>> what else -- go ahead and throw it back at those guys. >> we should do this. >> it's been a great week it's been a remarkable people who put this together here and back home. >> can we take a shot? >> here and back home. >> thank you, everybody. that does it for us. that does it. hopefully we'll see you on monday. right now it's time for "squawk on the street." good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer. the dow back. comments by draghi in davos, also watching euros. japan up nearly 6 as some see the boj adding. the question is can oil hold 30. our roadmap this morning begins with two dow components on the move this morning after

earnings. what you need to know from amex and ge. >> thousands of flights have been canceled as the winter storm makes its way across the country. we're going get a live look at preparations. >> shares of starbucks and the outlook from that company. coming up, we'll talk with howard schultz in an exclusive cnbc interview. first markets rallying. ecb draghi hinted there may be a round of stimulus from the central back as a volatile week comes to an end. still they could post a weekly gain, although, jim, s&p has not had an up friday since december 4th. >> so worrisome because i think that we've changed the narrative of this market entirely. it used to be on fridays we felt that something good would happen over the weekend. remember for the longest time, this will be the number in china, this will be the number in japan? well, now the numbers will be

bad, until today because there's this new narrative that has taken over. you see japan up. you read about what china is doing and draghi. and the narrative, which i believe is a false, false button, is there's going to be worldwide stimulus announcements within the next 72 hours, coordinated. japan -- >> coordinated. >> coordinated. what would that look like? i don't know. >> what can abe buy that they haven't already bought. >> draghi has played his hand. can they really come out and saying oil going down is maybe not as good as we thought like "the new york times" said today? i want to debunk the thee this that has the futures up big. >> do you think the futures are up big? that's the kind of thing that's warranted in a true financial crisis. we're not in one of those. >> i don't believe the thesis, but you ask me. i think -- >> you think it really is having an impact. >> here's what i really think is happening. if you reat the front right-hand

columbia of "the new york times," it's about how the oil's declined. it's about the demand issue. demand is coming down and it's really bad. we're finally getting a conventional wisdom that oil is a demand problem. so when we see oil up, we suddenly rejoice even though the retail numbers have been badder. we rejoice that perhaps there's demand pickup. now, again, i think everyone -- oil was forced down by supply. gary cohn on "squawk" was talking about, hey, listen, it's a supply issue. there's no doubt in my mind that oil going high is a result of that. oil is copper, oil is tin, oil is iron, oil is nickel, oil is steel. it's one commodity basket. whether it's commodity or oil, it's good. that's where we feel the stimulus. when we see the futures like this, there's an under current. this time is different.

>> well, certainly moody's doesn't think it's -- >> oh, my. did you see that? >> 130 -- no, 120 oil and gas companies on review for downgrades. they think there's a significant risk prices recover more slowly than we think, that prices could fall further. >> i think people think when moody's gets involved, they're late to the game. >> they're known for having a very keen sense for the obvious and so, yeah, when they're downgrading, it's already too late. >> and that's, again, part of this overall rally that we're seeing, which i think is more tactical than actual which everybody now thinks oil going down is bad, but it won't be because oil's going up now. so it's good. >> now it's good. >> now it's good. >> now rand is coming on. remember, there are plenty of ships to take it to whoever can take it. but they have to discount it.

it doesn't matter. we hit a demand where it's higher. it's out of synch with everything. the airlines is saying, it's bad. no one is saying oil going higher is good for the economy except for the stockmarket. >> all right. at the same time -- right. we've also been dealing with the opposite. i talked for a year about the fact that falling oil prices would be generally a positive. >> right. >> and everybody's throwing their hands up. >> it turns out, i think, that there are certain markets that we kion and you're part of the debt mafia, the high yield, the stretch and loan market. these are the underlying, underpinning negativity. this is unbelievable how much. >> how about shorter term. two days in a row we've closed

off the session lows. oil as you mentioned, 31 ch. 1 1 1890, 1900. >> these are technicals. they're then being in a shut begun review. now i'm saying we've got minus nine on the oscillator, 15 times 2016 earnings on the s&p. we got down to a level where you could justify it versus the ten-year treasury going under 2, and then suddenly we're looking at a 2.3 s&p dividend. do you think the stock should have been up that much on that verizon conference call? >> yesterday i thought it was a reasonably decent quarter. and as you pointed out many times, you have a dividend that's going to most likely sustain it to a certain extent. >> right. that's in synch with maybe we got too negative. >> yeah. >> this is the we got too negative going into a weekend where we're frad of being too

negative given the fact that it seems the central bankers have gotten wind and that draghi is driving the bus. >> yeah, but you're negative and basing it on the earnings. >> i'm stuck with the four walls we deal with. the conference calls say despite this horrible environmental, we're not doing as bad as you and i think. that's tough. it's like, we're not doing as badly. we're 8/8. do you think we only lost four games? >> no. you won eight games. no one's making the playoffs. playoffs, playoffs. this isn't even a game. >> jets are 3/6. >> the jets are jpmorgan. >> starbucks, american express -- >> american express is -- please, cleveland. you have lebron. >> you're not putting american

express with cleveland. >> you have to fire the coach every single year. groundhog days. >> if you missed the imex, 1.3 beats the 12. the guide for 17 and then 16. >> one of the things that -- let's just keep with the football analogy for a second. what this says is it's not a rebuilding year. it's a rebuilding several years. 2017. how do you know that your business is doing badly in 2017? we're not doing well and in 2017 we're going to do badly. this is the kind of thing that typically someone might say who's on the board, geez, if we're giving up on 2017 now, maybe we have to rethink the way we're doing it. >> merchants and competition, broadly speaking. competition.

>> let's get a.j. on. let's call him in and get charlie scharf, the ielusive -- these guys are two of the a greatest in the world. american express is trying to play catchup. when we hear the mastercard and visa report, they're going to say we exceeded everything. charlie scharf will kill the numbers. a.j. will kill the numbers. they're in the same business. is it the diner's club, david? >> no, it's not. >> i need a certain reason. 2017 would be the year you see the fruits of the transformation, and they took that away. they took that away. >> what about g.e. where we had a 52-cent number for the fourth quarter. >> backlog of 18 but up seven. >> if bowie hadn't guided down

the numbers last night we would say the aerospace is a tough compare versus last year. schlumberger and g.e. -- i think schlumberger is doing the same as g.e. if you want to do that, you need oil much higher. g. echlt had a downtick of 1%. people were hoping for no downtick. 3% industrial, there we go. that's fabulous. that's fabulous. >> g.e. is now an industrial company. it's all industrial. that's the company. >> right. but no one will have 3%. my prediction is no other company will have 3% yore gabbic growth, no other one. but again jpmorgan is touting the best quarter up. >> down from about a high 306 we saw toward the end of the yearing of course, and that huge move up when tryian took that position last fall and came out with a lot of its positive

support there. also talking for a little more lever ramg, if you remember, and buyback. they haven't answered either one of those. >> remember, they're sify. i think they're wrong. >> i think you're right. >> bank of america -- talk about my being wrong. the stock was $15.30 and i thought it was a decent quarter. instead all that we hear about is the $20 billion in oil exposure. >> right. you're right. until they are able to be d-certified, they're not going to be able to discuss those other things. >> right. and then there's a storm coming, dave. >> there is. we're going to gem get to schlumberger and starbucks later on. as jim says, thousands brace for the major storm. jay gray is in roanoke where they're going to get hit hard.

