february of '09. dow down 76. mattel is the biggest loser suffering the biggest loss since 2009. barbie down 13%. some bright spots today, chipotle, the biggest gainer on the s&p, tyson foods not too bad. pulte, best buy, and broadcom are trading higher. >> the road map starts with the market. major averages aiming for the first january drop since 2000ed.

we'll tell you in a few minutes how to navigate the volatility. reports saying that microsoft ceo search could be over very soon. swisher was the first to report that news and she will join us live in a moment. walmart lowering guidance for the quarter and the rest of the year. what does this say about the state of the american consumer? as we said, those stocks continue to drop this morning. major averages down across the board. the losses for the week are not quite as much as we lost last week. that's important to keep in mind. on this cnbc news line this morning is ed, the president of yardeni research. ed, it's always good to talk to you. happy friday. >> thank you very much. >> we keep seeing conflicting points of view. some argue we're getting close to the end of this selling. some say you've got t to go back to the 200-day closer to 1700. where is your head? >> i think the 200-day may very well be tested. it's really not that far down from here. i think it will hold. i think this is a price we're

paying for an amazing year last year. market was up 30%. we got three years worth of return in one year. starting the new year off with a correction like this, i guess certainly it makes sense. >> are we pivoting around the yen? are we pivoting around the ten year? what are you looking for as the tell when you glance up at the screens? >> i really think the underlying fundamental problem for the market right now is a disappointing earning season for the fourth quarter. that's at the heart of it. clearly there's been other issues. i wouldn't call them background noise. they are important. emerging market jitters. we're jittery this morning about european data and german retail sales, inflation china manufacturing has been weak. i guess my concern and i've been quite bullish all along here, i'm quite concerned that maybe we're seeing competitive pressures putting deflationary pressures on the margins. that's what i'm looking for. >> the percentage of companies

that are beating, ed, is not terrible or somewhere around 70%. >> no. no, it's not -- it's not terrible. but i look at the overall earnings expectations for each quarter and analysts do this dance where they lower their numbers going into the season and suddenly the numbers turn out to be better than expected. that's not happening this time around when you look at the overall numbers. and i think maybe that's what's missing here in the earning season. but you know, the fourth quarter's over. the impact on the first quarter and what i'm also seeing is analysts are lowering their expectations for the fours quarter and investors are take that to heart. >> there seem to be 59% of the companies reported so far. have issued weaker guidance than the street expected. i think that's surprising because of where the broader economy seems to be tracking. >> yeah. >> do you think corporate america will be weaker in 2014 than we maybe expected? >> i've been looking for

earnings to be up 10% this year which is pretty optimistic. it basically requires 5% revenues growth. some buybacks. and for the profit margins to go up a little higher. but as i've said, i think maybe the problem is pricing. we saw a lot of retailers give us some bad results in the fourth quarter because of discounting. amazon reported today and that was another retailer that disappointed. so the entire deflationary issue i think is something that needs to be considered in terms of impact on earnings. it's got me concerned. i'm watching it. i still think the overall global economy generate enough revenues growth to grow earnings 10%. >> ed, let's say for a moment we get close to the 200-day. let's say the ten-year comes in below 25. do you have a list of names that you wish let you in first? >> well, i don't do individual names. i do sectors and industries. i think the ones that are getting beat up here the most are probably the ones that will

bounce back the most. that would be the consumer discretionary area. certainly the industrials, i think, would bounce back. like financials. i mean, all the cyclicals including i.t. especially i think is going to bounce back. >> ed, we'll see where the next few hours and the next few weeks take us. thanks for kicking off the hour. see you next time. >> thank you. >> ed yardeni. up next, re-code's kara swisher, the first one to say the search might be coming to an end this week and reaction to that news after the break. rick santelli, focusing on the markets today. what are you watching? >> we're going to be watching some of the implications of what increment spending told us today, savings rate, and the very notion of what a correction is and why we call it a correction. and we're going to talk to peter bookvar on this at the bottom of the hour. 1 million businesses. if you have a business idea, we have a personalized legal solution that's right for you.

