♪ good morning. welcome to "squawk alley." playing some gesh wynn in honor of woody allen. joining us from palo alto roger mcnamee co-founder of elevation partners, great to have you back. with us jon fortt at post nine, kayla tausche has graceds us with her presence once again. good to have you back. >> good to be back. >> markets in rally mode, dow up 245, looks like a lot, the best day for the dow since last thursday but the dow is positive once again for the year. just about. s&p is up to 2053. crude oil, providing some stability here as west texas has once again gone positive. apple shares meantime gaining nearly 3% after getting a pretty nice upgrade this morning over at credit suisse. they see greater iphone 6 sales driving the stock higher on the back of pc sales out last night.

gardener and idc showing, jon, apple with about 7% market share. nice in addition to everything else going on. >> it is. i'm a little cautious on apple here just personally. i'm not an analyst obviously but i take a look at what's happening out there in general and you see iphone has been doing extremely well. they've increased their target inventory for the iphone which is going to have an impact on comps for the rest of the year. so when you consider that, and apple has been up for nearly 18 months straight at this point, a lot of times people start feeling emotional about the stock to the downside. if we get any kind of conservative guidance after a holiday quarter, which apple is prone do, doesn't necessarily mean anything negative, then people start looking at well are they going to put out as many units of the apple watch as we expect, are people really going to be excited about it and people start reacting to a bunch of stuff that isn't really real that could happen this year. be careful out there.

>> roger, we'll take your temperature on macro stuff in the markets in a minute, but on apple, they're talking about a $200 billion buyback of new money. i wonder if you think people are getting 130 on the upside, too rosy? >> well, as the old senator dirksen once said, a billion here, billion there, pretty soon you're talking real money. the numbers are mind boggling but look at apple's ability to generate cash i wouldn't put it past them. i have no idea what they're going to do. the one thing i do know, to jon's point here, is whatever the emotions, the underlying fundamentals at apple are really fantastic. and they're in this position where the ecosystem around the ios operating system and the mcintosh are one large cohesive whole and that with each new feature, whether it's apple pay or the watch or whatever, each thing makes the over all

ecosystem more valuable and interestingly enough, because it's one big ecosystem they aren't as sensitive to the success of individual products like the watch as they would have been in the past. so to me, it's an amazingly cheap stock with nearly a 2% yield in a market where yields are a hard thing to come by. so i, again, if you're going to own a stock here, i think apple in the tech space is the one to own. but, you know, like i say your market call is going to drive whether you want to be in it or not. >> fred wilson calling apple among the tech stocks that are now considered the new flight to safety, but a call for apple to potentially have $200 billion to give back to shareholders. at what point does it become the victim of its own success as a company? it sells more products, has more cash, then it has to figure out what to do with that? >> wouldn't we like every company in our portfolio to be a victim of that kind of success. at the end of the day, i really do think that apple has created

something that you don't see anywhere else in the stock market and again, i'm not privy to their thinking relative to stock buybacks or whatever. what i do though is that their brand at the moment is unassailable. the issues people have raised about the quality of the software are legitimate but i think at the same time apple is a little bit like the two guys in the woods when the bear examines up and the one g guy puts -- stops to put his sneakers on and the other guy says what are you doing? he says i don't have to outrun the bear, i have to outrun you. apple is outrunning all its competitors very effectively. as a consequence, if you don't like the market you don't want to own anything. if you like the market apple is a way, way, way better than average stock to hold here. >> that's the question, isn't it? what if this year there are two bears, then what do you do? >> that's a big problem. you know that i was tremendously concerned about the market right up to the point where oil prices

collapsed. to me, oil prices relative to the market and relative to the economy are like a defibrillator. right. as though we've put two paddles on the market and gave it a zap because it's a dividend to every family in america right as we're going into the winter and so cold people's bills will be higher or would have been higher and now because of the oil price they will be lower. and if that infusion into the economy can't stimulate the economy here then i think, you know, there will be a quiet funeral for this market. >> wait wait wait -- >> i expect it to be positive. >> so are we, once again, constructive, roger? are we no longer in t bills? >> no. what i'm saying, i'm still very defensively positioned for myself because that's my risk and reward. what i'm suggesting is, that i do believe that when you get this kind of a positive to the economy it has to translate into equity prices. i simply make the observation if for whatever reason it doesn't, there's nothing after this. right? i mean we've been in a six plus

