good morning. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. breaking overnight, a global market shocker. bank of japan cutting rates below zero for the first time in its history. japanese stocks swinging wildly in the wake of the announcement. the nikkei had been down before the news. then it spiked by as much as 3.5%, before dropping slightly and ending the session up by about 2.8%. other asian marks posting green arrows across the board as well. check out the yen. you can see the shanghai composite was up, so was the shenzhen. you can see the yen also trading up. 120.70 is where that stands now. take a look at the european markets and how that's reflected around the globe. you'll see right now the dax is up by about 0.4%. the ftse in london up about 1%. here in the united states, you'll take a look and see that

the futures right now are indicated higher as well. dow futures up by about 90 points. s&p futures up by seven. this is off the lows we had seen this morning. >> europe is good too. i think negative interest rates reminds me of negative growth. it's too long. it's too many words. we need a new word for these. some people are writing in to me. what about optist rates. >> clever. >> so japan now has put into effect some outrest rates. it's that simple. it's quicker. it's succinct. someone suggested that on twitter. >> the head of the bank of japan said the country is recovering moderately, but they made the move to stop risks by falling oil prices.

>> did cramer make up f.a.n.g. stocks? >> i don't know. they have t.f.a.n.g. now too. >> anyway, they talked about the prices and slowing emerging economies they've been watching closely. he told reporters that there is more policy ammunition available if necessary, but it's hard to think what you'd be getting beyond that. >> let's tell you about some of the other stories we're watching today. the first read on fourth quarter gdp is coming out at 8:30 eastern time. forecasts calling for gdp of just 0.8%. on today's earnings calendar, we're going to go betting numbers from chevron, mastercard, american airlines, and xerox all before the opening bell. yes, speaking of xerox, the company may be bowing -- i don't want to say may be bowing to pressure -- i think they are bowing to pressure from carl icahn. xerox will split into two separate businesses, hardware and services. icahn will be getting three seats on the company's board of the services side. we're going to talk about all this in a little bit. in november, icahn had disclosed

a large stake in xerox, now 8%, making him the second largest shareholder in that company. he said he would seek talks with management. icahn spoke with cnbc thursday saying, quote, we think this is a major move and will greatly enhance shareholder value. xerox expected to announce that move when it reports later this hour. we should tell you, you do not want to miss this, chairman and ceo ursula burns will join us at 7:00 a.m. eastern time. we hope we'll be able to talk through all of these issues. >> a $9 billion company. it's been a long, slow, sickening decline. today it doesn't look like it's bouncing. i was hoping it would go up a little to help carl icahn pay for his contribution last night to donald trump's charity for vets. the donald, as i was flipping back and forth -- and i was up. i just stayed up -- >> i can't believe you stayed

up. >> maryland was playing iowa. i'm preparing for march madness. i'm going to do it this year. i'm watching all these. >> one finger. one button. fill in the blank. >> i know six people on maryland's team already. >> your wisdom versus my one finger. >> i know all these players. i'm so prepared. i'm going to do so well. i'm going to call them all. i'm going to be the kid that got all of them right. but actually, maryland is great and beat number three. iowa is overrated. the debate was coming on after. >> i wanted to stay up and watch. >> i was really interested to see how -- >> the donald did. >> well, cnbc and msnbc, to see whether they're -- >> counterprogramming. >> it's not a question of what you are. it's just a question of price. remember that expression? and there's no way they're not going to -- >> everybody has a price.

>> and they glued, glued on donald trump. cnn and msnbc. god bless them. but richard, the frack, one of our guests. >> he gave some money to trump. >> i think raised $6 million. and some rich guy that usually wants attention for giving money, but didn't want it in this case and wanted to remain anonymous. people were trying to figure out who that was. and donald himself gave $1 million. we're going to talk about who won that debate. >> whether it was a debate. >> it's not just fewer people watching fox. megyn kelly looked like she was ready for primetime. did you see her? >> i didn't see any of it. i fell asleep. >> her eyelashes your like this long. i swear to god. did you see when she looked down in her eyelashes came down to here. it was important. but it wasn't just who watches fox to see the debate. but they're losing people that

were turning the debate over to watch trump. who knows. >> the question is, voting with your remote vcontrol s that the same as voting at the poll? >> we don't have to wait long. >> you see the iowa caucus coming up in just a few days. but does that reflect what the nation thought about him? iowa is going to think one thing. >> they didn't really bang him that much. they still went after each other like pir ra that almost. >> it's hard not to go after the people standing next to you on the stage. >> jeb bush has struggled. in part, when donald trump was there, he makes it tough. >> i think jeb, honestly, is being held back by his tie knot. again last night. big, not pulled all the way up to his color, no center dimple. it was like this big. maybe we can get a shot of it. terrible. look, everybody is checking their ties. >> you have ocd. >> no, i'm tell -- what other

