of targets for unemployment in terms of inflation and i don't think we've hit those levels yet. look at our numbers that came out, durable goods orders that's concerning in terms of if you are looking for a fed interest rate hike. >> ben, thank you very much. great talking to you. >> thank you. >> enjoy. thank you, everybody, for joining us. join us tomorrow. time for "squawk on the street." good tuesday morning, welcome to "squawk on the street" i'm carl quintanilla with david faber at the new york stock exchange. jim cramer at hq, courtesy of the snowstorm that has largely spared new york city but hammering much of new england. >> good morning. >> kaycase-shiller home prices out. dow futures down almost 30 on weak earnings from -- 300 on weak earnings from a lot of dow components. big miss on durables a lot of revisions, raising questions about the u.s. recovery.

oil stable. and ten-year has crept down to 1.77 1.77. futures falling. earnings painting ableak picture. greece continues to weigh on the markets too. >> seven dow companies, p&g, pfizer, caterpillar, dupont, 3m microsoft, and united technologies, all seven lower. >> nyc largely escapes storm unscathed but boston new england battered by heavy snow. we'll get live updates on flight cancellations and travel around the region. a rough morning in store on wall street. wave of earnings news sending futures tumbling. dueuponting proctor & gamble, pfizer expect the stronger dollar to weigh on full year profits. caterpillar, a warning for 20157 the ceo on "squawk box" -- >> oil is a piece of our energy and transportation is worth about oil and gas is about a

third of that business. the natural gas piece of that business is doing pretty well and so far holding up. the oil piece, though what we're taking down and that's the primary number for our reduction in 2015. >> jim, not only did he say when it rains it pours but also said fed's got to hold off. can't hike rates in 2015. >> i don't think -- if the fed took it, it would matter for caterpillar. it was a terrible quarter. i have to tell you, it's absolutely -- true copper was bad, natural gas will be bad, doug to give you heads up in the first quarter what matters this company has not guided the street at all, didn't really give you a sense this was going to happen. caterpillar, so we distinguish things and this is what's going to happen in three days we'll start distinguishing things caterpillar was a terrible quarter because they executed poorly end and markets are bad. stocks trading down today did not execute that badly. they executed well. they have to back out currency figure out the organic growth

and recognize some of the companies are doing quite well. but if -- that's not today. today is the day where the market's stupid and everything goes down. >> that's fine. >> are you referring to companies that are executing? is that p and g. >> i had tom on from kimberly. i thought kimberly was better than proctor. that stock lost share in proctor. what we're going to do circle back that wells fargo was a good quarter. honeywell was a good quarter. we'll look at 3m. 3m is going to be down today. an amazing quarter, 6% organic growth, made no excuses, department have a doug olberhein situation. these are all going down and we'll take a look and maybe -- again should be looking today but it doesn't work like that -- maybe look thursday, friday, did a great job at 3m. what are we doing throwing that away.

we'll say john stumpf did an amazing job at wells fargo, let's be in on that stock. i a america first purely. but we'll be saying what are we doing investing in overseas? so few doing well. domestically, companies are hitting the ball out of the park. >> caterpillar shares jim are going to be down sharply, call it 79 bucks a share from close of 86 yesterday. i mean that 460 number for 2015, well below what people had been anticipating in terms of the outlook. energy and transports, about 30% of their business but it's got 20% margins. >> right. >> a strong profit contribution given that. also interesting, the number for the quart that was reported was not particularly good. some believing at least the impact from oil and gas was not going to be felt until 2015 but it appeared to creep in at the end of the quarter as well. >> right. schlumberger didn't have bad an oil quarter as caterpillar did. caterpillar is a great american manufacturer.

the fact is caterpillar is trade like a commodity, iron like cliff's natural, like freeport -- nothing is bad as freeport excuse me. i look at caterpillar and i say to myself why am i in it? after today, maybe for yield protection. they do a lot of cash flow. but, david why didn't this company preannounce? why didn't they at the begin of the year look at order book and say we're not going to make the number? >> they do issue rolling retail sales, jim. you could have taken a clue from na that. >> look, i think in the end if you look at their end markets you were hoping that nonresidential construction you were hoping that road building hoping that anything might offset what caterpillar had. instead i look at schlumberger halliburton, baker hughes, deeply involved in the oil business and they did not complain about the price of oil as much as caterpillar did. >> yeah. >> not the only big component. microsoft shares down sharply after weaker than expected revenue guide 'for the quarter

and fiscal second quarter in line with forecast. on the conference call the ceo spoke about some of the challenges the company faced in the second quarter. >> as expected the one time benefit of windows xp end of life pc refresh cycle has tailed off. additionally, ran into unexpected issues in select geographies. where there are execution issues, we will address them. where there are macro economic challenges we will weather them. >> jim, software up five new york where near the double digit. citi takes it to a sell. amy hood mentions the dollar moving to office 36 pa5. >> my charitable trust owns this. bad call. body language was like we're not that good. don't worry, we'll get better. in the meantime, when you have companies like adobe going to the cloud, they tell a good cloud story. satya telling a good story.

what happened in japan, what happened in china i think a quarter where everybody's turned on microsoft. when the smoke clears you might like the stock, they have a lot of cash into a buyback. but it is -- what's incredible to me is how hated this company was underneath. they -- if the stock had run, nadella didn't do anything bold hood did nothing bold maybe they can pull off something in the next few months. this is a quarter they said gee, we've got problems in thing about countries but don't worry, we're fine. well they made me worry about china, made me worry about japan, made me worry about pcs. go back and look the intel, widely panned and say, intel did good. >> by comparison, what we're going to start to but is that a broad reflection then of weakness jim, or a lack of strength, if you want to put it in a different term? >> both companies did well in the united states.

i think what we're seeing is that if we hear -- we talk every day about the weakness overseas client na europe. >> we do. we talk every day about oil and gasp if you're in that business or international company with real selling linked to the dollar, what stay away? >> well i think you have to recognize it as a reset going on. maybe you don't have to stay away. after a couple days stay away people are just shocked. again, witness kimberly first day goes down eight and next day it goes down two. kimberly is a prelude to proctor but some say proctor is taking share from kimberly. again, no benefit for most companies from the decline in oil that occurred in october of 2014 to the end of the year. that will benefit. second half of the year's going to be pretty good for kimberly. if you look at diaper or depends -- hopefully you didn't have to look at either lately -- these are oil-based products but not seeing gain yet. that comes later this year. so, yes, i see you want to throw these away and you want to throw

away 3% yield and say forget about. in the end ten-year at 1.77 raw costs getting better everybody's digesting the fact dollar's going to be strong. guys saying we were using 115, 120, well get real. if you start using 100 you'll do better than expected at the end of the year. >> we see your point going domestic jim, but durables not reassuring down 3.4 november revised down 2.1. the idea that the u.s. the single engine on the plane is the oil pressure of the engine dropping? >> the durable goods out of whack with almost every company, whether ge honeywell, microsoft, intel. i have yet to find any company that -- include target there -- i have yet to find any company that is bemoaning the united states other than tiffany in the month of december. tiffany had other issues overseas. i'm not so quick to dismiss the u.s. retail sales number that looked bad in december we don't have