year bull market run without an interruption and the chaos around the world is just staggering and it scares the heck out of me, but again, i'm not -- i'm not sitting there trying to build my life's savings. i'm trying to protect some things. for people who are on fixed incomes this is a time to be really defensive if you're looking for return, i think this oil dividend is suggests that you're going to be able to make money in the stock market for a few months. and maybe a lot of money. because it is a gigantic dividend for the economy. >> so you think, roger, the whip saw activity that we've seen so far in 2015 triple digit days nearly every single day -- >> nearly every day. >> you think that that is still -- that's just short-termism, that we still have positive underlying fundments? >> no. i'm saying i think that is the normal now, what we're going to have, is lots of whipsaw.

i think what i would anticipate is that this big oil dividend will give us more up days than down days for at least a while. but i think volatility is going to be the norm because there just is so much uncertainty, so much chaos in the world. there are things going on now on a weekly basis that a few years ago you couldn't possibly have imagined. and, you know, as a result, i again, i am personally very defensive but i totally respect and understand the person who sits there and says, hey, with this stimulus to the economy i can make another 10 or 20% on what i own. that could be the case. >> interesting take. roger, we're watching your world view closely. finally it's been a big week for amazon. the company winning its first ever golden globe for transparent on sunday night. this morning the citi ups it to a buy. amazon studios announcing it has signed director woody allen to write and direct his first television series ever. it will premier exclusively on

amazon prime although woody allen does say in a statement he thinks amazon will live to regret this. does it move along with transparent and everything else, does it move the needle here? >> well, you know, i actually think it's a very important thing for amazon. you know, their first couple forays into creating their own content were, shall we say from an artistic point of view, less than successful and i know this because they had one show where there was a character modeled after me which was obviously a terrible idea, and, you know -- but winning a golden globe is a big deal and i would have thought it would have been harder for them to enter this market and tim my hat to bay zoes and the team because they did put together something very successful. woody allen is probably right also. at the end of the day, like the apple watch, you know, the tv products through prime, are very, very small economic things, but amazon is the kind of stock that needs -- it needs buzz and cache.

unlike apple it's pretty expensive and this is actually a real deal. >> yeah. i think you hit on something there, roger, when you talked about the scale to amazon. you look at amazon it's $135 billion market cap give or take. netflix, $19 billion. so different kind of scale of what good streaming does for you and the purpose of prime content on amazon is to get people to actually buy the nonprime content, to get people into the ecosystem. it's similar to the hardware purpose. keeping them in the ecosystem. it's an expense going forward. we'll know if it's successful if the media line moves over the next few quarters. the media line -- >> and if they can do it again. the key question, can they do it again. the fact they did it one time is in my opinions just magnificent. >> and relatively quickly, into their foray, right? netflix has been doing original content for a few years. >> well, but in fairness, i think netflix really didn't make any mistakes.

they got into it more successful right away. amazon has, as you say, only been a couple years. the first couple things did not go very well, but then kaboom, a big win. you know, the big -- >> even if they win another golden globe, but they don't get that media revenue line to move, if they don't get people to buy movies, buy tv shows on top of that this will not be a business success. >> but people are buying that stuff. i mean to me -- >> not -- >> the way i look at prime, prime one of the thing, a subscription service, roughly ten bucks a month, little less, and people sign up for it for a lot of reasons. they got me years ago because i wanted to save money on shipping. they get other people for other reasons. and if they can get people to download the content and to become more intense amazon customers, that's clearly strategically a huge benefit. the way i look at it, there is no other retailer on earth with a relationship with its customers, anything like what amazon is, and no matter what

the economic revenue that you get from this streaming, the relationship that amazon is cultivating here is very powerful and in that sense, analogous to what apple is doing on ios with apple pay and these other things that permeate your life. i do tip my hat to them. i think this is -- i'm not a fap of the stock but i'm a fan of what their business strategy is. >> part of citi's argument they're relying less on pricing and more on convenience and selection when it comes to prime separate from all the media. >> and that's incredibly important because if they just rely on price, that means they have to, you know, treat their employees poorly and they have to have really low quality stuff all over the place. >> yeah. >> i think to the extent that they can put more premium into their model that's going to be good for them in the long run. >> roger, always good to see you have. have a great week. >> you too. >> coming up more on the upgrade over at apple and the analyst from credit suisse upping apple to explain the call. insta cart announcing $220

million in new funding. is this the next web van or amazon. the ceo will join us. the rally here, off a session high but the dow up 241 points. and the s&p up almost 25 handles to 2052 positive once again for the year. back in a minute. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities.

