good morning. 8:00 a.m. at netflix headquarters, 11:00 a.m. on wall street. "squawk alley" is live. ♪ ♪ and welcome to "squawk alley" for a wednesday, joining us this morning, be jon fortt, kayla tausche here at post nine. interesting market day setting up. a lot of headline risk. bank of canada cutting rates. rumors about the ecb move tomorrow. the secretary general of opec

saying oil prices will return to normal soon. then netflix, of course after the quarter last night 72 cents, beating 45 cents. a lot of discussion about international going pretty well. the notion that tv channels, john and kayla, turning into apps working in netflix's favor. >> that was my question international heading into this where would it fall in the hierarchy of needs in europe, apparently high with shelter and food. >> netflix coming close to making up the ground it's lost in the last six months. i checked the data and actually for the last 15 quarters, 15 out of the last 20 quarters, it's had an average of a 9% move to the upside or the downside after earnings. so that's what happens with a momentum stock. expectations are low or too high and you get a big move like you see today. >> not working in the shorts favor. the streaming service has 40 million subs in the u.s. but mark mahaney asked reed hastings if that number could head to 60 million. here's what he said.

>> looking very good. we're at 39 million in the u.s., adding, you know, 5 plus million a year, so the trajectory is great. you know, if you step back and say, is internet video going to be in every home in america in ten years? you know, that's a pretty clear yes. so tons of potential there. and we're very excited about just continuing to improve our service. >> and mark mahaney joins us now to talk about the quarter. good morning to you. >> good morning. >> why do we have this bipolar relationship with netflix and where is it going to settle out? >> well you're right, it is bipolar. i think of the large cap internet stocks the high short interest in the space. there's concerns ability just how many more subs they can really add. i think the market is fundamentally skeptical of reed hastings claim he can get to 60 to 90 million subs. i think the market shouldn't be that skeptical. this person has proven video streaming, created this market and the forecasts have been

largely accurate. >> we think they can get to that 60 million number. >> last quarter reed hastings attributed the slowdown in growth to the u.s. subs to the fact that netflix raised prices in the u.s. and now basically changing course, saying maybe growth is mature in the u.s., maybe it's just slowing down naturally. do you think the company really understands how to grow subs in the u.s. while funding international expansion? >> yeah. i think there were two key pieces of news out of netflix last night. one is that they think they can generate original content more efficiently than they can license content that's got major industry implications and this company believes it has pricing power. we've done a lot of survey, we think they have price power, an attractively priced package for 8.99 and ability to take that to 9.99 and 10.99. there was questions on the september quarter. we think they addressed those with the december quarter results. >> it seems like netflix was saying yesterday, reed hastings

in particular, that originals are even more of an advantage for them than they realized, that they're playing well internationally, they expect when we go to 4 k to uhd and people want higher definition content they're going to have a strength position there. what did you hear in that and does it cause you to shift what you see as netflix's power position with originals? >> yeah. jon, i like the way you phrase that. i think there's actually a little bit of a hint they may have more leverage versus those companies that license content to the hbos and the netflixs of the world. there may be more leverage than people realize which is a positive for netflix. there's a second point, they're now doing global distribution deals. one of the few companies in this world, less than a handful of them, that can actually buy content and distribute it globally. that gives them a lost of cost efficien efficiency. the international margins which are depressing overall earnings massively those international margins long term can be the same as u.s. margins.

this is a 40% ebitda margin business globally within ten years. that's a heck of a lot of earnings power. >> on reed's comment last night that it's not a zero sum game between applications like this own and hbo's, how is that true? if i'm a household and have a limited budget to spend on content even on the margin, why is it if i pay more for one i might be less likely to buy another? >> your skepticism is right. it's hard to believe it's a zero sum game. the advantage that netflix currently has is that it's got far and away the lowest priced offering in the market. we think the stand alone hbo offering whip be 15 bucks a month. i bet netflix stock goes up if it's around these levels. if the keep they the low priced offering, broad level of selection and some of it will be unique proprietary to netflix, for the extra 9. 9 a month a the lot of families will be able to add on or keep netflix in addition to other services. it's not nonzero sum.

there are limits here. >> the fact that hastings says that the company will now borrow about a billion dollars to further fund expansion, is that a sign of confidence that the company can leverage itself going into this growth or is it more a sign of weakness that they really want to protect their earnings and not be plugging their earnings into expansion? >> well, i'm going to put that in the bold camp but their ability to make that statement on the oorngs call was strengthened by the international sub numbers they put up. if they hadn't had the 10% international beat i'm not sure they would have been able to put the statement in the document. i think it's coming from a position of straeng. as far as we can tell they're going to use that solely for international expansion and showing that international markets can be profitable for the company. they're certainly showing a lot of growth. their international subs are half the size of the u.s. subs. that's a pretty remarkable feat just in a relatively short order of time. >> before we say good-bye, amazon up 5% today.

