600 calories. five chicken wings, over 500 calories, that's without the ranch. >> forget about fat tuesday. it's fat monday. >> i'm drinking light beer. >> i have spinach and kale chips. >> thank you. eat up. bring us some of that. looks great. join us tomorrow "squawk on the street" begins right now. ♪ ♪ good morning, welcome to "squawk on the street." i'm david faber along with jim cramer, live from the new york stock exchange. carl is off today. a look at futures, as we start our day here. you can see, we are poised it would look like, at least, for a higher open we shall see how we do during the course of the day. that has changed dramatically in recent sessions. crude oil a key. mr. cramer tweeting yesterday, a key yesterday, perhaps more so

than the federal reserve. up after hitting six-year lows yesterday. the ten-year yield, yeah that's what you get, lend your money to the u.s. government, 1.75 let's be generous. road map this morning starts with alibaba and its shares which are slipping after a miss on revenue. executive vice chairman joe tasi with us in a first on cnbc interview. stocks high in the premarket. what you need to know about the changing of the guard in the ceo sweep. from a social network to mobile network. how mobile apps are changing facebook's core business in a dramatic and positive way. oracle's ceo, he's going to join us exclusive interview, that's later this hour. all right, back to the news of the day. alibaba reports revenues that increased 40%, but were below the expectations of analysts who follow the company.

shares appear poised to decline this morning. you can see right there talking about $90 level. hasn't seen that in a bit of a time joining us first on cnbc is the executive vice chairman of alibaba. he is joe tsai. great to have you with us joe. let me start off with at least concerns. high-class concerns as we say, given the rapid growth of the company. nonetheless, you've got asked about this on the call as you transition from desktop to mobile, it does appear that growth slowed. your desk top take rate declined year-over-year. concerns about the take rated t-mall. address whether that's going to right itself or this is a new trend in the future. >> well thank you, david. there's always two sides of the coin to mobile. we're very excited about this quarter's numbers, in terms of mobile gmv and the active users.

just taking a step back we had 49% year on year growth in gmv and we added net, added 27 million active buyers, taking our active buyer base to 334 million. now looking at mobile we -- looking at december, we had 265 million monthly active users on mobile. so now about 42% of our total gmv is coming from mobile. we're very excited about that especially fleetlight of the fact in the last three months we added 48 million monthly active users on a mobile app. and these are users that are coming in day in and day out to purchase things on mobile device. in that transition, you know we have covered that issue on the call. our mobile monetization rate is lower than our monetization rate

on the desktop computer and that's why that has affected revenue there i guess the key question, joe, will that continue? is the transition -- as the transition continue is it your expectation the monetization will move up on pc or expect a lesser rate of growth when it comes to monetization and overall revenue growth, i guess, of the company? >> well we take the long rue inview in transition to mobile. the first thing we focus on is user growth and engagement. as long as we zero bust growth of monthly active users going up to 265 million a month, that is a very very large number and a net add of 48 million active users, just in the matter of three months. so that's something that we very much focus on. this is the first thing that we will drive. we think monetization, over time will take its course because mobile you can provide

mortar gets ads to users because of location-based data and other personal data that we can collect. so in the long run, we see that monetization is going to trend up. >> specific to t-mall the take rate would be higher in fact it wasn't. it appears that things seem to be slowing a bit in terms of growth on t-mall. is that a concern for the company? >> we don't split out take rate on t-mall versus marketplace. what you're referring to is gmv growth. t-mall gmv growth grew 61% year on year. that is an extremely, good robust growth. just by the large numbers the percentage growth comes down. but if you look at net ad of gmv

on t-mall we've added more than 120 billion r&b of gmv, that's 18 billion, 19 u.s. in additional gmv on t-mall. we don't see issues with than taking a step back the way we operate two marketplaces is that you know gmv on t-mall and marketplace is not something we separately manage. we manage as a whole. as long as we see overall growth being very healthy we would be very happy. overall growth gmv rate is 49% year on year. >> right. again, as i said most companies would kill for that. but your investor base has expectations above that, joe. tell me a bit about your expectations for nongap ebitda margins oop ss i think 58%, down a bit. you seemed to do a good job

holding down expenses. is that going to continue? can we expect to see ebitda margins in that range for first quarter and coming quarters? >> uh-huh. we have always said we don't manage to a margin number. our margins 4 fluctuate from quarter to quarter, depending on our investment plans. so you know you could see that our -- this quarter our ebitda margin went up relative to the last quarter. you know on a going forward basis, we don't provide any guidance on that. but what we would like to ask investors to look at is you know look at our initiatives, look at some of the new things that we're doing investing in the online to off-line space and local services digital entertainment. and these are the areas that we'll continue to invest in.

>> yesterday the stocks and down in part, reports out of china. i characterize at least some believing there's increased tension between the company and the government particularly the state administration for industry and commerce. i guess a white paper that they had. joe, are people right to perhaps be a bit concerned about alibaba's relationship with the government, as it oversees in this case questions about, you know fraudulent, fake items on the website? and can we expect to see that tension increase over time? >> i just want to say, we take our relationship with the government and with regulators very seriously. we put a lot of time into main tanning these relationships and cooperating with regulators on issues of their concern. in this particular instance we felt we were unfairly attacked

by a report that purported to be a sample check of some of the items that we thought the methodology was flawed we thought the attack was unusually targeted at us specifically and it it was unfair. so we spoke up loudly and publicly about this. you know overtime we -- what we hope to do is to continue to work with regulators to address issues of their concern. on the issue of -- i just wanted to make sure i'm clear on the issue of counterfeit, you know the whole marketplace, our entire business is built on the trust that consumers have in our platform. that's when they come to our platform to buy stuff, you know they're buying good quality products. >> right. >> so you know when you see 334 million active buyers coming to our platform consumers are voting with they're confidence in our platform. you know with a platform that

does annually 370 billion gmv a year, you're going to see some issues with it because it's a very large reflection of what's going on in the off-line economy. but we are taking a very draconian approach to cracking down on counterfeits. we put in a lot of resources to do that. >> i've seen some of those people at your headquarters when i visited. joe, quickly, yahoo! announces aplan yesterday to split off its stake in alibaba into a separate company. that won't take place until later this year. is that a company you would be interested in buying, given it will own 384 million of your shares? >> well i could really only talk about this from our perspective, which is we operate the business day to day. from our perspective of operations, it's -- nothing has

changed. today yahoo! is a 15% shareholder in us. after the spin-off we're going to have another corporation that is also 15% shareholder in us although it will be owned broadly by yahoo! shareholders because it's going to be distributed to yahoo! shareholders. i just like to say, i would like to take this opportunity to thank marissa mayer and jackie reeses, who served as director on the board until the ipo. they've been great partners to us. >> joe, we've got to let you go. we appreciate you joining us. joe tsai vice chairman of alibaba. all right, let's move on now to other news. mcdonald's -- there no no. >> you want to talk about this. >> long-term view obviously in sync with what yahoo's! doing. this is one where it came public. i think people felt that