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is. > . ♪ fog rolling out of san francisco this morning. big question of the morning whether oil can hold on here and it is slipping back a bit. jackie deangelis at the nymex. >> hi, carl. what i want to point out this morning that the spread between wti and brent is really tightening here and what's interesting about this is we haven't seen a reversal like this since july 19th of 2013 when it reversed about ten minutes. the last time it traded and stayed over significantly was in july of 2010. it tells us that brent is falling out of favor when compared to wti, that the economies of europe and asia are slowing and demand falling off there. if we flip, traders say it shows us wti becomes the global benchmark. this could be intensified if we see exports from the united states as well. >> that one-year chart never gets less stunning no matter how many times we show it. appreciate your reporting this morning, jackie deangelis at the nymex.

huge round of funding announced for instacart, a start-up that delivers groceries from retailers like whole foods and costco. led by kleiner perkins and comcast ventures part of nbc universal's parent company also part pated in the round. josh lipton at a whole foods in oakland with the ceo of instacart. over to you. >> well, kayla, here with instacart's founder and ceo. thank you for joining us. instacart raising $220 million. a couple different ways you plan to use the funds. one you talked about was category expansion. explain what you mean by that? >> currently we focus on grocery. we deliver groceries to our customers. what we've found is that groceries are a difficult category to deliver. once we have figured that out we can expand to other categories easily. today we're not disclosing what

categories we're going into but it is likely we're going to other categories. >> more opportunities coming beyond groceries to users. you talked about geographic growth. you know when you talk about that, do you mean not just here in the u.s. but possibly at some point internationally? >> absolutely. we're in 15 markets in the united states. and what we have shown previously we can launch new markets easily. it takes about two weeks to launch a new market. and our model is very easily extensionble not only in the united states but other cities outside of the united states such as canada, such as europe, asia. >> you know, no secret when you talk about this grocery delivery space. you've got big competition from amazon, from google. when you think about that, so what are instacart's competitive advantages here? >> the main reason why customers love instacart over other competitors is because we allow customers to shop from the stores that they love where whole foods today, customers

love whole foods, customers can shop from whole foods market and get it delivered to their door within one hour, two hours same day. they can get a larger selection, shop at all the stores in their cities, they can get their deliveries within one hour, two hours, same day, which is much faster and a larger selection than other products can offer. >> jon, you had a question? >> i do. jon fortt here. tell me about the labor market, your workers. we see various things out of uber, drivers concerned about their pay. in this kind of on demand economy for work like yours, do you expect to be paying your workers more overtime to do this job or are you going to be dealing with a lot of turnover as the economy improves and maybe those workers move on to other jobs? >> what we have found is that the personal shoppers as we call them, the people who pick and deliver the groceries, these are folks who want the flexibility

of time. they want to be able to work on -- between two and three hours a day, two or three hours a week even, and earn a wage while they're doing that. so what we have found is this actually is a supplement to their income rather than them saying that this is their only job. >> and let me ask you, just for our viewers, how your business model works. how does instacart make money? >> so customers pay us a fee between $3.99 and $7.99 for two hour or one hour delivery in addition to that, we get a cut from the retailers as well and a portion of that is paid out to our personal shoppers. the rest is what we keep. >> delivery fees, i would imagine are you also making money by marking up store prices to a certain extent? >> when we work with a retailer or partner with a retailer, we remove all the markups. the fact at this point the majority of the retailers on the instacart platform do not have a markup. >> thank you for your time today.

back to you guys in new york. >> thank you. >> thank you so much. our josh lipton. when we come back, apple getting a nice upgrade at credit suisse, 112 and change. more iphones, more cash, price target $130. market set to close in europe about now. we'll get the european close in ten minutes. "squawk alley" is back in a minute. [container door opening] ♪ what makes it an suv is what you can get into it. ♪ [container door closing] what makes it an nx is what you can get out of it. ♪ introducing the first-ever lexus nx turbo and hybrid. once you go beyond utility, there's no going back.

