let's see if it holds on after the bell. that will be an important stock for after the bell. thanks for watching, "closing bell" starts right now. hi, everybody, and welcome to the "closing bell," i'm kelly evans at the new york stock exchange. >> and i'm bill griffeth. remember the old days, like last year, when buy the dips was the mantra on wall street. no longer, it's now sell the rally, that's the new mantra for the stock market these days. the dow was up 184 points on the open this morning and then it lost all of that. we're down 61 points right now near the lows of the session. we will look at what's behind this move and the other moves we've been seeing lately just like it. also we have corporate earnings, that going to improve sentiment? >> and plenty of people who are hoping so. energy keeps getting hit today and that's not helping with most

of the big u.s. banks reporting, we will tell you how ex opposed they are not energy market and whether european banks could be the wild card worth watching. >> why does lower oil effect the stock market so much, that's one of the reasons right there. we have a market strategist who says we are seeing science of a, quote, yet unknown financial crisis. he will explain what he's talking about and companies that could bring a potential black swan event to this market. like we need another one. >> plus as we mentioned some big earnings reports from netflix and ibm are coming out after the bell. we will get you ready for those numbers and bring you an exclusive interview with the chief financial officer. >> let's begin with bob pisani. he is on the floor. hopefully you can tell us what happened to to today's big gains. >> a 20 point gap up in the s&p 500 completely faded away, now down 12 points. there's two reasons, one is relating to the oil market, it's simple, there is no market piece

without oil settling down and oil did not settle down today. oil broke down twice today, right after the open and going into the 2:30 close, two separate points where oil broke down and then the s&p breaking below the august lows. let me show you the s&p intraday. we had two breaks in the s&p today on technical levels, 1880 was the old close on friday. when we hit that level and broke below that the market floodgates opened, particularly etf, a lot of selling occurred, then we broke below the august lows which was 1867 and that initiated another modern round of selling. we are sitting at 1870 right now. take a look at what broke down, energy stocks obviously, the xle which is your main etf moved to the down side, materials, industries, anything related essentially to global growth moved to the down side. i think the only thing that's up today you are looking at telecoms, consumer staples, utility, defensive names. guys, its s&p 500 has not had a single day this year where it

hasn't turned negative. i don't know when that's ever happened but certainly a very disappointing start to the year. >> i was waiting in good taste to wear the red dress on an up day and, you know, still too soon i guess. >> i wish you had a green one on there, kelly. >> she does but just not today. thanks, bob. earnings will be getting into full swing this week, we have a few themes that are already emerging. dominic chu is joining us to share some of that for us. >> there are some of the same themes we've seen very early into this earnings season. a big theme that we are starting to play out and could be playing out as we get into the heart of things in the coming week. since alcoa kicked things off monday 17 companies have reported results, each earnings call addressed a number of company specific matters. among them the concerns about the world's second biggest

economy, china, now according to fact set china was mentioned during nine of those earnings conference calls including the likes of alcoa, john mccain and intel as well. intel said parts of its outlook were on the cautious side. another big theme is oil mentioned in some way, shape or form during 13 of those earnings conference calls including csx, also fast knoll, also regions financials and one of the many banks that have reported, they've been updating investors on how much exposure their loan portfolios have to that oil and gas industry. then the strong dollar, it was mentioned four times including csx, jpmorgan, chase and wells fargo, also delta airlines this morning. things get a lot busier this week, certainly in the next couple weeks. we will see if more mentions of these issues come up and at what point that weather makes its way into the conversation.

back over to you guys. >> that's coming as well we hear. thank you, dom. let's get to our "closing bell" ex dhang for this tuesday. joining us consumer contributor heather hughes from sun america funds in d.c. keith bliss from can a tone and company is at post 9 and we have cnbc contributor jack bouroudjian. that would make a terrific law firm name if that ever works out. >> i have to pass the bar first. >> we will flip that around for you, heather. keith, by most measures in stock market is oversold, it has been for a while, we're waiting for a bounce of some kind, no bounce. what's going on? >> well, i think people are just very skittish about the market right now and there's enough internal factors inside of the market as well as global stories to keep people away. we've seen money flows out of the equity etfs into money market instruments for a while now, that's been the canary in the coal mine. what people are focusing on and we are not talking a lot about because -- and we need to

because it plays into the narrative of the u.s. economy being strong while the rest of the global economy is not, is people invest in the stock market are not buying it. all you need to do is look at the russell 2,000, that hit a 52 week low today and that is the index most reflective of the u.s. economy. that's been diverging away from the large cap indexes for some time now. at some point historically we know those divergencees need to reconcile one another. they need not be negative but it may be there. i think i would stay away from this market a little bit. we do see things of it basing out and turning back, but we need to see a little bit more kapt la testify behavior in market participants before i would step back out on this. >> are you ready now finally to buy these dips? >> not yet, kelly. remember the markets are still sick, you know, you still have a period where you've having a hard time holding rallies. until this works its way out

it's going to be hard to step in and buy stocks. that doesn't mean that there isn't going to be a time within the next few months where that's going to happen. these lower input costs will work their way into earnings. we already see it working its way into some of the earnings if you look at the airlines, for example, all of that has to play out but right now this market is being held hostage by crude. >> it's almost scary. traders are simple people. as long as the market continues to do what it's doing they will sell into every rally and trade it along with crude until otherwise noted. >> jack, you mentioned the airline companies and airline industry. why are they not yet benefitting from these lower oil prices? i just saw $1.94 per gallon of gas, that's crazy right now. while we have the lowest prices at the pump since 2003 it's not yet translating to sectors such as the airline that you might think would benefit. >> they're throwing the baby out with the bath water.

you've got to understand that. that's one of the reasons why you are looking at stocks trading at 8, 9, 10 times earnings. when you have people selling what they have to sell, you have them selling what they can, not what they want to and because of that you end up getting bargains out there. >> where are you putting money to work? >> i think right now you have to turn to those -- when you're looking for safety everyone is somewhat skit i wish in these markets. last year technology was the best performing sector, it's no surprise to see money move out of the so-called fang, that's wherein investors are taking profits at this time and they're looking for those companies, dividends are key, those that are shielded from a global slowdown and a strong dollar which we will hear the impact of the strong dollar in all of the fourth quarter earnings results i'm sure. >> the dollar index up a little today. keith bliss, let's go back to those transports, they're down again, another 50 points or so.

we mentioned even the airlines aren't benefiting here. how much of a tell do you think this will continue to be for the rest of the stock market? >> well, it is a big tell. kelly, you and i have talked about this a lot over the last six months, transports have been leading the market lower. all you have to do is overlay a chart of the s&p 500 on the transports you see the s&p 500 make those sharp moves down a week or two after the transports do. it's odd and ironic to me that the transports are making this move down while oil is collapsing here and typically you don't see that happen, you see them move inverse of one another. i think what's occurring is you've got transport companies like the major movers or parcels like ups and fedex, they're getting whacked as well. >> or the movers of oil and other commodities that people aren't buying right now for whatever reason. >> yeah. >> the transport sector i think is slowing down because you are not seeing production of goods. we have this overcapacity, this global overhang of too much inventory, too much manufacturing, production of

these finished goods we have on the books and you see the transports lagging as a result because nobody is putting anything out there on the ships, there's too much inventory to get rid of. >> that's very true. >> that's very true. there's such overcapacity in the shipping industry right now, we know of storage where it's more profitable for shipping companies to go ahead and scrap a lot of the tankers that they -- and transport ships that they have out in the ocean as opposed to just leaving them idle in the ports. >> jack, i'm just curious, you know, on the yield curve, treasuries, 10 and 30 are back to lows now that we saw in august. >> yeah. >> which is also pretty telling as well. do they go much lower? is that part of this puzzle we're watching unfold right now? >> you know, it is, bill. in fact, it's one of the reasons that i'm looking at this trade and i'm convinced it's liquidation. we are not seeing any rotation whatsoever. if this was last year or if this was, say, 2014 had we seen these types of moves in the equities we would have seen gold $200