good morning, jay. >> reporter: good morning. the snow has been falling for several hours. i hope e i'm not too scientific, but the flakes are getting bigger. that's the end of my scientific knowledge. it's building quickly here and the national weather service says it will will build over the next 24 to 36 hour. they expect to see accumulations of 30 inches or more across the region, two feet expected to be the average here. locals calling this epic and historic and really preparing for what's going to be a tough go over the next several days. there's a state of emergency here and in four other states. right now there are national guard troops on the ground. every state police officer has been called. we've seen plows out but not much else. that's good news. people who don't have to get out shouldn't. this is the leading edge of the system that's going to swallow

the east coast for the next couple of days. after that will be the power outages. we've seen power crews staged throughout the region. they're ready to move in when necessary and when able. again, we're going see pretty significant conditions for the next 24 to 36 hours. 80 to 90 million people along the east coast to be affected by what is the first major storm of the season. guys? >> jay gray of nbc in roanoke. jay, thanks so much for that. when we come back, a live and exclusive interview with starbucks ceo horld schultz and his game plan for growing the coffee chain. a look at futures, up close would be the second this year. back-to-back dow gain, but the first for the nasdaq. we're back in just a minute. this bale of hay cannot be controlled. when a wildfire raged through elkhorn ranch, the sudden loss of pasture became a serious problem for a family business. faced with horses that needed feeding and a texas drought that sent hay prices soaring,

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starbucks is down in the premarket despite the earnings beat in the holiday quarter. the long street forecast. stick around for the live interview with howard schultz. we'll have that later this hour with jim. global comps up 8, travel up 4. >> u.s. is strongest it has ever

been. some would argue it's the strongest quarter in history if you ask what happened in europe, which is terrorism, the decline in starbucks from a haier base was the same as pretty much everybody else through europe. think i the focus here is china. i was going through fourth quarter 15 to first quarter 16. what you're taking a look at is china comp sales had been at 6. a lot of us decreased traffic. a decrease of 5. that's what we have to ask howard about. i think what people are saying, look, i don't care that china is on a tear or that you opened your 150th store. i worry that china is bleeding in the coffee that. is the central issue why the stock is down, not the european issue. and the question is do you see through this short term problems in china or are there even problems? >> when you say weakness in

china, put that in perspective. are we talking a smatter rate of growth than we anticipatedsome. >> thank you. we're talking about a smaller rate of growth than anticipated. >> okay. >> if you go over what was said, it was a bad setup for star buck. they said, hey, listen, china is going to be terrific. china is terrific, but there are a lot using 6% growth in their model and we're getting 5. now they're starting to worry like a lot of other companies, is it going to be 4 next quarter because the china thesis is slowed down now blending over to the consumer. you know, you add cell phones to that. certainly i consider the consumer to be the guy who shops -- who buys nikes and goes to kfc. those are both good numbers. i'm not buying the negative starbucks number. you want to be a buyer of it. the u.s. is so strong and i believe the european decline in the rate of growth. and i don't think you open 151

store as quarter -- this quarter in china if you really felt that china was bad. i think china is good. >> 42% gain in a year, jim. that's pretty nice to sit on. are you going to hold it forever? >> this hold things forever. wow. >> the prince once said that to me about citi. it was like the fifth time. it was like you're going to hold it forever? like why? >> howard schultz, kevin johnson, brought nan, this is a fabulous team and they dealering with this. what's a shame is we're letting that one percentage point china take over the story completely. versus the comps in the united states that are incredible. that's going to spill over. technology is spilling over. i'm not going to say that you sell starbucks in this quarter. if you buy it for life, that's a mistake. that just presumes that howard

lives to -- who's one of those guys -- you said a thousand-year plan? >> months a son. >> jpmorgan defended sprint today. >> they've underwritten a lot of debt for that company. lord knows sprint's got plenty of it. >> why are you going there? you make it sound like it's a conflict. >> conflicts on wall street? come on. >> that was dead -- dealt with. >> we'll get cramer's mad dash and counter down to opening bell. futures continue to be in positive territory. core rhoda saying there's more to buy in japan. more "squawk on the street" straight ahead.

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bell. we have day of trading, snow. that's exciting. don't tell me you don't enjoy going out there. >> i told the wife water, milk, wood, bread, i want the house stocked. >> board games. >> yes, yes. maybe some backgammon. >> do you want to break into the meteorologist -- >> holy cow. double the water. look at that. two feet. socked in, david. >> fun. >> i'm staying in the city. >> you are. >> tom farley was on earlier. he said there's not a lot of ipos, sleep right here. >> let's move on from the weather to apple.

>> okay. david, you'll notice this stock is up big in the premarket. >> that is a large move. >> but it's nothing compared to what gene munster said is coming ahead. the piper jaffray ax so to speak. he said it could achieve an upside of 50% by the current levels since the launch of the iphone in september. david, do you know where that would put this? >> yes, i do. at almost $150. that doesn't seem realistic. >> oh. doubting tom. doubting david. he's just saying valuations very attractive. remember, there's been multiple compression for apple. you look at the multiple. it's the same multiple. it's like delta, united airlines, and apple. what he's saying is we're going to pay more for the earnings. a lot of people felt march is the trough. what you're saying is buy it

ahead. for people who are not us on wall street every day, what he's saying is take it. do the thing that no one's doing, which is buy ahead. everyone else is saying wait for the bad quarter and the guide down. he's saying buy ahead of the so-called bad quarter. the absolute opposite of the $93 call we got the other day, which seems like a lifetime ago. >> it does. it does. these days stretch so long they feel like weeks. >> don't they? >> yeah. >> i've been working on starbucks for the last seven hours. >> you have. and the last seven years. we have less than seven minutes before the opening bell. >> imagine that. >> yeah. >> good luck. >> as we end the trading week. stay with us for "squawk on the street."

