de. >> like luke skywalker. >> presses the button. hyperspeed. >> let's watch this. >> this is -- >> he's got -- >> 0 to 60 in 3.2 seconds. >> our show's over in 3 seconds. gotta go. >> let's watch. >> tell us when. one-thousand one, one-thousand two, one-thousand three. >> pretty fast. thanks for joining us. thanks guys for being here today. "squawk on the street" begins right now. ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. stock market cautious as european leaders take on some big issues the future of greece and effort to end hostilities in ukraine ukraine. plenty of earnings to work with as well. oil's lost that five-handle

again, as you probably know currently 49. .60. ten-year yield below 2%. apple making history once again. first u.s. company to close with a market cap above $700 billion. >> hours from now, greece's finance minister set to meet with eurozone counterparts in hopes of striking a debt deal. >> pepsi beating the street. pepsico's financial officer hugh johnson will join us in a few moments. apple's making more history, becoming the first u.s. company to close with a market cap above $700 billion. two, exxon mobil, $385 billion. apple's ceo tim cook attributing the success to rapid growth in china. also announcing partnership with first solar to build $850 million renewable energy farm in california, jim, in monterey county, where they're going to power not just own headquarters at data centers, retail outlets.

>> i've always liked first solar. glad he's teaming with them. used to be high cost producer loes cost producer. tim cook making a good engineering move. a lot of different things. the company's doing great. i think two initiatives underplayed, i think ipay as i said to my colleague here rolling all of the retailers. -- yesterday, we don't have the wi-fi but it's obvious, if you're going to have a register you're going to have to have i pay. >> is ipay? >> i call it apple pay. >> i call it ipay. >> a strange marketing thing. they're not using the "i." >> sorry. apple pay. shorter way. i think that's good. and then the underarm recorder that talked about health i'm telling you your doctors are waiting for. apple to give you that blood pressure reading and working around the clock so you will have a dashboard in your

body -- this is apple's goal, i leave -- ilive. >> iive. >> if your bloop pressure spikes doctor immediately's on the phone to you and suggests, a, so you avoid the most common form of death, cardio infarction. >> this is in our lifetime. according to my guys this is what they want to sell. >> as far as apple goes, tim cook did say talk about distribution plans in april, after all bond sales the past few days. barclays yesterday said that they have no excuse now to do something -- not to do something big. >> apple could trade through. it could have negative yields. it's that good a balance sheet. could have a negative of first corporate to have a negative yield. >> with the swiss off, yesterday. >> negative yield. >> it's very close. nestle's traded at negative yield which we talked about last week. >> but u.s. corporate -- >> not on issue, but in the

market. >> but u.s. corporate -- look i'll tell you what i think is really exciting about apple, it's got a low multiple. it's really low price-to-earnings, and that came back in vogue. i mean people liked those. >> i can't help -- i agree. when you get to $710 billion but i can't help but think about the law of large numbers. keep getting bigger. 18 billion, when you say it wow! what they earned last quarter. >> i remember in '84, merck passed valuation of general motors, that's not possible. how could a drug company pass the value of an auto company. >> my favorite stat in the journal, since ipod introduce in 2001, market cap is up 100 times. that done even make sense. >> everybody wants you to index. >> yeah. >> look i just -- it's a marvel. >> it is. >> i think these two initiatives, i think the health initiative -- look everyone in the valley wants to live to 120.

right? isn't that like not earnings per share, goal to live to 120. apple is part of the 120 move. 110 is the new 40 out there. >> amen. >> right. >> that would make you like 20. >> dog years. >> almost. >> yeah. >> let's move on to the broader markets. one day after stocks reversed two sessions of losses futures moving lower with greece in the spotlight. the country's finance minister will meet with eurozone counterparts trying to convince bailout terms need renegotiated. some officials downplaying a chance of a breakthrough. not talking about that much money, as we've said a number of times. and you know ecb did what they said they would, return profits me that a on greek bond holdings that would even tighten it more. but, we will see. >> 11 million people versus 700 million people in the eurozone can it really be this jason

character. >> of course. >> the finance minister of greece. >> is that the his doppelganger. >> nose, jason, impressive. you know -- >> kill you with barehands. >> he's not the guy you want to go against. charismatic. looks like jace. might as well be. i'm not kidding. >> no i know. >> let's get two pictures up. he's better looking than jason and tougher. >> how much risk if there's no deal tonight, tomorrow, friday, there is another meeting monday. >> they like to go to the brink. they don't like to solve it on fridays, right? they don't like to solve it on fridays. like -- it's like they get short s&p over there. i think that there is a stretch out deal -- look. >> yeah. >> i think there's better pictures. >> there are. >> "people" magazine youngest, best looking under 40.

>> yeah. >> 50. >> 70. >> i think that this guy's real. i think he's surprising people. i think the germans are on the run. the germans have been fitted from the crisis with the euro they're selling even more. they're going to be forgive, they'll give them a 70-year deal. 70-year deal. i do i believe that. that's what stathem wants. >> otherwise you get a foot to the face. >> that's not -- i don't think those are stunts. i think they happen. i think germany's on the run, i think their blinking. i think they've had too big a run. they're tired of. that's what they care about. care about the far right and they care about the national socialists. and that's why they'll blink. i'm serious. i think they're blinking. really important. i think -- it's the story. it's the story. >> you've been critical of merkel hoover in a pantsuit. >> right. thought he was doing it right. thought he was doing the right thing.

thought the issue was tight money. and he got it -- the great engineer got it wrong. i think she's got it wrong. history's going to say she's trichet hoover or ber nay yellen. >> the white house sending a request for authorization of military force in combatting isis. doesn't rule out boots on the ground but does call -- calls for an enduring offensive combat rule. >> a guy named bingewest, the most influential military writer in our country former marine embedded in afghanistan, his book "1 million steps" a must-read. that's said over and over, right now there are 7,000 iranians including iranian general -- remember they had a hit squad according -- there was an a

iranian hit squad -- gates is amazing -- talks about iranians targeting u.s. guys. it's got to be u.s. guys. that's what he's saying. you need the 3-5. you need tough guy from marines to be forward observers, to be able to pinpoint precision bombing. >> tough guys john malone in the news. shares of lion gate are higher. shares of starz may be higher. two companies, at least, having a cooperation agreement, if you will involves mr. malone. recall, of course, he one of the control shareholders of starz and will continue to be to a large extent with owning 6% of the equity of starz and 32% of total voting power. he's going to exchange a 4.5% stake in starz, in the common stock, the economic stake we're talking about, also represents 14.5% of the voting power in

starz and he's going to give that or exchange that with lionsgate for 3.43% of that company. he's also going to go on the board of directors of lionsgate. >> really? why? >> malone. >> pretty active. >> yeah. it's kind of interesting. it's a tax-free deal of course i'm going to guess, because it's malone. it's a swap. got to be. but he's effectively taking some of his starz shares trading them over to lionsgate for roughly a 3.5% stake there and he's going on the board as well. says lionsgate emerged as leader developing global content, transaction creates potential for a number of strategic opportunities around the world with them. that according to dr. malone. delighted to add my voice to board of directors of one of the most exciting content companies in the industry. a link-up with further potential, it would seem here

between -- >> stock's going much higher. >> malone and lionsgate and starz and lionsgate. the ceo of starz quoted here. a lot of talk starz for sale. i asked about it. this is the deal they ended up with. had been thought that maybe lionsgate would step in and buy the whole thing or you'd get some deal there. this is what you've got. >> notice last time malone stepped on to a board. >> isn't he on the charter board? >> that worked. i think he's on the charter board. when they took -- when -- >> do they know the power of malone? >> can be a lot of power. a lot of intellectual power. >> i would not bet against lionsgate. >> can you keep it going? after "hunger games" and everything else. >> "hunger games" not over. >> more to go. stock up almost 8%. >> should be.

