commodity of oil. don't know if they're bottoming or not but they are some of the best performers today and they've been some of the best performers recently. big market day. "the closing bell" has the economists from morgan stanley with their fed call. fed day tomorrow. "the closing bell" starting right now. i will see you in about 23 hours. well happy tuesday everybody. welcome to "the closing bell." the market finally trading on earnings but guess what? it's not liking those earnings. it's a market sell-off at the new york stock exchange. welcome to "the closing bell." i'm kelly evans. >> i'm bill griffeth. and then there's snowmageddon. billions spent on a storm that was largely a bust for those in manhattan part of new york city and parts west. those of you in long island and connecticut and eastern massachusetts and rhode island you got hit as was predicted but those of us in parts west preparing for all of that was a huge displacement and there's a thought that maybe billions will

have been lost as a result of all of that. the biggest blizzard though turned out to be inside the new york stock exchange today. >> well put. take a look at what's happening in the market. we are geared up for a negative start then got a flurry of earnings. caterpillar disappointing. microsoft didn't help thing. both stocks getting hit hard. what's interesting, that's contributing to the dow being a weaker performer than the s&p today. it's off 231 points. the s&p mean while down less than 1%. so you could argue perhaps it's an oversized reaction to a couple big companies, but by the way, they're important companies, and by the way, the nasdaq also off 1.3%. >> if we get a moment could we see crude oil settled higher. we did see a comeback in that sector and energy was one of the leaders to the upside in an otherwise down day. crude oil was up 2%. it was up 3% in the settlement. we're in the electronic trading

right now. in fact, i will just point out, the aaa daily national average gasoline gauge actually rose today. he was unaware that gasoline prices could actually go up but they did overnight. >> first time since mid-september they have moved higher. because of some refinery outages as well. >> mysterious how those things happen this time of year. we have an extended "closing bell" exchange. christine short is with us. rob morgan jeffrey cleveland from payden, and rick santelli oning us as well. what happened here david? did the market just suddenly realize that the dollar is strong and that oil has been weak and that that was going to hurt earnings from some companies that would be affected by that? >> i think you're seeing the recognition by investors that is

stronger dollar and lower oil prices is bad for some companies. the impact of oil is relatively isolated to the energy companies but a stronger dollar with the s&p 500 drawing 50% of its revenues from abroad a stronger dollar is definitely going to burn a little bit there. >> but we just needed to wait for a caterpillar and united technologyies and other companies to tell us that before we figured that out i guess. >> jeffrey cleveland, how much of this is to blame on these macrospa spa macro factors? >> looking at the data i thought it was all driven by durable goods. look at treasury yields right after 8:30 a.m. new york time. you see that plunge in 10-year yields and 30-year yields. i thought the market was reacting to durable goods which was weaker than expected and the big way to read that i think, kelly, is perhaps investors, forecasters, got a little too enthusiastic about a cap ex boom or a pickup in cap ex given the

data we saw back in q2 and q3. maybe that enthusiasm was a little unwarranted and we're seeing that fizzle out here in the data. so that's actually how i read the market today. >> speaking of which christine short, we're waiting for apple's earnings after the close today. you have called it one of the most highly anticipated earnings reports of all time. i think i heard the mayor of new york city say similar words yesterday as well. >> hey, look you know the holiday results are always big for apple but i think with iphone sales expected to hit a record, we're certainly looking at this this afternoon. we're expecting $2.61 and i have to say that's in line with what wall street is expecting. usually there's a bigger divergence between our consensus and wall street. what that says to me is that this beat isn't baked in if there is a beat, so you could see the stock soar if it does beat after the bell. we already saw some notes fromu

bs ubs saying they're seeing chinese sales of the iphone outweigh phone sales here in the u.s. for the first time ever. so i think there's going to be some interesting things to watch from apple and we'll also get a bigger sense of how the tech industry is faring with this stronger dollar. arguably the sector most impacted by a rising dollar because they get a large chunk of revenue from outside the u.s. we'll see if that's across the board or just certain companies with management issues. >> you wonder kelly, whether a big beat by apple which is anticipated is enough to buoy the whole market or conversely if a miss by apple would be a bigger disappointment and bring this market even further lower here? >> apple punches a lot more than microsoft in some of the indexes and you can see the impact from that company's miss yesterday. interesting to go back and ask you, rob, whether to jeff's point here earlier how much of what people were expecting for 2015 is predicated on a capital

goods corporate spending boom and how much by the way -- because, again, look at the consumer confidence numbers this morning. even some of the hole sales data, how much might actually be consumer strength that carries us through in the end? >> i think, kelly, ultimately it's going to be consumer strength that carries us through in the end. i think durable goods today was certainly an outlier low, and then we did see the earnings reports that reflected a rising dollar. i think we're going to continue to see a rising dollar. that's why i have been suggesting underweighting those big cap multinationals leaning more towards smaller cap companies and underweighting international investing as well. >> rick santelli kelly and i have been having a conversation today about why the markets haven't responded more drastically to the elections in greece over the weekend where you have a new prime minister and a finance minister pounding the table loudly about no more -- they're going to change things now. mo no more austerity in that country.

why are we seeing a greater response in the markets right now? >> i think it's a bit of kabuki theater. they need the bailout funds already promised but they know they have a great position because from the perspective of the bureaucrats in the eu it's like the hotel california. they won't let you check out or let you leave, and i think the greeks are going to get a lot of what they want. i don't think they're going to get all of what they want. but history deck tatesictates that's the case. i think the market is looking at this one accurately, and i think when it comes to interest rates just consider this. we're at a 1.78%, 1.79% before any durable goods orders came out. we're currently at 1.82%, virtually unchanged on the day. the other thing that to many might not make sense is we really haven't seen the kind of drop in yields post last thursday's ecb announcement considering the kind of data we have had. believe me that's something to pay close attention to. >> you mean the soft data or the -- >> the soft data.

strong data doesn't count. consumer confidence is gasoline. we all know that's what's driving consumer confidence. in terms of new home sales, it was better than expected but consider over the last ten years what the extremes have been. in the 200,000 camp a couple years ago, in the 1.4 million camp nine years ago. it makes 48 is1 look a little different. >> this is interesting, there's this tension, almost this -- interest rates are caught between weaker than expected data, important u.s. data points but on the other hand there seems to be another force and maybe it is this idea that oil is nipping higher and we've got quantitative easing in europe coming and all of those forces would otherwise be pushing interest rates higher. is that what you're saying? >> could be like the euro constipation constipation. you can't have everybody one way in a markets even if they're newcomers on the bandwagon of loans and treasuries and think the market is going to move forever. when things stop making sense, even a little bit, you got to pay very close attention.

>> yeah. >> david, what do you make of the greek issue and why we're not seeing a greater market response to that? as rick suggested, they're not going to get everything they want over there. we already know that. why have an extreme market response at this point? >> i think one of the biggest things is the element of contagious relative to the debt crisis in 2010 is significantly smaller. greece's problems are pertaining to greece. they don't exist out of the country. equity markets and rates around europe were relatively muted in the wake of the greek political election. that's part of the reason we haven't seen a knee-jerk reaction. >> circling back as well to the other fact quoors moving the market apple, it's the biggest name to the s&p but it's not just the indexes. it was able to move the retail sales report recently with a debut of its iphone.

if there's anybody soaking up the consumer demand that didn't show up in the holiday season you would expect apple to be the beneficiary. >> we call it a bellwether. >> we have ma bell reporting as well at&t. yahoo!, too. there's alots on lot on tap next hour. >> jeffrey cleveland, are you expecting -- are we seeing a slowdown in the economy or not? with the durable goods report with some of these disappointing earnings reports because of the strong dollar and lower oil, are we then therefore, seeing a slowdown in the economy? we'll talk about it later on what the fed is going do about that but what do you think? >> i don't think we're seeing a slowdown. don't call it a slowdown. i think business cap ex did really well midpart of last year. heightened expectations that would continue. a little bit too much enthusiasm for that. we're getting pushed in the opposite direction. jobs are better. gas prices are lower and that's good for the consumer. overall, the economy looks great. it looks pretty good.