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you're watching cnbc "squawk on the street." stocks are trying to go back to back for gains. meantime getting a lot of

comments whether it's draghi and davos. now it's kuroda saying two-thirds of government bonds still not bought by the boj. there are no limits to policy. many ways to strengthen the program. that's why futures are up. >> worldwide coordinated stimulus when actually, of course, it's patchwork coordinated desperation. >> it's amazing. >> uncoordinated desperation. >> so draghi by any means necessary and kuroda, there are no limits. >> i mean what these guys are saying, i know there are a lot of people who hate to hear this because it's solid logically poor from this government's hands off. you've got china buying shares of stock, japan saying they've got a lot more weapons. draghi saying anything they want, they can do and you have the fed being silent. they're in a why period. you don't have a fed government on the tape like we had bill duffy last week saying all systems go. there are two places in the world that are raising interest

rat rates, brazil and the united states. brazil to control inflation. i guess us too. >> it's amazing. there's the s&p at the bottom of your screen and down here at the big boards, community options, highlighting its cupid chase, 5k to support people with disabilities. over at the nasdaq, it's comcast our parent company celebrating the premiere of the fantasy series "the magicians" on describe five as we psci-fi as we pay attention. did you see this survey? they took a survey. 56% of the respon accidents say they would cut espn to save eight bucks. >> there is an issue. espn is expensive. the fios. as you scroll through the espn

channels you can't get, but i think that's the issue. i don't know. you know this area. >> listen. that survey was out earlier this week. whenever you ask people would they. they say they would drop it, but, of course, they don't. >> they don't. >> and the issue we talked about for disney is the minimum distribution they agreed to with their various agreements. perhaps they have a lower minimum threshold than others do so there's the opportunity for the cable provider to "x" them off of any number of different packages they're offering. so-called skinnier bundles don't need to have espn, whereas, they would have to have others to reach that given cable system. but all the shares in the media sector right now are up. of course, time warner, jim, as you well know has been the a greatest performer so far this year in part because of this continued con jekive would there or wouldn't there be some activism which raises its head

there, which i think is still very much unclear. >> how about the fact that it's just inexpensive stock. >> maybe. >> selling at maybe 11 times the conjectured number for 2017. the last talk, things are better. they're saying they're not getting it but they're getting tnt. their sports is very strong. one of the things that has hurt espn, i don't know if you use it. they have the a greatest app in the world. i feel leak i'm watching espn on my cell phone and the resolution is fabulous. i don't know how much of an ad

unit they get but they spend a lot of money making a greatest digital experience of any media company. i don't know about you guys, but i watch a lot of it on my cell phone, but what does that count as? >> i know. we talk about that a lot. >> there's like five different espns on your cell phone. before i go to bed, i go wow, wow, wow, wow. i don't have to turn the tv on. >> marathon's at the top. devon, chesapeake, morgan. >> chesapeake is the prefer. so finally we have chesapeake maybe doing the right thing. marathon was maybe the worst because they were the first to cut the dividend. devon, a lot of people concerned about the last debt deal. they spent $2.5 billion, some of those with equity at the absolute already high, so people were worried about devon. suddenly if you have oil up, hope springs eternal. don't forget natural gas ahead

of a storm has always spiked. kinder morgan lowered guidance and then people wonder. i'm going to tell the as poi positive gas usage story for a moment. it's up. >> the news is incredible. it's up. it was up yesterday. >> a greatest story in history. >> that moved down once they did cut the dividend prior to it and after it. remember. if you listen to the railroads. if you listen to the rails, the coal load is down 30. it's falling from 38% to 33% of what is -- what is of energy and natural gas has taken all of it. by the way, g.e., natural gas,

fantastic. the story is a natural gas story ahead of the storm that david just indicated could be legendary. >> that explains a 20% move in marathon? >> marathon was the worst of the majors. they cut the dividend. they had lots of people worried about the liquidity. when you cut it, we think, maybe it's worse than we thought. marathon has been a disaster. the worst of the big ones. the one to watch, believe it or not, is schlumberger. >> yes. >> schlumberger told a tale of, hey, listen, it's bad, but we bought back a lot of stock. we've got a lot. don't give up on the oil patch. the revenue decline wasn't as bad as some thought. we've got the story of oil. schlumberger says, hey, it's business as usual. >> you don't sound ready to call a bottom on oil. >> i think iran's shipping more

than we thought. i know u.s. is going to be down 2% in production. know tell debt markets are not reacting in the same way the kmonl stockmarke common stockmarkets are reacting. >> all these activists push you to optimize your balance sheet and then you can regret it in a market like this. >> the oil is very interesting. they didn't need anyone in there. >> they didn't. sharrif suki, the deposed ceo once told me, you know what? when you go to procter & gamble, they have big marketing departments. marathon actually separated. remember -- marathon petroleum. they sold their refinery. so they say, hey, you know what? the market's not that good, maybe we ought to cut back. they don't do that.

they go flat out at all times because they're oil men and they're optimiss tim. >> the story of the year. all stocks are up except for g.e. let's get to bob pisani on the floor. >> let's show you what's going on overseas. asia was ripping, japan was up, shake high was big, hang seng was up. germany is up and the reason is central bankers are saying look what happened in the last 24 hours. one of premier abe's aides said conditional easing has fallen into place. they say china will continue to intervene in its stockmarkets calling his markets imma tear. draghi says they may need to review a policy stance. you've got energy stocks leading very big. you mention all the usual high beta names like marathon, devon, murphy, anadarko. all of them are up.

most in positive territory so far. i hate to bring everyone down but we're missing on revenues a lot. g.e., kansas city, suntrust. kansas city is up. they're up about 9%. earnings and revenues. revenues well short of expectations. that's way below expectations. we asked our friends at kensho to look at it. 2009. 1970 was lousy. 1960 was down 7%. 1990 was down 6.9% as you can see. in each case for those four lousy years we rebounded. look at 2009, for example. january, we were down 8 president8.5%.

1970 we were down 7.1%. even in 1960 when we had a terrible start to january we were only down 2.9% by the end of the year. we were only down 1.4% for the year. our thanks to our partners at kensho. my point being, carl, we had a lousy start to the year. but they even not produced the terrible returns to that january. back to you. >> thank you very much, bob pisani. let's check in on bonds. rick santelli. hey, rick. >> good morning, carl. i know it should. be a stock. the global markets at least for the moment right themselves. treasuries, ten years specifically, move back above 10%. but that really isn't the story. the story is ten years were hard to push under 2% and indeed seem to be a lot more buoyant to

being at or slightly above. look at a one- and two-day chart. you can see what i mean. we only had one close, and that was, of course, the day before yesterday, and that was below 2%, and that was the first time since mid october. open the chart up to early august of last year. you can clearly see that 2% seems to always find some type of support. we built a lot of wood aztec nick nick as technicians say. for the most part even with trillions of treasuries and quarantine on the federal reserve balance sheet, flattening is still the key. look it. since mid-november, we're still hovering at 120. granted it isn't 116. it's flat. market may debate how many tightenings, but it still seems to be baked into the curve. look at that. they avoided the october 23 basis point. low close. it defended it slightly above

it. dow versus canada, if we switch gears a bit. we all know three days ago was close to 146. but the bank of canada did not move rates. we see that the canadian dollar has firm -- you see the dollar coming down. last, shanghai composite, simple way to monitor global equities. that major bottom we had in august of 2927. we're still below it. not by much, only ten ticks. that's what you want to watch on a closing basis. carl, back to you. >> rick, thanks so much. when we come back, a live and exclusive interview with starbucks' chair and ceo howard schultz. we're back after a break. hey dad.