acceleration, it's clearly that they're not thinking like that right? they're taking it very -- >> dealing with the same transition from desktop to mobile, the monetization rate as joe said are lower for now. you know it's funny because we've got two companies this morning, facebook the other, incredible growth rates but it's all about expectation. >> but also when we talk about facebook, which i know we're going to. >> yeah. >> it's going up. mobile is more lucrative. >> they're further along in the transition. >> when alibaba became public facebook had a much higher multiple on 2016 numbers than alibaba. it reversed last night. if you put a multiple like alibaba on facebook, you've got a $95 stock. i mean it's really incredible how quickly these two converge. >> in talking to people who are alibaba holders, who are largely disappointed. >> yes. >> it's a high-class problem, as we say see a company growing

dramatically. but they point out listen you're 30 times '16 numbers now. if you're paying 30 multiple for a company that's growing revenues 40%, '16. >> a company growing revenues 50% that gets that multiple and that's why facebook is cheaper and goes higher. alibaba -- i think the most amazing thing that alibaba, when listening to that unbelievable interview you did -- alibaba's like china. listen, it's growing fast just not as fast as we thought. it's a metaphor forchina. facebook is a metaphor more mobile. a tremendous contrast to have these two companies born on the same day. one lives on mobile the other's trying to figure it out. the one figured it out the other is like where facebook was when it came public. >> one is truly global perhaps in a sense, whereas alibaba is still about the growth of e-commerce and the willingness to spend of the chinese consumer. they benefit from all of that. >> when i listened to the

interview it made me rethink alibaba. facebook, when they realized we have big challenges we are going to address them head-on, we screwed up no admission at all pause they don't think they've screwed up. they're taking a long-term view. i like the fact that zuckerberg mr. long term said we screwed up short term humility. . tsai has nothing to apologize for except he has to be envious of zuckerberg. >> we want to talk about don thompson stepping down as ceo of mcdonald's. mark hurd will join us and jim, oracle ceo, his company's bent on the cloud. more "squawk on the street" after this.

mcdonald's announcing ceo don thompson is leaving the company after less than three years running the company. slumping sales at the giant. steve easterbrook, who once ran mcdonald's's business in the uk going to become ceo, effective march 1st. earlier ceo jim skinner told us he was confident thompson would turn things around. >> i have great confidence in the leadership of the company and don thompson. they have suffered substantial headwinds, as you know over the last couple of years.

this is a cyclical business and i'm sure that they will move forward with the appropriate strategies to recover in the market. >> we asked him why and he said he's a great leader and i picked him. what do you think happened here? >> i think that this is a company that was in revolt. i think the franchises who are the company, had enough. menu's too hard worried about wage pressures. the dollar affected them tremendously. i think europe has kind of lost its way. when the united states lost its way, the local franchises in this country, they revolted. i think they had the votes on the board -- this surprised a lot of people. i think this occurred at the board meeting. reminds me of the vikram pandit push at citi they couldn't take it anymore. >> he is obviously resigning so to speak, saying it's his decision.

he's only 51 been on the job a short amount of time. to your point the franchisees may have forced this one. that does make sense. >> he's a great guy in a challenged business. what i like about easterbrook, what i'm hearing about it he recognizes, like wendy's, we'll make the best-tasting food. i love my product. we're not shy about. that's part of nut campaign you see. remember this man ran 7,000 mcdonald's in 39 countries, a worldwide company, perhaps you don't want someone domestically. remember, they had, you know charlie, they had an australian ceo who was fantastic. but what i look at this -- when i like at this situation, i say to myself united states ceos are on notice. this is a new era. thompson was defend eded. >> recently. >> you asked him i said boy, this is a tough question. basically, are you going to

stick with the guy? the last quarter, you couldn't stick with him and still be a great international growth company. easterbrook, my prediction when schultz came back to fix starbucks he told me it's going to be 18 months before you even see a sign of a turn. i wanted to say, howard's going to bring it back immediately. he said don't you dare. 18 months. i said when will the bathrooms be cleaned? he said 18 months. you know what? people buying the stock understand it my charitable trust owns it, terrific. 18 months starbucks a small company versus mcdonald's. i think 18 to 36 months. >> a long time to potentially wait. not to mention, though the amount of competition that's out there. you talk about it all the time. the healthy way of course chipotle, and at the other end of things so to speak, the shake shacks going public pricing tonight. we'll have them tomorrow morning. >> irony. >> how do you navigate that world if you're a mcdonald's, not to mention new, stronger

competition, one would argue as you said from burger king and the like and wendy's. >> when karen cramer worked at mcdonald's and has that fry basket, because they -- it was a simple menu. foe to mcdonald's, you make it they do a good job, and they're fast and the best all of that's gone. all of that's gone. the other guys they've gotten it right. i remember how simple it was, my college roommate worked at mcdonald's. all you did got the job at mcdonald's, plug and play. they got complex, that's not right. wasn't thompson's fault they sold chipotle. i believe shake shack is an example of not -- they're not anti-beef, but when you go to shake shack, notice how simple the menu is? >> it is the a winner. mcdonald's can be a winner again. my plan on the turnaround is just based on the fact that schultz was the greatest turn around artest and couldn't get it that fast. they need a marketer someone who understands how to get people back.

>> all right. we'll be watching shares of mcdonald's. also facebook of course. more to come in discussion on that important company this morning. up next, we'll have the "mad dash" from jim as we count down to the opening bell. one more look at futures, just because you asked. more "squawk on the street" after this.

it's time for a "mad dash." got about 5:30 before the opening bell. start out with qualcomm. >> talk negative first of all. qualcomm horrendous outlook, they lost samsung. now, they have insolvency problems in china. but i've got to tell you, downgrades, price targets that are cut. i was trying to figure out a

normalized model without samsung, such a big client, i can't. people can't figure out the multiple. when they can't figure out the multiple, the stock doesn't stop. does have a lot of cash. it is well-run. but no one saw this coming. just worried about china. >> samsung. samsung sells a lot of phones. they sell fewer. >> because apple figured out how to stop the galaxies. do not extrapolate qualcomm. sky works solutions yesterday, fantastic. apple bays and -- do not -- don't make a sox case for this all right. >> i won't. >> it's wrong. >> harmon. >> okay. a fantastic executive, you remember harmon from the days when they almost went private. >> kkr made a large investment yes. >> the big of the beat of 2015. i was looking for 1.29. they did 1.79. >> what's going on?

>> they are owning intellectual property inside a car. it's not just a sound system anymore. >> it's audio its the whole presence the connectivity presence an acquisition he made that said your car's connected to the internet, we'll do. he owns the space. my favorite thing, the deal with neil young high-def sound. but he delivered and it's not going to stop here. one of the best performing stocks. it's going here because the quarter was so amazing. and by the way, when i go to the factory, it's toyota it's mercedes, high-end lexus, it's everybody. and don't forget ford by the way, which reported a good quarter. mark fields did a good job. car connectivity the story behind harm. hear me? >> i know. my car's a wi-fi hot spot. love it. opening bell coming up. talking about facebook. we'll come back to alibaba, which is going to be down. talk viacom and more. stay with us.