>> i got out of that thing way too early. >> who am i to criticize? >> that's true. didn't have a great year last year but otherwise, i know. only got -- >> i don't want to be around david. >> i'm on you. >> standards are high. our first on cnbc interview with the cf of of pepsi, hugh johnson, stocks getting a nice life, share buybacks facing challenges due to strong dollar. premarket, still haven't had two or more days -- three days -- without a triple digit move on the dow. more "squawk on the street" when we return.

nbc news announcing suspend suspending brian williams six months without payee fechive immediately. he admitted he misrepresented events coming under fire in a chinook helicopter. brian has jeopardizes the trust millions of americans place in nbc news. his acts are inexcusable and this suspension is severe and appropriate. burke said williams deserves a second chance and we are rooting for him. brian shared his deep remorse with me and committing to winning back everyone's trust. nbc news continuing an internal investigation. lester holt the substitute anchor of "nightly news" in the

immediate future. tough week for all of us the nbc. we all know brian, work with brian, proud of the traditions of standards here at nbc news. >> tough week way to put it. tough week. >> not much more to say. sara eisen to talk about pepsi, the quarter this morning. 112, did beat by 4 cents revenue nice beat. soda volume down noncarb volume up. >> earnings out, beating the street. you see in the market reaction. in the premarket, pepsico stock trading higher. the cf ofo of pepsi, hugh johnston. welcome, hugh. >> sara good morning. >> clearly, a difficult environment, currency volatility strong dollar craziness. still you managed to beat. talk about how. give us color behind the numbers, especially that 5% organic revenue growth.

>> yeah happy to. it was a terrific quarter for us. really coming off of a terrific 2014. three big messages here i think. number one, pepsico's deliver, you see in the numbers in quarter and the year as we raise guide 'over the year. behind that pepsico does have a lot of momentum. both in terms of our large customers and our small customers. the business is performing really well right now. one interesting fact in that regard, we generated in the u.s. about a billion dollars of sales growth for our customers. it took the next 27 customers to get to the next billion of growth. and that's why walmart named us supplier of the year in large format and small format big of the customer 7-11 named us supplier of the year. we have great momentum. perhaps most compelling for investors we're doing it the right way innovation is trif,

whether toes tease toes titos cantina. we have been growing r&d spending faster than sales and growing a & m spending. we're doing it in a sustainable way. >> you have a perception among investors, frito-lay, north america, making it work right now. up it 2% carbonated drink sales, volumes down 2%. how do you plan to get those more in sync? can you address that perception that investors have and perhaps a concern? >> sure. listen, overall beverages are doing really well now. not just in north america but around the globe. if you look at the performance of north america beverage in the quart, 3% revenue growth 11% operating profit growth it seems that business is performing quite well. really at an industry leading level.

importantly, both in the u.s. and internationally, it's the integration of the food and beverage portfolio allowing us to play at the top tier i think of cpg company performance now, whether you look at developing an emerging market whether look at developed marketsen interplay at r&d level, selling level, is what's enabling us to perform consistently over time and that's making pepsico work. >> you any your new board members going to agree with that analysis, integration? you think you'll have to go justify it all over again to try the member on the committee? >> jim, as a rule i don't speak for any of our board members. what i would tell you right now is the pepsico board is very much aligned with senior management here, that the integrated food and beverage strategy is within that seems to be working best in the marketplace. we've made the case successfully in terms of lodgic and performance. i expect will continue to be

that. >> couldn't agree more. i listen to the idea volumes aren't up that sara just talked about. yesterday, coca-cola talked about pricing. as long as i can remember a price war and battle in the aisles. is it time to say, to admit, there's a truce, the war is over, and that pricing between you two colossus is no longer going to be an issue? >> jim, as we've been saying a couple of years, i think basis of competition is shifting from price to advertising and marketing and innovation. the consumer wants new and different types of products whether from us it'sly. ton sparkling tea or mountain dew kick start or tropicana 50. when you do that they're willing to pay for them. i think as we've been saying for a couple of years, basis of competition is shifting and that does seem to be finally happening in the marketplace as well. >> cfo of coke told me

yesterday, the lower gas prices especially in the u.s. should start to help especially at convenience store. you've got a good presence there. are you seeing that reflected? and do you project it will happen in a few months? sometimes these things have a lagging effect. >> yeah they really do sara. i think best way to think about it is it's more evolutionary in nature. as consumers get that benefit from lower gas prices each month progressively you see a little bit more of a benefit in the stores. people fill up they go into the store, want to buy something. good news when they do that from a food and beverage perspective, we're the big of the player. they tend to buy us. history tells us will take 6 to 8 months to fully feel that effect. i expect that will happen again this time. >> all right. hugh johnston, thanks store joining us first on cnbc pepsico beating the street both on revenues and earnings. seeing that in the stock reaction.

cramer's "mad dash," count down to opening bell take a look at the premarket here with the stocks reacting cautiously to what may happen over the next few hours and days in europe. we'll be right back. sometimes the present looked bright. sometimes romantic. there were tears in my eyes. and tears in my eyes. and so many little things that we learned were really the biggest things. through it all, we saved and had a retirement plan.

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a "mad dash." less than six minutes before the opening bell. >> busy day. i know. >> talking about rite aid. bought for 2 billion in cash and stock, pbm, pharmacy manager. mimic vcvs. i think that this decision to make this acquisition is going to take out this level, this

stock's going through 8.60 traded june '14, 2014. i felt rite aid was a turnaround. now it's just a growth story. it joins walgreen alliance boots and cvs in its rightful place as the big three. >> really. >> does that represent more of a competitive challenge to a certain extent therefore -- >> yes. >> -- margins -- >> walgreens isn't that crazy. now i need rite aid to take tobacco out. i think cvs taking toebacco out, part of becoming the blue chip in the group. the stock's back. it's amazing what the company's done. they're quiet, not promoters, won't come on tv. they just keep doing it and doing it. this is terrific. tom and jerry are two great pharmacists i use at rite aid. >> tom and jerry? >> my pharmacists. >> the names are tom and jerry?

