logo on my shirt. i felt they should pay me for that. i don't wear stuff with logos. >> you are modest, insignias sell. >> guys, thanks for joining us this morning. make sure you join us tomorrow. "street signs" begins right now. ♪ ♪ i'm giving you a long look every day every day every day every day i write the book ♪ morning. and welcome to "squawk on the street" i'm david faber with jim cramer. author of "get rich carefully" who had a very successful book signing at new york's union square. >> standing room only. >> that's what i like to hear. and scott wapner is joining us and we're live from the new york stock exchange and carl is on a plane right now for so much dhi. let's take a look at the futures. you can see we've got an implied open that would put us down on the s&p and the dow, of course, after a rare positive day for the month for the year yesterday, let's take a look at the ten-year yield.

what, 263. wow. down from 3% not long ago. all right, europe looked pretty good at least last time i checked. that continues to be the case. largely green, of course. you had the nikkei up after the 4.2% drop the day previous. kind of going back around the world the other way as in positively at least so far. let's get to our roadmap this morning and it starts with those markets which are preparing for as you saw a decline at the open after private sector employment data comes in below forecast. also weighing on investors s&p downgrades puerto rico's general obligation yesterday they go to junk level status. merck misses by a penny due to patent expirations and ralph rawrn beat lauren beats. and twitter set to report its first quarter as a public company after the bell today. and big news from cvs caremark announcing it will stop selling cigarettes and other tobacco products at its 7,600

stores by october 1st of this year. >> whoa. that is an interesting story. futures extending their losses this morning after the adp employment report showed 175,000 private sector jobs were created last month. that is a bit below economists' forecasts, investors also paying attention to fiscal distress in puerto rico s&p downgrading the country's general obligation bonds to junk level status. why do you say do we care about puerto rico it's issued over $70 billion worth of bonds and it's a large issuer and given its triple free status, it winds up in a lot of other focused municipal bond funds. >> that's what's going on. >> that's why it's broadly throughout the municipal world and that's why we should at least be aware of it and see what the impact is not that this was unexpected because there were many anticipating it would, in fact, happen. >> i was surprised to see they're the third largest issuer

s of munis after california and new york. >> i used to sell tons of these when i was at goldman sachs and the pharmaceutical companies got special deals and they could issue bonds and triple tax free people love that stuff, no matter where it is. it's great. to david's point there's a great moment in an otherwise what people thought was a downbeat call from travelers. where fishman who as i regard the single greatest buyer of municipal bonds in our lifetime, all right, said that there's great value occurring in the muni bond market because puerto rico's pulling everything down. people kind of ignored it. he said something, he used the word competitive, about pricing, you know, words you cannot use. it's like george carlin, one of the seven words you cannot use, say your business is competitive. but lost in that he said the whole market is coming down because of it. >> and it's been something to watch. the municipal market a look at one of the most frequently referenced indexes of muni bonds. there is an expectation that

puerto rico is still going to come to the market to show that it can kind of raise some money and be done. it won't have to come back to the market for quite some time, so this idea that a default is looming may not be correct. >> how about a bailout? how about a federal government bailout? >> feds say time and time again that's not happening. >> is it more difficult to come to market now because of the downgrade and the cash position that they have a precarious one at that? >> it's not clear that it's going to be any more difficult because the market already seemed to be anticipating, scott, that this downgrade was coming and are judging it to be a junk credit. we'll see what the interest rate is. simply by being able to do it will be a sign strangely enough of confidence perhaps in puerto rico to a certain extent if they can get it done. if they can't get it done, big trouble. >> i think a lot of people have been waiting for the moment to buy. a lot of smart people i know have been saying, listen, you keep hearing about the denials from the federal government which you do not want to be in until the federal government comes in and does some sort of guarantee and that can be done. look, anything can be done, right?

i mean, we know that from the "godfather" anyone. but i think that puerto rico bonds are not yet the bond. and, boy, do i have a lot of people who want to buy them. it's not the time. another leg down. >> story we'll be watching. of course, you may remember our own michelle caruso-cabrera in puerto rico talking to some of the senior officials there. continued concern about the sales and use tax numbers and what they're going to be. there's a lot of that pledged to the cofina bonds which is where the bonds may come from. but let's move on to the markets here as well, not clear that it will have much of an impact on the equity markets, but as for earnings, dowmissed eight cents per share and ralph lauren beating forecasts with quarter earnings of 257 a share helped by rising sales at its stores and the company raising revenue guidance for its current fiscal year. on the markets overall do they get helped at all by the two earnings? >> one of the things i hate this, merck the headlines were

bad, i was watching, and how much is that going to -- no, the headlines were totally wrong. for the first time in memory merck did the quarter. you have to look at all these "xs." you can't read the headlines. the headlines are written by people who really need to go back to headline school. you can't put them in journalism jail because there isn't one, but this quarter merck made the numbers and they're also reviewing animal health and consumer. the animal health is very big. the latest data for pfizer acting very well. and this is a new merck. this is a merck that can't do anything wrong. the old merck couldn't do anything right. when this number came out the stock traded up to 50. the stock will be at 55 today. they are buying back stock. they are refaux cuss ocused ande a lot of new drugs in the pipe. it's the new merck, loved, loved, loved. >> there were active shareholders in the ranks. >> there were. thank you for mentioning that. >> they do seem to be responding as you might when activists come with their checklists and ask

you to do certain things before they undertake public campaign which is not the case at all at merck. but some of the things they're putting under consideration. and interesting to -- pfizer has also been aggressive in this way and has been rewarded. >> is merck's quarter great? no. it did the quarter and there were a lot of people betting that it can't stay up here. where is merck sure to be valued? i don't know. i did work for my book where i said it should be valued in the low 50s. pfizer is doing so many things right right now and they got a lot of new drugs. people are re-rating pfizer the way they did bristol-myers saying it's more of an anti-cancer company. these are companies that frankly are boring. they have big dollar exposure. they got a decent yield. but the consumer pack packaged good stocks have been busts. >> you don't have to choose between fideer and merck, right? you buy them both? >> well, you know, you are diversified. as between them i like pfizer more than merck because merck has a remarkable run from 44 the

last quarter all the way to 54. pfizer's, you know, underperform merck and pfizer's a good company. these are the kinds of companies let's just understand, these still are safe may havens. they have worked during this period of just -- this book has been horrendous and they've worked during this period. >> it has not been good and today with the adp number given what we've seen from auto sales and housing starts one has to wonder it's not just all the weather, is it? >> no. >> it's also probably the impact of higher rates even though we're back to two six on the ten-year, maybe the lagging effect. >> the taper that's really irrelevant, you know, the fed may not be as friendly, but what's happening is, look, underarmor reported great number and kors reported a great number and netflix and then there's kind of everybody else. >> and ralph. >> and ralph numbers are really good. >> a lot of people had been betting against the stock. >> the last quarter set a lower bar. but you're talking about third quarter 11% and the double digit

and the company raising its full year 2014 to a 7% from 4 to 7 range. very good quarter. >> is the sweet spot in retail and certainly that come to stocks those that play in the kors, ralph space, the spending space? >> it is a gatsby space and i feel that coach is no longer gatsby. it doesn't have the allure. tiffany had a good number. the gatsby index is alive and well, and the higher end has done -- the highest end has done well. have you ever shompped at kors? >> i have. >> it's much out of line with everything else. >> i almost went in one. >> you are a radioshack man. they don't have that. >> no, they don't. >> they don't have kors. kors connectors. >> closing 500 stores stock having reacted positively to the super bowl add a. >> i'm not embarrassed to say i own a couple of michael kors

men's shirts. >> really? boom. >> you should be as embarrassed as all get-out. >> i use the shirts the company gets me. >> do you know what else? >> what? >> i like them. >> you like the kors? >> yeah. >> my daughter went to the kors outlet and said, dad, it's just too expensive and that's a benchmark! that has never been reached before. >> that's a decent-looking stuff. >> this is someone who shops at tesla. >> price discipline on the part of your children. >> yes, price discipline. >> how about "the usa today" maybe time to buy the dip? talking about the overall market. >> yesterday it was time to sell the dip. it was the front pages yesterday. today it's the business side says to buy it. >> they are coming back. they have pretty good stats in here. >> they are going to drive me smoking to cvs. no. >> here's a good stat bespoke. the downturn has lasted 20 days less than the 25-day average for 5% plus pullback since march 2009. yes, it could last a little bit longer.

hasn't quite lasted to the average of what these things typically do. >> let's see the number tomorrow, on friday. we're oversold. there's no doubt about it. it's never been -- minus six on this s&p oscillator and even more oversold after yesterday. it's called dropping -- you dropped an up day from the -- it's a technical term. >> thank you. >> trust me. >> i will. >> trust me. >> i always trust you. >> it's been a sucker level to short. at the same time, you come in the hottest group in the country had been the 3-d printer. 3-d. we talked about boxle jet and jim cramer on twitter, people are threatening me with death that i mentioned it. ddd hk the highlight. what i'm saying the growth that -- with the exception of a couple of growth momentum names they really come after things. >> i tell you one they haven't come after. >> who's that? >> twitter. not yet. >> it's not a stock, david. it's a religion. religion. >> does it pray in the church of

amazon? maybe it does. >> no, church of facebook. amazon's church been a little discredit. >> a little? >> excommunication of shareholders. i was going over the numbers for twitter. >> we should mention twitter reports after the bell its first quarterly report as a public company. not bad. $36 billion market value. stock has done extraordinarily well since it went public right behind us not that long ago. >> undertone is what matters is the number of users. because you can't really value it any other way but if they say something that is positive at all. >> i mean, halftime will be covering this i'm sure tomorrow. >> we have bob peck your guy. we have bob peck on today. >> bushel and a peck, that's how right he was. >> what ends up being the key metrics that we need to focus on? >> if they do $300 million, let's set a bar so high someone could actually be disappointed, that stock goes to 75. maybe 300. >> do you think at all, jim, that because of what facebook

delivered it quietly raised the bar as to what twitter now has to deliver? >> facebook has earnings. it is cheap on 2016 numbers. we are using 1999 valuations for twitter. now, it didn't come apart until 2009. i don't think twitter comes apart. i think it's a great company. but i'm saying twitter is getting the same pass that amazon a getting. the tesla pass. it is not bound by us conventional thinking people. maybe the vulcans. maybe they can figure it out. it is not bound. people are not talking about earnings. not anybody. >> talking about sustained incredible top line growth for company and continuing to expand the platform and all of the different ways eventually this company is going to be able to earn itself into that valuation. >> right, but there i am signing books at barnes & noble after the 20th person asked me about apple i stopped counting, you do

that one, two, three, four, one, two, three, four, apple, apple, apple, and finally someone threw me a question about tesla, thank he heavens. >> what did you say? >> it is a value stock, a decent year. i thought i was talking about pfizer. not bristol-myers! >> and half the people bought apple at 600. those people are so unhappy, they are coming to book signing to get me to say they'll be okay. my name is jim cramer in conclusion you are okay if you bought apple at 600. >> came to lay on the couch? >> for 50 minutes i prescribed a lot of xanax, 0.25, a baby dose, but that's what people talked about was apple, apple, i tried to get them to talk about netflix. no, no, no. tried to get them to talk about facebook. no, no. google hey, you know, europe, i thought europe was supposed to

break up google and now they love google. >> settlement with google good for them in terms of search. >> how much is the wearable device going to make for apple? >> i thought it had broken. >> the spell has not broken. >> the stock had moved yesterday? >> a value stock. it held up well during the onslaught. >> maybe it is a defensive play. >> i will watch your show. maybe we get a tweak, carl tweets that we talked about apple and the next thing you say apple is 560. there's a cycle for you. it is kind of like curling. is it more like the toboggan ride? >> toss me the faber phone. let us make it happen. >> "the usa today" said the dip should be sold. i saw it because twitter told me. cvs announced it will stop

selling tobacco and cigarette products. the futures have been all over the place. implied open down 36 on the do you and s&p implied down 6 and more "street signs" when we come back. so you can get out of your element. so you can explore a new frontier and a different discipline. get two times the points on travel and dining at restaurants from chase sapphire preferred. so you can be inspired by great food once again. chase sapphire preferred. so you can.

cvs announcing big news it will stop selling cigarettes and other tobacco products at its 7,600 stores by october 1st

becoming the first u.s. drugstore chain to take cigarettes off the shelf. they say the sale of tobacco products is inconsistent with the company's purpose of promoting better health. president obama already issuing a statement praises the move saying cvs is setting in his words a powerful example. one that will cost $2 billion in annual revenue. okay, take the difference between whether you decide to buy a stock for the socially responsible reason or you pay attention to the numbers and the numbers ultimately matter more, right? >> in 1988 al gore came to me because i'd done work with him and asked me to build a responsible index, companies that didn't pollute, that didn't hurt health. i came back with an index of eight companies. i mean, i see this move, i understand it, buy walgreens, buy rite aid. >> really? that's cold, man. that's cold. >> how are they going to respond? >> they're getting incredible press for this.