is it a 4%-plus economy, bill? i don't think so. is it 2.5% to 3% sure. >> things change so rapidly. >> he was saying if you want to see the top line growth we need 3%-plus. >> you folks stay right there. we'll come back. we've got a lot more to talk about with our "closing bell" exchange guests. >> we have about 50 minutes to go into the close. the dow well off its lows. we were down by several hundred points. we're now down 219. big earnings misses weighing on that index. there's a look at the s&p 500. more red than green but there are some bright spots as that index is down about 1% on the day and the nasdaq underperforming. it was just a week ago tonight that president obama declared victory on the economy. >> we've seen the fastest economic growth in over a decade. our deficit is cut by two-thirds, a stock market that has doubled, and health care inflation at its lowest rate in 50 years. >> well he's right but

corporate earn frtionom caterpillar and procter & gamble is telling quite a different story as well as that troubling durable goods report this morning. is america's economy strong or not? we were just talking about that. we'll take a closer look. and brace yourselves for a huge wave of key earnings that could help decide if a sell-off continues tomorrow. the numbers you need to watch out for coming up. don't go anywhere. "the closing bell" continues in just a moment.

welcome back. big sell-off early this morning. the dow responding to the sell-off in europe. we were down about 390 points at the low this morning. have come back since that time but one gainer among the s&p ten sector that is are listed out there, you can see, utilities are still positive. they've been hovering near all-time high territory as interest rates have still gone lower. energy was positive a moment ago as oil prices moved higher but they have since now -- energy stocks have moved lower and

technology and consumer staples the big decliners. >> and industrials might have joined the party except that oil prices are bouncing back and caterpillar had a big miss andu tx wasn't that great and look at technology real quick. the biggest decliner down 2.5% as we await some critical earnings from that sector. dominick chu is tracking this. >> caterpillar falling heavy after they posted weaker than expected quarterly profits and reduced full year revenue outlook because of declining oil prices. shares down by 7%. protector and gamble moving lower as it too, missed analysts' estimates. the consumer product giant blamed the strong dollar which hurt sales in -- will hurt sales in 2015. p & g shares down by 3.5%. on the flip side world wrestling entertainment its shares skyrocketed after it announced thew we network had topped 1 million subscribers

after its launch. shares up by 19%. we'll end by corning gaining ground after posting better than expect ed expected. up 4% in an otherwise down tape. >> thank you. we continue our look at the big move for red stocks. back with us here we have christine short, rob morgan jeffrey cleveland, and we have david leibovitz and our own rick santelli. we were just talking the utilities have been strong, christine christine. it would appear some people are starting to invest defensively again expecting a slowdown in the economy. would you? >> you know i think you look at the companies that have been posting great fundamentals and it's those that are mainly domestic. you're seeing like we discussed with the big industries usually seen as a proxy of global growth. they're down because of the

stronger dollar. you're seeing a lot of large multinational companies miss and disappoint on earnings. so i think a lot of people will be headed to those companies more domestically focused -- >> utilities, health care. >> telecom. the more defensive sectors because that's where we've been seeing the gains. you can see it again today. >> how much of this david, is about investing in cyclical versus defensive names as opposed to rate sensitive plays. i know it wasn't you, it was morgan stanley who we'll talk to pushing out their call for the first fed rate hike to march 2016. that can't be good news for the financial sector certainly. perhaps for others as well. >> i would agree. and i'm not sure that march 2016 makes a whole lot of sense for the first fed rate hike from where i sit. turning to your question about utilities, i think you see investors retrenching a little bit. there are a lot of balls in the air right now. how weak is global demand

actually? is qe going to work in europe? we're seeing the effect of a stronger dollar on the earnings of u.s. corporations. we all know when rates start to rise utilities will get hammer and that's why we're still steering clear of what look like overvalued defensive names. >> even as they continue their outperformance. when do you think here the fed will and should as you indicated move? >> well when should they move? i think they should have already moved at this point. when will they move? our expectation is for june of this year. one of our biggest concerns is if the global economy really is that weak and the fed does not hike rates. what do they have left in terms of ammunition to fight any weakness that finds its way into the u.s. >> did i hear applause coming from chicago rick santelli? >> you did. i tried to bite my lips but a little glee did slip out. and the gentleman is absolutely correct. >> but do you blame morgan

stanley for extending their expectations for fed policy and raising rates? >> not at all. it's totally rational. the problem is not the current chapter they're in because i happen to agree. it's all the chapters they missed. they want to keep the thermostat at one temperature for six years. i'm sorry, the central bankers should be a lot more fluid. economies are fluid. they should be fluid. >> not on the downside rick? only fluid on the upside? >> upside downside. they should play pepper with the market. things improve, they should have normalized rates. they didn't warn to be at the current level for much of the time they were there. now in noshanother three or four quarters they should be there. but all the malinvestment that was created when they should have been fluid, that's still being tagged along with us no getting rid of that. >> rob, what are you buying here? cyclicals and defensive? are you buying utilities? >> we're not buying utilities.

we think this is a head fake towards a defensive stock. a lot of people are right now, but, you know, once we get -- once we start getting out of this earnings period and start looking to the next earnings period, we think we'll continue to see the economy grow and we like the cyclical sectors. we're buying technology financials, industrials and those are a little bit out of favor right now but they'll come back. >> i love -- we have so many people come through here very very smart people who are still investing for growth. i'm not saying that's wrong but clearly somebody is investing defensively here jeffrey. they're going to those defensive sectors or the ones that are most benefiting from the u.s. economy and not worried about what's going on overseas here. are you guys investing for growth or are you pulling in your horns a little bit here? >> well we think u.s. economy is fine but we also think, bill, that rates are going to be low for some time from here whether that's shorting rates

because we don't think the fed will move in midyear, we think it will be later, or longer term rates. we haven't talked about where is the ecb going to find all the bonds they're going to be purchasing -- >> i'm going to start issuing some. >> good point. >> 50-year bonds and use the proceeds to buy back i don't know. >> there aren't enough bonds. >> that's my point. but nobody wants to issue them either. the u.s. doesn't want to issue them. there's no public or political interest in doing so worldwide. >> right. so investors are faced going into the markets against the elbows of major central banks that are going to be adding to their portfolios. that will keep interest rates lower longer. looking for income for our clients remains paramount. high yield is an opportunity that's presented itself and we have a high diffident stock strategy. i don't know if you want to call that defensive. it's outperformed the s&p over the last year. i think that's something to consider and look into as well.

>> fascinating. >> thank you all. appreciate your thoughts on -- as somebody said extending the fed's interest rate increase to march of 2016 doesn't make a whole lot of sense. what does make sense right now in the markets? >> it's a brave new world. >> we have 40 minutes left in the trading session. the dow down 259. don't be too alarmed. it was down 390 points a little while ago. the s&p is down 23. nasdaq down 73 still waiting for the apple earnings that will be coming out at the top of the hour. >> coming up next a tale of two economies. president obama talking up the recovery late last leek but corporate earnings telling quite a different story. who has got this one right? we'll speak with the morgan stanley economist telling clients the fed won't raise rates until march of 2016. she and our team of pros right after this.