is that a netflix halo? >> no. it shouldn't be. what it should be is, i thought we entered this year with some of the most attractive entry points on some of these internet stocks, not all of them, but netflix, amazon, priceline, google, these are all near 5-week lows and the fundmental trends haven't changed. the market overshot sometimes on the upside. it's created great entry points. we think this is one of those for amazon too. >> good to see you again. thanks for the insight. mark ma happeneny at rbc. >> microsoft set to take the perhaps off its latest operating system, windows 10, though we don't expect to get it to the second half of the year. showing it off to the press in an event that starts in a little under an hour from now. the system would release its predecessor windows 8 which has received in backlash including the start menu. raul is the ceo of unicorn, former head of microsoft ventures and former cto of hp's global gaming business. raul, good to have you back with

us. so windows 10, best case scenario for microsoft, what does it deliver and how is it received? >> well, i think, you know, best case scenario for microsoft is that it re-establishes the credibility that microsoft had with windows 7. the windows 8 launch, microsoft lost quite a bit of credibility in the consumer market. just by the way it was launched, even though, you know, quite honestly the operating system was quite good. it was just the -- there was a jarring experience going from the modern start menu to, you know, the old way of navigating windows. it's -- they got some work to do to catch up, i think. >> that was rough for me going back and forth between one interface and the other. another feature that we're expecting to see here is the spartan browser. how big a deal is that? do you think microsoft can reassert itself in the browser wars when chrome has momentum, firefox is trying to do new things. can microsoft's new browser get

some traction? >> it's unfortunate that people didn't really have the opportunity or give themselves the opportunity to try internet explorer touch because, you know, if you look at windows 8, the best experience in windows 8 for touch was the browser. they actually had an amazing browser experience with touch, better than any other browser out there. but unfortunately people just didn't give it a chance because, you know, a lot of people weren't buying windows 8 machines with touch, they weren't sure how to, you know, use the start menu that was there, and so this new browser experience should actually change that. it should get people -- i peen we hope to see more people using it. upgrading from windows 7 to windows 10 and using the new spartan browser. it will be interesting to see what happens. i have to tell you, i don't think microsoft got the credibility it deserved or at least the respect it deserved for that browser. they did a really good job with touch. >> raul, overall, when you think

about the release of windows 10, how much will be undoing some of the errors the company made with windows 8 and how much do you think it will be just building new capabilities on top of the existing windows 8 platform? >> well, i think most will have to be rebuilding the credibility that they lost with windows 8. you know, i have to tell you, the -- if you do just a performance comparison between windows 8 and any previous operating system, windows 8 is far and away a better performing operating system. the challenge was just in the navigation. i think microsoft has gone back to the drawing board and really rethought navigation altogether, rethought the ui, the ux, experience and they're hoping to see, you know, many of the people that have windows 7 and previous versions of windows upgrading to windows 10. >> sounds like windows 8 tasted again for the first time called windows 10. maybe they will work out some of the kinks. enterprise adoption is going to be key here, because the enterprise wants something

relatively stable, which you say this is, that isn't going to confuse workers. mobile is also really important. have they worked out do you think in the software a way for this to work on touch devices for those that want to use those, keyboard and mouse with those who want to use those, without confusing the developer community at the same time? >> start with the enterprise. in general, surface pro 3 has been a really good product for microsoft. i mean, it -- if you look at the previous two surfaces it wasn't a big success but surface pro 3 has been a pretty significant, you know, success for microsoft in the sense of it's influencing the oems to think about hardware differently. more people are using it, giving it a chance. the commercials are way better. the product is actually really good. so i think you'll see that more and more enterprises will start to adopt starting with surface pro 3. but as far as mobile goes that's

a tough one. it's really hard when the app ecosystem isn't quite up to snuff like compared their peers. i think microsoft has some work to do there and i think with windows 10e being common core across all devices i think that will be helpful. it's hard to say. mobile is a massive challenge for them. you know, i don't know what to tell you, but i would say that the good thing about the new microsoft is that they're very cross platform friendly, that they're probably one of the best partners to work with. >> you're really buying this new microsoft thing? i mean, you know, i've known you for a while, you're not one to pull punches. you seem almost as excited about microsoft as the seahawks. >> definitely excited about the seahawks. i have my custom jersey here. but no, i have to tell you, be i am excited about the new microsoft. i am. i think that, you know, they're just the whole culture is

