>> what happens if they choreograph in advance? >> she calls it a sexual fantasy, not a -- so it doesn't -- and the club's attorneys counter that the state's tax law is unconstitutional because it's based on the content of the performances. none of us like treating women as objects. >> thank you, guys. it's time for "squawk on the street." ♪ good morning. and welcome to "squawk on the street." i'm david faber with jim cramer. we are live from the new york stock exchange. carl, of course, continues to report from sochi. we're going to hear from him later in the hour. all right, let's start you off with a look at futures, of course, after yesterday's very big move up a good day if you were long the market certainly making up a lot of the losses that we saw earlier in 2014. you can see not much going on

yet this morning but we'll see. that can change as you well know. ten-year note yield, where are we? yes, we are moving up yet again after yellen's testimony yesterday, of course, going on for much of the day. in front of the house financial services committee. europe did well. europe so far looking pretty good as you can see there, of course, we've got the china trade numbers, bank of england also, by the way, raising its uk growth forecast. china certainly helping on the trade front, those numbers when they came out helped turn europe or continue a rally there. >> right. >> let's get to our roadmap this morning as well, of course, we'll be talking about markets. starting off from their highest levels in more than two weeks the dow and the s&p looking to extend the strongest four-day run since june of 2012 and december of 2011 respectively. deere shares are higher in premarket. the company reporting earnings and revenues that beat expectations also citing what it says was effective cost cutting.

procter & gamble cutting its 2014 profit forecast, this is due to currency-related fluctuations, in particular highlighting venezuela's currency devaluation. and amazon, set to hire more than 2,500 new full-time workers at various fulfillment centers in five states across the united states. all right, let's start off on the market. stocks aiming for a five-day, that's right, a five-day winning streak. the dow, nasdaq, s&p 500 each rallying more than 1% yesterday. this after fed chair janet yellen testified before a house panel and signaled there wouldn't be a major change in the central bank's policy stance. in the meantime the bank of england raising its 2014 economic growth forecast for the uk to 3% to 4% up from previous projections of 2.8% growth. later this morning we'll talk markets and more. we'll have an exclusive interview with jeffrey gundlach and he loves to talk equities,

too. always a lot -- >> a little something to say? >> oh, he's always got something to say and oftentimes a bit connell temporary to what is the general perception which is helpful in many times in the markets. all right, here we are now. you'd been saying last week keep an eye on some of these things that didn't go down, the cummins, some of the retailers. we've been rallying ever since. >> right. >> yellen yesterday people seemed to say, fine, good, all is well. and then we got the china trade numbers. now, these numbers, jim, are notoriously hard to say they are accurate is a fine way to put it but they were certainly well beyond in terms of what exports anybody had anticipated. >> we got the baltic it's minus six to 1085. you need to see that non -- let's say that's a -- that's a number that can't be -- i don't want to -- it's not a crooked number? it's not a corrupt number? what's the -- >> those are two good words. >> honest nin number?

and you need to see the pick-up in order to believe china. china coming back online does matter. we see the chinese market had been horrendous and it's okay. china matter's immensely. it's the next data point. it's so big. >> it's so big and it matters a lot to the emerging markets. let's not forget it wasn't just weakness because of argentina. >> it's always china because china takes a lot of materials that define our economy. i always find, by the way, you'll see some line from a packaged goods company and it will say, well, the problem was in china. holy cow, are you kidding me? and they say because they changed the birthrate you can have more than one kid and suddenly you buy kimberly-clark. it's the big swing. i think too much was made of yellen and not enough made of the debt ceiling. there were many people selling the market betting that there was going to be a move by the insurgents in the house to create another problem. and as soon as that didn't happen within a 24-hour span of

yellen being -- what did they think? did they think yellen was going to be a clown? >> right. >> it will be interesting. if she were a man, would we have doubted? would the market have doubted? >> there were some that say i -- when you look at her experience as i think it was diane swonk said yesterday on our air she's as qualified as anybody has ever been to have this position. >> thank you. i cannot believe how -- i mean, that there is was anyone doubting this person. she was fantastic. she said i don't care about the emerging markets. that's a good way to put what she said, but she's basically saying the u.s. is the focus. >> i'm not going to not taper because i'm worried about the emerging markets. >> i thought that was terrific. steady hand. >> your point was an interesting one and we didn't talk about it a great deal yesterday, the debt ceiling. boehner takes it to the floor and they get the vote. only two democrats vote against. so it was close. it's done, though. >> it's done. >> it's off the table. >> what happened in this country? was it not that the republicans

recognized either that obamacare could sink the democrats or that the economy was really derailed and the funds, the republicans were not getting the kind of fund-raising that they wanted from corporations because the republicans were perceived as people who were not helping the cause. that was a bigger indicator. david gregory last week in a chat with me was saying, listen, keep an eye out, the debt ceiling may not go -- this is something you people are really taking for granted. i think a lot of people weren't taking it for granted. they got the employment number on friday and they short monday. monday's an iffy day because the machinery stocks rolled down and it was led by the soft good stocks and sudden lyellan speaks and we get a debt ceiling and the covering in this market -- >> it was violent, ooh, baby. >> including a lot of companies doing badly they started buying stock back. >> panic and emergency among buyers because the correction between january and february looking like nothing more than a mild speed bump. >> and about to be sunk by

turkey? remember argentina. >> although to our credit we were saying -- >> this is cyprus-like move. in the interim the ten-year has actually given you a little bit of inflection which the banks need so the banks can participate in the rally and the italian bond market who we often write off. what is the third biggest bond market in the world? hits 3.66 on the ten-year. i don't think we'll trade through the italian bond market. keep an eye on italy. last week we saw things people didn't think could happen in november of 2011. we used to say the italian market can sink the whole world! but we got the government out of the picture. >> and pain 3.611 on the ten-year. >> spain was supposed to default, david. >> i know. i know. france is 2.28. i mean, they're -- >> all right. all right. >> i want to move on.

i want to move on. i want to move on to more of our favorite topic which is corporate news and earnings. >> yes. >> on the approach to the market at this point given what you've said, what is it? >> we're suddenly willing to overlook huge negatives. >> like we were last year in terms of incredible multiple expansion without as much catch-up in earnings? >> i feel when you look at -- scrambling for my notes, but here it is. dr pepper, okay, keep in mind -- >> that's not where i expected you to go. >> i had the company on air. the income is $1.046 billion versus $1.092 billion. the core earnings a little bit better than last year, but the main thing you need to know the core earnings are up 10%. next sales increase 12%. how much is the stock going to be down with the sales decreasing? it's up two points already. that's the prism. it's the happiness prism, it's back. the happiness prism. >> i love being in the happiness prism. let's talk about deere reporting

fiscal first quarter profits a buck 81 a share. that was well above wall street estimates. revenue also above the conskc consensus. and deere reaffirming full-year guidance. >> let's drill down. >> you always have an issue. >> here's agriculture and turf retail sales. >> yep. >> down 5% to 10% u.s. and canada and south america down 5% to 10%. and asia up slightly and u.s. and canada utility equipment down 5%. >> it doesn't sound good. >> no. but worldwide construction and forestry. operating profit up 32%. and net sales up 4% for the first quarter overview, incremental margins good. and research and development expenses price realization and unfavorable. and production bottoms being the farmers. you saw the stories the farmers poorer than ever. well, not really because we know from listening to the industrial farm information bureau which, of course, is the madeup company that -- that chipotle has given us that everyone was short this

stock because agco came on. "mad money" in abeyance. stop it. it's not on on some secret channel! they said that business could be bad so a lot of people were short deere. they're coming in and got hurt by the construction buzz saw. >> the construction buzz saw will get you every time. >> yes, it will. i had a gator at one time, david. >> did you? >> yes. don't ask where it went or who has it now. >> i have to ask both. where did the gator go and who owns it now? >> can we take that offline? >> all right. all right. before we move on to procter & gamble any final thoughts on deere? >> yes. this is a company -- >> is there a look-through to caterpillar or not? >> i think they are foreseeing residential construction staying strong and we know that from the housing numbers. i think we'll see nonresidential come on. and nonresidential construction is a huge employer, david and so even though it's the winner, let me give you a real simplistic

one, have you driven lately? >> yeah, i have. >> do you see how many axles are broken and how many potholes we have to fix in this country? owens corning with an insulation number, the insulation, you know who that is? >> yes. >> pink panther. i wanted to shoot the pink panther, not the shooting of the giraffe thing. >> denmark. >> theoretical and not literally. pink panther are in endanger. they are in danger. >> and the black ones, too. >> but the profits were in danger and not this quarter. insuflation is back and it's bigger than ever. >> bigger than plastics in "the graduate"? >> yes. it's cold around the country. there's a ton of downside to the cold, the mall traffic, houses and roofs break down, potholes, you need construction equipment. my conclusion those who were short caterpillar are going to pay the price. >> all right. >> pink panther, listen to this, it's a feline. panther doing better. cat doing better and let's throw

in thumper. okay? let's throw in bambi. >> bambi and thumper. >> doing better. >> procter & gamble lowering its outlook. don't forget, insulation, insulation. if you want a future, insulation. let's talk procter & gamble the consumer giant citing unfavorable foreign exchange rates in venezuela and a devaluation of currencies in a number of developing markets and seeing earnings per share growth of 3% to 5% compared to the prior forecast of 5% to 7% growth that's a fairly significant hit and they are active in many of these countries being that they are exceedingly a global consumer product company. >> you hear often about stocks that my charitable trust owns, we own proctor, listen to me and i know you're the senior dean in this, but you could not figure this out when you reported just a few weeks ago? this was not good. how could you not see these trends when you reported? >> doth they protest too much,

then? are you pointing a finger here saying perhaps there is something more than currency and it's a way to simply get by with that? >> yes. i feel like that this is the kind of -- that was severe. think about conagra, that guide down was severe. proctor may get the benefit of the doubt because the stock was $82 and they reported that thing and no one believed the growth. unileaver is taking it to them and colgate was taking it to them. this is embarrassing they lowered the guidance two weeks after. jim, come on, pass, pass, pass. no free passes. >> i did not know that they did that much in terms of the balances in venezuela. 2$230 million to $280 million after tax onetime charge of write-downs because of the devaluation of kurcurrencies. >> you didn't see that hit. you didn't see that. disappointing. let's say that.

disappointing and my charitable trust owns it. disappointing. >> we'll see if the stock is down. if it's going to be down at all this morning. >> by the way, deere was up two because people didn't read the deck. the deck did not talk about robust ag. >> they do that a lot, though, with the -- >> and then when the cfo comes on -- >> yeah. >> -- i mean comedy turns to tragedy. i'm talking about shackespearea nightmare, it's not like "king henry v." you can look at the annotated it talked about deere going to 85. >> shakespeare was a known player of the then stock market in the uk. >> procter & gamble. beginning of a big run. >> i heard some things about shakespeare. he had a good line into small to big brokerage houses. >> i don't want to see it but i'm hearing it's good. this morning it's good news and bad news for amazon. we'll tell you why this is the case for the internet retailer. i think i'm hearing "pink

panther" music. and we'll have jeffrey gundlach hear about the man who shook up the bond world is saying about the bond world. >> anything on cliff's naturals? >> we'll have mr. drabkin joining us at the 10:00 hour. they are trying to put in a new ceo and take control of the board.