higher, we would have seen the ten year up around 150. none of that is happening. so that tells me that there is no rotation, this is pure liquidation and it also tells me that there is a very good chance somewhere along this year and along this whole path we are probably going to see a v-shaped recovery and people are not going to be expecting that. now, that v shape could be coming from 10 or 20% lower from here, but either way it's going to be one of those things that people are not going to be able to catch. >> one thing i do want to end with -- >> we have to lean on you, you have to flag it for us when you see it coming. >> the only long-term hold i have is my wife of 30 years. let's keep that in mind. >> as a trader i am in and out of positions fast. >> rally points for jack. thanks, guys. >> so sweet. >> see you later. >> 50 minutes to go here and the market is under pressure. the dow is shedding 31 points, the s&p we have been watching for key levels, it's down 7 points at the moment but just a little while ago it was lower

than the 1867 lows from august 24th. some places people are certainly watching as the vix actually a little lower on the session. >> and the fun continues. netflix and ibm earnings will be out at the top of the next hour, we will have those numbers that the analysts are looking for and deliver the results the second they hit the tape so stay tuned for that. and then big blue's cfo will break down the tech giant's earnings with us. what he says could move tech stocks. up next, a special report on banks with the most exposure to the volatile energy patch and what that could do to profits going forward. you're watching cnbc first in business worldwide. the microsoft cloud allows us to

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welcome back. i was going to say tough to find positive stocks, but it's not. the top row you have green there for the dow today which is now down 50 points after having been up 184 points, but you see the best performer today is united health, that's helping this market today, earnings at the nation's biggest health surer beat street estimates on both the top and bottom lines, surging profits at its technology and consulting business help to offset losses from obamacare plans. united health today is up 2.4%. >> earnings for most of the nations major banks. let's get over to kayla tausche, which ones had the most exposure to this energy space? >> the earnings were upbeat but not enough to outweigh those concerns about what exactly these concerns have lent to the struggling energy sector, especially now that it's under pressure with oil prices so low

and sustaining those levels. all banks are setting aside more money for these bad loans, the worry is what is still outstanding. bank of america this morning said it has $21 billion of debt funded, about 2% of its total loans, and it said sustained prices of $30 a barrel woor mean $900 million in further credit costs and $700 million in losses if it stays that way for a couple years. city group says it has $20.5 billion in funded debt, that's mostly investment grade but that will cost $600 million in credit provisions in the first half and double that if oil reaches an stays around $25 a barrel. wells fargo, $17 billion in exposure, that's less than 2% of its total loans, the company says it's preparing its portfolio for, quote, very, very, very low oil prices. jpmorgan said if oil stays at 30 bucks it will cost an extra $750 million for that company.

u.s. banks have the highest exposure in a dollar amount but the european banks it's a higher percentage of their portfolios. according to a report from citi group energy is 9% of outstanding dad at credit agricole. standard charter didn't break out this specific number but it's roughly around that 3% change. regionals could be the hardest hit in the states because they have been the ones who have been lending on the ground, sometimes below investment grade to a lot of these companies, but, guys, where the stocks are concerned it's not only the threat of low oil prices, but also what that means for global economies and what that means for the fed because if the fed holds off on these rate hikes then that removes one of the only remaining catalysts for growth for these companies and that's another this i think that investors don't like so it's a double-edged sword. >> relative to their book value where are we relative to the

extremes that we saw during the last crisis? >> we are not close to the extremes and also remember that these banks had to dilute their stocks so much when they issued equity to pay back tarp from the government. so the two situations aren't necessarily comparable but what is worrisome and what analysts have brought up on a lot of these calls is what if you guys are wrong? what if this situation is more serious than you are giving it credit in a year will you be staying we underestimated that, we will lose a lot more money. that's the worry. there seems to be a mismatch in what some companies are saying and what other companies perhaps aren't saying. >> we have to go, you said they're preparing their portfolio for very, very, very low price in oil. what is that price, do you know? >> it's a little vague, bill, isn't it? they didn't really say, that was cfo john shrewsberry he didn't say what very, very, very low oil prices will be, perhaps that means in the 20s sustained longer. at this point i don't think they

even know, i think they are just trying to keep everything under the sun as aossibility and prepare for the worst. >> kayla, thank you so much. at this point only oil can fall another 28 bucks from here. >> wishful thinking. >> jpmorgan chase ceo jamie dimon is speaking with "squawk on the street" tomorrow morning. that will be at 10:30 a.m. eastern. don't miss it. >> good to see him back. oil prices did start off with gains but did close the day lower for wti in the first trading session since the iran sanctions came to an end. >> reuters reporting saudi arabia's foreign minister is warning against nefarious activities by iran. hell ma croft is here from rbc capital markets. that news did seem to rattle markets that the saudis didn't outright deny they might pursue a nuclear weapon. >> saudis have been saying this for the last 18 months.

in iran got a nuclear weapon they would seek parity. in having the saudi embassy in iran torched, the heightened tension these type of statements make people nervous about the state of the middle east. >> do we know when the iranian oil will hit the market, how much and is it the market ready for it. >> i don't think the market wants this oil at this point. >> we know that. >> the question is how fast do the iranians want to bring their barrels back. they have 36 million to 40 million in floating storage between crude so they can probably sell that as soon as they want. so the question is how much oil do they want to put on, how much do they want to see prices collapse. it's a question of their own timing. it kind of goes back to that relationship, you know, if we look at oil today, the u.s. benchmark is much lower again, but that brent international beng mark is higher. do you think that reflects the news flow or how is it taking into account. it almost made me think the opposite would happen today. >> typically you see middle east

problems reflected in brett. it's not how we thought it would go in terms of where you see it reflected. i think jig more in terms of you really want to look at the brent benchmark in terms of anything middle east unwrapped, iranian barrels that's where it should be reflected. >> price as well. the saudis have already cut their price to undercut the iranians and the iranians are cutting their price as well. >> iron has said they want to regain their market share in asia. how are they going to regain market share in a saturated market? are they going to deeply discount? that's the concern furthering the race to the bottom in terms of the prices. >> here in north dakota, i guess, one buyer had offered a negative price. now, granted it was a high sulfur type of oil, but the fact that that would even be on the table is how extreme things have gotten. >> we are in a historic bear market at this point. if the saudis and the rest of opec knowing what they know now would they have made the same decision in november 2014. >> referring to? >> decision not to cut

producti production. if this looks like winning tell me what losing looks like. >> nobody is winning this one. hell ma croft. >> cheap oil often leads to geep gasoline, but if you think gas is cheap where you live, you couldn't do any better over the weekend filling up the tank than with the folks in houghton lake, michigan. that is not a misprint. there is no letter, no number missing from that. we were selling for 47 cents a gallon. helema wants to go there now. the beacon and bridge market first dropped its price to 78 cents a gallon in the popular resort area, competitors marathon and citgo then slashed their prices and the price war was under way. don't jump in your cars and head to lake houghton just yet. yesterday the price of regular at the stations was back to

$1.46 and $1.47 a gallon according to gas buddies. >> we always say that it goes up like -- no, it goes -- >> it goes up like a rocket. >> and down. >> and down like a feather. >> thank you. time for rocketing downward, i think. >> this is exactly the way it should be in the whole country. you know, as you well know, you get tired of hearing me talk about it i get infuriated when you go to any street corner and there are competing gas stations across the street selling at exactly the same price. >> you don't think that indicates its as low as it can go. >> they're not trying to compete with each other. when you compete that's what happens and that's the way it should be. >> you're not going to michigan anytime soon. >> i was thinking of driving there but it's up $1.46. i paid $1.69 over the weekend. >> that was in jersey into that was in jersey, as it should be. we have 35 minutes left in the trading session here with the dow down -- if you just joined us you're saying, wow, boring looking market today, down 12 points.

>> you would be wrong. >> we will tell you more about that coming up. the amazon dash is going live. do you remember this, those buttons help you reorder. so will it live up to all the hype? and then later netflix and ibm posting their results today tonight, we will bring you their numbers and break them down with the street's top analysts and ibm's chief financial officer we will speak exclusively with her coming up next hour on the "closing bell."