changing. the openness to partnering is changing. you never would see peopwalking around with android phones inside microsoft but now you do. people use what they want because microsoft is developing across all devices. i've been a gamer since i can remember and there is no larger platform for gaming than windows. so, you know, yeah, there's a reason that i'm bullish on windows. yeah. >> all right. duly noted. raul, ceo of unicorn, thanks so much for joining us. >> thank you. let's send is to dominic chu for a market flash. >> we're just calling attention right now to a sharp move in shares of amazon.com. they are up near session highs right now, up by 5% on heavier than average volume. they've already traded about 4.2 million shares, about 4.15 million shares what it trades on a normal day over the course of the past three months. a lot of rumors working through the market right now but wanted to call your attention to the fact that amazon shares again spiking up to -- having their

best one-day gain since july of last year on rumors swirling around the markets. we're working sources to confirm that but for now know that amazon shares up towards 5% highs here on the day on heavier than expected trading volume. certainly a story we're watching for sure. back to you guys. >> we are as well. mark mahaney saying that amazon still close to its 52-week low but this might be an attractive entry point. in the meantime want to check on the broader markets, all major averages eyeing their first three-day winning streak so far this year. the dow had been down as much as 119 points, led in part by weak earnings from ibm or better than expected earnings, but weaker guidance from ibm, that led that average down. you can see firming oil helping as well as headlines about what the ecb might do in a crucial meeting that happens tomorrow morning. reports saying that ecb could be set to approve a program of roughly $700 billion in bond

purchases each year. shares of united health in the green after fourth-quarter profit and revenue topping expectations with the company saying it benefitted from an increase in profit margins and a surge in premium revenue. that stock up nearly 3% today. but on the downside of the dow, shares of ibm slipping after revenue in 2015 forecasts came in below analyst estimates. jon fortt will have a lot more on what you need to know about ibm a little later on this hour. that is the biggest contributor to any downside pressure on the dow. down by about 3%. carl? >> as it was all of last year. when we come back, a great interview coming for you later this hour, jpmorgan chairman and ceo jamie dimon will join us live from davos coming in a few moments. the president coming out strongly in favor of an open internet during the state of the union last night. former u.s. chief technology officer anish will tell us what happens now. the long awaited video service from the former ceo of hulu is launching today.

what separates this service from all the others. the former ceo will tell us later this hour. "squawk alley" is back in a moment.

welcome back to "squawk alley." thank you, carl. i'm david faber. wanted to update on a report wes just brought to you from dominic chu regarding that move in amazon. a lot of the move seems to have come as a result of a twitter

posting from something called zozo trader in which it was pos itted the activist investor carl icahn would soon announce a large position in the stock and a plan to try to gets the company to break off its amazon web services business as a separate entity. what i can tell you at this point, again the stock did start to move on that twitter posting by this particular account on twitter, what i can tell you is, that according to my sources, there is no position whatsoever at icahn associates in amazon. no ownership stake at this point in the company. and it didn't make a great deal of sense, given you have a large ownership stake, of course, of jeff bezos. you do not have special voting rights, i don't believe, but an 18.3% stake owned by mr. bezos. more as well by his family. so you would immediately have at least the potential to block any sort of activist approach, which there's never been one at

amazon. specific to these rumors started on a twitter feed, another effective way to get rumors out there these days, i can tell you they are not true. carl, we wanted to share that with people wondering why that stock gapped up. >> some talking about taking positions based on the rumors. good to have some truth or some reporting to put behind that to know why amazon is moving. one reason could be positive netflix earnings as amazon doubles down on content as well. so even as you reported we've seen the stock come off its highs but up about 3%. >> there may be fundamental reasons for that move as you point out, but this definitely did seem to give it a tail wind and icahn, according to my sources there is no truth to his ownership of any stake whatsoever in that company. >> all right. david, thanks for that this morning. meanwhile president obama hitting on a cyber security threats facing the nation during his state. union address. take a listen. >> no foreign nation, no hacker,

should be able to shut down our networks, steal our trade secrets or invade the privacy of american families, especially our kids. we're making sure our government integrates intelligence to combat cyber threats just as we have done to combat terrorism. tonight i urge this congress to finally pass the legislation we need to better meet the evolving threat of cyber attacks. >> the question many are asking the next morning is whether the president is being tough enough on this issue and can congress act? aneesh chopra the nation's former chief technology officer and author of "innovative state" and joins us this morning. nice to see you. >> thanks for having me. >> your take away on the president's words and whether they are strong enough to spur real action in washington on this issue? >> i absolutely believe that. if you take a look at the challenges that we face in responding to the cyber threat, one of the key factors is how do we bring the private sector in, collaborating with the public sector, to identify those common