amazon announcing it hiring more than 2,500 new full-time workers. the jobs are at fulfillment centers in virginia, kansas, south carolina, washington state and tennessee. in the meantime ubs downgrading amazon from buy to neutral. the firm citing deceleration in revenue and paid unit growth as well as a ubs survey that shows amazon prime customers are less likely to renew the service if the $79 annual fee would be increased, were to be increased by 20 to 40 bucks. that is something that was at least referred to as a possibility in om done's call, of course, after its disappointing quarter the stock took a significant hit on it. international is where people were worried about amazon from the quarter despite top line growth being quite substantial. the bottom line is not what people were looking for not that they're looking for much when it

comes to amazon. as for the job, the fulfillment centers continue to put up more in the u.s. and they have 100 worldwide over 52 in the u.s. or more. these are jobs. jobs are jobs. they're not great jobs. it's not like you are working in seattle at corporate hq with the potential to move up into -- and getting a lot of stock, but it's a job. >> now, you're close to amazon. do you think it's really -- ubs survey i felt was a little daunting and on the whole, by the way, breaks the halo of amazon. you don't usually see amazons break it off on a survey. do you really think that people won't pay for prime? it's been the same price forever. they paid it for costco. or do ul think costco's a better -- >> it's a great question. i don't know the answer. i think so many people i've been speaking to for the work that we've been doing on a documentary -- >> which i cannot wait because it's the most exciting company. >> it's a ways out. there are a lot of very pleased customers, people who use it

constantly. hard to imagine that a price bump of some type would really hurt them, but i don't know. listen, it's an interesting survey. i don't know how well it was conducted by ubs. but it's something you have -- what is the elasticity in terms of their ability to raise prices on prime without losing a lot of people. we know they signed up an enormous amount of people and, in fact, had to stop signing people up during the holiday season because it was such a successful offering. >> united parcel was stunned by the amount of business that was done online which we always want to presume to be amazon. when i had channel advisers on last week on "mad money," they're trying to figure out which channels work and they are saying don't necessarily flood the amazon channel. but amazon web service, david, the hidden gem. >> it is -- not as hidden, but, yes. i mean, so important to the backbone of so many companies now. and when you do speak to people, jim, they think this could be the real growth platform one day

conceivably even swamping the marketplace in terms of revenues, you know, which seems impossible or profits i should say. >> do you see parallels to walmart? which you know well. walmart didn't do the international that well. do you see parallels? >> i see parallels in a number of ways, simply that amazon is no longer the underdog, which is why they want to promote something like this we are adding 2,500 jobs. that is great. people argue about the quality of these jobs. these are warehouse jobs. these are not for college-educated people. you are going to walk nine miles conceivably in a day. at some point these jobs may be taken by robots. >> is that february 12th lincoln that you worked in now? walking nine miles the rail splitter. that was a clever reference to lincoln that you slipped in. >> i didn't know that i did it. you deconstruct what i say. >> subconsciously you remember when you were a little boy. how many jobs has amazon destroyed that are higher

paying? how many small businesses have they destroyed? >> well, creative destruction. what are you going to do? >> remember sherman with the crew with lincoln. >> on fire. all right, up next is cramer's "mad dash" as we head to break. more "squawk on the street" right here from the nyse right after this. ♪ take the money and run i take prilosec otc each morning for my frequent heartburn.

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all right, we got about five minutes or so before the opening bell. let's get to the "mad dash" this morning. want to start with trip adviser. >> trip adviser like my best friend yelp is a service that -- trip adviser, expedia, priceline, yelp are the backbone of the travel and leisure economy. that's been revolutionize by the internet, fabulous numbers. >> it's also considered social. in they can make or break any enterprise including an inn in summit, new jersey. i follow trip adviser daily. daily. >> as you do now yelp for the restaurant in brooklyn. >> i took a lot of heat from people talking about -- i won't mention the name anymore. i don't know trip adviser or open table or grupo, i don't noelle. it's the fundament of how you get reservations. not aaa, trip adviser. although i like aaa. >> we want to get to walgreens.

>> look at this. this is tobacco! >> i know. tax inversion. remember those words. >> tax inversion. >> remember, it's when you redomicile essentially to get out of the u.s. tax jurisdiction and there is starting to be talk about that research out this morning, corporate inversion second phase of that transaction process, walgreens buy the rest of it. >> right. >> a lot of their -- a lot of their profits are going to be coming from overseas would they conceivably redomicile, would they try to make themselves a 20s entity? who knows but apparently it's being talked about that would take their tax rate down from 35% to 25% or maybe less. >> i know when parago became an irish domiciled company. initially people didn't include the gains, david, because they said, it's all done by tax rate and the stock goes from $120 but this matters. by the way -- >> don't know if it's going to happen, but corporate tax reform so important.

>> the drugstores. oh, my, rite aid, cvs, walgreens, they are so powerful. they are the strongest tenet of retail. >> those to follow and a lot more. opening bell right after this. welcome back. how is everything?

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we are back. ten seconds away. there it. opening bell for this wednesday. there's a look at the real time exchange back at head quarters in englewood cliffs, new jersey, waiting for snow, of course, will come later tonight. >> yes. >> here at the big board, inovio ringing the bell and at the nasdaq, atlas holdings commercial auto insurance company. >> do you know what, david, there is so much happening right now and i am looking at regeneron, i want people to understand that celgene has lagged, and i think celgene will pull up the rear.

that's one of my four horsemen of the pharma apocalypse and i think people should buy cell geep now. >> when you look at the market values of the so-called biotechs versus the old pharma, i always bring up gilead, $125 billion market value and celgene $66 billion. >> that's creeping into the -- >> biogen $75 billion. >> this is the lilly area. bristol-myers. these are big companies. >> bristol-myers, yes, gilead is $40 billion bigger than bristol-myers. >> it's a hep-c formlation works as well as we think it's an important breakthrough and like gilead. >> merck as you pointed out has a nice move and it's back to a very respectable $160 billion market value. >> they are talking about spinoff of the animal health which we know by the way.

zoesis. >> and if they sell the consumer products division that's the schering-plough ralization, when they bought schering-plough, the company was in stay sis and that's why merck is high. >> do you know what they're doing, don't you? >> they are shrinking to grow. good. >> by the way, dow chemical, daniel loeb in a letter to his own investors, remember, it wasn't a letter to the company, a letter to his own investors but he proposed the same kind of idea, shrinking to grow splitting the company. dow for its part comes out this morning and says our board, our executive team in conjunction with external advisers previously and recently conducted an evaluation -- by the way, previously and recently conducted an evaluation as part of a broad and thorough review of our strategic options and we found that a break-up of the company in a significant manner and then in parenthesis, special

chemical assets, created no productivity or capital allocation improvements but negatively impacted dow's value proposition which leverages scale integration costs and technology benefits and vertically integrated value chains. >> we didn't want to hear that. loeb i think -- i think loeb gets this stock to $55 if there's a change in management. and i think that liverist did a lot that was not good for the company. i think everybody that owns dow has to be disheartened by the statement. >> the stock moved up a lot, of course, on the day that we first told you about loeb's interest there. >> yes. >> again, it's a significant stake for loeb but it wasn't -- he was giving it time. he let the proxy deadline -- he's waiting until really this is next year's battle or later this year i should say. conceivably. >> or just, like, hey, do you know what, long game. >> it's a good question.

>> good question. >> because it hasn't gone particularly well. they'll say, well, a lot of people have been focusing on the value of the entertainment assets and they weren't looking a it earlier. >> dow does have a lot of assets and we see how fantastically dupont has done in getting away from ingly ppg has done getting out of the commodities and going to the high value-added chemicals. obviously you could have a tremendous amount of value unlocked if loeb were to win. >> thank youing about a company you know fairly well, you know so many well, and a proxy fight that is happening today is cliff's article cliff cliff's natural resources, and 5.2% owner there, they gave us a hint that this might be coming and they file to try to take control of the board with nominees and also propose a ceo for a ceo-less company at this point is cliffs. the stock is up about 5%. >> we have to be careful here because this is iron ore which

even though those is the highest quality, those who follow cliffs when it was the old cleveland cliffs after the reorganization because there are periods where iron ore is bad. we know that china has been using less iron ore. they have a very troubled iron concentrate project in eastern canada called bloom lake and that's what we have to find out because they are kind of in phase one of bloom lake. it's way, way too expensive for cliffs to handle. where is the money going to come from? this is not a done deal. their basis i think, you know, they bought a lot of stock, this proposed ceo has bought a lot of stock. but in the end the analysts i want to recommend people read the cliffs natural credit suisse report and the swiss bank of america report those are both sells and explains why the plan will not work that they are presenting. they are presenting casablanca somewhat the way the movie kind of turned out which really wasn't all that positive.

>> no. although you did get the beginning of a beautiful friendship. >> yeah, that's right. let's round up the usual suspects activism. >> all right. what do we want to take a look at? looking at amazon shares down 1.5%. >> significant. and yet apple going the other way. >> perhaps it's on the ubs downgrade and the survey they did that there's not as much perhaps elasty or willingness to accept a price increase among prime members of amazon as you might expect if they were to raise the price 20 bucks to 40 bucks from the current $79. that's a bargain. >> i don't know about surveys, they are great, data points, something to hang their hat on saying we're getting off the gravy train that is amazon. i keep waiting for that for tesla. it hasn't happened. i keep waiting for that for netflix. it hasn't happened. understand that apple this morning we are finally beginning to hear buzz about new products. >> we are? what's the buzz? >> talking about a

transformational -- jpmorgan is talking about, are you ready skee-dad skee-daddy? >> yeah. >> converged mobility is what we've been looking at, a way to be able to have all your devices -- >> talk to everything already and to my home, too? >> that's what i think. but this is the converged mobility. >> i already had converged mobility when i get a text now it shows up on two ipads, three iphones, it's ridiculous. >> it's the super duper i love you, you love me converge mobility. >> if it's all about love, it's a good thing. if it's all about love it's a good thing. some people wondering whether carl icahn when we lack at apple 538 and '46 right now, if he's a seller. i have no insight on that whatsoever as i pointed out the other day when he lost, of course, he knows when to hold them and fold them. he's a great poker player and perhaps his greatest strength in this case folding in terms of the shareholder proposal, and some people wonder if he's about to leg out.

>> why would you sell a no-brainer? he kept using the term no-brainer. >> probably wouldn't. >> obviously have to follow twitter. twitter stabilized to see if he follows us. i know he watches our show and perhaps, carl, please tweet to tell us whether you still think it's a no-brainer at this level. we'll find out. i'm going to twitter because i'm not going to miss his response. what's the matter? that's how you get information these days. what, you look at the news ticker? >> apparently there is a lot of scaffolding around twitter that makes it difficult to access it. >> a lot of people talking about the puerto rican deal. shorter paper low end. keep that in mind you brought it up. puerto rican paper looks like it's coming to the market now. >> thank you for sharing it. we're talking about puerto rico the commonwealth $70 billion in debt outstanding, one of the largest municipal issuers and owned widely in the united states given its triple tax-free stat status. we've been focused on the island for quite some time because of the deteriorating financial situation. we learned yesterday they were

going to come to market in the near term is what they said. the question is, how much and at what yield and once they do, jim, the key is they may not have to come back to the market for quite some time? >> they are talking about the puerto rican government, $3 billion. morgan stanley is your context, rbc and barclays are rumored to be leading this. i'm staying on this because people don't realize, i hate to use this term but wealthier people own a very big percentage of triple tax-free puerto rico and puerto rico, by the way, is in. it has infected, if you're a negativist, a lot of bond funds a lot of muni bond funds and i saw, it disturbed me, i see a downgrade of travelers today. travelers does not have -- travelers been taking advantage of the weakness in the municipal bond market and citi with a sell. citi, can i just tell you that you do not short fishman. >> you heard it here. >> big mistake. >> don't short fishman. >> i need to correct something i said earlier.