>> kind of. yeah -- anyway rite aid's going to 5052-week height. >> talk dupont. >> what? >> a put on gm. interesting comments from harry wilson who i spoke to earlier today. that's just from me you've got so many things to talk about. >> pier 1, take back the wicker. >> opening bell after this. female announcer: get 36 months interest-free financing, and save up to $300 on beautyrest and posturepedic. even get three years interest-free financing on tempur-pedic.

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you're watching cnbc "squawk on the street," live from the financial cap it'll of the world on wednesday. 0 opening bell in a minute's time. covered what's going on in europe pepsi, apple, rite aid, lionsgate. haven't gotten to time warner yet, guys. 98 cents, beat by a nickel. revenue a slight miss. studio revenue weak. a year ago "hangover 3," hbo revenue up six. >> internal revenues lower. hbo fine. the key here carl is what they told us they would do in '16 and '18 in earnings 6 in 16 8 in 18, can they achieve that through all of the different mechanisms they need to hit, whether cost cutting, increases and everything else.

>> felt like allergan to me. they made the huge productions in order to fend off a takeover and meeting them. david pyott not able to fend off takeover but this was a company, this was the most uneventful box in the corner. uneventful. buried the lead with american sniper it's the next quarter i guess. >> uneventful best way to put it. >> what you want. >> solid. >> solid. >> s&p, filling in at top of the screen. big board this morning, ringing the opening bell we have the american swiss foundation celebrating its 70th anniversary. at nasdaq border free operating in technology and services platform for e-commerce. >> border free became public at 16 spiked 20% on day one, that's right 20%. ipo price was 13. not doing as well as people would like. i mean it's important -- it became public when there were 63 deals all at once. >> i missed that one.

>> became public a-10 remember when you see a lot of deals public at once it may be -- >> pepsi will lead hasbro all of the proctor & gamble among the winners in the top ten of the s&p, jim. >> i thought that proctor was interest. announced a plant built in the united states, because of low-cost natural gas feed stock. pepsico what it said it wasn't about the dollar. >> that was, what six points of revenue? >> but they -- they had a good story. i thought quaker had a decent quarter. tropicana still number one. i like the fact that they literally weren't hurt in areas that coke was hurt. but i think that the key story is is this piece, i saw it in dr. pepper. an amazing quarter, series of amazing quarters under pressure from act esteektive vift.

soed's no soda, it lets you see how great frito-lay is. can i say, katy perry youth -- >> halftime show? >> i think this brand is positioned for youth. don't forget they got shanghai disney from coke. they got that. >> big win. >> big win. >> they'll sell some soda. >> impressive quarter. the fastest -- the fact that it is the largest -- the biggest increase of all of the packaged goods industry compared to all of the other 24 players, add them together biggest increase. the terms, if you're kroger you love them. it's cash cash cash cash. a lot of good here. fantastic job, i think vindicate vindicates the model. >> oil services companies down as oil of course trying to hang on to 50. jpmorgan out with a note look for copper as other shoe to drop

trade. more cost deflation. weaker chinese demand supporting it outright short. >> commodities like imelda marcos' market. waiting for iron ore to bottom. it's a claymation death match with them. they're all going full-out every day. china hasn't bought an iron filing. >> where are they putting it all? >> some warehouse, like sunbeam grills from the old days remember that in. >> of course chain saw al. >> commodity, stay away from commodities oopi think freeport front and center. if you want to short commodities it's got everything you need. i feel carl the run in oil that we had, the great bull market of the 43 in january 28 to here is over and now stuck with with the supply again. so much supply. >> i did want to get to dupont because this morning trienyian

follows its proxy, continuing to move ahead what appears to be sole fight out there between actactavis and a company. dupont put two new board members on it appeared to make it more likely we will get a fight. and i think that is fair to say. but this morning, tryian puts out its proxy and a new white paper. what are the key things that tryian's got to deal with, dupont stock price performed very well. so it becomes sort of a more difficult perhaps case to make when dealing with a stock price that is up even versus its peers. i think we have this chart, one of you know it's an 80-page white paper, but this is one of them, and they're making the point, eps is down why is it up? it's up because of us. dupont is up because of us.

we first invested when the stock was 50. announced the spin along the way, announced $5 billion share repurchase along the way. in '13 another $2 billion in 2014 another white paper later in '14. and that's why it's up because look at eps. eps has done nothing -- they're gone down, there is it versus guidance. this is what they're going to come to jim, as i would argue the crux of an argument if they're to win it given nobody's arguing with the two guys they put on the board last week. isn't that interesting? >> undoubtedly, maybe a back story there the fact is that him and breen are considered to be pretty good directors. >> great. breen's great. frank mitch has put out great stuff for wells fargo how the two board members are -- >> as i said if you're interested it's a long white

paper, worth a look if you're an investor. come to -- sales of stock on page 74 that was story yesterday in the journal. >> cancel that program. i did think now that the pepsico cur kerfuffle is over it's full bore. i don't know dupont's a great performer, it is a tough sell because maybe the multiples expanding the whole time. >> that -- i had made that point as well. exactly. when -- like okay numbers are down, what accounts for the stock being up multiple expansion? >> it's become a proprietary company now. ahead of ppg and chuck bunch who knows nelson from heinz, but chuck bunch was the -- laid out the course of action now following chuck bunch's program at ppg, which has been a great performer. it's like mary barra, mary barra

solves ignition thing by putting feinberg in, how many claims. builds these cars, better lucky than good for the gas guzzler, right? gives you a big dividend boost. what happens? two of the most powerful hedge fund managers, they train their guns on her. so i mean, what do you have to do in order to please these activists? >> how about be a man, right? barra, rosen feld coleman? is this -- are we arguing coincidence? >> not to mention marissa mayer gets a lot of heat for whatever reason, meg whitman got earlier, but that was not as much her as it was last management team. >> i call it from popeyes, that stock doing well, a woman that's

doing well. >> dupont. >> wish doing well. >> your point, i think, the right one, maybe it's multiple expansion because they've gotten -- they will argue, tryian, no it's not, it's just us. >> it's both. >> people believe that we were in there, going to make things happen and certain things already have happened and it's us. if we weren't there, stock would not be -- you'd not be talking about multiple expansion. talking about a company reflecting the fact earnings down in '12 sps 13'13 and '14. >> i found you made money in every one of the cases. most people you buy it after you hear it, the move's been made. he's a great catalyst. i think that the resolution of pepsico is the way i hope dupont's resolved. >> we haven't done pier 1, down 30%. cfo's leaving, of course guidance no good on a pretty

good week for specialty retail. >> there's a guy, i'm going to spare you his name he's having an awful day, pier 1 upgraded to outperform by credit suisse after preannouncement after better than expected quarter and that was a tough upgrade. this took your breath away. this was an amazing -- the upgrade took place january 9th. something's wrong in pier 1. i've been a big -- something's very wrong. you do not see the stock down down, there's a larger story than a miss. i put this in worrisome camp. >> we'll get to tesla later on. dow's down 58. bob's on the floor. good morning bob. >> greece down 4% but calm outside of greece 4% in europe. oil's moving 3% range again. usual suspects. exploration, production stock put up big names, apache drillers, down like transocean as well.