threats and deal with them? the challenge has been the legal framework. how do private companies share data with the government, without taking on additional risk or liability? and so the president affirmed his 2011 proposal that said, we should basically make the trade, bring in information on cyber threats, protect personally identifiable information, and in exchange, provide some targeted liability protection. in addition to the ideas he put forward in 2011, he went a little further to say, companies can now work with each other and potentially get that same liability protection, even if they didn't share with the government. this is about targeting the specific problem, a bulk of our cyber activity is in the private sector and those threat factors are important for us to understand to be responsive. >> but aneesh, when he says he's calling on congress to enact legislation, look at the legislation that's been proposed. one law that the president has discussed is basically telling the private sector that they need to give consumers a quicker

warning of whenp their information has been breached and another one barring the selling of students' educational data. those pieces of legislation wouldn't really seem to get at the core problem, which is that we have had expansive attacks on the private sector that have been increasingly costly for corporations and consumers alike. how do you legislate against that? >> so those are the actually three pilars to this. one is sharing information on threats so we have a better defensive posture between the public and private sector. that's the part that the president spoke of in the proposal. in addition, he actually wanted to harmonize these data breach rules. today there's a -- if you're a private enpren nur, you have to meet all the different states' individual rules. there are already rules on the books that say you have to meet certain requirements. in one state or another. there's been a lot of private sector support to say is if we can harmonize these across the country with one standard that would make it easier for business. it's not so much adding new

regulation as harmonizing what today is a mish mash. on the privacy issue that's unrelated to the core of the cyber security threat. it's more of a protection issue and i think it's an important one, but i wouldn't commingle that with the core issue of information sharing, liability protection, and harmonizing data breach which are, i think, actually in many cases bipartisan provisions. we're pretty close in getting compromise on the hill. >> given the lovie dovey relationship we saw last night between the president and congress, any specific reason to believe that this is going to get done? can you point to talks or relationships or any one bipartisan in congress that's going to carry this forward? >> one of the bills that passed at the end of 2014 was the rockefeller bill, bipartisan bill, that endorsed the president's essentially standards approach, which is a voluntary collaboration for critical infrastructure to work with our commerce department to improve upon the nation's security standards, so that's

one step in this larger framework. that was done on a bipartisan basis. it's been signed into law. that didn't solve the problem but it's evidence we can do it at the end of 2014, it got done. republican senator thum, republican senator jay rockefeller and a bipartisan coalition in the house. steps along the way, thoughtful policy to improve cyber security, already on the books. >> aneesh, just before we let you go, do you think that sony has made congress understand more the importance of some of these issues? do you think that there's been an example set bay cooperation that has put this issue on the table? >> go down the litany of the reasons i've been on the show the last several months. one company after another going through these challenges. the private sector wants to see thoughtful policy in cyber security. this is not really an us versus them battle. it's let's sit around the table and work through this. that's why these are policies i think have a great shot of moving forward. how do you protect privacy and

civil liberties in a stronger way providing liability protection. these are the three pilars of what you need to get done. good people will sit around the table and do so. every one of these stories adds to the point as more sectors of the american economy rely on the internet, for commerce and for service delivery, they will ask for stronger protections that can be done public and private sector. >> hopefully the next time we see you, will not be in the wake of one of these large-scale corporate hacks. we appreciate your time this morning and hope to see you soon. >> my pleasure. thanks for having me. >> our interview with jpmorgan chase chairman and ceo jamie dimon will join us in a few minutes. "squawk alley" will be right back. [ male announcer ] your love for trading never stops.

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bureaucracy,bureaucracy, sw. let's bring in simon hobbs. >> stepping on to a trading floor tomorrow the equivalent of watching penalty shoot-outs of

the world cup final where your team is playing. that's how rbs summed up the day tomorrow with the ecb statement and then the news conference at 8:30 new york time. he says tomorrow will be one of the most anticipated moments of the crisis and you have to question with that sort of build up, and he's speaking from the heart because that's how so many people are positioned in the market, whether they would always disapoint with whatever the ecb brought to the table. we have this report on the table is a draft document they'll consider tonight at dinner which would involve buying 50 billion euros of sovereign debt, in installments for at least a year, 600 billion euros in at least a year, 1.2 trillion euros in two years and still the market appears to be slightly disappointed. it depends on what you think is factored in. worth noting, though, that "financial times" is suggesting there's now a lot of opposition on the governing council, and actually the burden sharing. remember that the individual

central banks should do the buying if somebody defaults like greece they'll take the burden. apparently that's a sticking block. we'll come back to that. this is where we are on the euro, 1.1597. when the news broke, the reports, the euro weakened, which is what the ecb wants. its main policy tool weakening the euro. strengthened on the disappointment arguably it's not unlimited bond buying and then see those gains have been cut. interesting, also where we are on the german bund as well. we were at 0.45 coming into today, actually the yields have risen quite substantially up 6 or 7 basis points as you can see on that report that we've had today, but still obviously historically low. you know they're going to being on the -- buying on the capital, buy bonds in proportion to the contribution each country makes to the ecb. 17% of bond buying will be on german bunds, why they are where they are. rbs coming into today suggesting the deal might be they would