retailers doing bad other than the high-est end. flummoxed by the big numbers. but i still come back to you raise numbers for the domestic companies. we had a lot of banks raise numbers people circle back. numbers, look finance is 17% of the economy. >> it is. jim, before we hit a break, you know, we haven't mentioned dupont, which i know both of us have done a lot of work on in anticipation in the midst of what is a fight seeking four directors on the board and somewhat different direction for the company. the company reported numbers, 2015, to acknowledge the share 4.20 what the operating earnings forecast is below what analysts anticipating. they do put in $4 billion buyback, as well jim. curious to get your take on this. >> sure, accelerated the cost takeout from 1 billion to 1.3 billion. obviously, right now oil is still not a tailwind, that will

happen late in year. ag division is rooted in corn and more farmers are planting soy. that sounds small, but when you have a gigantic ag business that is not small. in the end, look it reported on a day people are starting to adjust, wow, 60 cents currency, that's bad. i want people to go over 3m he's saying i don't care about the dollar. we're doing well. he does a lot of domestic. he does a lot of domestic organic numbers to show what's going on. when 3m goes down 10% -- i don't think it will i'm just putting that number out, the stock united states up when reported -- this will be the stock to watch today. if 3m bottoms some point today, that's a sign the market's distinguishing between companies that did well and companies that didn't do well. i put dupont in the middle between caterpillar and 3m. >> 3m yeah local, organic, organic local currency growth up six. >> fantastic. a funny one, who had the best

domestic organic growth so far in the industrials? david, guess. >> i don't even know. no way, can't be what i'm saying. >> is it, man, i'm reading your mind. i'm carnac. put it in the form of a question david. >> doesn't start with -- >> david, you're on jeopardy!" form of the question. >> what would be -- it's not possible. i don't know. ge -- no. >> what's the answer jim. >> the answer is ge for $500. >> very nice. >> it was. >> double. >> i got it. it took me a while. i was scared but i got it. >> jim, we'll come back to you in a moment. >> reporter: blizzard battering the northeast. new england bearing the brunt of the storm. a live shot of plymouth massachusetts in a second. unbelievable especially new england. boston pounded as well. we don't have the live shot. thousands of flights canceled or delayed. collect in with phil lebeau at united's flight operation center in chicago. good morning to you. >> good morning, carl. good news here. they're starting to look at

whether or not to bring back flights quicker than planned, at least with the new york city airports. a lot of that predicated upon when will mass transit open up how quickly can they get planes crews there the fact that the storm was not as bad as expected, that certainly is welcome news perhaps indicates they might be able to bring back some flights quicker than planned. overall, between yesterday, today, and tomorrow united is canceling about 1750 flights, that's about 15 to 20% of the total flights that it operates here in the united states over those three days. when you look at problems when it comes to not just united but other airlines and dealing with this blizzard you see on the map, it's swirling over new england, hartford boston are getting hammered now. those airports are completely shut down. flight aware says cancellations right now, totalling more than 7,000 for all airlines related to this blizzard almost 5,000 today. again, most of those

cancellations are in the tri-state area as well as with hartford and with boston. gis, here at the network operations center for united they are optimistic that perhaps they can start to bring back some flights in the tri-state area quicker than planned. back to you. >> we'll come back to you later on phil lebeau. earnings to tell you about this morning. plus the ceo of medtronic, the company closing the transatlantic purchase of covidien despite guidelines meant to discourage the tax inversion deals. premark, looks weak. we haven't gotten to a lot of earnings including pfizer corning, texas instruments from last night. more "squawk on the street" continues in a moment. ugh... ...heartburn. did someone say burn? try alka seltzer reliefchews. they work just as fast and taste better than tums smoothies assorted fruit. mmm... amazing. yeah, i get that a lot. alka seltzer heartburn reliefchews. enjoy the relief. she's still the one for you. and cialis for daily use

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have you heard of the new dialing procedure for for the 415 and 628 area codes? no what is it? starting february 21, 2015 if you have a 415 or 628 number you'll need to dial... 1 plus the area code plus the phone number for all calls. okay, but what if i have a 415 number, and i'm calling a 415 number?

you'll still need to dial... 1 plus the area code plus the phone number. so when in doubt, dial it out! take a look at premarket. it a tough one, at least at the open in large part because of the earnings that continue to come in. pfizer another one, jim cramer where they reference the dollar though vaccines were up 18. as someone mentioned this morning, welcome to a strong dollar world, this is what it looks like. >> yeah. it would have been great if all of the company as the beginning of the year said look our forecasts for the dollar is wrong. you analysts who are using certain forecasts, you've got to change them right now. i think a lot of people kind of hoping that this dollar wouldn't

continue to slide, it's been a record decline in the dollar like it was in oil, cut in half. i look at pfizer this is going to sound contrary, i like pfizer. i thought they did a good job, given the patent expirations. no one wants to hear that today. it would easier to say i hate pfizer, but i'm not. i like new drugs that they have that are doing quite a good job. but i would come back to say, when this period is over we're going to say, why weren't we in regeneron? what were we thinking not to be in biogen. celgene will get hit and it will come back. this is again, return to thinking all right, pfizer had a good number but nobody cares. maybe a week from now we'll look at pfizer and say they didn't do that badly. pfizer is night favorite of mine. bristol-myers is a favorite of mine. currency is completely -- i don't know what analysts who got currency right. there wasn't anybody who said see, currency was going to be bad. instead, everybody's surprised if you have currency bad and

execution bad, like microsoft, you're hit with multiple downgrades. ore otherwise people say x the currency out it's not that bad. that's the theme three days from now. >> interesting on pfizer of course continued focus on whether or not the company's going to pursue consolidation, as we know of course for quite some time, pursued astrazeneca, speculation, a story at another news organization that it even may have approached the generic drugmaker, 50 billion for a generic maker, they could use overseas cash borrow accretive but it's away from innovation, which pfizer is embracing as its strategy not to mention the breakup of the company. if they were to do a deal like that, they'd spin it off. not sure that made that much sense. but we wonder whether going to look to do a deal. they are aggressively looking at opportunities. >> a lot of biotechs that would

welcome pfizer's cash and stock. you're right, the idea of mylan to go down the food chain for pfizer. the reason why your pork prices are falling, the vaccine. that was innovative company they decided to get rid of. maybe kimberly wanted to become more focused. i'm not sure what pfizer wants to become. >> all right. we'll get cramer's "mad dash" count down to the opening bell in a minute. one more look at futures on this tuesday morning, as we continue to watch developments regarding the snow mostly north of new york city. more "squawk on the street" in a moment.

. you can see columbus avenue is completely clear. it's 7:00 in the morning. not sure how laura's getting to work today. dan working from home up there? possible. look look a good time for a subway ride. but no. is it the dupest thing in the world? >> yeah. we can walk. where are the cabs? this is a joke. >> here's my ride. there they are. saviors. >> want a ride? >> yes, thank you. >> so interesting to bump into you. >> all right. time for the "mad dash." i took videos on my way down jim. i made it 36 and i got picked up travel ban was lifted. absurd they had subways closed. never in all of the snow days of all of the years in new york have they ever done than perhaps flashbacks from sandy i guess were bothering governor

yesterday when he decided to do that. >> look, it is kind of -- if you're in chicago, right now you're just saying what a bunch of jokers new yorkers are. green bay thinking the biggest group of losers i've ever seen. i was surprised. one of the reasons why i stayed at the crown pavilion royal plaza, i had a feeling, you know what? this was a warning post-sandy every time we get some snow we just have to accept the fact that everyone's going to close everything because the one time you don't, sandy made it so everything's changing. >> that was the hudson river rushing into the tunnels of the subway. how many riders are going to and from work city's built on commerce. the idea to do that with seven inches of snow. less than six minutes to the opening bell. >> i was impressed you took the subway. i got to ride it with you. goes underground. >> i used to see you on the subway. going oppenheimer. opening bell 5:30. mad dash. you want to start with freeport.