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welcome back. a quick check as to where we stand. a little more than a half hour to go. the dow is off 1.5%. same for nasdaq. s&p holding up a little bit better. just so you're aware, we have caterpillar, for example, off more than 40 dow points. visa, microsoft as well. some of the big reasons why that index is lower today. >> united technologies the gainer today. they reported earnings early last night because of the snow coming. >> right. those weren't initially

applauded by the market but it shows you they have other concerns. how strong is the u.s. economy? some major executives are telling cnbc they're so worried that the fed should postpone any rate hikes until next year. >> i would put it off definitely. there's no question that it's a fragile economy. >> i would advocate that they are going to have to go into battle. if you consider battle not raising interest rates. >> well one of our next guests says those two gentlemen will get their wish. she thinks the fed will sit tight until march of next year. joining us is ellen zentner from morgan stanley. also with us is david wessel of the brookings institute and our own steve liesman. ellen, you got a lot of people's attention with that forecast. give us your reasoning on that. >> thanks. i'm glad to be able to take this opportunity so you can hear it from the horse's mouth so to speak. >> indeed. >> essentially since our last forecast update that we had

produced in december we've now had sharply lower oil prices and a sharply higher u.s. dollar and here is how that plays into our forecast change. growth for the year has been taken up because on net lower energy is a positive for the u.s. economy. that also means though that for headline inflation, we're going to spend the first three quarters of this year in deflation with year-over-year declines and headline inflation. for the fed, they look through that and they look at core inflation. so what is corep ce prices doing? in november they were 1.4% year-over-year. the fed only needs to see that move toward their 2% goal to be comfortable to raise rates, but our new outlook suggests we get further away from goal and that occurs through much of this year. we don't bottom until october. so that's going to have to lead the fed to a change in rhetoric. they're going to have to move away from that promise to raise rates around midyear because it's just no longer credible. >> what's so interesting about this, david, to ellen's first point, is on net this is a good

thing for growth. do you think the fed will still want desperately to look through that to try and still raise interest rates for -- giving themselves some ammunition down the road or not wanting to overreact to a deflation that might ultimately be a good kind of deflation here? >> well i think that the fed is watching wages pretty carefully. i take them at their word they want to be patient. they don't feel any pressure to raise rates prematurely. i think that the trouble is the financial conditions are a little confusing. a stronger dollar means tighter financial conditions lower long-term interest rates means easier financial conditions. so i don't think -- i think they will wait as long as they have to and i think there is some evidence that they're going to have to wait at least beyond june. march, i can't see that far in advance. >> steve, when alen's forecast came out you called it the outlier of outliers. what do you think of what she's saying here? >> let me just set the table a little bit. the cnbc fed survey came out today. they did push ahead the average

month where they expect that first rate hike to happen to september from july. it's a pretty big bump for three months. the plurality though is still in july but now you have a bunch of other people who are outliers two of which are where ellen is which is well into 2016. i guess i would say it's early to make that call. i probably wouldn't have made that call until i saw what happened to the employment cost index on friday. picking up on what david is talking about, the fed wants to see wages on the way up. if they continue to decline like we got in december bls report payroll report, then i think it's definitely off but that eci could go the other way and there could be some sense that wages are a little bit more buoyant than we think. >> ellen, this is just so fascinating. i don't know what the fed is supposed to do in this situation. look, we're still dealing with people who say even when they do raise interest rates it will be one and done. that's stan greenhouse's view. others say they missed their window.

the window was early last year. has the ship sailed and if so why? >> well i think that, you know we believe that a cautious fed will delay the first rate hike but having delayed, by that time our outlook implies in march of next year we'll be approaching a four handle on the unemployment rate wage growth will be accelerating, it will look like core inflation is going to move back toward goal so they will have to raise rates at every meeting once they start because they've delayed. there will be some catch-up to do. and so in a way that's more where we're out of market consensus is in the fact that we believe they'll raise rates every meeting because by then they'll need to. they'll see that they need to in order to head off an overheating economy. >> so what do you think janet yellen is going to have to say to set us up. it's clear that they want to forecast this ahead of time. they want to foreshadow and let us know when they plan to do that. they've been using that word patience lately so do you

expect a change in rhetoric from her at her next testimony coming up? >> the testimony, yes, most likely. tomorrow'sf fomc meeting, no we expect it to be a nonevent. we just don't think the data inhand will lead them to soften. the hurch frimphrey hawkins later in february, they haven't set a date yet, is certainly a forum her predecessor has used to provide more terse language about defending inflation from the low side. that's something she can do in february to set up expectations that patient remains in the statement in march which would remove midyear rate hike. >> david, i just want to go back to this point, if we're talking about an unemployment rate in the 4% range which is a historic low for this economy, should the fed be getting ahead of that now even if it is worried about low inflation? >> well, sorry -- >> sorry, for david.

>> okay. >> david? >> yes. i don't think the fed is going to let unemployment get down to 4%. i think if they think it's going there, they'll tighten. i think the question is if it's at 5.3% 5.2% 5% and we don't have wage increases, the temptation will be to wait another two or three months and frankly i don't see the big risk. what is the risk of them waiting too long? net interest margins on bank are a little squeezed? i don't see there's any inflation out there. it seems to me they're making the right calculation. you have to weigh all these factors and they think the danger of going too soon exceeds the danger of waiting too long. >> what were you going to say, steve? >> i was going to write an e-mail to david. instead i'll tell you what i was going to say on air here. what's interesting to me right now is how little we know about the inflation process. if you think about what's going on right now, declining unemployment and yet also declining inflation. it's very much the reverse of the momentous 1970s that changed a lot of thinking about monetary

policy. i was just going to say david should hold one of his terrific seminars, get bernanke down there to talk about what it is we think we know about the inflation process and how it works because neither prominent theory on inflation has worked well since the financial crisis. >> i totally agree. >> ellen, how much of your own thinking has had to change give the often confusing environment that we're navigating temat the moment. >> i think the discussion absolutely has to be around wages. i agree with that. and that that skug hasdiscussion has to include where is the natural rate for unemployment. the fed thinks it's 5.2% to 5.5% -- >> and yet there's no inflation. >> and there's no inflation which means the natural rate of unemployment is much lower than where everyone thinks it is. >> so they should not move until we hit something like 4.5% then. >> well no, we think it's probably somewhere in the high

4s and we don't get there until going into 2016. so as we get close to that we should start to see the more pronounced pick up in wage growth but that's what is exactly what yellen is waiting for. she puts a very heavyweighting on wage growth and without a more material pickup rate hikes are not in the cards. >> and we have a new most important indicator to watch for the next couple months. thank you so much for being here. >> thanks so much. >> such an important topic with 25 minutes to go. >> yes. and the dow is down 262 points. kind of holding at these levels here after having been down sharply this morning. about a 390-point decline. we've come off the lows right now. just ahead, stocks down gold up though. we'll speak with the man whose job it is to make sure every day investors can also invest in gold. that's coming up. stay tuned.

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welcome back.

20 minutes left. i haven't seen art cashin lately. i don't know if it's the buy or sell side into the close but we've definitely seen a trend lower here. the dow now down 280 points. a decline of 1.5% with the s&p down 1.25% and the nasdaq down 1.7%. this is the dow heat map as we call it. all 30 components of the industrial average. again, united technologies is the biggest gainer today and the only one right now. caterpillar -- >> ouch. >> high profile company, the ceo saying they've been hurt by the strong dollar and the weaker oil price. do not raise interest rates, he said this morning on cnbc and microsoft out with those disappointing earnings last night down 9% right now. >> and amid all of this gold is on a hot streak lately. climbing after a weak stretch in 2014. >> but gold is still a favorite of many investors, of course who are always interested in hearing from guests like our next one. let's send it down to florida where cnbc's bob pisani is with world gold trust services ceo

will ryan. bob? >> thank you very much bill and big etf.com conference 2,000 investment professionals. will ryan joining us. we are living in a deflationary world. that would seem to be not good news for gold and yet you are the sponsor of the gld, we're seeing inflows into the gld in the last few wekts. can you explain that? why is that happening? >> gold has had a good start to the year. the price of gold has increased year-to-date and we've had some pretty strong inflows off the back of that. but i think when people talk about deflationary forces and the global economy, you know one of the first reactions to that is governments looking to weaken their currency for competitive reasons, and currency weakness or debasement is has typically been a good thing for gold. >> just a quick question, will from kelly here. hello. thanks for joining us. as we talk about the pressure the financial pressure on some of these oil producing nations,

how much downward pressure might that put on gold? how much gold reserves do they have? do you anticipate any liquidation? >> it's a really good question and i think one of the key countries involved in that was russia and we had a lot of questions when oil first started to crack and collapse like it did that russia being the largest buyer of gold from a central banking perspective, would they sill theirell their reserves. we've seen russia coming into the market and buying more gold as a result of that. so we can't say that every country is going to respond in the same way as russia but so far we've seen positive reaction from russia and i think that sort of goes to the point that last year gold priced in other currencies, foreign currencyiescurrencies, not the u.s. dollar did very well. >> classic portfolio theory says

the average investor should have 5% in their portfolio of gold just to have it there. do you suspect most people do and back to bob's question in a deflationary environment, does that still make sense? >> i think that so, first of all, yes, i absolutely would agree that investors should have an allocation to gold in a diversified portfolio. we at the world gold council think that somebody should be between 2% and 10%. and i think if you look at the years pre and post financial crisis investors did have more al vooelocation to gold than the last couple years, particularly as the u.s. economy strengthened. people did reduce their weighting towards gold and i think in many cases got rid of gold altogether out of the portfolio. and so now we're seeing a little bit more of a reaction as some of these paradigms that people have talked about or presented these last couple years are starting to be questioned.