surprise on the upside with unlimited bond buying but the burden sharing they scraped back a bit of time on or credibility. at this stage that is really to be debated. only 5:30 in frankfurt. dinner yet to be served and the discussion to commence before tomorrow. biggest day in the cry is, one of the biggest days in the crisis. >> rest up. simon hobbs at post nine. keep it here, meantime jpmorgan chase chairman and ceo jamie dimon will talk about the future of banking, probably european qe, live from davos. "squawk alley" is back in a moment. there's a difference when you trade with fidelity. one you won't find anywhere else. one-second trade execution. guaranteed. did you see it? in one second, he made a trade, we looked for the best price,

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these are the only medicare supplement insurance plans endorsed by aarp. call now and request your free decision guide and start gathering the information you need to help you go long™. ♪ welcome back to "squawk alley." the annual world economic forum meeting is continuing in davos, switzerland, today. our squawk box team there with a leader in the banking industry, jamie dimon, the ceo of jpmorgan chase. joe, becky, andrew, take it away. >> thank you, carl. thank you, jamie, for being here. we have a lot to talk about. the economy, what's going to happen with the ecb tomorrow. we want to talk about banking, at least start with banking. you made some provocative comments last week. i think that's how they could be described. you said that the bank is under

assault from regulators and used a couple other words, i don't know if we can talk about on tv these days. where are you on this? >> well, let me take back some of the words. we have worked very closely with regulators all the time, we've supported most of dodd/frank, capital liquidity, we do have a lot of issues. we're doing fine. >> what happened on that call? you were much feistier? >> i was referring to the fact that there are lots of different regulators. it's hard to deal with. we're going to deal with it. my job is to deal with it, not to complain about it. but the most important thing to me isn't that. it's do we serve clients well around the world? and can we continue to do that. yes, we do. like you -- like we had a record year last year. so you read all the press, talked to all the stuff, the press and analysts talk don't overfocus on quarterly earnings. we earned $4.9 billion. it was marred by another legal charge. it was another record year. out of the last four, third

record year. >> sounds like you're under assault, why do you say you're under assault then? >> banks have a lot to navigate through. you know that. you can make the list yourself. it's not my job to worry about that. >> you did have a big legal charge. explain this. every quarter when there is a legal charge, you say it's a one-time charge. >> you do. >> we do? >> one of my directors says we don't miss your estimates. the analysts miss the actuals. >> you guys -- we give analyst ideas what it's going to be and they didn't know about this. >> we have been very, very persistent about legal. it's lumpy, not predict, particularly by quarter, that's what we have to deal with. i've told our analysts it's going to be a number and one day it will be a lot less. it will normalize. it will still be higher than it has in the past but i can't make something predictable that's not predictable. >> justin on that note -- just tough on investors. >> they shouldn't buy the bank

stocks then. i can't change that. that's a reality and it will be lumpy for now. >> how long do you think? >> i don't think any ceo can estimate how long or when it's going to be. >> you look at the political winds and where things are and you know what investigations are yawn going. >> right. >> and to the extent you can see that pipeline. i mean is this something that you think your firm and others will have to deal with for the next several years? >> i think it's coming down. but i can't tell you -- it's not up to us. it's up to government regulators around the world and their judgment about how bad the behavior was. i should point out, by the way, it's important, we always admit we make mistakes. we want to fix them, know we're going to pay a price. the regulators have a job to do to punish people that make mistakes. i can't predict that. the company, the company is doing really well. it's not just record financial results. it's market shares, growth in credit card, investment banking share, that's my real job. this other number will take care of itself over time. i can't -- i wish i could make

it predictable. analysts want to put it in their numbers. you can't. just like you can't make oil prices predictable. >> we had dick on the program a week ago. he compared the banks writ large to asbestos and cigarette companies. if you're invested that's how you have to think about these firms. is that fair? >> i think that's an exaggeration. >> it wasn't said in that way. >> didn't say it in a malicious -- >> you have to be ready for litigation. >> wasn't giving people cancer. >> not in that regard but in the constant litigation that comes after these companies. >> ask about the breakup. i want to ask about -- >> i wanted to ask about the goldman sachs report quick and then get to a lot of other issues. goldman sachs came out with this report suggesting that jpmorgan would be worth more broken up than together. you've made the argument that's not the case. >> right. >> when you first saw the report, did you call lloyd blank fine? >> no, i didn't call lloyd. i don't think lloyd was involved in the report.