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a little more than half an hour to go and the dow has been fluctuating. it's now back up by 26 points and the s&p barrel above the flat line. we're watching 1867 because it wept below that level today from the august 24th closing lows. it's back at 1881. the nasdaq still down by about ten points. shake shack popping after an upgrade by william blair to outperform. adding 5.5%. the firm set ago more palatable valuation. >> they have a new menu item. >> oh, the chicken sandwich. >> what do they call that, the chicken shack.

>> yummy. i don't know. i don't know what they call it. i had half of one. it's rich. it's good. >> thank you, jon fortt for joining us. >> that's why you have me here. >> clarify what they will call that new company. amazon is hoping to make your home appliances smarter. today the company's dash replenishment devices are officially going live. amazon hopes to have devices such as printers and washing machines recognize when they are low on ink on detergent and automatically order it for you through the website. the aforementioned jon fortt joining us with more on this story. did you bring one of those buttons with you? >> i don't have the button. it's not just the button now, they do have the button, if you want a button nor your tide detergent, maybe not the milk, i guess amazon does deliver groceries, you hit the button and they send it. for certain devices like your

brit at that water filter you don't need a button. if it's connected either by itself, it has a wifi chip on it or through your phone it can let your phone know or send a pinning up to amazon to say i'm almost out of filtering capability or almost out of ink and amazon will automatically send you the update. they have specific guidelines on how they want manufacturers to set this up so it works the right way. >> in a way it could be deceptively brilliant, what people need to get more of the things they need in their lives but it makes me think of the front page "wall street journal" article about wireless routers, how vulnerable they are to hacking, how there is no real way of tracking software upgrades. now that all of these devices are being connected to our wireless network i would just hope that people are reading this taking the time to try to seriously fix these problems. >> that is true. i will say how low you are on toner is one of the less

important pieces of data that somebody might capture about you. >> if they can use your toner level to find out more about jon fortt, that's the real problem. >> you get the old college trick, somebody will send you ten cases of toner, right? >> that would be -- >> all that pizza that you get. >> here is what's powerful, though, amazon asks manufacturers who sign up for this program for the devices to send them a ping every day to show how much of that ink you have used. amazon is not just getting an alert when you are out of ink, they are getting a constant stream of data how much people are using their printers, how much they are using the water filters in their water if that's connected as this spreads among more devices amazon will have an amazing trove of data not only what we're buying but what they're doing every day. >> this could be a huge boone for brit at that if people actually replace those filters. time for a cnbc news dup date with sharon epperson. >> president obama welcoming

australia's prime minister to the white house. it's his first visit to washington since assuming the office. the two were set to talk about the global fight against isis as well as trade. amir hekmati one of three americans released from iran says he feels lucky to be alive and proud to be an american. he spoke to reporters for the first time outside of the lansing medical center in jeerm knee. a texas judge postponing after hearing to determine whether the case of ethan couch should be moved to adult court, this for fleeing to mexico after video showed him around alcohol. a violation of his parole in a deadly drunken driving case. couch's attorney used and affluenza defense to keep him out of jail. peruvian vultures are being fitted with gopro cameras and gps device toss crack down on illegal waste dumping in lima. ten trained vultures monitoring the city as part of the program. the birds already seek garbage in their search for food. and that's the cnbc news update

at this hour. back to you. >> appreciate it. sharon, thank you. less than 30 minutes to go. dow holding on to it gains now although we are well off what we saw at the very start of the trading session. at least we are back in the positive. >> we will have a leading trader join us in a moment to look at a couple of charts to see what he's watching going into the close. stay tuned. and a strategist warning the market's recent declines could be a sign of a yet unknown financial crisis. you're late for work. you grab your 10-gallon

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tiffany is lower, the luxury jeweler cutting its four year profit forecast after reporting a 6% drop in holiday sales. tiffany also paving the way for job cuts, though it didn't specify how many would be lost. those shares are down 5.5%. >> as we go to the last half hour of trading this tuesday, yet another day where a big rally has been lost. mark newton of gray wolf execution partners joins us with a couple of charts. we've established that the small caps have underperformed this market, they've been leading to the down side. we will look at the russell 2,000 and compare it to the s&p. >> one thing of interest is just

in the last week we've seen signs of the russell versus the s&p in relative terms breaking down to new lows and that's a little bit of a concern if you look back really over the last couple years. we've broken down under these lows from last year and the prior year. on an intermediate term basis it is a negative. when we peaked back here in 2014 that's what started this whole select tift in the market where fewer and fewer stocks started hitting new highs. it was led by the mid caps and large caps followed. until we reclaim and start to stabilize that's going to be a continued a area of concern this year. >> we need to see the small caps turn before the rest of the market is going to. >> that's right. today they are underperforming down 1.7%. there could be signs of capitulation in the near term. >> you want to compare it to the financials, why? >> they have also done a similar thing just in the last couple days. if you look at just what this has done, and this is the xls versus the s&p, it's not a

perfect benchmark, but it is a negative to how financials go to new lows in relative terms. we need financials to participate. financials dropping, obviously yields pulled back in the last month, we need this sector to stabilize. everybody is watching crude, china, obviously, you know, treasury yields. we really want to be watching the russell with small caps and financials with regards to their participation. the one thing i might add is on a short term basis the market has gotten a little better in the last couple days. it doesn't feel good, we haven't been able to sustain gains and we also haven't been able to give up that much on a short term bases we are slowly getting less bad. >> must be slow because we are not feeling it. good to see you. thank you as always. >> some bears are breaking out the r word of late, radio he session, but not everyone is so discouraged including our next guest who says market declines aren't always followed by recession. jason is founder and chief

investment strategy and joins us at post 9. no recession but a possible financial crisis? >> well, that actually happens more frequently than you might think, certainly not pleasant but we've seen three in the past 30 years, 1987, '98 and 2011. so '87 was obviously the crash, '98 was long-term capital, 2011 was european financial crisis also our debt was downgraded. so the question is whether that turns into a full blown recession and i think when we look at just the gdp equation it's hard for us to get there. government spending in our view is probably going to add something like .7 to gdp this year, we think that's largely unappreciated by the market, that was -- the budget was passed in the waning days of 2015. the consumer, too, is another one where it's a little bit of a head scratcher because wages are bottom, the unemployment is low and yet savings rate continues to go higher. you have pent up demand but

consumers aren't spending. >> if you ask people involved in the energy industry the financial crisis is already here, right? >> that's true. listen, bill, normally what kind of starts the bottom process is somebody gets toe tagged, somebody kind of gets taken out. that's the capitulative event that eel sits some policy response. you haven't seen that yet. >> is oil leading this charge here, this en? we need to see a bottom there before we move higher. >> i think so. >> in the small caps, too? >> if you look at oil and its correlation to almost every asset class or even almost every security, the correlation between oil and apple is very, very high. there are things that make really no sense, oil is really driving -- it's driving the bus right now. i think you have to see some sort of capitulation in the energy sector, you have to see some capacity taken out. i think putting a bottom in oil will make the whole market feel quite a bit better. >> what's your best advice to people given all this?

there is a lot of different things going on there. do you just stay calm and stay invested. >> i think you should stay calm and stay invested although you have to recognize the fact it could go lower. we don't -- lord only knows when this thing bottoms but i do think in the three financial crisis i mentioned the market was up meaningfully a year after the bottom in each instance. after '87, '98 and after 2011. so i know the emotions run high on these things but i also think you have to keep in perspective what the other alternatives are given how low inflation s given how accommodative monetary policy is, how low interest rates are. i wouldn't get overly worried about the big one. >> good. >> thank you, jason. jason trener joining us today. we have a little less than 20 minutes left on the trading session with the dow up just 18 points, we have been all over the map today, up 184 for the dow early on, down 67.

the nasdaq has lagged all day, it was down more than a percent for a time today. ibm coming out with earnings tonight. we will break out the numbers with martin schroeder in a little bit. >> subscriber growth numbers at the top of the hour, julia boorstin joins us with a preview next. ne surface... no one speed... no one way of driving on each and every road. but there is one car that can conquer them all. the mercedes-benz c-class. five driving modes let you customize the steering, shift points, and suspension to fit the mood you're in... and the road you're on. the 2016 c-class. lease the c300 for $399 a month at your local mercedes-benz dealer.