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now. one of your friends up there on the post there, terry. >> macy's. >> talk at leaf briefly. there it is. [ bell ringing ] you can see the real-time exchange at hq composing itself. a little bit more green on the board than we're accustomed to seeing. jim, we opened higher, only to move lower. >> yeah. you know what? oil, i think, killed us not the fed. break that $45 number, all drilling in this country, all of it, has no return on investment. now i have to tell you, this is -- december 15th, the low for the oil stocks almost all of the big ones. we have to hold that level. that's what everyone's hoping. i don't know if we can hold december 15th. >> you don't? >> no i don't, because if you take a look that means chevron's got a lot to go down exxon's got a lot to go down. december 15th brent at 61 west texas 57. stocks rallied off the level. december 15th level of the

international energy, you lowers the forecast. can those levels hold? if they can't, major breakdown in the oil, bingo. >> why we reversed? >> yes. >> wasn't on the fed? >> no. >> oil. >> oil. tick by tick oil. dow up 90 points after the release and plummeted bought oil did not hold 45. >> oil stronger than the fed. >> yes. oil stronger than talk. >> talk facebook because we spoke about it juxtaposition with if you will alibaba, both of -- both. companies have incredible top and bottom line growth rates. facebook, jim, people say, they say numbers were great. forget about what you heard after-hours. >> right. >> it's a crowded long but they beat on margins. >> right. >> it was a very good quarter. they tightened up their operating expense spending. maybe the only thing to hit them on user growth rate decelerated.

>> they can do $3 in 2016 sells -- the brand marketing here is the story. they talked about -- they're talking about people loving the ads. love the investment. three-fifths of the world is covered by water. in three years they will equal water. the standout, it's making a fortune. >> $22 billion well spent? >> yes like the billion they spent on instagram which is a home run. read this quarter. go over this quarter. it was a thing of magnificence. zuckerberg understands strategy. you have sandberg doing tactics. the numbers. remarkable. >> it -- >> reremarkable quarter. look who walked on the set. >> i know. alibaba down almost 10%, alibaba shares. and the respective market caps

of alibaba and facebook converging again. >> they should. >> with $214 billion market value and alibaba $222 billion. >> only company monthey advertised mobile. can we speak about an amazing team? >> a guy who sat down. better dressed than both of us. >> terry lungren, you know more about football than any ceo in the country other than somebody who runs espn. who are you picking and why? >> going with the patriots it's their moment it's their time. and i feel really confident that they're going to take it this time. seattle's a great team a great run. it's new england's time. >> does this have anything to do with the fact that when brady wants to help his offensive line and gets presents he comes to you? >> let me tell you, this guy is just a first-class individual. when the pressure -- i feel this way about myself -- i love pressure you love pressure. this guy loves pressure. when the pressure's on he's going to rise to the occasion. a great game but i'm going new

england all the way. >> feeling pressure terry? >> always. i put pressure on myself constantly because i've got to grow. we're here to launch talia, google her be the hottest, hottest artist in all of mexico. a massive -- she's got more facebook fans than macy's which is embarrassing than me. 15 million facebook fans. we're here to launch her today. >> she's been seen in brooklyn. >> yeah. >> she has. >> i do. >> you know that. >> fantastic -- >> we play her all the time. you are fantastic for stopping by. >> thank you. >> brady's a good guy in person. >> first-class guy. >> jealous? >> absolutely. >> i know, really first-class guy, too? isn't it enough to be 6'4" and everything. everything. >> he's everything. >> his wife makes more money than him. >> there you go. i like that. yeah. we should all be so lucky. >> we should all be so lucky. >> thanks for stopping by. >> terry lungren, ceo of macy's.

just stopping by saying hello. >> cameo. >> he was in the neighborhood. >> reported. you can't grill him about the numbers, it's a quiet period. >> why we weren't able to talk more broadly. >> a fabulous job at macy's. it will continue. >> all right. what do we want to move on to? so many other things worth discussing. you mentioned ford. briefly hit on it can we? shares are actually down. you thought it was a decent quarter, didn't you? >> i liked america. i liked america a lot. the problem with auto company is everyone thinks you know what? why do i need them? i can buy harmon for the inside parts companies. in the end, fields did a fantastic job, north america. people worried about the lightweight f-150 wouldn't do well because gasoline's come down. stocks are in a bear market in a bear market because they're international and don't trade off of america. but i was encouraged by what fields did. this group, 4% yield that they

have to do a lot just to be able to continue on the treadmill because of latin america, because of europe. if europe turns around buy ford. >> if europe turns around buy ford. what about gm? does the charitable trust still own gm? >> it was a big mistake. you know i thought it would go higher, they'd get a big pension break. a huge business in international. trying to do the best in europe can't go -- united states is killing it. but like ford it's killing it but the united states is only a portion of this. ford -- gm has to raise its different dent when they report or the stock will go to 31. >> really. >> yeah. they have to raise their rate. >> liveris on with "squawk box" crew, dow chemical up. remember the activist thing in their rear view mirror so to speak, agreeing with dan lobe board appointments. >> i would be happy, one of the new board members, did better than dupont and ag.

performance chemicals good. station of keeping the company together, they can switch to raw fuel. they've got a lot of high proprietary products. value chain is good here. the dividend will be boosted, i believe. cash flow's extraordinary. my charitable trust does own this one. it's a very bad performer. i will tell you this andrew liveris is not going to get the hard time from lobe. not going to get the hard time from lobe. >> when you have an activist in your stock, it's distracting for management takes their a off the ball and can bring back things activists are alleging are happening as a result. >> i think they come in they say the combination here is not as bad as we thought. the feed stock's not bad. and you know what? in the end, dow needs to do some more self-help. they have to keep selling divisions, buying back stock. they bought 40 million shares this quarter. i like the situation. it's not as hostage to oil as

people think. when oil goes down they send this down. they shouldn't, it can switch-to-propane. dow's more competitive than other companies around the world. they have problems in europe but so does everybody else. >> mary thompson. >> big day for earnings. the positive tone that we've seen from corporations helping the markets perform mixed today. we are seeing weakness in the nasdaq follow through from yesterday's decline. dow positive since the open s&p turned positive. good earnings news mostly from corporate america, at least those reporting today, helping to offset weakness in the european and asian markets coming in today's session. let's -- the markets benefiting from the good news from jobless claims falling to their lowest levels since 2000. housing data coming up. we're keeping an eye on energy. this is one that tends to move the markets. a little bit of weakness

despite bounceback in crude oil prices today. discretionary and consumer spending watching these because a number of companies in both sectors reporting results. as i said the results have been fairly positive. utilities also higher in today's session. weaker performer in yesterday's session. quick check of the dow components. mcdonald's popping on the news it's going to get a new ceo. reports after the bell today. and boeing extending its run from yesterday, when of course fell at the end of the day but reporting positive results. check of the energy sector. we continue to hear from companies, they are cutting capital expenditures. conoco said it would be cutting cap x by 11 billion. upped that by reporting better than expected number. valero stronger than expected results. chevron tomorrow, exxon next week. dow's given up most of its gains now. holding on to a 13-point gain. >> story that we've seen any number of times. did want to hit -- i love the media companies, as you know.

