that free, artists don't like free they think it's commoditizing the music and a lot of price competition from people like apple. >> that was fast. we have no time. >> thank you. come back. you have a home on "squawk box" and don't need to go anywhere else. >> my house isn't far. >> join us tomorrow. right now it's time for "squawk on the street." ♪ ♪ i got to have faith♪ >> good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla david faber. stock market calling for backup in the rough earnings season and looks like apple and boeing will deliver. futures set to bounce after the worst day for tech stocks in three years. oil back on its heels. down 2%. it's fed decision today, ten-year hovering above 1.8. road map, apple, boasting the

biggest quarterly profit in its here. demand for iphones in china driving results. >> fedpushing markets to gain back some ground after yesterday's significant tumble in the major indexes. >> boeing's quarterly results soaring past expectations. the company seeing 2015 jet deliveries outpacing 2014. apple is the big story, up sharply in the premarket after posting $18 billion. ipad sales helped by strong demand in china. tim cook -- >> demand has been staggering, shattering our expectations sales over 74 million units driven by the unprecedented popularity of iphone 6 and iphone 6 plus. this volume is hard to comprehend. on average we sold over 34,000 iphones every hour 24 hours a day, every day of the quarter. >> at least 75 million iphones.

estimate 69. average selling price bucking the trend. switching from android, hard to find much wrong with the quarter. >> people say if it doesn't take out 119, november high it's going to be a fail tock. let say, don't trade it own. this is a mesmerizing quarter. i think what's so important, those who felt this is only an iphone story, maybe one day it will be a worldwide story, this was a fabulous china quarter, they seemed to like the phones different from what steve jobs said they would. they like a big phone. en an i pace quarter. it's a watch quarter. he said i can't live without. his credibility's the highest of any ceo now. if he says he can't live without the watch, 500 million people have the phone so it syncs, you're giving me the watch for

my 60th birthday. >> got it. coming at you. >> that 6th is a long way to say. we're ignoring next week. >> before the launch. but you can remember me. >> fun metrics. china revenue up 70%. >> geez. >> four stores there now. they'll have 40 next year. made -- almost three times as much in china as mcdonald's makes in a quarter around the world. >> mcdonald's sales are going down. so the china thing amazed me when i saw how few stores they have. they can probably use a thousand stores in china. not kidding. they could use a thousand stores. online business is incredible in china. growth absolutely stunning in brazil. i mean this is one of -- that's a quote from tim -- one of the thing's that amazing about the quarter, maybe the economies aren't so weak around the world because this thing costs a lot of money. >> it does. >> average selling price well -- much higher than -- i was trying to do an analysis of how much of

the retail sales in this country weren't caught aggregate numbers, because of apple. apple sells, 1/7 of what walmart sells in the country, but this is -- >> but without a doubt, the sale -- that's something our friend david berman discussed. but is that representative of consumer sentiment and willingness to spend? it's a huge number to your point. some of it is subsidized by carriers. >> and all foreign carriers this time for the first time ever. >> big price point. china, huge. >> yeah. don't forget baseball in a month. where are they in mobile payments? not completing the first inning. typically what these guys say, early innings. no i mean away team -- >> opening pitch. >> away team. >> let's mention ipads, down 18. tim cook says long-term positive, still bullish but tablets are having an issue.

>> he does point out the ibm relationship could be positive for tablets. it's funny, i almost felt like they sold fewer tablets so there was something negative. hold it to be sure. he's asked about. listen don't worry about it. the fact this is a conference call that every ceo, 499 guys that are otherwise in the s&p, that hang themselves. they're hanging themselves when they read this. i thought i had a good story. this! >> not often you get a company that earns $18 billion. think about that number. i remember exxon quarters from years ago being staggering at 10 billion. >> i remember 10 was a big one. >> this number's hard to -- hard to imagine. >> the cash the cash alone is enough to give every american $5 $556. if it were a security, number 14 on the s&p. >> they clearly have more money than the u.s. government. president obama wants to take away step up in bases.

>> 529s okay. >> do-overs. he's a charmed president. total do-over. some of the things they were talking about -- it's funny, those guys complain about currency. they were -- buy currency why bother to mention it? >> to your point yesterday when things are going really well they're going really well. >> tim i know you're watching give us a jingle here. >> do we think the ipads, particularly mini being can bolized by the 6 plus given their sizes? high-class problems they say. >> what did you think, honestly when he teased the watch? >> he's a salesman that's the first thought that crossed my mind. >> yes. yes. he's got us going. i mean this is a man who has gotten into the job and has gone from a guy, struggles in the conference call to putting on the greatest show on earth. he's got the greatest products on earth so he can do that. the watch comments were a

reputation of all of these small-minded analyst whose say the watch won't be good. have you even seen the watch? i went over analysts' notes before going into the quarter. the last good quarter. we'll hear that. but the watch, the watch is sudden i like the must-give present. >> well suffice it to say, he doesn't lack for credibility, mr. cook. yeah. or confidence. >> he's got more confidence than dougolberhelm. >> your back here yesterday. holding back on him. kept wrapping in the nice guy stuff. >> i read the four principles it's one of those books, good book, made me feel worry about yourself, don't worry about the other guy. i'm back. >> that was a one-day phenomenon. >> i'm back and bigger than

ever. >> futures on the rise as we said after stocks did tumble. disappointing earnings newsadding to growth concerns. dow finishing down 29 on fed will wrap up first two-day policy meeting, expected to reaffirm patient approach to raising rates, clearly after durables yesterday, you might expect them to do so. >> they should think of -- i shouldn't -- yellen thinks about everything. she's underrated. she's like tim cook a year ago. the idea that they are not going to take into account the fact that the dollar's making it so we're going to see a pretty staggering change in a lot of our companies. i was talking with joe kernen is this a quarter for boeing that is not yet the quarter where they're going to be beaten by airbus on some things that are machines new ones are superior, plus a great defense business. i think the fed is going to look at this and say, the dollar headwind is right now way, way

overcompensated versus say, oil situation, a lot of companies. no one has said yet, we're seeing the benefit of the lower oil, no one. no company. companies saying it should happen. >> the airlines. >> i meant the creeping part of the rest of the economy. >> you're talking about in consumer spending? >> yes. >> not users of the commodity. >> did you see that american was downgraded downgraded, selling six times earning. it's staggering to downgrade. southwest upgraded, superior operator. upgraded now. i think maybe later -- >> front page story in usa today, why air fares are not coming down though oil has, they argue whether it's true still selling seats at $100 oil. >> i great quote. one of the reasons why if you're worried about boeing's orders you're crazy. i want people to go over the united technologies quarter, give that guy another shot.

he is just -- >> which one? the boat guy? >> new yorko, he's gone. he owned that quarter. >> i'm not so sure. >> really? >> i'm not so sure. united technology's doing incredibly well right here. ge we played "jeopardy!" yesterday, i'll follow up with "family feud." >> what were you upset about. >> ge. >> i got there. it took me a while. >> honeywell, ge. >> i finally said ge but yeah it took me a while. i didn't realize the industrial business is strong. >> it's because of engines. >> and turbines. >> and speaking of aviation boeing, fourth quarter profit 231, beat business 20 cents. revenue, crushes, 600 million of estimates. and looking for 2015 cash flow of 9 billion. >> cash flow operating cash flow, the most important, five versus one last year at this time. defense, finally moving on the tanker business defense.