apple getting a nice boost this morning. credit suisse youp grading the stock from outperform to neutral. citing strong iphone sales and expectations the company will return more cash to shareholders. joining us is analyst goldvendor. good morning. >> you take your numbers up but this new return program that you say is due because you say once again the cash levels getting in your words excessive, expand on that. >> yes. the way we see it apple return program three years ago in 2012.

they had about roughly $110 billion of net cash on the balance sheet. by our estimates they will have $143 billion come this april. our problem if they thought they were excessive then, they're clearly excessive now. cash flow higher than back then. the way we see it apple will have the capacity to announce around april at the time of their results where they could increase a capital return program to $200 billion over the next two and a half years, a 50% boost, something the street is factoring in. >> what time of year was the previous return program launched and what's the split between buybacks or dividends, any idea? >> yes. >> in your view. >> basically they announced the capital return program march of 2012, every april on the results of the april quarter is when they revisit it. our working assumption of the $200 billion capital return going forward, that gets announced, around $165 billion will be buybacks and around $37

billion will be in the dividends. that's assuming that the 25% dividend per share boost. apple have more than enough capacity to cover this going forward. >> the watch seems to be the wildcard. it's something that gets talked about as a gift potentially. and we wonder if it's a gift that will keep on giving or something that would be nice for those apple fan boys who love the ecosystem to have. you say 20 million shipments is your view. how do you figure yourself within the spectrum of those who say it's not going to be a blockbuster and those who say it's going to be a barn burner on the other side. >> i think that the -- i think a couple things i think about the apple watch. this is a generation product. if we think about the first iphone that was launched and all the innovation that followed in the subsequent years i think the cases for this device are still unknown. applications exist on the fitness and health side could be tremendous. that's one thing. >> i'm being told we're getting tape out of the white house which i'm going to interrupt the conversation briefly to take a

listen to that. >> convalescing a little bit from the mishap in the gym, but i know he will be back strong next week and i've had a chance to talk to him. i want to thank the speaker and leader mcconnell as well as dick durbin filling in for mr. reid and nancy pelosi and the leadership here today. first of all, some of these folks i haven't seen so i've had an opportunity to wish them happy new year. to the speaker i want to point out, i said there will be some things we agree on. having a college football playoff is clearly something we can agree on. i called for it. when i came into office. i think it turned out well, particularly for ohio. i want to congratulate ohio state buckeyes for their outstanding victory. and commend oregon as well for fielding a great team because their quarterback is from my original home state of hawaii. and i also want to just talk to

all this leadership about how we can keep the progress going that we're seeing, particularly in our economy. the latest job report indicates that the recovery continues to move in a robust fashion. we've now created 58 straight months of private sector job growth. about 11 million jobs created in the private sector. unemployment rates come down faster than any time in several decades. we are seeing the strongest job growth overall as well as in manufacturing since the 1990s. we are producing more energy than ever before. the deficit has been cut by two-thirds. and we're finally starting to see some movement last year in wages going up, at a time when families are also enjoying some lower gas prices. so we're in a position to make

sure that 2015 is an even stronger year and relative to our competitors, we are holding much better cards. the key now is for us to work as a team to make sure we build on this progress. obviously there are disagreements around the table on a whole range of issues, but there are areas we can agree and that's where we're going to be focused. just to cite a few example, i have a state of the union next week. one of the things we will be talking about is cyber security with the sony attacks that took place, with the twitter account that was hacked by islamist jihadist sympathizers yesterday, it goes to show how much more work we need do, both public and private sector, to strengthen our cyber security to make sure that families' bank accounts are safe, public infrastructure is safe. i've talked to both the speaker

as well as mitch mcconnell about this and i think we agree this is an area where we can work hard together, get some legislation done, and make sure that we are much more effective in protecting the american people from these kinds of cyber attacks. i think there is going to be opportunities for us to work together on trade. there's going to be opportunities for us to work together on simplifying the tax system and making sure everybody is paying their fair share. there are going to be opportunities for us to streamline government so it's more responsive and on each of these issues, i'm going to be listening to everybody around this table and i'm hopeful that with the spirit of cooperation putting america first, we can be in a position where the end of this year we'll be able to look back and say we're that much better off than we were when we started the year. i just wanted to thank everybody for being here and i'm very much looking forward to not just this