the olympics where carlos was not -- where protested where there was a black power salute was the 1968 olympics, not '64. it was very bad of me because i remember. i should have known better. sorry. always want to correct yourself immediately while you are in the out. >> yes, we do. we try to do that. we're moving very fast here. let's get to mary thompson with more on what is moving. >> we're seeing modest gains in the markets after a four-day winning streak as the markets are -- traders are asking are we going to make it five in a row. essentially we're seeing broad-based gains and a little bit of weakness in the interest rate sectors and reits as well as utilities and the s&p within striking distance of its all-time high within about a 2% range there. a number of people are saying what are the catalysts that we could see in today's session, the china data imports at a six-month high and good earnings news and if possible a senate vote on the debt limit, the news

that the house, of course, voted to extend that yesterday, providing strength to yesterday's rally certainly. so, again, if they decide today and it passes, that's also going to be a plus. headwinds, though, some traders say the markets look a little bit overbought after the four-day rally we've seen and the yen strength caused the s&p futures to come off of the premarket session and we're keeping watch on oil over $100 at $101.15 and we'll get more data from the energy department. the inventory data is coming up at 10:30 eastern time today. let's look at a couple of companies released earnings, deere coming out with better-than-expected results thanks to strong equipment sales and cost cutting and the stock down just about 1%, though, on the news. fossil benefiting from strong sales in north america of watches and jewelry and even though it beat for the fourth quarter, the company's full-year outlook is below estimates and not hurting the stock, though, as you can see it's up over 5%. dr pepper, snapple providing

strong guidance for the full year. a couple of warnings let's check png and warning on the currency fluctuations and inoff to it as well saying a slow start to the tax season because of the government shutdown is going to impact its fourth quarter results. its stock is down over 4%. again, the dow is holding on to a 21-point gain, the nasdaq higher as well up 13 points and the s&p up over four. david, back to you. >> let's head to the bond pits and rick santelli is at the cme group in chicago. rick? >> good morning, david. let's hearken back to a week and a half, two weeks ago and remember that kind of perfect negative cycle where we had china's shadow banking under the spotlight, emerging markets, the taper, pre-yellen all of that, of course, gave us a lot of volatility in emerging markets, but i think china and many other investors have come to this conclusion is where you want to pay attention. overnight they had their data come out for their trade balance. i don't say trade deficit because they have a surplus. year over year their exports

were up 10.6% and the imports were up 10% and the surplus although not quite there is getting close to the highest surplus since 2008. that's the table and the setting is done. and the markets are responding. whether it's our equity markets doing better, it's taking a bit of a toll but not maybe as big of a toll on interest rates as they move higher. here's an intraday and two-day of tens. we're testing the big 38% retracement from the 303 down to the 258 and that comes in right at 275 on a closing basis, you want to pay attention to this. let's contrast that to what's going on in europe. we all know there's more questions regarding the outlook of the u.s. economy. just look at france 11%, unemployment rate. and what you come up with is, yes, the bund is looking about the same, but the intra-day didn't take out its first spike like we did at 273 up to 275 and year to date, not as developed of a bounce. deal curve is giving us a lot of secrets over the last few

months. steepening usually means higher rates and flattening lower rates. tens and twos a little bit of steepening coming into the marketplace, the final two, the kerry trade. look at the dollar/yen, the dollar's down today. that doesn't auger well for stocks but let's pay attention, it's early. but notice how the euro/yen is definitely a little bit more negative the euro than the dollar is on the dollar/yen a dynamic to pay attention to as well. david faber, back to you. >> thank you very much, rick santelli. coming up expedia has been trading at near record highs. what is the state of travel? 12, we're going to ask the ceo. luckily i don't have to pronounce his last name, he'll be joining us in an exclusive interview, but, first, we'll take you to sochi, it's carl live from the winter olympic games although it is 62 degrees. we're back after this. we needed 30 new hires for our call center.

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it is day seven of competition in sochi with an action-packed night last night on nbc. our carl quintanilla, of course, live from olympic park and he has all of the goings-on. carl? >> reporter: david, so much to talk about. got a victory in women's curling last night. of course, women's first-ever medal in the luge for the women, but the lead may be that the u.s. men's hockey team has officially arrived in sochi. we're going to get our first look at them on the ice tomorrow when they play slovakia and the czech republic versus sweden today. this is going to be a tough one to predict, guys, a lot of injuries all around the world. the games are being played on a wider european ice surface, unlike vancouver which was on nhl-size ice, so that's going to be fun to watch. of course, the big disappointment of the day is shaun white last night, the snowboarder, failing to medal in the half pipe. losing to ruthe russian born th

call him ipod of switzerland, he's disappointing, white, a tough night, said he felt the pressure. here's the weird part, american danny davis one of his colleagues on team usa says this, quote, it's good for snowboarding, man, the world now knows there are other snowboarders besides shaun. we're not exactly sure how to take that. definitely got some people's attention today. the medal count goes like this, norway 12, canada 9, netherlands 8, and u.s. and russia are tied for seven. and tonight a good one women's downhill, guys, julia mancuso won the bronze in the super combined on monday. if you want the results, you know where to go, but suffice it to say that a medal would tie her with bode miller for being the most decorated u.s. alpine skier in history. we've talked so much about the conditions on the hill, the warm temperatures, the snow, earlier today, guys, we got a chance to actually go to the hill

ourselves. strap on some skis, check out whether it was icy, was it slushy, it was definitely warm. i think it was 44 degrees at the top of the summit today. and coming up in the next hour we'll talk about how this warm and slushy snow affects individual winter sports. it's not what you'd think in some cases and you might actually see me bite it as we watched on "squawk" earlier today that's coming up in the 10:00 a.m. hour of "squawk on the street," guys? >> i know you hit a divot or something. there's no way given your extraordinary abilities that -- >> reporter: obviously conditions were very extreme. >> carl, i got to ask you, you talk about the idea that someone -- for these great snowboarding guys, this is an american sport. when i watch the x-games which i love, this is american. i mean, how did this become not american? >> reporter: unbelievable. how do we the u.s. lose to switzerland and then japan with the silver and the bronze?

people are asking that question, jim. and then not to -- not to belabor it, but shaun white, bode miller, mancuso, i mean, are some of the veterans of team usa showing their age a little bit? is it the conditions on the hill? we don't have answers to that yet. but clearly the u.s. which as we said earlier now tied for fourth place is having to deal with some issues in these winter games. >> yeah. >> and curling, you know, we obviously are still fascinating, but do you find year over year curling continues to grow? >> there's no doubt. a breakout sport back in vancouver in 2010. of course, coverage begins, again, today 5:00 p.m. eastern time. we're not really considered favorites for gold in the u.s. but getting that victory against sweden last night that was a nice little notch in our belts, so maybe we start to build some momentum there. >> i am waiting, carl, for our kids who play ice hockey to take up curling and they probably have to do a 3:00 a.m. practice because as it is you have to

have a 5:00 a.m. practice with that sport. i love your reporting. >> reporter: thanks, guys, see you soon. >> carl quintanilla. here's what's next on "squawk on the street" -- >> coming up, launching into a market like this could be tough. but we have someone here who can help minimize the damage. jim cramer and 6 stocks in 60 seconds. he may just give you the lift you're looking for when "squawk on the street" returns. opportunities aren't always obvious. sometimes they just drop in.

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all right. it's that time we're going to go through 6 stocks in a minute. let's start off with anheuser-busch. >> goldman sell to buy and that means they've got something proprietary. february 6th is when they report and i'd be a buyer. >> sprint is up after better-than-expected earnings. >> this is not an earnings story but they are trying to make it one. >> consolidation, of course, continues to be important. cheniere, what do we got? >> this is probably the largest project going on in this country right now which is the liquefied natural gas export and they continue to get approval after approval after approval. they have a four-year head start on anyone. >> i'm so happy to see boxel jet. >> it's one of the 3-d printers

and people are making a stand with the 3-d. i continue to believe that this group is other than stratus is dangerous. >> dangerous. here's the name i don't really hear very often. >> this is the next one. we did the regeron when it was $5 billion and celgene, this is a fantastic number. another cancer drug possible great stuff, $5 billion market cap. >> and finally let's talk about crocs. >> i don't want to get in front of this one. >> notice shares of deere are down. you said comedy to tragedy. >> comedy to tragedy. the shakespearean tragedies they can be very sad and this is -- >> it was a really good number, so why down? >> richard iii started good. because ag's not good. it's an ag stock not a construction stock, but, remember, this is a company that is really leav lly levered to t of commodities and levered to farmer wealth and some people

think it's leveled off. >> no "mad" tonight. we've got curling. he and i will be here tomorrow regardless of how much snow is on the ground, right? >> you think i care about that? i got my mucks and north face. >> all right, simon, i know you'll take a hotel room. >> i am. i'm booked in already. how do you follow that? we've got news in the next hour, donald drapkin will talk about cliffs naturals. the ceo of expedia will be on the program as well. and the former new york governor george pataki on why he is now lining up against internet online gambling at the federal level. [ male announcer ] we all think about life insurance.

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we're 16,000 on the dow and the roadmap starts with the market, five-day winning streak following the yellen testimony before the house panel. can the momentum continue? and cliffs popping on the news that drapkin is backing his own candidate for ceo. and he'll be joining us to tell us about it. from online booking

agencies, expedia bouncing back and the ceo will join us for an exclusive interview. but we start with the markets. take a look as we speak. five straight days of gains continuing to push higher following fed chairman janet yellen's testimony. she goes before the senate banking committee tomorrow. we're going to see whether these stock market gains will continue. with us now joining us on the panel here we've got the u.s. economics editor for "the economist" and the vice chairman and portfolio manager with aerial investments. janet yellen a celebration. markets greeted her very warmly. can it continue, though, and is the worst the volatility that we saw earlier in the year behind us? >> sure, it can continue. liquidity and easy money is always good for the stock market in the short term. this is not a new analogy, but it is like liquor at a party and it tends to make people happy in the short term. some people behave badly when

there's too much liquor and mr. facebook and mr. twitter and mr. tesla have probably been behaving too exuberantly and then there's always a headache the next day. but right now everybody's feeling very happy. >> i would say everybody's feeling very happy but, greg, to me i didn't get the easy money kind of vibe from her. sure, she was calm. sure, she wasn't worried too much about the impact of tapering, but the message was clear and that is the scaling back of quantitative easing will continue unless something changes drastically, would you agree? >> absolutely. in fact, one of the things i was most struck by this is a fed chairman who is best known as having dovish tendencies and yet she passed up ample opportunity to show that by showing no sympathy at all to the idea that the recent run of bad data we've had such as the payroll reports suggest that the economy is stumbling. she seems very positive about the economy and set a very high bar to backing off on quantitative easing. the worry i have is that that optimism may be misplaced. we're already tracking only

around 2% growth in the current quarter. i don't know how the fed gets to the 3% growth they expect for the full year. >> well, let me first come back to the point i think you were making about liquidity. and we've got a lot of the bulls -- a lot of the bears are still in there, the action we're witnessing in the market is eerily similar to what took place at qe-1 and 2 you sell off hard and bounce back sharply only then to have, again, a significant decline in qe-1 and qe-2 it was 17% and 16%. the big question whether you are tapering on qe means that you don't get the decline. to the point that you were making earlier, when does the hangover kick in? >> you know, unfortunately my opinion is nobody can make that kind of short-term call. there are no clocks on a wall like this. so, all you can do is say is the market fairly valued or overvalued.