i think analysts are pretty independent and he's quite a good analyst. here's the thing, we have to hold more capital. that's a good question to raise. too much capital, you can earn a fair return on. the fact is it's not. we're going to be able to raise our capital levels easily, earn a good return for shareholders and maintain these four fabulous franchises. i asked the question, did we build really good franchise over the last five or ten years. everyone is world class in its business. every single one. the company itself was a port of safety in the storm. we didn't jeopardize the american economy. we bought bear stearns, rolled over hundreds of billions of loans at no additional price in the crisis. a lot of people roll over -- when they make investments in the crisis they want 50% premium, we didn't do that. the company has done well. our margins are good, our returns are good. we had a record year. i hope we have a record year next year. and -- >> the force -- >> keep in mind about p/es, p/es

are temporary and a lot of my directors mentioned to me some of their companies were under some pressure to break up and thank god they didn't. because we will be important in the next storm and you want me to be important, you want me to be here, we serve governments, we serve companies in 20 countries. 30 countries. 40 countries. we move 6 to $10 trillion a day. you don't want to [ inaudible ] jpmorgan. the diversification of the businesses makes us stronger not weaker. >> when lloyd was on, i said, you know, during the crisis, a lot of firms had a lot of trouble. lloyd, one of the best risk managers around he took off a lot of risk in mortgages. you did as well. you maneuvered jpmorgan through the financial crisis, you two guys probably better than anyone. here we are, however many years later and you got the giant squid, goldman sachs, on the world and you got the $20 billion settlement with jpmorgan. how did that happen? how did you turn into the pos r

posterchild for bad behavior when you managed better than anyone through the crisis. >> you see a lot of big companies come up here and they are going to be scrutinized by media and press when they make mistakes and so we went through a time where we didn't make that many mistakes and then made a few. we legitimately were criticized for that. >> was it bad behavior on goldman and jpmorgan or the media? the narrative has been changed by people who have a dom going to -- >> 75 to 80% of the $20 billion was bear stearns and wamu. if you criticize me, we didn't do all that bad stuff. >> i would say that's unjust too. >> i didn't expect it to happen and, you know, unjust things happen. i have to deal with that. they happen personally, they happen to individuals, companies, and, you know, i'm over that. we -- my focus in building a company going forward, including building the mortgage business, which has been the world's business i've seen in my whole life. we're devoted to be good at it and do a great job for american cup assumers.

>> last time -- consumers. >> last time you made a prediction the u.s. economy was on the upswing in a big way. we're a year later. where are you? >> the american economy, look at two things, three things, number one is the immediate here and now it's pretty good. companies are in great shape. consumer confidence is good, housing turning the corner, car sales up, retails sales are up. i don't see any potholes. i can't predict the future so don't -- i don't know exactly what's going to happen. it looks pretty good. 10 million more people working since 2009. wages -- we start to see a little wage pressure, i think is a good thing. look at the big picture, long-term picture. this country i'm going to say it unapologetically in davos, has the best hand ever dealt of any country right now. why? deepest financial capital markets people that head up hedge funds, private equity, banks, nonbanks, military,

schools, best businesses, very low corruption, unbelievable work ethic and innovation like dark matter going through everything from your phones to the medical technology to -- we have it really good. do we have issues? of course. immigration, education, fiscal reform, tax reform and we have to deal with those issues, infrastructure, or we're not going to be sitting here in 20 years making the same statements. >> you bring up all these issues what america is doing right, some of the issues we have to fight. the president spoke last night in the state of the union address and he threw out his own ideas on how he thinks it should be fixed. do you agree with some of the proposals he threw out? >> i was on a flight and did not see it. i want to get it on the airplane one day, but i read a little bit this morning. what i would say is, when i go to washington, i talk to democrats and republicans, almost none of them, doesn't think we should do proper infrastructure investing, roads,

bridges, tunnels, schools, hospitals, all want proper immigration reform. everyone agrees our corporate and individual tax thing needs to be reformed. most people acknowledge we need fiscal reform. and i think most people acknowledge education. like the biggest sin in our country is half of inner city school kids don't graduate high school. >> how to fix it. >> well, first you have to acknowledge it's a problem. it's not just money. so i support a lot of things for education. i support community schooling is a great idea but it has to end up with a certificate and job. i think that means you have to -- it's the detail behind that's important the government get right. not just the money but that the local community school work with the local businesses what they need and those kids get jobs and out so it's valuable. you know, so to me it's the design of these things that matter not whether it's democrat or republican. >> if you were a central banker here and you know they're going to do qe with rates that -- we need lower rates than 60 basis