>> you got a little bit of a boost this morning. jeff gundlach was here. he's big on gold. he says everyone who criticizes gold because it has no yield, he says there's trillions of european bond that has a negative yield. gold has a higher yield than swiss bonds which have negative bonds. i don't get you gold bugs. you say when inflation is up gold is a good thing to own. now deflation and you're arguing gold is a good thing to own. you try to have it both ways don't you? >> people say gold acts as an inflation hedge. in terms of deflation we don't exactly know because the best example of deflation in the u.s. economy was during the great depression and gold was pegged to the dollar. we can't exactly say that gold was a good thing or a bad thing during that time. however, gold miners did act as a proxy and did quite well during that period. so if you proxied gold miners for goal could you maybe make

that link. >> one thing i have learned out from hanging out with gold bugs is it's always a good time to buy gold inflationary or deflationary environment. will ryan, thanks very much for joining us. always appreciate it. >> appreciate it. >> covering the etf.com conference. guys, back to you. >> we wouldn't expect him to say anything else. it would be their job to say it is a good time to buy gold. 15 minutes left in the trading session. the dow down 262 points as we head toward the close. >> comingup the market moving lower on earnings missing. and a big batch moving your way. keep it right here. you can't afford to miss it.

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welcome back. a head-spinning week for earnings with more than 100 companies in the s&p reporting. >> dominic chu in the next hour there's some heavyweights on tap for the markets to digest again. >> absolutely. let's start with the biggest one of them all which is apple expected to earn $2.60 in earnings on sales here of $67.6 billion for its fiscal fourth quarter. regard iphone sales should

highlight some of the results among a slew of other things. ahead of the news apple shares are down 2.5%. yahoo! also out with its quarterly results. the street looking for 29 cents a share on sales of $1.2 billion. everybody is really wanting to know what the company is going to do with its alibaba stakes. yahoo! shares down by 3.25%. and then there's at&t. analysts are expecting the company to earn 54 cents per share for its fourth quarter on sales of about $34.25 billion. at&t down. amgen, the street is looking for a profit of $2.05 on sales of $5.2 billion. amgen down by half a percent. we'll have complete coverage team coverage for you beginning in the next half hour. myself included. also josh julia boorstin and meg terrell all watching these companies, guys. back over to you. >> i'm hydrating. thanks, dom. appreciate it. dominic chu with 12 minutes to go into the close.

the dow is off, look at this heading back towards the lows. we were down a lot more but we're currently minus 270 points. just hanging onto the 17,400 mark on the dow. >> we'll take you to the final minutes of this rough day. the heat map tells the story. a lot of red, not much green. we'll be right back. in my world, wall isn't a street. return on investment isn't the only return i'm looking forward to.

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eight minneapolis left inutes left in the trading session. the dow heading lower. art cash ynkashcashin just came by. it's minuscule in financial terms but $50 million of stock to buy on the close, but that's already been matched up i think. >> you have to wonder if the buy the dippers are snowed in or just not interested. let's ask jeremy hill joining us with matt cheslock. matt, are people snowed in. >> it's been a disappointing day all around. starting with the snowfall first and then earnings economic data. there's no reason to buy anything today. people were anticipating being out today and maybe tomorrow so there's no positions on. no reason with a skeleton crew to put anything on going into earnings season. >> but we have lots of earnings, jeremy, and some high-profile companies have disappointed because of the strong dollar a lower oil price. what do you make of that?

>> it's moveable object irresistible force, dollar versus other macro wins in the environment, particularly oil. i think right now what we're seeing is a lot of people are putting on hedges so they have positions in place and our feeling is we're getting a lot of hedge action right now on the downside protecting for that maybe for this earnings season people are feeling that it's going to be a little bit weaker here particularly on the revenue side. i think that's kind of a logical place to be. >> how about that caterpillar number? they took down their top line 2015 guidance by $5 billion to $50 billion. that's a huge decline. are we supposed to expect other companies to do the same? or do you think that's a unique situation? >> i think caterpillar has some asymmetries or idiosyncratic work particularly with its work in the oil patch, building machinery for that type of production but i really think the dollar is a problem, but eventually, kelly, that's going to be balanced out by the

positivity. >> the ceo was saying it was oil. he didn't even really bring up the dollar. >> if you're not watching earnings, you're watching the fed. what about that? you know morgan stanley out today saying maybe march of next year before we see a fed rate increase. what's the market going to do with that do you think? >> obviously we've been buying the dips. so if you're a trader you're range bound and it's been great trading. we've seen volatilesumeatilityies 200 pounds. there might be short-term plays and there's fire sales going on in small to midcaps. >> do you know what i learned today as well it's the ferries you want to count on. when the rest of new york city grinds to a halt -- how did you get here? >> i took a ferry. >> the hudson -- >> this is from the jersey shore. it was great. made it home last night and in no problem. >> there you go. matt thanks. jeremy, we'll bring you back here. we'll get to the closing countdown as we get ready for

big earnings. >> after the market there's a look at the dow heading to the lows of the session off 300 points. apple, yahoo!, amgen. apple and yahoo! in particular having a you have to day. let's see, can they turn sentiment in the tech space around? that's coming up right after the bell. she's still the one for you. and cialis for daily use helps you be ready anytime the moment is right. cialis is also the only daily ed tablet approved to treat symptoms of bph like needing to go frequently. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long term injury, get medical help right away

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phenomenon before. art cashin likes to point it out, the european influence on the markets. the first couple hours of trading europe is also open at that time, and whatever influence is going on whether it's buying or selling coming from europe will be alleviated when europe closes at 11:30 eastern time. that didn't happen today. our durable goods report was very disappointing. the earnings from caterpillar, the comments from caterpillar's ceo disappointing as well. we were down 390 points. we're down 284 points right now. will things turn around with earnings coming out at the top of the hour? we'll see. apple reporting they're down 3.25%. yahoo! is down 3%. amgen down half a percent. at&t reporting, they're down 1%. obviously mary thompson of those apple will have the biggest impact. >> without a doubt. it was interesting to watch the stock. sold off a little bit coming into the close. the key is houp iphones did it sell into the quarter. >> do you like apple, jeremy hill? >> i don't like apple right now

because i think there's a tremendous risk around the watch. i think we're hearing a little bit about some of perhaps the manufacturing problems they're having. this earnings season i think is all about how many new iphone 6 they sold. that's a given. >> better be allowed. >> if they have guidance at all vis-a-vis the watch, we start to see kind of coming out of silicon valley a little bit of chirping about a watch. i think we're going to see some price pressure. >> at&t -- >> at&t amgen, yahoo! is important because they want some indication of what they're going to do as far as tax strategies with selling their alibaba stake and at&t not expected to receive as much attention as the other two i'd say but the fed meeting concludes today and we're looking for a statement. >> oh by the way, right. thank you both. see you later. so we're going out, big sell-off today as matt cheslock pointed out. we may see more of this tomorrow but we'll wait and see. of course, we have the fed

comments coming tomorrow as well. stay tuned. a lot of earnings coming up on the second hour of "the closing bell" with kelly he was.evans. see you tomorrow, kel. thank you, bill. welcome to "the closing bell." i'm kelly evans. we want to thank the nyse facilities and dining facilities. they provided all of us here food in a neighborhood that was otherwise shut down because of the blizzard that hit the northeast today, and it was a storm for the markets here as well. we have a storm of earnings awaiting. some huge names due to report companies like apple and yahoo!. let's begin with where we're finishing up a session where we look like we're going out towards the lows on wall street. the dow off 200 and just about 90 points. that's good enough for a decline of 1.6%. interestingly enough the nasdaq was even worse. it was down almost 2% shed 90 points. the s&p is little more than 1%. so the bradoad market index not quite as bad.