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a few down grades. morgan stanley down grading best buy, party city and sally beauty to equal weight from overweight. the firm is citing disappointing sales and limited upside potential at all three companies and all are down, especially, look at party city, that's hardly a party there, down almost 11%. >> over the weekend netflix announced a $6 billion rollout of content. we will get more on that in today's after the bell earnings. julia boorstin joins us with a preview of what to expect. >> the most important number to watch next flicks's earnings is the number of new subscribers the company adds. netflix pro vekd it would add 5.15 million new subscribers to end the quarter with 74.3 million. that subscriber number is generally what sends the stock swinging in one direction or the other. the median swing is nearly 17%

over the past eight quarters. we will be back after the bell with the numbers and then we will be monitoring the video call which is an unusual format that netflix does and that comes up at 5:00 number eastern. all of the astute viewers out there saw josh lipton waiting patiently. that's because he is going to tell us about ibm right now. what are you expecting tonight, josh. >> bill, ibm stock just suffered its third straight jeer of decline so the ceo convince investors to commiter capital after the blew. 481 on revenue of 22 billion. ibm stock in the red so far this year down 20% over the past 12 months. investors will focus on the company's software business which we know has suffered quarter after quarter of declines. rbc thinks that business will show another drop as customers move to the cloud. in addition the street wants more color on what ra metty refers to as that company's

strategic imperatives, cloud, security, social and mobile technology. guys. >> we're looking forward to t josh, those results and julia thank you as well. the ibm cfo will speak to us after the company releases its earnings. 13 minutes to go here. the dow now up 66 points, mirror image of what we saw about an hour ago, the s&p now up 6. we did hit pretty much that 1876 level and moved right up off it. in any case the russell small caps, the nasdaq barrel in positive territory and transports down again. >> that's the victory is the nasdaq was down more than 1%, now positive as we head toward the close. coming back we will double up our market conversation, we have twin brothers david murray of lincoln financial and jonathan murray of ubs. one is a bull, one is a bear. that always works out. how does that work? we will ask them when we come back. ke to think of myself as more of a control... enthusiast.

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ten minutes left in the trading session. dow is up 80 points right now. >> wow. >> come back a little bit. >> one of the murrays is happy about that. >> we're just not sure which one. >> mrs. murray.

>> i forgot to ask one one is witch. joining us jonathan murray from ubs who is bullish, so you are the one -- which one is john? >> i was popular an hour ago. >> david murray is bearish. why is that always -- have you ever switched? >> rarely. we were sort of born that way. >> i think it's a function of mine beings four minutes earl r ee, generally more responsible. >> you lure that over here him. >> he is a grumpy old man. >> you must be in the stock market, you are in the bond market. >> i'm more comfortable with cash and fixed income, but jonathan is the financial advis adviser, i'm more of a big picture guy. >> you are bullish right now? >> i am. especially after this selloff. look, the risks have actually come down. now, the prices have come down, everybody flips out, all our clients are worried and it is worrisome, i'm not belittling that but risk goes down when prices come down, you do the math, the s&p is currently trading at 15 times earnings, we are expecting about 125 bucks

for the s&p 500 this year, so that's reasonable. >> at some price level, david, the market must look for attractive to you. >> sure. the lower it goes obviously no one knows when it's going to bottom, that's the ultimate question, but, you know, i think it's always hard to buy low. buying low never ever feels comfortable. so there's one sort of insight i'd share with mr. optimist here it's as people get more and more uncomfortable that's a better and better opportunity to load up on good stocks. >> you must have an opinion on oil, then. >> yeah, it's not going to go to zero. >> but where does that decline stop, though? >> well, it's a really good question, and i didn't mean to be flip. >> i know. >> for the next 12 to 24 months, which for most of us is our investing time horizon, oil will be substantially higher than where it is today. i firmly believe that. so i think that represents some opportunities. >> what would cause that to happen when you consider that we are awash in oil around the

world, iran which has -- >> 500 million -- >> that he have 36 million barrels of oil waiting to hit the market they could dump right away if they wanted to. what's going to move this market higher. >> >> i think the old expression is low oil prices are the answer to low oil prices, right. >> it's supply and demand. >> pickup in global demand. >> you could see that, too, higher oil prices. >> eventually. i'm not sure it's going to go to 20 but i suspect we are not done going below 29. >> here is the other thing for your audience is that low oil prices have never really started a recession. steve liesman did a survey of economists yesterday and 71% of those economists said that we are not heading into a recession. that's the most important thing for investors. >> i think cash, really good quality stocks. if you are an uncomfortable investor here right now there's nothing wrong with having some cash, avoid margin and own really, really high quality

companies and start nibbling in high yields. at some point high yield bonds will start looking really attractive for long-term investors. >> there they go starting to finish each other's sentences. >> you get the fixed income component and the growth opportunity. >> great to see you both. >> thanks, kelly. >> coming up right after the bell we are going to hear from netflix posing its results plus ibm as well. >> we will have the closing countdown when we come back right after this. stay tuned.

welcome back. heading to the last three minutes of trading for this tuesday. what do you say about -- well, let's show you the chart for today's dow. we got the bounce on the open this morning, almost a 200 point gain this morning and then you just see it, it just heads slowly south and then we got in the negative territory right around 2:00 eastern time, hit a low of decline of about 67 points and then it's been climbing back ever since, up 50 as we head toward the close. let's remind everybody how we have done so far this year for the industrial average a decline of just about 8%, just off that low right now. by the way, we did take out -- we did hit the low of friday today but didn't reach it and it came back. so some technicians or at least short term taking comfort from that. what's driving the bus as jason trennert said that would be

crude oil, wti moved lower, down 3.5% to $28.39. by the way, it settled in the regular session at the lowest level since 2003 while brent held on to gains. earnings coming out tonight, i will get to that in just a second. earnings from netflix which is up almost 4% today, ibm down 1.22% today, bob pisani. >> 1880, you will notice at the hit 1880 on the s&p and fell apart. that was friday's close and people always right to me they don't like technical analysis. people sold when friday's sold was breached and then we hit 1867, that was the old august low. lows for last year and we had another leg down. we have come back a little bit. this is the kind of stuff that gets people worried. when they don't understand the fundamentals or what's going on traders that have to trade every day turn to technicalities and today was a good example that technical analysis did move the market. you and i know there is no piece in the asset class we cover, the

stock market, without oil calming down and oil had two legs down, right at the open and later in the day as we went into the dloes at 2:30 for oil and the markets went down both times on that. i want to put up some of the wig oil names, hess, conaco down 7%, marathon, exxon seems to be miraculously spared from these big down days. >> among the oil stocks -- >> i am waiting for that day to happen when exxon sees a big down. we haven't seen it so war, conoco 7%. >> we have earnings coming our way, sont big blue, netflix. >> i've been encouraged by the financials, we always get the big financials, bank of america, wells fargo, morgan stanley, all the numbers have been good, consumer long growth was good at bank of america. i think that's been very, very encouraging overall. now we will get into some of the bigger industrial names, ge, too. i want to hear what they have to say. >> we're going out with a gain

of 32 points after another volatile day for the markets. the new york historical society as you can tell ringing the closing bell here at the new york stock exchange, at the nasdaq it's the da light fast 500. we have ibm's cfo joining us coming up on the second hour of the "closing bell" with kelly evans and company. see you tomorrow, kell. thank you, bill. welcome to the "closing bell," everybody, i'm kelly evans. what a session today. to kick off this holiday shortened week. the dow going out in the green with a gain of 26 points, now, remember, in just the last 90 minutes or so we were down as much as 80 points on that index after opening higher by nearly 200 this morning. as all is said and done adding just about .2 of 1% closing under 16,000. the s&p adding just one point and the nasdaq was down 11. now, we will have much more on

these markets in just a moment plus we are getting ready for a big session of earnings, julia boorstin will cover netflix results for us and so is josh lipton waiting for ibm. as mentioned first joining today's panel we have mike santoli here along with jon for fortt. "fast money" trader tim seymour. mike, what do you think -- did something change at the end of the day? do you think this was just still markets digesting a lot of different -- >> i think the market is trying to metabolize a lot of different things. this was basically a bounce that would have satisfied nobody. you have that kind of gap up opening, that's something a lot of people are suspect of right now, last thursday up 2%, all those gains were gone by the next morning. then you had people get a little bear i wish when we went negative, crude oil closed, at least on the nymex we didn't have to watch it every second, i don't know if anything brought it back at the end except we have been so oversold, everyone has been saying that the consensus is so negative.