but boeing is a conference call stock. so, i urge people not to buy it in the premarket. market nernny is a straight shooter. i think it's a great company. i've never felt anything like that. but never questioned. but remember, it is a conference call story. >> yeah. we are looking for comments about forex, which was not evident immediately. >> like oil. they can sell planes in dollars work i just think that again, one of the things that's the hallmark of the quarter is listen to the conference call. i thought microsoft, maybe okay. but the microsoft conference call and was a funeral dirch. >> why depressing? >> when you hear an executive say japan and china are bad, we're going to find out about that. it's better to find out ahead of time. last week green bay, we had -- two weeks ago, fourth quarter

was bad, man. we're going to watch the tape. >> just circle back quickly to the broader market. any impact here? greece is having significant issues today. a time that might have roiled our broad market. doesn't appear to be the case. banks down 20%, 30%. they are marxists. >> merged with the -- that right wing party that i won't say who i think they're affiliated with but look like. >> tsipras promiseing radical change wants to avoid destructive clashes with creditors. >> people feel this is going to spur the central bank more aggressive. some of the europe. banks are not doing well. i'll use a term, david, going to get mad at me carl your open minded, green chutes in europe electrolux. >> really. >> after phillips and -- >> phillips just terrible. >> i would do a little

reshuffling there. there is -- electrolux it's duopoly, ge selling appliances, but we're seeing good numbers there. for the first time. seeing -- germany's good but starting to spend. spain was good. keep track. keep track. i'm not saying that europe's turning. i'm saying europe's going to have maybe 1% 2% growth and this is going to help a lot of companies in the end. the euro will not plummet endlessly. >> mean while, we haven't gotten to yahoo!. yahoo! announces plans to spin off its stake in alibaba, the chinese e-commerce giant feeling heat from a regulator in its own country. we'll talk about that. the dow and s&p, on track for the first back-to-back monthly losses since 2012. as january has been a rough one. more "squawk on the street" from post 9 in a minute. the lightest or nothing. the smartest or nothing.

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heat from a regulator in its own

♪ share of yahoo! look to be up sharply. last night the company did what it said it would do giving guidance on its plans for its 15-plus percent stake, 384 million share stake in alibaba,

do what many investors hoped the company would, creating what will be a vehicle to avoid paying any taxes on that stake. this is something that yahoo! has been working on for years, in fact trying to figure out a way to effectively and efficiently separate the most valuable part of the company from the core business without generating a huge $16 billion tax bill. that's right. just on those 384 million shares. the device it's using, a spin to which it will put a small active trader business along with that 384-million share stake in alibaba, spin that off. hope to do that call it late in the year it will be after the law expired under the shares and we'll see what happens with that. remember, it's not as though -- that will be tax-free to yahoo's! shareholders give value in the marketplace to the value of that stake and trade

largely, if not entirely based on the performance of alibaba. tomorrow we're going to hear from alibaba in terms of its earnings. that will be very important for this newco. it would trade at a discount one would imagine. it's not clear that will be able to distribute all of its shares in tax-free matter unless bought back by alibaba itself and it's not clear alibaba will buy the entire thing. last night during yahoo's! conference caulk webcast, marissa mayer did speak how shareholders will benefit from the spin-off. >> during this team's tenure yahoo! returned 9.3 billion in capital to shareholders through share repurchases. assuming monday's value of alibaba post-spin, we will have returned nearly $50 billion of in value to shareholders. this level of return is historic. >> don't forget of course a company who once owned 40% of

alibaba, the previous management that chose to sell some of the stake and signed up to sell more in the ipo mayer able to pull back how much they sold in the ipo, pointing out she saved the company $7.5 billion, roughly the equivalent if not more than her stake in yahoo! japan. nobody can criticize them on what they've done in terms of capital and the use of it for shareholders, i would argue. they've been a good steward, jim. the core business which i haven't mentioned at all, not looking that good. >> i chose the whole time not to mention the core business but now that this is going to be done, look at the core business. the whole time i've said listen i'm behind mayer. there are a lot of problems in the core business and a lot has to do with programmatic ads, display business going away so rapidly, banner ads on pc something that's -- that's a previous generation thing. i'm not so sure that a lot of things that they're doing will

in time pick up. >> interesting. mobile sales up 23 some argue it does buy her some time. >> well mavens. >> mavens it's mobile native video, and -- >> mobile video, native social. >> all good. >> but again, the problem is is, geez google's powerful. >> display and search. display, down search flat. i spoke to marissa mayer and the cfo ken goldman on the phone, talked to them and asked them specifically about that. their belief is the growth trajectory of those other -- those maven businesses will overpower display, which they hope will return to growth over the course of this year. goldman saying the accelerated momentum on the year as the year unfolds, will be the story. we'll see. we'll give them credit because now it's the focus is on that core business. once you have dealt with alibaba, and, yeah yahoo! japan

st. louis a significant stake, once you dealt with it it's about performing for the core business. >> given the number of shares they bought back if this does turn, they'll be bought by somebody else. >> it's hard to turn hard to do, isn't it? >> it's really hard. those of us involved in the web, seen the display crash, it's almost impossible to make it up in volume in other places but they do have -- they did have good page views. again, you know they did not do social. and she's late to the party. not her fault. a lot of what happened is not her fault. long knives are out for this ceo constantly. >> i don't know why that is the case. i have to say, in terms of at least doing -- given the hand they were dealt coming in and whef done in being good stewards of your capital as a shareholder i can't criticize. what her ability is to actually execute a true turnaround of a

troubled company, that remains to be seen. i don't know that that is going to be successful. >> from an investor standpoint saving investors a $16 billion payout. >> look it's brilliant. david, i wanted to ask you, in the spin-off why are they putting that little bit of yahoo! operating business -- >> you have to have an active trader business in the spin in order to maintain its tax-free status. >> can they have a loser. >> whatever loser it is it does contribute something. talking about it being worth 1% of -- putting $40 billion of stock in there. it is going to trade at a discount. >> the numbers, after you look at 61 cents for next year i've got -- got to see where the stock trades after this because -- look when it was at 40 when it was 30 it wasn't expensive. here it could be an issue. they can get mavens in time you want to buy. but if they're not mavens

they -- >> by the way, alibaba's earnings, of course tomorrow morning, very important for yahoo! and for the future of this future spin code. tomorrow, a live interview with alibaba's executive vice chairman, joe tsai 9:00 a.m. tomorrow. >> cramer's "mad dash," count down to the opening bell. a look at premarket on wednesday. "squawk on the street" continues in a moment. obsver of the world has gotten you far but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running. can it make a dentist appointment when my teeth are ready?

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all right. time for the "mad dash." quick one here shake shack's going to price thursday to trade fi morning friday morning. looking forward to what we're going to get on the desk.