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looking for a new ceo and day could be here but in a new twist reports are indicating microsoft's cofounder and chairman bill gates may be out as well. how is the future of microsoft panning out? kara swisher is the coexecutive producer of re-code. we have a content sharing partnership. kara, thanks for being on the phone. >> how are you doing? >> i can fairly say that you caused this? >> i did. but, you know other people are also reporting it. i just felt like it was -- we like to do things when they're happening, not guessing. it's going to happen next week, by the way. it's not happening today or on super bowl sunday, although it's the seahawks, man, that would be all positive for microsoft, i guess. but, yeah, i think it's pretty much done but it's not voted so you never know until the vote is actually? >> we talked to cherlin earlier in the week.

he argues that there's some dysfunctional dynamics and all about to change dramatically. you agree? >> there has been. unusual board. because it's dominated by bill gates and steve bammer who own 8% of the company. so there's a lot of push and pull about who should be controlling it. and that's what's going on right now and going forward as they can fix some of the problems. >> kara, you've got your ear to the ground on this company like few other people. when we talk to him earlier he said the dynamic would change but offered no names. do you have a short list of people that you're either hearing could be tapped to be on the board or should be tapped to be on the board? >> i don't know if they're going to add board members right away. he needs people who are helpful. he's never run a company this size. the board will play a very important big role, and so will bill gates. it's mostly to help nadella in a

significant way to get through this, especially in technology and product innovation. and so i think gates will be hugely involved. i've written that many times before. the question is can he also be the chairman at the same time. they have a very ambitious director john thompson who has been leading this, easily step in that role. he's very cognitive of wall street, very smooth, very smart guy. you can see -- i mean, that's probably what will be happening, tom will take over and gates will spend a lot of time with nadella. >> not to front run your article, kara, but how do you feel that gates stepping down would help nadella. you mentioned that johnson is savvy and good with wall street but is there more to the story? >> gates is not good with wall street, by the way. >> talking about johnson. >> thompson is very -- >> sorry. >> the ceo. he's very comfortable in the things that a chairman has to. bill gates is an unusual

chairman. often dealing with wall street and investors and things like that. and i think that, you know, he's bill gates. he's running a major foundation. time constraints. i guess the chairman takes a lot of time, especially if you do it right, by the way. and he does want to work with nadella. i think he will be closely working with nadella. so the question is can he be chairman and work with nadella or is there a better configuration. it keeps a better creation of the board not having the founder and owner running everything. things changed. >> how much patience are inhave esthers going to need with nadella as he grows into that job and to what degree is amy hood the glue? >> amy hood, that's interesting. microsoft, i don't know if you know this, had a fantastic board. so they're going to have a lot of patience. just recently their quarter was very good. and nadella, i think they will have a lot of patience.

why wouldn't you? reminds me a little bit of bob iger taking over at disney. the quiet character and turned out to be a fantastic ceo at does any. so you just don't know how people are going to rise to the occasion. this is a big job. he's a very quiet unassuming guy. he's very nice. he's well liked. but he's never run -- this is a big, complicated -- i don't know, hair ball of a company. it's a very difficult -- i don't know who -- i mean, i don't know. it's going to be tough. he's going to need bill gates' help for sure. >> obviously we all want to simplify it, insider, outsider, insider, outsider. the fact that he is an insider mean that transformational deals are off the table? >> no, no, i don't think so. i think what's -- i mean, yes, in a wae way, yes, change things. he's been there since 192 so he obviously likes the way it is. i don't know if it's an interesting thing. what if he disagrees with bill gates?

that's going to be an interesting thing. he's known as someone very conventional choice to pick someone like him. you never know when someone gets in the seat what they can do. >> kara, you've been keeping a pain stanking count of this. 160 days since the search began. do you think business schools will sew see this as something brought up in their classrooms? >> i hope so because i would like to know a lot more. i would like to know what really happen with the slow dancing that went on with alan mulally. that went on forever, right? let you know what happened there. i would like to know a lot more about what happened with the other outside candidates. it's a fascinating -- it's taken a long time for a big company, especially in tech. >> a lot of people will be glad to see this chapter closed, kara. imagine you're one of them. >> whole new problem. >> yes, kara swisher joining us from re-code today. thanks. up next, we'll be talking more tech. tale of two companies today.

amazon taking a dive google hitting record highs. how to play both of those stocks coming up after this short break. mine was earned in korea in 1953. 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.