we're talking about it. everybody is talking about it. they've got the front page of their website is cvs quits for good. obviously it's not until october 1st, 2014. they got a little while. >> walmart going to take guns out. no, guns don't kill, people do. right? come on. focus time. look, what am i supposed to say -- what business am i in now? am i a new business? am i in the business of telling people how to lose money? >> of course, not. why? it's not going to lose money. >> you are giving away big money to competitors. dollar general people do buy them mostly at convenience stores. you want attenuated, buy dollar general they made a big commitment to tobacco. and the gross margins aren't that good for tobacco. i'm sure someone midmorning is going to float that they'll take medical marijuana in the space that used to be tobacco and cvs will start going owp that craziness. but this is not good for earnings. it's just, david, people don't go into a drugstore and say, oh, they're selling tobacco? do you know what i'm going to

do? i'm going to go to a local pharmacy that doesn't. >> only 5%. >> i have to admit, i had no idea, never having smoked, that they even sold tobacco at cvs. >> it's behind a calendar there. sudafed, how about sudafed? they were making the crystal meth out of sudafed. you probably missed that "breaking bad" episode. >> i'm in the middle of season three. >> i won't spoil it. i hate tobacco. i've lectured my kids tobacco, i've never smoked a cigarette. i've never even smoked pot. i'm ridiculous. >> you're a loser then. >> do i -- have ever denied that? have i ever denied that to you guys? >> no. i don't believe that for a minute. >> i haven't! >> good for you. good for you. you are high on a life. >> i was afraid of getting beat out by my dad. my dad hit me pretty hard when i thought i was at a party with pot. he was furious. >> cvs has one disease from smoking. nine in ten lung cancers caused

by smoking. way to go, cvs. all right. >> eps, david. >> eps on cvs. >> what about the tobacco stocks? does it have any impact on how you would treat those? >> i don't like the stocks at all. pm is going down. the world is turning against tobacco. you see philipmorris? stocks horrible. i'm not looking at those stocks but i was surprised by cvs. the stock has been in a straight line down from 72 to 64. someone could make a judgment that this stock was already overcompensated but someone else could make a judgment that they'll go to walgreens. get this one, you want a total play. monster beverage. people going to go to the 7-elevens and monster beverage is the number one thing. >> he's looking for all the angles. we got a lot with cramer, of course, the "mad dash." >> buy mountain dew. >> coming up next. ♪ said he was ruthless and said he was cruel ♪

make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. 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.

♪ all right. quick five minutes before that opening bell. time for a "mad dash." a little hain, after the bell it was down yesterday. >> skeptics on the call suggesting that perhaps irwin simon the ceo is not talking about the downshifting the united states versus the nielsen category. saying that they are not overachieving versus the nielsen health -- in the health category. simon comes right back and says that's not the case. there was a onetime only problem, $15 million but it's become very controversial. it's been controversial because barrons hit them a bunch of times and the stock hit up here because they crushed the quarter. it's a long-term category, if

you think people will not use this kind of natural or organic food, you're wrong. this is all about buck marshall, the industrial food information bureau also known as ifib. the chipotle commercial. marshall a big opening coming february 18th of the chipotle sponsored movies. >> what about the drought in california? they also talk about that. >> almond prices. worry about white wave. maybe worry about white wave which has been a red hot. almond market prices a real erosion problem. the drought is something to follow. they use a lot of water for that. ethanol uses a lot of water. big water shortage coming. and hain going to be rocky for a while. i expect that barrons will hit them pretty hard because that's kind of what has been happening. it's not a clean quarter. i'm having irwin simon on tonight and i think it will be interesting to see what he has to say. >> we'll watch hain and a lot of other stocks including some of

the ones we already mentioned. a lot more coming up right here on "squawk on the street" after the option bell after this.

so ally bank really has no hidden fees on savings accounts? that's right, no hidden fees. it's just that i'm worried about, you know, "hidden things." ok, why's that? well uhhh... surprise!!!

um... well, it's true. at ally there are no hidden fees. not one. that's nice. no hidden fees, no worries. ally bank. your money needs an ally. ♪ ♪ ♪ [ tires screech ] chewley's finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. get the most extensive charting wherever you are with the mobile trader app from td ameritrade. tell them it's not a joke. >> we're about to have the

opening bell here from "squawk on the street," of course, at the nyse, the s&p 500, the cnbc real time exchange coming up. you hear that opening bell. here at the big board, cycle for survival, a cycle event and raising money for rare cancers and the go red for women movement raising awareness about heart disease. we're back at hq. more red than green as we take a look at the real-time exchange for the s&p. does appear we'll be opening down this morning after what was a rare up day yesterday. but we'll see how we square off. >> a lot of good. yesterday there were a couple good earnings but there was also a sense of maybe the market's overdone on this selling. but, again, friday, employment number. you got a weak employment number and you'll start to hear a lot of different things about a lot of different stocks that will be positioned wrong mostly industrials. >> what do you think of, guys, the tom demark noted technical

analyst was on "squawk" this morning saying the market could unravel quickly in his words if it trades lower this week. says that the next two or three days are critical in his words for the performance of what happens here throughout, jim, that we need to find some sort of traction at some point here. >> i'm saying the market tests 1650 on the s&p. that would be if things go wrong. i was listening to tom. i'm not a chartist. chartists are very self-fulfilling. if you look around this room there are a lot of machines that go off if we hit certain levels, 1650 s&p and if we don't hold that, the machines go to 1500. it's machines in charge, why i am trying to tell people find stocks that you really like when machines send things down you're able to get stocks at reasonable prices. the technicians the one thing that they forget is stocks do get cheaper on the way down. it's just something i point out. >> it's a good point as well. in fact, many stocks are getting

cheaper -- >> by the moment. >> -- today. >> 3-d systems, jim, you were talking about that and 3-d the printing stocks, david, down 25%. >> don't have a lot of value but they had a lot of momentum and the momentum stocks with the exception of netflix and facebook, a couple others, have really unraveled. they have unraveled. you know, listen when demark talks, he's got -- he's very honest. listen, i made some right calls and some wrong calls. obviously if we get a decent employment number people will say what are we selling down here for. it is a fulcrum day. he's got within those three days is a very fulcrum day which is if we have a second unemployment number and if we go back to 2007 we've got the second unemployment number and that's when things did start to unravel. people will say, listen forget about the weather. >> we're slowing a little bit and the weather has certainly played a part. so, we're slowing a little. >> why haven't they been buying clorox, that's what people are worried about. they are huddling merck today.

clorox did not have a good quarter. gross margins weren't that good and top line was weak. you expect congregating in that group and there's not been a lot of places to go. fastenal reported a great quarter and people aren't excited about it and merck now said things are fine. geez, i can't believe that stock is going straight from 44 just because they didn't screw up. >> yeah. it really has had quite a move, of course, and is the -- is the outperformer of that group as you might expect today. we mentioned pfizer earlier. it's down a bit. bristol-myers down a bit. nothing to mention. >> look, wynn's down today because january was a rough month in macau. >> macau was lower-than-expected revenues. >> i think wynn -- there are certain things that i think continue to work, under armour works, wynn works, kors works. that's a diminished group. the magnificent seven i talked about them last night not a lot of companies that really delivered on top-line, bottom-line guidance and were often heavily shorted, not a lot

fit that. but if the employment number is like the adp in line, geez, what were they thinking of when they sold boeing at 121. it's demark moment a moment where one number can cause a lot of damage or get people excited. >> the same point the dow is trying to work its way back. only down 15 points or so. there are good stories to tell. you just have to look. >> right. look. last night on "mad money" we had eaton. sandy cutler basically said, look, i screwed up, the gross margins weren't what we wanted but trucks are doing better. don't worry about aerospace is good. a nonresidential construction coming back and i listen to that, that stock is down in a straight line from the high 70s. and is that overdone on the sell side? i think so. but if we get another downtick in employment people will say, look, that company's not coming back anytime soon. >> do you know what they're going to say if you get a downtick in the unemployment? they are going to say they're going to taper the taper. that will start dominating the conversation and what that will

mean to the market. >> hope that the ten year doesn't go to 2.25. >> or 2.6. >> some things, look, the fed is no longer as friendly, right. but it's not the fed playing a role here. we can talk about the fed endlessly but it is the downtick in the economy and the fact that you can say weather caused a problem but if there's too much inventory because of weather, inventory has to be slashed when you sell it, that misses numbers. jcpenney a lot of people fooled yesterday, came out with a good number and it wasn't good. they have a lot of inventory. >> may breach five bucks for the first time i've seen. >> did it go below five yet or not? >> no, it's two cents above pbu you can see jcpenney. >> it was buried in the news of the positive comp. >> decelerating positive comps for the months, of course, coming down off 31% comp but at least they had an up one. you wonder at what point if it wasn't for the number of

employees this wouldn't be part of the conversation given it's a $1.5 billion market value. >> retails come down a lot. cvs not getting hit that bad. >> not too bad. but you mentioned family dollar and dollar general are the beneficiaries. dollar general is up 1 1/2%. >> and dollar general just moving to california. that was a very tortured decision when they brought in tobacco because they had not had tobacco. they knew it lowered the gross margins, but the traffic really increased with tobacco. >> right. >> a lot of people smoke in the country. and rite aid is going to get some business. rite aid had a couple of really good quarters. last quarter people weren't crazy about. i found a lot of good in it. they are moving very aggressively to private label. that will be a beneficiary. >> apple google, facebook, twitter, yahoo! tesla, netflix all up. >> there you go. that's what people want. all up. >> did you talk about the religion? is the religion up? religion is up 43 cents.

i meant twitter. >> amazon, however, is down another two bucks. >> i thought he was talking about amazon with the religion thing. i went right to amazon. >> that's a false god. >> amazon is a religion. it's been around a long time now. >> that tick down was like the chinese -- >> it's a coming religion. >> how little did amazon tick down and the idea that they raised prime? who would not pay more for prime? prime is a ridiculous bargain. not unlike the costco card when costco raised prices no one balked, prime could raise prices and no one would balk. >> 79 to what? >> 99. 79 to 99. >> we don't know how many prime members there are because prime doesn't tell us. >> got to be a pretty good number, right? >> could be 20, 25 million, we don't know. >> they don't follow necessarily the disclosure rules that we would like. it's a religion. >> it's a religion and that's part of the religion, we tell you what we want and nothing more. >> how is the religion of solar

city doing today? >> that's a cult. amazon is almost 20 years old it's a religion. it's a religion now. >> it's not the jim jones. i covered the jim jones when i was a reporter for the "l.a. herald xinl examiner." >> you are still not playing it, are you? >> no, i'm not playing solar city but i am playing tesslar. other rival cars to tesla, they weren't as good as tesla. remember, these stocks go up on strange things. some stocks are bound by earnings per share. it must kill them. don't you think it must kill ford which closed the remaining plant for four days? how much is ford down? to close the remaining four days and they have too much inventory in europe. ford makes more cars in an hour than tesla makes all year. but so what. >> so what i say to you. >> ford and gm both down today. tesla up. >> jcpenney five bucks even. all it will take you to get one share of that. let's get to bob pisani who is

on the floor with more of what's moving today. good morning, bob. >> good morning, old friend. mixed open. most of the major sectors are fractionally to the downside. i watched tom demark's interview this morning on our air just like everybody else. he's a respected technical analyst. a little bit on the high concern side my opinion. i would note mr. demark is in the business of selling market timing seminars. i think that's a fair observation. he's doing one today that you can go to in new york. take that for whatever you want it to do. i do think there's some important points about the trading action the last few days yesterday 4.2 billion shares was heavy volume but lighter than the prior day when we saw a lot of selling going on. 3:1 declining to advancing stocks, it was good but it wasn't as good as the big heavy declines that we saw in the prior days. in other words what we're seeing is the selloffs are coming on greater breadth and volume than the rallies. we need to see it moderate. from my point of view as a moderate, modest technical watcher that's the most important thing we need to see.