but that's the big mover on downside. heartened about kb homes commentary. did you see what they said? orders year-to-date up 25 percent, optimistic about the -- i know weather was severe last year but this is better than expected. we've had good news from the home building companies. the low rates, stronger jobs numbers, home sales in december pretty good overall. bad news market knows this. if you look at etf for home builders, itb, we're near the highest levels since 2007. prices are high. this isn't the case with kb home. remember, they cut margin guidance because of higher costs a while ago. they've underperformed home builders for a while. see if that's less than an issue. owings corning, had a good report. surprised me because roofing business had been weak. fiberglass installation excellent, up 5%. if they can get the roofing business going better the stock

would be on fire. ipo business switch gears, a horribly slow year so far but starting to heat up. tonight one of the first big ones. this is inovalon holdings $pa 50 million deal. all of the right things cloud computing. help health care companies manage costs and they're profitable. they upped terms, 21 to 24 as i recall. now it's 24 to 26. keep an eye on than first big one. another one people are watching a big yield play big thing here, yield. it's a complex financing structure. yield plays have proven popular. a number of them last year obviously, take solar assets and end up putting them into a vehicle and taking advantage of investment tax credits that are around them. keep an eye on than ipo business

improved as market has calmed down. the deal not very big. half of that of 2014. no energy ipos. that's the big problem. take a look at ipo, etf, off of its lows as market has calmed down in the half several weeks. i don't like doing silly stock valuation comparisons but it was intriguing. some of the guys talking about early this morning apple $700 billion valuation. spanish stock market total value, $664 billion. spannic stock market's total value is less than that of apple. again, i don't like doing these silly comparisons but thought that was interesting. apple, $123 up 1%. >> so are quite some numbers, whether you like doing them or not. interesting to listen to. a story we covered first yesterday. jim has been mentioning this morning, as well of course activists in the shares of gm one of the key fights we may

continue to watch ooh-to-to its end, trian versus dupont. harry wilson a restructuring expert who participated in the restructuring of gm has part of the auto task force, has nominated himself to be a board member at gm. i spoke to mr. wilson about the reasons behind it and what actually came together here in terms of the four hedge funds he's in effect representing as their representative, if you will, on the board of directors though he'd be representing all shareholders. talked about the company's balance sheet. the fact that with 20 billion to $25 billion in cash it becomes a question as well if you can run this company at break even even if a downturn why do you need that much cash in opportunity costs that are -- come along with that let's call it not underlevered but simply

not appropriate balance sheet, showing capital discipline perhaps, he would argue, that they need to buy and of course this is key part of the activists if you will of the hedge funds, returnsome of it to shareholders. this is what he said on the balance sheet. the difference between being conservative and being silly. we're clearfully the silly camp. that was mr. wilson's quote to me earlier when we spoke. and many people may agree at this point. when i spoke to him as well he's talking obviously about strategy and not particularly critical of the strategy undertaken by mary barra as much as simply saying that conservative stance doesn't appear to be as rational perhaps as it should be given what he of course feels he knows about the company. there is a key here that perhaps i would argue will also become a key weapon that the company will use against mr. wilson and that is the large incentive fee that he potentially stands to reap

even if they doesn't get elected to the board. it's 2% fee if he doesn't get elected but 4% fee if he does on 34 million shares. stock started ticking on monday's close. anything up from there, he gets 4% of the profits on. that's quite a fee. and when you speak to people in a larger investment community, some shake their heads at these arrangements saying mr. wilson would have a different compensation scheme than the rest of the board, he being paid by shareholders as opposed to by the company it promotes what some say short termism, but it does last three years until end of 2017. i asked mr. wilson about that as well. he said my three-year horizon is much longer than most companies or investors have. he believes it's a better arrangement for many shareholders to be have somebody on the board who has their interests in mind. but that said weave seen a couple of these in the past

recently dow chemical with dan lobe and a few that didn't make it to the finish line. janna had a deal with its potential nominees but lost the battle. elliott management recall also had that arrangement but hess came back fairly hard on them. elliott, many argue won the war, it did lose that battle dropped that plan. icon for forest labs nominee would have been compensated. certainly something to keep in mind. if it's up ten bucks over three years on 34 million shares that's $340 million he gets 4% of. by the way, considering maybe pursuing a new business as a nominee of activist hedge funds. i'll take that deal. >> i think that these are novel, i think that the dow chemical deal was a bad deal for dow. >> you do? >> i do. i think a good deal for loebbe.

this surprised me having watched gm in the '80s where people felt they had too much cash, then the largest loss of all time these are like steel mills. >> massive restruckturing -- >> my clareharitable trust owns. >> 33 at ipo price, you can argue some are frustrate the given 33 at ipo and 37.76 today. >> i just think that -- look yes, he's -- i don't know how old, i think it's terrific maybe 43. >> 43. >> i'm older. i remember when the cycle went bad, when i met with ford in the '80s, it was great, next thing you know it's horrendous. beth le them steel earned 27 a

share and then went bankrupt. these are difficult to run. young guys terrific forget what it's like. >> bond pits now. rick santelli at the cme group. >> two-day chart of tens gives you a lot of information. playing with a psychological area 2%. arguably, we settled pretty much right on it yesterday. but we really really haven't had a solid settlement since early in the year. you see on the year-to-date chart. bunds, it's fascinating. two-day chart, yields have moderated a bit today. but this is fascinating throw up a chart, one day before the ecb meeting, big one, mario draghi. i'll show you the bazooka meeting. since that day we settled 40 basis points or higher. it's been very contained. switch gears and look at yield curves. why do we like to look at yield curves? gives us an idea potentially of what the market's thinking of

adjustment of what the fed may or may not do and awhy adjustment's taken place. tens minus twos going back to july of 2012 because virtually this month, that's how flat we were. but as i mentioned, since some of the data has been a bit better on the job side like jolts and whatnot, flattening reversed and we're getting steeping steeping. something to pay attention to. let's look at two-day of dollar/yen. why? they punched through 120. about five minutes ago. how long has it been since we've closed above 120? around the early part of january of this year i believe around the 6th. but what's important here is there's a lot of buy stops up here, and many traders are hoping that we'll know exactly where they are when that line you saw shoots higher. david, back to you. >> rick, thanks so much.

rick santelli in chicago. tesla's earnings. how the electric automaker of the vehicle looking to lure cold weather buyers. dow's down 55. in my world, wall isn't a street. return on investment isn't the only return

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all right, guy on the right, greek finance minister varoufakis meeting with eu count parts in the showdown of the week. cramer says he needs to meet the guy on the left and that is jason. >> i'm tell you the -- that varoufakis, lock stock, barrel he's got the germans, germans over a barrel lock stock. one of great movies by the way. >> very good. we'll get "stop trading" in a moment. dow down 58.in it. what makes it an nx is what you can get out of it. introducing the first-ever lexus nx turbo and hybrid. once you go beyond utility there's no going back.