>> freeport is like caterpillar. listen, what are you doing. freeport more directly involved with copper. bought an oil company. talking about trying to find third party financing. david, when i hear third party financing what that tell me things are stretched here. am i being diplomatic? >> no. i don't believe you are. i think you actually are being appropriate. >> thank you. it's no laughing matter what they got, david. they bit off more than they could chew. >> the planes deal shareholders didn't like it at the time boy were they right. >> right to revolt against. got a big dividend. >> they sold off a lot of the good properties from planes as well. the stuff that they kept i don't think break even -- it's above in wti i believe. >> sure. remember at 44 we could be soon, everything is underwater when trying to drill. everything in this couldn't trip we're not saudi arabia. sometimes we're saying we're the saudi arabia of this or that but we're not. >> right.

we may match in production at some point but not what it costs to get out of ground. >> exactly. >> "mad dash"? >> american air's a company that is going to get lost in the shuffle today. first it ran up a lot. expecting a good quarter. you got a good quarter. second we're in a market now where they're the last to report in the group. all you can do is say, they were as good as delta. we're in a moment in the market where everybody feels like look, even if they're good we should sell because they've run. if they're bad, sell anyway. let's get caterpillar down to 75 76 where it's more rational. look, when we have big down days you wait and buy bye the end of the day you think which of the biotechs bounce back? which of the companies have good dividends and look again. but it's a reset day. that's the point. reset day. >> all right. we'll start that reset day just a few minutes from now with the opening bell. we're back after this.

>> you're watching cnbc "squawk on the street," live from the financial capital of the world. opening bell set to ring in 30 seconds. of course nyse open though subways here in manhattan took a while to open up not that you care much if you don't live in new york city. our feeling sorry for the folks in boston providence, long island, talking one to two feet maybe three. >> they got a real storm. here in new york -- >> deflated up there at that point. >> there's the s&p at the top of the screen. and at the big board, rosenblatt securities. at nasdaq world of money.org

providing education to young people. jim, you say that 3m should be one of the keys to the market but everybody's watching caterpillar and microsoft at the open. >> well caterpillar took your breath away. literally. how -- this is a quarter where if i really felt that oil was such a big impact i would have thought to sell oil companies. i would have sold observation on i wouldn't have thought to sell caterpillar. caterpillar if they set out to make equipment for all of the parts of the world and all of the didn't commodities that are bad, they're doing that. now i know i saw a downgrade today, machinery stocks down caterpillar taking out levels we haven't seen in a long time. i remember -- i remember delivering alpha a couple years ago, chanos talking about how caterpillar could be in real trouble. it took two years to manifest itself. that caterpillar quarter was a head-scratcher given the fact when doug was obviously -- he

literally kind of said listen you know wow, i come on when it's good i come on when it's bad. inga does not come on when it's good and bad, he just does a good job. dave cody from honeywell, he put up a great number. currency wasn't a factor. you talk about headwinds, make the headwinds be real ones at proctor and kimberly talking about the dollar. go back over what cody and honeywell said, this is pretty good. back and forth, this is pretty good. these are not what you're hearing from other companies. i say it's a men from the boys moment. seeing some companies doing well and they're being obscured by other companies that haven't figured it out. >> yeah. even some of the companies, jim, you could argue, got the higher grade on the curve, lockheed texan, glow worm punished a little bit but not much. >> i liked the texas instrument quarter, they did a lot right, a

good organic growth good buy-back. lockheed martin, i was surprised the buy-back slowed versus previous quarters. that concerned me if only because this company's one of great buy-backers of all time. and if you want to see, watch kimberly, they've bought back a quart of the company last decade they had good organic growth but hurt by venezuela. venezuela something to watch guys because venezuela has literally -- it's just -- it's left the building. >> a look at american airlines this morning, right? >> yes. yes. glad you mentioned that. i think if you fly over venezuela you're earnings have been hurt. venezuela is amazing. that's a country to watch when oil keeps going down. when kimberly took $400 million charge -- how about clorox with vision saying we're getting out of the venezuela. listen kimberly can't afford to get out of venezuela they need our products. let someone else make those

products. clorox held up well in part because they bit the bullet in venezuela. >> you spend a lot of time talking about venezuela for a couldn't that small with minor implications. >> $400 million charge from kimberly, that's not small. >> no that isn't small. how did they get to be so big there in. >> growth country. remember when you in fifth, they have a lot of oil. it was a great market. >> it was, i remember being there in the -- i guess it was early '90s, late '80s, good stuff going on. >> the equivalent of brazil. it was like ric instead of bric. >> anyone who has any business is getting killed. i want to come back to the first earnings period a great number from alcoa, great number from wells fargo we just didn't flow it was great. last week fantastic number from honey well ge. amazing number from schlumberger

in retrospect. today it caught up with us. >> you keep trying to rewrite history here my dear friend who i wish was next to me here so i could give you a look. come on ge was not a great number when it -- >> oil and gas -- >> all right. stock went up. a horrible day, stock went up. >> stock went up. that said i feel like you're coming back to things and recycle through them only things to grab a hold of, this i not a good day. >> i'm talking about did. >> plaj major parts of the dow and s&p -- >> by friday we're going to look through. i'm saying if you go over wells fargo's quarter, use that as an example, which stocks stock to where it was, say domestic with rates down rates don't help curve this the house number today is going to be the

last of the bad ones we know from horton yesterday, things are good in housing. this gasoline is going to trickle down to the rest of the economy. hasn't happened yet. >> and i think, really like last night, i was really struck by the fact going over the quarters a lot of companies have said we haven't seen the benefit yet. a lot of that's diesel hasn't come down enough. you'll see benefit. but right now throwing away everything. and oftentimes that's an opportunity and i'm going to include airlines. >> a lot of pressure on tim kick agree? >> which one? >> tim cook. >> way too much. i wish i weren't tim cook -- i guess there's a lot of good stuff being tim cook he runs greatest company on earth -- i heard someone say on "squawk," apple could turn everything around. that is revisionist history. david, i will give -- i think if i were to say apple turned things around, that's being a pollyanna. everything's coming down going to cause up to relook at what we didn't think was that good. and we're going to be at lower

levels and maybe some opportunity. >> back to your point of reset. microsoft down 8.5% is a reset. when you look at a longer term chart, it's still not too bad. >> but they didn't -- right, but this is level it's got to hold or it becomes head and shoulders pattern. >> hewlett-packard down 4.5% oracle down 3%. >> that's on top of seagate, sandisk, zylink. build a good argument on that front. >> i think they'll be -- i'm going to give in to david. it's a horrible david i'm going to got crown royal plaza pa viv pavilion double degree, say it's so bad. i'm trying to find opportunity. that's wait to handle the market for the last seven years, look at opportunity. but it's not the first day. it's not the first day. >> right. that has been the blueprint. >> what am i supposed to do?