reason is there? do you have a reason why he's not getting any traction? it's the tie knot. >> we'll have to take a look at a picture. >> politic and the fashion police right here. >> look at this center dimple. >> i struggled with the dimple. you don't have a dimple going on over there. >> you don't always need a dimple. >> he does a full windsor. >> it's early. >> i've been asked for us to do some tie explanation on the dimple. people struggle with the dimple. >> they do. struggle to get one. >> there's a guy -- maybe we should have him as a guest one day. he does a youtube thing, teaches you how to do the dimple. >> you got to put your finger in there, so to speak. >> okay. we have to talk some numbers and results. you're looking at me like i'm crazy. amazon's results missed the mark on both some and bottom lines. the stock getting slammed, down as much as 15%. joining us to break down the results is.

it's sort of mind boggling. best results in a way in terms of just pure revenue number that they've ever had during a holiday season. you say unbelievable. yet, they miss. it's like, are the expectations wrong? are they doing a bad job? >> no, not at all. this is not a structural issue with amazon at all. it's a simple case of expectation is just getting ahead of themselves. when you look at the quarter, the reason for the miss on the margin was in order to meet the demand that was so great, today had higher variable costs than expected. i think the issue was as you look forward, the nature and magnitude of the investments they're making weren't fully appreciated. think about it. billions of dollars going into content. building out a massive logistics network with ships and planes. you have the you want a economics issue with the same-day delivery. india. >> well, first of all, aws seems

to be doing okay. >> on the margin side. >> let's talk about all the money they're spending on logistics. does it make sense to you? i was talking to some of the guys from alibaba who reported yesterday. they obviously had gone a completely different direction. they don't want to own any logistics, but they want to partner with everybody. they view that as a better investment. they can effectively, without actually making the underlying investment, have what they think ultimately will be the same type of logistics. maybe not. >> i think what we learned from jeff bezos, at least watching him, is you got to give this guy the benefit of the doubt. the only other ceo in tech i could say that about right now is mark zuckerberg. i think the logistics investments will make sense as we go forward and when we look back to see how much efficiencies they're able to drive from it. they know where their customers are ordering from. they know exactly what the purchase patterns are. if they can add efficiencies to

their own fleet, supplementing the established logistics players, you can create a winning scenario. >> given the investment, the long-term numbers, you expect this company to ever really make s significant money? >> ultimately. >> what does that mean anymore? really? >> look, they made money last year, right? at times they do check in with the market to show they can deliver the kind of results people think that they can deliver. but the issue right now is -- >> but the question is can they deliver those results every quarter. >> it's an expectations issue. they're delivering the record sales, but if the expectations are x-plus ten, it's going to constitute a miss. just as estimates overshot on the high side, you know, i do think that there will be an opportunity to get constructive because they'll probably overshoot again on the downside. >> what's your price target now? >> na, neutral. downgraded at the beginning of the year. >> you don't have an actual

number on this thing? >> no, neutral. it's market perform. when i was a buy, before our downgrade, it was 705. >> okay. thanks, james. appreciate it. great to see you. >> it is the final trading day of the month. it has not been pretty if you're a bull. for the third straight year, all thee major indices are down in january. the nasdaq is on pace for its worst january ever. can the markets turn it around, or is this a signal for a touch year ahead? joining us is ed campbell, principal at qma, and peter brook far. let's start with what happened in tokyo overnight. bank of japan moving to negative interest rates to outrest rates, whatever we're going to call it. peter, what does that mean? >> i think it's economic kamikaze. let's create higher inflation for the japanese people, who are barely seeing a wage growth, and let's amp up the currency

battles and hope everything gets better. i think it's insane. the old saying, if you get in a hole, stop digging. they keep digging. i think the 5-4 vote was evidence that kuroda got a lot of pushback to get this through. if this means now they're out of bullets with qe and this is their last hope, then i think this is a mess. i think this was a bad choice on his part. i don't think we're going to get a different result. >> ed, what does this do to the federal reserve? does it additional pressure for them not to raise rates just so we're not going in the complete -- going full speed ahead while bank of japan and the ecb are moving the opposite direction? >> well, as you pointed out in europe, opening comments, markets had gotten very oversold in january. >> that's what you think? >> and we expected that to generate a policy response. policymakers were going to try to lean against this because they don't want financial conditions to tighten so much that it further damages growth. so we saw the fed back off a little bit on its language.