>> they raised the price. shake shack, at jim cramer on twitter, hard to get the stock. so i mean people are watching. this is one of those people love the taste of the burger and want to own a piece of. this is going hope ging open at a huge premium hard to get the stock. why? for the same reason we see a lot of companies that are -- the public loves the product or they love the taste, they're going to try to buy. don't be -- don't be dissuaded. but if this stock opens at 30 that is too high. i'm saying i felt that 20. now feel 22. but if it opens really high, please don't chase it. we've seen that happen and stocks come in shortly thereafter. danny meyer, the guy behind shake shack, he's done a remarkable job. each store lucrative. the price is too high. >> talking about an open by the way, a market open coming up. keeping an eye on at&t apple,

boeing, you name it we got it, after this.

watching cnbc's "squawk on the street," live from the financial capital of the world. opening bell in about 20 seconds. anal and boeing did impress this morning. so far, not showing evident signs of forex pressure like the kind that derailed so many dow components yesterday. there's a look at s&p. the top of the screen. down here at the big board, empire state realty trust, celebrating 38th annual empire

state building run-up. and ever done the run-up, jim, up the empire state building. >> when i was a little boy. >> exciting. one of these real estate investment trusts they've been big winners, amazing winners. they've all been domestic yield plays. they're the great buy market equivalents that don't have any europe. >> get through a fed decision this afternoon. tonight about facebook and qualcomm among others. >> facebook those and my charitable trust owns facebook wish it were 72 ahead. one of the reasons why boeing popped so much gone from 138 to 132. facebook back up. one of the problems this quarter, if the stock is up big into a quarter, it has not reacted well. microsoft, for instance up big into the quarter the day before a little bit weaker and the company that have done incredibly well people have

given up and they're doing fabulously. a major theme of the quarter. apple has traded higher after the past -- the day after the past three earnings releases 8% 2% 2%, and it looks like 7, 8% today. >> one of the things people say, why doesn't it go above 120, it not taking out its top, is this a double top? hard for a company this big to go up 15 points. the company, a lot of shares. it's not like -- this is a monumental move for the size of this company. don't fret that it didn't go up 12 today. i mean -- that would be crazy. >> yeah. i mean talking about a staggering market cap, as it is as you say. still wonder when -- if you project out, could you ever get to a trillion dollars? it seems impossible. >> remember the companies during 2000 talking about the trillion dollars. this is certainly the one most

likely. i think that there are going to be people who say, you know what? there really isn't more that can happen. i'm urging people to think about it. sticking by my don't trade, own, because it's still inexpensive. >> all right. electronic arts on a day nintendo has blistering warning up what almost 5% 6% 122 beats by 30 cents, revenue beats, raised fiscal year guidance. >> what a well-run company. that and take 2, i like take 2. but ba doing everything right. a lot of these -- a lot of the games are not brand-new games. but this is a remarkable company. we always for get if you go back on microsoft, had i scripted the microsoft call which i would have done a better job than they did, believe me i would have started with xbox 1, i would have said the great device. i would have given us some hope. that was a no-hope conference call. amy hood could have told a

better call. amy, call me we'll work it out. the conference call said we don't have much cooking here. and they had xbox but obscured it with negative karma. a bad karma call. >> right. juniper, by comparison, this is going to take you back to the highest level since august or so up more than 7%. even though i think warning about the short term longer term, i think guidance is more bullish. >> talk about at&t soon. >> yes. >> but there's a sense that there's more spending going on in the teleco world. >> verizon, remember verizon took up its -- >> cap x. >> -- cap x a bit. at&t is not. gone from 21 down to 18. >> tower stocks on fire. >> wanted to mention alibaba. we mentioned it in relation to yahoo! of course, with spinco being created or in the process of alibaba shares themselves, which we'll hear from the company tomorrow morning, are

down. it would appear on reports out of china about more tension between the company and the government. china -- the biggest platform apparently hitting back at the results of an official quality survey that accused it of selling fake and substandard goods. they say the poll sampling methods were questionable and test standards unfair in an open letter published on its account in which it said you're not being fair to us. state administration of industry and commerce that did it. but it's an interesting relationship, to say the least, between alibaba and the chinese government. and when you see tension perhaps there, you have to at least pay attention. >> yeah. this is -- remember party runs everything there. we tend to think it's a great capitalist country. but you don't want that to happen. you don't want that -- they have

to project, when they give guidance, maybe the government is going to intrude? we saw when the government intruded with fast food and create an aura negative aura. i just think that was very bad. >> the stock is getting hit. and of course having an impact as you might expect on yahoo! hope for a bigger pop given their announcement yesterday, quite friendly to shareholders. >> i thought the government was short yahoo! -- put out a shorting make extra money, dispute it to the 400 million people. >> like gadhafi used to do in the oil market? >> wouldn't that be something? >> amgen a good quarter, 216 beat business 11 cents. stock's not responding. >> people are saying that -- ever since the gilead deal since the hepatitis c, people are saying companies are now price competitive. remember that? people thought that was the end. i think there's a lot of room for biotech to go up. the quarter may not have been as

clean as people think. there were some -- some noise in the quarter but amgen's a very good company, not as good as celgene, biogen regeneron and maybe gilead. it's all about conferences. it's all about drug approvals. and if you don't have one for agio, when it gets downgraded it's going to go down. these are not trading on earnings. they trade on some new drug that comes in. i like regeneron. i think their drug will be one of the big of the drugs ever. >> after yesterday's weakness would you like to see a few more days of downward action? >> it would be great to wash out the optimism because you know what happened here is that we're trying to get this reset going of all of the companies that have a lot of dollar business and we also i'm sure there's a lot of people worried about the fed. if the fed said it's a strong dollar, we'll keep things on hold the market will tear. i don't know if i want that.

>> someone wrote in i'd like to see another day. you might get your wish. dow's up 37 points. mary thompson. >> off our highs of the day. we're seeing a turnaround in tech fueled by the blockbuster numbers delivered by apple. and that's giving a nice lift to the nasdaq up 42 points. quick check of the sectors. tech leading today. energy pulling back. one of better performing sectors, along with utility, lower because of oil prices pulling back a stronger dollar at play there. the dollar weaker yesterday on a turnaround in the euro. but it's resumed its gains today. and that's keeping pressure on oil prices and, in turn oil stocks. materials under pressure, as well in today's session. let's take a quick look at the big tech names. of course apple, after reporting record quarterly results, cisco systems and intel, two companies weaker following the lead of apple. watching facebook this company reports after the close of

trading today. supplier check for apple, the companies that supply apple, to make its iphone and other products. western digital, results that were in line with expectations getting a nice lift up over 5% in today's trade. the rest of them posting modest gains. now, as we've been hearing this earnings season, two key factors and a lot of companies bringing down their forecasts for the full year. either the price of oil or the stronger dollar. let's take a look at a couple of companies whose forecasts have been impacted by higher or lower oil prices. boeing coming out with strong results, its gain contributing to 41-point gain in the dow. its forecast for the year, lighter because it's concerned about demand for fuel efficient vehicles -- planes i should say that might drop off because of the pullback in the price of fuel. rockwell automation, very strong results, it helped factories run more efficiently. it's concerned stronger dollar and lower oil prices will

decrease demand for its product. rockwell gets about over half of its revenues from overseas. u.s. steel, the third steel company to come out with better than expected profits lowering its full-year outlook, it expects weaker demand from the oil industry. hess weaker than expected results, cutting capital expenditures by 16%. its stock off 3% today. and of course, one of the reasons we're seeing weakness in energy stocks today. the dow up 41. we could be in a bit of a holding pattern, that's what traders say, until we get the statement from the fed at 2:00 after 2:00 today. back to you. thanks very much mary thompson. at&t this morning and the faber report. stock up nicely this morning, despite what you have to argue were mixed results from the enormous provider of wireless services and broadband services and video services soon to be more video in that package when