you have to weigh that and potential for a good rally against the idea that there are these disturbances in the capital markets and you have oil and you have credit not acting well and i think it has people unnerved. that's the mix that we saw on display. >> nasdaq was the worst performer all day and the only one that finished in the red. >> the little stocks got their lunch money taken. take a look at the tech stocks i track, some of the ones that went public most recently, balk down nearly 8%, gopro down nearly 8%, square down 7.5. you go down and you see down 5% group on, etsy down 5% also. twitter didn't do so well, we know the twitter story, but the smaller cap stocks, the russell fared worse than the s&p, worse than the dow today. we can see just among tech stocks, tough to be small today. >> it wasn't just the case for tech stocks, either. >> no. mike talked about sentiment, jon talked about small caps. large cap over small cap was the trade for the last six months

and continues to be. i think you're buying good balance sheets. i think we will see a couple companies after the bell in the case of ibm and netflix you have conflicting growth stories. i think that the market internals tell me if you want to get more towards value stocks, i think we're getting to a place where we will have to digest that. i think finishing above those techniquel levels with positives, i didn't expect the market to trade straight line up on what was okay china data, it wasn't that fantastic, it shouldn't have been enough to forget about everything but i think the bullish is -- bear sentiment is at march lows. >> the s&p 500 did trade down briefly below 1867. >> well, again, i think you are at a place why people want to test it. the anxiety over policy from the fed and china remain what i think people are worried about. i don't think we have a contagion type event. while we are talking about credit i still think that the good credits and bifurcation in the credit markets are end can a

at that testify there are a lot of good companies out there and it won't bleed forward. there are companies having trouble finding financing but i do think we are at a place where it's not contagious. everybody is talking about this like it's a 2008 moment and i don't see the event risk. i see a place where markets need to respond to earnings, earnings are really the story, obviously it's a tough story we have ahead of us. >> the way things stand today, mike, not contagion, but do we still have to be on guard for something like that to happen. it's like if you have enough of the wrong kinds of things in place it doesn't take much more something to, you know -- for there to be flames. >> here is where you maybe have to draw some distinctions between a 2,000 type event which was a complete free-for-all and the entire system buckled and you had a very deep recession to a market centered event where basically a lot of the stir rings that we have had of credits in trouble, maybe you will have the markets attacking some of these huge commodity

players because they want to see a bankruptcy, they want to see some realization of all these things we have been afraid of. maybe that's all it's going to take. i think it's just much more of stuff we already are watching coming into fruition. >> the companies with the biggest debt load, so market markets about the shorted companies into earnings and i think it's all the energy names that have the highest debt loads. on a day like today with where we see exxon and chevron the worst performers on the dow. it's those smaller companies, especially the ones carrying a ton of debt. >> one of the things that's going to be important to look at, we get the first of the fang stocks give earnings results today, that's netflix, we also expect big things from amazon giving how much mobile growth this season. that's going to be another peels of that story to take a look at. people expect big international subscriber growth out of netflix, can that narrative continue? amazon turned in big numbers driven by mobile and then we will see if that shifts

sentiment at all. >> look at how the stocks traded today, tim. those names, facebooks, amazons, netflix up almost 4% on the session today. i guess not only is there no contagion at the moment but in terms of the consumer spending conditions they are not as bleak as some of the discretionary retail head lines would have you think. >> consumer discretionary is expensive, energy is cheap. what you have with these fang stocks you ultimately a real read on where we had market breadth narrow to being those four stocks and a handful of others that saved the day last year i think you will see a different story and obviously exciting to see where people are willing to play with the multiple on netflix and come up with whatever numbers they want. that's what it's about with the growth. people are, i think, ultimately throwinger darts and saying, i think this company can do this forever without competition at a multiple that's to me tough to sustain. we will see this in a second. >> mike. >> more broadly it will be very bullish if the markets start to react company by company.

so, in other words, if, in fact, netflix, amazon, if they're good or bad, if we see those company specific news events and results start to get traction in terms of what people decide to do, buy or sell i think it's positive. the earnings season as a whole can be a net positive for that reason. >> we're showing ibm shares which appear to be up after hours, reporting $4.84 a share and we will have more on that for you in just a moment. that would be about 3 cents above the consensus forecast. a lot of the questions for this company which the ceo has mft sized is intentionally is that linking and trying to change itself is how are those new categories they want to carry the business forward performing. let's bring in josh lipton now. he has the full results. joshua. >> well, kelly, ibm just reporting let's get you those numbers. $4.84, kelly, on $22.86 million. the street was looking for 481 on $22.02 billion.

just coming through the results here, kelly, strategic imperatives to remember that's ibm's move into cloud, mobile, social security, revenues from that division it looks like increased 10% year to year. also services, kelly, global technology services secondment revenues down 7%, global business services segment revenues down 10%. software, remember, that business under a lot of pressure quarter to quarter here, revenues from the software segment down 11%. hardware finally revenues down 1%. this call starting at 5:00 p.m. eastern, kelly and we will be on it. back to you. >> thank you, josh. one thing jon fortt looking through the results appears to be a strong dollar hit. >> yeah. >> a lot of companies have in common. >> we expected that. amazon has got massive business overseas, they've been taking the brunt of the currency. this is the first time i can remember in quite a while that amazon's sorry -- ibm's revenue -- >> see how much it came in above i said amazon -- has come in

above expectations. i think that's important. also the strategic imperatives, you know, ibm saying total cloud revenue $10.2 billion up 57%. that's -- that's notable as well. i want to dig through here and find what their back log and services is, that's always an important number because services -- the margins aren't as great as they would be in software, they do drive a significant amount of revenue for ibm overall. i will dig that out and give it to you. >> as tim said about netflix there's going to be two separate stories you can write about these results whatever they are. i do think ibm is definitely ripe to have people start looking on the bright side for how beaten down and hated the stock is. we will see if that comes through after the call. >> and that services backlog is $121 billion, up 1% year to year, adjusting for currency. so, you know, for a business that hasn't been doing that well that kind of stability is something that you want to see. so overall not bad. >> tim see more, what's your

reaction? >> i think with ibm, how cheap is it, what does it need to get down to? if you look at trough pes for ibm and their peers probably 7, 7.5 times, right now the stock is around 9 times. if you take the stock back down to 127 and this is a very important level of stock going back to pre crisis levels, a level that used to be the old resistance, it's now in support. i think it's an interesting place to look at the stock. i think that the sentiment is so bad but still a multi-year turn around story, cloud 40% of the biz, that's impressive, it's changing but not overnight. >> that was our first earnings report of the hour. netflix results are out, let's get straight to julia boorstin with the numbers. >> we see netflix shares moving higher in after hours trading, the company reporting better than expected earnings per share up 10 cents, 7 cents versus expectations of 2 cents according to thompson reuters, the company's revenue coming in right in line with expectations,

$1.82 billion. that's right in line with expectations. the key beat is all about the subscriber numbers with netflix. the company announcing total net additions of 5.59 million new subscribers around the world. that's versus 5.15 million that the company projected last quarter. so the real beat here was international where the company added more than 4 million overseas subscribers and the u.s. subscriber additions were actually a little lighter than expected, 1.56 million u.s. subscribers that's versus expectations of over 1.62 million subscribers. so big beat in terms of global subscriber additions with the company rolling out overseas faster than affectexpected. the forecast for next quarter are also coming in stronger than expected. the company says it expects 6.1 million net additions in q 2 of this year and that's also driven by strength overseas.

i'm going to continue to read through this letter to shareholders written by reed hastings and get back to you with more. >> thank you. now, netflix shares up almost 10% after hours. tim, i can hear you chuckling. reflecting what i think a lot of raised eyebrows and they did miss a little bit on the u.s. numbers, but this is a company whose story increasingly is a global one. >> not surprised to see a plus 10% move, plus or minus 10% move which is what it's done half the time the last ten times it's reported. so rolling out rest of the world faster which was expected to be midyear i think is part of the reason why the guidance is better and part of the reasons why these numbers came in better. i think i tend to believe there is a lot of great prices for the stock, very little competition. we know what they are having to go out and spend on content. i remain cautious on this. this is not the kind of stock i'd chase especially after this kind of a move. the bar gets extremely high.