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at business.ny.gov starbucks shares are down this morning after the company reported earnings yesterday. joining us from seattle is howard schultz. he's the chairman, ceo and founder of starbucks. good morning, howard. how are you? >> good morning, jim. >> let's get right to it, jim. you do a 9% comparable score in the united states.

unheard of. 8% globally. tremendous global traffic growth and we're all keying on the one week deceleration. does it make any sense to you how we're interpreting starbucks? >> well, let's just frame the quarter first. a record quarter that was beyond anything we've ever done in our 24-year public life. 12% increase in revenue. 15% increase in eps. our first $1 billion operating income quarter. at any level, especially 4% global traffic, it's hard to beat anything close to that in terms of north america. turning to china, as you said, we've had 12 consecutive years of positive comps and positive traffic. perhaps the underlying issue we didn't discuss in the call-up, maybe we should have, is that traffic accelerated beyond the

comp number. but having just come back from china, jim, all i can say is with 2,000 stores in almost 100 cities and opening 500 new stores a year for the next five years, the future of starbucks coffee company in china and globally has never been stronger. the brand has never been more relevant. and this is a long-term story that probably if you look at our peer group not only within the restaurant and retail sector but anywhere around the world, who's putting up 4% global traffic, 8% globally, 9% in the u.s. and 5% in asia-pec. it's unheard of. you link that to our business that has had a record quarter and being so strong in north america into china with a great partner and hundreds of thousands of points in

distribution, this is a story that really has no peer. so those people who are focused on a 1% interpretation, their interpretation, not ours, of a downturn in china are misinterpreting the information. our business in china has never been stronger. the way we measure china is we want to measure sales to investment ratio, our operating income in terms of the economics of the store and obviously traffic. and in all three metrics, we're hitting the bar beyond our own interj expectations. so all i can say is this is a long-term story and china has never been stronger if the company. >> okay. now we also want to deal with europe. i know it seems wrong that we're not focused on technology and consumers strong. but europe, obviously there was a decline because of terrorism. but i think that it did not include perhaps the increase that you have seen of late. so can you put the decline, post the terrible incident in paris

versus the increase since then? >> sure, sure. well, if you look at the last 18 months in our ema business, month over month, quarter after quarter, we receive a significant positive impact in terms of our operating income and we were on track to have a record setting quarter in europe and that came, unfortunately, to a screeching halt as a result of the act of terror in paris. i spoke to almost every other retailer who's doing business in france and the mea and we all had a similar situation. i can tell you thes by has begun to return and i suspect that this quarter will see a return to the numbers we've seen in the past. the european business up until the act of terror has gone very well. we're expanding in europe as we are all over the world and i see no reason to conclude anything other than business will return as usual in the coming months and quarter. but if you look at our overall

business, jim, especially when you overlay the significance of the mogul ecosystem we built in the u.s., 23% of tender is now mobile payment. they're way ahead of plan. they're introducing all of this to markets all over the world. and just wait until it comes to asia, and specifically china toward the end of this fiscal year. it will have a significant catalytic effect on the business as it has in the u.s. so if you look at all the innovation, the number of stores we're opening, the relevancy of the brand and the growth of the company, you tell me another company that has projected the next three to five years at double digit revenue increase, 15% to 18% epa increase, middle to high-single digit comps all over the world and the strength of the equity of the brand, and i -- i don't know what else we can do other than as -- you know, as you and i have talked

before, i love the missouri state motto which is the show-me state. we'll koinl to play the market, play the long term and be discipline and thoughtful about how we build the business and at the same time try to have as much of a social impact as we can and at the same time invest in those making college achievements and really achieving the balance between a profit and social conscience. >> just because i know there are a lot of doubters out there and if we talk about the a greatness and people at home may say, wait a minute, why is the stock down. there were in the 2015 conference call accelerating for china. they've skipped the whole generation. they're right on their handheld. but performance in terms of comp in china accelerated above the total region. we've seen it accelerate into the month of october which is a great news for us. did you set people's

expectations too high versus what happened in the last two our three months? >> the truth of the matter is we've never given guidance on any level as to what the comps would be. the guidance we gave last quarter which i think was pretty stunning is that after having years and years of consecutive mid-single comps in the u.s., we said that -- we began to see that comps would be stronger in the u.s. and, in fact, we put up a 9% comp. unheard of, especially at our base and scale. i think anyone who believes there is a softening of a forecast is just ridiculous. we beat the quarter by a penny. there's no reason whatsoever that we lowered forecasts or expectations. this is a year that's going to be a stunning record year all over the world and our business in china is at record levels, jim.

>> these good. you know i wanted to get this out there. i think there's a misperception and misconception. you said euros are down and you were going to turn it and it was a great buying opportunity. i remember the december analyst meeting and you said why are people worried about china and you beat numbers handily. let's talk about the u.s. how were you able to accelerate? there's no restaurant or retail that's doing plus five and you're doing plus nine. how is that happening? >> it's a great question. it's happening because we have increased significantly the day part business. we're no longer a morning business. we're day part throughout the day. we have developed innovative products. our morning peak business has increased as a result of mobile

pail and the relevancy is the starbucks brand domestically and around the world is driving more. i don't think they picked up on this in the conference call. we served 23 million more people this quarter than we did this year than last year and 18 million more in the u.s. at a time in america where every bricks and mortar is struggling to be even, not only are we driving coffee store sales but we're driving traffic. it's unheard of at our scale and there's no reason to believe -- go ahead. sorry. >> last question i think will answer a lot of the doubters. buyback. why would you accelerate the buyback here if the doubters who seem to know more about your company than you do, which you know i disagree with. you accelerate the buy, but give us the magnitude of what you're buying here than you were a year ago. >> i think that's a pretty

simple question. we think the stock sujds valued relative to the long-term for our shareholders. at these levels, we'll back the truck up and buy as much stock as we can and bethoughtful and disciplined. it's relative to our performance and the long-term view we have about the world. we're opening 500 new stores a year in china. we're opening a store a day there. our u.s.s by has never been stronger. our upg business has never been stronger. the last thing i'd say is what we have done in mobile payment and mobile order and pay is in its nay sanlt stage in terms of technology and what's coming as we create the kind of bricks and mortar retailer that no one has ever seen before in mobile

technology. >> howard schultz, thank you so much for coming on squauks "squawk on the street." >> thank you, jim. >> sales have gone up just during this interview. >> do you know? i mean it doesn't make sense. >> sure. >> the only thing that makes sense is the stock is up huge. >> it has moved interday. he made the point repeatedly. on 4% traffic. it's not all price. and with that many stores in this one country alone, it is impressive. >> it does remind me of that moment in europe where it turned out to be an unbelievable opportunity. i think this one will be no different because he's backing up the truck. >> he is. the dow is having a terrible