another thing that two help would be a little bit of moderation from the fed heads. placer and lockhart are speaking today, no surprise what they'll say. dennis lockhart from the atlanta fed a moderate. yesterday one of the reasons i think perhaps we had a rather muted rally was charles evans from the chicago fed coming out rather strongly and saying it would be a very high hurdle for the fed to move away from tapering. i happen to think that's the right position for them to take but i think that moderated the rally that we had yesterday. let's look over in japan where everybody is watching the yen, the nikkei did have a nice move off the bottom today, 1.2% but it's down rather noticeable for the year. gee sent earnings from toyota as well as panasonic. here in the u.s. speaking of earnings, ralph lauren beat on the top line. revenues a little bit light but they raised the 2014 revenue guidance and that's all everybody cares about. estee lauder, they beat but the revenues again light. they did note strength in emerging marketsarden in line, and the north american

retailers were weak during the holiday season and they are blaming that. transports are weaker than everything right now because of c.h. robinson they really disappointed and the revenues were below expectations, that's hurting some of the trucking companies overall. i tell you the big surprise this morning to me i don't think you mentioned it, 3m the buyback they announced i had to literally check it twice, 12 billion? the market cap is $84 billion for 3m, if i'm doing the math right it's close to 14% of the stock outstanding. that is a huge buyback. i'm trying to get, you know, the historic buyback numbers. that's one of the biggest ones i've seen in a long, long time. finally we'll get twitter's earnings report after the close today. the first one ever here and what a ride for them. what a thrill it was to be on the floor for the opening for twitter a few months ago. priced at 26 that day. opened at $45.10 and got as high as $74 in the early part of december. by the way, you follow their report and it's going to be a twitter, @twitterir is the

handle for their report. and biotech ipos at the nasdaq and one here continental building products, give you the numbers later on. back to you. >> all right. capital markets activity keeps going. do want to get to time warner that company reporting earnings and i typically do like to focus on some of the media names. if you've been focused on them, of course, you had a great year last year but so far this year it's been kind of ugly. you can take a look at shares of time warner over the last month or if you want to take a look at viacom or cvs the libertys whether it be liberty media in particular or even liberty global. yesterday it was a little confusing on both of those. you can see they're all not doing so well. now, that may have been baked in but time warner shares off another 1, let's call it 1.3, 1.4% this morning. the company coming in with a number that was -- met expectations and might have been ahead of some of the analysts out there, but it is interesting when you dig down into it a bit. the call is not beginning until 10:30 a.m. eastern so we may get

more information a little less than an hour from now from the conference call, but when you look at q-4 adjusted operating income, for example, at turner, hbo, warner bros., you'll see it was down at turner. subs were up 6% and advertising up 1% but programming costs are getting very expensive. up 12%. company continues to talk about affiliate increases that it will be seeing over time as it renegotiates those contracts, of course, with the distributors. that is all going to help it, but at the same time you do have to wonder whether it's not going to be offset by those increased programming costs. that's a big number. that is why turner adjusted operating income was actually down year over year. they did continue to reduce the share count as you see it there. overall, hbo was broken out for the first time. i thought this was interesting. they don't recall it being broken out in the past. maybe it's saying, hey, take this netflix. this is just a quarter for us. and look at those numbers we're talking about $1.3 billion, subscription revenues up 8%. but programming costs also we

know how much money hbo spends, ""game of thrones"" alone, holy cow the money they have to be throwing a that thing, but nonetheless subscription up and, of course, this is -- it's a machine still, hbo. netflix could only hope to match its profitability certainly although its growth rate at netflix is very strong. as for overall, you know, the share count declined by what was it about 60.5 million shares. they spent $3.7 billion in 2013 to buy those 16.5 million shares back. that continues to be a theme that we've talked about so often when it comes to these media companies generating so much cash as they do and putting a lot of that to work in terms of reducing the overall share count. if you assume they'll buy back another 70 million shares this year, you're talking about a 9% reduction, 8%, 9% reduction in the overall flow. >> it's huge. >> that helps a lot on the bottom line. for whatever you may be facing whether it's rising programming costs and the like. >> and time warner, viacom, cbs,

those buybacks are very real. you'll hear a lot of times even tim cook when he said it on apple, it's consistent. no, these companies buy when there's big sellers. they're opportunitinistic buyers, they buy with a brain. i have also said if you really think we're going to be in a demark moment, who will be buying. meaning some big selloff, time warner, cvie ac viacom. >> and disney reporting after the bell. we'll see how disney did and let me end on time warner, they did give us an adjusted eps base for 2013 of $3.51 that excludes time. remember, "time" is being jettisoned and that will take place in the next few months. the publishing part of time warner will no longer be, they'll still call it time warner but "time" won't be a part of it anymore.

they are talking about low double digit increases in what they are calling diluted income per common share from continuing operations off of 351 base. stock down almost 2.5%. >> cash flow very good. if you want to think about where to go if the market bottoms remember the cash flow from this, cash flow from our parent comcast, these companies generate a huge amount of cash. >> yes, they do. >> and it's important because that is what creates real value. >> future cash flows. if you do pray in the church of amazon and you believe in mr. bezos he talks about future cash flows being way more important than report eed gaap earnings. >> are we going to once again start focusing on the buybacks whether it's warner, rainfall, 3m, is that going to be a continued story just like it was last year? >>scpc& m has had a good buybac. i'm flummoxed by estee lauder

not doing well. it matter us but it depends what kind of buyback. some don't help. if you are in there both fists. exxon, big buyback hasn't done anything. let's get up to chicago and rick santelli at the cme. >> adp 280,000 original release last month goes down to 227,000 and currently 175. 175 isn't bad. we had 4.1 in the third quarter on u.s. gdp, we had 3.2 in the fourth quarter. 3.2 isn't bad. but there's something here to pay attention to. they are all sequentially lower, okay. the question is what type of momentum did we have midyear last year, what time of momentum did we have at the end of last year and how are all of those adjustments affect what we're going through in the first quarter this year. and if you look at an intraday of ten-year -- excuse me. let's start with the dollar/yen. that's the one. if you look at this chart

clearly see at 8:30 when the number came out that it moved in a fashion that would dictate lower interest rates and lower equities. but it's also high beta with regard to how all the other markets get affected by that, so the dollar turned back, up to the upside. now, it's not in positive territory, but look at the chart of tens. it's exactly the same. if you look at a two-day chart of tens, what's noteworthy here we took out yesterday's high yield so it did kind of a turnaround. and if you look at bunds, didn't take out yesterday's highs. the debate on this floor is if the yen continues to improve against all the major currencies, is today going to see a reversal of some of the positive meaning that the number wasn't as bad. we're going to have to continue to watch. dollar index year to date, well, it doesn't look bad. it's close to the high levels of the year. but minuscule net change. it's really more about what's going down with the yen that. it is the euro centric dollar

index. back to you. house of cards and netflix hoping to remain on fire by ordering another season of the online-only series. "squawk on the street" will be right back. tall the building is, or how ornate the halls are. it doesn't matter if there are granite statues, or big mahogany desks. when working with an investment firm, what's really important is whether the people behind the desks actually stand behind what they say. introducing the schwab accountability guarantee. if you're not happy with one of our participating investment advisory services, we'll refund your program fee from the previous quarter. it's no guarantee against loss and other fees and expenses may still apply. chuck vo: standing by your word,

that's what matters the most.

can you start tomorrow? yes sir. alright. let's share the news tomorrow. today we failrly busy. tomorrow we're booked solid. we close on the house tomorrow. i want one of these opened up. because tomorow we go live... it's a day full of promise. and often, that day arrives by train. big day today? even bigger one tomorrow. when csx trains move forward, so does the rest of the economy. csx. how tomorrow moves.

netflix has ordered a third season of the original series, how house of cards," last year netflix won three hemm emmys an making it the first company to win awards for online only shows. i was one of those viewers. very much looking forward to the second season. while they have the exclusive right to broadcast it first they don't own it in perpetuity. >> i saw that how can they without congressman russo -- >> i saw him on the street one day in midtown. i was taken aback. >> we have to talk about this phenomenon, we've had unbelievable quarters and ralph lauren reported an amazing quarter and the stock is getting hammered. and estee lauder talked about

margin and getting hammered. and whack-a-mole. chance to get out. >> the whole sentiment has gone from buy the dip, now it's selling any rip at all. >> this is the problem with this s&p. with people really think that the s&p's got to go lower because it's in some sort of no man's land. and that's the technicals are in control. >> all right. we'll talk 6 in 60 with jim right after this break. 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.

ha ha. made-est thou look. so end-eth the trick. hey.... yes.... geico. fifteen minutes could save you... well, you know. some brokerage firms are but way too many aren't. why? because selling their funds makes them more money. which makes you wonder. isn't that a conflict? search "proprietary mutual funds". yikes!! then go to e*trade. we've got over 8,000 mutual funds and not one of them has our name on it. we're in the business of finding the right investments for you. e*trade. less for us, more for you. the fund's prospectus contains its investment objectives, risks, charges, expenses and other important information and should be read and considered carefully before investing. for a current prospectus visit www.etrade.com/mutualfunds.

save get a sealy queen set on befor just $399.osturepedic. even get 3 years interest-free financing on tempur-pedic. keep more presidents in your wallet. sleep train's presidents' day sale is on now.

it's time 6 in 60, 6 stocks, 60 seconds. let's start with packard. >> and volley, volley, volley. >> morgan stanley said let's look at it. the yield is 6% and one of the largest iron ore companies. brazil, be careful. my travel trust owns but it's been -- >> whole foods. >> deutsche said listen, don't worry about the gross margins and the second guy saying don't worry about whole foods. worry about it. >> goldman lowers the price target on buffalo wild wings. >> they had some quarter noise on the franchise scores that wasn't so great and the stock

has been red hot and people are coming after these stocks that have been red hot. >> the goog. >> i think that bernstein's raised the price target big and one of my biggest worries watt the european regulators and they've given it a blessing. >> and tableau. >> this is big data valuation. you get all this big data. they sort through it. >> holy cow. >> someone should have bought this company like a microsoft. like a microsoft should have bought it. because they're not good enough in the big enough data valuation. >> big data is incredibly important. i hate to keep mentioning amazon but there's a reason for that. incredible and big data, amazing amazon. >> they are huge. they know what we like and want and how many times have you clicked on something and it said other people like this, the next thing i know, jim cramer you bought a book on world war ii others have bought books on how to grow tomatoes indoors. >> exactly. irwin simon coming up tonight on "mad." >> it's a defend your life situation all of a sudden where

people decided hain's no good. that natural and organic is no good. let's hear what irwin had to say. i'm not in the guilty until proven innocent world. that's only in the irs tax court. >> beyond a reasonable doubt. that's where you are. >> bingo. >> all right. jim, we'll see you 6:00 and 11:00 tonight, i'll see you right here tomorrow morning. >> yes! all right, let's get to the "ts" and breaking news on the service data and we'll have information on the big downgrade on puerto rican bonds. keep it right here. i always say be the man with the plan

but with less energy, moodiness, and a low sex drive, i had to do something.

i saw my doctor. a blood test showed it was low testosterone, not age. we talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these symptoms to your doctor. tell your doctor about all medical conditions and medications. serious side effects could include increased risk of prostate cancer, worsening prostate symptoms, decreased sperm count, ankle, feet or body swelling, enlarged or painful breasts, problems breathing while sleeping and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. ask your doctor about axiron.

welcome back to "squawk on the street," january ism nonmanufacturing, better than anticipated at 54.00, 54 flat. it's better than expectations and better than the last three which remained at 53. give you some context. 54.1 was november obviously we were higher several months ago and the high water mark was august of 2009. the internals and employment number improved to 56.4 versus 55.6. that's especially important considering adp on friday. and last new orders 50.9 a subtle increase from 50.4. kelly, back to you.

>> all right, we will take a subtle increase this morning. thank you, rick. and we'll also take a look at the markets, major averages extending losses this morning. stocks heading lower, this after we got the adp private sector payroll report that was a little bit shy. we'll see if they turn around on the stronger ism figure. let's bring in our analysts, good morning, to you both. chris, what do you think about this services number? is this going to be enough for us to perhaps stage a little bit of a rally? >> i think the potential for a rally is there. we look a lot at crowd sentiment and, you know, basically crowd sentiment just today on our models hit a bit of a pessimistic extreme which would signify a tactical buy in our opinion. loo there's a decent chance the market finds a bottom in the near term. >> what about you?

>> we think maybe this week we test 1700 on the down side and maybe they try to rally them a little bit. but i think this market in general is headed lower before it's headed higher. >> can we take a look at the ten-year yield as well as we have this conversation? because i think we got a pop on yields. 266 i think is where we moved up on that better-than-expected number. chris, does this -- this is a sigh of relief, right? this is -- after the data we've gotten, it's a much-needed sigh of relief, is it not? the >> absolutely. there's been a big hiccup in the early part of this year on the u.s. data on the global macro data. i think in the u.s. it can be explained predominantly by weather but there's always that uncertainty. you don't know is it just weather or is it weather or something more. and given the fact that we entered into the year with such, you know, optimistic extremes in sentiment, with basically nothing on the wall of worry to worry about as we enter january 1st. i actually think this pullback

and uri might be right, it might go lower. the pullback is healthy. the market was going up close to a 25% anal i anua aal walliz aa it's actually a healthy thing for markets. >> uri, are you very different from chris in your analysis? i mean, do you think the bull market is still there? or when you call potentially for 1700 do you have a very different view? >> well, you know, i don't think that the bull market is over. i think sometime in 2014 we're going to give 2000 a serious run. but i think that the correction could be much steeper than chris thinks and that we may even test 1525 on the downside this quarter. >> 1525? >> why do you think that? >> because the market was priced for perfection. it's basically been a straight line up for five years. there's definitely a risk

aversion trade going on right now. emerging markets are falling apart. while the u.s. is a safe haven, the mattress is a safer haven. i think you'll see panic selling and that may set us up for the final leg of the five-year bull market. >> if this scenario plays out and this is a more serious event, why will people jump out of u.s. equities when it's going to be i would imagine everything else other kinds of assets in other parts of the world that raise much more alarm than stocks back here at home? >> i think it really comes down to valuation. so, as uri mentioned the u.s. stock market has had a terrific five-year run and what we do at our shop we look at mean reversion potential using a lot of historical data and what our models tell us is that essentially, you know, the u.s. market from a mean reversion perspective is about somewhere around fair value with u.s. small and midcap being somewhat