viacom reported a mixed picture. ads down about 6%. affiliate feed growth not bad. people on the call waiting for guidance. i have to tell you, at this point, not sure what we got there. the show started, had to get off the call. producer's on it. not sure we got a lot on it. the other key, future of the company, summer red stone controlling shareholder. he didn't speak on the call. some people will -- you know, a mistake to draw any conclusions, that's all i'll say on that subject. any conclusions you draw from that would most likely be perhaps incorrect. but you know the question for viacom, of course becomes, jim, can you compete effectively in this rapidly changing environment in which we not just see disagreements or potential dropping of your channels by bis butte distributors but cable sets at

home no longer growing. we talk about people cutting the cord, are there networks you must have. >> one, cheryl sandburg said 20% of the people tune in on their phone. >> in terms of on video. but on viacom's positive people say it's cheap. and so i want to get back to this a bit more when i get a better sense, in terms whether they gave any real guidance. everything was sort of based on what that would be. we're in process right now on that. so given that let's head to rick santelli at the bond pits the cme group in chicago. take it way. >> thank you, david. yesterday a big day. so two-day charts what we want to watch, knowing there's curve flattening going on yesterday. look at 5s, 10s, 30s on a 2-day. maturities have yields up up. but it's a retracement april lot of drop especially long end yesterday. the charts here.

draw your attention to than same 5s, 10s and 30s and add the bund with respect to the key day january 15th. you can see how the longer you go the more the right side is below the left side. there's your flattening in action. the foreign exchange side, eurodollar euro versus dollar not holding all of its bounce. but as you can see on the year to date chart, it is fighting here. why is that important to know? after last thursday's ecb, market seems to be in consolidation mode. how and what speed it pops out of this kind of wedge formation, of course we'll continue to monitor every morning. david, back to you. >> thank you. up next jim's live and exclusive interview with oracle ceo mark hurd a big message for cloud competition. "squawk on the street's" coming right back.

shares of oracle are flat this morning. the company making a big bet, and so far successful, on cloud

computing. joining me oracle's ceo, mark hurd. how have you been? >> i'm doing great. how are you, jim? >> okay. mark, some companies are trying to transition to cloud and they're struggling. s.a.p. struggling. ibm struggling. why is oracle not being hurt by its transition? >> well i think it's a lot of work, jim. i think if you look the our results and look at our performance, it's one that's built over time. it's a lot of r&d. it's a lot of work to write software that's been a six, seven-year process at oracle. it's building a sales force. it's educating the sales force. creating awareness with customer. we've just done a lot of work and, jim, it's been over a long period of time. i think it's shown up in our results. i mean to your point, we're one of the few cloud companies that frankly we're not only getting bigger but our growth rate is actually accelerating at the same time. and i think that's because of all of the things i described,

better training better sales, more salespeople, great products in r&d, good actquisitions and it's combined this set of results. >> talk about the acquisitions. data lodge hardly mentioned, micros. you're coming into verticals that other companies have done. this remind me of something you taught me this seems like a turn off the oxygen situation, against other guys you're going against. >> thank you for that jim. data logics is part of our whole effort to go into marketing automation. so we've tried to build out, jim, two differentiators in our cloud applications business or if you will s.a.s. to have each application to be the best at what it does best at marketing, the best at hcm, the only ones in the market today with erp and epm, best at sales. and then at the same time to be the only one with a suite of capabilities building up both

things. you have a suite you can get all of that from one company and yet each app is the best that it can be. data logics fits in perfectly. a data company that provides rich data set that actually works with multiple of our applications. micros leader in the hospitality area a key vertical as part of our retail business. we're thrilled with both acquisitions. >> mark how is it working with your co-ceo who everybody has always loved, cfo. and also with larry ellieson said we're take nothing prisoners, we're killing everybody. what's that trio like? >> it's fun. i mean i think, listen you know, i've been doing this a long time she's been doing this a long time larry's been doing this a long time. we believe in the concept of a team. we're a team here. the titles may change a bit. but in reality, it's a team.

and to be honest with you, jim, it's just -- it's even more than the three of us. we have some great leadership in our development organization, some great leadership in our sales organization. when you run the big companies and try to do things that frankly attack a lot of work it's great to have a great team around you. i'm fortunate to be surrounded by a terrific group of people here. >> oracle has its tentacles everywhere. companies have said and said the dollar's killed them that was not something that was said on the oracle call. where are the green chutes? is europe turning at all? you had a good quarter in europe. are you concerned about the world outlook or taking it as an opportunity? >> i'm most concerned with oracle jim. i think oracle's in a position where we have a fantastic product portfolio. you mentioned a bit about that earlier. we think we're in a marvelous competitive position. we think we're in a position to take market share. we'll take whatever the macro

environment gives us. last quart, safra guided in currency because of the volatility in currency. make no mistake, we are laser focused on taking share. we're focused on growing. focused on driving the company forward. we can control that we believe, and i think you see that in our guidance, our guidance is to accelerate growth. talked about the fact that our cloud bookings, very well if you look at next year we may book more cloud business than any other company in the world. i mean that's a statement that i don't think anybody would have made about oracle several years ago. so we're really focused on us jim, and focused on our customers and not worried so much about the macro. the macro to us looks fine in terms of other ability to compete and take market share. >> mr. hurd it's david faber. let's get our response to a story in the "new york times" about the chinese market particularly new rules requiring

foreign technology companies to adopt a lot of different protocols, if you will that some are saying are noncompetitive and designed to force you from that market. is it a concern for oracle? >> i did not read the article, david. i haven't. i will. that said china is an important market to us but compared to other tech companies we're not as large in china as some others are. and we have enjoyed a pretty good position in china. we've got obviously software that's a little different, i think in the software market than in the hardware market. and much of what you read about the things are attribute butted to the hardware part of the industry, less so in the software part of the industry. >> mark i want to go back to the competition because i know that you guys are all part of a kind of let's say collegial fight. i like to think it's collegial,

they've known each other for a long time, larry and mark. listening to the interview, where is oracle in social mobile connectivity internet of things? we're beating them in that. what would you say to a sales force, oracle good guy but was they're not -- they're not winning like we are? >> i'd say look at the numbers. so i mean, again, you know we can all talk and we can say a lot of things and to your point, you know it's collegial, but that said at the end of the day, it's about performance. you know we have built over a period of time a suite of capabilities not one application. we have brought to the market best breed applications. and we are now growing faster than they are. and we're -- we're getting bigger and growing faster as we're getting bigger. so i think it will play out in the numbers. we'll see. we made a statement in our call that we will book more cloud business as we go forward into

the next fiscal year than any other cloud company. let's see what happens. >> mark hurd thank you so much. oracle ceo and a feisty interview there from a man who is -- let's say he's not at collegial as he sounds. >> he doesn't back down. we'll have "stop trading" with jim after this. recently, a 1954 mercedes-benz grand prix race car made history when it sold for a record price of just under $30 million. and now, another mercedes-benz makes history selling at just over $30,000. and to think this one actually has a surround-sound stereo. the 2015 cla. see your authorized mercedes-benz dealer

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"stop trading." talk boeing. >> you know i love management. mcnerney comes in how can a stock go up eight yesterday and go up again today. >> the answer is that he answered every objection.