day, almost 10%, jim. >> when you take away the upside and don't have a reason to own the stock, they'll turn on you pretty hard and there was no reason to own the stock. i had hoped for a turn. it was the exact opposite. it seemed secular. i know it's a strange word to use for a great company but it seems lysacike a secular. >> hate to bring it back but between buffett and ibm, the pain continues. >> people thought that was disappointing. we'll hear from mun tar kent. we heard from him with a good story. i think mun tar is going to put up a good story for coca-cola, but it seems aged right now. buffett seemed aged. >> jim, what's on the m"mad" to? >> we're going to do the game

plan. there's more. stock like in avon, too much debt. they bring on sheri mccoy. trying to save versus digital. you don't have to save alphabet or facebook. you don't have to save amazon. those don't need saves. you know why? because they are -- they've gone through the divisional playoffs and they're in the ac and nfc championships. playoffs, yes. >> jim, what a week. we'll see you tonight. "mad money," 6:00 p.m. when we come back existing home sales and lei. don't go away.

thanks. ♪ [ male announcer ] fedex® has solutions to enable global commerce that can help your company grow steadily and quickly. great job. (mandarin) ♪ cut it out. >>see you tomorrow. ♪ there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be.

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whack back to "squawk on the street." i'm carl quintanilla a. they continue to hint about more global easing. oil up.

let's get to rick santelli. breaking news on leading indicators and then we'll get to existing homes, rick. >> i'll tell you. we're sweeping up the 2015 day. selling numbers down 0.2, which is exactly as we expected. it's a tie. month over month-percentage change. the first was in february. you have to go all the way back to march 2013 to find a minus 0.3. it was a three-way tie. not a great finish for lei. now, of course, we want to look at the existing home sales. for that, diana olick, d.c. how does it look, diana? >> reporter: rick, existing home sales jumped 14.4% month to month to an existing annual rate. that's the largest monthly sales jump in history, but, wait,

there's a reason. you remember that huge nearly 11% drop in november. this is all because of new mortgage rules that went into effect in november and delayed a lot of closings and pushed them to december. so it's really a wash. the realtors are saying that today's data was just confirming the november drop was due to delays in those new mortgage regulations. we do have full year numbers for 2015. total sales, 2.56 million. prices up 6 minnesota 7%. for december t median home prierks $224,100 up 7.6% year over year, the realtors calling that very unhealthy. inventory is your headline here. 1.79 million units for sale. that's down 3.8% year over year. we're at a 3 president 9 month supply. that's the lowest in a decade the retore is saying. they're saying there's a housing

shortage in the cards for the spring buying season. if you don't get more homes, you're not going to get more sales. days on the market dropped 58. that's down year over year. again, monthly jump. 14 president 7%. again, it's all because of the mortgage closing delays. back to you. >> thanks for explaining it. diana olick, thank you. stocks keeping gains here rallying today after lots of volatility this week. what we're seeing is all major indy sees up 1%. the dow is up 240. larry fink talked about what's ahead in the markets for davos. take a listen. >> we're not over yet. we still haven't found the bottom in oil prices yet. we still are learning more and more supplies everywhere in the world. first of all the equities, these are just market corrections. as warren buffett said it's a long, long race and i think too many people are panicking over

these corrections that are necessary and the reality is over a long cycle, you're going to do fine. >> so let's talk about that. with us now, david leave vits and from boston, michael arrone. michael, is that what you are telling your clients right now? short-term pain, long-term gain, stick with it, don't panic? ? >> that is what we're telling clients. we're expecting a little two steps forward one step backward market for most of the year. what i find interesting about the volatility is a lot of the economic conditions remain largely the same. so kind of good but not a great economic growth which is leading to accommodative monetary policy, low interest rates and low inflation. certainlily we're seeing some of the challenges that it doesn't seem to be working very well.

competitive devaluations are not working as well as they once had. we're in the later stages of the credit cycle and emerging market is growing. with that backdrop we're expecting slowly but grinding higher. >> i'm not sure all of those conditions are actually in place, michael, of what drove the rally starting in march of 2009. t the federal reserve is tightening, i would add to your list, corporate profits are no longer growing and circulate's certainly slowing. >> certainly there's impact with policies in place. it is true earnings are driven by primarily energy space. we know if we back out energy for example earnings last year probably in the s&p 500 drew more than 6%. so there's still a significant amount of the market that remains healthy. so our perspective is think about those that are able to grow their top line revenue growth, those that have access to the u.s. consumer who's in

reasonable shape and those who have pricing power. so technology. consumer discretionary. we think they're attractive. >> david, on a short-term market can you trust the rally? what we learned over the last few weeks is they fade and the conviction has been with the sellers. how do we know if this one is for real or this one is different? >> i think it's important to keep in mind it's shorm term. there's no way to know. we expect those to rebound this year. you really need to focus on the underlying fundamentals and identify the mispricings. that's the way you identify the market. you find stuff thrown out with the bath water. in the long run that stock appreciates making you a nice return. >> can you give us some examples?

>> we're seeing it in the cyclical sectors. the comment about pricing power is particularly important. we still like technology. we still like health care, we think they may benefit to. me the downfall on the market in 2016 represents a buying opportunity. so we're maintaining our pro cyclical tilt and are advising our clients to do the same. >> does that provide any moves especially on day where a wash in rhetoric from kuroda and draghi? >> deutsche bank uses a great analogy about keeping the plates spinning. they're going to keep the plates spinning. i this i they're going to remain very accommodative. the federal reserve, i've about had a tough time seeing it. i think the bottom line is that although policy in the u.s. may be normalizing, policy globally is very easy which should lend support to risk assets over the course of the year. >> michael, how do you position ahead of next weeks what would have been an otherwise boring

meeting. we do get a statement and all of a sudden now that representing a real opportunity when it comes to the fed's communication policy. how do you play into that? >> i think the fed will certainly take some of its cues from what mario draghi did yesterday what abe is saying in terms of conditions being warranted for some more quantitative easing, more easing. i would expect the communication from the fed to be a bit on the dovish side and to talk about the fact that they're looking at some of the issues outside the u.s. as well as some of the mixed data we're seeing within the u.s. as well. now, i also think the big key component that the fed continues to struggle with is inflation and the fact that what's been going on in terms of the dollar strength, what's going on with china and oil is likely to put downward pressure on inflation. i expect a bit of a dovish

commentary next week. >> thank you very much for talking through the long-term strategy. david lebovitz and michael arone. >> wilford frost has all the details on all those moves. my favorite british co-anchor. >> it's just wonderful to see my favorite central banker back to his best weakening the euro. he topped on his dovishness. the euro down another 1.3, 1.4%. that has lead to positive returns and resoundingly so as you can see when we get the results. they're up about 3% for most of the main borders. the stock's up 3.4%. and the sectors that have suffered, they're the ones rebounding. oil, gas, commodity names topping the pile. indeed, enough, but the gains

have taken us into positive territory. not yet though enough to put us in close territory for the year for gloomy returns year to date if we flip to those numbers. we're down about 9% for germany still year to date. let's have a look at asia because the day's trade vaguely similar, in fact, to what we've seen in europe today. the nikkei rallying. we had the bank of japan talking about the possibility of more easing. as you guys just mentioned, the boj meeting, of course, next week, very important. i would say further easing is mainly driving the day, sarah. i know you're very much focused on that oil price as well, back to you. >> thank you very much. we're going to watch. when we come back, blizzard preps up and down the east coast. d.c. could get 30 inches over

the weekend. are they prepared. and as will fred mentioned, oil back above 30. s&p, best day since december 4th. "squawk on the street" continues in a moment. man, i'm glad aflac pays cash. aflac! isn't major medical enough? no! who's gonna' help cover the holes in their plans? aflac! like rising co-pays and deductibles...