they close the acquisition of directv, scheduled for the second quarter call it april. reb revenue number was a beat over estimates. 55 adjusted also a bit of a beat as well over the 54 cent share estimate for -- that analysts had out there. when you look through the quarter, some things to focus on and positive some perhaps not. post pay churn did rise 1.22% still. but it did rise. average revenue, per phone user down from a year ago. they did add 2 million new wireless customers. 854,000 contract subscribers. when you get to post paid additions, it was really addition of a lot of tablets that seemed to help the overall number. they actually had a negative post paid phone ads or lost 115,000 post paid phone and

other subscribers. talking about addition of low-end tablets that helped make the number look better. i talked with the cfo, john stephens and had a brief chat and he made the point negative postpaid the losses there, were feature phones not smartphones. they added 1 million smart phones, once you migrate 1 million smartphones to the platform chances are they'll use more data and more services than do the so-called feature phones, the old fashioned, can we call them but you know what we're talking about. free cash flow as a percent of the dividend pad, also something investors are focused on. approaching 95% which may -- some may find scary. i asked steffans about that made a couple of points. cap x down from 21 to 18 billion in 2015. that will drop down to the free cash flow line. he also talked.

something we've talked about, but it's a complex topic, eip program, equipment incentive program, where they are paying up front and repricing their entire base of subscribers. what it's resulted in a lot of receivables from their customers, so you're paying up front and getting paid back over time. that has effect of hurting free cash flow at least in the near term it can. because you're financing your customers. he's not worried about that. is the end game here. neither are the analysts out there. though i would end, jim, with this quote from craig moffett who says simply excuse me for one second i wrote it down here, the question we get more than any other is why given our bearish reading in the industry in the company, we only neutral on the stock? the anner, the dividend. the as long as the dividend is secure, for now we think it is stock won't don't down near as

much as its poor fundamentals would otherwise demand. a world in which, you know people are actually getting paying swiss government to take their money, 4.7% is not a bad number. they point out more than half of their revenues wireless revenues will come from the business channel, only a fifth come from consumer mobility. >> yeah. i know directv's coming on. i feel much better after that interview you had with the cfo. i've been recommending verizon, they have better coverage. this made me feel much better. before the q&a, we have the panel for cash flow. there's a lot good. but i was concerned because of the coverage mentioned. now i'm less concerned. i think it's a good stock. >> a great deal of aggressive pricing in the wireless marketplace, led by t-mobile so successful over the last 18

months at this point. and we expect that will continue to be the case. it's even gotten to verizon. perhaps some expected it would been sul lated if you will. >> the stocks have not traded like the utilities, people think they're not going to live on the cash flow to be able to do the dividend and you basically said they are. >> they are -- >> i'm feeling better. >> ability to borrow at low rates. end of the spectrum auction, aws-3, provide more transparency of what's going on in the industry. let's get to rick santelli at the bond pits in chicago. rick? >> good morning, david. if you look at two day of tens you see important information. first, volatility. it not as though we weren't consolidating. as a matter of fact, what's fascinating, currently we're at 1.79 yield in tens. next chart, revealing. keep the same continueten-years. you can see that 1.79 level is

the low end of a closing yield range. we've had intraday lower. we're looking at today the ninth session where the closing yield in tens is between basically 1.79 and 1.83 very significant. now, let's contrast that with what's going on in bund yields. you can see, their year-to-date is different. but let's keep it all in context. we've dropped a lot in yields. to think the scale of how they've dropped since the ecb meeting on the 22nd is smaller than people think. at and post very counterintuitive. look at italian yields granted from lower levels but moving higher. so spain a 30-year auction in europe, didn't go very well. bund, had to save the day. if we look at what's going in

foreign exchange look at two-day euro versus dollar the big bounce yesterday, short covering but holding on to 1.13 handle. by the way, supply we have 26 billion two-years today. weather delayed the auction. hopes ours looks better. new currency chart, dollar versus chinese currency the dollar's at eight-month highs. pay attention. everybody seepms to want weaker currency, whether they want it or not. whether they have bands or not. oil under pressure this morning. jackie's at the nymex. >> good morning. that's right. oil under pressure on both sides of the atlantic. seeing wti hanging out over $45 a barrel brent over 49. stuck in this range. traders waiting for the department of energy report on crude inventors. expecting a big build, as confirmed by the api report last night, reported more than 12 million barrels. last week de.

reported $10 million barrel build. all signs point to oil prices lower both supply is in good shape. gasoline a drawdown demand could be up. gas prices are higher. we'll come back to you with those number. more on apple's blowout quarter. what ceo tim cook told joshly. ton after the call. dow's up 60 a lot of that is boeing, but other components joining the party, too. back 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

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and i'm not. >> interesting. seattle seahawks star, richard sherman speaking to our cameras with microsoft xbox last night, aware of the volatility. >> i follow him on twitter. sent me a nice pro bowl signed sharp. he tweeted when i did an invitation to him, best sherman that i've seen. i know he's watching. he's a very bright guy. a fabulous guy. he's -- it's not controversial, he spends more time on charity and less time talking about how much he does for charity. i'll do it for him. thinking about a few shorts he says. he should -- have you talked about that? >> no. no. we haven't talked about shorts. >> interesting. we'll get "stop trading" with jim in a few moments. dow's up 68 points. "squawk on the street" will be right back.

time for cramer and "stop trading." >> a different day than yesterday. for instance, western digital reported good numbers, the semiconductors on pressure yesterday. sky works, unbelievable quart, didn't go up much. why they're in apple. avgo, great merger why is it flying in they're in apple. nxpi if you want payment semiconductors, stock's going

higher. a lot short it. free scale, that's auto semi not an apple play. nxpi when if it is the year of i pay, it's the year of nxpi. >> free scale, almost a busted lbo, so ugly. >> spring's eternal. >> texan had nice things to say about the auto market. >> connectivity in the home and the car. the semis are back. and it's an amazing move. it feels like the '80s because contextivity so big, trillions of point of connextivity. >> by the way, we haven't mentioned fiat chrysler. but according to phil lebeau, no regions of the world where we are bleeding. made money in all regions. >> i like that. good, one auto company doing well. one defense company doing well. lockheed martin bad yesterday. boeing conference call 10:30 our time, very important. apple, i like the act, what happens happening there.

>> "mad" tonight? >> classic case of what's ailing the market and making it great at the same time. nick akins, not great quarter. it is screaming. why? they've got a safe dividend. this is what is bugging people. that they could miss the quarter and still do great. the answer's they're a great company and we are using power but they have a great dividend. differ rules. how did you get to mayer and goldman of yahoo!? don't answer. i'm jealous as all get-out. i'm jealous of you. >> you talk to more people than anybody. >> no. >> you can't talk to everybody, jim. >> i talk to jack. i talked to jack-in-the-box. chipotle doing well. >> see you tonight. >> thank you. >> apple's record setting earnings. what did tim cook tell josh lipton after the conference call?