there were a series of shorts put on because people felt fuel efficient planes won't sell. total nonsense. and military has turned around tankers are happening. the expenses are coming down dramatically. new product line refresh, all of the airlines they love it. the main thing you need to know about boeing, when the airlines are flush, boeing does great. by the way, i talked about whiners, who is whining and who is not. colgate ain't waning. that stock up four. cook has done a remarkable job in reinventing things. organic growth up 6%. compared to proctor & gamble up 2%. he's killing it. tired of the whiners. we have winners. >> no whining. "mad" tonight? >> trying to book. >> done well enough this morning. >> terry lungren's cameo, mark hurd. >> the good and the bad. we've got a core lab, stock down

nine, the primary. i have to tell you the primary intellectual property to drilling for oil service and it just ain't working. it's not working. mcdonald's again long term. don't get ahead of the tape. >> understood. we'll be talking more about that tomorrow. and he'll be talking about it on "mad." this show facebook's earnings here what coo sheryl sandberg told julia boorstin coming up.

breaking news. diana olick with pending home sales. diana? >> pending home sales down 3.7% in december from a downwardly revised november read a big miss. street lookinging for a slight gain. sales in december though still up 6.1% from a year ago. pending home sales a measure of signed contracts to buy existing homes. so again, future indicator about two months later foreclosed home sales. closed sales in december higher than november. chief economist is blaming falling inventory and higher prices for the lack of pending home sales in december. this after newly-built home sales rose 11% a measure of

signed contracts. pulte great earning with the ceo saying that they saw much stronger buyer traffic in november and december. realtors also reported stronger traffic in december. that's why the number is a surprise. going regionally in the northeast, month to month, pending sales down 7.5, midwest 2.8% down. south down 2.6% the west stronger, down 4.6% on month to month. all saw gains year-over-year. back to you guys. >> a bit of a disappointment on the headline number. s&p 500 in the red. the dow's positive thanks to mcdonald's shares on the rise this morning after the company announced that it is shaking things up. new ceo don thompson is out, steve easterbrook is in. he'll succeed him march 1st. mcdonald's facing a broad set of challenges but none bigger than a steadily declining same-store sales picture. joining us william george

professor of management at harvard, currently on the boards of goldman and exxon mobil. we want to hear from you. what do you think about the this, the fact that mcdonald's is going inside a 20-year veteran of the company to completely shake things up? was that the right move? >> i think it was the right move. i don't know steve but i think this board, he's to be credited with moving quickly. they did it before when charlie bell died and brought in jim skinner, who had been passed over, a spectacular job. made the wrong choice in thompson. they're making their bet on steve easterbrook. but it's going to take more than one person. it's going to take a whole, new strategy at the top because they have lost -- they're not getting the millennials and losing their current customer base because the market's shifting into healthy foods. they cannot abandon the existing customers. they cannot do what jcpenney

did. they have to be able to offer healthy food offerings to people without cluttering the menu. that's a stricty strategy. this is a i company that needs a new strategy appropriate for today's consumer not 30 years ago. >> to get investors' expectations. >> execution gone downhill. reinvigorate franchisees. they've got old stores. they have to bring everything up to speed the same way that howard should did with starbucks, replaced jim donald got the brand going and to his credit. that's what easter brook has to do. third you need a new leadership. they have to bring in outsiders. a mix of insiders and outsiders, fresh blood to make the place go. >> bill --

>> buy time need financial engineering, return more cash flow to shareholders to kind of give them a little time to get this done because this won't happen overnight there you lay out a good play book there the to-do list is very long. wanted to point out, easterbrook, since he returned to mcdonald's after brief stints elt where elsewhere was the chief brand officer. he was in charge of marking, digital initiatives what the turnaround strategy from don thompson has been focused on. just to get investors' expectations in line here do you expect any radical change or is this just someone new, a new face to put on this turnaround plan that already has been implemented. by the way, there is optimism from the franchisees. >> i think it's going to take more than just implementing what's already there. i think it's going to take much more of a fresh look fresh look in the stores, on the menu. you never know whether easterbrook was calling shots.

probably thompson was. we need to give him the opportunity to get it done come forward with i think more significant changes. mcdonald's has had problems in its past. otherwise it's going to continue the steady slide in same-store sales. ef they've got to freshen up. how do you freshen up an old complain? can't go the route of sears or jcpenney. you can't make minor changes. you have to make major changes otherwise millennials won't go in they'll go to chipotle every place else but not mcdonald's then need to capture millennials. if they don't, you'll see continuing slides in same-store sales. >> bill, these events are interesting, from a number of perspectives. one that don thompson leaving was one of the best-kept secrets for so long. many thought he was out but wouldn't say it in public. what do you teach your students about the cult of the ceo. don was paid $14 million a year.

yet apparently he's not the right guy. seems to me when things are going well ceos are incredible when things are going badly, everything is their fault and there's no middle ground. you said he was obviously the wrong choice for the job. how do you know? where would they have been with somebody else? >> he didn't get it done. look at results. leadership make as difference. look at what brian car nell is doing at target. making hard decisions, getting rid of canada. easterbrook may have to shut several hundred stores or a thousand i don't know. i'm not there. but i do know that thompson was continuing with a strategy of the past and just making minor tweaks and it wasn't working. shame on the board for giving him a big bonus two years ago. that's not leadership on the board. the board has shown leadership stepping up to the issue. they tried to overplay the ceo.

but, frankly, he wasn't getting it done. now they have to make their bed with easterbrook and we hope it gets done. it's a great franchise i'm want to see it successful. i don't want it driven into the ground. that will make major changes. >> 36,000 chains globally 1.9 million people working for mcdonald's. bill george thanks for the perspective. facebook results outbeating but the stock swinging between losses and gains. julia boorstin spoke to coo after the earnings came out in an exclusive interview and joins us now from l.a. dodged a lot of questions, but good color in there. >> absolutely. she really honed in on mobile growth. saying that mobile is what drove facebook's upside surprise this quarter. sheryl sandberg telling me that mobile does still have huge potential to drive facebook results. >> i think we felt strongest mobile app out there and ability

to measure, that's driving results. it's interesting because consumers are shifting time to mobile, and the marketing dollars are falling but still falling slowly and that's what we aim to accelerate going forward. >> as for where else facebook's growth will come from, mark zuckerberg pointed to potential in search and said what's app and messenger app will be key contributors to facebook's business. sandberg announced on air, video exploding, an area that drew a number of analysts' questions. >> we just hit 3 billion video views per day on facebook. from the advertising side that fivs gives us an opportunity to monetization because ad products follow consumer products. when consumers do more video we have ability to show more video ads. >> how many 3 billion views attributable to auto play or viewers clicking to watch a video. one of the big headline out of

earnings yesterday with concerns about expenses weighing on the stock. the company tightened its forecast range for the year noncap expenses grow between 50% and 65%. that tightened from a 50% to 70% range. >> to pick up the point on video, this is because the videos play regardless of whether you click on them or be it sigh licenselylently. if people watch for three seconds, it's a win. >> up until recently facebook populated with youtube videos. >> right. >> then sometime last year facebook launched its own native video player which means you can upload videos into facebook's player which means down the line they can control all of that ad revenue rather than outsourcing to youtube. september, facebook announced that it had 1 billion video views. now they have -- each day -- now they have 3 billion each day. critics would say you shouldn't count all of the views because a

lot of because videos auto playing as you scroll past a video and you aren't seeing. a lot of people would like to get more detail on what you know sort of more granularly how many are opting in to watch the videos. one thing that is clear is that the volume is massive. >> julia, thank you for the moment. julia boorstin joining us from the west coast. for more on what you do with the stock, betlet's bring in colin sebastian. after a strong run, the stock's up 40% over the last 12 months though you've not got much movement, it's hanging in on a market cap of $212 billion today. that's the bigger picture. what do you think about mobile the growth driver here? >> well clearly the results are still being driven by mobile primarily. in mobile facebook is the dominant ad platform in terms of native ads driven by text.