overvalued. if you compare that to europe and japan what you'll find on the same analysis is that europe is japan from a historical basis are well, well below, you know, their average return levels, suggesting that the next, you know, one, two, three, five years could potentially be much better in those areas than it is in the states. at the end of the day i think valuation kind of acts as a floor and i believe and we believe that valuation is just, you know, on the whole more attractive in developed international markets than it is in the u.s. that doesn't extend to emerging markets, though. we're pretty bearish on emerging markets. we have been for some time and i just think that u.s. tapering is going to continue to be a headwind for em. >> want to thank you both for joining us this morning, an icy within to be sure. thanks, guys. >> snow and ice wreaking havoc from the central plains to the midwest and even here in the northeast by the time this winter storm is over, it will have affected more than two dozen states and at least 100

million people. the weather channel's mike seidel is live in lowell, massachusetts, with the very latest there. >> oh, my god. >> meek? >> reporter: aren't you glad you're in new jersey with an ice storm? maybe not. we're out here in lowell, northwest of boston. so far about 6 inches in about 4 1/2 hours, oeasily more than an inch an hour. one thing we don't have with this one is the wind. it is not bitterly cold. we've had so many storms this winter i've stood out and the temperatures have been in the teens and 20s and snow and subzero windchills. today, you know, it's bearable. it's 25 to 30 degrees. over at logan airport they've canceled about half their flights, 174 departures. pretty much the same across the board at the new york city airports. 45, 50% of all departures have been canceled and then hundreds of inbound flights in those areas. new york city, central park had 4 inches. went over to sleet and freezing rain. upstate in binghamton, new york, as much as a foot of snow. danbury, connecticut, has had 9

inches of snow and you get down to pennsylvania where we have now over 650,000 customers without power, especially in the northwest suburbs of philadelphia. a lot of freezing rain, trees -- tree limbs are just snapping all over the place and taking out power. up here we're going to get 8 to 12 inches. it moves on out. tomorrow will be a sunny, better travel day. airlines will be able to catch up here in the northeast. and then we turn our eyes to the weekend where we still think we'll have some kind of storm on sunday and sunday night. right now, though, we don't think it's going to be a blockbuster, but it's still four days out. we'll have to see how the european and the u.s. or the american model fine-tune this as we get towards the end of the week. simon, back to you there in new jersey. >> okay. thank you very much for that, mike. wow. maybe not so bad on sunday night. >> we're learning so much about modeling. who knew? this is like gps systems there are different weather tracking systems as well. is it just the u.s. and europe? i'm fascinated by all of this. executives from target and nieman marcus, meanwhile, are

facing questions from lawmakers on their big data breaches for a second time. today it's in the house. eamon javers is in d.c. eamon, how is it going today? because yesterday they seemed to almost excuse their lapses by arguing that retailers face brutal, almost insurmountable odds against cybercriminals. >> that's right, simon. target on a bit of an apology tour in washington this week, yesterday in the senate, today in a house subcommittee. target saying yesterday they apologized but also that a lot of other retailers are in the same boat that they are. take a listen to the cfo of target speaking just yesterday as we watch the house get set today. take a listen. >> to begin, i want to say how deeply sorry we are for the impact this incident has had on our guests, your constituents. we know this breach has shaken their confidence in target. we are determined to work very hard to earn it back. >> interestingly what target said yesterday was that they had no idea they'd had such a severe

penetration of their servers until the u.s. department of justice came and alerted them to it back in december. after that they said they had a meeting with the u.s. secret service and began to hire an outside forensic firm to look in to what exactly had happened there, it was the government that spotted this huge incursion into their servers not target's own computer i.t. guys, that had some of the members of the senate committee a little flummoxed, but in general the companies are getting up on capitol hill is fairly supportive. member of congress saying, things, hey, we don't blame the homeowner when there's a break-in, we blame the robber, but we need to look at what kinds of things we can do legislatively to prevehement it from happening again, guys. back to you. >> all right, thanks so much, eamon. coming up, twitter has more than doubled since its ipo in november and now it's beginning to make its earnings debut. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading.

tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading.

twitter will report its first quarterly results as a publicly traded company after the bell today, giving investors, of course, a first glimpse of its progress in growing both its advertising and user base and joining us are our analysts, both of you welcome to the program, thank you very much for joining us. >> good morning. >> let me kick off, we've come so far in just two months since it priced at $26 a share. will the metrics today really be

anything more than passing interest given that you don't know what the business will look like in 18 months or do you think this is a moment of truth? >> i think this is definitely a moment of truth. it's all eyes on twitter. twitter has had one of the most successful initial public offerings in terms of the stock price going up in recent years here in the tech industry and in a lot of ways twitter had the ipo that a lot of people were looking for facebook to have and i think that's because twitter has made a lot of the moves especially when it comes to monetization that investors were hoping that facebook would make. facebook had a strong q-4 they announced last week their results and that looks good for just the mobile advertising business that we're expecting to see twitter to really benefit from. so, this is a good time for twitter to have earnings reports starting in q-4 when you've got black friday and christmas and all these things under its belt and i think we're looking for a really strong debut here but we'll wait to see. >> well, we will see. it really i guess roger depends how high expectations are on

monthly users on monetization on the ability to target certain groups. i mean, where do you stand on this? >> i agree with colleen. i think that they benefit from a really good quarter. the metric that's most important that will be monthly active users. it's still a fraction of what facebook has. and it's still unclear where the growth is going to come from. the company's certainly growing, but in the u.s. there's some concerns that it's starting to mature a little bit, so i'm really looking at monthly active users and where that's going to be in the fourth quarter or what it was in the fourth quarter. >> roger, people like to talk about how twitter's over and it's done and it's not the same, all of that. but to your point about whether it's matured, what kind of evidence are we going to get either from twitter itself or from outside groups that would point to user disengagement? >> i think -- well, i think twitter's going to address some of those concerns on the conference call today. most likely you'll get more of that stuff from third party date p data.

but i don't think twitter is over. i think it's a common thing to say or common criticism but i still use twitter pretty actively. >> sorry. >> i was going to say, roger, how could those questions even be seriously entertained when twitter, when you relate it to facebook, twitter has a more mobile-centric foundation, if you will, they seem to have more momentum mobilely, if you will, than facebook. >> that's certainly the case. i mean, during their ipo filing, they made it very clear that they're a mobile-centric, mobile-first company. i think you'll see them hit that theme again and again on the conference call today. >> i wonder, colleen, the extent to which this sort of commentary gets knocked out of the water if they can come through and say, yes, we are setting up a marketplace platform and a number of you guys have been reporting that. i believe there's actually a mock-up that's available online, you know, if products can start being pushed in that way, that's surely a game changer for monetization or not, i mean, where do you stand on that? >> it could be.

it could be. there are some indications that they are moving toward e-commerce which could be good, could be a little bit weak. facebook has dealt with e-commerce and it hasn't been gangbusters. one thing i want to make about twitter and its monthly active users. it's made great moves here in it doesn't have to have make money based on its monthly active users. it's acquired a company this past quarter which allows it to run a native platform on other apps and places, just the same way that google doesn't have to have people on its website google.com in order to make money, twitter is making moves to not only make money based on its own immediate users. so, that's what i mean when i say that twitter has built the advertising platform that a lot of people were hoping facebook would build. i think it's showing that twitter is making a lot of really smart, creative moves. this is an energized company that's being creative and really experimenting here with a lot of new things that could make it a lot of money. >> roger, what is the best that you would hope for on that

creative side? what would be your ideal left-field announcement? >> left-field announcement? probably more immediate partnerships. i guess the clearer picture of how the advertising model will take shape over the next year. >> okay. we'll see what they report tonight. i am sure we'll be talking about it again tomorrow. roger and colleen. let's send it to dominick chu for a quick market flash. what are you watching in this now down again market? >> down again and down is humana, the health insurer is moving to a fourth quarter loss, way down by expenses from some long-term health care policies it has on the books. it did, though, stick by its previous 2014 profit forecast in mart to strong growth in its medicare membership. it also said it got about 202,000 applications for its 2014 health care exchange, obamacare, of course, some numbers maybe not as impressive those humana shares, kel-down on the day. back over to you. >> thanks very much.

not down, coming up ralph lauren shaking off the holidays and posting big sales numbers, this time it could be purses, watches and jewelry boosting the brand and not the signature polos. we'll have a lot more on this when we come right back.

when you order the works you want everything. an expert ford technician knows your car's health depends on a full, complete checkup. the works. because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. get our multi-point inspection with a a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup. only at your ford dealer.

open to innovation. open to ambition. open to bold ideas. that's why new york has a new plan -- dozens of tax free zones all across the state. move here, expand here, or start a new business here and pay no taxes for ten years... we're new york. if there's something that creates more jobs, and grows more businesses... we're open to it. start a tax-free business at startup-ny.com.

all right. go back to post nine. ralph lauren shares in the red today even though the company reported earnings that beat the street estimates. profits rose 10%. ralph lauren's future also looking fashionable. the company raising its fiscal 2014 revenue outlook. matthew boss is an analyst with jpmorgan. welcome. >> thanks for having me. >> what do you think is first and foremost with the shares turning negative? is it the overall turn of the market or is it something the company said on the call? >> i think it's company specific. first off, the quarter was a two cent beat versus our model but there was an 11 cent tax benefit in there, so essentially missed the quarter on our numbers. on the call the cfo outlined operating margins down next year. the street was looking for 50 basis points plus. our math would be 9.25 and the street is sitting at 985.

that's 6% below the street and that's pretty material on a company like this. >> i had margin as better at least for the current quarter that the company is reporting for in the last quarter. >> gross margins -- >> margins were not negative, right? >> gross margins were in line. sgna was a headwind but, again, the tax rate was the real benefit versus the street. really on the call it was next year's margin guidance that surprised people for 2015. >> it's interesting because some of the notes that i read this morning say, you know, despite the headwinds around the holiday season that ralph actually came through, that it wasn't being viewed negatively. >> look, in-line revenues in this holiday season, i'd say inline is the new beat in retail. if you could beat up, you know, we were at 9%, and they put up 9.1% revenue growth, yes, on the top line, no question. i mean, i think in line is a win here. as you think to next year, i

think the issue here continues to be the sgna constraints. they are talking about growing the polo store concept. that will cost money to get it up and running. china is only 1% to 2% of sales. there's a significant investment needed as well as accessory. i can't sit here and say that the longer-term investments that ralph is making is the wrong call. but it's going to constrain the earnings growth in the near term. >> in the meantime, what about this advance on the wholesale business into the department stores? i mean, that in this environment can be a tough sell not least when the buyers if they do have to discount then demand clawbacks which would appear in q-1. >> as you guys pointed out before, the wholesale revenues still remain there and remain on track, you know, on the call the other thing the cfo spoke to was a more promotional environment and, you know, i cover the department stores as well. that's something we're seeing across the board whether it's macy's, whether it's kohl's or nordstrom and saks, that's

playing into the margin out for next year as well. >> matt, let me ask you really quick and see if we can pull up shares. i want to change the topic just for a moment. jcpenney is below five bucks i think for the first time ever. what do you make of what's happening there? how concerned should we be as this stock continues to tumble? >> look, it's a tough road ahead at jcpenney, it has been and will continue to be. the path that people are trying to figure out how do they get the share back and is any of it sustainable. i think what they're facing and we spoke to them yesterday, look, macy's has stolen the weekend from them and off price i think is something that i wouldn't say that they overlooked but i think it's proving to be a much more formidable competitor as they're trying to get the share back. i wouldn't want to be -- i wouldn't want to be jcpenney trying to go up against macy's with half the tools that i think macy's has in its toolbox. >> how is the balance sheet looking and the cash burn even

though with the equity raise that they did last year? how does the balance sheet health look to you today? >> the issue is on our numbers for this upcoming year, we're modelling a mid single digit positive comp and gross margin expansion of 300 basis points. that's a pretty mighty task and even on those numbers i have a cash burn of 1.1 billion. and the guidance right now is to come out of this year at $2 billion. if that's the case or we end up doing a little bit worse which the math rate now on the fourth quarter a plus two against a negative 32 last year comp, i mean, that would imply that maybe the numbers i'm talking about need to come down and if that's the case i mean, it gets pretty tight in 3q when you need to make the inventory buys. >> it's a story worth following for sure. matt, thanks. s&p, of course, downgraded it into junk territory. we'll talk to the analyst

responsible for that report right after the break on cnbc. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your siness inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

welcome back to "squawk on the street," i'm reporting from the nymex the department of energy releasing its crude inventory report for the week ended january 31st. the number coming in shy of expectations just around 400,000 barrels. the market was looking for 2.3 million barrels, a big drop there. we did get the api report last night and it was shy of estimates as well, so crude

inventory, crude futures were up this morning on that. we are watching these prices closely. trading just around $98 a barrel right now. we're also checking out the gasoline and the distillates number, less than expected as well just a build of 500 and for disti distillates the draw was 2.4 million. and take the numbers in context, energy demand spiking because of the cold temperatures outside. certainly stormy weather here on the east coast. meantime, we are watching these prices holding flat and steady around $98. back to you, kelly. >> thanks very much. and speaking of commodities, we have some breaking news on jpmorgan's commodities unit. kate kelly back at headquarters with details. >> thanks so much. jpmorgan appears to be down to one final candidate to purchase its commodity unit, mercuria, they are preparing to enter exclusive talks with jpmorgan