points, if you -- you're a great banker. if you were a central banker how would you be offloading the risk we're building in the system? do you see some problems with central bankers around the world and where we are right now? >> one of the things that people worry about is interest rates in america and qe and all that. i actually think the fed has done a terrific job and we can raise rates. it will be volatile, painful, give you things to talk about, but if the american economy is strong it won't matter that much. >> negative interest rates in europe. >> a little different. in america, all that qe reduced short rates and long rates and i think it did help mortgages and assets and people repsi. in europe rates are low. the mechanism which monetary policy might be transferred may not be rates, it may be currency. i think that -- i think that's a step removed. i don't know. i think mario draghi has done a great job and i hope it works. i think they should do something. it shouldn't mask the fact we

need structural reform. they need structure reform in europe. i think the euro is one of the great -- european monetary union is one of the great human endeavors of all time. the countries got together, had centuries of war, and said can we live in peace? i think it's a wonderful endeavor and it's hard. you see the hard part of it now. so i hope they get through it and the monetary side is only part of it. now they have to deal with the fiscal and structural. >> i want to talk about cyber security briefly. you said you may be spending $500 million in the next few years. 250 now -- >> might be going up to 500. >> rapidly going up to 500. who should be paying for this in the end? should shareholders? what do you think the role of government is supposed to be in all of this? do you believe we're secure? is there ever a day you worry one day we will open up our accounts on-line and you will see zero in the bank? >> i think banks are very good at cyber. i think defense companies are. i think there are a lot of people who don't know they're under exposure.

so we are -- our clients are safe. you can rest assured in that. >> why do you feel so comfortable saying that? >> because we have really good people and work with the government. here's the great example, we need -- the government needs to do it. businesses need to do it. collaboration is required. the government gets to see various attacks. this is real time coming from around the world in different lines, different types. if we can inform you you can put up immediate protection. banks that work with each other, we work with the nsa, dod, homeland, cia to do that. this is where government and business are working together. it's important. it's going to be a really big deal and there are going to be problems and we've got to get braced for it, we being not jpmorgan, but all of us industry and all of us have to really get engaged in this fight. it's got to become part of world trade and it's got to be part of foreign affair, you know, diplomacy. it is not going to work this way if it goes on like this for much longer.

>> final question. this interview airing on "squawk alley." we talk about technology. you said you thought apple pay could cannibalize some of your businesses. is apple pay doing that? is it a success yet or failure? >> i'm not worried about being cannibalized. when we met with the folks from apple they said it's consumer friendly, merchant friendly and it allows us to do a better job with the data we have. they can help reduce fraud. it's being used. it's going to take a long time. the 8 million, when you swipe your cards, i think there are 200,000 machines that can take it yet. it's easy to use. i think it's great. we think if you have our cards and i hope? of you do, use the card, apple pay, google pay, chase pay, visa.me, whatever works for you. we want to make you happy as a customer. >> still a democrat? >> i am still a democrat? >> last time you said barely. >> just barely. >> i -- >> you're back all the way? >> put it in the barely category. i want democrats and republicans to come to common ground, face our issues, fix trade, fix

immigration. >> you believe in the democratic process. >> i don't think the fix is democratic or republican. >> most important question before you leave, how are you feeling? >> i feel good. >> yeah. >> i'm mostly back to health and so i feel so good experience done -- i mean, how do you think about -- what's changed? for you? >> i'll give you a couple things. my doctors were here, my oncologist, my radiologist, my surgeon, were exceptional, but when you go through something like this, i dealt with 100, 200 people in the hospital. nurses are unbelievable, the receptionists, people that run the machines, mris, cat scans, it's an unbelievable thing that comes together. the technology, machinery is unbelievable and so i just look at those professionals and thank them for that. my family was fabulous. sat with me day after day when i was getting chemo and so it was hard.

i got thousands of calls and letters from people and the management team was -- i mean they kept on running that. i went to work, but i took naps every day. it was quite an experience. my value system didn't change. i always had family first and i think this confirmed that. country second. i love this country. still think america is a beacon of light and hope for the world. and right next to that humanity i want the world to be a better place, including income equality and people to be happy and healthy and share things around the world and that part didn't change. i work -- jpmorgan is where i spent spend all my time is not as important as those other things but the best i can do for the world and humanity. if i make us a good place we can hire veterans, help middle market, large companies, governments, sovereign wealth funds, schools, hospitals, that's what we do. i'm proud of the company. i'm proud of our people. and my family can only spend so much time with me.

my three daughters and wife are busy. they probably cap their time they can spend with me. two hours a day is plenty. let me go back to work. >> awesome. >> that was really awesome. >> thank you for being here. >> enjoyed it. >> love watching you guys every morning. keep doing it. >> you bet. >> carl, sending it back to you at hq. >> all right. sounds good. vintage dimon the general reaction back home. thanks so much for that and an amazing show this morning. a lot more from davos throughout the week on "squawk box" and other programs too. >> up next, meanwhile, not a good day for ibm shares slipping after the company giving weaker than expected guidance for the rest of the year. we'll tell you what big blue might be able to do to turn things around in just a moment. can data help cure a disease? the right treatment for you is out there. the problem is some of it's in this lab. some of it is in her head. some of it's in this new journal. and the rest of it is in your personal medical history. ibm watson can not only read this data, but understand it. it's trained by doctors. and it's always learning.