nicholas carlson is here from business insider. welcome back. kayla tausche has had a long day already. cnbc market analyst kenny polcari is here and also with us for more on today's market action and the earnings out shortly, "fast money" trader guy adami. welcome. and with ross gerber from gerber kawasaki. do you think apple is going to blow it out? >> apple will have a huge number today. who knows how many phones they sold in china and i'm really excited because they've taken so much share from samsung. so like last earnings they did very well. i expect more too, also from the mac. the mac i think sold very well in the quarterback. so . >> just because we're going to need them to deliver if you want the tech sector to turn around. it was the worst performer today because of microsoft and some others. speaking of earnings, the parade is getting under way as you can see. amgen earnings are out. the biotech giant results now with our meg terrell. >> looking at amgen fourth

quarter, a bit of a beat here on adjusted earnings and revenue. eps at $2.16 versus $2.05. now, importantly there also reaffirming their 2015 guidance of $20.8 billion to $21.3 billion in revenue. $9.05 to $9.40 in adjust the earnings per share. it's important they're reaffirming that guidance because so many companies have been getting dinged because of dur currencies. seeing strength from many of their new drugs. a couple of those were from price increases primarily rather than demand. that's going to be interesting to watch. kelly, back to you. >> that's for sure. thank you. our meg terrell covering amgen. it looks like a relatively positive response. the shares up almost 2% after hours. we haven't had as much focus lately on the pharma on the biotech sector. >> but we're going to start to we'll see the numbers come out

the rest of this week and into next week. and i'm not necessarily surprised with the amgen number. i'm not necessarily surprised to see the market kind of react in a positive way on the back of that headline. >> although it has been a rare outperform. i should welcome kenny to the set. kenny polcari from o'neill securities joining us off the floor. we're looking to some reports to maybe turn sentiment around tomorrow. was that the problem? was it all earnearnings? >> the tone was negative coming out of europe. so when the tone is negative they look for everything negative. on top of that the earnings today were not good. some of it was because of the dollar which i don't think is that surprising to anyone who is invested in those stocks. they understand the risks. people shouldn't necessarily take that as a huge negative because i think that's much more of a temporary situation. >> guy, is pharma biotech, could this be a port in the storm as people continue to navigate earn sntion. >> it has been. you know that. hi kel. it has been a port in the storm and i think it continues to be. you lump amgen as a biotech.

there's some major pharma companies that would kill to have some of the drugs in the pipeline amgen has. amgen is a monster company. it topped out at 173, traded off, bouncing now. i'm not looking through the numbers like you are because i'm sequestered here. >> can i ask you quickly as well, against the break drop of the weak stock market has been a very low rate picture. you have talked about this endlessly. so i just wonder where you think the next move is here for rates as the fed debate continues and some of the data still comes in a little bit -- >> lower still. you know if the bond market -- if rates wanted to go higher if the bond market wanted to take rates higher they would take rates higher. they're not waiting on the fed. they never do. this is a bond move outside of even what the fed can jaw about all they want. the reality is you have a global deflationary problem, rates across the planet continue to go lower, and u.s. rates are catching up. i mean i still think, and i

have said it now for months rates are going down. people have to sort of wrap their head. >> i agree 100%. guy is absolutely right. >> i want to pick up on this kayla. if you look through the weakest names in the dow, yes, it was caterpillar on those earnings declines, off about 40 points of the dow decline, but it was also a goldman having a negative 2% session. it was a praktor and orpraktor and procter & gamble off 3%. >> you had procter & gamble which disappointed on earnings today. that's going to hurt the dow but goldman is more of an interest rate move. when you see the ten-year dip below 1.8% on global slowdown fears on the wake of earnings and the weak december durables numbers, that interest rate move is really going to hurt the banks. you will see banks have weakness across the board because there's such interest rate driven machines almost on the flip side of utilities. utilities and other heavy

borrowers benefit from it and goldmans and other banks don't benefit from it. >> at&t is now hitting the tape. we've been waiting for this earnings report as well. dominic chu has the numbers. what can you tell us dom? >> we have a slight beat here. earnings per share at 55 cents beating the estimate of 54 cents per share. at&t revenues also coming in with a slight beat. they have $34.4 billion worth of revenues. that beats the estimate of $34.3 billion. always a highlight with at&t with regard to its wireless business, they do say wireless revenues were up 7.7% versus the same time last year. also wireless data billings up 18% versus the year earlier period. 1.9 million total net additions with 5.6 million total net additions in 2014. so all of the year. also post paid net additions, 854,000, nearly 3.3 million post

paid nedt ads. they're very much about a dividend payment. they say throughout the course of last year they paid out $11 billion in dividends and buybacks in that year. we'll comb through the rest of the release but for right now you're seeing those at&t shares up in the extended hours trade. >> hold your thoughts, everybody, for a second. i believe we can get to our report on yahoo!'s earnings as well. we'll do that in one second. >> i was going to say look at how investors are rewarding at&t. taking it right up in the aftermarket session because that was not a stock that at all disappointed. they had punished that stock going into earnings and so therefore it makes perfect sense. >> the response here as well with regard to is this as much about the environment and the kinds of names investors are looking for? is this about at&t now perhaps being the big north american telco name? >> i think it's a little bit of both. i think it covers a wide range -- you can spin it anyway you want.

it's an all-american company. they'll look for tellico names to perform well. they used it as a source of cash. the earnings come out and they take it right back. 3390 is probably going to be a resistance point. >> we have the results from yahoo!. interesting stuff in this one. julia boorstin, what can you tell us? >> kelly, really quickly i'm going to run through the numbers but the real news here is about alibaba. yahoo! reporting 30 cents per share, a penny better than expected. down from 46 cents in the year ago period. revenue at $1.2 billion, a little stronger than expected but the real news is about alibaba. the company announcing that yahoo! has announced a rend days that the board has authorized a plan for a tax-free spinoff for the company's remaining holdings in alibaba. the company saying that this will be spun off into a newly formed independent registered investment company. the stock of the new company

will be distributed to yahoo! shareholders. it will be a separate publicly traded company. yahoo! saying it will continue to operate its core business and hold its 35.5 interest in yahoo! japan but that the spun off company will hold all of yahoo!'s remaining 384 million sharesalibaba. the company saying in its earnings press release that with this planned tax-free spinoff, it will have returned a total of nearly $50 billion in value to its shareholders to date. so big jump there on this alibaba news which is far more important than the earnings themselves. >> a lot to digest. julia, thank you. nicholas carlson, what do you make of this? >> that's big news and it's very exciting for yahoo! shareholders. it's what a lot of them wanted for a long time. it's going to be interesting now to see what happens to yahoo!. it's a much smaller company now. some of the things that activist shareholders were asking for now matter a great deal more. >> such as? >> cost cuts you know maybe

this whole ao ll merger. if there's really a billion dollars in synergy is matters more. >> when you think about the activists banging the drum for a tax-free spinoff of the alibaba stake it was largely starboard value, the loudest about this issue but they also wanted this to be the first of many steps or one of many steps that the company pursues. nicholas mentions cost cuts but they did think that the tax-free nature of it could be reached by doing a merger of equals with an aol or another basket of assets. so it's expected that there could be a part two to whatever this deal looks like and that today is just the beginning of that. >> ross do you buy yahoo! at these levels. it's over 50 bucks right now after market? >> well, i like this. i thought marissa was going to make the shareholders happy by spinning it off but yahoo! is absolutely now ripe for the picking. this is such a good buy for microsoft. they tried years ago.