75 times ebitda for next year it's not the kind of a stock i would own. >> jon. >> kind of like one of those rudy moments. i don't know. the sentiment these days is against your netflix, against your amazon, you know, people -- facebook, how well can it do? google for some reason seems to be evading that but you can't deny this kind of an after hours movie. we expect it with netflix because it does this all the time, but, hey, it does this all the time. maybe things aren't so bad for everyone if they can grow international at a time when we are so worried about global growth overall. people are still watching "house of cards" dmoo people who are cautious on the stock have raised this and probably will continue to do so but the u.s. contribution margin according to the company's own results, you know, is healthy, 34%. when you look at the international margin it's negative because you're obviously investing so much to rule this out. >> it's right according to plan.

that's what they're doing. they're hoping they get a little bit of the allowances that amazon has gotten for years. this model works if we get volume big enough, we get those ads to scale the whole content cost it does work. that's what it's going to take for this stock to crack. they have to stumble on user growth. then it becomes a whole other set of concerns. >> let's get back to julia boorstin. >> a couple more interesting things from the letter to shareholders. in q4 average subscriber price grew 4 to 5% year over year around the world. that means that people are willing to pay more for the netflix subscription, they say they are seeing increased adoption of the ultra hd plan which is $12. now, as to the slower u.s. growth the company says that high penetration in the u.s. seems to be making additions harder than in the past and that's why they're bringing down their forecast for additions in the u.s. for this coming quarter. but they say that given that their members have been with them for at least a year they

expect only slightly elevated turn. they do address that slower u.s. growth but it does seem to be massive growth in terms of overseas. now, in terms of the investment in original con it tent, they say in 2016 they plan to launch over 600 hours of original programming to give a sense of context that's up from about 450 hours in 2015. they also address the issue of expansion into china. recently there has been speculation that maybe china will be launching fairly soon. reed hastings seems to be tapping the breaks and says the last remaining major market is china we have work and uncertainty ahead and working and building there. but in order to be able to get started and deliver the whole world by the end of 2016 it may take longer than that to launch in china. there has been a lot of talk and controversy over why netflix doesn't release ratings, questions about how many people are watching these shows. netflix saying people around the world are continuing to spend more time streaming netflix.

in 2015 streaming 42.5 billion hours up from just 29 billion hours in 2014. clearly looking to address the issue of competition and where people are spending their time there. back over to you. >> we will have more on netflix coming up just in a moment here after the break. tim, before we let you go a final parting thought here. you're right, it's an expensive company but do they demonstrate the earnings power that could justify the price? >> nothing wrong with this company, it's a fantastic company, the technology side of this is not something i think that is that innovative but ultimately they have a major leadership position, how long they hold on to it i'm not sure. i think the bar is also very, very low, i think there is a lot of people defensively in position, i think there is a tradable scenario. but as we have been saying for the last week i'm not sure that the market is ready to buy as if they were in the last quarter. i think it's a challenging time for the market and i would be

cautious but i don't think you have to chase any of these names here. >> fair enough. that one people at the moment are chasing higher, 9.5%. tim, thanks for joining us. tim see more. catch more of tim and the "fast money" crew with netflix earnings call. they will have reaction from bob peck. up next, we will have more on the results just posted by netflix and whether you should buy or sell the stock right now. ibm's cfo martin schroeder will break down the company's earnings. and donald trump has been taking aim at his presidential rivals, now he also has apple in his sights. those details are coming up also on the "closing bell." you're watching cnbc, first in business worldwide.

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find out who really has the lowest. then click to buy. hey guys...want me to come along? >>no!!!! gotta respect the truth. compare.com. saving humanity from high insurance rates. netflix just out with its earnings and the stock is soaring after hours, up more than 8%. joining us with more on their reactions christine short and ross gerber. >> i love it. i love the numbers, better than expected with almost 6 million new subscribers. i'm not worried about the u.s. because it's totally saturated, everybody in the u.s. has netflix already or steals it from somebody else.

so this international growth is where it's at and they are just killing it already. by our estimates there's over 250 million homes they can penetrate in the new markets that they are addressing and they have 10% penetration now. even if they double that you're talking about adding millions and millions of new subscribers. very happy. >> mike, what do you say? >> ross, that's 250 million homes that have broadband that are today ready to subscribe to netflix? >> correct. >> christine, meanwhile, people are wondering about what he mentioned which is a lot of people piracy is a problem for netflix. is it going to be as profitable, is there a home market? >> we know they have already entered the most lucrative markets. there are some growth opportunities as they expand no those 130 companies but certainly content acquisition costs are going to effect their bottom line. there's lots of other things that go go that. necessary flicks had us on edge

all week and they are they are tricking us once again. those subscriber numbers were absolutely fabulous. what we were looking for was that 74.3 million subscribers they said they would have by the end of 2015 and they surpassed that i think with today's numbers they are somewhere closer to 75 million. >> they mentioned right after the new year they passed the 75 million threshold. >> they did. i mean, increasingly this is a global story, i think it is an interesting note that they said here higher rate plan 12 bucks a month for people who have 4 ktvs is doing pretty well. i brought that up to an analyst this morning, he didn't think much of it. i think that's potentially important. if they can increase their in essence average revenue per user because of this high definition plan, because they've got their original content that they can put out there in 4 k and it's a reason to keep next flicks and upgrade that's going to be a good thing for the bottom line. >> you're right on here, john. >> this is where netflix is going to make a ton of money.

most analysts they just don't get it, okay, it's vr and 4 ktv, there are going to be a delivery system for these new entertainment means and they will be able to charge for. >> ross, question for you. what about, you know, i understand that that side of things may be going up, but content costs, this is one there has been a lot of reporting, reed hastings said we outbid everybody else, the journal has stories about other more traditional tv players banding together to outbid netflix for some of the content they want. as that drives up content costs how much does that weigh on the earnings power? >> it doesn't because it's a subscription model. because they know exactly how much money is coming in next year they know exactly how much they can spend. it's a direct ratio. so when you look at that ratio it gives them building of cash flow for operations and ideally profits but i think the how much you spend on content it's its quality of the content.