and i would say we're right around fairly valued. the short-term liquidity, the continued bond purchases. we still have quantitative easing going on. it's racmping down, but the fed is very, very accommodating. >> to the point that greg makes, it may be fairly valued, but what is the risk to the valuations and to the growth? you know, can we see the future well enough? >> yeah. so, that's a good pioint. that would be what would derail all of this. there's a reasonable expectation of slowing in china but nothing dramatic. a reasonable expectation of improving europe. if one of those three things turns the other way, then clearly there's too much positive in the market and we could have a tough run. >> greg, to me one thing that stood out from the janet yellen testimony is that she doesn't seem too worried about what's happening in emerging markets. it wasn't mentioned in the january fed meeting. she said it doesn't represent significant threat to u.s.

growth right now. is that right? should u.s. investors really not be worried about what is happening in emerging markets? >> you should be a little bit worried. because first of all, there's a grand old condition of contaging in emerging markets spreading to u.s. markets. and they tend to flee in all categories not just the most directly affected countries. that said the reason janet yellen isn't getting worked up about it is the risk to the u.s. economy is pretty minimal. i was pretty struck in the monetary policy report that was released alongside her testimony, they went into the emerging markets in some detail and they basically concluded by saying, look, they have a lot of fundamental problems in these countries and they need to work on it especially because of global investment community is watching them. >> yeah. >> it wasn't anything like -- >> putting pressure on them. >> this is all your problem to fix. >> hey, charlicharlie, you saw procter & gamble lowering forecast for sales and profit on some of these head winds,

currency volatility, venezuela was a big part of that story, but do you need to stay away from the multinationals because of this type of threat? >> it depends where they have exposure. europe we think is getting better. european exposure is a positive here. clearly if you've got venezuela or god forbid turkey exposure, that's going to be tougher, but we would say that europe is a positive for u.s. stocks right now. china is the big uncertainty. >> finally, greg, janet yellen says unless a notable change in the outlook for the economy happens, would she change the path of the taper, what is a notable change? what would it have to look like for the fed on change course here? >> i basically think when they go into the march fomc meetings and the fed presidents and governors round up the forecast, you've got to see a significant growth down from the 3% growth to somewhere between 2 1/2 to 2 3/4 percent. i think what investors have to

get their heads around is the fact that the fed faith in the ability to help the economy with more quantitative easing is diminished and they're more worried about the costs in terms of inflating bubbles. and so even if they thought that the economy was softer than expected, they're very, very reluctant to ramp quantitative easing back up. so, if you are waiting to get bullish again because it's going to be another round of quantitative easing, i think you'll be waiting a very long time. >> like how she said monetary policy is not a panacea. good to see you both, greg and charlie, thanks for that on the markets. let's send it over to dominick chu with a quick market flash. >> check out shares of owens corning the building materials maker posted better-than-expected fourth quarter earnings. the company also announced its first quarterly dividend in 14 years. a programming note owens corning michael thaman will be live on "street signs" right here on cnbc. so, we'll all tune into that one.

>> yes, more conversation there. interesting news out of the auto industry, new data saying that for the first time since 1998 vehicle dependability has dropped in the united states. simon, i know that we're going to go to phil lebeau in a moment, but it's interesting because they do break this up among brands. it will be interesting to see which brands were safer than others. >> dependability? >> dependability issues, i think problems. let's bring in phil lebeau with more. are we talking about safety here, phil? >> we're talking about complaints that people who own 2011 model year vehicles have registered with jd power, more than 41,000 people filled out forms saying here's what i don't like about the vehicle i'm driving. these may not necessarily be problems that indicate the car's going to break down or there is imminent safety issues but they are issues for people who bought a 2011 model year vehicles. it is down for the first time in 16 years according to jd power. owner of 3-year-old vehicles in particular complaining about engine issues. especially those who bought four

cylinder engines. they are saying they are not performing the way expected. here's the leaders in terms of vehicle reliability. lexus leads the way. lexus for the second straight year is the leader and it has extended its lead followed by mercedes, cadillac, acura and buick. cadillac and buick in the top five, dependability for 3-year-old mods is improving, they really stand out among the big three. all four of the gm brands rated as having fewer problems than the industry average overall. as you take a look at shares of general motors, it is important to know that mary barra the new ceo of general motors has made dependability, reliability one of the things she wants to be working on primarily at general motors. she was in charge of vehicle development and when she was in charge of that, she made it very clear that vehicles have to be top notch, not only in terms of styling but also in terms of dependability and reliability and as you can see from the latest report the 2011 model year vehicles from gm are

holding up relatively well compared to the rest of the industry. guys? >> does that automatically translate to sales, phil? i appreciate it's a good title in that, but can you monetize it? >> over time you can. if you look at who leads this list, they tend to be those who do very well in terms of sales. look at the bottom of the list, are they selling cars if you are a brand at the bottom, sure they are, but not doing as well as those at the top. >> phil lebeau live from chicago. up next activist investors strike again, this time it's cliffs natural. donald drapkin's casablanca is stepping up its fight at the mining company and he'll join us next. that's right for you. with easy step-by-step guidance, we're here to help you turn your dream into a reality. start your business today with legalzoom.

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casablanca capital one of cliffs natural resources largest shareholders is coming out and banking gonsalves to be the next ceo and it tends to nominate a ma majority of the board to the company. donald drapkin joins us on cnbc. always nice to see you. your firm owns 5.2% of cliffs.

my question simply is why should shareholders give you the right to choose the ceo and control the company when you only own 5.2% of it? >> well, david, that should be obvious as i said on cnbc last week. this company has been asleep at the switch for the last three years. the executive chairman has lost 80% of the value of the stock since 2011. there is no ceo at the company yet. he lost about the same amount of value at his last company. and these guys were completely asleep until we showed up. we have chosen and i've been lucky enough to find a gentleman that is willing to take the task of being ceo of this company over who has provided first seven times and then five times value in metals usa. knows the space very well.

and is an extraordinary talent and will pick a better board and shareholders can make their minds up as i said on cnbc last week, this is a no-brainer. we didn't start this fire as billy joel would say. we're only trying to put it out. >> my colleague, jim cramer, has followed the company for years and i know he's got a couple of questions. jim? >> i know you wanted a suspension or maybe some sort of reconfiguration of bloom lake. the company just gave you that. why not just declare victory and move on here? >> because there's -- the cost cutting and the other things that can be done at this company both on the sales and cost side, jim, are enormous. this is just one little baby step that anybody looking at this balance sheet would have -- would have been able to do. my pet canary, they should have done this a long, long time ago. it's the least they could have done. there's so much more value in this company, jim.

>> here's my problem, donald. i follow valet closely. they've streamlined and taken costs out, in the end they are stuck in a business called the iron ore business, it is a terrible business. why will cliffs natural be able to triumph in a world where valet i believe has higher quality, i know it can be argued, iron ore than you? >> well, for one thing as you know very well, jim, cliffs has a natural advantage in the great lakes region. so, its pricing power is greater because it doesn't have the transportation costs everybody else has. we've run our models with iron ore going down significantly and you still get a tremendous increase in the share price of this company. they have spent hundreds of millions of dollars each year on exploration, development which has produced no value whatsoever. they've wasted $5.2 billion on

bloom lake and they were going to spend another billion three. there's cash flow and cost savings all over this company. and if iron ore goes down, it will hurt them less than everybody else. they are not a proxy for -- i'm sorry, jim? >> why should we be so sanguine about the american steel industry and canadian steel industry given the fact that the chinese are flooding us with their own exports? >> i'm not asking to be sanguine about the steel and ore industry. what i'm asking you to be sanguine about is the prospects for this company. there's money lying around all over this company. people are still going to buy iron ore, the question is can you get it down to the cost structure where they are coining money and there are a lot of assets in this company and a lot of things that can be done to increase shareholder value. this company would have done nothing at all if we hadn't shown up. >> donald, are you confident that you -- you know, one -- part of your proposal is to

convert the u.s. assets to an mlp, are you confident it will be accomplished and accomplished in a fairly tight time frame? >> we've -- we've done a lot of work on that. we think it can be done. but we didn't have lorenzo at the time and lorenzo's an extraordinary executive. who knows value very well,s a jim pointed out. and knows the business very well. so, we will, of course, re-examine it when we get in but we still think it's a very viable option for the company. >> and in terms of management in their discussion with you, has there been any at this point? >> no. despite the fact that these guys said they would have significant discussions with us, they sort of gummed us to death. came out with this announcement without telling us it was coming and have had no meaningful dialogue with us. i have to tell you, these guys are asleep. >> well, that seems like a decent place to leave our

conversation, donald, to be continued, of course, donald drapkin, thanks for joining us. appreciate it. >> okay. david, thank you. >> donald drapkin from casablanca, 5.2% owner of cliffs natural resources trying to take control of the board and offering that new ceo. sara? >> interesting to see how the company will respond. up next carl's live from sochi, testing out those controversial snow conditions. how did he do? >> reporter: on track for the warmest weather in the history of the winter olympics. how does that affect the snow on the in the? wh the mountain? we'll talk about the slushy snow and the warm temperatures and how it affects the races when "squawk on the street" continues. [ male announcer ] the new new york is open.

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we may be having historic ice storms in this country. meanwhile the winter games are under way in sochi part of russia they often call the riviera known more often for its beaches than snow. in fact, it is 60 degrees there today and our very own carl quintanilla joins us live. it's warming up, right, carl? >> reporter: it's been a very nice series of days here, simon. 60 degrees the high of the day. i want to begin with a spoiler alert. some people don't want to hear the results as they happen but others do. women's hockey canada versus u.s. just ended in the past few minutes and canada does pull out a victory, 3-2. both teams are guaranteed spots in the semis. but the winner, of course, canada, does get a higher seed on monday and canada, you might already know, is the defending gold medalist from vancouver. a tough loss there by the u.s. the u.s. really has to get some stuff going here maybe with

davis as he speed skates tonight. speaking of tonight we'll also get the women's downhill and there's been so much discussion, guys, of the warm weather, of the slushy snow conditions up on the top of the mountain, so we asked ourselves what's the effect on some of these alpine sports? well, for that we went directly to the source. ♪ we're on the gondola heading up the mountain. we're on track for the warmest weather in the history of the winter games. that's what you get when you hold the games in a subtropical area. up at the very summit, there is some snow obviously, but on the way up, a lot of what you see is just bare dirt and rock. where there is snow, the warm temperatures tend to soften the snow, melt it. that changes the skier's strategy, even the types of skis they use. for example, warm weather means it's easier to turn in the snow, but it also slows you down. that means skiers need to be more aggressive about picking up

speed. especially in the downhill. different sports have different words for snow like this. in the half pipe community it's called mashed potato. some americans like julia mancuso say they actually ski better in these kinds of conditions. one things for sure, it's the best assignment ever. whoa. whoa. ah [ bleep ]. so, you saw how long it took me to stop. i mean, that's how icy the snow is. guys, i mean, it was an impulse decision to go up there. i didn't even have ski pants on, but it was a nice way to sort of bring you some flavor of what it's like on the top of the mountain. i don't even want to compare my skills to simon's, because i have a feeling, signe simon, yo like jean-claude of the als. >> when we do ski school, i'm

the last to arrive. people say, are you up for this? i would never guess that carl quintanilla would ever have to have a bleep, but you had a bleep there, carl. >> reporter: yeah, my thanks to our amade izining photograph, b not only skiing backwards but keeping me in the frame. i don't know how he did it. and he also helped me get my foot, my boot, back in the ski. thanks to bill. >> you are looking very "gq" and fashionable throughout the whole thing, i don't know who goes skiing in jeans, but it looks good. >> reporter: as i've been saying on twitter, i'm from colorado, we ski in shorts, jeans is no big deal. >> you cut a good dash, thank you very much. we'll see you next hour. carl quintanilla from sochi. expedia up 20% in the just the last week building on the momentum from its fourth quarter results. will the trend continue? the ceo of expedia will join us live to talk about that move and