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blizzard is hitting the east coast. washington, d.c., could see as many as 30 inches. gabe gutierrez is live with the latest. gabe. >> reporter: hi, sara. here in charlotte, this is the bull's-eye for ice. you said d.c. expecting to see that storm. as the storm movies to the east, it's dumb ping a wintry mix, snow, sleet, and freezing rain in charlotte. you can see behind me it's been dangerous commute. schools are closed here in charlotte. american airlines has canceled all of its flights into and out of shay lot which is major hub. bus service has just been canceled. we're hearing reports of thousands of power outages as well and major pep rally that had been scheduled later on today for charlotte for the carolina panthers, that has been canceled. the panthers are still scheduled, of course, to play in

the huge nfc championship game on sunday. here officials are expecting about a half inch of ice or snow just to our west in the carolina mountains. they're expecting more than a foot of snow. but, again, the major danger here in charlotte right now is the ice. carl, back to you. >> gabe, thanks for that. gabe gutierrez joining us talking about the weather. oil holding about 30 in part due to the cold weather. have we seen a near term bottom? bart, it's good to have you back. good morning. >> it's a great to be here. >> i love the title of your report. it is always darkest just before the day dawneth. so is this the day? >> i think the day is dawneth a little bit. any trend to the downside is sustainable for a period of

time. a lot of the producers particularly in the shale areas are hurting and they're hurting quite a lot. producers going after it, oils contained there, they're hurting. the hypothesis is in the next few months we're going to see data screens showing us that production down and that is a trend that will stay with us for the foreseeable future. >> right. in your view we've reached a pain threshold. the saudis have said we can handle this as long as we want, we're not going to cut unilaterally. >> i'm sure they think that, but i think politically from their perspective. the other day the imf suggested to them not to loosen their peg

to the u.s. dollar and while their production costs are low, around $10 or so, the fact of the matter is their economy needs higher oil in order to subsidize all the activities in that country. another year of these prices will mean that their budget is going go in a massive, massive deficit and that they're going to be basically, you know, biting into their nest eggs, and at some point that will run out too. and then that could be problematic longer term. >> bart, early january you forecast $60 a barrel of oil in 2016. i think north of that even. are you sticking with that forecast? are 'do you think it's realistic to see oil prices double this year? >> yeah, i do actually. that's the way we put it in the report. we do think there is going to be quite a bit of short covering as we move into the year. and we are starting to see, i

think, the groundwork for a small deficit in the second half of the year. and it's not unusual to see price moves of that magnitude based on previous cycles. very, very deep corrections usually suggests a fairly sharp recoveries as well. >> why, then, does moody's put so many of these oil and gas companies on credit review today with the hint that there's a risk -- not just a risk but a significant risk that prices stay lower for longer than anybody thinks? >> and they are going to stay lower for longer. we're probably unlikely to hit $100 and above. but 60 is very reasonable. and i think the trend with credit agencies has been in the past that they're very backward looking, not necessarily, you know, the best forecasters out there. >> earlier this morning when we

were talking to ed morris who runs commodity forecast at citigroup he said in order to see the change, when prices are going to affect the economic fundamentals, that you have to see the cma, buying distressed. do you agree with that? if so, do you have your eye on any companies? >> i'm not sure that's a precondition. much of the trigger in our view will come from the speculative investors covering the more extreme short positioning. we receive on example of that yesterday post the department of energy inventory data where they were poor but not as poor, i think, people have positioned. and we showed short covering moved higher and with the draghi statements move even higher. i don't cover companies specifically, so i don't really have an opinion on which ones are about to be merged.

>> one last condition. there's a report out this morning that the first iranian crude floating vessel has departed the region. what realistically can they add to global supplies by summer? i think the con senn sis is 200,000 barrels immediately. not sure how smart it would be on their part to flood the market in the short run. think they i're going to self-regulate, but maybe 100,000 to 200,000 immediately is very possible, but i think that's been pretty much priced in. >> you would hope so, but difficult to tell the way prices have moved around this week. bart, thank you so much. joining us from t.d. when we come back, starbucks said it had the best holiday season in its company's history but the stock is under a little bit of selling pressure. it's off the lows to down about half a percent as the market

rallies. hear what howard schultz, the ceo had to say in our exclusive interview about china and the u.s. when "squawk on the street" returns. ♪ every auto insurance policy has a number. but not every insurance company understands the life behind it. ♪ those who have served our nation have earned the very best service in return. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life.

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welcome back to "squawk on the street." check out schlumberger. the earnings just wrapping up a few moments ago. paul making some interesting comments. he said they captured the most challenging downturn in 30 years. he's keeps an eye on opec and north america and says in many cases that producers have basically opened the caps wide to maximize cap flow that that could be a short-term increase for production but the short-term actions will be skpafting for that reason. the company expecting positive movement in 2016. now, this also means that the

company quarters will be challenging for schlumberger and other oil services companies. they don't expect to see a meaningful recovery until 2017. also worth noting, differ accident. they're not increasing dividend. it's maintaining the differ accident and it's putting into place a buyback that becomes effective when it's exhausting. shares of slumbchlumberger are up. back to you. >> morgan, thanks so much. morgan brennan. meanwhile starbucks reporting that they t fourth quarter worked its way out of the green a few moments ago. howard schultz had a lot to say about china and global growth. take a listen. >> the 2000 stores in almost 100 cities and. it has never been stronger, the

brand more relevant. this is a long-term story that probably if you look at our peer group not only within the restaurant and retail sector but anywhere bricks and mortar retail around the world, who's putting up 4% global traffic, 8% globally, 9% in the u.s. and 5% in asia peck. it's unheard of. >> some amazing stats unheard of. that's due in part to 20-plus percent mobile payment in the states. you'll get a lot more people through the doors if they pay not using cash. >> on the other spot, they were quite bullish saying they were going to recover to usual levels in months or quarters. analysts agree with him. they say buy the stock. the average price target is $68 per share km is higher than they are now but it's had a nice run up 40% in the last 12 months. >> anybody who follows carl on twitter will know what it's been since he came back.

carl, the numbers are pretty staggering. >> schultz. >> yes. january '08, he comes back. it beats just about anybody. >> you can see why. in that interview he was very defensive, almost sounded frustrated with the sellers. anybody who says it's below forecast is ridiculous. we've been telling you this all along. the oil slump, the stock down more than 30%. that's just this year. so how does the company and ultimately the industry recover. "new york times" columnist jim stewart dug into that issue. he'll be here to discuss it after the break. there's a lot of places you never want to see "$7.95."