>> my kid will only watch netflix. if you think about this globally it's huge. >> fair enough. we will have more on netflix in just a bit. christine short and ross gerber, the bull from gerber kawasaki. turning to shares of ibm now a little lower despite beating earnings estimates. in a cnbc exclusive we are joined by ibm's cfo martin schroeder. good to see you again. let's just start with the story for ibm at the moment and it appears to be still one where you're trying to grow the new parts of the business while shrinking the old parts. would you say that the fourth quarter was a step forward in that process? >> good afternoon, kelly, thanks for the opportunity. boy, we're pleased with the progress in the transformation of ibm. when we look at the full year,

for instance, our focus has been on growing our strategic imperatives which for the full year we are $29 billion in total growing 27% for the year on a very substantial base and now represent 35% of ibm. so very good progress in the areas we've been focusing on for the year we also had good margin growth again, part of our model and we had good cash flow and we were able to return three quarts -- three-quarters of that to our shareholders and keep our risk research and development streams going as well. so we are very please wds the progress. >> there are some looking at your tax rate and saying if it hadn't come down you wouldn't have been able to have that earnings beat. is that right? >> no. no. our tax rate is -- reflects what we've been talking about all year which was we had a u.s. tax audit settlement that we were expecting all year and -- and

the -- the legislation that was passed at the end of the year reduced it as well. >> understood. you mentioned the strategic imperatives. just so everybody knows what you're talking about those are as i understand cognitive, cloud, mobile, social, analytics, security there as well. interestingly enough intel has had a little -- those shares were hurt after they had more cautious numbers on the growth of the cloud, competition is fierce, amazon trying to make some headway there. how is ibm staying ahead of the game? >> so in our cloud business, which again, was $10 billion last year, we have a number of approaches to this marketplace, clearly we have a very strong infrastructure as a service offering and when we look across all of our service offerings we finished -- we finished 2015 with an exit run rate at $5.3 billion and that's across both the infrastructure as a service, the platform as a service and our software as a service offerings all showing good growth in the cloud space.

additionally we are obviously helping our clients build their own clouds as they're looking to get the agility they want out of a cloud platform and within that space we saw very good growth in our power platform as well. power platform for us was up 8% for the quarter, it's now four consecutive quarters of growth and we are seeing good take up on lynyx on power playing. we have the open power foundation which in the fourth quarter re leased its first system into the world. for us that's an intellectual property upstream but we are saying food takeup in that space on the power platform as well. >> martin, what can you tell us about the trends that you see growth wise, demand wise coming out of china and here in the u.s. and other parts of the world? are we close to a recession? >> well, for us, you know, china was really no different than what we've seen all year. now, we have -- we have a focus

in china like we do everywhere on building high value businesses and in the fourth quarter in china we were able to get new mainframe customers, new mainframe customers during the year. ur trajectory in china is no different than it has been as we focus only on the high value spaces we see. relative to the rest of the world what we've seen is clients continuing to focus both on getting productivity out of their i.t. systems but they continue to invest heavily in what we call our strategic imperatives of cloud, analytics, social, mobile and security. we're seeing good growth in all those areas. so on a country by country basis we saw very good performance in germany, very good performance in the u.k., very good performance in japan and australia. we're seeing growth in areas around the world. >> that might offer people some comfort to hear that they moment. finally, martin, the strong dollar i guess that's the flip side of the picture you're painting, for whatever reason people still see the u.s. as a

place they want to put their money and that was a big head wind for you guys and probably will continue to be. >> it sure will. for us for the full year currency last year was a $7 billion impact to our revenue. now, our focus in currency is always to make sure we maintain our competitiveness in those countries which we absolutely are, but there will be a translation impact of that strong dollar, again, $7 billion for us last year and we see that head wind continuing but the dollar still stronger than it was at this time. it has been a head wind to revenue and profit to us. >> one final question. as you guys continue to focus on the growth areas, how are you going to invest there relative to return in capital to shareholders which has been a huge theme for the company in the last couple years? >> well, we have -- we have a pretty balanced model and we see the opportunity both to invest as i mentioned we finished about 14 acquisitions last year, we have one still open, the weather company which we will finish this year, we will remain inquisitive because we see good

opportunity in some of the spaces in which we have been investing like cloud and an mitt lit iks and building out our watson health platform and watson iot of platform. at the same time when we look at our free cash flows we are substantial generator of free cash flow. we can continue to return capital to shareholders as well. last year we were able to return as i said about three quarters both through the dividend and we were able to reduce our share cap by 2.7% during the year. we see an opportunity to continue to do both, invest as well as return capital. >> all of the above. martin, thanks for joining us. appreciate it. >> thanks, kelly. >> that is martin schroeder the cfo of ibm. >> let's send it over to seema mody. we have another earnings alert. >> advanced micro devices reporting an earnings loss for -- an earnings loss for q4, that's a loss of 10 cents adjusted in line with expectations. revenue actually topped the analysts view of $958 million versus the estimate of $955

million. here is why the stock, though, may be down. weak revenue guidance, sales down 14% in the fourth quarter, you can see the stock is down better than 10% after hours, this after losing over 25% over the past one year. this is a company that has been suffering from a decline in pc sales plus heightened competition from intel and video. back to you. >> thank you. our seema mody. just a moment ago those shares were down about 10%. >> it looks rough for amd. we saw in intel's earnings last week that the pc was actually surprisingly strong versus the cloud and then the flip side you see on amd. intel said it was higher end chips that did particularly well for them. that's where they really beat amd. lower end chips is an area where you would expect amd to own it. you really have to hope if you're amd that your plan to have serves servers have been accelerated as quickly as

possible and hopefully shell out before this thing gets into penny stock territory. up next we have breaking news from the presidential campaign trail involving donald trump and some morgan stanley business conditions index falling to its lowest level in nearly 7 years, the company's chief u.s. economist coming up, we will explain what's behind that decline on the closing bell.

breaking republican presidential candidate donald trump getting a big endorsement. let's get to john harwood with

the details. >> kelly, sarah palin has had her star dip since she burst on the scene as john mccain's running mate since 2008 but she still has the following. she's endorsing donald trump this afternoon. that's a blow to ted cruz who she supported in his 2012 senate race. not sure how many votes will be swayed by that but it will grab some headlines for donald trump in a time when he and ted cruz are locked in a tie for first place in the iowa caucuses. >> trying to appeal to many of those tea party supporters who still support sarah palin. >> that's right. ted cruz has been reaching out to some of those tea party supporters, that's why this endorsement matters a bit for donald trump. >> john harwood with the latest from the campaign trail. >> time for a cnbc news update. iraq says the u.s. led collision against isis hit a

bank used by the military group in mosul. coalition planes targeting hideouts of isis members killing a number of them and their commanders. iowa republican governor terry balancen has come out against senator ted cruz's presidential candidacy. he called cruz an opponent of renewable bio fuels which is a critical industry in the state. the florida home office once owned by columbian drug lord pablo escobar was demolished in morning. it was seized by the u.s. government back in 1987. the current owners purchased the home in 2014. before the demolishing they hired treasure hunters to look for traces from the escobar days. the san diego chargers could be a step closer to moving to los angeles. the team has applied to trademark los angeles chargers and l.a. chargers on everything from helmets to golf balls. the chargers have an option to move to the city of angels and that expires next january.

that's cnbc's news update at this hour. >> all of a sudden los angeles becoming a big football town again. up next morgan stanley's chief u.s. economist reveals a potential fallout from falling business conditions. and donald trump proposing a big import tax and specifically targeting apple. >> we're going to get things coming, we're going to get apple to start building their damn computers and things in this country instead of in other countries. >> well, and he just got another endorsement, should apple and other companies making products overseas worry about a president trump? that's later on the "closing bell." ♪ those who define sophistication stand out. those who dare to redefine it stand apart. the all-new lexus rx and rx hybrid.

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welcome back. here is a look at how we finished the session on wall street. it was interesting going into the close stocks were whip sawed around, down 80 points, up 80 points. the do you do is up by less than 30. the nasdaq couldn't finish in positive territory, it was down a quarter percent or 11 points. let's take a look at two big after hours earnings moving. netflix up 7.5%, off the highs certainly when those results first crossed the high, ibm is negative by less than 1% after posting an earnings beat. >> morgan stanley is just out with a new survey on the

business climate and this market volatility. it's business conditions index fell 9 points last month -- this month -- january, that is, to its loi west level since 2009, a decline largely driven by weaker sentiment in the service sector. for more let's bring in morgan stanley's chief u.s. economist ellen zet ner. what is going on in the service sector? >> i think that for our survey which is important because it tends to lead investment activity in the u.s. and suggests we started out 2016 on soft footing, i think what it points to is sentiment is overdone. there are a lot of sentiment indicators looking as bad as they did just after the financial crisis and clearly that is over done. i think that's what's been captured in our january survey. >> when you say the sentiment is overdone, that implies that this is not necessarily a leading indicator of actual reductions in business spending on bigger risks to the economic outlook.