i'm curious to nicholas' thoughts on this but yahoo! is now just a duck and this is marissa mayer's out package to look like a hero. you spin it off, you sell the company, you make everybody money, and you move on to something else. so yahoo! looks attractive spinning off that asset i think. >> nicholas? >> it's going to be interesting to see what happens with the market cap in the next few days. it's already up 8% people are excited about this and it's true that yahoo! is very -- the valuation is very attractive for people who might want to buy it because it's just downso poorly for so long. >> it's cheaper than snapchat. >> it's true. it's still a very -- >> which would you rather own? >> i'd rather own yahoo!. >> than snapchat at what valuation is the question. >> at ten bil. >> when you start to focus on what's left for example, of yahoo!, nicholas what is it and what then do they do with that remaining asset? >> right. so mayers is in a situation -- she has a lot of money left and

she has to take that and she's going to invest it in her core strategy which she really needs to get revenues growing. you know i didn't see the numbers, but i'm curious to see if display advertising has started growing. >> it looks like fourth quarter display revenue was down 4%. about $532 million. fourth quarter revenue in total looks like about $1.25 billion. >> so that's right around about people were expecting. but that's even actually disappointing growth shrinking. that's the big problem yahoo! has had for years. it keeps getting smaller and smaller. so mayer is the one who is supposed to come in and turn that around. she's done a great job to be a financial engineer. she was hired to be a software engineer. now she needs to show us that product prowess and get it going. >> it's interesting to compare yahoo! with microsoft yesterday, kenny, which missed. it's in the middle of revamping itself doing as much as you can do at this point. investors were not pleased, not pleased with the progress not pleased with the numbers. you saw how far those shares were marked down today.

yahoo!, imagine if they didn't have that alibaba factor the conversation about marissa mayer -- >> it might have been a very different conversation but now she's got this platform now that's a very positive conversation after this and so now what's her next move going to be. >> we'll leave it there. we'll come back and answer this question after we take a short break. we'll have much more on yahoo!'s plans to spin off the rest of its alibaba stake and we're waiting on apple's earnings. they're due about half past. and a gentle wavelike motion... ahhh-ahhhhhh. liberate your spine... ahhh-ahhhhhh...aflac! and reach, toes blossoming... not that great at yoga. yeah, but when i slipped a disk he paid my claim in just four days. ahh! four days? yep. see why speed matters, at aflac.com. opportunities aren't always obvious. sometimes they just drop in.

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welcome back. some major news after hours. yahoo! announcing it will spin off its remaining stake in alibaba alibaba. lets bring back guy adami and the closing bell panel and eric jackson. your reaction to this move? >> kelly, i think this was the biggest lever that marissa could have pulled to unlock value. sort of the minimum she could do to probably get investors to be onside with her and it should be a major boost to the stock. stock is already up after hours, but i would look for the stock to continue to move up as the conference call gets under way and especially into tomorrow as

well. this could have another $5 $6 to go before it closes tomorrow on this news. >> $5 or $6 on top of the $3 gain we're seeing after hours, eric? >> yes. >> okay. nick? >> their stake -- it's a $40 billion stake untackxed. the whole market cap of yahoo! at the close was something like $43 billion. it's a massive win as people get their arms around that and start to look at what's the true value then of the core business and the cash they have on hand. they'll start to bid it up. >> what do you value the core business at? >> well, it's a tough business but it's all about expectations. this is not a business worth less than zero. it's doing $1.3 billion a year ebitda. so i think conservatively at least a $6 billion business. i think probably more realistically it's closer to $10 billion. >> yeah, i think around 10 too.

>> as part of the release, yahoo! says it will retain its 35.5% interest in yahoo! japan which helps out its market cap a little bit. what do you make of the fact that they're not carving out the entire business and that they're holding onto what is a pretty sizable chunk of revenue for them there, too? >> well i'd love to see them spin it off, kayla. i think they should and i'd love to see them hack 8,000 jobs in the core business too, but some interesting speculation i have heard is one reason why they kept the yahoo! japan stake with the core business is they're perhaps hopeful that maybe softbank will want to swallow all of the core business plus the yahoo! japan stake sometime in the next -- before the end of the year. >> nicholas any insight on how likely a move like that would be buying japan softbank. >> they have always been closely tied to yahoo! from the very beginning. he was a big investor. he's close to the company. also they hired the former google ad sales guy. he's now running -- he has a big job for softbank digital.

so that makes a lot of sense. >> if softbank buys, it eric or ross if you want to weigh in on this one as well, what does it mean for the attractiveness of yahoo! here? >> well i think they are in play and softbank wants to protect its position and they certainly should buy yahoo!. i still think it's a more natural fit for microsoft, especially with the display ads and their bing deal and such. but i think yahoo! is just a duck. this is a great out strategy for marissa. she mollifies everybody for another six months to a year and now somebody can come in and buy it and once again she can ride off into the sunset with a$300 million or whatever. >> guy, do you have a view? >> eric has been bullish in this stock since it's been in the teens and i have been there with him. i think we sort of parted ways as we got it closer to $50 but let's not kid ourselves. she walked into a declining business and she's done nothing to improve it whatsoever. what she had working for her was this ace in the hole and she's playing her hand. good for her.

you know at 50 bucks you probably valuing yahoo!'s core business at effectively zero given some of the things that eric just said. so you probably still have some further room on the upside. i think the reason why the stock has rallied as sharply as it has in the aftermarket is because of the sell-off we saw late in the day in the name. if you looked -- >> good point. >> put a tweet out in the last half hour that a lot of people were playing it on the options side for a bearish move. those people are clearly getting blown out. >> it had been atough day. >> eric thank you so much for sharing your hours. ross and guy for sticking around as well on a big move in yahoo! after hours. stick around to catch i go adami coming up on "fast money" at 5:00. we'll be talking to a young app developer who turned down an internship with apple. we'll see what he's up to right now. straight ahead here the big event hasn't been happened. speaking of apple on this show the company's earnings report are just -- is just moments away. stay tuned. what can your fidelity greenline do for you? just take a closer look. it works how you want to work. with a fidelity investment professional...

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a blistering pace here after hours for earnings and some big news. dominic chu will round things up for us. >> let's start with yahoo!. the company has authorized a plan for a tax-free spinoff of its remaining stake in alibaba group holdings. that probably trumps any earnings headlines that come out. yahoo! shares are up by 7.25%. we should also note that yahoo! has already traded about 10.5 million shares in the afterhours. they traded 27 million all the entire regular session.

a very active after hours trade for yahoo!. then there's at&t reporting fourth quarter earnings and revenue that beat analysts' expectations. they provided no specific guidance. they're waiting for the directv deal to close before they do that. they're up 1.5%. then amgen posting better than expected results driven in bart by strong sales of its blockbuster drug embril. shares are up by 0.75%. apple's numbers are due out momentarily. obviously keep it right here. we'll bring you those as soon as they become available to us. >> yes, we will dominic chu. thank you. we'll be back with those results when we come right back. stay with us.

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apple earnings are expected out any minute. let's just remind everybody of the estimates here. we're looking at eps of $2.60 a share. 25% year on year gain. revenues of just shy of $68 billion, also up 18%. our panel is back waiting on these results along with max, lou and alex. hi, alex from jmp. welcome one and all.

max, i want to actually start with what we've just heard from yahoo!. the tech sector has been under pressure since microsoft's results. can yahoo! turn that sentiment around or is it so specific to alibaba we're going to need apple to deliver. >> thanks for having me. always a pleasure to make it through the storm for you guys. glad you did. hope everyone out there did okay, too. i think yahoo!'s story has to begin to be yahoo!'s story. the only way to get there is to spin it out. that being said you're spinning out about 80% of the market cap and we still need apple to do well because apple is the heavyweight here by market cap by sent am by concentrated ownership, and by headline attention so it's absolutely going to be essential that cupertino dazzles which we expect they likely will. >> lou, do you agree? we have had two people both max and our other guest saying they expect really strong numbers from apple. >> i do. i wasn't able to hear it but i'm with business insider with the

potential for mind melting iphone numbers. the consensus is 66 million iphone sales. i think we might see a number above 70. if that's the case that's going to be a big driver. >> alex are you worried about this? i think what this means is the numbers have to be mind melting or otherwise shares could move lower here. >> jmp securities isn't worried. i think what's being missed in some of the other weaker tech earnings out there is that apple probably did have a mind blowing december quarter and that sucked a lot of the oxygen out of the air for other tech companies to perform. yes, there are some issue was the exchange rate hurting earnings for other players but a big part of the problem for some of the other tech giants is apple is doing so well. >> you actually think this entire story fits together because apple is winning share from the rest of the sector? >> yeah. it's very clear right now that apple is winning share, and it has a long way left to go. one of the things we keep pointing out in the stock is