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welcome back to "squawk on the street." check out wellcare health plans, posting weaker-than-expected fourth quarter earnings as medical benefit expenses overshadowed sales growth and the stock is down about 6% in early trading. back over to you guys. >> i'm just watching the markets, simon, it looks like

the dow jones industrial average did flip negative. s&p 500 holding on to gains, we're coming off four days of wins for the s&p 500 and that's the best winning streak since more than a year. so, it's been pretty strong rally thanks in part to janet yellen. also watching some of the sectors -- >> you like yellen. you should say that, you love janet yellen. >> i think she did an amazing job and did what she set out to do is emphasize the consistency in policy from ben bernanke to her and investors liked her as well. breaking news out of the new york mercantile exchange. >> good morning to you, the department of energy coming out with its weekly inventory report on crude oil supplies, and actually what we're seeing here is that build in inventories that is much larger than expected. a build of 3.3 million barrels. traders were looking for about 2 million barrels. we're watching the prices here and they are holding steady. a couple of reasons for that. as you mentioned the equity market the have been on fire

even though it's a muted session this morning, that has driven the price of crude up as well. but also some traders saying a report out this morning on crude imports into china also boosting these prices and this is a technical trade at this point as well. these prices well above $100 and gaining momentum when they were in the high $99 range. but also some traders are saying that we need to watch the spread very carefully, the spread between brent and west texas intermediate. that is closing in, showing that there's a little bit more demand for that west texas intermediate product. just want to talk briefly about the gasoline and distillate numbers, those are impacted by the weather. we are seeing the gasoline draw of 1.9 million barrels a little bit more than expected and the distillates a draw of 700,000 barrels also in line with expectations. guys back over to you. in the meantime, it has been a stunning few sessions for the giant online travel agencies after expedia was able to come

out with its quarterly results which showed a big surge in hotel bookings, bookings actually up 21%. and that's lit a fire under the entire industry. joining us now exclusively dara khosrowshahi who is the president and ceo of expedia, he joins us from washington state. it is also fascinating to watch what expedia is doing. one way or the other there's always news. why were the hotel bookings so strong? is it because of this new deal you've got for customers where they can book and pay now or book and pay when they leave the hotel? >> well, i think first of all, it's about the travel business. the travel industry in general last year grew 5% well in excess of gdp. you got more consumers coming online and mobile is even accelerating that, so you've got a great industry to be in and we've been introducing great new products such as expedia traveler's preference that does allow consumers do they want to pay up front, do they want to trust us with the credit card

data or are they comfortable trusting hotels with their data as well? giving consumers that choice has definitely accelerated our bookings and has really improved the consumer experience to the extent they want that choice so it's been a nice time for us. >> the myriad of relationships continues. the first quarter that you had your new deal with one of your major rivals travelocity. what are you doing there? are you running the back office for travelocity? is it basically a technology deal or is it more? >> it really is a technology and also supply deal. so, when you come on travelocity, now it's our back-end technology that's powering the travelocity site. we think it's a greatly improved experience. and the early results have been very good. and also we're powering travelocity with our worldwide supply platform over 200,000 hotels, great last-minute deals, great deals in general and so far it's been a nice win/win for both companies.

>> i said it's never a dull moment with you guys. two or three weeks ago, of course, your stock was under some pressure because it was reported that your page rankings were down 25% on google. and the commentary at the time was that google was punishing you guys for the way in which you were still using a techniques which artificially boosted you up the rankings. i have read the conference call transcript. you wouldn't talk to analysts about it then, so i doubt you're going to comment directly now. but the fact still remains that you are a $10 billion company that can be infected by a decision made by google. that may worry people. can you address that concern? >> i think if you young it judgt by news reports, there have been news about google that could drive us out of business. the relationship with google is very, very strong. our transactions through the

google channel both through the paid and organic basis are up on a year-on-year basis. so, the fact what this report was talking about 25% decrease, that's just not true. we're not seeing it. we're always looking at our practices with google. we're always in contact with them so we want to make sure that we're doing the right thing and we're really confident that we are. and if you do the right thing, then the business comes to you. >> thanks for addressing that. i'm curious about the impact of the weather. we've seen thousands of flights canceled. we're all bracing for another storm here on the east coast. how does that impact your business, travel bookings? >> well, it certainly increases the number of cancellations that come through. trips that might have been planned, have to be canceled. and it also puts a lot of pressure both on the customer service of the airlines and ourselves so we have people out there 24 hours a day, trying to make sure that the customer experience is as best as it can be under these circumstances. you know, what i tell consumers is always come to our sites to check for travel advisories and

try to use the online tools to the extent that you want to make changes to your travel because they're much easier to use and much faster. you don't have to be on hold. >> more specifically how does it affect the fees with the cancellations? do you still get the fees and do you have to update investors on what that will mean given how much bad weather we've seen? >> you know, expedia doesn't charge any cancellation fees. obviously suppliers sometimes have fees as well. in general it's a negative for the business. consumers are more involved as far as managing their travel versus booking their travel. when you do have the kind of global perspective that we do and the global coverage that we do, we're in over 50 countries, while it's a negative for the business short term and we hope that the weather gets a lot better, overall we're still very confident that we can grow through this. >> you know, dara, to read the transcript of the conference call which i would advise people to do, it's fascinating to see how many variables you're dealing with at the moment. yes, mobile is a big issue for you. yes, you are investing but you

don't monetize it so well for obvious reasons. it's not so long ago you lost a quarter of your market cap in two sessions because you weren't bidding properly on trip advisers platform the spinoff, we've discussed it before. but you still come back to this fundamental realization this is an industry that is in massive flux. can you really say cumulatively day by day building this business to a stronger ba is? because it seems to me that one of the variables can hit you from either side at any time. >> well, if you take a long-term perspective, then any investor who has been into online travel space over the past three to five years has actually made a ton of money. the fact is that there can be volatility in this business. the fast or the ones who are rewarded, the ones with the best technology are the ones who are rewarded and what you saw with us is we were hit by a significant change. we adjusted very, very quickly as a company. and we've had a great q-3. we've had a great q-4 and i

think we'll continue to have great quarters ahead of us. so from a quarterly basis can this business be volatile? absolutely. but a smart investor can take advantage of that and from our purposes when our stock went down, we increased the buyback levels. we believe in ourselves. we bet on ourselves and so far it's been a really great bet. >> before we let you go, i should mention, of course, that you guys are still riding high from the seahawks success in the super bowl and i think your staff actually dressed up the company headquarters in celebration of super bowl and the seahawks' victory there. do you fundamentally see your business as a creative technology business or is it more about doing deals with hotels? >> you know, i think it's both and that's what makes this company special. there's this technology aspect which is absolutely forward which is creative and it was the engineers who put that together and then there's this relationship business, part of

our business. we are in the travel business. i think we're selling the best product in the world and when you put those two together, you get a really potent mix and that's what makes our employees and the folks who work here really, really passionate about the company and we want to translate that passion into great services for our customers. >> it's good to see you, dara, thank you for sharing the time with us. dara khosrowshahi from washington state. >> thank you. the coalition to stop internet gambling backed heavily by sheldon adelson officially launches its campaign today with a very interesting list of partners including former new york governor george pataki who is the co-chair of the group and he'll be joining us live. to tell us why he's so against online gambling, that's next. real estate in hong kong, and the optics industry in germany? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average.

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the coalition to stop internet gambling that is backed by sheldon adelson kicks off today with the announcement that 39 organizations have actually joined its efforts to ban online gambling. the launch follows the release of the coalition's first web commercial monday all part of a six-figure awareness campaign. here with us for a first on cnbc interview is former governor of new york george pataki who is the coalition's national co-chair. it's good so see you. i'm curious how you got involved, steve wine and sheldon adelson, where do you fit in? >> it's nice to be on with you, sara, and i don't pick fights with the moguls at all, but it's my interest to prevent online gambling from exploding across this country. i think it will have a tremendously impact on families. it will have a negative impact on jobs and particularly from my standpoint i'm very concerned

about the ability of organized crime organizations and terrorist organizations and criminal organizations that are transnational to actually launder money and move money illegally. it's a tremendous problem. it's something the american people should debate before any change is made. i think it's just unfortunate that it is now apparently legal in some states are moving forward. >> but here is the counterargument to that and that is it's already happening. it's already a $3 billion industry happening offshore why not legalize it and regulate it and therefore protect the consumer and the investor and the gambler while doing that? >> first of all, you can't protect the consumer and the investor. to think someone sitting around in their college dorm or in their home at 3:00 in the morning after a bad night and deciding to put everything they own on double zero is a good idea just makes no sense at all. to allow this explosion of gambling -- >> but that happens at the physical casinos. >> sara, it's totally different. you have to make a conscious

decision. -- authorities, it's completely different from just sitting around in a college dorm at 1:00 in the morning and deciding you're going to play online poker or gamble. and with respect to the illegal offshore activities, my understanding is that they have been in significant decline over the course of the past five years. and to just say that because something happens illegally when we're trying very hard to monitor and crack down on it when we find it should be legalized when law enforcement, particularly the fbi is saying this will unquestionably allow transnational organized crime organizations to move and launder money, that is just not the right thing for the american people. >> but there are precedents to this. for instance, europe has more of a regulated industry, online gambling. there haven't been any major problems there and some states

are going through it as well. so, what exactly are you pointing to to determine that it perpetuates illegal activity and money lawndering? >> first of all, i'll point to the fbi who said unequivocally who said they believe this will allow tourists, particularly transnational criminal organizations to move money illegally. they have said it is going to be very difficult if not impossible to monitor this. and when you have it being done on a state-by-state basis without any input from the american people, changing the law that was in effect for 20 years simply by ruling of the department of justice, this is not in the american people's interest. it's going to strengthen crime, allow money laundering. cost jobs in casinos across the country that currently do exist. and i really fear the number of families, college students who are going to decide when they're feeling invulnerable at midnight to -- in their living rooms or in their dorm rooms go on the

internet and gamble, that this could have seriously economic consequences for them. the very least, sara, this should be debated by the american people and not changed after 20 years simply by ruling of the justice department. >> well, perhaps it will finally get its moment to be debated, because i know there are several commercials launching. i want to play a clip of one. there's big money behind the campaigns and the lobby groups. here's yours, listen. >> right now this reputable gaming interesting are lobbying hard to spread internet gambling throughout the country. if they get their way, gambling will be available in every home, every bedroom, every dorm room, on every phone, tablet and computer 24/7. targeting families, kids, the elderly. this isn't a game. >> it's scary stuff, i mean, you paint it to be scary for the consumers, scary for your college kids. can you really sustain this argument? is it the technological innovation toward the internet, isn't this a natural growth opportunity for this industry? >> not at all.