over the purchase of this unit which has been valued depending on where you look at anywhere between $1 billion and $3 billion, physical assets like a metal storage warehouse, offtake agreements for energy supplies and so on. i'm told the exclusive talks will probably last two to three weeks so we may have the details of a deal put together by the end of february, of course, it would take a few months to close assuming that all goes well, guys. an end may be in sight for this deal. it looks as though blackstone and mcquarry, the two other final bidders have dropped out. >> okay, kelly, thank you very much for that. meantime, a sigh of relief from many in the market, the ism survey for the service sector beat estimates this morning. it's no coincidence, steve liesman, that the market's down 75 points after so much weak data presumably still the belief that the taper is in from the fed and it's solid. >> yeah, i suppose that's one way to interpret why the market is trading the way it is. maybe less the market's reaction to the economy. i think this is a pretty

important number. because a lot of the data has been pretty awful and has raised serious questions about whether or not that's true economic weakness in the u.s. economy right now and this number combined with adp suggests that things may not be quite so bad as people had feared. i want to show you the numbers. you can see the 54 that came out. that's an acceleration from a weak number in december. and better than expected. while not quite as high as the 58s, but we'll take it, which means the service sector is growing, the u.s. economy is growing and some of the comments we got capital economics say the ism, quote, makes us more confident that the recent weakness of some of the other incoming data is just due to temporary weather effects. and we know, for example, the fed is interested in how much of the weakness is weather related and there's an employment component to this that also did well and pantheon said it's consistent with payroll gains of 230,000. and here are the numbers, the adp missing the overall estimate

at 189 but we'll take a 12,000 miss compared to how some of the other data, for example, the december employment report, missing by a digit. at only 74,000. how much that missed. you can see november was revised down a little bit but still strong at 227. good services. and by the way, no weather-related decline in that number with the 25,000 increase in construction. so, simon, i don't know if the market is trading because now it fears that the taper's back on or back off, but i think it's important to say that so far we've had a couple pieces of data today that have not been in line with the really lousy data we've had, kelly? >> steve, it's scott. i want to ask you a quick question. is there more positive to put in this report today which as you note that it's a larger part of the economy. >> right. >> or are you more worried about the manufacturing ism which was negative by a lot? >> so, here's the story with that, scott, which is an excellent question. a lot of the variability in the economy comes from

manufacturing. services are very steady. it's very rare that, for example, the bad example for me personally but that you don't go get a haircut or that you don't go to the doctor. i mean, some of that is obviously economic related. services very steady. all the volatility in the economic, so manufacturing, the ism manufacturing a much older piece of data. market much more likely to trade on it. we're getting more and more used to this 10-year-old services component and paying more attention to it and the employment component of it. so, yeah, it's a better one. we do not have good gauges of the service sector. this is increasingly one of them, scott. >> got you, thanks, steve. >> sure. thanks very much, steve, in the meantime, we're keeping a close eye on what is happening in puerto rico, the s&p has downgraded it to double b plus or junk status, they say it no longer qualifies as investment grade because the government is losing the ability to raise cash through its bank. joining us is the credit analyst

s&p. it's great to see you this morning. so, your verdict here for puerto rico is? >> yeah, so we downgraded the rating on the commonwealth of puerto rico to double b plus yesterday. and that was primarily based on their limited access to liquidity among other means through the government development bank. we also continue to maintain the rating of the commonwealth of puerto rico to negative and that reflects the risk that the commonwealth may not be able to access liquidity through the markets or other means. >> and this morning, we have the white house saying they are still not considering a bailout of puerto rico. and i wonder, do you imply any u.s. or federal backing, any support, for the debt of puerto rico in this analysis? >> our ratings don't assume any extraordinary support from the federal government, no. >> market kind of beat you to it. i mean, they were already

pricing this thing as though it were a junk credit, weren't they? >> well, what we believe is that's part of their market access, you know, we believe that puerto rico if able to access the market within the next couple of months will likely access that market at a much higher price, so that is reflective of our rating at this point. >> what are you seeing on the ground in puerto rico in terms of your fundamental analysis of the ability of the commonwealth to actually repay its creditors? you know, when it comes to the cofina bonds, for example, there's concern i think that the sales and use tax that is pledged to that first is not coming in where it's expected. give me a quick take on the fundamentals in puerto rico. >> yeah, the fundamentals are still challenging. the economy continues to, you know, have some headwinds. unemployment rates are still high. as far as the sales and use tax, there's been some slippage on collections of sales taxes, we did not change the rating on the cofina bonds.

we do have a negative outlook which is indicative of the economic activity on the islands so we'll continue to monitor that and to the extent that there's further slippage on the sales tax bonds we'll consider that and determine if rating action on cofina is necessary. >> i'm fascinated as to what is happening behind the scenes at s&p. has the way in which you react to what's going on in the market changed according to how those that you are rating might extract some revenge upon the business? because your chairman's defense in court against the government's $5 billion fraud suit against you for the financial crisis seems to be that it is revenge from tim geithner for the fact that you downgraded the united states in 2011. have things changed? are the processes changing because you are, after all, a business? >> well, that's an interesting question. and, you know, what i would like to say is as far as puerto rico goes, we're looking at the fundamentals as they are presented relative to our criteria and that is what is

guiding our rating actions in this case on puerto rico and the current watch that we have in place. >> let me ask you one more question about sort of to david's point and the fundamentals on the ground in puerto rico, what's actually happening there. their response seems to be that they're confident they say that they have liquidity on hand to deal with their current situation. is that a true statement? do you believe in it? should we believe in that? >> well, one reason we have the rating on credit watch is because we will continue to monitor their liquidity at this point. the government of the commonwealth has stated that they have sufficient liquidity to address about $940 million of potential exposure that they have in the short term, but one thing that will continue to monitor and the reason why we have the rating on credit watch is their ability to access the market because we do believe that ability to access the market or obtain liquidity will be critical to the commonwealth

in the coming months. >> thanks very much for joining us this morning as markets digest that move. really appreciate it. >> thank you. well, for months carl icahn has been buying up apple shares and pushing ceo tim cook and apple's board to increase the company's share buyback and dividend, but a prominent apple shareholder now has a different view on icahn's activism. josh lipton is live in san jose with more on that. josh? >> yes. scott, there is a brawl breaking out between two big investors over the future of apple. in one corner an activist investor we all know, carl icahn, in the other corner c calpers, the company's largest pension fund. icahn remember originally pushing for a $150 billion buyback. he scaled back his proposal, now asking shareholders to vote on a $50 billion proposal at the shareholders' meeting on february 28th. apple recommends that

shareholders vote against icahn's proposal, the company has committed to returning $100 billion to shareholders by 2015 in the form of buy babbs and dividends. ann simpson the senior portfolio investor manager at calpers which owns $1.6 billion apple shares agrees with apple and she has a serious problem with icahn's activism. >> now, standing outside and lobbing a brick through the window is really not a sensible way to engage in the conversation. we don't think that, you know, carl icahn who is a relatively small investor with a very short-term agenda should be steering the board of apple which is a very big company with a long-term future which many people are relying on. >> now, icahn is firing back saying that simpson's priorities are misguided. it is a shame, icahn tells me, that anne simpson is more interested in spewing pejoratives than improving corporate governance in this

country that calpers can do. icahn said he's often a long-term holder, for example, he has owned biogen since 2007. up later in the halftime report with scott, i'll have more on this story including the most important reason icahn says you should trust his advice, his returns, simon, back to you. >> okay, josh, thank you very much for that. josh lipton live on the west coast. let's send it over to dom chu for a quick market flash. >> thanks, simon. a bad day to be a 3-d printing company, 3-d systems cut its fourth quarter profit estimate hurt by falling demand, that stock was down 25% on the day. the stock, though, up other 3-d printers are having the ripple effect and falling in sympathy, if you will, check them out, all moving to the downside, so, scott, those 3-d printing certainly a focus for investors today, back over to you. >> thanks so much. how this winter's rash of bad weather could be causing a serious heating crisis in some parts of the u.s.

we'll have more on that later. "squawk on the street" will be right back. when you order the works you want everything. an expert ford technician knows your car's health depends on a full, complete checkup. the works. because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. get our multi-point inspection with a a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup. only at your ford dealer. 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. open to innovation. open to ambition. open to bold ideas. that's why new york has a new plan -- dozens of tax free zones all across the state. move here, expand here, or start a new business here and pay no taxes for ten years... we're new york. if there's something that creates more jobs, and grows more businesses... we're open to it. start a tax-free business at startup-ny.com.

welcome back. it's that time let's get out to the cme group rick santelli with the santelli exchange this morning, rick? >> yes. good morning. you know, i love all jobs, jobs, jobs days even if it's adp, of course, friday will be a lesson. what did we learn today? we see that the number release last month was downgraded a bit to 227k. we see the current read on the light side at 175k. not so bad. and as i've been talking about all day, this number sequentially is weaker. the gdp number from third to fourth quarter at least our first glance at 3.1 -- excuse me, 3.2 was weaker, but still decent numbers. why is this important? because when it comes to numbers, of course, we have two areas. we have expectations. and i always think extreme examples really pound the point home best, you know, if we were looking for friday's number to

be down a million jobs and it came out down a half a million jobs, it would have blown away expectations, but it's still a lousy number. so the actual number really is what's important. okay? because most of you out there aren't trading like some of these folks are minute by minute. so, why is this important? well, let's look at a chart. this is a chart going back a bit of the nikkei. remember, the nikkei was the huge performer last year and it's the huge underperformer this year and they are supposed to change the negative spiral of the japanese economy. well, as you can see on this chart when you really see that pretty much 25 years ago this past december, that it was close to 40,000, it really drive lly point home of 14,000, 15,000 being a bit on the deficient side. let's summarize. what's the real issue with japan? many believe and i've talked about this in the u.s. when it comes to the economy and the output, let's say here's your high bound. here's your low bound, whatever

it is. okay? that these programs that save us from the bottom lower the top. so, you end up getting smaller growth numbers. and i think that's true in china. but let's even get more macro than that. it's really a productivity issue. when the banks were in bed with the government which were in bed with business in the '80s, they never really reformed that. a lot of those issues really never went away. what happened is they robbed productivity from their economy and they're paying for it. now, let's read something that came out yesterday from the cbo, you know, that nonpartisan group. let's throw it on the screen. it says the economy will lose the equivalent of 20 million full-time workers this happens to be from the journal but it's from the cbo report. no matter how you slice it, if people are voluntarily wanting to say home and do whatever it is, maybe they want to paint and get a whiteboard and draw on it but if they're not forced to work to get their insurance, i understand humanitarian issues, but think of the productivity issues.

so, when i look at this report and i see what the cbo says, it makes you look at everything different. then add in all these issues about labor force participation. what significance does the unemployment rate really have? i think we're going to go through a major upheaval in how we view employment, but the long and the short of it is, if less people are working whether it's by choice or unintended consequence of legislation, in the end, lower productivity means lower everything and my example was that chart of the nikkei. back to you. >> it's certainly something yellen's going to have to grapple with for the moment, rick, thank you very much. up next on the program cvs says it's quitting for good. the pharmacy announcing it will sacrifice $2 billion in sales by stopping to sell tobacco. what does it mean for shareholders in the future? what is the trade-off here? more details after the break. tdd# 1-888-628-2419 searching for trade ideas that spark your curiosity tdd# 1-888-628-2419 n take you in many directions. d# 1-888-628-2419 you read this. watch that. tdd# 1-888-628-2419 you look for what's next.

tdd# 1-888-628-2419 at schwab, we can help turn inspiration into action tdd# 1-888-628-2419 boost your trading iq with the help of tdd# 1-888-628-2419 our live online workshops tdd# 1-888-628-2419 like identifying market trends. tdd# 1-888-628-2419 now, earn 300 commission-free online trades. call 1-888-628-2419 or go to schwab.com/trading to learn how. tdd# 1-888-628-2419 sharpen your instincts with market insight from schwab tdd# 1-888-628-2419 experts like liz ann sonders and randy frederick. tdd# 1-888-628-2419 get support and talk through your ideas with our tdd# 1-888-628-2419 trading specialists. tdd# 1-888-628-2419 all with no trade minimum. and only $8.95 a trade. d# 1-888-628-2419 open an account and earn 300 commission-free online trades. call 1-888-628-2419 to learn more. tdd# 1-888-628-2419 so you can take charge of your trading.