>> put in the german ten year. pay them. >> there you go. that's -- how about -- how much -- you know what? if you open an account at first horizon, do they give you $151? >> currency trading. maybe an accountant at fxcm 50-1. >> a lot of the guys discovered there is such a thing as currency trading. why didn't companies preannounce? did anyone hedge? >> jim, you're saying these things and you are right behind you is a wall that is entirely red. >> it's like the red sea and it ain't parting. >> with all of that look at the bred very negative. down dow286. mary thompson. >> low of the session for the dow jones industrial average, of course disappointing earnings news disappointing data on durable goods, contributing to the sell-off that we're seeing here. vix ticking a bit higher.

seeing strength as you might expect, strength in gold. also, oil is higher oil service stocks looking positive and we are seeing people move into treasuries as the yield on the ten year is moving higher. a couple of things traders are talking about the wake of today's earnings reports. they're wondering whether or not, well they say, basically expectations for earnings for the s&p 500 to high have to be brought down. that prompt strategists to readjust earnings? durable goods numbers, negative print, disappointing reading. btig noting poor orders a sign of business spending down for four straight months right now. out of the earnings hearing a couple of specific themes. first, the stronger dollar and the impact of that. the negative impact of lower oil prices and potentially positive impact of lower oil prices. let's take a look at the dow component. caterpillar, a currency story. microsoft a number of factors there. disappointing cloud revenue for casts for that company. weakness in china also at play

and currencies. united technologies taking the numbers for 2015 down as well. once again, stronger dollar impacting those companies' results. dupont a dollar story, currency story as well. company announcing $4 billion buy back not helping its stock. p&g, impacted by the negative dollar but the cfo on "squawk" saying a positive that could help them in the months ahead are these lower oil prices which could boost demand for some products. i want to focus on regional banks because zions reported weaker than expected results. a significant energy portfolio, goldman sachs taking down the numbers there some other stocks, regional banks exposure to energy under exposure as well because of the results. dow coming off its low, 271 points. >> not a single s&p component up more than .2%. it's been a while since i've

seen breadth this negative there talking about the negative impact of the dollar for quite some time. oil and gas, certainly our focus for months now, to a certain extent, and it's creeping into earnings and certainly outlooks and the market had not fully adjusted. i think a fair point. >> in part because companies like caterpillar didn't forecast it or at least foreshadow it perhaps as they should have. we'll see. debate for later on. the bond pits this morning. ten-year a different story as well. rick santelli at cme. rick? >> hi, carl. before i even get to the chartize want viewers to realize, you know some of our systems use a 3:00 close for cash and pair with futures. i continue to monitor the late evening cash close. so if what i'm saying done jive with the charts, you'll know why. look at two day chart of tens sorry, 24-hour chart should jump out at you, that is of course the data had a quick response from the treasury market yields moved lower.

but they didn't challenge what i view is the late cash close from the 15th of january, right around 1.71 for tens. you can see the number on left side of the chart. but 30s a different story. again, the long end. the long end, intraday is trading under that 2.36 level. we monitor this closely because there's divergences. not only weak data, divergences and thank making the market nervous. i'll point to a couple out. europe stamped on the divergence that is worrisome to traders who expected a different kind of marketplace after thursday. they didn't get it. maybe the time line leading up to it was too long. look at two-day of bunds and the second half, basically today's half. look at the two-day of the dax, okay? normally, when the stock market goes up or down rates have a corresponding move. no rates creep higher though the dax reversed lower. that is very significant. if we look at two-day of the euro versus the dollar no

market can go one direction forever. we get a reversal blast on the euro, significant also post the 22nd, thursday's ecb meeting and the mirror image, dollar index, having one of the bigger down days from intraday perspective. back to you. >> when we come back ceo of medtronic, what's ahead for the medical device maker after closing its deal to buy covidien. s&p back to 2033. we're back in a moment. ♪ etta james "at last" sometimes, at last doesn't happen at first. ♪ your dad just kissed my mom.

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crosses the diversification, revenues, from these two companies companieser. >> 27 to 30 billion. one thing an impendment we're seeing a lot of international sales, only more now, of course the strong dollar, what is the impact that you're seeing currently as a result of our currency here in the u.s. moving up so sharply? >> well you know for sure that that is a headwind there's no question about it because a lot of our sales are outside the

u.s. but primarily the euro and yen, two places we have large amounts of sales and so it's an issue that we deal with. long term medtronic had hedging strategies. long term expected to settle down, overall operationally, moving costs to where revenue is only way to manage this but obviously that's a long-term strategy. right now it's a headwind we've got to deal with. >> jim's back in ec. he has a question. >> the combination, makes you a dominant company in 12 different business line but was left open an opportunity i've been waiting for a long time. talking about potential for the repeal of the u.s. medical device tax which i never understood at all. can that be a 2015 priority for you guys? >> well, you know, this is something that has had a lot of energy in the last you know six month or so a lot of convergence around it. we are glad to see than but at the end of the day, there's not

too much we can do about it. currently, device tax is there, we have to pay the device tax. we built our business accordingly. obviously, device tax were repealed it would give us opportunity for incremental investment incremental jobs and that will be a positive for us and the medical device industry. go ahead. >> if i can ask you, it seems that one of the reasons for this very clear to your website, this gives you a little more power against what i guess are some pretty powerful hospital administrators these days. >> well i'd like to say it makes ace better partner because what we have with covidien id a broad range of offerings not only in terms of clinical areas but in terms of wait in which value's generated. a lot of medtronic's therapies are chronic therapies value created essentially outside the hospital setting. covidien's therapies create value within the hospital. when you join together in the

upcoming reimbursement reform which will happen where you get paid over a longer time horizon it positions medtronic to be an effective partner with hospital systems evolved into provider systems. >> you are no longer a u.s. company as of today, though of course you're based here. >> yes and i think we all think of you that way. was it worth having done that? >> well you know obviously we looked at the best opportunities we had and the ability to access the cash that's sitting outside the u.s. and use it effectively, a lot of it in the u.s. we think is well worthwhile. and it makes complete sense to us, we think it's the right thing for medtronic. it's the right thing for the u.s. under the conditions. >> you mentioned that specifically access to cash generated overseas are you going to can you give us detail how you will deploy that in the u.s. >> we made a public commitment

we're standing by we will invest in a billion dollars in the u.s. in medtronic specifically -- medtech, in which medtronic is an expertise in. we know -- access to the cash will help us accelerate that effort. >> thank you for joining us today, particularly on a difficult day to get here. appreciate your willingness. >> medtronic completing the act question six of covidien. omar ishrak chairman and ceo. >> dow's down 302. caterpillar, visa microsoft, goldman four worst, taking 125 points off between them. back in a moment.

time for cramer and "stop trading." >> what happens when you deliver good quarter? good organic growth international company, break everything out how did tid domestically in the different countries, you get 3m. take a look at 3m. it's up. why is it up? it's up because executing magnificently, for the same reason honeywell hangs in here

because dave cody executing magnificently what happen will happen, three, four days who can handle the currency who can handle this oil situation, and who can't? and we're going buy throws stocks. 3m remain up all day? i don't know, etthe a down day. 3m is best in show. a great manager. that's what happens when you have great management at a great american company. >> what's on "mad" tonight? >> a come polaris, why did we pick that? what david should have used to get from midtown. you should get one to cruise around the upper west side. tim walbert, a drug company, drug companies, take a look at pfizer, bristol-myers, people want to buy stocks that have 3% yield. kimberly clark is stuck. 3%, done want to go down a lot. a like that. >> we'll see you tomorrow hopefully downtown. >> yes. >> across the bridge.