♪ ♪ hooked on a feeling ♪ >> good morning. welcome back to "squawk on the street" i'm carl quintanilla with sara eisen and david faber at post 9 at the new york stock exchange. decent action dow close to session highs, up 64 points.

boeing and apple pretty good. of course get through the fed decision this afternoon and facebook and qualcomm tonight. >> let get to our road map, beginning with apple. a blowout quarter, record quarter, 74.5 million iphones sold. the stock is soaring. will it an all-time high? yahoo! spinning out alibaba shares, a tax-free deal. what does it mean for the core business and ceo marissa mayer? t-minus four hours until the fed decision. strong dollar taking its toll on corporate results. tomorrow alibaba reports earnings alibaba's vice chairman, joe tsai, joining "squawk on the street" at 9:00. apple, stock up over 8%. josh lipton a chance to sit down with apple ceo tim cook. talk to him about the results. josh, what did tim cook say? >> well, sara tim cook tells me that apple is selling iphones in his words, as fast as the

company can make them. and he's not kidding. apple reported results that bested expectations on the bottom and the top. investors reacting. that stock racing higher this morning. it is now up over 60% in just the past 12 months. the real stunning number though this. apple shipped over 74 million iphones in its december quarter. that is way more than analysts predicted. it a hard number to get your head around. so cook described results this way, on average apple sole over 34,000 iphones every hour every day, of the quarter. by country, unit sales very strong here in the u.s. up 44%. but cook made it clear to me a real standout in the quarter quartermaine quartermaineland china, unit sales surged 100% as demand for 6 and 6 plus boomed. piper jaffray says mainland china accounted for 21% of

apple's revenue in december quarter, up from 15% in the prior quarter. of course, there are challenges for apple in china, including local rivals competing fiercely for customers. on that conference call cook did not sound concerned. >> the local competition was obviously there this quarter and has. there for many quarters before. the local competition isn't new. i think we did really well there. i'm very proud of how we're doing. >> now, cook has reason to sound confident. research firm says apple, for the first time became the top-selling smartphone maker in china this last quarter by units shipped, even though the price of its iphone was nearly double those of its nearest competitors. back to you. >> stunning numbers. thank you very much josh for comments from cook. much more on apple. but first, back to the overall markets after yesterday's

volatile session shaving 300 points off the dow. looking for a rebound. 71 points ahead of the fed. european stocks followed suit continuing to tumble in the wake of greek election results. continue volatility here let's talk about it with the ubs' chief global investment officer. mark looking worrisome there on earnings. apple's record quarter, enough to turn sentiment around on stocks and earnings? >> we think so. people were concerned about the durable goods coming off and maybe mid cycle slowdown. but we are seeing lower oil prices come through, apple is consumer related and i think that's going to pick up and take us through the year with stocks. >> apple wasn't immune to the strong dollar impact. shaved four percentage point off of revenue, weathered it better than most. the strong dollar's starting to cut into profits and revenues

and should only continue. is that a reason for you to stay away from multinational, businesses that do business overseas? >> no we don't think so. i mean we've looked at it in our forecast and we think that even a rise in the dollar from here of 10% is still going to be something that can be absorbed. we like u.s. equities. you know 75% of the earnings from the s&p 500 is still based domestically in the united states. so compared to other markets, you're relatively well shielded. >> i guess the question is why optimistic on stocks? just to hammer this point home about how much apple's report did for earnings s&p earnings growth, 4.4% if you take out apple that falls to 2. 3%. is it enough to keep stocks going higher? >> yeah. well i think that this quarter, there's going to be -- earnings growth isn't going to be as strong as we start to see the impact of things like the oil

coming through. but we think growth can be 7% this year. and u.s. stocks got a couple of things going for them. first, there will be earnings growth on the back of global growth. second there's 12% cash on the balance sheet, that's double historic levels. valuations aren't that stretched yet. we like the u.s. equity market. we've moved into european equities on the back of this -- we did it before the move in the ecb, but again you've got this stimulus from the central banks buying risk assets and even if it's happening mostly in europe in japan, some of that will leak into the u.s. markets. >> mark you know a chart being passed around this morning looks at the top 1% their income share in this country right now. it's basically the a century high, 100-year high. we continue to post good job growth month after month. what is keeping wages from getting a bounce? >> that's an interesting question and i was at davos

last week and i think this was a very large topic. and it's a topic that's going global as well now, because if the ecb is stimulating, that's going to create these kind of inequalities in a society like europe where there's much higher unemployment and differences between the north and south. i expect the topic itself to become a bigger one. nobody knows yet why that wage growth is not happening. it's probably has to do with the composition of the labor market post the housing boom that happened before the great financial crisis. >> right. >> but we think that janet yellen is focused on that and that's going to keep the fed from raising rates at too rapid a rate. >> yeah. you mentioned durables yesterday. i saw a couple of notes that argued inventory hasn't accelerated and that's leading some to believe that we're going through a relatively quick correction in terms of durables. do you agree?

>> we think so. we they so. we'll see now, as consumer cough dense remains high we need that peckup pick up from the consumer to take us through the higher stocks for the year. >> are you confident that u.s. is insul lated from greece? the athens stock market down 9% credit default swaps widening out, implying 70% probability of default. doesn't look like it's spilling over into the united states. do you worry about the contagion factor, or is that not a concern for u.s. equities? >> the first part where it would be contagion would be into europe and it's relatively muted. in our base case the a low probability of a greek default. we need some kind of deal now where germany can save some face and greek can save some money, and we think -- they've started talking. if you look at default situation, greece has 600

million they have to pay off in february, and then to private creditors and then it's over the summer that some of this debt comes due. there's some time to work this out. >> thanks very much for the perspective. global markets, the global investment officer at ubs. of course waiting on the fed statement in a few hours. steve liesman, senior economics reporter on what we might expect. >> good morning. later this year when things get tougher for the federal reserve and fed chair will look back on today's meeting and the policy statement as the end of yellen's one-year honeymoon. no press conference only minimal changes expected to the stamt statement. wall street sure the term patient will remain but that's it. after today, and that's what makes this meeting interesting. 33% plurality of our respondents to the fed survey think the fed removes the word "patient" from

its statement in march. by april, percentage jumps to 60. the question whether the leadership at the fed thinks market's expectations are offsides one way or the other. the fed funds market sees central bank benchmark rate ending the year at 45 basis points compared with 11 today. average of the projections of the members of 0 the fed, 1.125. the market much more dovish than the fed by nearly three-quarter point rate hikes. as reported yesterday, the market's getting more dovish, not less. that is, it's moving further away from the fed's own forecast for rates. average month for the first rate hike seen in september compared to the prior survey which was july. all of that brings us to today. many think there won't be many changes, it's likely the case. the question whether the fed tries to tweak a few words here and there to better align the market with the fed or maybe the fed to the market. for example, greater concern about undershooting inflation or

adding worries about overseas growth could hit the market. the fed has to be concerned about the alternative, pushing ahead adjustment one way or the other to march. the question is how does yellen want the honeymoon to end, whitmore or less volatility in the markets. >> steve, does yellen need to be talking more frequently in between pressers? >> we know she's not talking a lot. i looked those morning, last kind of monetary policy economic speech she gave back in november, that's apart from the press conference. clearly following a path of letting the press conferences do most of the speaking and guidance. the question is whether or not we're approaching a time we need more guidance not less from the federal reserve. >> thank very much steve liesman. yahoo! last night reportingite fourth quarter and full year '14 result but was also presenting its plan to separate ow its 384 million share stake in alibaba, more than 15% of that company in a