whatever this number is this quarter, this company is back on track for a midteens or better growth rate. it's still less than 20% penetrated mart phones. less than 10% penetrated into pcs. less than 1% traded internet of things. there's a long runway for this company to keep performing in growth and in valuation. >> we'll get everybody the full details here in just a moment but we do have the apple numbers starting to hit. $3.06 is the eps number relative to the $2.60 expectations we were using. shares moving higher to the tune of about 4% on that. it was well above forecasts as mentioned for the earnings piece of this. the big numbers are not just going to be the numbers, they're also going to be the number of iphones sold. josh lipton now with us for the full results. hi josh. >> kelly, apple just reporting as you noted $3.06 on $74.6 billion. remember, the street here was looking for $2.60 on $67.7 billion. so a beat there on the bottom

and the top. just looking through the release iphone shipments, 74.5 million. that is much more than at least the forecast i was seeing. the street was around 66 million. ipad shipments at 21.4 million. the street there was looking for 22.2 million. and mac shipments of 5.5 million. apple's closely watched gross margins, 39.9%. in terms of guidance for q2 apple offering revenue guides now of 52 to $55 billion. i just had the chance to speak with apple's ceo tim cook. give you some of the comments he gave about the quarter. one, he said iphone was clearly the stand out. he said apple was selling that flagship product as fast as they could make them. he talked about the strength we saw around the world, not just the u.s. up 26%. emerging markets up 58%. mainland china, up 100% kelly. talking about the ipad as well. tim cook saying they sold more than apple thought they would and he was confident about that

product product. he talked about how commerce and consumer satisfaction and usage are off the charts but noticed the upgrade cycle is longer for the ipad and some of the cannibalization you're seeing from six plus and apple pay clearly confident about that service. said they're off to a strong start. the service getting traction and adoption faster than they first thought. as for new products, apple watch, apple teased that early 2015 launch. tim cook telling me he's going to give more color about that product on the call that starts at 5:00 p.m. i'll be on it and give you head looirp headlines as they cross. what a reaction here. they managed to -- had mind melting expectations to me guys, and it appears they surpassed them. >> for some quick color, the iphone business for apple is now bigger than google and microsoft combined. >> incredible. >> it's huge.

74.5. >> max, what's your response? >> it's very interesting, very good. obviously the margin is the buried lead here. a little bit of waegeness in mac, a little bit of weakness in ipad although less than had been feared. the iphone 6 is the record breaking story. it sold much more than people thought. way move a quarter. that jacks up the margin and the average price per unit sold. i think the run away success of the iphone 6 plus and the huge hunger particularly in asia for the large screen is the runaway story of why this set of numbers is so strong. >> incredible. lou, what about you? what do you do with the shares now? >> this is a must-own stock. we were on a couple weeks ago saying that. it's hard to imagine a year ago where apple was at trading in the 70s and everyone was dogging tim cook wondering if he was cut out for this job, if he could really deliver. quite frankly, i know it's not in his character but he should just stand up and point to the scoreboard and sit back down.

these are mind melting numbers. i'm really interested to get some color on apple pay. they said they're not going to break out the data there, but as you know this is a growth driver that i have been talking about for a year that i really think could deliver a lot of upside for them over the longer term that people aren't taking into account. >> alex how does this change your price target for apple shares? what is it going into the report, what do you do with it now? >> jmp securities is already at $150 price target which is basically just giving it a mean market multiple for the s&p 500. i think you could argue with these kind of numbers that it deserves a premium to the mean market multiple. you can go higher from there. the good news for apple is the linchpin of the strength was the iphone and the iphone is really the foundation upon which all the other internet of things and compute and halo effect type of technology opportunities are there for apple. so i think there's a long way for this story and this stock to go. >> and, kayla, i would like to hear more about apple pay as people start to look to what

could be the future drivers to keep the growth going. >> especially since we didn't get news of any major breaches during the holiday season. you would expect tim cook to be touting the strength of it, how much pickup there was in activity over the holiday, but i'm most interested in looking to see if apple had any currency issues because so far as i see, there's no mention of currency no mention of any specific currencies themselves in the release, and actually there's a headline that international sales made up 65% of the quarter's revenue. for every consumer company that's out there saying that the strong dollar is hurting us and that deflation is -- >> 65%. >> apple is basically shows us that's not the case. >> people would typically look to a yum brands looking for a u.s. international. apple becomes that company and as to kayla's point they did not mention currency. >> so that's a huge positive in my mind but, you know, to your apple pay point, it might be too soon yet. i'm not saying there weren't any

breaches but it may be too soon yet. once it gets even more penetration, then you actually may see people trying to hack the system and create that problem. maybe it's just too soon to have that answer. >> but you put $74.5 million iphones in people's hands, many of those equipped with apple pay. as soon as you get the merchants online, then you have real activity there. >> understood but until that happens, right and you don't know if everyone is just using -- >> do you have an iphone 6? >> i have an iphone 5 -- >> i have a 6. >> i do. >> do you use it for point of sale. >> i use it in the cab. >> you hold it up to the thing and you pay it in two seconds. >> do you use it as well? >> we think it's pretty important. it also hasn't been rolled out internationally so there's a couple real issues here. one is the numbers sound good the 200,000 plus locations but it's actually kind of small given how many locations it needs to be in. we know for mobile point of sale

and mobile payments the magic is to be ubiquitous. if you're not ubiquitous people don't ha pitch wait to using you. it's fun and cool to use your fingerprint and check out to the phone and then you go back to the other point of sale terminal and do the other 11 steps. >> i want to ask you here as apple's cash piles are up significantly, we're talking about $178 billion, it's up 12% year on year. are they going to continue to be under pressure from the icahns of the world to do a larger buy back and keep returning capital and get shares towards the $200 point? >> they're going to have to increase the buyback which everyone is going to be calling for but i think they need to start thinking about making major acquisitions again. beats was one of the biggest ones. there's some pain points in the future product lineup for apple, specifically the apple watch. the battery life is something everyone is concerned about.

there may be an acquisition there, possibly in the wireless charging point and that cash pile would make it fees inl forasible for them. >> alex, are they going to buy yahoo!? >> i don't think so. they don't need to. apple is doing just fine under its own head of steam. i think what i'd like to see apple do is execute well on the watch. for us it's all about the second and third generations of watch because the battery life as you pointed out just isn't there right now. also watching the competition. apple has to keep running hard. the mean note sold out in the first day. it's not the end of the day for apple. they have to keep innovating. >> we saw what john steinberg did to get his hands on one of the phones. they are quite the status symbol. thank you so much for now. apple shares rallying nicely on top of their earnings report which did beat those mind melting expectations. so what's next for the company? the big hype around apple watch,

will it drive the company's earnings next quarter and what sells in the pipeline? we'll talk about that when we come back in two.

welcome back. here is a look at shares of apple. just below the $115 mark after hours. a rally of 5% after earnings with that iphone in particular beating expectations. so as we start to think about where the company goes and how it continues to grow from here a lot of focus on the pipeline the watch, the apple watch is due out within the next two

months. let's bring in colleen taylor and roy choi and our panel. colleen, what is the latest expectation for the watch in terms of timing and features? >> we're hoping that it's going to be out sometime this year but again they have kept this really cloaked. i have been sort of refreshing my laptop right now kind of trying to hear. we're hoping they're going to reveal that in the analyst call that's going on right now. >> well we'll listen for that and plenty of other things roy. how important to apple's future is this device or is it going to be ultimately about the iphone for years and about apple pay? >> well we know the iphone and the ipad are going to be products that we'll see for years to come. we know the iphone has sold gangbusters this last quarterback. quarter. we know the apple watch will need the iphone to function so we know that the iphone will be part of apple's main portfolio. >> nick, so does that ultimately mean that people if they buy an apple watch by definition they

have to have an iphone so ultimately this is just an add on? >> the apple watch, apple pay, the big screen they're all the same things. they're in the universe of the iphone. they make the iphone more valuable. that's apple's dna to have a totally integrated experience and that's why apple can charge twice as much as anybody else for their phones and that's why their profits are so amazing. >> they are incredibleyey expensive. this great mystery, where are all the gas savings going? everybody is just buying an iphone kenny. >> because he's rate. everything is integrated no matter what you have whether you pick up the iphone the ipad, the i-watch, your mac computer at home. it's unbelievable how they have created that really that world that people just -- now we just operate in it. >> we're seeing some upward pressure. the cues, the etf for the nasdaq, is moving higher. apple is a big component of the nasdaq, the s&p 500. i imagine quite solidly the