discussion, but some real collaboration over the course of the next several months. all right? thank you very much, everybody. you are listening to the president moments ago addressing bipartisan congressional leaders for a meeting at the white house on the docket discussions about taxes, infrastructure, and you saw the president mention his upcoming state of the union speech to talk about cyber security. john harwood, what do you expect would have happened inside that meeting? any progress that would have been made or is this just a conversation to set the table? >> the latter. i think this is a courtesy call, a conversation to set the table. but sometimes steps like that are important because we don't really know how it's going to go in this congress. there's a presumption, which is probably pretty sound, that most of the next two years are going to be spent fighting between the obama white house and congress, but it's also possible that there are some things, even after presidential vetoes, for example, that can be compromised

on. you know, we expect the keystone pipeline bill to pass house and state, go to the white house, be vetoed by the president, but that may not be the end of the story in the same with other legislation, you know, the president put out a veto threat yesterday on legislation weakening dodd/frank, delaying the vul ker rule. you could see talks on a strange of priorities so the president is trying to plea serve some of that space and republican leaders are too. >> thank you for that. john harwood at the white house. the pool report says that the president after that tape ended whether or not that cyber attack represents a new kind of threat. the president did not answer that question. wrapping up quickly with credit suisse on the upgrade at apple so many things seem to be working, whether it's iphone sales, competition with samsung, now this capital program that you envision, what's the downside risk? >> i don't think it's really significant the near term outlook for this company with

all the supply chain coming out of asia ins past two months looked supportive. we highlight this morning our apple watch estimates of gross margin estimates on the fact that we don't assume any new significant products or services probably means our number for next year while it looks aggressive where the consenses are, in the end will probably prove conservative. i don't see downside. i think in the worst case, downside to $100 but that makes the risk/reward quite favorable here. >> bullish case you make. thanks for your time. always good to have you. joining us from credit suisse. europe closed a couple minutes ago. simon hobbs at post nine. >> check out the green, a really good broad basted rally today. i mean oil is under pressure. check out what's happening with greece in the bottom right-hand corner. the way greece continues to come backs despite the election on the 5th. perhaps people less concerned about that as we've spoken about on recent sessions. the news as we close out this session is that at 330 new york

time in the morning, we will get that judgment from a preliminary judgment from an adviser to the european court of justice on the challenge from the german constitutional court that bond buying by the ecb is illegal or some broad questions as it to whether the ecb should be doing it. now the market doesn't expect that to be a major upset but clearly it's important for tomorrow because the germans have kind of said we're not sure about this. you're going to find possibly that ecj tries to limit the bond buying from the ecb or is in direct conflict with the germans. it's not plain sailing by any stretch. just speaking of the potential of limiting the bond purchases with any qe in europe and remember they're supposed to launch it we think january 22nd, that's one week from thursday, interesting over the last 24 hours that you have christian, the bank of france governor and a member of the governing council, suggesting he thinks it should be a cap on the buying in an individual country according to the proportion of outstanding debt.

the argument goes, it's intellectual, they shouldn't be crowding out the private sector. it is still an indication that the debate is real, it is unconcluded at this stage, and there's a massive possibility that it will underwhem the market because these guys are not singing from the same hymn and it ain't the market hymn sheet. just a note the uk inflation has dropped to a record low. that means that the bank of england governor will have to right wright a letter of explanation. it's an indication of disinflation that we see everywhere or europe and the eurozone. let me mention where we are with the uk supermarkets. going into the holiday season there was concern, morrisons had a bad season, they're ditching their chief executive. sainsbury overtaken walmart as the number two operator in the uk but a lot suggesting that may

be rarery. set your alarm clocks. >> it's already done. >> keeping an eye on these markets. dow up 213 awfully close to the lows of the session after that very dramatic upswing when the bell rang earlier this morning. when we return, short technology investor kevin o'leary joins us with thoughts on the market and more in just a minute. .