it's something that -- it's totally -- it's an industry, first of all, that has been highly regulated ever since it's been legalized. and initially as everyone knows it was just las vegas. it has since expanded. but when it has expanded, it has been subject to political debate and strict regulation. and in every instance i'm aware of you have to travel to a facility. that facility creates jobs. it is a destination. it is highly regulated at that site. and you can't simply sit around at 1:00 in the morning and decide, well, i only have half the rent money, i'll put it all in a poker game and see if i can pay the rent. that is not in the american people's interest. apart from the law enforcement issues which are enormous here. because all of a sudden you're going to be able to across the country as the ad accurately says 24/7 from your dorm room or from your living room be able to gamble. now, how do we expect law

enforcement to be able to monitor that in a way that prevents organized crime organizations, terrorist organizations, or others to illegally launder money? they say they can't do it. >> well, that's your side of the argument and thanks for making the case here on "squawk on the street," the former governor of new york george pataki is the co-chair of the group he's with sheldon adelson, battling this online gambling. we did get a statement, by the way, from the other side by mike oxley, saying american families including children would be less safe online should congress pass this online gambling ban. the risk of exposure to identity theft, fraud, even money laundering on unsafe, unregulated overseas black-market websites is serious and ignoring that black market rather than addressing it, will only allow those markets to continue to thrive and make us all less safe online. two sides of this argument set to go national in a very big way. still ahead on the show, did you know that there's a tablet

for just $30 that's on the market? so, what do you get for a tablet you that can get for 30 bucks? walt mossberg will join us live to tell us what he thinks about it a little bit

the street." and wednesday's edition of the santelli exchange. you know, during the shutdown in the first part of october the big story, of course, big story everybody all over government shutdown, it's going to be horrible, the economic data is going to suffer. this is going to be the linchpin for the 2014 midterms. not! you know what? i went back and picked out in the santelli exchange where i compared people that go along everything in politics to boards, a few in washington on the more fiscal conservative side that try to do, in their opinion, the country a favor by trying to hold out for some issues regarding the affordable care act with regard to the shutdown. let's play a clip of that day. >> many in washington that are boards think cruise control is steady as she goes in every respect. then there's a group that is

against cruise control. one year from today my guess is that the biggest variable affecting the polls will be how well or not well affordable care act is going. all right. well, you heard it. i still think that's absolutely spot on. as a matter of fact, i think yesterday and last night the vote in the house really underscores that. it's an election year. they want to keep it on obamacare, whether establishment pol tirks is a good thing or bad thing that is what happened. i'd also like to read a clip. this is from the website cbo doug elmendorf said, we're going to lose a couple of million jobs. he underscored that on the website later because there was so much talk about that. people who leave a job for reasons beyond their control and other people who choose not to work will work less. if the threshold to get subsidy for obamacare is here and people start to approach it from this standpoint, once they cross it, they end up losing some

subsidies or whatever the rules of road are regarding obamacare. but if they want to keep the subsidy and choose not to work, that's okay. i disagree. we're splitting hairs because the economy is going to get a ha haircut if people don't work. end of story. here's a different issue. yesterday to president also put a delay, another delay, i think the 27th or 28th delay. why is it important? mr. taylor in testimony yesterday at the fed meeting on the house side gave us the answer. it's about rules base because, you know what, whether it's the fed or whether it's rules of the road in a game or an olympics, once you lose rules you lose all order. and when you lose order you lose investors. the economy is going to be spongy until we get back to the rules of road. back to you, sarah. >> all right. rick santelli, thanks very much. tech bust protests. they're not just for san francisco anymore. demonstrations against buses t that ferry tech workers to their

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which transport tech workers have become more commonplace in san francisco and now the protests are popping up in seattle, as well. josh lipton is live in san fran with more on that story. good morning, josh. >> yes, sarah, we're here in san francisco where tech whizzes are now boarding private shuttles bound for google, apple, facebook. a few blocks away we talked to community activists demonstrating against these private shuttles along with other protesters. tony says the problem isn't just the buses but the broader themes of genderfication. >> the buses really are kind of emblematic of this class, this privilege that people have. i mean, are they too delicate to take public transportation? i take public transportation all the time. i've lived here 50 years. i've taken it 45 of those 50 years. i turned out just fine.

>> san francisco is booming but that wealth has created tensions in the city. well paid tech workers moved to san francisco and the cost of living in the city has skyrocketed. home prices and rents have shot higher. many long-term residents of the city have been forced out of neighborhoods they've lived in for years. evictions are up 40% in just the last 36 months. the business community will counter that. home prices are surging but they pin that on the increase on the lack of housing inventory here in san francisco. jim lazarus of the san francisco chamber of commerce makes another point. he says, tech is a job multiplier. meaning every well paid engineer is supporting restaurant, retailers, and personal services. big tech says it tries to be a good neighbor to the city. google points out to the millions it donates from the profits. it has in some sense deepened that divide between tvs and tv notes. we're going to see if there's not common ground between these two to ease that tension.

guys, back to you. >> sign of the times, josh. thank you very much. josh lipton live from san francisco. okay. let's get to it. here's what you might have missed if you're just tuning in. >> welcome to "squawk on the street." here's what's happened so far. >> i think in a lot of ways this could only be the middle innings or what could be one of the longest bull markets in history. we can't predict how long this is going to last but i see plenty of reasons why the market could still advance double digits from here. >> we thought she was more dovish. >> they think with the market loves the accommodation that we've seen and i think that if there was anything that would indicate, she would be less accommodative than bernanke, that could scare the markets. they love this money. >> the main thing that you need to know, up 10% is they brought back a lot of stock. david, how much of s. this stock going to be down today? net sales decreasing.

it's up two points already. that's the prism. it's the happiness prism. >> amazon is no longer the underdog. it's going to take more hits, which is why they want to promote something like this. adding 2500 jobs. that is great. >> there it is. opening bell. >> these guys were completely asleep until we showed up. we have chosen and have been lucky enough to find a gentleman that is willing to take the task of being ceo of this company. this is a no brainer. we didn't start this fire, as billy joel says, we are only trying to put it out. good morning. we are live here t at post 9 at the new york stock exchange. let's get a check on markets for you. little changed here from the dow and s&p 500 and nasdaq. dow in negative territory but really not much movement here. s&p 500 managing to stay green. coming off of four straight days

of gains. that's the best winning streak in more than a year. we'll see if we can make it number five. and the nasdaq also positive. by the way, in terms of industry, tech turned positive year to date this morning. shares of owens-corning are rallying this morning. earnings that the building materials maker beating the street helped by a return of profitability for insulation businesses. meantime, we're watching shares of amazon. slipping this morning after ubs downgraded the stock to neutral citing seasonal trends in amazon's latest earnings report. the company announced it will hire 2500 new workers at a fulfillment centers around the country. here we go. this is what's coming up. in this hour of "squawk on the street," the manned who shook up the bond world is today making big calls on bond stocks and a whole lot more. jeff gundlach will be here in an exclusive. plus, some are already calling it ice pocalypse and

threatening to bring snow and report levels to virginia and carolinas. we will go live on the ground in georgia to bring you the latest. if you're in the market for a new tablet, how much do you think it will cost you? you you might expect to pay, i don't know, a few hundred bucks. but sprint is now selling a new android tablet for $30. the one and only walt mossberg will tell you if it's worth your time this hour. but first, let's kick it off with the markets. stocks now as you can see mix e following four straight days of gains. markets acting favorable. day two starts tomorrow. she'll be before the senate b k banking committee. let's bring in executive director and global market strategist with jpmorgan asset management and elan, financial reporter with "the washington post." joe, first to you. markets seem to be celebrating, janet yellen, the next fed market is not until march 18th

and 19th. is this going to be a fed driven market until then? >> i suspect over the last few days we have seen investors on hold waiting to see if yellen is going to come out with surprises. given the fact there weren't any surprises she stuck to the script on this one suggesting that the pace of monetary policy isn't meaningfully changing from bernanke's era. as a result of that, investors are a bit more relieved and markets can move higher from here. >> transparency has been so key with the federal reserve and for investors for wall street. did she give us the transparency? did she give investors the transparency they needed? >> well, i think if there is any surprise out of the herring it was a how long it was, four hours. really a marathon. and i think that should put to rest any questions of whether or not she has the metal to stand up to an antagonistic congress. after four hours of speaking about monetary policy and banking regulation, if you didn't find what you're looking for there, you're not going to hear it any time sgloon joe, i'm struggling to see why it's so dovish.

what did she say that is so dovish? surely the taper is on until the end of the year. i'm not sure this rally has anything to do particularly with yellen. we didn't have any upset from yellen. i would have thought got much more to do with the fact the house republicans have decided that they're going to increase the debt ceiling to 2015. >> i think it's a combination of things, simon. you're right. it's removing a little bit of the uncertainty, of course. there was concern about yellen. is she going to come out and surprise the markets. that didn't happen. concern around the debt ceiling and we appear to be moving in the right direction. there's a lot of concern and chatter over the pace of economic growth. some of the numbers we've seen recently haven't necessarily been all that bad. i think as you continue to peel away the uncertainty, investors can then focus on the underlying fundamentals. for that reason, markets can move higher. >> the unpeeling process, let's be clear, is the fed is normalizing policy. the printing of money and the forth feeding into the economy is going away. >> yeah. >> and in return, they are

relying for the moment on guidance which is very, very wishy washy. there's not a lot to hang your coat on. >> i would agree with you that the fed is trying to move you back towards normal monetary policy. one thing she did make clear, as bernanke has done in the past, is that the labor market is still not at a point where we would feel comfortable tightening monetary policy. i think this really is where they're trying to make the distinction between tape erg and tightening. the fed's balance sheet is still going to expand over the coming months. it's just going to be expanding at a slower pace. as for raising interest rates and trying to tighten monetary policy we're just not there yet. i think the fed continues to be accommodative and that, of course, is part of what investors are looking at. >> there's a lot of talk about the yellen put, the bernanke put, the greenspan put. this idea that the central bank will be there in case the gyrations are too wild and too painful. do you think that was affirmed yesterday? >> well, i think that what she tried to make clear was that we're not going to -- they're not going to be hiking rates as soon as we hit that 6.5%

threshold they set out before. she said it very clearly saying, the unemployment rate is not the only number they're going to look at. they're going to move back to sort of more vague forward guidance. one economist called it a forward suggestion now instead of forward guidance. that should give them t. markets confidence that the fed is not going to let this recovery stumble and is going to ensure that the economy is actually in a stronger place before it starts to hike rates. >> all right. we will see. it's the beginning of a new era. good to see you both. >> good to see you, too. historic storm is bearing down on the south threatening to bring tons of ice and snow to parts of georgia, the carolinas, and virginia. the weather channel's jim canner to is live with us now from augusta, georgia with the latest. how is it looking, jim? >> simon, we're basically encased in ice here. look at this tree behind me. you can see the icicles dripping from it. of course, looking up at it we've probably got quarter to half inch of ice that has accumulated on here.

that's where we had rain earlier. a lot of this is before sun rise. since then it's been all sleet. sleet doesn't accumulate on the trees and power lines. we were hoping for the main event to be sleet but unfortunately we are starting to go back to rain now. that's a bad thing because that means it's going to continue to accumulate on the trees. the roads are already slush, as you can see in through here. we're going to have additional power outages so far in the state of georgia we're approaching 100,000 customers. that could easily be 300,000 before the end of the day. and this will be one of the bigger ice storms we've dealt with in many many years. we're right here at the river walk in augusta. savannah river here off my left shoulder and the other side is south carolina. look at the waves from the wind. you can see the wind pushing across the river here. so that's an additional prorks sim simon. we've got a chance to take the ice that's fallen and the additional ice that's forecast and blow these trees that are encased in ice around. and that's just going to cause them to come down. you don't need as much ice on the trees especially if the wind

kicks up and it could be 30, 40 miles per hour here. epic delays out of the busiest airport out of the world. 75% of the entire stock of planes not coming in and out of atlanta today. charlotte is 50% to 60% right now. that's going to be a huge backlog going into the weekend. the huge issues again are with power outages. we are expecting those to exceed potentially 200,000, maybe even a quarter of a million people before all is said and done. sarah, we'll keep you posted here from the river walk in augusta, georgia. right now, though, temperature around 30 degrees. >> thanks for showing us that ice. we are bracing for another paralyzing storm here ourselves in new york. good to see you. stay warm. up next here on "squawk on the street," $30 can certainly bayou a lot of things including a brand new tablet. yes, last month sprint started selling its own android tablet for 30 bucks. the real question, is a $30 tablet any good? is it worth it?