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from a fog i did friday morning in seat to shares of google hitting a new record price of 1180 earlier this morning. fout quarter earnings short of estimates but revenues beat in a big way. we turn to brian, senior analyst. he just lowered his price target on google from 1300 to 1325. first, your general take awayses from earnings. are you in the camp that acceleration of clicks is more important than the price per click? >> yeah. i think the acceleration of clicks, more importantly, the ad dollars moving on to the platform is the most important factor because as google makes changes to the interface and

drives the acceleration in clicks and costs per clicks fall. costs per clicks is more of output than input. continue to be healthy are better indicator for how fast google is growing. >> when you think about motorola mobility, the fact that they were able to finally get it out of the way, do you think it's a positive? >> i think it's a positive. they looked at the asset hard. they tried to turn it around. i think that ultimately they realized that motorola is better served if lenovo is going to be b the one investing behind it and trying to build up a distribution in products. if lenovo has success in driving more motorola handsets globally. >> who is the competitive threat against these guys right now? really, who has the strongest position against google? >> it's a great question. the way it's kind of shaping out in mobile advertising eco system, google is really on top p. they're the king of search and facebook is the king of display.

so it's really a situation now where in the mobile eco system and advertising, facebook is basically running uncontested in display and google is uncontested in search. >> we speak about self driving cars and nest. it's almost like a disruption at will. you obviously want to keep that sentiment in check. something could go wrong at some point, right? >> right. you have to keep checking it. the thing you like about google is the way in which they continue to inno we vat, the innovation pays off and monetization improves. you've seen it through mobile and improved mobile measurements. they call enhanced campaigns. it help s advertisers better understand the advertiser investment. pulls more dollars into the mobile eco system. you see it through product listing ads, retail ad units very well in the holiday season. they keep innovating. they're getting more into the home. better ad units and pulls more dollars on to google. >> advertiseing the original business but when you look at

the earnings caltrans scril tra the play store and from hardware. i mean, it really doesn't seem like they're put that much focus on the core advertising model at least from a growth per expect. >> i've the core business is still growing over 20%. the core advertising business is still growing very healthy. a lot of emerging initiatives whether it's chrome books, google play store, digital media business trying to build. those are just more of the ways that they're entrenching themselves in people's lives. >> 1175. you don't sound that enthused at these levels, right? >> still a $1300 price target. the only reason it went down was really just because of a movement down on the market multiple. value it relative to the s&p 500 market. so i still think the stock has a lot of room to run. as you go throughout the year the earnings expectations on the street are still too low. and so, you know, you could see upsides of that 1300 if they continue to post-up ward

revisions on advertising and on earnings. >> where do you see them spending these class c no pro seeds? debating earlier what they could potentially buy. we had one analysts saying they should buy snap chat. one said they should spin off youtube instead in a completely different strategic move. do you have an idea of what you would like them to do? >> no specific use on the c shares. it's more around optionality if they see something down the road that they need to fit into the overall google eco system. they think long term. they think they don't want sergei and eric schmidt to be diluted in 20/20 or 20/30. they want to keep paying employees with stock-based compensation with non-voting shares. nothing specific. >> april 2nd is the day those become active. >> that's right. >> $1300 price target? >> yep. >> trading at 1175. we'll check in with you in a few months see where you are. >> great. have a great weekend. after missing the street on

earnings, can e-commerce giant amazon bounce back and could it mean a price hike for amazon prime? out perform with $440 target. john, good morning to you. >> carl, thanks for having me on. >> some of the early narrative after the call last night and this morning is that the hall pass, so to speak, is beginning to run out. is that's what's going on here? >> yeah, well, i think it was a combination of things. i think number one, revenues were a little light so revenues grew 20%. about 2% lower than what we had thought and what the street expected. actually margins were up year over year and a little bit better than consensus. i think one of the key eissues was the unit growth number. we were looking for 30% growth. one of the problems investors had with it was that they didn't think amazon would be -- they thought amazon would be immune to the six fewer days during the holiday season.

>> good point. >> and, yeah, and, you know, we unfortunately, you know, they -- you know, they were impacted. as an offset to the lighter unit sales number, i would point out that they grew two times the rate of e-commerce growth in the fourth quarter which is a positive and they also came in above the mid point of their revenue growth range. >> what is it like as an analyst, investors, we all talk about the opacity when it comes to metrics. what is it like to build a model around a company when they tell you so little? >> yeah, you know, we do bottoms up analysis on it. actually we do a monthly survey. 2500 u.s. consumers that does inform us on a number of trends. namely purchases and visits. i know you highlight a prime before and the increase in price to prime. and we actually think it will not have a negative impact on