>> what we're seeing is that the headline index is based on just a sentiment measure, do you feel better about conditions in early in the year or worse. clearly with the market volatility that's weighing on that sentiment. when you look at the actual activity measure, though, it is holding -- it softened but it's holding at higher levels. that's what leads me to believe that sentiment is being kicked around by market volatility early in the year and it saw that sentiment is overdone. we've seen that in some of the fed's regional manufacturing surveys as well where levels are just a as low as they were around the financial crisis and you can't possibly compare today to that period back then. >> i'm glad you raised that is correct ellen. what do you think when you look at conditions, when you look at very weak gdp growth but a strong jobs sector, when you look at some sentiment surveys in manufacturing looking very weak and then -- like what is the picture as you see it unfolding here? >> the picture to me is an

industrial recession in the u.s. when you look at industrial production and it's dropped nearly 2% since early 2015 showing a clear peak, that's an industrial recession in the u.s. when we look at the other three broad indicators for tracking the coincident economy, jobs, still expanding, personal income still expanding strongly. business and trade sales still expanding. that service side of the economy still growing and that's the majority of your economy. that's 90% of your economy. so we're digesting the weakness that still stem k from energy led, export led weakness. what we're doing is sitting on our hands nervously wondering at what point does that spill over to the domestic side of the economy and we just don't see that kind of broad weakening yet. >> we hope corporate america is not sitting on its hands too much. you can't blame them for having some concern about the business environment. ellen, thank you for joining us. >> thank you. >> ellen zetner from norgen stanley. netflix is rallying after reporting its results.

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olay. ageless. steve, other than making i'm here atme move stuff,rade trader offices. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. td ameritrade. netflix is up about 10% initially after beating its earnings results, our next guest says he is waiting for a correction before jumping into the stocks, daniel ernst joins us at post 9. let's begin with the results themselves. what did you think about the numbers? >> i mean, you know, the consensus going into the print is they were going to miss which has never been a good bet in a

seasonal period. netflix adds subs when its dark and cold outside. during the december and march quarter, this is the year they are going to miss, they tend to miss in the april and in the september periods, but, you know, it's been just a killer growth story. the thing is i think within two years netflix is going to cross 100 million subscribers, so that's a juggernaut that i just don't think ever stops, but for us we should be looking at a stock trading at 87, 90 times ebitda when four years ago i couldn't give away when i was on the sell side a dinner with netflix. no one wants to touch this stock when it was $8. adjusted. now that every single analyst has a buy on it, it's totally favored, it really is difficult to chase it up here, but there are so few winners in tech and so that's why you have the

faings. >> what should we take away from the fact domestically netflix seems to be reaching a saturation point? can you extrapolate that out to what it's going to mean internationally? do you see other potential avenues for them to pursue domestically to grow the business here? >> i mean, you know, they added 1 million 6 subs, it's up 10% every year, cable tv are declining every year. they are actually not quite there yet. that's in an environment where if you have cable tv you're forced to spend $80 a month on the entire bundle. when we get to the point when people are selecting their channels, these are 45 million people that are selecting, choosing themselves to subscribe to netflix. so i think if we have an environment where some of the $80 portion becomes unlocked, maybe they could actually grow even faster. i think that most of that growth will come international in the next few years. >> a lot it priced in at this

moment as well. dan, thanks for joining us. we have a news alert from the semi-conducting space and seema mody has it. >> that's right. we have a tech deal on our hands, after some back and forth micro chip technology has announced that it will a kwiel atmel for $8.15 a share if a combination of cash and micro chip common stock. the acquisition price represents a total equity value of $3.5 billion. micro chip expects this deal to be closed in the second quarter. shares up fractionally after hour. micro chip also on the move. coming up, why donald trump is targeting apple. stay tuned. ♪ aflac. ohh ah ah aflac! aaaaf-lac! ta-daa! he's not a very good magician.

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brilinta may cause bruising or bleeding more easily or serious, sometimes fatal bleeding. don't take brilinta if you have bleeding, like stomach ulcers. a history of bleeding in the brain, or severe liver problems. tell your doctor about bleeding, new or unexpected shortness of breath, any planned surgery and all medicines you take. i will take brilinta today. tomorrow. and every day for as long as my doctor tells me. don't miss a day of brilinta. for every car, truck, and whatever else you are building, you are going to pay a 35% tax every time it crosses the border. you have to, or we're not going to have a country left. everyone is ripping us. everyone is ripping us. i don't want to do that because i'm a free trader. i want free trade. we'll get ape to start building their damn computers in this country instead of other

countries. >> that was donald trump speaking about his plans to penalize companies with operations overseas like apple with import taxes yesterday at the university. apple shares were down half a percent today. >> what he said is ridiculous. apple is building the highest end computer in the u.s. tim cook said it is a skills issue that prevents that. and i don't know why people are enamored with manufacturing jobs. the retail jobs over here are better jobs than iphone assemble by would be. >> mike? >> should we still be making t-shirts in south carolina. the same logic is we should not make these components anywhere else. and i love the -- but i'm a free trader. i want to put 35% duties on companying bringing stuff back and forth. >> it has to be fair trade. it is a better deal. and a prominent civil rights leader weighing in on donald trump today. john harwood sat down with democratic congressman john

lewis why his speakeasy series. what did he have to say. >> apple is not the only target for donald trump in the campaign. he's gone after immigrants from mexico and muslims and that him compared to george wallace in more ways than one. >> tell me what you make in this political season of the rise of donald trump? >> i don't understand it. i've been involved for a lot of years, i've never seen anything like it. i think he's playing on the fears of people. and we have to say over and over again, be not afraid. >> some people have made this argument publicly that the closest analog to trump that we've seen before is somebody like pat buchanon from 20 years ago or before that, george wallace. does that strike you as a reasonable comparison? >> i think it is a reasonable comparison. i don't think wallace believed in all of the stuff he was preaching. i think wallace said a lot of stuff just to get ahead.

i don't think trump believes in all of this stuff. but he thinks this could be his ticket to the white house. >> what conclusion to you draw from the proposal that trump has made, for example, to temporarily bar muslims from entering the united states. >> that is not in keeping with the american dream or what we believe as a people. it is demagoguery and it is to set people up to be targets and cause hundreds and thousands of millions of people to live in fear. >> do you there trump a racist? >> i don't like -- i don't like calling people -- i never call george wallace a racist because i never believed that he believed in what he was preaching. it is not something in their spirit. it is not in their dna. but they use it as a mean, as a method to get ahead or to win a political victory. >> now of course the latest dividend from donald trump shoot from the lips style is the endorsement we talked about a

few minutes ago, from sara palin, former governor of alaska. >> john harwood. with the latest from the campaign trail. as we get set for the netflix conference call, the shares are moving lower. you pay your car insurance premium like clockwork. month after month. year after year. then one night, you hydroplane into a ditch. yeah... surprise... your insurance company tells you to pay up again. why pay for insurance if you have to pay

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welcome back. let's get a check on the companies who just reported earnings after the bell. i mentioned netflix moving lower in the sense that it is off the highs. just wanting to be clear about that. it popped up to about 7.5%. and ibm is lower, con seventient lower by almost 1%. >> and i think of those two, ibm might be a net win on how it is traded on results. i want to see traction in how companies trade on their own news and goldman sachs tomorrow before the bell is a good sense. >> that is a good point. >> john. >> there was a lot of negativity on netflix and its ilk coming into this. it is after hours. now you have to look to amazon and to facebook and to google, alphabet as we call it now, name change, post-marriage, new cfo, and if so, how gloomy could it be.

>> you're saying it with a smile so i'll feeling good about it. that does it for us. michael santoli and jon fortt on a big earning afternoon. we did manage to go out with small gains. the nasdaq couldn't join them yet. that does it for "closing bell." "fast money" starts right now. >> this is "fast money" starting right now. live from the merchandise market site overlooking times square. i'm simon hobbs in for melissa. good evening. our traders on the desk are tim, dan nathan, brian kelly and pete najarian. tonight on "fast," classic bear market behavior. find out what has the top technician on wall street drawing parallels now to 1932. plus netflix soaring on a big subscriber beat. the call getting underway right now. we have live coverage through the hour with julia boorstin and from sun trust, bob peck, who is managing the infamous