>> i'm going to stay at four seasons englewood cliffs otherwise. >> breaking news on consumer confidence, new home sales. take a look at markets. dow down 300. we'll talk to rick and see what you think of microsoft down almost 10% in a moment. welcome back to showdown! i'm jerry rice here discussing the big race between the tortoise and the hare. my guest is stephanie branton. jerry, i'm going bunny. shocker. not really. you see, the hare's "thoracic limbs" allow for greater extension and elongated strides. look for the hare to leverage this advantage. ok.

good tuesday morning, welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, david faber. simon hobbs in los angeles today. >> lucky. >> america's lodging investment summit talking with virgin america president and ceo david curb in a moment. the real storm ms not about snow it's about strong earnings, miss in durables and the dow down almost 300 points s&p below 2030. oil one of future things that's working today, down almost a percent. getting some macro data now. rick santelli in chicago. rick? >> all right. first, we'll go for the easier date tap richmond fed for january, about as expected came in at six. now for the heart throb of it all, 102.9 for january read on consumer confidence, that is

just off the charts i think it's probably due to energy. believe me that's the best read since august of 2007. and the last one to be coming in, of course new home sales, and that is a big deal. why is it a big deal? new home sales is definitely a bit on the strong side unlike durable goods. 481,000 on the seasonally adjusted an annualized base since nitty-gritty on this stuff, aim towards the snow head east and see what diana olick is up to with regard to her interpretation on the read on new home sales. >> a big number, of course signed contracts, not closed sales, of newly built homes in december of 2014. the jump is big, as you said a revision. what's interesting is the pricing because that's what we've been talking about in both new and existing homes. prices, significantly higher. pricing, the median price

$298,100 in december. that's a big gain from 275,500 in december of 2013. the builders still raising prices, even though complaining on the one hand that not enough people are coming in because of these higher prices. existing home sales, we saw from case-shiller, price gains coming down. you might think more people would be going to existing market. i've got to say, everyone's going to say a volatile number but a big jump. can it continue into 2015 as we see more supply of existing cheaper existing homes come on to the market? we saw dr horton yesterday saying express homes, an entry hfl level -level doing well helping to boost earnings. prices higher for new homes, can they keep that going, once the inventory of existing homes comes back this spring? already seeing inventor start to bump up a little bit on the existing side. back to you. >> thanks for putting it in per

perspective perspective, diana olick and rick santelli with the number. a big sell-off. the dow's down nearly 300 points. s&p 500 down 1.3%. bring in art cashin director of floor operations with ubs. the blue chip companies missing, one by one by one this morning, that is what it is negative sentiment around earnings? >> more than domestic. you're right impact of the dollar on earnings is clearly being felt and that's casting a pall not only on those reported but anticipation of those yet to report. we still have problems in europe. they kind of let greece slide yesterday. they're back at them today. greek banks are down 10%, in some cases. so this is kind of a combination of several things. the strong dollar impact on earnings, and some lousy 8:30 data. >> why is this coming as such a surprise? we've been talking -- i've been talking about the strong dollar

for the last six, seven months and how it will hit earnings and the stock market kept going higher. why is this a surprise? is it going to impact the stock market and earnings for rest of the year because it comes up in all of the guidance and lowering forecasts. >> yeah, i think up until now people looking at it other than you and i, were saying, you know it's a nuisance it's not a high-impact item. >> dealt with it before. >> right. >> it is one of those things they can't control. >> i know. but recall all of the arguments that people would pop up only 18% comes from offshore blah blah, blah you know, that's not important. i think they're going to see how important it is. and again, we're beginning to see that the drop in oil is not necessarily an allowed gift. a kind of ugly buffet in friend of us today. we've got europe starting in again, greece getting pounded, and then we have these problems with the dollar and some

earnings outlooks. >> michelle caruso-cabrera write the market thousand tsipras would strike an -- >> i think the first day things looked like they were in stride he made a quick coalition with a large enough team that he could even avoid some of his -- his version of the tea party, if you would that the more rebellious member of his own group. so everybody thought, well maybe this is going to move along, it was all for publication, the election. not so far. still using the same rhetoric. >> consumers feeling awfully confident right now, but that is not matching up with what we're getting in terms of retail sales, and durable goods, you buy the number? negative 3.4%. there's sketchiness. steve liesman is pointing out if you take away defense and aircraft orders it looks a lot better. >> looks improved. but some revisions bad, too.

it is a worrisome number. i agree with rick santelli i think the confidence number got a big boost from dropping gasoline prices. you know, art, it's funny, i mean, through time we've seen other periods of a stronger dollar, though haven't been that many in recent history until very recently. willingness of investors are to ignore it sometimes and then focus on it goes back and forth. i don't know necessarily what distinguishes this point in time from other. you're a student of history. perhaps you can help me here. >> i think it's one of those things where you know it's an annoyance, it's conditional. it's not important. as carl said you've addressed it before. and then suddenly begin to say, wait a minute this is ongoing. this is the aspect of currency wars that we've talked about, when it begins to change for the cerebral chess match to people poking each other in the face and we're getting very close.

you had an absolutely stunning whipsaw move in the swiss franc overnight. some people felt there may have been closet intervention that came across. but you're beginning to see currency markets destabilize here. and that will not be good. that will not be good for people's trust. >> i thought it was interesting p&g used unprecedented in their earnings release, that's not a word you use lightly. unprecedented currency devaluations from a company that has -- for whom this is not their first rodeo. >> absolutely no the they've been around the world and successful. not given to using currency as an excuse. absolute concern. >> i would point to that i mean they depend a lot on the emerging market. ruble devalued by 55%, unprecedented. venezuela, ukraine, sell a lot of the emerging market countries. >> morgan stanley pushing expectation for first rate hike 2016 q1 sound reasonable to you? >> i've been there okay? i think we still have surprises to see in europe. it looks like they have some

form of qe, i'm not entirely sure it's going to work. i think there's going to get pushback before they begin to implement it. >> all right. art cashin thank you very much for joining us. we're monitoring off the lows but dow down 267 points. we dodged a bullet here in new york city in terms of the worst of predirections for the storms. much of new england hit hard the farther out east the stronger winds, colder it got, and the more snow. obviously roads in new york city are back open and so are the subways. man who dodged all of this is simon hobbs who went out to los angeles for a hotel industry conference with the virgin america president and see. i'm sure simon, he's dealing with the fallout. >> it's in the 70s again today here in l.a. you know sara the airports are closed in new york. you need to bear in mind about one-third of the country's air traffic goes through the new york region every day. so as it stand as the moment

it's a national problem. the ceo of virgin airways. the youngest full service airline in the country. good morning. >> good morning. >> how many flights did you cancel? >> about 100 flights over 3 days, which is 25% of our schedule. >> you have 53 aircraft. where are they now? where do the aircraft go? >> i'll tell you where they aren't and that's new york and boston, most important thing, get the aircraft out of there. what we ended up doing, canceling out origination, primarily california and they're gassed and ready to go as soon as airports open. >> one of the big questions, will flights resume today? if you canceled them can you reinstate them now that the new york airports aren't that bad? >> you can reinstate them. one of great things about the technology available now, in terms of getting in touch with customers. we could operate it to the airport this even for example, we could reinstate a flight and get people on that flight. the biggest issue we have with the airport now is getting groundworker there's. and -- >> out for the day.