prime member growth. our survey suggests that prime members actually visit amazon 95% each month and they make purchases 80% to 85% make purchases this month. it's a very high purchase conversion rate. it's actually near around par with walmart and target. the off line brick and mortar guys, after the two-day delivery lag. so we use other means to try to forecast the company. >> yeah, yeah. i guess they leave you no choice. but interesting quarter, none the less. john, thanks so much for your time. appreciate it. >> thank you. >> talking amazon. the bells are about to sound across europe in a home. we'll get the close and detail on the impact here. we have taken the losses and have them. we're down 122. back in a minute. ree research r, customizable charts, powerful screening tools, and guaranteed one-second trades. and at the center of it all is a surprisingly low price --

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after losses of 1% to 2% this week, europe is closing. >> importantly, europe is off the lows. we were getting losses almost 2% on the session. but actually if you look at an average across europe at the moment it's now just half of 1%. front and center is the fact that we have inflation going in the wrong direction in europe. it's beginning to decelerate. the ecb thought it would get stronger through the year. it's back down to 0.7%. what will the ecb do next week

if the eurozone recovery is faltering? very important today, the bank has suggested through one of the wire agencies it would consider an end to sterilization. it's not necessarily the sterilization itself. it's fact that the whole bank is considering new things to do in europe. that had brought some of the banks off lows in particular. these guys were down really heavily earlier today. deutsche bank down 3% as you can see. emerging market are clearly the focus for many people and today electrolux as a result of experience in brazil, falling. downgraded by goldmans because it won't be able to sell its spirits as successfully in emerging markets move forward. if you look at the year to date chart forks euros for europe ag united states, europe is not doing as badly as we are in this country partly because the gains were not so great in europe last year. finally, let me show you what is

working in europe today and titsz luxuit's the luxury goods. louis vuitton sales are good. they attempt to restructure lvmh and says that cognac sales will rebound in china this year. lvmh up 7 1/2% and lifting the other quoted luxury goods manufacturing in france as well, guys. in the meantime, broncos, go. >> thank you. very nice. >> go broncos. >> i can't have it all. i have decided to swing in they vor of you. >> i will take it. i think that's the good luck charm the broncos need. thanks, simon. >> have a good weekend. let's bring in bob pisani with a look at what's moving here on the big board. what's going on? >> better than it was just after the open. put up the s&p 500. so tough open. bottom line is, we didn't drop below the original open there. see that? come off of that nicely. europe bounced, the yen still on

the strong side. but we're still holding up very well. i want to move on to the earnings situation. it just depends on what you're looking at. i mentioned earlier, broadcom is good. the mall is not dead. they had an excellent report. it's been overshadowed by the high profile names like amazon with higher costs. walmart talking about cutting guidance. bright news in home construction. builders are up on the year, most of them. pulte beat new orders, fair, not great, enough to move these up. as i said before, they're up for the year, most of them. the credit cards on the downside. mastercard missed on the top and bottom line. mastercard was up 50% last year. just bear that in mind when you see a 4% drop in the stocks. the vix, i just want to show you what's going on here because once again, the vix kush is flattening and inverting. so the cash on the viksz, 17.59, much higher than the february contract. you see that? what we're seeing here is when this inverts notably, if the

february contract goes well above the march one which i'm waiting to have happen, that's often at a good buying sign in the past. finally we've got a stocks exchange merger. i didn't have time to tell you about this in morning here. bats and direct i imagine received final approval for the merger. wait for this for a long time. three exchanges. and look, in terms of trading volume, they're neck and neck, bats/direct edge combine 0%. new york stock exchange about 28%. but that back up. the nasdaq about 19%. so, guys, important thing here is we've got a new combined stocks exchange here that's essentially a competitor for nasdaq and new york stock exchange. bill o'brien, he's going to be the president at direct edge. the combined company. we'll see if we can get bill on on monday. they're not doing interviews right now. interesting story. back to you. >> thank you for that. bob pisani. for more on the markets, rick santelli in chicago. hey, rick. >> hi, carl. i like to welcome our guest.