biggest company in the country. >> the more products it sells, the more money it makes from its own ecosystem, the more cash it's going to have on hand the more demands it will get from shareholders to return some of that cash. $178 billion is its cash pile as of the most recent quarter. that's up 15% according to our earnings expert and now there are going to be some shareholders of course including carl icahn saying you need a bigger share buy back program and bigger dividend. >> how much of this cash should be invested in future projects? how much should be returned to shareholders and will an apple watch or another item in the pipeline really be able to move the needle here? what kinds of investments or acquisitions should they be making, if any? >> i think that it's incredibly important for them to continue to invest into new things rather than just give the money back to their shareholders. i mean giving money back to shareholders shows that you

don't think that you as apple can do anything interesting with this money so you're just going to give it back to the people. you don't have any new ideas. i think it's important for apple to stay ahead, that they come up with more new ideas. the iphone is great but we need more in the future. >> listen i think that's true, but i think at some point there's so much money there, i think the call for a bigger dividend or buyback is going to be a part of the story. >> haven't they already committed to buying back or giving out $100 billion? >> oh yeah tons. >> it is true at some point the $100 billion you have in your bank account isn't going to be the reason you come up with the next product. >> now i believe credit suisse says it should be $200 billion. >> they're printing money. it's unbelievable. they can't spend it fast enough. >> roy, listen when we talk about the pipeline ultimately the apple watch is really all about driving the iphone ecosystem. is there any competitive threat to that core product from elsewhere? >> samsung is huge in the smart

watch market. i think every company we saw at ces had a new wearable a new smart watch. we have pebble samsung,l g. i have an lg watch on my wrist right now. the market is just saturated with smart devices that you wear on your wrist, on your head, wherever. >> yeah. can we see that watch real quick as well? you said it was an lg? what phone do you have? an android phone? >> right now i have an android phone and i have a windows phone. i just like to try out as many phones as i possibly can. >> does the watch connect -- does that particular watch connect with either one of those phones? >> it connects specifically with android devices. >> right. that's the point. we got to watch these ecosystems as they all develop and keep an eye, colleen, like you said obsessively to see if they say anything about the timing of the watch on the call. colleen taylor and roy choi for us this afternoon. we have another earnings alert we want to get to. dominic chu, what's happening?

>> electronic arts the stock is moving higher after the video game maker posted better than expected third quarter results. it also raised its full year guidance. the shares are up about 3.5% in the afterhours so far, kelly. back over to you guys. >> thank you. well, back to apple. my next guest says you need to buy shares of the company right now because the stock will hit $120 a share by friday. well, it's at almost $115 right now. he'll tell you why when we come right back.

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here is a look at apple after hours. just shy of $115. according to my next guest, apple will reach $120 by friday. joining us with what will be driving the stock to those levels, james, we're having a little chuckle because at this point $120 looks conservative, doesn't it? >> i think it does. we knew we were going to see some fireworks inapple. but we're seeing a huge move higher as they absolutely blow out expectations for both

revenue, earnings per share and the iphone unit which is was just as important as that earnings number. we knew that they were implying a big move higher. we were looking for a movement about 50% larger than the average earnings day movement in apple. and we're still implying a couple more dollars to the up side before we hit that target that the options market was implying for friday. >> and you looked at the price action and maybe got a queasy stomach. what do you think about tomorrow? >> i think you'll have a whole change in psyche tomorrow. earnings tonight starting with apple -- >> even beyond apple? >> absolutely. it will change the tone in the market and people will put the negative ones behind us, that was so last century, and now we're in to all these newspapers tonight numbers tonight. >> we should take a look at what ali baba -- freudian slip -- i can't yahoo! shares are doing.

are these two companies with specific stories in would you buy other names or just reinvest in apple? >> i think i would just be looking to reinvest in apple and names like yahoo! here. we're wondering for a long time or the past month or so where all this extra cash that consumers have been getting is closing into due to cheaper gas prices. and i think it's been going into iphones. that's why we see such blowout numbers like this. and i think apple has sucked a lot of air out of space for competitors. which issis why we saw poor earnings and this morning. we'll have to see whether or not it is the space that will do well or the specific stocks within the space that have been strong. >> so no one is talk about the bears case. >> there are bears? i thought we threw that out the window. >> sorry about that. let's do it anyway. but maybe we're seeing a super cycle. everyone was really waiting for the big phone, they didn't buy

phones for a long time and then they bought it and that's it. >> so now it's an apple super cycle. >> exactly. >> so what happens now? >> maybe this other one thing happens which is that the apple watch isn't that great. none of these watches have been good so far. steve jobs isn't around for this one. maybe the new watch isn't that great. already they're saying that its battery won't last all day. >> but they know that. that's out there. it won't be a surprise. and yet still look what is happening. >> i think maybe not a bearish point about apple stock, but on tech generally is the fact that apple has to carry so much of the sector on its shoulders. when you look at estimates for earnings for this quarter, growth was 3.8%. it was only 0.1% when you take out apple. so apple has been expected to be strong. but the sector overall is really flagging. >> that's a point we have to leave it there. so what is everybody supposed to do, just strip out the rest of tech from apple? ultimately what is good for them has to be supporting a much

larger supply chain delivery system. >> right. absolutely. i think that's the plan at least in the short term until we get a better look at how the rest of the space is going to report. we had two really bad reports this morning and two really good ones today. and it's important to stick with those reports as we're seeing volatility in the broader market, as well. stick with the names that have been working. >> and 120 by friday. we'll bring you back and see if it happens. thanks, james. that was a wild hour for earnings. more potentially market moving events. we'll tell you which ones to watch for next. etting married. never. psssssh. guaranteed. you picked a beautiful ring. thank you. we're never having kids. mmm-mmm. breathe. i love it here. we are never moving to the suburbs. we are never getting one of those. we are never having another kid. i'm pregnant. i am never letting go. for all the nevers in life state farm is there.

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take a look. that's tomorrow. another super busy day on the earnings. we'll hear from names like facebook and qualcomm and key factors they need to watch in light of what we heard from yahoo! and apple after hours. what do you think, what are you focusing on? >> i think it will be earnings. i think once again investor in his market is all about the earnings. this big week, 140, 150 names reporting.earnings. this big week, 140, 150 names reporting.market is all about the earnings. this big week, 140, 150 names reporting. but it would build after hours.

>> apple was you touch an important such an important part of the tech eps. >> and facebook is an important part of the calculus for momentum names, though. he was first with the holding company structure where basically he's building all these different apps that are diverting people away from facebook. it will be interesting for see as it always is his comments on how all of that will work together, how the facebook ecosystem will function going forward and where they can make money. >> that's a point. nicholas, what are you watching? >> i'm looking at facebook, too. facebook is in theogle a few years ago. instragram has not been fully monetized. >> do you know what the value roughly anymore is? >> i wouldn't be able to guess. many billions of dollars. >> a steal. >> purchased for a billion as was youtube. >> an utter steal.

and going forward, facebook is going to get into the video advertising market. and they're really strong. people spend 20% of their time with their phones on facebook. >> actually on this point twitter had an interesting announcement today about its video moves. are you seeing those as potentially disruptive here for a facebook or yahoo!? >> really disruptive for google for sure. people are worried about google being able to keep up with facebook and video for sure. >> kenny, final point. when we start to look at minus 290 on the dow kind of day. >> i think it its's short term. no panic. the market is just churning and we're set to move on. >> thank you so much for being here on this blizzard or lack thereof tuesday. "fast money" is coming up in just a few moments with melissa lee. >> the big question tonight is will apple and yahoo! hold their gains and mapping to turn around market sentiment. we're trading the conference

calls. >> and i want to hear about the kid who turned down an internship with tim cook. >> we have him on. "fast money" starts right now. overlooking a snowy new york times square, i'm melissa lee. big selloff, but could apple earnings change sentiment. shares up 5% after hours. blowing past expectations. the company selling 74.5 million iphones. well above estimates. yahoo! also popping on news it will be spinning off its stake in ali baba. we'll be bringing the details to you as we get them. we also have the latest earnings news on at and