tax efficient manner than plan in part has the stock up though not as sharply as it seemed to indicate yesterday after we first heard about. the plan itself its what many shareholders had been hoping for, a full spin if you will of the entire stake that yahoo! holds in alibaba. of course remember sold shares in the ipo on which it paid taxes, sold shares prior to that though sold less shares in the ipo than originally slated for. the new plan spinco will include that stake and active trader business. small business but needs to be in there to continue to make it tax-free to yahoo! shareholder transaction. after that what do you get. >> yahoo's! a pure play on what it currently is core business and don't forget the 35.5% stake in yahoo! japan, worth $7 billion. it is, of course the focus on the spinco that has the stock up

and perhaps for good reason. it's not going to be completed until the end, let call it of this year. in fact it won't be unlocked on the shares until i think september of this year. they're expecting the spinco will be ready by the fourth quarter of 2015. when it is it will trade independently with its own board of directors. it will reflect the value in its 384 million shares of alibaba. it is expected to trade at a discount given the fact unless it were to sell shares back to alibaba any sale of the shares would be a tax -- taxable event. so you will have some slight discount. as for yahoo! itself well now the focus will really be on the core business. of course, still going between now and then be focused on alibaba and its performance. we'll get more on that tomorrow morning. for the core business, well something of a mixed bag. mobile growing very quickly. but you have display down you have search flat some wondering whether the first quarter sales

guidance, we first got it but analysts had been out there with numbers, perhaps a bit low on both ebitda and sales for the first quarter. when i spoke to cfo ken goldman and ceo marissa mayer last night at 9:30 last night on the phone, i asked them about their hopes for sort of overcoming the weakness and the legacy if you will business, and brought up the incredible growth of mobile and the belief that the growth trajectory of mobile and native advertising and video and social will overtake weakness seeing in display, which they hope by the way, will turn around by the end of the year and flat so far in search. that at leafst is the hope, the plan. give marissa mayer credit she's going to be focused on because it's no longer about the alibaba stake and the value inherent in that and figuring out a way to

tax it, divorce it from the company. they may have saved themselves $16 billion in taxes as a result of the plan many of shareholders i've spoken with happy with that part of it. >> clearly a move that wall street wanted. yes. >> i didn't realize she was there since 2012. >> she has been there since 2012. their point is well taken. they claim to be good stewards owe of shareholders' capital. she rules out this proposal from starboard about ending with aol. >> we will see. when we come back more on the blowout quarter for apple. the stock up almost 8% as we speak. citi's apple analyst with us next. take a look at the week for the dow components. proctor & gamble dropping after poor results. the story of the week of the earnings quarters, of the year we'll talk to our currency strategist coming up. i've been called a control freak... i like to think of myself as more of a control...

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welcome back to "squawk on the street." watching chairs of petrobras. the company released unaudited third quarter results after months of delays it left investors in the dark over the financial impact of a multibillion dollar corruption scandal. sars down ss

down 6. >> apple pay will be available for vending machines and other self-serve appliances. will 2015 be the true year of apple pay? the director of investment research at citi has a buy on apple and 135 price target. good to see you. >> great. good morning carl. >> yesterday we were talking about foreign exchange easier to manage if you get plarjens closer to 40%. >> when you have a hit product with innovation foreign exchange is a headwind for many companies but we see that apple plowed through the foreign exchange headwind. >> stocks hesitant to break through 119, 120, why? >> people were concerned about the foreign exchange risk that we talked about. but would we see a top in apple sales? we saw they beat expectations by over 10% to 13%, based upon sales, units and earnings. we are seeing it start to break out. is it expensive?

up 40% last year carl and we're happy with the buy rate on it and see that price move it's relatively cheap. excluding the big amount of cash it's trading at ten times earnings. we think it continues to move higher . >> any worries about tablets and ipad, and if not, when does this period of softness and adjustment start to end? >> absolutely. i can agree with you on that point, is there is cannibalization happening on the tablet especially ipad mini users buying iphone 6 and 6 plus, maybe deferring purchases or not even making a purchase on an ipad. also looking at enterprises trying to justify, is it worth buying ipads for consumers or notebooks. ipad was an area of softness but iphone trumped that with bigger than expected numbers we saw on the print. >> on that point, jim, one of the biggest questions, is this a one-off boost for iphone sales based on pent-up demand over i

phones and excitement over the larger screens or can apple take that momentum and run with it with new products like the watch. >> it's important to note seize seasonally, december quarter strongest quarter. you've got christmas and holiday gift giving. in calendar q1 we have chinese new year. that will help. but seasonally things will soften in the march quarter. we do not believe that the iphone 6 plus and 6 is dead. we definitely do think it's going togo going to continue to see strong sales. seasonally things are slower in march quarter. you do not buy a phone for easter or valentine's day for loved ones or family members but you will for christmas. >> people say one of two things you're talking about apple too much, and, b, since you are talking about apple, what's the guidance on the dividend, because now we're left with that conversation about the balance sheet and that what $178

billion in cash. >> let's talk about the those in the order that you laid them out. first, talk about apple too much? well it's the largest market cap company in the world and impacts so much whether the indexes across the world, the supply chain, the consumers, retailers, even now we see the watch industry going to be impacted by things. so do we talk about apple too much? we do not believe so. as far as the dividend and the cash flow and the balance sheet, talk about this that's a problem but it's a good problem. apple has too much cash. what a great problem to have. if you remember years ago, they really had a problem about potentially not meeting cash flow needs over a decade ago, now they're cash rich. people are complaining about that. it's an optionality to make acquisitions, buy back more stock or increase dividend over time. we think all of these things will fit and help resolve the cash situation. glad they have too much rather than not enough. >> obviously, it is an important

asset. just to go back to apple pay, i like the recode angle. they were skeptical on the idea 2015 the year the apple pay. many large retailers are going at it alone, not taking apple pay, trying to compete. does apple need to be in those stores or can it be a u quickubiquitous breakthrough payment. >> at the end of the day the con consumer will vote and enter pry has to adopt to that. we'll seen that with corporate e-mails. many thought apple wouldn't make it into the corporation. today we see many different companies, including myself can access, secure corporate e-mail on their iphones. we pleefbbelieve enterprises if apple continues to innovate and have

products that consumers like enterprises will embrace. we believe it will roll out. there is reason to believe, skepticism of will it roll out or not. right now apple pay is only available in the united states. a large world out there that hasn't seen or used this product yet. we've got to wait to see how it rolls out. >> people were hoping that analysts would have gotten a more on the specifications of the watch, battery life how often cook needs to recharge the one he say his loves so much. did you get any granularity on that at all? >> we got a little bit on it's shipping in april, previously we thought march. that's a disappointment. but the stock up today is on the iphone better than expected unit. we believe people don't want to recharge something every day and believe built-in gps is important. we believe it will sell well but it may not be best in class, coming out of the gate.

with time version one tends to improve to version 2 to version 3. we expect enhancements to come. >> as is the case with the iphone ipad and every other category. the strong dollar taking the wind out of a lot of multinationals. we'll talk about that with the dow up 72 points. don't go away. 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... or managing your investments on your own. helping you find new ways to plan for retirement. and save on taxes where you can.