peter boockvar. thank you for taking the time, peter. >> thanks, rick. >> i want to go over three areas. on the first area, whether it was yesterday's gdp number, today's income and spending. savings rate, why don't you summarize for us? >> savings rate in q4, if you look at october, november, december, they declined each month. and we saw today specifically december number and if you don't include the late december early january 2012, 2013 tax related distortions, the savings rate is down to the lowest level since 2008. and it seems that consumers are driving their spending from that rather than income. real income for the fourth -- for december. actually fell 2/10. it tells you the underlying pace of spending and obviously that being a huge part of the economy is not on firm ground and this we need a pick-up in income

growth in order to sustain and accelerate any economic activity 2014. >> i gotcha. now i'm looking at the dow, down 113. the talk on the floor all day yesterday and the morning was, end of the month reallocate, things are going to testify it inially put a bid in the stocks and sell into treasuries. add in the notion a correction, hey, everybody says we need a correction. peter, as i summarize these two issues, i guess what bugs me is where is the gray area between correction and change of trend. do you have any thoughts on that? >> correction and we're a bear market or a bull market. they're all defined in the stock market and encyclopedia and dictionary or 10%. >> my point is that's noise because the last thing you want to hear about as a correction is after it happened. there's a clear change in trend. >> exactly. >> the lack of qe this year compared to the qe on last year has changed the entire investing environment and i expect that

change to continue. >> correction of fundamentals don't change. i think they are changing. the last topic and you're the only one i've read anything on this topic i agree with. when i listen to the imf and listen to what's going on in europe and simon pointed to it, talking about deflation. you written there are many forms of deflation in this world where we don't even follow money supply anymore and there's bad and good, can you give us an idea of what you think about europe in that context? >> well, if you look at spain, italy, portugal, greece, these countries are doing their best to better position themselves competitively. and this means lower costs from a labor perspective which then follows lower cost. income growth is sluggish there. they need to get more competitive. inflation or disinflation is a good thing in these countries. for the average consumer they can do more for the average company, get more competitive. >> i like. there's always two sides to

every story. quick, who is going to the super bowl? come on, quick. >> seattle. >> wow! okay. peter, always going. contrarian. back to the "squawk on the street" gang. >> thanks, rick. pete kerr say that because we're not in the studio and doesn't have to deal with carl quintanilla. watching with walmart shares flirting with the flat line now. nearly $75 after falling pretty sharply after the retailer lowering profit expectations for the latest quarter. citing cuts to food stamp benefits and tough winter from a weather perspective. walmart is set to report full year earnings on february 20th. let's bring in patrick to discuss the state of the consumer because we saw fairly good consumption patterns throughout 2013. we saw report from the occ today that consumers are wanting to borrow more. but we saw consumer confidence dipping a little bit. are we going back down a softer path starting in 2014?

>> hi, kay la. one thing to keep in mind with walmart is they've had negative same-store sales throughout 2013. it looks like it will be negative again in the fourth quarter on saturday. i don't know that things, the consumer has definitely been in a bit of a funk. it's been a very difficult fourth quarter for retailers, particularly bricks and mortar retailers. the underpinnings of consumer spending are better. right now than they were this time a year ago with housing on the mend and the stock market having done pretty well. at least up until recently. gas prices are relatively benign. so i don't think that that much has changed with the consumer. i think the consumer, you know, it was a tough year last year, 2013, for retail. and we saw that again in the fourth quarter. and i think, you know, 2014 is going to be more of the same at least through the first half of the year. >> walmart does have some emerging markets exposure. it is opening more stores

abroad. it is interesting to see whether some of the weakness we're seeing in the emerging markets would affect walmart. do you think that's going to have an out sized effect on this stock? >> it's definitely going to have some impact. they have a big presence in brazil. they have a decent presence in china. they actually just closed about 50 underperforming stores in those two countries. so walmart is the -- it's a global retailer and it's one of, you know, only really a handful of u.s. retailers that do have exposure to emerging markets. so it's definitely something to watch. >> patrick, lastly, on february 1st, doug mcmillan will take the helm of the company. it's a pretty difficult ship to be inheriting at a time like this when they are lowering guidance and is some disspirate desclosures. >> i like the choice. i think he will be a very good chief executive officer. he's been with the company a

long time and he has exposure to all different parts of the business including wall martd international which has been tough along with walmart u.s. i think he's a great choice and we'll have to see what some of the major agendas are as we move in next year. he definitely has the background to take over at this juncture with what's going on both in the u.s. and internationally. >> all right, patrick mckeever, thanks for being with us this morning. >> thank you. got a news alert for you. janet yellen, incoming chairman of the fed, will make her first appearance in front of congress on february 1 1th. this is going to be in front of the house financial services committee. give you an idea of how the tone might go. we treasury issuing report amounts of debt and the fed buying it is a dangerous mix, he says. this will be her first chance to go on the hill and make the fed's case. february 11th and 10:00 a.m. eastern time. with all the speculation