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all right. have a look at the consumer staples sector. one of my favorites. one of the losers on the s&p 500 this morning, dom chu is back at hq with more on that. >> it's tobacco stocks leaving the sector lower in trading today. lorillard reported weaker than expected fourth quarter results. philip morris, altria down as well. philip morris beating expectations earlier in the week.

again, the tobacco stocks is leading the consumer staples stocks lower in today's session. back over to you. >> thank you, dom. delighted to see in our new weekly segment on "squawk on the street" walt mossberg will be joining us to give us his take on the newest tech products that you need to be paying attention to. today he's focused on the tablet that's being offered by sprint for a price tag of just $29.99. so it's cheap, but is a $30 tablet actually any good? let's ask walt mossberg, so ko director of re/code. we have a constant sharing partnership with re/code. what do you make of this tablet? >> well, you know, you kind of get what you pay for, simon. this is a very -- i decided to take a look at it because of the price point, as you point out. to be fair, you have to buy a two-year contract.

it is a phone carrier, after all. but the contract can be had for as little as $5 a month. so it's still a pretty low priced proposition. and, you know, i was prepared for a tablet that was not going to be anything as good as an ipad or the better google tablets. what i was not prepared for was a tablet that would not function very well. that's really what happened here. it kept giving me these messages that it didn't have enough storage and, therefore, it couldn't sync g-mail. i really had put very few -- like four small apps on it. so the company is -- says they're going to look into it and see what to do about it but i can't really recommend this tablet at any price even at $30. >> i guess -- i guess the argument -- this is a chinese manufacturer that is bringing it to market. i guess the argument would be, walt, it's not aimed at people like you and me that can afford

a more expensive tablet and have a choice. it's aimed at people on food stamps or aimed at people in emerging markets. that's presumably where they're coming from. to them, it might be worth the money. >> well, it might be if it worked. i mean, that's kind of what i was expecting to say after i tested it, it has a bunch of older technology that a sophisticated user in a developed market might not want. for instance it only has 3g phone service has a relatively low res screen, relatively lower battery life. that's fine. i agree with you. somebody on a budget, somebody that doesn't want to pay up front $200, $300, $400 up front cost, somebody in an emerging market might find that worthwhile. that's kind of what i expected to say when i tested it, except it doesn't work well. and when it doesn't work well, that's not helpful for the

person on, as you said, food stamps or in an emerging country. i would not rec men it just because they don't have the money for something bigger unless it worked properly. >> yeah, well, i've read many of your reviews over the years and this is kind of the worst when it just doesn't really work for basic functions. here's my question. i mean, if they're going to subsi doosu subsidize a tablet, why don't they just subsidize, i don't know, a google nexus, why not subsidize an ipad? >> well, i guess because the unsubsidized price is $170 just still considerably less than -- i mean, the nexus is $229. the cheapest ipad mini is $299. so $170 is pretty low. and they were able to get the

subsidy down to 30 bucks. i think that's why they did it. they also hope -- to be honest, i write primarily for consumers, john, but they are hoping businesses will buy these and maybe use them for one app or one function and lock down the rest of it and they can cheaply drib bite it to a bunch of employees. and again, i have no problem with that. i think that's all great. i think tablet prices should come down and are coming down. but it's got to work. >> i think it's interest that you brought up business because that does seem to be one of the battlegrounds for the tech companies this year, apple, microsoft. who's got the business or the enterprise tablet right now on the market? >> well, microsoft is making a tremendous push. they all are, as i said. i don't have all the figures handy but i think it's still true that most of the business and education distributions of

tablets are still ipads despite the price because of the huge variety of apps. this is something that i don't think people understand fully. and i think it's worth pointing out. one of apple's advantages, even though shares are slipping, they still lead. one of their advantages is they have made an enormous push to get apps developed that specifically are designed for tablet, the ipad, and they have now have about half a million of those compared to really, i would say, probably under 10,000 on the android side. so most of the android apps that run on these tablets are just stretched smartphone asp and that's okay. but on the ipad they can do more with the apps. >> you know, walt, i'm really looking forward to having you on every week. it's nice to see you. walt mossberg, re-view digital's

and re/code, nbc thankfully has a partnership. coming up, a lot has been made with the supposed great rotation from stocks into bonds, from bonds into stocks, that is. what is a bod king jeff gundlach think about it? plus, live to sochi to bring you an update on today's action on the winter olympics and whole lot more, next. (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.

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under way in sochi. it's been a pretty rough few days for team usa. our own carl quintanilla is live in sochi with more. even i was upset to watch shaun white miss the mark. >> the last couple of days have been rough. look at the medal count as it stards at this moment. norway is still very much in first place with 12.

then there's the u.s. and russia with seven each. germany had six. five of those were gold. we're going to have to find our mojo here. maybe it's men's hockey as se we see them start to face off against slovakia tomorrow. people try to draw distinctions between a country's gdp and the number of gold medals that it wins. so we got to thinking, what about russia's economy? it's a giant. we know that. we took a look at where it's been and where it's going. russia's gross domestic product, a measure of how productive the country's economy is, rings in at $2.4 trillion, making it the eighth largest economy in the world. but after three years of steady growth around 4%, russia's economy is slowing and xhiszs are now projecting gdp growth 3.3% for the foreseeable future. that's a far cry from the 7%. as the world's top oil producer,

growth over the decade has been fuel bid the energy markets. the country pumps 9 million barrels of crude oil a day and its massive oil reserves are estimated at 80 billion barrels. a lack of investment in theinfr drive it into weaker territory. for now it's mostly unscathed by the current slump. unemployment hovers around 5.4%. the cost of living, however, is on the rise. inflation recently jumped to 6.4%. a fact that might not impact russia's 111 billionaires but leaves little comfort to the nation's 18 million people living in poverty. and there is that middle class. the country is really trying, simon, you will appreciate this covering tourism, to get the russians in the middle clasdss try to take their vacations in russia, that's part of what sochi's strategy is all about

long term, filling the hotels with people from this very country. as for tonight, they got some great action. women's downhills coming. four gold medals are going to be given away tonight. and women's snowboard, men's speed skating and figure skating pairs. so a lot of action still to come. and, of course, curling on cnbc which begins at 5:00 p.m. >> i would have thought the opening ceremony would have driven straight to the emotions of the russian people. that's what it was clearly designed to do in part. i guess that in itself might bring people to sochi. it will have a kind of a tale to tell, if you like. >> yeah. i would agree. i mean, that really does set the tone for what the country's trying to get across. the other thing is, too, because there is so much concern about security and really going, we've seen putin at the open and at figure skating. he's visited us a striia house and visited china house. he's trying to be as visible as

he can to prove to the world really these games are going off without a hitch. >> we look forward to an interview with putin on tomorrow's show, carl. for the moment, thank you very much. carl quintanilla live from the winter olympics. don't change the channel near. doubleline ceo jeff gundlach is coming up. exclusive interview next. he will talk about bonds and also stocks and some individual trading ideas like twitter, apple, and google. plus, the bells are about to sound across europe. just a few minutes left on that trading. we'll bring you the european close after this short break.

we know we're not the center of your life, but we'll do our best to help you connect to what is.

the european markets are closing now. >> you will see green on the screen in europe today. we are higher overall. that's a six straight session of gains for the european markets. the upbeat data we had from china help ing there. if you look at where we trade i'd so far this year you will see from europe at the moment the climb back is, in fact, leading where we are on the united states. the earnings today were good. at least from the banks. remember when we thought they might possibly go to the wall? consumer banking do well there now. ing in the netherlands, again, it's banking unit very much doing the business. we may soon have in italy a new prime minister. the coalition may be changing there.

however, the bond market continues to ride high. in fact, yields in italy are now almost at an eight-year low. that's partly because, of course, the data is also so weak and manufacturing across europe today, the eurozone did disappoint. i want to take you to london and show you mark carney, the canadian that is running the bank of england. he is a thought leader among central bankers today. he scrapped the old guidance they have in the uk which used to explicitly link interest rate rises or a lack of interest rate rises to an unemployment threshold to 7%. hess ta he's talking about a new phase of guidance. it's complicated and it's fade. essentially says that rates are going to remain low for a considerable amount of time. but here's some quotes that you might see in the press tomorrow that will catch your eye. the objective, he said, is not to have forward guidance forever. and yellen will go to that. yell listen go to that here. no one, he said, is enjoying this period. overall, we're serene but not complacent about this recovery.

the pound is higher today. it's climbed a cent and a half, a cent 1/3 against the u.s. dollar. they obviously feel that is relatively positive for the uk pound. >> good quote, serene but not complacent. let's get a check on u.s. stocks. losing some of the momentum here. mary thompson on the floor with what's moving at the nyse. >> a mixed market now. traders not surprised. expecting a pull back in the wake of the four strong gains we saw on wall street. the dow jones industrial average just off the worse levels of the day. the nasdaq is showing strength thanks to the gains we're seeing in tech and telecom today. let's look at the ten-year because the yield on the ten-year note is approaching a two-week high. this ahead of the $24 billion bond option later today and, of course, in the wake of federal reserve chairman janet yellen's testimony yesterday who said the central bank is going to stay the course on its out like for tapering those bond purchases. quick check of the sectors. consumer staples are lower today along with materials, tell con and i.t., the leading sectors.

among the dow components, proctor and gamble. currency fluctuations. gains in caterpillar. it's benefiting from the strong a data in china. that, too, helped material stocks, the steel stocks, aluminum stocks. they're getting a bid from that good news out of china in today's session. another sector we're watching, take a look at crude oil because we did have a larger than expected bill in crude stocks. never the less, the price of crude is still very close to a four-month high. that's putting pressure on the airlines today. of course, because fuel and labor, their two biggest costs. lastly, end with procter & gamble, seeing weakness in con sawer staples. cigarettemaker reporting weak thaern expected results for the quarter. so its stock is down just about 6%. the dow is off 46 points. back to you. >> mary, thank you very much. let's pick up that oil theme and send it over to dom chu at

hq. >> simon, oil prices are moving higher boosted by expectations of increased global demand after opec raised the 2014 forecast and chinese data showed imports hit a record high. china's oil exports beat expectations with a rise of 10% from the same time last year and total imports jumped 10%. opec did raise 2014 outlook by 40,000 barrels per day. sarah, back over to you. >> thanks for the update, dom chu. up next, exclusive interview with the man who shook up the bond world. he's known for making big calls. he will be here to give us his take on janet yellen, stocks, bonds, twitter, google, apple. we're talking about jeffrey gundla gundlach. latte or au lait?