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time for cramer and "stop trading." >> not long ago, talk about tim armstrong should take over for yahoo! get marissa mayer out. i think marissa mayer should take over for tim armstrong. revenue declined. only reason they made the

number tax write. let's go. >> what's on "mad." bob pisani talked about spain and the valuation of apple. this reminds me of hoover when he said look babe ruth asked why they made $5,000 more than hoover. i had a better year. this will tell the tale of the week. >> claim ber always brings it. >> west virginia senior dean. cisco, back and better than ever. >> "mad money." op-ed in the journal.

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good morning, welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, simon hobbs, david faber. mark caution, down 40 points as europe deals with what person calls its twin nightmares greek crisis and attempt to bring an end to hostilities in ukraine. crude oil below 49.

>> road map for the next 60 minutes. pepsi in the green today. thanks to its earnings results. hear what the cfo had to say about the latest quart. >> tesla looking to boost its sales in the colder northern states. find out how it plans to do that with a look at the newest tesla model. also ahead, former chief marketing officer of mcdonald's speak what needs to be done now to turn the fast food joint around. live on cnbc. art cashin joins us leer at post 9 talking about a market that doesn't know what to expect for just over the next several hours. what's your expectation? >> that's the problem. two key meetings. meeting on the ukraine and the meeting on the greek problem in brussels brussels meeting, is it hoped for, will have something out around noon probably after the european markets close, unless there's a leak beforehand. but you're right, also about oil. there's a big debate going on whether this is simply the

continuation of the bottoming process or was that a short covering spike and are we headed lower? so, if we get down below 47, again, oil may begin to put pressure on equities and that will be something else. >> timing of the announcement or the leak, as you put it, does that tend to come on the first day of what you expect something over the weekend? another meeting on monday? >> yeah i don't know how far up to the edge of the cliff they want to go here. that's the feeling -- i think probably majority of the floor brokers think that the easiest solution is to grant greece six-month extension, a lot of time to talk about things and then plot and plan. other than that keep running from deadline to deadline it could destabilize the market. >> a question why we're not seeing the type of fear on greece we once saw on the brink of challenging decisions. you see it a little bit in the

euro there's not any contagion. yeah, u.s. stocks a little bit under pressure. because they're expecting a deal or it's not the systemic threat that it once was? >> no, i think it is that they're expecting a deal at least postponement and that may work. everybody will get a chance to kind of move things along. between having schauble saying they've reached the end, can't get it done. >> it's over the expression if you don't deliver on what you promised to us. >> if you don't do it my way, as you promised. i think people feel we can't go from day to day like that. they're afraid of potential of a lehman moment. it doesn't look like it could be big, can they exit gracefully? all of those things will take weeks and months to work out and that's why the extension seems to be the most logical choice. >> as far as the markets are concerned, you have a massive qe

from the ecb coming in two months' time why things are probably holding together. on other hand the markets have to fall aut ofout of bed or risk a fire in order for politicians to do something about. the four or ubs massive withdrawals from the greek banks? >> i've been saying that for weeks. watch for a run -- runs on banks how these things start. and you know you would have picked this up in cypress except cypress didn't owe money. but the greeks own so much money, they're afraid of contagion ala the lehman event and they don't want to let it go. >> you know simon and ion "closing bell" talked to the chief economist talk about the rate decision everybody's exing. ing it this year. he expects the year after. he says there's deflation all

around the world and the economy's not that strong. is that what the bond market is telling you. >> the bond market believes that, i believe that. i've been saying i don't think they'd raise this year. watch when yellen gives her congressional testimony, a perfect opportunity. if she continues to say we're data driven that will be no help. i think you will find in her heart of hearts she knows you've got for a change some decent news from the small business group yesterday. >> although hiring plans down cap x plans down. >> some good news. so, that's the backbone of the american economy small businesses provide most of the jobs some she thinks there's still risky but on the edge of improving, i don't think she's going to raise rates. >> art, good to see you. art cashin. >> nbc news announcing it is suspending brian williams for six months without payee effective immediately.

williams admitted hi misrepresented events coming under fireflying a chinook helicopter covering the iraq war. burke says brian has jeopardized trust millions of americans place in nbc news. his actions are inexcusable, and the suspension is severe and appropriate. burke said that williams deserves a second chance and we are rooting for him. brian has shared his deep remorse with me and committed to winning back everybody's trust. nbc news continuing internal investigation. lester holt will substitute anchor for nightly news for the immediate future. oil, the rally that lifted crude more than 20% since january lows has stalled for the time being. as far as west texas is concerned, as you can see, on the screen we've lost $50 a barrel. let's get analysis on that. joining us now, rbc capital's head of commodity research. >> how are you?

>> i'm concerned about oil. >> you should be. >> what is happening here? >> i think it's -- where you had rally in oil based on the sense the market was too short, you had rig count reductions and people said this is a turn. you're battling with high inventory levels. and the cap x cuts are probably not going to filter through to the back half of the year. i think there's is an expectation you'll have a tough first half for oil. >> this is not the bottoming now. the bottoming happens after the summer from what you're saying, correct? >> if we're looking when cap x cuts should filter through, a lot of production's already hedged you should be looking at cuts coming off back half of the year year. there are geopolitical factors to watch. >> for those calling for a bottom that supply and demand has tightened and that has rebalanced leading to a higher

price. >> i think people were starting to see the signs of tightening waiting to see. when you see rig count come off, you think is this starting to happen in terms of a slowing of north american production? you also had opec this week come out with their report saying it should be lower by 400,000 barrels this year. you're having an anticipation of lower u.s. production. when does it filter through? >> copper's next right? i mean pattern on copper supporting what they're calling outright short. are you in that camp? >> i mean what we've been talking about in terms of oil in copper, they seem to be correlated at this point. any type of rise in terms of oil prices we think would lift copper as well. in some respects it's lifting all those if you have a rise in oil. >> does that mean -- you believe oil will rebound, hence you believe copper will rebound. >> i see a recovery in oil. you have cap x filter through, taking down significant amounts of investment, this should

filter through into 2016 and demand should recover. we should be looking at a higher demand picture in 2016. certainly more than 2014. so i am positive on 2016. >> you and i were talking before we came on the set and there are a lot of geopolitical problems potentially down the road nigeria, what saudi does politics of the princes and everything. is it therefore too dangerous to short oil at the moment? most of the things you list would be oil positive. >> absolutely. there's not in any way filtered into the market. i don't think there's a concern in the market now about niger yap their election supposed to take place this within has been postponed. we've seen around elections volumes of crude come off the market. 2003 elections, we lost 850,000 barrels of production because of unrest throughout oil facilities. this is a very very volatile election. you should be looking to

significant outages of africa's largest producer. >> next 20 minutes? >> i think it will be a sell-off. >> some people think it might be a draw. >> we have to see. literally, you're going to go either way. >> look worse than the jobs number. >> either way today, based on what the number comes in. >> thank you. >> when we come back beat from time warner company increasing its dividend. later, he was mcdonald's's chief marketing officer. out with an op-ed in the "wall street journal" about what the company needs to do to fix its problems he's going to join us in a few minutes.