pictures video and instagram and what's app will drive incremental growth for facebook. underlying trend are positive. >> video, julia makes the point in four months video views from 1 billion to 3 billion albeit with this automatic playing function. from an advertising point of view they're counting on a three-second play. what about the monetization of that or do advertisers not care? subliminally you'll be able to program a generation of facebook users. >> well the way facebook is approaching video is similar to the way they approached other products or the user experience which is drive consumers to use video on the application, using their uploaded videos and then as people bm moreecome more accustomed to viewing on facebook then introduce advertising. it could be native ads in a

individual yo format or ads inserted before or after a user's own video. both of those i think very interesting. >> colin one of the focuses or investors the ramp in operating expenses higher than many expect expected. 87% increase in costs and expenses. happening too fast? what is being used for. >> i think mark zuckerberg underscored the point yesterday that he's building the company not on behalf of short-term investors but rather for the users and long-term investors. and so facebook has significant growth opportunities that require a lot of investments. in fact they lowered the top end of their operating expense guidance range. so if anything, they are investing a lot disproportionate to revenues but they have tightened that up a bit. >> what about the focus on the ability to monetize people in this country and canada more than elsewhere? overall per user per user the

monetization's up to -- up 30% to 2.81 but it's $9 per user in the u.s. and canada. i mean is that a risk for them that they suddenly doesn't become hip here or is it a great advantage because they can money advertise other people that level around the rest of the world moving forward? >> as sheryl sandberg said on cnbc yesterday, that there's a disproportionate amount of spending still off-line. and mobile will benefit from that. that will benefit per user spending as well. and the other die nam ex-isynamic is that users internationally are undermoney advertised facebook doesn't show as many ads to those users. by those users that than domestic or north american marks. >> let's cut to the chase. where does the stock go in your view from here. >> we think the stock has upside to the year to our $93 target. we think that will be driven by increasing mobile revenues,

launch of video, and the ad network. facebook deploying advertisements on other applications. >> sorry, repeat the target. >> 93. >> wow colin, good to see you. shares of alibaba are getting smacked around today. they have been down as much as 10%. let's give you a look where they are at the moment. down 9.6% as you might expect given yahoo! holding in the company and its plan to spin off 384 million shares in a separate company later this year. that stock also down rather sharply. 8.5% for yahoo!. the reasons for alibaba's decline, well they go to of course its reported earnings this morning. while many argue it's a high-class problem, so to speak, for a company growing as quickly as alibaba is it did not grow as quickly as those who own the stock had hoped and the take rate on various transactions not

as high. the company is going through a transition that we've seen facebook go through, from users using their pc more often than not to using mobile devices. and as is often the case the monetization rate on mobile not as high as it is on pcs. we asked joe tsai earlier on cnbc about that transition and whether he expects it will eventually be the same rate if you will on mobile as it is on pcs. >> we take the long view in this transition to mobile because the first thing that we focus on is user growth and user engagement. so as long as we zero bust growth of monthly active users, going up to 265 million a month, that is a very very large number and a net add of 48 million active users just in the matter of three months. in the long run, we see that mobile monetization is going to trend up.

>> and that of course the hope for many who own the stock. the belief that overall, the take rate the percentage of sales that actually -- of the sale that goes to alibaba, will go from 2.5% to as much as 6% over time. that is the argument certainly made by the bulls. another argument right now the stock's trading at about 30 times 2016 estimates. yes, 30 times a high multiple but not for a company growing revenue at rate of 40% and gross merchandise value at 49% year-over-year. something that hit the stock yesterday, adding to the losses that we've seen today, was potentially at least it seemed increased tension with the government, in particular a report from the state administration for industry and commerce that criticized alibaba for we'll sengslily fakes. >> in this instance we felt we

were unfairly attacked by a report that purported to be a sample check of some of the items we thought the methodology was flawed. we thought the attack was unusually targeted at us specifically and it was unfair. we spoke up very loudly and publicly about this. >> interesting to see, sara willingness of alibaba to challenge. listen, it is a national champion, alibaba. it is commerce in china. you know i checked around yesterday a bit with -- best i could with people who understand the dynamic there. nobody seemed to indicate this is something that is going to bubble up into significant tension between the company and authorities. >> for american whose don't understand that relationship, i remember peter thiel talking to us about that it's all of that politics. >> they knew they're taking the risk. they don't own assets they have a contract.

>> and it all comes down to trust. got to trust us. >> so far, investors are for the most part. >> today, investors are not happy because the growth again, growth while it is extraordinary, it was not quite as much as people had been hoping. >> high expectations. coming up -- speaking of high expectations mcdonald's stock trading up 4.5. more on the big story of the morning. should you be buy on the news they're replacing the ceo? back in a moment. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

the stage is set for difficult decisions from the fed, when to raise interest rates after describing the economy as growing at a solid pace at yesterday's meeting. our senior economics reporter steve liesman is in san francisco and joins more are you of the view they will not raise rates this year. >> it's possible. but what they're talking about interesting and bordering on an historic conflict that the federal reserve not among the members, not yet, but certainly in the mandate, and that conflict, i think obvious when you looked at statement and some of the changes that were made. let's take a look at that. of course the fed has dual mandate of maximum employment and low, stable inflation. when you look at language they

described employment growth at a solid pace. they haven't used that since october 2007. and job gains, they upgraded from the prior statement saying they were strong. on the inflation front, it's going the other way. it declined further. they said marked expectations as tip spreads we look at guess what? they declined substantially but they blame transitory energy prices. a new swing factor of international development, that could go either way. if the ecb and what they're doing works along with other central bank who could be moving as a result of what's happening in the united states could be a positive. on the other hand if the weak growth and low inflation overseas washes up on these shores, that could be a dovish signal. that's not going either way in terms of being hawkic or dovish. that was seen in the economists' reaction. we totalled reactions. we had five economists on wall

street thought it was hawkish, three dovish two said both. the way to think about this fed playing for time. they do not have to make a decision just yet. ult ultimately, leaping again the market getting too far ahead of itself think there would not be a june rate hike. thank you, steve liesman in san francisco. so we are up 11 points on the dow. stocks are stable this morning. the dust settling on two days of selling. the dow 4.8% below december's record high. the broader s&p index down about 4.2 from that record high in late december. joining us now post 9, jim paulson, chief investment strategist with wells capital management. >> good morning. >> oil is more important to this market than the fed at the moment. >> yeah. i think, myself i think the oil story certainly some people think it's a supply story, the

united states independent, some think it's a demand story. i think it's both of those but mainly a dollar story. i think what -- if you look at a chart overlay of crude and the oil dollar, they're the same chart inversely. if you're thinking the dollar's going to peak, and i think one of the things that's going to happen this year crude is bottoming but the dollar's going to peak as well that changes a lot of dynamics. >> if you're right, what does that mean? >> well i certainly think it says a lot about international returns, you know investing away from the united states, for example, get the weak dollar repatriation back. but it also is going to influence the fed's decision and influence the inflation outlooking if you get a weak dollar and a pop in commodity prices in the country, particularly when wages come up as well. >> to be clear, are you saying we've bottomed on oil, topped on the dollar and commodities can come back? is that what you're saying? >> i'm saying i don't know

that's today. i'm saying i think that's what's going to happen over the next few months. and the surprise won't be a bottom in oil but a surprise will be if the dollar peaks, and that could play a lot into the fed, the inflation feelings and how fast -- >> was it -- >> i think the market's going to be caught in a trading range this year, dealing with a lot of vulnerabilities. we've got positive sentiment coming into the year. high valuations and the fed is going to start raising rates. that tell me we've got a mark that's going to be -- >> it tells me a stronger dollar. i don't know why you think the dollar's going to peak. the u.s. is outgrowing europe and japan. that's why the dollar in part has been so strong and many say it's going to stay that way on this u.s. outperformance. >> that's where everyone's at. >> to consensus? >> no, the story's right.