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i'm sue herera with your news update. more than 23 believed killed by islamic extremists. al shah bad has claimed responsibility for the attack. north korea has said they've arrested a university of georgia student for, quote, hostile acts. they say warmbier entered the country under the guise of a tourist and undermined the government. they did not say when he was arrested. bernie sanders releasing a

new ad showing everyday americans. it's scheduled to air in iowa and new hampshire. according to the polls, sanders has an eight-point lead over hillary clinton in iowa. and the first man to win downhill skiing has died. bill johnson passed away at an assisted living facility in oregon. he had been suffered since 2010. he won the gold in sarajevo in 1954. we're one hour into trading here. let's take a look at what is moving. the dow is up over 200 points. two moving lower. american express at the bottom of the list. lowest we've seen since december. general electric taking a hit after reporting a profit in its industrial business slid in the fourth quarter. not all bad news as the dow is up being led by commodity named

caterpillar. capital is also up. oil rebounds sharply over 7%, david. >> yeah, exactly. of course. that turnaround has boosted nermg and mining stocks. of course, it's just this morning we're talking about wti crude up as sara said over 7%. still down over 30% this year. our next guest says the company is taking a dive. cnbc contributor, pulitzer prize winning column iist jim stewart. we've been following it to buy the oil and gas assets but in reading your column, i was glad you came back to something i had forgotten, which is the incredible conflicts of interest at the time they did that deal. >> they're appalling.

i think we were all kind of wondering during the era of super low interest rates like where the excess is going to show up. we expect they're auto there somewhere. here you've got a great american company like freeport mcmoran and there's a river of cheap money floating around them and they fix how do they take advantage of it. i read some of the old transcripts saying, look, i geeshet the money, it's so cheap, we should borough something. what did they do? they took a balance sheet that had $3 million in debt, they went out and borrowed $20 billion and decided to buy oil and gas assets that, guess what? they already owned. the chairman of freeport mcmoran many of it is the ceo of the company they bought. it is staggering. they say independent directors approved it. what would approve it with nine other board members in stock is going to say, no, we're not going to let you do this.

this was a completely bad deal, buying at the peak of the market, going against all of their traditions and they walked away with a total of hundreds of millions of dollars. >> they went against their shareholders also who hated it and they fled in droves. >> whou knew going ahead it with u going to be horrible or not. now a couple years out we do know it is horrible and it never would have happened if there weren't as much self-dealing in the deal. so there are really practical meetings why you need to hold -- uphold these ethical standards. >> this is around the world. >> they're not unique. this is a particularly egregious example. they're also symbolling of other

companies, particularly debt convinced. after all, they evenen been doing it for centuries. they know there are booms and busts. there always have been. they kept a very low leverage on the balance sheet. now they've got this cheap money and they're scratching their heads and saying, it's crazy, let's take it. how much risk? look at freeport mcmore ran now. the debt is four times the entire market cap even after the reality of today and yesterday. >> obviously mr. moffett has finally existed, 76 years old. carl icahn owns 90% of the stock. a that point it may be an option. >> would somebody give me an exit like, this please? $79 million to go away? a $1.9 million consulting contract? title for life of chairman emeritus? look, i'd be happy to go away for that. >> he was considered one of the

world's best geologists, wasn't he sf. >> he had a great record. he was a very color character. some of his quotes are pretty amazing. he's got that texas swagger no doubt about it. he takes it and goes in these parts of the world and comes up with the gold and copper mines. >> in indonesia. >> i don't want to take way from him but nevertheless he drove it. >> schlumberger out yesterday saying another thousand job cuts. a lot of pain. what do you predict we're going to see in the rest of the year whether oil bottoms or not in terms of bankruptcies? >> again, another fascinating thing that freeport shows, in the face of falling prices, they increase production. one of the things that has confounded economists is why is it so big? that's part of the debt story, too, because they've got to keep generating the cash to pay off

the debt. eventually we're going to see the bankruptcies. they're going to be extinguished and i think they'll reassert itself and we're going to see production go down. there will be a recovery. the question is when? this year? next year? 2018? it's not going to be tomorrow. >> everybody saw the yellow light and they slammed the gas pedal, right? trying to get through it. >> exactly. i think that's why we're seeing people now starting to realize that, uh-oh, this sort of oil collapse, this commodities collapse is causing more pain at least in the short term than anyone thought it would. >> what about this market? we're a couple of weeks into the year. still down 7% on the s&p. the focus has been on oil, has been on china. what do you make of sort of this move down that we've had on things that are hard to read, i would argue? >> absolutely. the speed of it is very

startling but the fast die carolinklei declines are slower that go on year after year after year. of course, nobody remembers the '70s anymore. i'm really calm about it. we're where we were last august. there was a 10% dip in. it went back up. in my kind of system where you look at it, i already bought back then. now i'm watching to see if i get some bigger bargains here, but i look at it kind of like this as a buying opportunity. if you're a long-term investor, you're certain. >> you don't give an increase to those using the r word. we used it a lot. that the market is sniffing one out or that the market action itself is calling like 2008? >> i don't see it myself. people like to sate but that's

the market's job. it's to predict and it's never to be right all the time. is it right 50% of the time? that's what you would expect. i don't think too much in into the predictive capacity but there are legitimate worries out there but i think the basic fundamentals look pretty good. >> nice place to end on an upbeat note. >> he always cheers up us. >> yes. jim stewart, "new york times." >> still ahead, stocks went public more than 20%. it's rising today but what's ahead for this company. ceo and founder aaron levie will be joining "squawk alley" a little bit later. we'll be back with "squawk on the street." whoa. what's going on here? oh hey allison. i'm val, the orange money retirement squirrel from voya. val from voya? yeah, val from voya. quick question, what are voya retirement squirrels doing in my house? we're putting away acorns. you know, to show the importance of saving for the future.