time warner earnings beat estimates, higher cable fees but weak studio performance and the declining ad sales hin drg revenues after rebuffing that takeovered by from murdoch's 20th century fox. what will it take to spur ad sales in growth? joining us media analyst, good morning to you. >> thank you. >> everybody says sort of a milquetoast quarter but there's a turner ad sales stuff. what do you make of it? >> well, i think the ad sales contraction was spot-on of what we model. obviously in line with consensus. i think there are ratings issues. i also think broadly across all of television there are measurement issues. you know relative to nielsen in terms how people consume video from the time warner content engine and other media companies. so i think time warner's a transitional story this year. i think when you get out to

2016 you'll see a further ramp in affiliate fees and also have a very strong warner bros. pipeline, d.c. comic characters and such. clearly they had a nice success with "american sniper" as well. this quarter's not a pivot point but strategy's work doing a very good job on the cost side as well. >> any question that hbo is -- remains the crown jewel. >> i think hbo is a business that the street has always undervalued and even warner's the quarters tend to be lumpy, as we've seen. people underestimate how strong the long-term earnings power is geared off international growth and technology. we love hbo and direct consumer spending for media. as you know they're doing over the top service this year. and certainly ample international growth as well. buchanank bewkes reminds us content has never been as strong as now.

>> when do you expect to get clarity on pricing about going over the top. >> i think fairly soon. looking for launch sometime toward middle of the year or later in the year. i think certainly pricing it premium to what they get from the traditional linear distribution. it's a nice complement for the 15 million or so u.s. broadband only homes and hbo rating is such a visibility it will be another testament atto value of intellectual property. >> came out with the targets 6 bucks in '16, 8 a share in 18. anything that leads you believe they're not able to reach them? >> i think most people including myself, are a little bit below the $6 in 2016 2018 you clearly have a lot of uncertainty at that point in time. but a number of kickers, one of them you mentioned, hbo ott

service, they can do more in merchandising side d.c. comics upside with turner over a period of time. so i think they can beat that number. growth is on the top line is not as glamorous as certain other media companies like disney. by think they've done a great job with the financial mall and fixing -- i think a great job of addressing organization that despite all of the success, could be dysfunctional sometimes. >> matthew, just from left field, what did you make of the report that some of the fox voting shareholders that make up 8% apparently according to reuters wanting to swap to ordinary shares down the line trading at a premium and potentially murdoch's stake in fox bumped up from under 40 to under 50. do you think he'd come back for time warner or do you think that's a deal that will never be done? >> i think he's pretty much distanced himself from time warner. literally people -- when that

initially surfaced people saying he's doing over the top and he's been craving time warner looking at cfn. they have so -- cnn. they have moved on. sometimes a little bit of support in time warner's stock price for murdoch coming back but i don't think it's going to happen but he's a deal junkie. >> thank you for your help. good to talk to you. >> up next find out how tesla's trying to warm up to buyers in cold weather states. a look at performance version of the p85d when we come back.

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most tesla sales take place in warm weather states like california. but now automaker pushing for buyers in the colder northern states. phil lebeau live in chicago. good morning. >> good morning. and it is chilly here along the lakeshore. this might be the thing that you need to keep yourself warm while driving. this is the new model-s p85d edition. the p85d was essentially marketed as a performance version of the model-s, and that's what it is but it also has better performance than the original model-s when it comes to driving in the snow. took it up to wisconsin. we put it on the roads and through its paces. let's me tell you, everything that you want in a vehicle in cold weather is there.

the p85d by the way, went on sale end of last year starts at $105,000. they're hoping this helps them crack the code in terms of electric vehicle sales in northern states. about a quarter to a third is the estimate in terms of tesla sales in cold weather states. they're hoping that this will help them increase that as it rolls into tesla galleries, as they say, and people looked at it. big focus with tesla is the fourth quarter earnings after the bell. in particular, what's happening in china. now, remember last month in detroit, elon musk said that the company had seen a dramatic slowdown in sales in the fourth quarter in china. we knew that. we had known they dismissed executives there. yesterday a report from reuters said sales in january were so slow it was down to 120 vehicles, 120 vehicles for the entire country in the month of january. we'll see if there's any comment from elon musk about that also e-mail was reported by reuters

that musk was threatening a shakeup of the staff in china to jump start sales there. if you look at shares of tesla over last three months, down 16%. under pressure today. guys, this report after the bell going to be highly anticipated, given all of the questions regarding tesla's overall performance, but china in particular. >> see about that number. want to ask you about gm. you've been wrapped up in the drama of the last 24 hours. the company feeling pressure and heat from investors. you spoke to harry wilson. what did you learn from that conversation? >> he's frustrated in part he believes that investors, shareholders in general motors, are not being heard in the boardroom. when i talked with him yesterday afternoon, he said look by any metrics, general motors is not doing a good job right now. and i asked him about the idea that they're going to be increasing dividend and he said yeah, that's a start, but there's no clear metrics beyond than specific quote from harry

was, there has been insufficient speed and clarity of milestones of when it will repay investors. it being general motors. there are no clear metrics so investors are left to say, i'm not sure what to expect. that summarizes where harry wilson is coming from in his bid to join the gm board and push the company to buy back $8 billion in stock. gm up fractionally as the market continues to digest whether or not activist shareholders and push the company to release some of the cash it's sitting on. >> you think it will sghoshg do you think gm will cave and let him on the board? >> a long hill to climb. it's going to be tough for him. but he makes a good point, look nobody with private equity experience. when they reshape the company coming out of bankruptcy bonderman and akerson on the board, they're not on the board now. who's representing the shareholders is going to be his

argument. >> not resolved anytime soon. thank you, phil lebeau, joining us on gm. straight ahead, hear what pepsi cfo had to say about the latest quarter and dealing with challenges of a strong dollar.