you subcontract. they may not come back in. >> even if you do your own ground handling, they've been told to stay home. drag people in on a snow day when told to stay home is difficult. >> it's interesting watching the way in which the big airlines canceled. their biggest fear to leave aircraft at the stand, during a snowstorm. now, why is that because physically it's difficult to clear them or clean them or because you don't know what the air crew is going to do or is it charges? do you get charged more for being at the stand for 24 hours? its not the cost. if you have an aircraft there, in an event like this that aircraft is out of service. >> it's locked. >> it's locked. >> locked. >> yes. if you have got a snowstorm like the one they're having it can take an hour hour and a half to de-ice. you've got an expensive asset no longer at your disposal. >> it's two months over two months since you and i sat at nasdaq when you ipo'd at nasdaq april great run for the

airlines. stock's up 60% because of what happens happened to fuel costs. >> yes. >> this bombshell from you thursday, it's taken $6 off the stock, you're down 12%, from a good high. >> right. >> but still down because you're locked into high fuel prices this quarter and next quarter, hedging. how about you hedges the wrong way? >> we didn't hedge the wrong way. hedging is there to smooth out the wild gyrations in the market whether up or down. we're getting negative side because the market's down. at the same time that will balance itself out. once we lock in the second half of 2015 we'll be locking them in at current prices. >> but you're at $2.76 this quarter, $2.48 next quarter, when the market price is below 1. 6? >> yes. >> david let me ask you about the virgin group in general. wlp you ipo'd, it was clear, but the richard branson might be looking to exit.

virgin money on the market in london at the same team we're in a phase where not only is virgin homes launched in chicago and we've seen pictures of that particular premise, but also now, virgin cruises, it's clearly on deck. that's a huge investment. that will be billions of dollars. >> yes. >> what is happening to the virgin group. >> having been i guess, quite successful with one of its main businesses, what happened to david cush now? >> the group is riding high. it's a popular bran. it's a lifestyle oriented brand. >> premium at low cost airlines. >> absolutely. we expect it will in hotels and cruises because of the experiential nature of the brand. the bran will do well. what happens to david cush i plan on being here and bugging you. >> david cush ceo of virgin america. plenty more to come from the investment conference and perhaps we'll get a chance to talk about gouging, guys.

the knack fact that simon's hotel is twice as high as the first two because he couldn't get back to new york. >> thank you. ? when we come back microsoft one of the stocks waving heavily on the dow, down sharply. rick has been bullish, did downgrade the stock to neutral. he'll join us live. financial noise financial noise financial noise financial noise

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blizzard 'hitting new england but microsoft taking a hit. earnings were in line with peck expectations but saw a decline in commercial licensing revenue. downgrading from buy to neutral, citing a tough transition for the company. joining us analyst rick sherlund joins us 30 rock. good morning. >> good morning. title of the report honeymoon end, that's all you need to say? >> yeah i think that they've had a benefit, you know for the past 16 months of significant multiple expansion. it's been a great stock. and last year you had the migration from the older version, windows xp where they

ended support, to a newer version of windows, so you had some tailwind as you're transitioning more to the cloud, you had this benefit that's now dissipating. and no one was real sure how much of a been fit that was versus underlying pc demand. when you looked under the covers of the december quarter, you realized windows was down 13% and office was down 13 per commercial and 25 for consumers. so if kind of took your breath away. and you realized the tough comparesons are coming up in march and june. so as we say, the honeymoon's over, you've got a tough transition ahead. you can either get through the next two quarters before you see things more normalized for them. >> you have been pinning hopes to move on the balance sheet. that is still alive? >> we thought the last remaining catalyst here was what are you doing with the cash. they did announce on the call they were going to use remaining share repurchase authorization

up more quickly. there's 31 billion left. we'd like to see them do about 35 billion or buy back 10% of the stock over a short period. they announced they'll do it over eight quarters. there's not immediate gratification there. it's going to be extended over a longer period of time. >> amy hood mentions the dollar which has been the focus of our discussion regarding all kinds of earnings today, rick. we've been talking about strong dollar environment for months, not just us everybody. it's the worst-kept secret everywrp whyevery everywhere. >> for microsoft, a 1% impact on the quarter because they have extensive and expensive hedging program. so about the most i've seen microsoft get hit one or two percentage points from currency. but because of the extraordinary move i guess you can't hedge for all of that, they did say it would be 4% headwind in the march quarter, was going to be a lot less than we'll see for most of the software industry.

>> all of the tech sites are writing about the hollow lands don't know when it's going to become a consumer product, vis virtual software product. is there a different kind of spirit at this company that makes them cooler and more innovative on par with the likes of google and facebook? >> yeah i think the new ceo nadella wants to innovate. the reason they showed you that product was to underscore that you know the company is innovating again. so it's nice to see. but i don't know that it's going to be a commercial product for another year or two. it's not going to move the needle. it's one of the things to demonstrate the philosophy of management, which is they're investing in the business they're not just wildly slashing costs and getting rid of x box, bing areas where they lose money. he's trying to build business. at the same time they are cutting costs. i don't think you'll see costs go down dramatically from here

i'm think they're going to continue to want to invest around windows 10 the platform for innovation going forward. >> rick, given the stock price itself down 10% right now, you're talking about a multiple i think, of about, let's call it 12.5 times if you tax effect offshore on 16 numbers. has the result in 10% in the stock price already taken out or taken into account what you're talking about? >> well david, on calendar 15 if you look at enterprise value to free cash flow, about $11 is where i've seen oracle and microsoft show good support in the past. you hit that level around $40, i don't know that you'd ever get to that level. but that's kind of the floor, i would think, from a valuation perspective you would think of. >> 11 times, yeah. okay. >> right. >> finally, rick i don't know

if apple's in your universe but they report tonight. would you look for as much forex effect from them as we have seen from other big national multi tech companies. >> not aware of what they're hedging perhaps are. but the currency swing for example for the march quarter is going to be 16 percentage points. half of your business is in -- offshore, you could expect an 8% hit from that. so it's going to be more about the guidance for you know march and june quarters. it's really dramatic impact from currencies. meanwhile, the euro seem to be weakening. i'm not sure we're through the whole thing. currency is something that will ripple through. we know it's coming but you don't reflect in the numbers until you get more clarity on the call. so it's an optic, at least at minimum. it's a headwind for us. >> good to get your insight. >> rick sherlund. >> dow down 288 points. more on today's big sell-off

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markets close session lows here. pretty much at bottom of the day. dow's down 309. news has been uniformly negative, whether durables and a miss for december, revisions for november and of course all of the earnings from big multinationals hit by the strong dollar. dominic chu, as you saw, at hq with market flash. >> sneak peek. although there was mixed news out there, right? good consofumer confidence.

corn, the company reported adjusted quarterly profits of 45 cents a share, 7 cents better than what wall street expecting. sales came in higher than forecast, as its results helped by strong demand for lcd glass products, the stock as you can see, up 3.75% on the trade. one green sliver. >> caterpillar in the red, hit hard by the drop in oil prices. the stock on the dow, down more than 7%. low oil prices low copper stronger dollar hitting hard. what the ceo had to say about the year ahead and find out what to be doing with the stock. we'll talk to jpmorgan's analyst when we come back been know that chasing performance can

mean lower returns and fewer choices in retirement. know that proper allocation could help increase returns so you can enjoy that second home sooner. know the right financial planning can help you save for college and retirement. know where you stand with pnc total insight. a new investing and banking experience with personalized guidance and online tools. visit a branch, call or go online today. [ male announcer ] at northrop grumman, we've always been at the forefront of advanced electronics. providing technology to get more detail... ♪ ♪ detect hidden threats... ♪ ♪ see the whole picture... ♪ ♪ process critical information and put it in the hands of our defenders. reaching constantly evolving threats before they reach us. that's the value of performance. northrop grumman.