markets are in rally mode this morning. the dow up more than 200 points. major averages off of the highs but still in positive territoryp. the dow and nasdaq positive for the month. s&p still negative for the month. joining us this morning is kevin o'leary chairman of the o'leary funds and "shark tank" investor. even on days like this where we see triple digit gains for the markets, it's the defensive sectors leading the way. obviously those are high dividend payers which you like, but what does that tell you about the market overall? >> kayla, i believe all roads lead to dividend payers all of the time regardless of how much volatility is in the market. over a long period of time it's where 70rs of the returns come from. when you start to debate stocks that provide a lot of volatility, let me give you an example, almost 20% down on google, don't you think it's time that google made itself attractive to me by providing a 2.5% dividend and maybe i'll treat it as a real company.

got lots of cash, should start paying some back and would be a good thing bought talk about volatility if you bought this six months ago you've lost 18.5%. >> google sitting near a 52-week low, the scourge of the analyst community, a lot of analysts weighing in. you think the only way a company can make itself attractive is give money back to you, you don't think there's anything on the product front to change your mind? >> no. what google has done and why it has to come to daddy now, i'm going to be and investors like me will be the reason this finds a stable place in value portfolios. stop investing in wow factor ideas that don't make cash flow, start focusing on generating capital returns to your shareholder base, admit that the growth story has slowed because there's no question about that, i don't use-goal as much because there's so much other platforms i can search what's happening right now. like instagram or twitter. buy those guys or realize your

growth story has softened. above all, pay daddy. time to start paying me something and i might buy the stock. >> kevin, we just had the ceo of instacart on talking about category expansion, he's going into more instant delivery which is an area that google is trying to get into to keep people in their ecosystem, amazon spending more on content, an area that google needs to protect with youtube, they started this on-line video streaming thing, don't they need to spend money in categories instead of giving it to investors? >> but the problem with that, jon, as we've learned over the years with google is, when you have a culture of just spending and trust, in other words don't worry about it, everything i put my money into will provide a great return to shareholders that story always ends in tragedy. as you're seeing it unfold in front on your feet with google right now. you have to have a balance. you have to provide great growth by picking the right opportunities and you to have the discipline from the board on down to realize that 70% of

returns come from dividends over long periods of time. you've got to pay some. you have to return some cash back to shareholders and not always have them be trust me it's going to work out, particularly when you're a multibillion dollar index stock. even apple has got to that conclusion. the reason that you've seen people talk about it as a good buy is, it's almost got over a 2% dividend yield and it's growing and it's innovating but it's paying back its shareholders. that's the mantra i'm pounding the table on. that's how you provide stability, that's how you provide overall long-term performance and you have less volatility. who wants a 20% loss in google in six months? i don't want that. i don't want to own that stock. they have to show me respect and send cash back and do it now. >> depending on when you got in that stock you could have seen a 20% momentum move in the other direction and ridden it to the upside. we were having this debate earlier with roger mcnamee of elevation partners and he said, the fact that amazon signing woody allen to develop a new tv

series, well done for them. they need some buzz and cache because that stock was getting expensive. buzz cache for momentum names does seem to be important, no? >> i love roger. we both collect guitars. a lot of respect for his opinion because he knows what a good pick-up is. anything about amazon and if you have to use the words like buzz and cache to entices consumers and investors into the stock, i think that's bad. i like the words cash flow after capital expenditures, low price earning ratios, and compounded cash growth quarter to quarter. that's sexy to me. i get excited about that. cache buzz woody allen, i have a lot of respect for woody allen, love his movies, nothing do with the investment thesis. amazon is a bad buy. over a long period of time to use google as a reason or a yahoo! and i'll say look there was a time you could have said to me yahoo! you missed the upside, i watch that stock go from $250 down to 12 and never return a dime back to

shareholders that's the kind of stock i have no interest in. i like cash flow. return back to me. >> kevin, you seem to redefine the word sexy every time you come on. means something different every time. kevin o'leary, always good to see you. >> take care. >> when we come back this morning take a look at i could merricks over the past year. doubling in the past six months. the ceo of the biotech company will join us in a moment. ameriprise asked people a simple question: in retirement, will you have enough money to live life on your terms?

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coming up stocks soaring today as earnings season heats up. will reports be strong enough to keep this rally going? crazy for el polo loco. the chicken chain joins us. are the traders still on board? and can health care stellar performance continue? one big time investor says yes, and will tell us where he's investing his $9 billion in that space. see you in about 15. >> sounds good, thanks. over to dominic chu and a market flash. >> so carl, we're watching shares of gopro the stock falling in an up market in today's trade. citigroup analysts repeating a neutral rating and reiterating $94 price target. shares down by about 4.5% on today's trade. back over to you. >> all right. thanks. the jpmorgan health care conference in its second day out in san francisco. meg ter rel is there with another leader in biotech. take it away.