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have it all wrong and it's creating a strong selling opportunity. that's your cnbc news update at this hour. >> thanks very much. >> watching shares of pepsico beating the street on the top and bottom. pepsico hurt by a stronger u.s. dollar in international volatility like coca-cola, proctor & gamble and other consumer giants. the strength of pepsi continue to be driven by better sales of frito-lay snacks in north america. talked to the cfo hugh johnston about that balance between stronger snack volumes and weaker soda volumes in the u.s. here's what he said -- >> overall beverages are doing really well right now. not just in north america but around the globe. if you look at performance of north america beverage in the quarter, 3% revenue growth 11% operating profit growth that business is performing quite well right now. really industry leading level.

importantly, both in the u.s. and internationally, it's integration of the food and beverage portfolio allowing us to really play at the top tier i think, of cpg company performance right now. whether you look at developing and emerging markets, whether look at developed markets, the interplay at r&d level, selling level, supply chain level is what's enabling us to perform consistently over time. that's what's making pepsico work. >> we also talked about the impact of lower gas prices and how that should help the consumer, something that pepsi's expecting. >> i think the best way to think about it is it's more evolutionary in nature. as consumers get that benefit from lower gas prices each month progressively you see a little bit more of a benefit in the stores. people fill up go into the store, they want to buy something, the good news is when they do that from a food and beverage perspective, we're the big effort player so they tend to buy us. i think history tells us it will take about six to eight months

to fully feel that effect and i expect that will happen this time. >> insight into consumer behavior. how there is a lagging impact between lower gas prices and when you start to see or consumer spending. obviously a big deal for pepsi as a strong presence in convenience store. he also said they were named top executer in terms of walmart retail shelf space, halting the argument they're better together snacks and beverages. >> gas prices the nymex, jackie deangelis has breaking news. >> good morning. the eia out with weekly status report on crude oil inventories and seeing a 50-cent drop after selling pressure started. wti trading at 48.29 right now. crude oil number came in at a build of 4.9 billion barrels, more than the api reported last night, more than most traders on the floor expecting. also, gasoline seeing a 2 million barrel build which people expecting to be negative a drawdown because of refinery

strikes but that's not happening there. meantime a stronger dollar dollar index over 95 last time i checked it. that's going to impact crude. traders saying from a technical perspective, once we broke the $50 mark sellers started piling on. traders are expecting that to continue. those saying we should have seen a draw down or production declining it doesn't appear to be happening at the moment. back to you. >> thank you very much. getting headlines from the house speaker, john boehner. >> good morning, carl. tensions boiling up on capitol hill over the homeland security funding bill. remember, there's a dispute between republicans and democrats over the funding for president obama's immigration executive orders in this homeland security bill. the house passed its version. it hasn't gone anywhere in the senate. that is frustrating to house speaker john boehner, who just used vulgar language in

describing the state of affairs up on capitol hill. take a listen. >> the house has done its job. why don't you ask the senate democrats went they're going to get off their ass and do something other than to vote no. >> frustration from the speaker of 0 the house. homeland security funding bill runs out february 27th. that gives them about two weeks to get something done here but real tensions on capitol hill and no clear path forward, guys on homeland security funding. >> eamon, thank vowyou very much. mcdonald's struggling to recover from its worst slump in a decade. shares of the fast food giant heading lower. one former executive ought with an op-ed, calling the company to get back to basics to feel a turnaround. joining us larry light, chairman and see of the brand management consulting firm. good to see you. >> thank you. >> interesting piece.

none of this is easy, but in short, i guess, to summarize it stop worrying about the about nair ra's and the chipotles of the world and get back to putting your eyes on the fries, as they say? >> exactly right. i mean they're so obsessed it seems with chipotle and with panera and similar so-called casual dining. but they should be asking the question, why is burger king growing? why is wendy's growing? why is popeye's growing? focus on the business you're in versus focusing on the business you're not in. and i think that obsession has gotten them off track and will continue to get them off track. >> sounds like they've heard that message somewhat. talking about simplifying the menu. on the other hand rivals are adding to the menu different kind of burgers.

burger king that's been their specialty for years. making new and inventive things or removing basics from the menu? >> i think at mcdonald's situation is different. the menu exploded. because they were so obsessed with everything outside their category, dhept on adding to the menu without subtracting from the menu. i mean many years ago when we worked on the turnaround we had a decision rule for every item you add, you have to subtract something otherwise the menu explodes. with over 120 i tips i defy you to go through the drive-through and attempt to read the menu. first priority which they are beginning to address, i don't think aggressively enough is to reduce menu complexity. >> larry, i've never had the privilege of going to one of the franchise meetings the huge

franchise meetings that they've happened it's the franchisees are the main customers. i hear they're big, it's razzmatazz, we are the winners, we're the best. internally there must be some question and demoralization of the franchisees. give us an idea of the structure of the contracts and the degree to which they can switch to competitors, take on other brands instead of them. >> mcdonald's has a unique situation in the franchise relationship which is different from, i think, any other major fast food franchise. mcdonald's in many cases, in most cases, owns the land and the franchisee leases the land. a franchisee can say, i don't want to work with mcdonald's any more but they can't put a burger king on that land. so that gives mcdonald's a lot more leverage than many other

franchise relationships have. typical relationship is a 20-year agreement. i believe that's still true. >> you know the culture inside the place. what do you think of the new ceo, steve easterbrook, even if you don't know him directly. do you think it's enough appointing him can change morale help mcdonald's's get its mojo back get more into an exciting and innovating company. >> you're right, i don't know steve, so i can't comment on him personally. but i think we need to bow back first. the problems did not start in the last two years. for example, the menu complexity, those seeds were planted under skinner's term as ceo. in fact i think most of the seeds of destruction happened

under jim skinner and were covered up by the positive mow momentum creed krooetated by predecessors. don thompson inherited a weak situation. but after 2 1/2 years, it's on his watch to fix it and he didn't act fast enough. i think bringing in a new leadership, at least signals that the board wants some action now. >> finally, larry, you're with the chief nashthmarketing officer, they have $1 billion ad showing hugs do they need to tap into emotion or did you think it was silly? >> i thought it was silly. i think that they seem to have gone into a space that's been labeled love and not hating which is a nice social

philosophy, who could be against that? but i doubt it's going to sell hamburgers and fries. i think that what they need now is a much more message that will dramatically capture interests of their core customers and bring them back to mcdonald's. >> larry light, former marketing officer for mcdonald's. op-ed in the journal today. thank you so much for your time. >> thank you for having me. >> walt mossberg joining "squawk alley" live with his review of microsoft outlook for your phone. how is the new version? hear from walt coming back. can data help cure a disease? the right treatment for you is out there. the problem is some of it's in this lab. some of it is in her head. some of it's in this new journal. and the rest of it is in your personal medical history.