story is europe japan weakening, we've been strengthening in '14. look at what is the payment of the policies we've unleashed on the world. what is the impact of quantitative easing which dropped last year which dropped sofb everyone bond yields everywhere. >> does the fed have to intervene? >> i don't think so. i think we'll see a peck up in europe and pick up in japan by spring. >> wow, spring. >> we'll see better reports and that closes the growth gap to the u.s. >> let me reframe it away from currencies. i was in a really interesting position on tuesday, at a lodging conference. lodging in this economy is $600 billion, give or take massive. they are so optimistic they're going to get record room occupancies because of business investment and consumer spending. they are going to raise prices on average by more than 5%. in california, by 10%. they are going to have their most profitable year in dollar

terms this year. that's the story of 3,000 people around me. up here i'm watching cnbc and the dow is down 350 points. and i -- that -- just the juxtaposition of those two things, an economy's that real strong and a market that's falling. i don't know if it's that odd. if you think about the premise for the bull mark we've had since 2009 the main premise has been climbing a perpetual wall of worry. no one could understand why wall street's doing well when main street's doing so bad. is it surprising that main street is better while wall street is struggling? i don't think it is. the reason that drove this liquidity, are ending if you will. i think financial prices will struggle with that. >> earnings are coming out better 6%. >> absolutely. i don't think it's about earning. i think it's refrushingeshing the bull refreshing valuations getting the fed in the game so

it isn't a nervous ratchet into when they'll start it. >> jim paulsen. >> in person very rare. a heavy day for earnings. more on qualcomm results. the stock down 9% 10%. eyes of shares of mcdonald's, up more than 4%. brand-new ceo, new strategy that's the question. "squawk on the street" is back in two. in my world, wall isn't a street. return on investment isn't the only return i'm looking forward to. for some every dollar is earned with sweat, sacrifice, courage. which is why usaa is honored to help our members with everything from investing for retirement to saving for college.

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breaking news. eia inventories at nymex. >> simon, natural gas prices plummeting, 3% on the day. right now, just around the $2.75 mark. this is after the eia reported that natural gas invent to drew down 94 billion cubic feet less than most traders expecting. looking for a draw of 100. less than we saw at this time last year and the five-year average. what's happening here? though the east coast did get walloped by a blizzard and winter storm and it's cold traders looking at demand used across the country and demand is actually dropping.

it's lower than we've seen it the last few weeks. also looking at forecasts for the next few weeks out, again, across the country. and looking for prolonged cold temperatures to take this price back up. but again, $3 is that level that we're looking at. doesn't look like we'll get there. remember last year at this time, we are were around the $6 range. consumers saving big on nat gas. back to you. >> ahead on the show the a good day for shareholders in mcdonald's. the british are coming and the stocks are up over 4% as ceo don thompson leaves. more on that after the break.

there it is chart of mcdonald's. stock mover of the day. up 4% after news it is replacing its ceo. joining us on the cnbc news line founder and ceo of the global restaurant consulting firm. aaron allen. you were instrumental in this huge expo day that was written in fortune magazine about mcdonald's problems. thanks for joining us by phone. so, diagnose the problem here. do you see this as a management problem and, therefore, are you optimist exnic optimistic there's a change at the top or is this structural changes in the way we eat, our habits and the rise of fast casual. >> a variety of factors.

don thompson the ceo now stepping down and being replaced, has given the market confidence. already the stock started to jump today. it's down 14.5 from this year so far. it does reflect a confidence in new leadership coming. in part mcdonald's has picked too many fights against too many competitors and too many different regions. and many ways its size started to become part of its weakness. fast casual in the united states playing -- eating away at some of their market and their share. sales here are down a couple of points. globally down 1% in sales. they've had a steep drop in same-store sales a key indicator in restaurant performance. and they took two really powerful kicks to the crown in the china market with a series of two back-to-back illness

there that they've yet to shake. affected as much as 30% in some months in china. so everything from missteps in foreign markets to trying to be all things to all people. >> sure. >> and they're being schooled by a 33-year-old that's taken the reins over at burger king. >> it's not just burger king. that's the pushback i have with everybody saying people want healthy food millennials want fresh, that's why they're going to chipotle shake shack. look at sonic, posted 10% revenue growth at an all-time high, best quarter in decades i done think sonic is healthy. what does that tell us about mcdonald's? >> right. yeah, i think americans we're not ready for healthy food yet. what we're seeing is more a trend towards healthful, making minor changes swapping out olive oil instead of butter as an example. fast casual chipotle the poster child of that segment of the industry is $30 billion segment

here in the united states. but it's projected to go over $100 billion in the next decade. so for $680 billion industry with 1 million restaurants here in the united states it's cannibalizing itself. now, the segment of the industry most affected are full service casual dining service with checkout less than $20. tgi fry fridays and apple byes are hurting. in the case of mcdonald's, they did come clean and admit they failed to evolve as fast as the consumers are evolving. menu has become complicated and bloated. it grew 75% in size in the last decade. >> aaron, forgive me for asking this, but the new guy is british, and i just wonder what it is about recruiting british ceos particularly within media, bloomberg, "wall street journal," "new york times," cosmopolitan, nbc news "vogue"

have british ceos. the media turn to the brits, for some reason in this country big time. why do you think mcdonald's might turn to the brits? something to do with imagery, what he did in the uk? >> i think it's a big part is what he did in the uk. very strong with digital. and in fact some of best digital marketing innovations mcdonald's had come from the european branch or european operations i'm think that's part of. millennials are a larger audience for restaurants than baby boomers, more of them eating out more frequently spending a higher percentage of their disposable income in restaurants, particularly in qsr, and the best way is through digital, social technologies. those operators getting it right there are doing very well even if in segments of the industry that don't perform as well or not as aligned with emerging consumer dining behaviors. if you're getting speed, convenience, digital program down well, if you have a strong

point of view it's another area mcdonald's has failed. very good on the charitable side but they've missed that. look at chipotle or starbucks, they're cause oriented and that resonates with millennials. >> we've got to leave it there. they appointed a google ex.ec. >> it's the swagger and the good looks of the british people. >> the british are coming. they're already here. >> stop it please. >> i feel invaded. >> holy cow. >> observe to dom chu for a market flash in i want to know why people saying shake shack is a healthy option. i had a burger and it didn't seem healthy. rough sailing for royal caribbean, weaker results due to weak pricing in the caribbean market. weak guidance for the current quarter. shares down 3.5%. carnival moving lower in sympathy, down by 1.75.