>> hey, jon, thank you. we're joined by chimerix could ceo michele berry. thank you for joining us. >> i appreciate the opportunity. >> you were in the news as ebola came to the united states and continues to rage in west africa but you tested your drug in a lot of viral infections and yesterday you had news you extended the patent license on that drug to 2034. tell me what the opportunity affords to you? >> great opportunity for us for the company because we've seen the broad spectrum of opportunity for the drug we are currently in phase three trials and prevention of cmv infection and stem cell transplant recipients and treatment of adno virus infection moving forward under the animal rule for treatment of smallpox infection in collaboration with barta. with ebola, again it really speaks to the broad spectrum of the compound. with this additional two decades of patent runway, it really gives us an opportunity to look

at the drug's potency against many other viral infections that may be in smaller indications or in other areas we've yet to explore. >> you guys just started a clinical trial in west africa in liberia on january 2nd with doctors without borders. >> yes. >> in ebola patients. this is tremendously exciting. you moved fast into that trial. tell us about the timelines on that, whether the drug could stop this outbreak? >> so we've really over the last four months have been working in collaboration with the doctors from oxford university, from w.h.o. in the clinics, we were able to get the clinical trial started that's important because this is the first investigational trial that's been able to begin in the middle of an epidemic. so it's a great opportunity for us to really test the drug in a clinical setting. and the reason we were able to move so quickly forward into a clinical trial because of the large safety data base that we already had from the ongoing

clinical trials and the data we've been collecting over the last four or five years. >> in addition to the safety data what's exciting it's a pill, you can take it orally. >> yes. >> store it in all sorts of temperatures and you can make it pretty quickly, ramp up production fast. >> because we had the clinical trials ongoing and were ramping up for additional clinical trials that we wanted to be conducting, we had clinical trial material that we were able to ship to the msf clinics to begin the trials. we did have clinical trial material already available. >> right now the study is open label, so you're not testing it against a placebo, is that correct? >> that's correct. this is a phase two initial exploratory trial. there will be a comparison looking at the mortality of the patients with ebola coming into the clinic, right up until the time that they started the trial on january 2nd and for those patients who don't want to participate, it is an investigatal agent and we are

trying to understand what the potentialerfy kasy is there. >> i understand there are discussions about doing placebo controlled trials and a lot of questions about sort of the ethics of that when you have a deadly disease like ebola, how can you give somebody a placebo if something could help them. >> sure. when you think about randomized placebo clinical trials that is the gold standard to know, especially safety and efficacy you can get from those trials. we need to work in a sensitive way with a community there in liberia, sierra leone, guinea, and make sure that the trials are comfortable for them. when we're in discussions about the best way to conduct a randomized trial but -- and it may or may not include placebo. we may be able to compare two potentially active compounds and an adaptive trial be able to scientifically robust way understand what the efficacy may

be. >> explain to us, we often try to explain sort of the reason a company gets into a disease like ebola. i mean obviously it's an important thing to focus on, but can you make money in something like that? is that why we don't already have drugs for these horrible diseases? >> well our core focus is in the clinical infections that we've been -- we talked about earlier, cmv, adno virus, smallpox as a medical councillor measure, ebola was one that really was an opportunity, we wanted to see if the drug because of our large safety data base is when that could potentially be effective in ebola and again, because of our large safety data base we were able to move that forward a little more quickly than some of the agents that are very specific for ebola and being developed only for ebola. you know, the -- getting companies interested in working in some of these other emerging infections i think we've seen an improvement over the last three or fours years really in a

public/private partnership that's really the best opportunity and has been a large influence in our company as well working with barta under the animal rule for our smallpox indication. >> absolutely. dr. berrey, thank you for joining us. >> thank you very much. >> back to you. >> quite a lineup for meg in san francisco. great stuff, meg, thanks. more from the jpmorgan conference, the ceo of valiant will join meg in the next hour. the markets still solidly in the green today. dow and nasdaq positive for the year. all dow components including the energy names are in the green. "squawk alley" will be right back. .