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coming up.

welcome back to "squawk" on the streak. the s&p 500 is up by nearly 2% just off its session heise. the utilities lagging. weighing on the sector. so far today shares of edison, con ed and others as well. these are the only three stocks in the red today because all sectors are in the green. the sector did close flat yesterday and is the second worst performer because of financials. interestingly enough, sara, utilities, comes lagging. sara, back over to you. >> all right. thank you. on that note, tell-year yield. back over to you. rick santelli.

he's got the santelli exchange. rick? >> thank you, becky. this particular spot is going to concentrate on the strims. quickly tell viewers and listeners who the responders are? >> happy friday. very dynamic industry and industrials. we're surveying the side that covers industrials. that's really our suh vai. we've been doing it since june. we have three surveys to report on shoo when i think of industrials, the one thing i'm thinking of are they going to survive? things are changing. what are earnings expectations? >> let me take a step back and give our viewers the sentiment. there's a psychology going on right now that has registered extremely bearish and negative. we're looking at the highest level that we've seen >> of bearishness. >> bearishness, absolutely.

this wall is being built. i'll tell you, no bulls are climbing it. >> now, when i think about earnings expectations being lower, that would mean that guidance most likely is expected to be lower. >> absolutely. lower expectations for fourth quarter. they believe that 2016 guidance is going to be softer than what is consensus. that's even from the south side who's pull it consensus out there that thinks it's too high. >> let's follow the flow side. what do they believe on sale growth? >> sales growth is going to be for 2016, slower than 2015. when asked where they feel it's going fall, most are in the flattish to 1%. a quarter of investors and analysts actually said it's going to be negative. >> wow. when i hear that, i think of one letter in the alphabet. it's "r." what are the thoughts on recession in the industrials? >> similar. 69%. >> 69%. >> in. >> they're not going to be in.

>> absolutely. >> all right. in the final minute that we have left, let's talk about sectors that may see improvement based on respondent psyches. >> yes. they're thinking about consumer spending increase. they're looking at that as bright spots. in terms of negatives, you know, again, it's metals in mining, machinery. we saw the largest bearish spike in transportation this quarter, 50 points. >> that is amazing to me. now, when it comes to improvement, i understand deterioration. look at the commodity charge, look at the crb. on the flip side of that, look at the input ones. some that make sense, your final thoughts. >> my final thoughts is it's going to be a very choppy tough first quarter. second quarter as well. we're probably going to see a

rebound in the second half. >> rebecca corbin, thanks for the on core on industrial. carl, back to you. it's down almost 8% so far, but one analyst says despite the headwinds consumers will be spending this year. wheel talk with him about that. we're off the highs, up 189.

>> the company says increased sales of its higher priced davinci surgical robots helped boost the results. the stock is up about 3% so far this year. big market up overall. 2016 so far hasn't given retailers much to cheer about, but our next guest says while sales and personal consumption have moderated a bit, consumers will still have a healthy level of growth in their capacity to

spend. >> the health of the u.s. consumer. through your lens, the companies that you follow, home depot, lowe's, costco, how do you see it? >> we actually think the u.s. consumer is in pretty good shape. employment is solid. growth is strong. home prices are up. all of those help drive the consumer's capacity for consumption. >> the gas dividend, those savings we're getting, they're spending it, but it's been lumpy and unpredictable. where are you seeing them spend it, and which names does that help? >> sure, i agree that the flow-through hasn't been quite what we would have anticipated a year ago when gas prices started to decline sharply, but we've seen pretty resilient spending at the low end.

>> it's trading above your price target. i think you have 58 still. have you been surprised to see wal-mart is actually the only dow stock that's positive for 2016. >> it is, and lots of our conversations with investors over the course of the year -- year-to-date have been much more skeptical about the macroback drop than our own view, and we think that there's been a flight to defense, if you will, among investors and retail stocks, and that helps explain why wal-mart has outperformed. >> what about the change in consumption patterns that we hear about. people more focused on experiences perhaps than they are on actual goods. a lot more services. do you believe that? are we seeing evidence of it?

>> we are. we're seeing it in a number. the cruise sector. the amusement parks. some of the domestic consumer oriented travel businesses are having a better time of it than the retail sector overall. that's something that we would expect to continue. >> would you look for a ceiling on the savings rate? is in a point at which the households say we've got enough. store it away. i'm not saying that's happening now. >> we've been a bit surprised that the savings rate has moved as high as it has. i would tell you that the market volatility that we've seen over the past number of months doesn't help. that's the kind of activity that would tend to lead consumers to pull back a bit. frankly, we've seen that at the high end. >> lots of the retailer that target the high income were the ones that gained early in this

stock market recovery and the economic recovery. is that going to reverse here with those that are targeting the lower income doing better? >> the single area of real weakness that we've noted over the past six months or so that's hard to explain for reasons other than the macro has been the high end. most of the data points we've gotten about the domestically driven high-end consumer have been disappointing. that's in addition to the negative impact on some of the high end firms from the tourist business coming under pressure. >> do you like then the retailers? can you name names that would benefit at the lower end? >> some of the sectors, once again, the dollar stores. some of the discounters. some of the auto parts retailers that will be the biggest beneficiaries there. >> in terms of the selloff that we've seen in early 2016, are you advising to buy some of your conviction buys? i think you like lowe's. do you still like william sonoma. >> we like lowe's, william sonoma. those are beneficiaries of strong housing activity, and we have a pretty good existing home sales number out just a few minutes ago.

yesterday we upgraded michael's stores, mid-market craft-oriented retailer that we think can have a very good run in this kind of back drop. >> we spent a lot of today talking about the weather, and it's been a story all season long on the opposite side. too warm. >> yes. >> is the inventory getting cleared as quickly as we had hoped post the warm weather spell? >> this weekend might help here in the northeast, but we think that the apparel inventory will take a while to move. i would point out kind of the one latent beneficiary of that warm weather, the home improvement retailers to the extent that the outdoor working season got extended through january. very good for their businesses. >> you have to be a weather forecaster to pick retail stocks. >> it's at least as tough as stock picking. >> thank you very much, matt fassler. good to see you. >> thank you. >> analyst covering retail for goldman sachs. what is coming up next on "squawk alley?" >> tech stocks are rallying along with the market.

look at the russell 2000. smaller stocks doing better than the market overall. speaking of which, box ceo aaron levy will join us. a rough ride for the stock, but how is he feeling about the company? jim briar has a warning on stocks. soon stocks to be. companies looking to go public doesn't look so pretty for a lot of the unicorns out there. all that and more coming up on "squawk alley." this just got interesting. why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension,

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>> off the highs, the dow is still managing to gain 158 at this hour. s&p 500 up 1.5%, and the nasdaq in the lead after being hit the hardest so far in 2016. are this week end higher? these are the biggest gains we've seen since early stem. we'll see if it can deny despite that drag on the dow, which is american express. >> american express, of course, had a difficult a conference call that will interestingly did include ken chenault and had guidance for 2017. it's not being met well by investors.

with that setup, dow up 158. we'll send it to you for squawk alley. >> sounds good. good morning. 8:00 a.m. at box headquarters in los at yoes. squawk alley is live. ♪ >> markets off of the highs and getting some -- a head of steam as central bankers hint at policy alall wered world. tech stocks moving higher. nasdaq still