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help right away. why pause the moment? ask your doctor about cialis for daily use. for a free 30-tablet trial go to cialis.com almost the inverse of yesterday when stocks were doing poorly and oil was doing well today the dow's up 67 and crude continues to be under pressure not quite at session lows but below $45 on west texas. >> flip side is stronger dollar. the question is is the dollar too strong in from dupont to microsoft earnings indicate strength in the greenback

hurting company sales and profits. apple's record revenue dinged four percentage points by the stronger dollar. joining us allen ruskin. is the dollar too strong? u.s. treasury says it's in our best to have a strong dollar but it doesn't feel that way. >> it's hurting companies are, significantly, particularly this in quarter. you looked at the overall economy and said we're froegrowing at 5% in q3, above 3% in q4. >> why are corporates proving ineffective when it comes to hedging? they're in the market, buyers in foreign exchange and sellers, why can't they figure the move out? why is it hurting them so much. >> the move has been very rapid. seeing central banks surprising not just corporates but financial markets in general. it's hard to keep up with the speed of the dollar's move that's one thing. the other thing, multi-euro

element. how far do you hedge ahead? that's a tough decision as well. >> carl's dying to ask about the singapore dollar a huge mover overnight. >> did make headlines. >> but seriously, more central banks are surprising cutting rates, fighting the currency war to get currencies weak. is the dollar going to sit out and the fed sit out and let itself lose the war? >> well i doesn't characterize this as a war and there are winners or losers in this. i think the u.s. economy is more robust than all of the other economies out there. it can withstand a stronger currency and there are feedback looms. the stronger dollar will mean the fed will do less tightening. you know seeing disinflation forces in the u.s. economy and that will have an impact on fed policy and will take a sting out of the stronger dollar as well. >> german finance minister can't imagine a haircut for the greeks. be fair to other constituents.

a, do you believe him and, b, there's a school of thought that say let them go and take liabilities with them. >> the second part of the question, i'm not of the school of thought you can let greece go. i think ramifications are enormous, to the extent if greece goes the markets will crash. is italy next? who's next? draghi's mentions in the past irrevoeshgable important component to the constituents in the euro usually important. >> how low does the euro go against the dollar, parody. >> subparody. official forecast 2017 is 90 cents. moving -- >> it will come quicker than that. >> if i can come back to the argument you don't think greece can go what leverage does the eu have? if you think the ramifications would be significantly nextive? >> a real tit for tat in the

sense the eu could say, we're not going to fund your banks, you're having a run on the banks and that would exacerbate run on the banks. >> it's already started, to a certain extent. >> that would be problem ex-for the euro. >> some think it would be good. >> it's not attractive proposition for any of the parties to get into that. >> thanks for coming in. >> we are getting oil inventories. jackie at the nymex. >> department of energy out with weekly status report on crude oil inventories adding pressure to prices along with the stronger dollar. crude seeing 8.9 million barrel build, less than we got from the api last night and less than we saw last week at 10 million barrel build. more than the five-year average around 3.5. gasoline down 2.6 million barrels, that build's less than the api as well. prices are bouncing around here. but john kilduff points out four downside reasons we will see crude oil prices go lower.

first, u.s. crude is well-supplied, the best in u.s. history. also reevenfineryies using less crude. the greek exit potential leaves hope there that demand is not going to get better from here. and iraq's output, surgingeing over 4 million a day. downside factors. >> more on oil's economic impact and what to expect of the fed. ethan harris with us after the break.

satya nadellas central bank banks the question looms will the fed raise rates in 2015? let's bring in ethan harris. good to have you back. good morning. thank you. >> do we get it this year or not? >> yeah we have them going if september, but anytime in the second half is a reasonable guess. i think it's going to be later than what the consensus is expecting right now. >> why the push among some morgan stanley the latest to think it's not going to happen at all, until q1 of '16. >> you have a very solid recovery in the labor market. so the unemployment rate alone

would be enough to trigger the fed by the summer. meanwhile, though ep flation dropping in the u.s. not just headline but the core. the fed's going to be achieving one of its goals, low un unemployment rate but missing the other one. how will they waer theeigh the two together? she haven't told us what they'll do if they hit one and miss the other. >> since the last fed meeting in december, oil was 20% higher around $56 a barrel. u.s. dollar was 6% weaker than it was right now. how do they deal with the crazy market moves they've seen which influence both inflation and growth? >> yeah, you have to look at this and think what's the root cause of all of this? you know the main story here is the glut of supply. it's the massive increase in u.s. production. it's not a sign of a feeble global economy. people have revised their forecasts lower, but to trend like growth from above trend

growth. people are not expecting a globe. recession. the main news from lower oil, stronger growth, because it helps u.s. consumer and lower inflation due to price effects and that makes the fed's decision complicated, kind of pulls them in two different directions. that's what the challenge is for the fed right now. >> do you expect any change in language? are they going to change out the script at all? >> i think it's a close call. the fed's language is out of date. the way they describe the inflation outlook makes it sound like inflation's on track for their target. they say they're closely monitoring it. but the reality is that the inflation date has been consistently week, a dramatic move in oil in the dollar. those will work their way into core inflation. so i think the fed's got to start coming clean on this that they're probably going to miss inflation forecast. >> what would the language sound like if not patient? what kind of words could they potentially use. >> they definitely keep patient.

they're in no rush to move here. if anything they'll move later than the markets expect. what they change is they acknowledge that downside risk to inflation have emerged and acknowledge in a clear way. owe don't think they'll do that today. there's no press conference, no rush to change. one of the next meetings they need to mark to market the actual inflation picture now. >> does that open the lid, that is the steam cooker the steam pressure cooker of the dollar right now, then? >> well it does signal to the markets the fed going later. so it takes some of the pressure off the dollar. i think it's appropriate for the fed to do than the dollar has moved a lot here. it's doing the job of tightening monetary policy without the fed acting. we may be getting too much of a move in the dollar. so i think taking a little pressure off of the dollar by suggesting they're concerned about low inflation and hinting of a later exit i think, makes

sense. >> on that move in the dollar ethan, any broader systemic risk that the fed should be worried about, not just impact on corporate earnings but commodities, loans denominated in dollars. is it the most owned and traded and denominated currency in the world. >> yeah, i mean the moment we've seen in the marks have been quite big. that creates big winners and losers in the markets and the economy. there's a certain uncertainty shock going on here. i think actually the drop in oil is the one that creates uncertainty. you kind of at this point the fed doesn't want to do anything. they want to wait to see how things settle out. ow how much does the movements help the consumer versus hurting the energy sector. it creates a certain uncertainty shock, the economy could weigh on growth in the short term. so definitely complicates matters a lot here. >> ethan, we'll see what happens this afternoon. thanks for stopping by.

coming up more on the market move after yesterday's volatile session, the dow up 28 points. to not miss cnbc's special coverage of the 2:00 p.m. fed policy decision and statement. plus added perspective on yahoo! and apple results, both of those stocks moving sharply higher. yahoo! up 2%. apple up almost 8. we'll come back in just two minutes. [ male announcer ] whether it takes 200,000 parts ♪ ♪ 800,000 hours of supercomputing time 3 million lines of code, 40,000 sets of eyes, or a million sleepless nights. whether it's building the world's most advanced satellite, the space station, or the next leap in unmanned systems. at boeing, one thing never changes. our passion