mp mp mplt. welcome back. nbc's tom costello is live in washington with the details on this big move. tom? >> it is the big story because cvs is the biggest pharmaceutical retailer thus far to make this announcement. i talked to the president of cvs last night about this. she tells me it's going to cost them half billion sales. when they're in the store shop for tobacco products. will other pharmaceutical companies and retailers follow the trend? here's what she had to say. >> this position is really where health care is going because we know the sale of tobacco is extremely inconsistent with being a health care provider. we certainly expect other people in the pharmacy business to look at the mirror themselves and ask themselves where do they want to be in the next few years and what kind of role do they want to play in health care, but ultimately that will be their tiger to make. >> she hit all the bullet points there. number one, there's an ethical issue here. inconsistent for pharmaceutical company to be selling tobacco products. two, trying to reposition themselves as more of a total health care company with pharmaceutical operations, but

also with that minute clinic and being more of an extension of your first care provider, whomever that may be, the doctor, the er, whoever. they're trying to grow into that space. and so those points are important. now, already this morning walgreens has come out and said it has been looking at its position in that space, in the tobacco space, and whether it wants to re-evaluate that. it says, its problem is and needs to be catering to needs of all customers, those who want tobacco products and those who don't. we have not yet heard from some of the other major retailers. the president today weighed in. president obama applauding cvs' tiger saying it goes a long way towards helping to bring the number of smoke-related deaths or smoking-related deaths down in this country. half a million people die every year from smoking-related illnesses. guys, back to you. >> you know, tom, when you spoke with the company did they say anything about selling e-cigarettes, about the junk food that you can't miss when you're checking out of the stores? >> yeah, they specifically said they're not going to get into

whether or not they sell candy at this point. listen, you can buy a snickers bar and one snickers bar, 20 snickers bar are not going to hurt you but there is no arguing with the fact that cigarettes, even in moderation, could do significant harm. i think that's their position on that. so they're dealing with this one issue at a time and right now clearly the biggest threat, the biggest contributor to deaths in the united states in terms of health of the united states is cigarette smoking. >> yes. it sounds like they will be press forward with some cessation programs to compliment this move. >> that's right. >> tom, thanks very much this morning. cvs shares are lower on the day. >> i can't help but be slightly cynical and wonder if it has to do with theft and i appreciate them dressing it up with doing deals with surgeons and hospitals but still it's a general sore, not a pharmacy in a foreign sense. >> guggenheim pointing out they now do 87% of sales from

pharmaceuticals in one form or another. perhaps this is more about getting the pr benefit of ending a business that wasn't that big or material and was in secular decline anyhow. >> yes. >> it could be an element of that as well, to be a little bit cynical. up next, how you can get your hands on this backpack. it is signed by the whole "squawk on the street" team and it is, yes, themed for sochi. k anytime, day or night. just like you can access geico anytime, day or night. there is only one way to celebrate this unique similarity. witness the cheesesteak shuffle. ♪ cheesesteak, cheesesteak ♪ ♪ it's the cheesesteak shuffle! huh! ♪ ♪ every day, all day, cheesesteak, cheesesteak! ♪ ♪ every night, all night cheesesteak, cheesesteak! ♪ ♪ 9 a.m. cheesesteak! ♪ 2 p.m. cheesesteak! ♪ 4 a.m. cheesesteak! ♪ any time (ruh!) >>geico. fifteen minutes could save you fifteen percent or more on car insurance. but with less energy, moodiness, and a low sex drive, i had to do something. i saw my doctor.

a blood test showed it was low testosterone, not age. we talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these symptoms to your doctor. tell your doctor about all medical conditions and medications. serious side effects could include increased risk of prostate cancer, worsening prostate symptoms, decreased sperm count, ankle, feet or body swelling, enlarged or painful breasts, problems breathing while sleeping and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. ask your doctor about axiron. open to innovation. open to ambition. open to bold ideas.

that's why new york has a new plan -- dozens of tax free zones all across the state. move here, expand here, or start a new business here and pay no taxes for ten years... we're new york. if there's something that creates more jobs, and grows more businesses... we're open to it. start a tax-free business at startup-ny.com. in today's market, a lot can happen in a second. 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, maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

we're less than 48 hours away now from jobs friday and this means another opportunity for you to nail the number. just tweet us your predictions of what you think the headline december nonfarm payrolls will be. use our handle, nail the number, and you will win this sochi olympics backpack signed by the whole "squawk on the street" team. bar one, evans is now going to sign it right in front of our own eyes. sign away. >> this is a thrilling morning. how about right here above the nike swoosh. just do it. just send in your forecast. i'll be back on friday to participate in the fun. >> do you know who else will be back on friday? carl quintanilla traveling to sochi. replica of what carl is carrying on his back through the airports as we speak. >> we should have signed his.

>> he has signed it. >> you have until one minutes before to submit your pro predictions. good luck. >> i like it. it's our own version of the whisper number. big report as ever. >> thanks for having me. >> thank you for coming. >> it's fun. >> enjoyed it. we'll do the "halftime" show from post 9 as well. >> dave, see you soon. >> you know it. here's what you might have miss fed you're just tuning in this morning. >> welcome to "squawk on the street." here's what's happened so far. >> we do have break news for you right now. and this is big. cvs caremark this morning, that chain is now announcing it is going to remove cigarettes and tobacco from all 7600 of its pharmacy locations by october 1st of this year. >> adp report that nonfarm payrolls of the private sector rising by 175,000. that's their estimate.

>> 55 tonight. they're buying back stock. the refocused. they got a lot of glu nu drugs in the pike. this is the new merck. it is love, love,love. this is not good for earnings. it's just -- david, people don't go into a drugstore and say, oh, they're selling tobacco? you know what i'm going to do, i'm going to go to a local pharmacy that doesn't? >> i think pullback is healthy. you know, the market was going up at close to 25% annualized rate over the last 14 months. we think that's unsustainable. even if you're somewhat optimistic about markets like we are. >> this is a good time for twitter to have earnings reports starting in q4 when you've got black friday and christmas and all these things under its belt. we're looking for a strong debut here. we'll wait to see. >> a good wednesday morning. we're live here at post 9 at the

new york stock exchange. we begin with a check on the markets. take a look at the major indexes this hour. the dow down about 63 points. in fact, we are negative across the board today. the s&p 500 off 12 to 1742. the nasdaq is off about 50 points. it is back below 4,000 at 3980 at this hour. shares of buffalo wild wings slipping this morning after fourth quarter revenue missed analyst estimates. it wasn't all bad news. fourth quarter profit came in higher than expected. meantime, shares of aramark are rallying. helped by a 7% jump in organic sales during its first quarter as a publicly traded company. >> okay, here we go. this is the road map for the next hour on cnbc. we're going to start with twitter. it's reporting earnings for the first time as a public company after the bell tonight. and you will be aware that shares of the social network of more than doubled. up 150% since the ipo. what will investors get tonight? we've got some of the answers. plus, ahead, the white house

says it's not considering any kind of federal bailout for puerto rico. this comes one day after s&p cut its credit rating to junk status. we'll go behind the numbers to find out what it means for your money and for muniz ahead. for world of edible marijuana is growing in denver. just about any food you can think of apparently is now available for pot brownies to a weed-infused spaghetti sauce. hmm. so is green eating good business? we'll find out later this hour. all right. but the countdown is on for twitter's very first earnings results. later today after the bell on the "closing bell," what is the most important thing people are looking for in this report? let's ask mike isaac, seniored door, senior analyst at stern ag. we should note that nbc news group ask a minority shareholder. so, mike, let's start with you. what will you be watching for this afternoon. >> yes. so obviously paying particular

attention to the revenue numbers. i don't know if people really realize how much twitter's revenue has exploded in just two years. and so essentially people are going to be watching, can they keep that growth curve up and what are the, you know, what are the sources that they're going to keep doing. are they going to grow at inventory or start charging more for ads or more importantly growing their user base is something that's a big challenge for twitter. >> we know monthly active users is going to be something people watch, as well. and we've already heard from the likes of facebook and yahoo! some mixed results. so where does that leave the bar here for twitter? >> the bar, i think, is pretty high right now given the run-up that you guys mentioned the stock has had. if you were to focus on the main metrics this company has to deliver tonight it could put them in three different bucket, reach, ine. engagement, and modernization. from what we can do intesters

are looking for, acceleration in all three of them. and also looking for improvements in margins given the long-term targets the company put out of 35% to 40%. the expectations for the quarter are north of 11%. and nobody is sure if there's going to be any guidance beyond fourth quarter but to the extent they provide guidance, i think that's going to be critical to see again if there's momentum, sustainable or not. >> our jon fortt joining us here at post 9 as well. >> yeah, you know, what i'm interested in in hearing a bit more about is what are expectations really? the consensus looks to be around 218 million for revenue but i see one of the bulls here has around 227, $228 million target on the stock. in order to maintain the current valuation that they've got, exactly how well do they have to do on the top line and maybe what kind of cost discipline do they have to show given the tone

that facebook has set this quarter? >> again, i think -- i was just going to say, i think something else to watch are the potential new revenue streams that they're at least thinking about. they acquired mopa which is a mobile ad exchanges right before they went public which is a way for twitter to make money by selling advertising on networks that are not twitter. and also as re-code reporting last week they're toying around with the idea of commerce on twitter. buying things within tweets on the surface. >> avrvand, do you want to tackle that? >> from a purely standpoint, 90% plus growth. the bull number that you mentioned represent north of 100% growth. that's what they've been able to do for the first three quarters. clearly if they can show that again this quarter, that will be a positive. but more than that, i think the user metric, people are looking for is 249 million users world

wide and i think if they can exceed that number, that will give people more confidence that this product is becoming more mainstream. ultimately this is a totable address market story, where they are relative to the total market they're addressing. by all measures they are less than 1% of the ad market in the u.s. a long way to go. >> wow. >> that's where i think people get excited when they start to extrapolate numbers four to five years out. >> just real quick. we're looking at the shares trading just under the $66 mark. what is your price target? >> we have a neutral rating on the stock so we don't have an official price target on it right now, but suffice it to say that valuation on this company, on this stock, is what keeps us on the sidelines. we like the platform quite a bit. >> okay. mike isaac, arvand, thank you so much. it's going to be an exciting afternoon. we want to bring you some news on time warner and hbo.

let's go over to julia boorstin in los angeles. julia? >> time warner's conference call is going on right now. there's a big focus on hbo. this is the first quarter that hbo has been broken out as a separate division. ceo just moments ago on the call talked a lot about how big and successful hbo is, saying it's in a league of outs own, clearly addressing the rise of netflix. he says hbo remains in a league of its own. noting last year it added 2 million subscribers in the u.s. highest increase in 17 years. while this is significant it's worth pointing out that netflix added over 2 million subscribers just in the fourth quarter. now, bewkes not to be out done by netflix, saying it's going to invest in original programming with five new series in this coming year. he also talked about the focus on digital with hbo go saying active users grew 30% in average

monthly usage increased by double digits. there's a been a lot of talk about whether hbo go can be a stand alone alternative to netflix. there was no mention of that in the prepared statements on the call but i do predict that there will be questions about it from analysts. but bewkes did note that hbo, almost 130 million subscribers globally. it still does definitely dwarf netflix when it comes to global scale. some interesting conversation there, simon. back over to you. >> are you going as far as to suggest there will be a debate whether hbo should be spun off? >> i think that now that time warner has spun off time inc, the focus now is on time warner as a video company. and bewkes is investing in content, they have turner, they have warner bros. which creates movies but also television for all of the networks. and then you have hbo. i think it really fits in there as a part of this new valuable video-focused content company. so i think that once they spun

off time inc it wasn't necessary. >> thank you very much. let's look at the markets. down 74 points on the dow at the moment. the adp was questionable. we had a good ism services report today. still stocks have fallen for three of the past four sessions. so where are we on a technical basis? dan fitzpatrick joins me now with stockmarketmentor.com. where are we on the technicals? >> i don't think we're as bad as a lot of people are saying that we are. we've definitely got to break an upside momentum but we're just in this consolidation phase. i really feel like the worst of it is already behind us. we can be talking about the correction that's already occurred. but we're really at some pretty good levels. the big deal for me is going to be the unemployment report on friday. if we can hold these current level, i really think this is a buy the dips market. >> dan, let's dive straight to it. look at the s&p daily chart.

talk me through that. >> okay. the daily chart, you can see the lines i've drawn. it's in a really pronounced up trend. even if the channel does breakdown and we've got some downside momentum, even if the channel breaks down, we've still got support that's maybe -- would require a 10% correction total. we could go clear down to 1650 but i think you're getting ahead of yourself to think that right now. so far that channel is intact. >> the weekly chart backs that up, from your point of view? >> yeah, the weekly chart. we've had two corrections. this would be the third since early 2012. and the reason that this feels different is because it's right now. but it's really been more the same. it's just more of the same and so we can go a little bit further. you can see that. but generally speaking, you know, this is already been a pretty healthy correction. the dynamics haven't really changed. they haven't really changed. >> what about the dow? is the dow jones industrial average different? >> yeah, the dow really got kind of ahead of itself.

you can look at the chart and it looks quite a bit more topee. now, the thing is where we are right now, if we get another 4%, which really isn't that far down, if we get another 4% that takeses us down to 14,750. i think that's a level where buyers would come in. my suspicion, my suggestion on the dow and s&p, you go ahead and back away a bit right now, but don't go away. be ready to buy these dips. i think it still works. >> dan, that's refreshing message given the number of voices we've heard this week and over the last several trading days saying, whether it's technical or the fundamentals that they think the market, we've seen the chartsz that line it up next to 19 29d. we've heard cia people saying we're on the verge of collapse. there seems to be a chorus out there saying they don't like the charts. everything looks like it's going south. and so as matt at miller tabback was joking, she made a negative

call just before the 87 crash. that's not your view? >> it was a great monster call but that was then. here's the thing. i've seen those chartsz. they are in sync. but this is not 1929. i do believe that ultimately this is going to end really badly but with all the firepower that the fed has, everybody has a vested interest in keeping the party going. >> hang on. an argument about the fed is not a technical argument. >> exactly. yeah. >> let me ask you another question. until we got through to the end of the year, if you look back at a chart of 2013, would you have pr predicted these loss snes. >> no. i wouldn't have. i was looking for a pullback in january. there were a lot of commentary on cnbc about profit taking in december as a guy who pays taxes i didn't really get that argument. i assumed that we would have some kind of pullback in january. i didn't think it would be quite this deep though. >> when you tell people any correction here would be quite limited, are you sure that you're able to say that?