an hour into trade, some stories we're watching at 7:30 on the west coast, 10:30 wall street. pfizer, higher on better than expected quarterly results drive bin rising sales of vaccines and cancer drugs. the stock, down 2% for aal. consumer confidence, above ten points to january reading of 102.9, the highest since august of '07. >> u.s. markets taking a hit from a slew of disappointing earnings out. caterpillar among them, shares trading at lows we haven't seen

since july 2012. doug oberhelman discussed the impact of stronger dollar and falling oil prices. >> looking at a soft year in 2015, and several reasons for than when we were altogether in new york, i talked about the impact of oil and it would hit us and it is. oil is a piece of our energy and transportation it's worth -- oil and gas is a thrird of the business. the natural gas piece of the business is doing well and so far holding up. the oil piece, though what we're taking down the primary number for reduction in 2015. >> what should you be doing with the stock? let's bring in ann of jpmorgan. you anticipated the oil price plunge would hurt took the stock down to $80 price target underweight. surprised how much it's impacting results and guidance for the year? >> clearly, guidance lower than

anybody had anticipated. now caterpillar, in particular, deck kramental margins what investors care about, they forecasted 25 30%, on lower revenue number. 475, turns out to be the right number, then investors are might want to look at putting a peak month, 20 month on those earnings which might make it attractive after today but a lot of questions going into the conference call. >> what's going to be your main question? they'll take additional restruck restructureing act. >> for deep value investors the most concerning thing in the press release keep cap x roughly flat. when earnings fall by more than 20%, year-over-year we expect managements to cut back on capital spending and rein in spending of all sorts. for me the most important question going into the call.

>> was there a way to extrapolate from any of the monthly or rolling sales data this quarter? should people have been taken by as much as surprise as they had been? >> that's an interesting question. yesterday we got their dealers' retail sales data and oil and gas sales were up 25% year-over-year. so, that was a surprise to everyone i think, to the upside. might have spooked some people coming into today. i think this is -- the ceo doug trying to set expectations as low as he possibly can, and the question is whether 2015 is the trough or whether we're going to look to you know further downside going into '16 from indirect exposure to oil and gas. >> obviously, not looking for big things out of the economy. oberhelman on our air, trying to fen fend the fed off.

i wonder where do you draw the line between number of ball he has to juggle and his own execution? >> we've talked about that several quarters before this. you know i think, again, he is in cyclical industries and has to manage the down turn and the upturn. the big question for doug whether they can, if he can handle 25% 30%, decrimentals. if the company doesn't, his performance will come into question a year from now. >> china numbers were disappointing. what is the view what are the problems over in china, besides falling price of iron ore and commodities? >> i think china's not huge for caterpillar directly and investors focus on it but in the big scheme of things it's only 5% of their revenues. but what we are seeing is a

continuation of the downturn in construction and construction activity and the industry's paying the price for overspending and overproducing for the last three, four years. it's just a continuation of what we've seen for the last couple of years. >> so bottom line i mean if you hear what you need to hear out of the call do you think this guidance was conservative enough to have a low bar, low expectations for 2015 and then would you be a buyer? >> i think we're going to have to wait and see how the economy turns out. it's early to start jumping in at this point, in my view. we don't know what the impact of lower oil prices is going to have on their business into mid '15 and into '16 versus what could be a positive for consumers. so we are lacking visibility at this point. i think it will take a little bit of time for investors to start jumping back in. >> and they said they're expecting economic growth to improve modestly in 2015.

that was out of the earnings release. thank you. dow's down 350, this is the biggest point drop not percentage, but point drop for the dow since june 2013. you've got to go back a year and a half to get as many points to the downside as we have today. fed kicking off a two-day meeting, investors watching for clues about rate hikes in its statement tomorrow. steve liesman at hq. >> sharp movement for the federal reserve, pushing ahead outlook for federate hikes. fed time line that we show you how this survey is different from the prior one. 33 respondents, economists, investment managers and analysts. take a look, first time the issue of when the word "patient" would be struck or removed from the statement. that is march. that's only 33%, you have to go ahead to april to get to a 50% majority or greater. how about when they will hike rates? important movement here from

july 2015 in the current survey now it's september on average, respondents do not see a rate hike until september. balance sheet allowed to decline, 4.5 trillion balance sheet, had been february 2016 pushed ahead until april 2016. one last metric we follow when will the federal reserve get finished hiking rates and where will it be? had been first quarter 2018 for one of the longest lowest rate hike cycles. it's still the same quarter but looking for a slightly lower average rate. we asked our respondents, why are interest rates so low? here's their reasoning. the first one is 72%, it's because of low inflation. i have to say, i maintained this for a very long time ten-year more sensitive to inflation outlooks than it is growth outlooks and only 19% say it's because of low growth. 13% say it's european qe. about a fifth say it's because of the easy fed.

and a third come in with the number two position, flight to safety. now, let's take a look at the fed funds outlook and the ten-year outlook. fed funds right here a quarter, 73 for december 2015 down ten basis points. 1.26, 1.75 this number was above 2% just back in august this year. push that over take a look at the outlook for the ten-year, and this has come down sharply, folks. 2.14 for june 2015 all the way to 3. all of these are down about 50 basis points. carl, we'll have more on the outlook for european quantitative easing effect on the u.s. and europe as well as the impact of oil and in a few minutes i'll punch the button put a story on the web about this on cnbc.com. >> quickly, steve, how much is because of the strengthening dollar, even if the federal reserve won't come out and say it -- >> you mean the outlook for fed policy, how much that's changed.

>> people are pushing out forecast for rates a little bit later. morgan stanley today calling for march interest rates. this is hurting growth. will the fed acknowledge that? >> first, i think it's a piece, i don't think it's the whole thing. you have lower oil prices you low inflation, and you have the stronger dollar which could be having an impact by the way, we saw this morning in the durable goods report. that could be hurting some shipments, some exports. although that number was much worse than the underlying economics suggested. but still, i think it's a factor i don't think we had a point where the federal reserve would add the stronger dollar to the statement right now. >> yeah. would have to be pretty bad for them to get there. thanks, steve. an exclusive interview with the co-founder of home away. one of air b&b's biggest competitors. what happens next for their mobile strategy. before the break a check on the markets. market equivalent of deflategate

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take a look at technology this morning, one of best performing sectors of the year until today. down sharply in the sell-off. dominic chu at hq. >> the worst performing s&p 500 sector today. a tough day for the information technology sector. led to the downside by microsoft shares this after the software giant gave 2015 fiscal guidance below what analysts expecting, citing currency headwinds. hewlett-packard, intel, micron, moving lower as well. cisco also in that list there, carl intel, microsoft, cisco, hp four of the most heavily weighted companies in the tech sector down big in today's trade. >> that explains a lot, with the dow down 360.

as the blizzard disrupts travel while companies like air b&b may be disrupting the logic industry the idea of renting out your home is not new. home away does that connecting travelers with homes ready to be rented. over to simon hobbs. >> hi, karl. everybody today's stressing about what foreign exchange markets and stronger dollar can do to your earnings abroad. for this sector these momentum plays like priceline, 75% of its profits earns externally, we've been through this rose with priceline and fell with priceline. as a result its market cap went from $4.5 billion to $2.5 billion. the co-founder of home away which has 1 million international rentals online now, carl shepherd joins me now. >> when you see the markets really under pressure today, foreign exchanges front and center, you've been through this what would you say? >> i think, like any company

that has 40% of our revenues from outside the united states we've always been looking at the euro and the appreciate sure that the you'reeuro's under lately is a concern. ethnic neutral basis, we look at this as if there's no fluctuation in currency and we manage our company to hit targets that fx newutral. >> momentum plays you and priceline and everybody else moving together in the stock market you rise and you fall? >> absolutely. in the last round of earnings reports, we watched that day the euro was falling, priceline went first, tripp second we went last and fell in tandem this day. >> this isn't your first rodeo. what would you say to investors? dow down over 300 points looks scary. >> i look mostly at my sector and follow it the most.