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coming up at the top of the hour, stocks going tort year's first five-day winning streak. could this be the end of the correction? we're going to ask tony dwyer, one of the most bullish strategist on the street. amazon shares dip on a downgrade. is jeff bezos' midas touch? two meks of the 1980 gold medal winning hockey team are here to talk sochi and stocks. all straight ahead at the top of

the hour. simon, see you then. listen up, david faber has a special guest. david? >> thanks, simon. as you know the ten-year yield ticking higher again this morning a day after janet yellen's testimony. and bond funds getting a boost from some of those moves. jeff any gunnrey gundlach is th doubleline capital. always a pleasure to have you. of course i want to talk about yellen but you know what, let me quickly share with you some talk i'm hearing on puerto rico. not to throw something at you although you can handle everything. give me your take on this. i know you're not muni focused but none the less this is a huge credit. very important in general to the municipal markets and bond markets. 2 to 3 million geo deal, 9% coupon to yelled 10%. would you buy it? >> it's not my cup of tea. i think it's going to be fine though for investors that are not of the faint of heart.

i think that at the end of the day, puerto rico will make it even if it's only because of assistance from the federal government. so if you really want to make some money but aren't afraid of losing a little sleep at night i think the pouerto ricoruerto ri fine but they're going to be volatile. my strategy and my kind of -- the way i deal with investments, i don't like that kind of volatility. the puerto rico bonds, i think, will make it to the goal line for investors that want to take that kind of risk. >> thanks for letting me get out a little bit of that news, of course, if they do come to the market they may not need to for quite some time. let's get to the broader bond market now, jeffrey. we heard from yellen yesterday. continuity, if, in fact, that is the case, and the fed really does end qe, for example, in 2014, who is going to buy the bonds? >> well, first of all, they are on path as everyone knows who reduce qe by $10 billion every

meeting as a base case. my suspicion, though, is that they will not end qe in 2014. there will be some reason probably because of market volatility to slow down the taper, even stop the taper, and maybe -- maybe there's a 50/50 chance to even have to go back the other way. but if -- answering your question specifically, if interest rates rise because of tapering of the qe and if also stocks do better than they've started out 2014, we've got something of a mini repeat of 2014, the institutions will be the ones that buy the bonds because the funding position of corporate pensions in the united states really improved radically in 2013 because beyond yields rose which is why they value their liabilities at and stocks rose which is a lot of their assets are invested in. if that's going to happen again as a hypothetical you would see corporate pensions in the united states with fully funded status

in many cases which would be overwhelmingly tempting to lock in. think of the you're a pension officer in the large corporation in 2008 and 2009, just how much indigestion and anxiety you had as you saw your funding status plummet and the markets have bailed out, particularly in 2013, and with asset gains in prior years as well in equities have bailed out the funding status of these corporate pensions. so there's a huge bid for bonds at yields somewhat higher than they are now. >> so above, what, above 3%, you think? in other words, they would basically be able to immunize their forward liabilities. where is it though? 3, 3 1/2? >> probably 3 1/2 to 3 3/4 on the ten-year to make that happen. it would have to happen, also, simultaneous with equities doing better. it's a possibility. i'm not sure it's the base case but certainly a possibility. >> right. what i heard you say though in your answer is a 50/50 chance we go the other way. why?

>> well, the world hasn't started out that great in 2014. i keep hearing about downgraded global economic growth from -- you just did a segment on cnbc about russia growth being downgraded. chinese growth being downgraded. i have a feeling chinese growth is going to underperform the downgraded expectations. it's sort of a miracle what's happening in china when you think about it. i saw a news piece just yesterday that talked about how chinese growth is now estimated to be about 7.4% in 2014. and that would actually amazingly be their lowest growth since the year 1990. can you imagine that? that many years of growth at 7 1/2% or higher? it's really amazing that the chinese authorities have managed to hold that amount of growth together. i mean, their gdp is up like 14 times in the past 20 years or so. and it kind of reminds me of like an investment firm that starts up. you know, it's like two guys in a bloomberg in a garage somewhere imagining $100,000.

and suddenly a year or two later they're super successful and they've got $10 billion under management. you start to worry about managing that growth. is the compliance there. they really have their controls in place. and you wonder how the chinese manage to do this with this massive growth and keep it under control. you know, a lot of people say don't worry about chinese growth. if it slows down to 7%, it's an autocratic economy and they will get it back to 8% or higher. and they have had it at such a high level for so long it makes me wonder why all of us are so fond of free market capitalism. if you can put an autocrat in place and ramp up growth to 8% or higher -- >> well, why don't we -- >> put an autocrat in place and get our economy humming at 8% rate. i think there's a downside risk of fairly substantial proportion somewhere. maybe it's not this year but there's got to be a entrenchment at some point. that's maybe a reason why we need to be worried. and, of course, there's that

shadow banking system problem that we all sort of loosely about for the last several of years. and up with of these days maybe it will be a problem. >> all right. they managed to move hundreds of millions of people from rural to the urban areas. but what i'm hearing you say is china is your main concern to the extent that if you see one out there this year that could really turn things around and send the ten-year yield back down and, of course, impact growth. correct? >> well, yeah. that's certainly an economic variable that's certainly important. but when it comes to bonds and what might make bond yields drop and i think they are going to drop. >> you think they're going to drop from here, really? >> i do. i mean, i've always thought entering 2014 that the risk was greater that bond yields would fall than rise in the early part of 2014. i think you should see the ten-year dip down to 250 or a little bit lower. i mean, it could go. there is a scenario that is plausible which is really interesting because it's so contrary to what people are thinking. and that is what if the bonds

start to rally and suddenly all of it underinvestment and short positions have to be covered? let's think about it. back in the 1980s when i started in this business everybody in the bond world owned treasuries. actually market time treasuries. and then starting in the '90s started to add other things to portfolios, junk bonds, throw in international bonds. and by the time we got to recent years, suddenly everyone was massively underweight treasuries in normal bond funds. etfs started to come into existence that leveraged negative bets, short bets on long-term bonds. and you have a new strategy that's called unconstrained where people buy credit and they leech out the interest rate risk by shorting treasuries. and then you have regulations that are encouraging financial institutions to own high more quality collateral on their balance sheets. when you look across the landscape you see underinvestment long-only funds, short positions in erkszt fretfe

need for investment in financial institutions. what if for some reason suddenly somebody actually wants the treasury bonds or they start to rally and the next thing you know all of these shorts have to be covered? what if there's redemptions from these short leveraged etfs and the shorts have to be covered? i don't think this is a 50% probability but i think it's at least 30% you could see something of a scramble into treasury bonds. that would take yields well below 250. i'm not sure that's going to happen. i give eight 30% type of chance. it's something you have to think about given the offside or tremendously skewed positioning. i mean, there isn't a bull in the world at the beginning of this year on treasuries nor was there a bull in the world on gold or commodities. and everybody and their brother said that stocks had to continue to go higher. and not much has really happened this year. but those consensus viewpoints have been wrong, marginally

wrong in every case. >> it is early, of course. but getting later for us. i want you to stick around. we're going to take a quick break. i want to stalk corporate credit, high yield and maybe even stocks with jeffrey gundlach right after this. ameriprise asked people a simple question: in retirement, will you outlive your money? uhhh. no, that can't happen. that's the thing, you don't know how long it has to last. everyone has retirement questions. so ameriprise created the exclusive.. confident retirement approach.

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i want to get to corporate credit because i know you're not particularly constructive on it. it's running at all-time lows and probably will continue to. why not buy some high yield investment-grade bonds? >> you're right about the default rate. it's basically nonexistent. we would probably have had about the right timing for a default cycle based upon the issuance patterns of 2009, 2010, but rates are so low, they're at the all-time lows in yields, particularly for junk bonds. a lot of companies that under normal circumstances might have defaulted got to refinance instead. junk bonds or investment-grade corporate bonds. with corporate profitability as a percent of gdp record high, the fundamentals are pretty good. the problem, though, is valuation. when we're at the end of 2013, the year end, long bond, 30-year treasury bond yielded about 4% and sort of unbelievably, in my

opinion, double b corporate bonds using barclay's data yield only 4.5%. that's a really remarkably low incremental yield to go from a government guaranteed credit to something that has some default risk, although it might not be in the near term. in fact, we do evaluation analysis on my team that we've been doing for over 20 years that kind of compares historical patterns of return for corporate credit junk bonds and other sectors versus the treasury bond market. as of december 31st, 2013, the valuation of junk bonds as a category was at its all-time overvalued versus long-time treasury bonds using that analysis. interestingly, investment grade corporate bonds were also at their most over-valued level in history versus long-term treasury bonds. the problem is valuation. junk bonds yielding 4.5% for the

double bger are so attractive, why do you simultaneously think that 4.0% is horrible, which most people think it is on 30-year treasury bonds? . quickly before we get to stocks, you do like corporate debt. you have a good amount of it in the close end fund, which had a rough 2013. why do you select this stuff? >> again, it's valuation argument. the valuation of emerging market debt is about average versus treasury bonds, one of the only categories on a par value. most categories are over valued. securities are fairly valued and emerging market debt are fairly valued. those are kind of the two. the real risk in emerging market bonds seems to be the currency risk more than anything else. if you go dollar denominated obviously you don't have that currency risk. last year corporate junk bonds in the u.s. had a 7% positive

return and emerging market debt had a negative 5% return or so. and that kind of a divergence is historically very, very rare. there is something to mean reversion. >> we keep hearing taper for the rest of the year, given what happened in june and what happened in emerging markets, why would you want to own this stuff? >> there's something called discounting in markets. the markets have acted exactly the opposite as everyone seems to think they're supposed to. since tapering started, equities have been struggling. bonds have been doing well. emerging market debt is positive return in year to date. ta's not struggling due to tapering. maybe we just talked the tapering so completely to death that the markets have discounted the concept of tapering. and this has been a pattern that has happened the last couple of times also the stimulus was removed or reduced in the economy. it actually led to bond rallies

and performance of assets that are more he can with wit related. emerging markets have largely discounted the tapering. and we need some other variable to come into play to really start to get worried about a repeat of 2013 there. >> jeffrey, in the couple of minutes we have left, even though you are the bond king, we like to talk stocks a little bit. apple did a huge corporate bond offering. by the way, they hit the lows. incredible. $17 billion. you always had the opinion on the stock as well. by the way, have been right on it. what do you see now for apple? >> last time we talked, david, i think was in september. >> yes. >> we talked about apple and i said it's okay, but it's sort of dead money in the 500 to 550 range. it's been pretty well contained in that range. we've owned apple. we still own a little bit of apple. the most recent move we did was to sell some apple, simply because i just don't see it going much higher than 550. it might. >> why not?

>> it may get to 600 this year. >> why not? >> the results have been sequentially disappointing for the last 18 months. forward guidance isn't that great. they're relying on stock buybacks, which is a good thing. it is supportive i what will the future really bring? it's a cheap stock. that's why i'm comfortable owning some of it and doing the share buybacks. some sort of tremendous growth engine of innovation, i think, is a little bit anacronistic. >> you made mention of chipotle or have an opinion on that. >> i am baffled by the valuation on chipotle. it seems that they've saturated the market pretty well. there seems to be almost starbusta starbucks-esque. it seems mind bogglingly high to me. it's a stock that defies

gravity, just goes sideways. >> how about twitter, man, or -- forget e. how about a multiple revenues? you want to get overvalue, talk, at least, jeffrey. >> i'm not going to disagree with you on that. i'm particularly stunned by the concept of this rapidly changing world of social media. it just seems odd to me that a company can be expected to be a leader, say, five or ten years from now with the rapid turnover of popularity on these types of things. so, yeah, i think that social media area has many, many echoes of 1999, 2000 on the internet type of bubble. i'm not going to disagree with you. plus, twitter has also sort of given up the ghost. so has amazon and super high flyers. the last one standing is google, which is a fantastic company, but it's awfully big. that's a stock that if it rolls over, it would be a harbinger, i

think, for a true bear market. that's the strongest company out there. >> that's a big if. jeffrey, we're out of time. we didn't get to talk gold mines or bit coin. hopefully, you'll join us soon. jeffrey, appreciate your time. thank you. >> thanks, david. >> that was interesting, david. thank you very much. we'll take a quick break and back in a moment. 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. (voseeker of the sublime.ro. you can separate runway ridiculousness... from fashion that flies off the shelves. and you...rent from national. because only national lets you choose any car in the aisle...

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that's it for us here on "squawk on the street." a great conversation here with jeffrey gudlunk. to me, he said qe might not be over in 2014. in fact, it may have to ramp up. >> probably the only one out there who has that sort of an opinion. we shall see. big day for the markets. thanks so much. welcome to "the half time show." miracle on ice. two stars from the 1980 u.s. olympic hockey team are here to talk stocks, sochi. not so prime. downgrade for amazon has that sto stock, and shareholders on edge. traders make their