>> yes, i am. but here's why, simon. because i don't predict, i look at the charts and i see levels and i see levels that everybody else sees. all the floor traders see. and what i do is, i look at those levels, i think they're kind of magnets for prices and that's when the inflexion point is. >> that was really the point i was driving at. >> yeah. >> it's good to see you. thank you vur very much for joinings us. now, thanks to the weather it's been a rough year for propane. some major shortage sending prices to highest levels in about 20 years. what does this propane problem mean for your money? we'll tell you in just a moment. but first, rick santelli, what are you watching this moment? >> you know, when i think of roller coasters, especially ones that go fast and way up, you have to equate that with corporate profits. they've been on a roller coaster ride mostly to the upside. historically so. but we have a guest, legendary guest, legendary with respect to

research, strategy, portfolio management, asset management. he's going to be up at the bottom of the hour to talk corporate profits. are they too high, are they too low, will they be different in 2014? definitely a don't miss segment. (announcer) scottrade knows our clients trade and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) ranked highest in investor satisfaction with self-directed services by j.d. power and associates.

welcome back. take a look at the health care sector. one of the best performers since last year but one of the biggest losers this morning.

dominic chu with more. >> it's biggest loser in the sea of red. tough day for health care stocks overall. cerner is leading the way. also humana losing ground as it swung to a fourth quarter loss. biogen idec and regeneron to the downside. all of them are taking a hit. thanks in large part to the freezing weather, the midwest is in the middle of a propane shortage. that's pushing prices to their highest levels, believe it or not, since the early '90s. morgan brennan is live in iowa with more on that. i imagine it's pretty cold there. >> sim man, the cold weather just keeps oncoming here in sully, it's 3 degrees. it's colder now than it was earlier this morning. it's not just here. the entire midwest is blab getted in snow.

high winds freezing cold temperatures as of course is the northea northeast. more bad weather means more problems for propanes. on going shortage leading to record prices and the d.o.t. is say an emergency declaration for 35 states and washington, d.c. a number of governors have actually called this a crisis. >> we have people who are at or nearly at no propane in their tanks. anywhere below 30% is extremely dangerous in this kind of weather. so we're monitoring it very closely. but we desperately need more propane in wisconsin. >> we're encouraging people to conserve and only order what they abs olutely need to get through this cold snap. >> now, in addition to that, texas also declaring a state of emergency but that's for another reason. texas sack chully home to the country's largest propane storage hub, so governor rick perry has waives transportation regulations there to make it easier to get propane out to

other states. >> we're blessed to have a ready supply here in texas. so it's neighbor helping neighbor, as it should be. >> in addition to that, the federal government also stepping in, deploying aid to consumers. now, there is some good news here. we saw propane inventories in the midwest increase a little bit with data this morning. however, with all of this terribly cold weather, we still have a long way to go. simon, back to you. >> you look absolutely freezing, margaret. get into the warm. thank you very much. >> morgan brennan out of iowa for us this morning. frigid morning, thanks. soak them or rather eat them if you've got them. brownie, cookies, olive oil, granola bars, even spaghetti sauce? wul of these products are now available at shops in denver infused with marijuana. we will talk to the owner of one of these shops when "squawk on the street" comes right back. [ male announcer ] the new new york is open.

open to innovation. open to ambition. open to bold ideas. that's why new york has a new plan -- dozens of tax free zones all across the state. move here, expand here, or start a new business here and pay no taxes for ten years... we're new york. if there's something that creates more jobs, and grows more businesses... we're open to it. start a tax-free business at startup-ny.com.

when it comes to edible parts you don't have to settle for just brownies anymore. shop owners in colorado say that they're seeing a strong demand for all sorts of marijuana-infused foods since retail sales of the drug became legal this year. what's driving this growth and can you tell that the food that you're eating is infused with marijuana? trip kerber is the ceo of a maker of edible cannabis. welcome to the program. what is the range that you're offering at the moment? >> good morning, simon. it has approximately 1200 skews that we serve both patients and consumers here in the city of denver, colorado. and that represents over 12 product lines, if you will. so including infused sodas, thg-infused chocolates, if you

will. and topicals you can apply to your body. >> unlike some others in this space right now you try to keep your bottles opaque, you try to label things clearly that they have thc or pot in them. you're being very proactive when it comes to alerting consumers. do you think your rivals are going far enough? >> certainly dixie has been considered one of the industry leaders here in the state of colorado with respect to both safe and responsible labeling. the appropriate package. most importantly, childproof and tamper resistant packaging is important for consumers and patients alike to understand the power of these products. just like a part or adult would be responsible for protecting opiates or tobacco or even a handgun, so, too, do we have the responsibility here in the state as consumers of marijuana products to keep those away from children. these are specifically designed for adult use here in the state.

>> yeah. it's interesting product. so one of them, did you say, a lotion, that you rub it on and presumably the skin will absorb the marijuana? >> that is correct. typically does not provide any euphoria but it does allow for an individual to receive the medicinal benefits of cannabis, absorbed through the skin subcutaneously and provides an effective way for patients to medicate and/recreate. >> particularly at the private level is looking to get into it. i suspect you know better than i do. where do you see this industry going? do you ever think the big consumer giants will come into this turf will they forever hold back for obvious reasons? >> well, absolutely. the growth here in the state of colorado and across the country, 20 states including the district of columbia, that offer some form of either medical marijuana or adult use. the research report which was

released earlier this month before the ink was dry they had to update the revisions in 2013 they pegged it at $1.5 billion, forecasting $2.6 billion across the country. so this is growth that is faster than the smartphone industry. here in the state of colorado we experienced a 50% growth from fiscal year 2012 to fiscal year 2013. now they're predicting a $600 million industry in denver -- excuse me, in colorado alone. infused products which includes the products that we manufacture will probably represent excess of 50% of that market. so we're really dealing with what i would describe as hockey stick growth. >> and at the same time safer presumably than actually smoking. tripp, we've got to leave it there. it's a fascinating growth area. who thought we would get here. thank you for joining us. the times, they are changing. >> yes. and fast. and the bells are about to sound across europe. just a couple minutes left in

the trading session there. we'll get you details on the close and the impact it's having here. 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.

we do? i took the trash out. i know. and thank you so much for that. i think we should get a medicare supplement insurance plan. right now? [ male announcer ] whether you're new to medicare or not, you may know it only covers about 80% of your part b medical expenses. it's up to you to pay the difference. so think about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company.

like all standardized medicare supplement insurance plans, they help cover some of what medicare doesn't pay and could really save you in out-of-pocket medical costs. call now. with a medicare supplement plan, you'll be able to stay with your doctor. oh, you know, i love that guy. mm-hmm. [ male announcer ] these types of plans let you visit any doctor or hospital that accepts medicare patients. and there are no networks. you do your push-ups today? prepare to be amazed. [ 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. as we cut our losses on the dow in the united states, this is where europe is trading at the moment. the big news, what everybody is waiting for is tomorrow morning's european central bank meeting. what are they going to say? in advance of that we've had bad analysis of the retail

situation. jpmorgan has put analysis together suggesting in the fourth quarter, at an annualized rate, we were shrinking by 2.7% on retail sales across the eurozone. the euro obviously will be absolutely key, sitting close now to a ten-month low. i'm not sure if we're able to have a look at the euro. i think it's relatively flat on the session overall. interestingly, the italian banks have been moving recently. we've got a lot of parts, momnte paschi will sell some stakes. they are higher on the session overall. other news today, the european commission in the form of the competition commissioner has signed off after two years of negotiation on the deal with google that basically means in the future when it promotes its own services it will have to list three alternative rival services next to them.

arguably google has got off lightly according to its rivals. and in london, there is travel chaos as a result of a two-day strike on the subway. we like to call it the tube, as the unions walk out, the labor unions walk out to protest the fact they're trying to cut the number of physical positions at the ticket offices. they want to automate everything. 750 job losses and the unions don't like it. >> only 750 job losses? >> i believe so. >> it's already quite automated. check on energy and commodities. jackie deangeles is live at the nymex. >> we did see strength in the energy complex early this morning, but on the back of the equities session in the u.s. here we are seeing a decline across the board in the complex. let's start with west texas intermediate hovering $97 a barrel. even after we got that department of energy inventory report that showed a lit bit of a build in subplies. not enough of a build according to traders.

you would think that would send prices higher. crude not really able to hold on. another contrary -- counter indicator i want to highlight, yesterday a report from reuters saying that a limited number of exports of crude were approved to europe but traders are saying they dug into this a little bit more. these are reexports, if you will, of international crude. but they are saying that they're looking at this as a precursor to potentially opening the flood gates down the road. we're watch that very closely. meantime, i do want to talk about natgas as well. we saw 5% pop this morning. but now we're in negative territory. interesting to note here that margin requirements were raised 10% by the cme yesterday. they've doubled in the last month. so that makes the natgas trade volatile. i want to talk about gold prices. we saw a spike after that adp report this morning. traders are telling me they want to test the 1278 level to know the bull market is back. simon and kelly, back to you.

>> in the meantime, on the main markets we are cutting our losses at the moment. what's going on? >> it was the mirror image of yesterday. yesterday we rallied in the morning and sold off and rallied today. if you're not paying attention, it doesn't make you a little crazy, you're not paying attention. today we do the opposite, of course. we move -- put up the s&p. we moved down. then we got the sm number and rallied up. opposite of what happened yesterday. let's call it indetermine nate day so far. we're going to get dennis lockhard not far from now that's going to weigh in on whether the fed is going to continuous program. let's move on and show you other things. yesterday, biotech was strong. guess what is weak today? biotech. a little bit of a disappointment there with gilead. transports are weak because ch robinson was a real

disappointment. the transports bringing down some of the groups associated with the trucking components overall. beauty components sank. we had disappointing commentary. esity lauder. arden, results sensitive to north american retailers. they're to the downside. coty and revlon weak. casinos under pressure because we've got revenue numbers and gaming revenue numbers from macaw that were on the disappointing side. bigger company players like wynn and las vegas sands are not downside. finally, i want a little bit of news on the etf front. charles schwab has just announced one of the holy grails. they have finally figured out a way to get exchange traded funds into 401(k) programs. we have been waiting for this for years now. here's what's happened. they're the first one to have a multiasset platform. off etf 401(k) program, commission free, broad selection of etf, 25 asset categories. 11 different providers including

vanguards like state street and they can process partial shares. guys, that's been a problem in the past. when you buy into a 401(k) plan you put in fractional amounts every week, $100, and it's $105 to buy into a share, how do you do that? they figured out a way to do it. the important thing is they finally fig ured out a way. >> it's time time restriktded. you can't go in and out. >> i believe. i talked to them but i didn't get the bottom line. i think you can probably trade them intraday. it's a big day for 401(k) and the etf business. for more on markets, rick santelli is in chicago. rick? >> well, thank you very much. kelly. i'd like to welcome my special guest, rob arnot. thanks for taking the time this morning, rob. >> pleasure to be here. >> before we get into this. every analogy about baseball and cars seems to fit well with the markets. i'm a cub fan. they haven't won a world series in over 100 years.

record attendance every year. i think that's one of the problems. as long as people are coming they don't really need to field the real baseball team. i see a lot of parallels with corporate profits and how little squawking the general street does regarding policies like qe. you see where i'm going with this, rob? >> i sure do. >> all right. let's talk. record profits. they've been going off the charts. do you think that will continue in 2014? >> well, i don't. i don't. we wrote a white paper, one of my colleagues wrote a white paper last month called "the profit's bubble." what he points out is that profits are hitting records, both as a share of gdp and relative to wages. and he goes back historically and explores how high this bubble looks. it does look pretty unsustainable. and the question is, what can bring it back into line, what would bring it back into line?

you mentioned the cubs analogy. why would profits continue to go up? part of it is, as you suggest, government policy. well, as mack said to his successor when passing the reins over at morgan stanley, your number one customer is the u.s. government. okay. if the number one customer is the u.s. government, don't bite the hand that feeds you. >> let me interrupt you. a lot of people tune in and a lot of guest, truly, i don't think they care exactly what combination of elixir creates the profits as long as the profits remain. with regard to qe, whether they back it up or they don't back it up, i guess in the end, do you think there's going to be enough change in all of these variables that will actually cost -- cause these profits to move down as your white paper suggests? what's going to be the catalyst for them not to perform for

another year? >> firstly, let's examine the question on whether profit on a short-term basis are the best thing. i'm a capitalist. i love profits but i love long-term profits. it's the old goldman sachs issue of being long-term greedy. i want long-term profits. long-term profits require investment. investment in building, infrastructure within a company. i don't mean infrastructure in the country. i mean infrastructure within a company. >> when i see all the money on the sidelines at amazon and microsoft, isn't that money that isn't building those factories? >> that's exactly right. if companies are frightened by an uncertain economy and fast-changing rules, fast-changing regulations, fast-changing tax law. >> rob, i hate to interrupt you. next time you come on we're going to carry this over into..com and have a good talk. thanks for taking the time to be our sges today. "squawk on the street" gang, back to you. >> thank you, rick.