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welcome back to "squawk on the street." shares of bank of america, moving to the downside to the tune of nearly 1% as investors

are digest a story that hit in the "wall street journal" that discusses a peculiar strategy that the bank set up over the last few years to take advantage of some international tax law quirks on behalf of clients that unfortunately were funded in the unit of bank of america that has insured deposits here in the u.s. the unit is called bank of america national association, bana or bana as we will call it and the bank according to the journal, using it since 2011 to fund dividend arbitrage and other trades for clients within its european investment bank. now, of course this started in 2011 according to the journal, by 2014 the bank started phasing it out but the report does say that in 2012 the bank had as much as 5.6 billion in these type of trades outstanding, guys. and this is not looked upon favorably by regulator because of the fact that deposits insured here in the u.s. should not be used to then in turn fund

risky trading and activities. certainly that is something that investors want to know more about, exactly what ramifications that holds for the bank. we should note we did reach out to bank of america for comment, as soon as we get a comment, we'll bring it back to you. especially dicey when it comes to avoiding taxes or helping those do it. take a look now at tech sector, trading higher in today's session on a down market. dom? >> the second best performing sector today, as you can see in the s&p, battle betweens bulls and bears continues. bulls claiming a small victoryk i have, -- getting into positive territory for the year. among gainers, akamai up on earnings beat. apple continues run on record territory. micron up today as first solar which marches higher inking a

dole on a solar farm with apple. interesting moves here with technology, at least for now, the bulls say it's good that we're back in positive territory for the year. back over to you. >> dow's down today. over to the cme group. rick santelli and the sandisk exchange. rick? >> it's wednesday and we have homer homer jenkins jr. >> glad to do it. >> listen american recovery reinvestment act of 2009 roughly 7/8 of a trillion and promised shovel-ready projects but as americans looked around in the dust of that they didn't see hoover dams or a new power grid they lost trust in shovel ready and the multipliers that sold it never worked out well. what is the current state of u.s. infrastructure and are we ready for another stimulus. >> a lot of what every level of government does all day long

state, local federal, identify investment projects and invest in infrastructure. it's not infrastructure has been ignored. i think the real problem, a better idea to have a big top-down project with congress and obama administration in control where dollars go or should local politicians respond to voters complaining about bad traffic, businesses complaining about bottleneck for transportation and energy? i think that democratic accountability is the good reason why we don't waste more infrastructure money than we do and we do waste a lot. >> i don't know many people that go to the bank borrow money to make charitable donations. we have this unbelievable envy of the high-speed trade in china but china doesn't have social security they don't have medicare safety nets. try to handicap exactly what type of cost effective structures have been placed or lack thereof of china that we're envious over. >> you have no idea in china.

there is no investigative journalism. the bullet trains, we know from a few years ago badly designed and built and serious accidents. you don't know if they'll ever pay for themselves. the china had 8% 10% annual growth rate will cover a multitude of sins. you have you peasants to turn into a workforce, that covers a multitude of cinks sins. the savings of the chinese people, which they need to support themselves in old age, they no social security no medicare that money's going to gold-plated projects that westerners love but may not make any sense for the chinese people. >> in our last 30 seconds, coincidence would have it and the "wall street journal" today your paper, talk about texas building a high speed train, doing it with private funds, whether to accomplish that they're on a different track than california. how can california justify 68 billion for a train that will

use other parts of systems that will slow it down and indeed the notion of cost effective gets lost in that conversation. >> completely lost. completely lost. no one thinks this is a good idea. the way it persists interest groups support spending the money because then benefit from the spending. no one thinks it will ever pay for itself. >> thank you. look forward to another visit in the future. carl, back to you. >> thanks rick. when we come back the ceo joins us live to talk about quarterly numbers and snow happening in northeast and new england.

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. shares of generac power systems off the highs. returning earnings that topped expectations. the backup maker of backup generators is likingly to get a boost. boston that's seen the most

seasonal snowfall on record with 77 inches is bracing for another two storms. joining us the ceo of generac power systems. before we talk about boston first on the quarter a 20 cent beat above consensus. strong way to finish the year. what drove that? i don't remember it being very cold until at least january. >> we didn't see much weather at all in the month of december or in the entire fourth quarter yet our residential business it's a conversation around people concerned about what if the power goes out in the middle of a snowstorm or if the power goes out 20 or 30 below. we saw sales pick up nicely in the midwest and northeast ahead of that. >> looking at the stock price. shares down sharply about 17% last year getting the rebound as i mentioned today. how core lated is your stock price and your businesses to the weather forecast? >> well that's been oourn, you know obviously we sell generators so to some degree you have to have

concern about power outages or actual power outages. we've gotten deeper into commercial and industrial applications, 10% of our revenues are exposed to oil and gas which is not necessarily a great thing obviously given where energy prices are at but we served the telecommunications market, backup power for bigger installations, hospitals, waist water treatment plants and the like. not as focused on weather but certainly outages are driven primarily by weather and outages do drive the underlying demand for generators. >> actually looking at the stock price over time i think you've got to 60 on the stock price shortly after, if i'm correct, when we had the snow in the northeast at thanksgiving when the leaves were on the trees and that pulled the power lines down. my question would be about if you have some color you can add to what the power companies are doing to make the power interruptions less likely and how that knocks on to your business? >> from our sper techtive they're not doing much. when you have an outage and a

tree falls on a power line typically you see the electrical company come out there and restring the exact same wire right? everybody loves trees so there's somebody behind them replanting the tree. so it's a cycle that keeps repeating. bringing the grid underground is the only true safe way to transmit power and to avoid these types of outages. the problem it's tremendously costly proposition. so, you know, we talk about infrastructure and not being able to get these huge infrastructure projects done. this is one of them going on multi decades. power reliability and power quality continues to degrade every year. those are statistics at the state and national level. >> i can imagine how the weather is good for sales but does it make it challenging to get your goods to market? is the port dispute affecting you. >> it is. we had great plans for that and it's been going on nine months. even the best laid plans nine months later make it challenging and so it's a tremendous, you

know, we use global supply chain like a lot of companies and a lot of manufacturers and retailers out there and a lot of that comes through the west coast and so the longer this drags on you know, there are all kinds of disruptions in a business like ours that occur. you shut down lines early, you to work overtime to catch up your air freighting components in. it is a serious headache. >> are you getting a boost in demand from new england this weekquickly, aaron? >> frankly with the snow events unless it brings down the power lines it's unlikely. people talk about it. it's the conversation. >> thanks for joining us with the color on the results. aaron jagfeld the ceo of generac. >> time to take a stroll downs the alley and what'sp on tap with jon fortt. >> you make it sound dangerous. we'll talk about apple, the company's market valuation topping $700 billion but tim cook says they're not too big to grow. tesla earnings trouble in china for them.

the prospects and finally walt mossberg takes a closer look at outlook for mobile. does microsoft have it right? we'll find out coming up on "squawk alley."

. let me take you to brussels

this is the scene. i'm not sure that is brussels. that may be the ukraine. a little bit of confusion there. we are waiting the eurozone finance ministers meeting to start. that will be a major not potentially market moving event. the other event the discussions over russia one of the russians going into that meeting suggested that there was a 70% chan that there would be a solution from the russian talks with angela merkel as well. that ahead to watch for the markets. >> of course we're going to monitor all of the comments from the finance ministers leading up to a euro leaders meeting later in the week. it's a busy one. the dow down 70 points and we'll send it over to carl for "squawk alley." >> thanks a lot. 8:00 a.m. at apple headquarters in cupertino, california, 11:00 a.m. here on wall street. "squawk alley" is live. ♪

♪ welcome to "squawk alley" for a wednesday. on a day where the broader market is down but techs have things that are working. nick joins us this morning, columnist for "the new york times" as always jon fortt, kth on kayla tausche on a busy day. becoming the first u.s.