one of the things that in the united states travel we see travel unlittle pressure and therefore, home away looking in the united states is fine. and we're also looking at our european sector. one of the things we've noticed through the last recessions europeans tend to travel. even though we may have some pressure sures we expect travel to maintain steady. >> let me pick up the mood of the conference. this is very very important here. this lodging industry in this country, is going to have record occupancy this year. as a result the advice from consultants to push holtz prices higher by over 5% they think the market can take this year to the extent that there's going to be record profitability from the lodging industry this year. and this is the motif, don't worry, be happy. literally what this conference is doing with its dellegatedelegates. it's on the front of the programs. i'm not sure that's what you see from the financial press. it's very different. >> certainly is. the mood is more upbeat about

investment in hotels and in the sector. perhaps that's going to ride out and come on the other side of this with investing being in a rationally high level. as far as whether or not the hotels could push through price increases in this year that's telling for us all. >> they say 10% in parts of california. people keep talking about air b&b. you are not air b&b. you don't rent out parts of apartment you rent out whole airportsren't apartments. you're defending yourself in san francisco against air b&b. the judgment will come through in the next 24 hours. summarize what's happening there? >> right. what home away is leading in the united states and 100-year-old industry in europe and new regulations that regulations that are coming out trying to regulate the sharing economy, where you're sharing your apartment. >> at the city level. >> at city level. i think one of the things that

we're doing always is we fight for fair regulations, want everyone to be able to rent short term who can rent short term. we want this a level playing field, taxes collected when owed. what we came up to in san francisco they said some people can rent some can't and that's not -- that's bad for people and they said one business model works and another business model doesn't and that's not good for industry so we decided to take a stand on that. >> seeing if suing of san francisco works and what it means for other cities around the country. great to meet you. carl stepherd. >> see you in a bit. coming up shark tank's kevin owe o'leary braves the blizzard. dow is down 377 points. s&p 500, almost down as much as 2%. seeing more than 2% declines on the dow and nasdaq. back on the sell-off after a quick break.

stock market extending its losses. let's get the santelli exchange with rick. hey, rick.

>> good morning, carl. . i would like to welcome our guests, my housing guy, mark hanson. we will work backwards in time to the recent data. we had case-shiller new home sales. seen existing home sales. new home sales foreign listeners and viewers, the 20-year chart tells me the low 270 k from february of 2011 and the high july of '05 shy of 1.4 million units. today's number 481,000, best since i think it was about, what, 2008. what are your thoughts on today's number? >> 481,000 gets everybody giddy but in reality, that's a seasonally adjusted annualized sugar number. the real number is that there were 34,000 houses sold in december which rounded in each four regions, could be 32 to 34 compares with 30,000 a year ago during the polar vortex when rates were 150 basis points higher.

normalized i would think it's roughly apples to apples the same. you have to look at those not seasonally adjusted numbers, rick. >> good point. as a matter of fact, my santelli exchange about an hour from now will apply the same logic to durable goods and viewers will be surprised at the outcome. here's the only thing that matters. is the housing arena, housing sector because of all the cottage industries a helper for the u.s. economy and any significant fashion for 2015? your thoughts? >> in the past year and a half two and a half years rather we've had a price recovery, not a demand recovery 2014 new home sales were 15 to 20% below analyst expectations. look at single family housing starts and permits. they were masked by the misallocation into multifamily. we've hit a peak especially if oil prices have an effect on demand in the southern region which drives houses housing will have a net draw against gdp

this year. house prices coming down i believe is the story for 2015. >> okay. now when it comes to interest rates with he could make an easy statement. low interest rates certainly arnce going to hurt housing. but the real question is everybody jumps to conclusions, we've seen refi activity i get it, these low rates have once again resurrected that chapter of the marketplace. s that has that run its course? >> low rates create some incremental depanned an pull forward a lot of demand into refinances and home purchases. which is why you saw a stronger than expected number today by a couple thousand housing units across the country. overall unless rates get down to below where they were the last refi and purchase cycle which ended in june of 2013 when rates popped up you're not going to get anything meaningful or durable. you will get high volatility in

the mortgage markets. >> thank you very much. our time has run out. you covered a lot of ground. sara, back to you. >> thank you. >> thank you, rick. and with the dow down 370 points let's get over to jon fortt with a look at what is coming up on "squawk alley." good morning, john. >> good morning. we will be talking markets with the dow as you said near session lows 2%. nasdaq more than 2%. s&p near session lows. we will be talking about microsoft's results, that guidance that disappointed and finally, forget about the weather we're looking forward to apple, apple save the tech sector out after the bell today. we'll take a look at the preview coming up on "squawk alley." if you're running a business legalzoom has your back. over the last 10 years we've helped over one million business owners get started. visit us today for legal help you can count on to start and run your business. legalzoom. legal help is here.

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hp helps business move on all the possibilities of today. and stay ready for everything that is still to come. . heading south on 8th avenue. what's this guy's deal? new jersey. otherwise just emergency vehicles. times square coming into view. by the way, it hasn't snowed a flake since i started walking. just letting everybody know. not not often do you get this opportunity to walk through

times square in the middle of the street. that may be a life experience. the huge billboard. pretty. how long did you shovel for today? >> all night. >> all night shovel. >> 5:00. >> you guys did a great job. look at this. that's amagds. >> thank you. >> how ridiculous is it the subway is not running? >> it's very bad. we need to work. >> we need to work. everybody has to get to work. >> we can't go home. >> you can't get home. >> you made it. >> 6 million take the subway or rides every day. the city people need to get to work. i don't know how that got added to the list of things that get closed during a snowstorm. hopefully next time wons be closed. >> i love how you're always reporting. not breaking deals reporting on the street. >> it was fun. a beautiful walk and fun to talk to people in the same boat as i am. what are we watching here? >> besides the weather, watching the currency market. everyone and their mother is blaming the strong u.s. dollar and the currency impact.

what's happening in the markets right now is the dollar is weakening pretty significantly. the euro above 1.14 perhaps the corporate executives can breathe a sigh of relief today. the problem is the prognosis the dollar will have a very strong year and we should note thompson reuters put out a list 18 companies in the s&p have reported guidance. of those, all 18 of them have disappointed. disappointing outlooks. that's been the theme. >> certainly has. this morning. we see broadly, of course with the s&p down over 1.5%. we are having a poor day due to earnings. it's fundamentals. people reassessing what the p/e they should be paying for the companies given the move specifically in the dollar affecting some of the multinationals. >> with the dow down about 360 points, over to you for "squawk alley." >> thank you very much. welcome to "squawk alley." on an eventful tuesday morning. the blizzard hammering the northeast but a bigger storm if the markets. stocks fall the dow down about

364 points. this is the worst percentage loss for the dow since june of 2013. biggest point loss in about four years. almost fours years. today's action largely the result of weaker than expected durable goods. rough patch of earnings and outlooks at major dow companies in large part because of the strong dollar. joining us this morning for the full hour zillow ceo spencer rascough with a new book today "the new rules about real estate." thanks so much for taking the time. >> thank you. >> jon fortt, kayla tausche as well. your take this morning, spencer? you're a real estate guy but thoughts op the degree to which 4 x and some of the macro data ha