that microsoft cloud enterprise, the front-runner to replace steve bammer as ceo. we should note he's off today. our own jon fortt was one of the first to float nadella's name in october of last year. last year forth sat down with a nadella right here on "squawk on the street" and asked about that prospect and continuing and sometimes criticized involvement of founder bill gates. >> steve's very much the ceo. i am really, really busy and excited about the enterprise job that i have. i'll leave it at that. bill is, you know, as he said, he's chairman. he's also engage with us on a part-time basis. and you know, he's sort of ask the precision questions on how we're going on any particular product in technology. there are a lot of areas of the enterprise business that he cares deeply about. >> great interview by jon. as kara said last half hour, he and bill gates are likely going to work together quite a bit if he gets this gig. >> and kara had the comparison between nadella and bob iger

says he's a quiet one and a stellar ceo. he seemed composed in that interview. >> kara said no announcement likely coming today. stocks are on the comeback trail. down 112. one and only art cashin is here to tell us what's happening when "squawk on the street" comes back. tomorrow. tomorrow is full of promise. we can come back tomorrrow. and we promise to keep it that way. csx. how tomorrow moves. what a day. can't wait til tomorrow.

can you start tomorrow? tomorrow we're booked solid. we close on the house tomorrow. tomorrow we go live... it's a day full of promise. and often, that day arrives by train. big day today? even bigger one tomorrow. csx. how tomorrow moves.

coming up at the top of the hour, lots of red on the screen today, but could this be buying opportunity? we're finding the bright spots, think burritos and chicken. amazon post the first profit in months, yet the stock the tanking. we're going to get the story from vc heavyweight who happens to sit on the board. japan is in bear market territory. is one of 2013's best trades in for a rough 2014? that and much more top of the hour. carl, see you in about 15 minutes. >> sounds good, scott. thanks. let's bring in veteran trader art cashin, director of floor operations at ubs. what's going on? >> well, they are trying to hold. the good news is you pointed out over the course of the morning already is that there's very critical level at -- in the s&p. 1766 to 1770. if they break that that may

bring in a lot of secondary selling. they have stayed above 1770. the low today is so far 1772. now, this is a little bit rough. i think we discussed this last week. fridays are very bad for nervous currency markets because most valuations occur over the weekend. and so about 2:30 this morning several hungarian officials were talking about the currency and what they said was not greeted favorably by the markets. they started to hit their currency and it spilled over into the russian ruble. that's when the bells went off. >> interestingly, looking at the fun flows though. we've seen equity flows into europe. a lot of the of the emerging markets as expected but a lot also out of the u.s. $12.3 billion in equity out flows overall. bank of america, merle lynch said this is a first sign of panic. should we be making anything of this? >> actually, there are some other flows going on. the federal reserve just

released some of the data on treasuries they hold in custody for foreign governments. that's down $21 billion. it looks like the currency problem has forced some of the foreign companies -- countries to ask the fed to either sell their treasuries or give them to them so they can sell them. so invisible to the viewer and to most of us is the fact that behind the scenes these flows keep slipping around. they call italy quiddity because it really is liquid. you know, what flows over one spot or another. >> is this january, art, payback, for a great 2013 or a real january indicator as people like to argue for a long time? >> i think atit's a little bit catch up for 2013. we've gone a long time without a correction. bull markets tend to have a maximum life of five years. we're getting awfully close to that.

ironically it would be march, recovering where we are. so i think there was some apprehension coming in. and the fact that these currencies and international flows don't look quite right have people nervous. now, last day of the month and new month. there's a chance we could see pension flows coming in and that could bail us out. the key thing the viewer could take away. it's a nervous friday in currencies and you want to stay above 1770. >> all right. >> got it. thanks, art. good weekend. >> all right. now, a lot of earnings move is moving the markets today. wynn and mastercard, just a couple of those names that have been moving to east there side of the board this morning. earnings squad is going to be here to break it down when "squawk on the street" comes back. [ female announcer ] who are we? we are the thinkers. the job jugglers. the up all-nighters. and the ones who turn ideas into action.