>> not as much as some people had been anticipating. >> we saw the bank of japan respond here. i think the ecb is going to step up asset purchases in march. so i don't -- i think this is likely to generate a relief rally. i think it's probably going to be short term in nature. i think we're going to have a lousy year in u.s. and global stocks. but i don't think this is the beginning of a new bear market. >> but you think a lousy year, meaning things will go down from here even? >> no, i think we probably rally from here to end the year, but 2015 was a pretty unrewarding year in u.s. stocks. i think 2016 is going to be déàa vu all over again. >> peter, you said financial kamika kamikaze. that's something you think the japanese are inflicting on themselves. what does it mean for us in terms of u.s. stocks? what's your take? >> if they're trying to steal growth through weakening their currency t affects everybody. the irony is the more it gets love, the japanese and weakening their currency, they love the

europeans when they weaken the euro, but everyone freaks out when the chinese try to weaken the yuan. central bankers have really run out of bullets to keep things afloat. the problem is we have inflated the valuations of asset prices so far above what underlying fundamentals are. we're now beginning to see some catch up. that's the unfortunate thing in terms of multiple compression, which i expect to see. >> you think it's not kentucky th -- china, it's not north korea, it's not all these things. it's the last seven years of reserve. >> right. and we inflated asset prices so far above the underlying fundamentals. >> this is the converse of that. >> now asset prices will catch up to the underlying fundamentals. it's a good thing we can focus on fundamentals. the problem is asset prices got so far above. >> you think even with the declines we've seen in the first month of the year that there's more trouble to come? >> unfortunately. look at the futures this morning.

they were up 20. then we're giving it back because if central bankers lose their influence, multiples are going to compress. >> it's nice to be able to travel around the world looking for any signs of easing anywhere. we got draghi last week turning us around. then china does something, they ease. now today we're going to get a boost from japan easing. it's called the shots for five years. still is. >> unfortunately, it's beginning to wear off, the impact. and that's the problem. >> i think one of the things that makes it maybe not as bad is what peter is outlining is we still don't have inflation. central banks still have free hand to pursue more actions. i'm not saying that's going to -- >> i guess the question is the actions they pursue, how effective are they? >> they're not very effective in terms of the economy. but they can be effective in terms of the markets. >> inflation is the most dangerous thing that can happen now. imagine what happens to the world bond markets if they're

actually successful. imagine what happens to the european bond market. they've sewn the seeds for their own implosion of the bond markets if they get what they want. >> if it works. >> we want it to work, but we don't want it to work too well. i agree, if we get inflation and get this big backup in rates, then it's kind of a disaster scenario. >> you both agree they're really threading a needle here, trying to get it to spur things on but not too much. >> right. i think it's a fallacy to think that you need higher inflation to generate growth. inflation readings are a symptom of what the underlying growth is. so for kuroda to think i need to generate higher inflation to generate growth is completely backwards. especially when japanese wage growth is so anemic. you're basically penalizing the japanese consumer. i don't know what economic theory is behind that. >> we don't need higher inflation to generate growth. one thing we need is to avoid

deflation. for heavily indebted economies, that's the most toxic thing. >> all right. gentlemen, thank you both for being here. really appreciate it. great seeing you. coming up, gop candidates taking advantage of donald trump's absence in last night's debate. the jabs, the jebs, the ties, and the winners and losers, next.

as you know by now, last night's gop debate went on without front runner donald trump, but his absence did not go unnoticed. >> i'm a maniac. and everyone on this stage is stupid, fat, and ugly. and ben, you're a terrible surgeon. now that we've gotten the donald trump portion out of the way -- >> totally spontaneous and ad libbed by ted cruz again. after the candidates tossed jabs at trump, senator cruz and roubo and jeb bush sparred over immigration. >> we both made the identical promises, but when we came to washington, we made a different choice. marco made the choice to go the direction of the major donors to

support amnesty because he thought it was politically advantageous. >> i think people, when you're elected, you need to do things, and he led the charge to finally fix this immigration problem that has existed now for, as marco says, 30 years. then he cut and run because it wasn't popular amongst conservatives, i guess. >> it's interesting that jeb mentions the book. that's the book where you changed your position on immigration. you used to support a path to citizenship. >> so did you. >> well -- you wrote a book -- >> meanwhile, donald trump hosted an event for veterans just a few miles away at drake university. he said his foundation had raised over $5 million for veterans in just one day. trump joked about the timing of his event to steal viewers from fox. >> fox has been extremely nice the last number of hours, actually. and they've wanted me there, and they said, how about now? they called a few minutes ago. how about now? can you come over? i said, hasn't it already