it can help find hidden correlations and help your doctor recommend treatment options for you. there's a new way to work and it's made with ibm.

coming up what a blowout. netflix shares up big on earnings. we find out how the traders are playing it. plus, we're going to talk to the analyst live who raised his price target to 500 bucks and told you to buy the stock last week. one of our traders' portfolios is black and blue thanks to his ibm play. will he tough it out and stay in that trade? and nfl hall of famer barry sanders joins us live to talk everything from the super bowl to the deflating footballs to helmet safety, it's all coming up on the half. see you in five. >> thanks. we'll be watching. move on to ibm, sharesing taking a hit after the company's 2015 earnings forecast came in below estimates. revenue missed expectations as ibm failed to generate year over

year sales growth for the 11th quarter in a row, guys. it really seems like in the cloud era, ibm story is falling apart. look at oracle what they've tried to do is add hardware into the mix to boost margins, sap, trying to move into data base to get into oracle's face and maintain there. ibm had services but the people story is what the cloud is directly taking on. analysts are looking to the next month, the analyst meeting for some kind of further answer from ibm on how they're going to face this down. ibm has already talked about cloud, analytics, security, as being their core focus areas, but it's not clear what particular advantage they have in any of those. >> that $20 promise for 2015 is so far in the rearview mirror now looking for 15.75 to 16.50, revenue growth again 2015 not going to be the year for it. after 11 straight quarters.

>> doesn't seem to be. what they're trying to do is invest in cloud and develop some kind of a story around it. they do say $7 billion in cloud revenue this year with these big companies, it's hard to know exactly how they're defining cloud revenue. they want to put some of their older revenues into the bucket, but when you see software declining the way it did, 3% in constant currency that's ibm's engine. >> what is the best thing they have going? the new main frame, something else, just having buffet? >> well, it doesn't hurt to have buffet unless -- you can't get more buffet, can you? you could maybe put more money into it. the danger now is losing buffet. the best thing they've had going has been software for a long time. people got excited about the apple news, the fact they're going to be a partner in that, what else can they do? can they develop a story around mobile. >> one thing they've learned to do is manage expectations in the near term. investors going into '15 with very muted expectations compared to what they were previously told. certainly that stock not helping

the markets today. thanks, jon. >> for the second time in a week a premium video service is taking on youtube. last week it was iac's vimo and today vesle from hulu's former ceo. julia boorstin joins us now who spoke exclusively with jason. julia, over to you. >> thanks so much. today streaming video service vessel launches in beta for consumers who requested an invite. this as it slowly rolls out wide. the service which targets 14 to 24-year-olds features premium video from youtube stars and popular youtube channels like taste made as well as media brands like sports illustrated and history channel as well as individuals such as alec baldwin. unlike vimo which sells content on demand vessel has an ad and subscription model. the app enables users to browse while they are watching videos and features a range of categories to make it easier to discover curated content which he says is different.

>> the user interface and it technology and software is very differentiated. first and foremost. second is, the content that you'll see there will be showing up on vessel before it shows up anywhere else. and so this is a fan service. this is where people who are passionate about content go to watch that content first. >> while there is a free ad supported version, he expects most people to pay $3 ap month for exclusive early access for videos pfr posted elsewhere. he says paying creators more will secure better content and lure subscribers. >> 70% of all advertising goes back to the video creator and subscription dollars go back to the video creator as well. to give you a comparison on the free web, a video creator typically earns about $3 per thousand views. on vessel we project they will make over $50 per thou sapped views. >> he's not trying to eat youtube's lunch. both it and vessel can thrive. as youtube plans more subscription content no question vessel is taking on the video

giant. >> thank you so much. our julia boorstin out in l.a. don't forget ebay earnings today, as earnings season powers on. >> yeah. that's going to be important, especially given people seem to be heartened by this netflix move, a lot of other speculative stocks are up. >> they will want more news on the spin coming this year. >> let's get over to headquarters, scott wapner and the half. >> thanks so much. welcome to the halftime show. meet our starting lineup. joe is the senior managing director, of course, at vertis investment partners. josh the ceo of rid holtz management and jon and pete najarian are co-founders of option munsters. black and blue. after yet another earnings day dive, can ibm get back on track or is jim lay venal that's portfolio bet already a bust? street fight. former congressman harold ford and republican joe