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dow up only 19 points now. take a look at i.t. moving higher. dominic chu's back at hq. >> a 1.5% move to the upside overall for the technology sector. a strong day for that sector overall, leading the way higher. electronic arts up 10%, also apple and juniper networks posting solid gains, after all reported better than expected earnings after the bell last night. te connectivity making it official selling most telecom

equipment leading to big gains for the tech sector. remember, it was the worst performer yesterday. >> earnings helped a lot. to chicago, cme group, rick santelli has the santelli exchange. good morning, rick. >> good morning, sara. i'd like to welcome my special guest, former fed governor from 2001-2006, mark olson. thank you for taking time this wednesday morning, governor. >> happy to be here. >> all right. now it is a fed day, second day, so we're going get the statement, no press conference. i would like to discuss not the intricacies of meeting and statement in particular but the overall macro viewpoint and no better place to start, you know one of the important issues of course is employment. and what i want to talk about are how skilled versus unskilled with regard to the workforce. you know you need leverage up to put the right pressure on wages, considering the large domestic and global pool of

workers available. your thoughts? >> well that's true. and i think if you look at the numbers, if you subdivide the categories of unemployed by education, and that's precisely your point, college graduates and higher it's under 3%. and so you've got two factors going, the demographic factor of aging population and then the transitional factor of people having to move from jobs no longer relevant to jobs that are. and those combined things are very much on the minds of the fomc members. but even more critically on the minds of people who look at resilience of the u.s. economy. >> all right. governor i don't mean this to sound critical but i'm sorry, i was one of the first out there in many ways to bring up the notion that the drop in unemployment rate is a mixed blessing. and many continue to say it's demographics.

no doubt it's had a big point or influence there. but jeff gundlach at a venue and said the following, he said with regard to those of age 65 and older in the workforce, their percentage is increased over 50% since 2000. your thoughts on that sir? >> huge issue. and i think if that's one of the real unknowns is the extent to which the demographic shift is changing with the unemployment rate really means because as you pointed out, the unemployment rate dropped in december but the labor force participation rate also dropped and that's what caused it. we are starting to hear for the first time in years a reconsideration of what they call the natural rate of unemployment and most people look at it and say, we don't know what that number is because they don't know what the demographic shift probably means to the current numbers. so i think it is going to have

to be more thinking about exactly what that number means. especially now when the inflation rate when the combination of a strong dollar and weak oil prices means it's reduced pressure on inflation. now we don't know exactly what that will mean on labor force inflation. >> all right. now, let's go to the standard derivative of what we just discussed, the second derivative derivative. hard to figure out how that figures in. but one step farther, how do we know many of the current zero interest rate policy issues aren't going to continue to kind of overweigh that. in other words, not have the type of influence in that employent regard.

monetary policy and impact the supply side but can't impact directly the demand side. we've yet to see that fully -- fully take hold. and that's the variable. but when that happens, then you'll know that -- notice the fed watching for those inflationary pressures carefully. and that's what i would look for today, extent to which the fed recognizes the changes particularly in oil and in the strong dollar will have an impact on inflationary pressure. >> governor just an absolute pressure talking to you. thanks for taking the time. carl sara back to you. >> rick thank you. >> thanks guys. when we come back obama administration dropping part of its tax plan after some widespread criticism. calling it a distraction. we'll get more on that story when "squawk on the street"

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welcome back. watching shares of boeing the stock hitting a 52-week high. it expects 2015 commercial jet deliveryies around 750 planes above 2014's level of 723. investors shrugging off light guidance and did say, phil lebeau pointing this out, a record $0502 billion commercial airplane backlog. an interesting day for boeing shareholders. >> cheap oil not hurting orders at least for now. thanks a lot. mean time the president's dropping his plan to raise tax revenue from 529 college savings accounts. john harwood is live with that story. >> hey, carl. wanted to break down the information about those 529 plans to show who would have been affected by that plan. now first of all, if you look at 529s they've had tremendous growth in the last ten years. in 2001 when the bush administration enacted tax cuts that allowed capital gains to be tax free when pulled out, you

only had a little over a billion dollars in those plans nationwide. by 2011 there was almost $10 billion in those plans. now who has 529 plans? only 3% of american families have them. of them 47% make more than $150,000 a year. most make under $150,000 a year. but if you look at the median benefit from the plans, this what is the administration was looking for, families under $100,000 had a median benefit of a little over $500 when they pulled money out. families earning over $150,000 their benefit was median was $3,000. now, the argument from the administration is that even though most of the plans individually are held by people at lower income levels, most of the assets in those plans and therefore the tax benefits were concentrated at the top, wanted to redistribute benefits down the scale while taxing those

affluent people. it backfired because you have a lot of people with a lot of influence who make money in the 200, $250,000 range who benefit from the plans and they have the ear of nancy pelosi the democratic leader from san francisco, and also democrats on the east coast as well. that's why the plan was dropped. >> i know schumer was against it. john, like the bigger picture message here daves weal of "the wall street journal" pointed out look at this a small example of the fact that tax reform is going to be so hard to do. they're going to be losers in every provision every time you want to cut it up. do we need to rethink how realistic that is going to be despite the fact that it's popular and so many business leaders and investors tell us it's their number one issue. >> that is the right point, sara. tax reform is incredibly difficult for this reason. the people who are gored by certain proposals, whether it's the mortgage deduction, charitable deduction, deduction

on the business side for domestic manufacturing will squawk loudly if their ben it fits are taken away even if it's to lower rates and benefit other businesses in that way. it also shows why deficit reduction is difficult because this was a small attempt, only raised a billion dollars over 10 years, to pay for other benefits the administration was trying to distribute which it's not likely to get from congress either. tax reform is incredibly difficult and anybody expecting that to happen in this congress has to realize very much an uphill fight. >> just shows good luck with that. thanks, john. thanks for bringing us the story, john harwood in washington. to jon fortt with a look at what is coming up next on "squawk alley." a few key movers jon. >> that's right. apple knocked the cover off the ball on earnings highest profit in a quarter ever. we're going to keep superlatives on them but analyze what comes next. yahoo! spinning off the alibaba stake later this year as many investors want it.

will the emperor have close after that process is done. facebook out with earnings afters the bell. so important to the internet and social media space. all that and more coming up on "squawk alley." financial noise financial noise financial noise your old 401k is rolled over into a td ameritrade ira. yes! so no set up fees! wooh! yeah! so i get help from rollover consultants? wooh! yes! no rollover hassle. great.

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u.s. stocks couldn't sustain their earlier gains, we're in negative territory, the dow down 17 points s&p 500 down 0.2%. the nasdaq is the standout that tech heavy index supported by apple and that great quarter that it had. anything could change. the fed meeting is at 2:00 p.m. we are all over it here on cnbc. with that we'll send it over to you, carl for "squawk alley." >> it is 8:00 a.m. at apple headquarters in california 11:00 a.m. on wall street. "squawk alley" is live. ♪ ♪

♪ welcome to "squawk alley." that song, of course a nod to the announced cast of an all female "ghost busters" staring kristen and melissa. no word on the casting of zooul yet. however our cast is the same this morning, jon fortt, kayla tausche here at post nine on a day where the markets have lost momentum even though we got a nice start with the likes of apple and boeing. apple, shares are still positive, soaring after fourth quarter earnings absolutely crushed expectations. the company sold more than 7