in the meantime, there will be no federal bailout for puerto rico. that's what a white house spokeswoman has reiterated this morning just one day after s&p cut its credit rating to junk status. so why is the situation in puerto rico important for your money? we'll tell you when this program returns. [ male announcer ] the new new york is open. open to innovation. open to ambition. open to bold ideas.

that's why new york has a new plan -- dozens of tax free zones all across the state. move here, expand here, or start a new business here and pay no taxes for ten years... we're new york. if there's something that creates more jobs, and grows more businesses... we're open to it. start a tax-free business at startup-ny.com. [ mala body at rest tends to stay at rest... while a body in motion tends to stay in motion. staying active can actually ease arthritis symptoms. but if you have arthritis, staying active can be difficult. prescription celebrex can help relieve arthritis pain so your body can stay in motion. because just one 200mg celebrex a day can provide 24 hour relief for many with arthritis pain and inflammation. plus, in clinical studies, celebrex is proven to improve daily physical function so moving is easier. celebrex can be taken with or without food. and it's not a narcotic.

you and your doctor should balance the benefits with the risks. all prescription nsaids, like celebrex, ibuprofen, naproxen and meloxicam have the same cardiovascular warning. they all may increase the chance of heart attack or stroke, which can lead to death. this chance increases if you have heart disease or risk factors such as high blood pressure or when nsaids are taken for long periods. nsaids, like celebrex, increase the chance of serious skin or allergic reactions, or stomach and intestine problems, such as bleeding and ulcers, which can occur without warning and may cause death. patients also taking aspirin and the elderly are at increased risk for stomach bleeding and ulcers. don't take celebrex if you have bleeding in the stomach or intestine, or had an asthma attack, hives, other allergies to aspirin, nsaids or sulfonamides. get help right away if you have swelling of the face or throat, or trouble breathing. tell your doctor your medical history. and find an arthritis treatment for you. visit celebrex.com and ask your doctor about celebrex. for a body in motion. coming up at the top of the

hour, cvs announcing it will discontinue the sale of tobacco products and a lot of stocks could be impacted by that bold tiger. we are trading all of those names. just hours away from twitter's first ever earnings report. we're going to talk to the analyst who first placed a buy rating on that stock and then downgraded it. what does he think now? did he make a right call? plus, digging through the sea of red to find out how the experts are trading the sell-off. that and much more when we see you over there at post 9 in just a few. >> looking forward to it. thank you. let's send it over to dominic chu with the dow now down. >> it's down more here. check out the casino stocks. it's taking a hit here. getting hit as the macaw casino winnings in january increase bid only 7% from the same time a year ago. that was the slowest gaming revenue increase since october of 2012. the casinos get most revenue from that macaw spreshl region in china when mgm, las vegas sands, all, kelly, back down on

the day. >> thank you, dom. next guest says she's not surprised s&p's move to downgrade puerto rico's obligation is to junk status. let's bring in president and ceo and also a cnbc contributor. it is great to see you this morning. i guess a lot of people wondering how long before moody's and fitch follow suit. >> well, that's the big question. and i think that's where we're going to see a real effect if that does happen because at that point there are certain funds that will not be able to hold the credit any longer and you would see foreselling which would really add to the dire situation that the credit's in right now. >> alexandra, we should be clear about people who think they aren't involved in this story. you know, if you own municipal debt in this country there's a good chance your fund might have exposure. have you seen lot of pairing back or do people still

generally hold puerto rico in funds of all sizes and types? >> well, let's go over that for a second because that is a really important point and that is why puerto rico is not a situation unlike detroit or unlike some of the california entitities that is puerto rico across every state in terms of taxes. most mutual funds do hold puerto rico bonds. chances are that you do hold puerto rico bonds. those funds have not been selling bonds per se so chances are the net asset values of the funds have been dropping. as i said, we've got been seeing a lot of selling from those funds. >> alexandra, i'm really sorry to be catching up with the back here. but why do people own so much puerto rico debt when they can see the difficulty that it's in? >> it's not that they've been investing as the problems have been going on. it really goes back in time when puerto rico was not as troubled

a credit or when bond insurance was much more relevant and you had mbi a&m bak and the other insurers. >> do you get a decent return? what is the interest rate at moment? >> i hope you're sitting down. there are some bonds that traded yesterday at 10 6 5 yield. >> wow. >> so i mean, it's just -- for an individual investor this is just not an area of bond that you should be looking at right now. but again, just to go back. this is not -- people have not been investing in bonds. you've seen institutions hedge on a lot of sharks circling the water. it's not something that individual investors have been investing in recently. >>al xand dra, when we had oppenheimer on this program and asked them about this, they'll say we're away of tre of the ri we're clud in this situation and we own this debt buzz we think it's going to be a great pickup in yield and it will resolve itself. does the downgrade yesterday or

potential further downgrades from the other ratings firms change that materially? >> the downgrade makes the situation worse, in fact. particularly as we started the interview, if the other rating agencies follow suit. there is a $2 billion issue that is probably coming to market in the very near future and that's only going to drive the yields higher that investors will expect. so for existing bonds, that will mean the prices are going to be lower. >> and here's what's so interesting about all of this. if puerto rico fundamentally can't service this debt, the obvious option, the sort of last, you know, way to resolve this is for the u.s. to get involved but the white house today reiterating that it won't. is that just politics? is there any press sent here or any way in which the market thinks the u.s. will lend a helping hand? >> unprecedent the u.s. has never stepped in. you know, going back to new york city drop dead in 1975.

i just don't see it happening. look, the common wealth has done a number of things to try and right the ship. so the question is, will it be enough to start to stem the tide? they are in a situation where they have an enormous amount of debt relative to the number of people in the common wealth, relative to other states that are out there. they have 70 to $80 billion worth of debt. it's just enormous. >> and, yeah, that's why we're going to watch very closely to see what the other ratings firms do and investors as well. alexandra, thank you so much or an important story this morning. >> thanks. look at shares of hain andestee lauder. the earning squad is here to tell you why went "squawk on the street" comes right back. ♪

[ bell ringing, applause ] five tech stocks with more than a 10%... change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade.

with the mobile trader app. sleep train'sor presidents' day presidents' day sale is on now. save up to $500 on beautyrest and posturepedic. get a sealy queen set for just $399.

even get 3 years interest-free financing on tempur-pedic. plus, free delivery, set-up, and removal of your old set. keep more presidents in your wallet. sleep train's presidents' day sale is on now. superior service, best selection, lowest price, guaranteed. ♪ sleep train ♪ your ticket to a better night's sleep ♪ squad. i'm melissa lee. joining me is dominic chu. got to start off with hain posting weaker than expected revenue yesterday. look at the reaction in the stock because it is a sharp reaction. part of this can be explain bid just the run that hain has had. over the past two years it has been a double. in terms of what they said for the quarter, yes, the quarter that they reported, there were some disappointments but they

did boost their full-year earnings as well as revenue forecast including the impact of acquisition of a recent acquisition that is a basami rice corporation. they're looking forward. they say the concerns about a slowdown in u.s. consumption. those are simply overblown and interesting because if you look at the valuation in the stock despite this big run it's had, compared to the five-year average pe, it's actually lower. trading at 29. the average five-year pe is two. >> we talked about this last night as well and he said it. this is just perhaps a pause for a stock that's had a really good run. and again, if it is a slowdown, it's really a certain part of the consumer, right? the upper, middle to upper end of that side of things. >> exactly. >> here's what's interesting. for all of these hi momentum fliers that missed earnings, investors are punishing. the stock is down almost 10%. >> we should note that jim has a hain celestial ceo irwain simon

tonight. sheila, you've been following this one. this stock has taken off just this year, if you look at the year to date performance. >> 2014 has been a big year of realignment for the company. here's what's remark about merck today. earnings missed, that stock is up as much as 2% today hitting a high and it's all because the company says the what jik words. basically cancer fighting drugs. merck announced a partnership with insight amgen and pfizer. this is the hot thing when it comes to pharma, when it comes to biotech. the world health organization says the cancer cases are going to be up 57% by 2020. those kind of trends, as sad as it is, actually farewell for a company like merck. >> when you said magic words i thought they were i don't guess go tee trough earnings for 2014. >> nice catalyst. if they're forecasting things are going to get better, that's

nice. >> estee lauder, perhaps we shouldn't be so concerned. >> maybe we were tempered. but still, this talks about a consumer that may be slowing down. the company came out and said that they expect this coming year to have slowdowns in the u.s. as well as certain asian markets. that's key. korea, china, hong kong, and certain specific markets in europe. so as you look at estee lauder shares, it tells you something about that consumer. this i guess you could call it a staples product for some people. they do use makeup on a more daily basis. maybe not as high end. >> including yourself, dom. >> maybe not as high end as the estee lauder stuff. yes, i do have to wear makeup. >> we all do, unfortunately. that does it for us. back quurg during "street signs" up next, instead of rolling over in your grave, how about rolling over your grave. we'll tell you a story of man who wants to sell his cemetery plot for $700,000. conversation r mortgage didn't start here. it began on her vacation in europe. someone stole her identity and

opened some credit cards in her name. checking her experian credit report and score allowed her to better address the issue...and move right in. experian. phone: your account is already paid in full. oh, well in that case, back to vacation mode. ♪boots and pants and boots and pants♪ ♪and boots and pants and boots and pants♪ ♪and boots and pants... voice-enabled bill pay. just a tap away on the geico app. ♪ huh, 15 minutes could save you 15% or more on car insurance. yup, everybody knows that. well, did you know that some owls aren't that wise.

don't forget about i'm having brunch with meagan tomorrow. who? seriously, you met her like three times. who? geico. open to innovation. open to ambition. open to bold ideas. that's why new york has a new plan -- dozens of tax free zones all across the state. move here, expand here, or start a new business here and pay no taxes for ten years... we're new york. if there's something that creates more jobs, and grows more businesses... we're open to it. start a tax-free business at startup-ny.com.

we're open to it. thcar loan didn't start here. it started with that overdue bill he never got. checking his experian credit report and score allowed him to identify and better address the issue. then drive off into the sunset. experian. welcome back. we've all heard of flipping a house, but what about flipping a cemetery plot? well, one l.a. man hopes to do just that and double his money, only in hollywood, yes, jane wells? >> that is right. and real estate, your know, guys, it's all about location,

location, location. tom gregory is flipping some of the most prime property in l.a. it also happens to be six feet under. >> it's an old cemetery. they go back all of the way to the -- as far as i can see, the early 1900s. 1908. >> ten years ago gregory bought a four-person plot in the cemetery. it's a tiny quiet beautiful place which happens to be the final resting place for a who's who in hollywood. dean martin, jack lemmon, farrah fawcett, natalie wood and the most popular of all, marilyn monroe. gregory's plot is only a few yards away from her and now he wants to sell. oh originally bought it for 350 grand. now selling it for twice that. that works out to over $10,000 a square foot. >> it's on the western most edge of the cemetery. it's the closest plot to beverly hills. and the most coveted corner, skyscraper views. it's real estate. it's not a condo. i mean, even marilyn monroe is in a condo.

she's going to come rolling down the hill and i'll still be safe underground. do you know what i mean? it's even more primo than her. >> he's posting the plot on ebay and taking offers at big star plot at aol.com. he is hilarious. more on why he bought, why he is selling, and where he wants to be buried now instead. right now at cnbc.com. guys? >> he's really thought this through, jane, when it comes to comparing marilyn monroe to the condo and what would happen during an earthquake. simon's a little bit troubled. >> it's not right, jane. there's something not right about it. >> well, i don't know what's wrong with it. this is l.a., simon. in fact, if he ends up not selling and stays there he already has his epitaph, she's over there. >> oh, no. jane, thank you this morning. it's big business in china. >> yes. very big. we were googling chinese cemetery during the break. kelly evans. >> big ipos. >> curiosity unbounded. heading towards the end of our

program. let's bring in scott wapner who is about to take over with the "half time report." i see the markets turned positive. >> what do you make of the volatility? when we were doing the show together we're down 80. then we come down maybe 30. now we're positive. >> very different from last year. you know, very different. we thought the volatility might come back but with tapering. they always said that, of course, with a potential, if a ceo is not to buy back their own stock, scott, at the rate that they did last year. >> it certainly teams to be a total change of sentiment, along those lines, simon, where people were willing to buy the dips and selling the rips as they say. really any bit of positive momentum in the market they seem to be laying into. we'll see if this holds. have a great weekend. look forward to seeing you on monday. welcome to the "halftime show" from post today. twitter's moment of truth. the company delivers the first earnings report tonight. will the stock live up to