>> the booking season isn't good either. richard fain on closing bell the godfather of modern cruising. many questions, not least in the caribbean. >> coming up on the show does it pay off to sponsor the super bowl? pepsico thinks so. investing big in the game in the halftime show. joined by chief marking officers for pepsi and frito-lay, coming up. [announcer:] what if one stalk of broccoli could protect you from cancer? what if one push up could prevent heart disease? [man grunts] one wishful thinking, right? but there is one step you can take to help prevent another serious disease- pneumococcal pneumonia. one dose of the prevnar 13® vaccine can help protect you ... from pneumococcal pneumonia, an illness that can cause coughing, chest pain difficulty breathing and may even put you in the hospital. prevnar 13 ® is used in adults 50 and older to help prevent infections from 13 strains of the bacteria that cause pneumococcal pneumonia.

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48-point loss on the dow, all sectors are negative. take a look at materials. >> simon, so a better day in terms of a relative perform 'for the material stocks here better than energy. leading the way higher air products and chemicals and dow chemical as well both strong earnings reports today. earlier in the morning monsanto sealed air top gainers.

moving green for right now doing outperformance compared to overall market. >> from the halftime show to commercials, pepsi's foot print all over the super bowl this weekend. joining us from phoenix, north america chief marketing officer simon loaden and freeito-lay chief marketing officer. good to see you both. simon, you're on with us every year. sounds like this year you're making quite the splash. not just $4.5 million spot and half tile show. a multiplatform event. why do you have to do that if 180 million are expected to watch on game day? >> good morning. how are you? it's you know for us it's real le a great combination of what's been six months of fantastic activity of football. as you know we started this in september. we had a great thing around thanksgiving with blake shelton

and now the super bowl. mountain dew and pregame. what great place to be at epicent they of music and sport. today's world, you may delay watching events, no one delays watching the halftime show. at least 110 million watching. katy perry, the igbiggest performer and brand pepsi. >> you don't disclose how much you're spending and you're doing the popular doritos competition, how do you measure whether it's a win and whether the massive investment is worth it? >> i think for us like simon said, it's a six-month engagement program throughout the nfl season. the game day itself is just the pay-off. really think about it the six months of engagement that we have with our consumer that's what makes this program pay off it's not a one-day thing, it's six months of asking consumers to submit ads, letting consumer

s s, that adds to final day on game day. by time we get to game day, the perhaps's paid for itself because of engagement we have with consumers. >> this year more activation we with customers than ever. 60% in increase with our retail partners this year. excitement is not only with our consumers but customer partners as well. >> simon, is it a challenge at all? i know by sponsoring the halftime show with katy perry, trying to show you're cool and culturally relevant and resonate with the consumer especially the millennial is that difficult when carbonated soft drinks and slowing and younger people are not turning to pepsi and diet pepsi like they used to? >> no it's not. in fact it makes it more important for us to be at the cultural center of what's happening in america today. this year this month, this weekend, the only place to be is

in arizona. the only place to be in the halftime show. it makes it more important for us to make pepsi relevant today as it was 10 20 30 years ago. for us it's enabling us to portray ourselves in a different way. i mean we're activating with twitter facebook a level of engagement never before. it's happening with doritos. it's a new way of talking to consumers, which we're excited about. >> the relevance of the nfl? it's been a difficult year with scandals on different abuses it is the number one sport in america and more people are expected to watch the super bowl. but has that brand been tarnished at all? it's a very important one for pepsi. >> sorry, go ahead. >> no you go. >> i was going to say, as you mentioned, it's the number one sport. 112 million viewers last year. and you look at viewership of women, that's gone up every single year. this past year has been a tough season for the nfl. but i'm really you know happy

about the steps that they're taking to correct it and make sure, you know this doesn't happen again. i think the game itself is you know cannot be tarnished by few people. i think our partnership is the strongest that we've had over the last couple of years. >> no question. as you know, we stood behind the nfl, we make sure the steps they are taking we support. it's an engaging sport. >> do you pay katy perry to do "the halftime report" or does she pay the organization? >> we certainly didn't. she certainly didn't. it's part of our contractual arrangement with the nfl. >> gentlemen, thank you for joining us from phoenix. good luckwith the game. nfl. >> good luck. simon lowden. be sure to catch super bowl xlix this sunday on nbc. coverage starting noon eastern time. >> you see more brits.

>> unbelievable. they're everywhere. >> they're infiltrating. coming up on the program, more on the white house reversing itself on the tax of 529. anti-tax activist grover nordqvist.

welcome back. thursday's edition of santelli exchange. special guest today grover nordqvist. thanks for taking the time today, grover. >> good to be with you. >> all right, listen. we had this whole strange 529 chapter over the last couple weeks on legislation that didn't have a very large chance to pass. but i think there's many lessons to learn on the 529 issue. what are your thoughts? >> the president has 245,000 in his own 529. his administration in 2009 said it was a great idea. in his budget he wanted to end them. not wound them. end them so they would no longer be tax-free so people could save for college education. there are 12 million accounts today where people save for their children's college education. the president wanted to attack

that, end it. that's an attack on the middle class. oddly, he made it sound as if he was trying to help the middle class. he got enough pushback that he says he was not pushing it but it's still written in the budget it's still there. >> point two. record tax collections. but if you look at those paying in it's a shrinking base. so what does that tell us about two issues? spending -- i see bragging regarding dipping under half a trillion dollars with regard to the budget deficit, but this speaks volumes about our addiction to spend more than we take in even if it's record amounts. >> absolutely. we're spending too much money. the sequester is the only things that's stopping us from slipping back to the first years of the obama when there was no end to spending. they were spending 24% of gdp. the feds last year spent 20. that's because the sequester put a cap on it. the most important thing this congress can do is maintain that

cop and not let obama break it because then the deficits will go back to what it was the first two years. >> all right, this is my favorite question. the new thing is the top 80 richest are as wealthy as 50% of the globe. in 2010 it was 388 of the wealthiest to equal the wealth of 50% of globe. so you look at an instagram that came out in 2010 we're impacting new instagrams? i guess in the words of hillary clinton with regard to this kind of comparison what difference at this point does it make? >> well, there's an important fix. i mean, there's something that we can do. her nando her hernando desoto has proven there's buildings and lands that poor people in the third world live on but don't have legal ownership of. they can't borrow against it. they can't sell it when they move. we can create $10 trillion in wealth by establishing property rights around cairo, in the big

cities of latin america, in the rural areas of africa. one of the things the united states should export is not our tax dollars and foreign aid to go to corrupt governments, but our ideas of property rights to the poorest in the world. >> listen i've got to go grover. i have a hard break. i want to pick up on this next time we have you on. thank you very much. what a day to talk to henry blodget, alibaba, facebook, and his company raising another $25 million in financing from the germans. "squawk alley" is next.

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good morning. it is 8:00 a.m. at facebook headquarters. and "squawk alley" is live. ♪

good thursday morning. joining us at post nine henry blodget, ceo at business insider. john ford is here as always. let's start with alibaba. sharing slumping after quarterly revenue came in below estimates. that stock on track for its worst day since its ipo. there was a suggestion there was