let's get over to rick santelli and get the santelli exchanges this morning. hey, rick. >> thanks, carl. a lot of technical activity going on in the treasury complex and one could almost say that there was a big knock that was stopped by a big rally in stock and that, of course, the rally going on today, just consider, this morning, in the wee hours we it touched 186 intraday low yield in 10s before they zoomed off about six basis points in the other direction. the equity markets, remember, the best hedge for soft equities is buying treasuries. today the reverse is true. yesterday, if you look at this two-day chart of 30s yesterday we get down to a 2.46 yield in 30s. why is this significant? the all-time low yield going back to the 25th of july 2012 when we were putting the

all-time low of 1.38 in 10s putting that in at 2.45 in 30s. these are huge areas. how many times do you say the market is dominated by buyers and sellers. god doesn't take up one side of a two-sided trading card. it's buyers and sellers. always in equal amounts. what you need it to garner treasuries if you want to keep it simple, unlike previous years, all the emotion of late is on the buy side of treasuries. which means in order to pull these sellers out, the emotion of the buyers really has been toying with pushing these yields down. and that's an important dynamic that has change for the last couple of weeks. really the dynamic of 2015. now when it comes to oil and stocks, we see that there are definitely fits will. but when it comes to what's going on with treasuries in oil, a lot more complicated. if you look at this ten-year chart comparing yields and oil prices, a couple of things should jump out at you on the left side of the chart from

about 05 to 08 they had more diverging and if you look at the right side the moves have been long in place for ten-year yields falling before oil started to ramp up in september of last year. so come out to my white board here now, if you remember that chart, this is what the left side looked like. so you did have the divergence. i remember this in this period of time well, the all-time high in oil, higher prices weren't doing good things for the economy. okay. and when you come to what's going on today, many, of course, want to make it about falling prices. bank of japan is making a big deal about that. doesn't make a lot of sense. one could say that the treasury market is looking around, seeing oil fall, hasn't seen the benefits due to the time lag that affects retail. the last one, we've all heard there's qe, qe in japan and europe, maybe bigger qe. qe in the united states. but one place we've never lookeds is china's land market.

you talk about absurd "financial times" had a story, china's small cities buy up their own land. this is ss something to watch, might be an indicator that means something down the road. buying their own land to keep land prices up and their own -- excuse me own municipal finances are deteriorating more because of this. not a good dynamic. back to you. >> all right. thank you very much, rick santelli. and amazon store near you, mayy's ceo terry lundgren weighing in on the possibility. here's what terry said on "squawk box." >> i think they should -- at some point they should but i hope they don't, you know. i hope they don't, but at some point they probably should. we're a serious player if the on-line world by itself but that's not the answer. i will predict that five years from now, any major on-line only company will have stores. >> got any problem with that

prediction jon fortt? >> no, but last time i talked to jeff bezos, it's been a while, the thing keeping him from brick and mortar they wanted some especially unique contributions, something they could do that everybody else couldn't do. he hadn't come up with that. >> like a distribution facility on 34th and 5th maybe. >> that wouldn't be i don't think that unique. we're watching the home builders which have gotten into trouble. dominic chu has more on that. >> carl, what we're watching is kb home. remember they reported earnings today. the stock had been up earlier. now the conference call is ongoing and as a result, shares down about 13%. kb homes says it's not expecting to reach its housing gross margin goals for 2015, though it does say that margins are expected to improve as the year progresses. those comments are dragging down not just kb homes but shares of other large home builders in the u.s. you think lanar, names like dr horton, all of those are moving down in sympathy. some downbeat comments with

regard to margins, guys, carl, on kb home. that's dragging the entire sector lower with it. >> seeing other headlines from various sources about q1 earnings guidance but wait until we have that pinned down. certainly not a good picture shaping up for home builders this afternoon. does it for us on "squawk alley." to wapner and the halftime. thanks very much. let's meet our starting lineup for today. stephen weiss, managing partner of short hills capital, getting situated okay. >> yes. got the phone book under me. >> good. joe terranova, adver tis investment partners, josh brown. >> no phone book. >> pete najarian the co-founder of option munster who should have listened to me before last night's game which he picked wrong, our game plan looks like this, loco for loco. the ceo of the fast growing food chain with us today. do traders have t