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sleep train's presidents' day sale is on now. - --- joining me today, cnbc's mary thompson and jon najarian, founder of monsteroption.com. posting better than expected fourth quarter earnings last night. nice pop to today's session. this stock all about macaw, 25% revenue growth in macaw. doubts about macaw because of what's going on in china. data points indicating slowing growth there. wynn actually did what its competitors are doing, discounted a little bit.

sue saw an increase in table games. top of increase and operating margins. >> so big there. high net worth is off the charts and that's where they're hitting the sweet spot lvs and wynn. >> yeah. and we actually got some positive data points about macaw because usually the week before chinese new year. happy new year. the week before we usually see a let up but saw a % increase and rbc says that is positive enif we do see a drop off for the rest of the month. we're seeing that stock up nicely. meantime, watching shares of chipotle heating up after better than reported earnings yesterday. huge pop here on the stock. >> like others. they're diversifying in other ways of getting you food and they're, of course, a spinoff. they've done a lot of great things. mcdonald's did spin them off a few years ago after they purchased them. and now these guys are getting more and more aggressive, melissa. i like the performance. new all-time high today and just exploded to that and wiped out

anybody who was short. >> they also talked about increasing prices. expect that. now they say they expect to increase prices in the third quarter so that's good news for investors out there. also they indicate that they aim to have all of their food, gmo freebie the end of the year. so that's a big marketing push that could differentiate. >> another quality play for chipotle. that's why people are going there. the quality. let's talk about mastercard quickly. earning miss because of higher expenses, et cetera. a couple of highlightses from conference call. company is guiding to the low end of the range for guidance for revenue growth for 2014. the reason being they're going to lose some customers because of a big deal that was signed by its rival visa and chase last year. so they're going to offset that with new deals. they did say that they did reaffirm this deal they had with citi and the american airlines card which a number of people. >> reporter: expecting. so that's a positive but still going to lose a couple of customer there's. couple of comments on the global economy because of the global play on the ceo saying that north america looks like it's

improving. actually on stronger t footing. in europe, the north is stronger than the south. it looks a little bit better. also talked about the china impact not only on asia pacific but brazil and mexico, too. emerging markets is still an area of strength for them. >> that's it for earning squad for today. we'll be back on monday during "street signs." up next on "squawk on the street," high end luxury was supposed to be immune from troubles but now quietly imploding. we got adt because i walked in on a burglary once. the physical damage was pretty bad.

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welcome back to "squawk on the street." the high end of the luxury business was supposed to be immune from all these economic troubles but it's quietly imploding, especially in china. lvmh reporting today that sales in 2013 were up 7% but growth in china falling by more than 50% from previous years and profits from fashion and leather unit they, of course, make louis vuitton bags and fendi, they fall 4%. they saw their share price fall 7% yesterday. that was after its asian revenue growth fell by half. china's slowing economy is just part of the problem but the crack down on corruption and all those flashy rolexes and rolls royces all right hurt.

china's rich are leaving the country. more than half of chinese multimillionaires are planning to move overseas. a report told the group today saying that the big growth in luxury will be in the u.s. and mainly in selling experiences like top restaurants, travel, and beauty. bcg saying of the 1.8 trillion spent globally, $1 trillion is spent on experiences. they're offering sushi in san francisco. back to you. >> wow. that's expensive sushi. >> continues to have the best beat on cnbc. thank you. you just tweeted, well off the lows. being carried in large part by some of the consumer diggs discretionary names. you have to shake your head at how chipotle is doing today. >> cutting 15% of the workforce during acquisition. that stock is up big. one of the leaders in the marth today. of course, you have chevron, walmart leading the dow lower. down 110 points on the day. >> as cramer pointed out this

morning, if you're a diehard bear, a lot of the names, the transports, for example, are not letting you in. that's one of the things he said. i wish they would come in so you could start to nibble but that's not happening. it's a good dynamic for the bulls. scott wapner will have more on this in the next hour. >> nice move off the lows for sure. but no denying the fact if people are fleeing equity funds, whether it's here in the united states or in emerging markets and if you're bullish the market, carl, you better hope that this as goes january so goes the rest of the year thing doesn't hold because we're looking at a negative january for the first time in a few years. >> yeah. our question to cashin is, all this pay back for last year or is this the january indicator we all know and love? we'll see. >> we will. carl, you guys have a great weekend. i know you want the broncos to win. good luck there. we'll see what happens in the super bowl. welcome to the "halftime show" on this friday. following the biggest stories on the street da