started? we actually thought what we'd do is let them start, and you know, we wanted to be about 15 minutes into that hour so that by now they're all tuned in. look at all the cameras. it's like the academy awards. this is the academy awards. >> he said fox news apologized to him. he wanted to do the debate, but after he announced the event for veterans, there was nothing he could do. he asked fox to make up the 5 million, and they said they wouldn't do that. apparently it was confirmed, i think, by a fox person that roger had spoken to him a couple times yesterday as it got later and later. >> the report i saw said he was also talking to ivanka. >> he called ivanka and milania. not to talk to talk donald into appearing. that's why i don't feel bad. you saw jeb's tie knot there. i don't need to show you a freeze frame of it necessarily,

but this campaign is so insane. we've dwelled on the most crazy stuff already this campaign season, that i really think it could make a big difference if he'd put it up a little higher, not make it so big, and get the center dimple going. if you can't, you know -- >> maybe he doesn't like the way it feels. >> well, i don't like the way it feels, but i care about -- anyway. here we have senior aide and white house political director for former president george w. bush, who always looked put together. his ties always had center dimples. also, chief political strategist at ddc and cnbc contributor in morris reid. this is what i'm talking about. >> there you go. >> democratic strategist and partner at mercury. good morning to you both. what we really need to decide is

that net-net, good or bad for donald trump that he didn't show, and good or bad for the rest of the candidates that he didn't show? morris, i'll start with you because maybe you can give me something really spicy about how these republicans are all a bunch of clowns. what do you think? >> first of all, it's very good for donald trump. master of stealing the spotlight. could you imagine someone else doing that? no one would have shown up. good for veterans as well. that's a great issue to get on. bad for everyone else, particularly for cruz. >> particular for cruz. sarah, do you see it differently or the same? >> no, i see it differently. i think it was good for many people. it was mostly positive for donald trump. he won the day, i would say, and he didn't have to take any tough questions, which can be perilous at this late stage in the pray mare process. but i thought that marco rubio had a good night. i thought ted cruz did quite fine. i thought jeb bush did great.

it was his best debate performance by far. so you know, they had a good night. they seemed much more comfortable without the side show that can be donald trump standing next to them. >> all the oxygen being sucked out. >> i think differently. you know, people would say donald trump has been a side show. i don't agree with him, but he certainly has gotten people interested in this election like no other person could have. 40 million people tuning in. if he wasn't involved, nobody would be paying attention to this. >> i think it's a fair point. i think the challenge for republicans, as you look to build your party and put someone forward to represent your party, he is not the direction that the republican party wants to go. the way he talks to people, his lack of seriousness about world events, i don't think he's a positive for the republican party. >> but sara, at this point, it looks like he might win the first three handily. you know, even "the wall street journal," which has been sort of echoing similar things two, three, four months ago, even

they recently had a piece that said, you know what, compared to the alternatives and his tax plan is pretty good. i mean, they've even pulled back the claws a little bit as the inevitability -- i don't know whether it's growing, but people aren't writing it off like they used to. >> i think that's right. and look, they make a good point. you know, compared to hillary clinton, somebody who is potentially facing indictment, someone who has real challenges with honesty and trustworthiness, in a falling economy, donald trump would become a very appealing candidate to a large percentage of this population. he has proven -- >> donald trump is an indictment of this republican field. i love the way you guys go after hillary. talk about your own party candidates. he's an indictment that you guys are a lack of ideas, a lack of star power. >> so that debate last night and the previous debates were much more substantive as it relates to issues as these candidates have become more mature.

they've put out a lot of substance, including jeb bush, including ted cruz. so i disagree with you, morris, on that. we agree on donald, but the rest of the field, the governors, christie, kasich, jeb bush, it's a strong field. >> it's a lackluster field on the republican side. let's be honest. >> there's a lot more people tuning into our debates, in part because of donald trump, but in part because of the field. >> because of donald trump. >> morris, i know maybe you're just saying there's nothing to see here and that's going to make it true some day, but i don't know which news organizations you're following, but there is something in the works with the fbi and every day something else comes out about secretary clinton. not only that, you look at her -- some of the numbers on her trustworthiness with even young women. i mean, everything is going south with her. that is not a candidate that looks like she's in her prime. so i don't know what you're

seeing. >> well, here's what i'm seeing. there are challenges on the clinton side. the good news about hillary clinton is she got 100% name recognition. bad news is american people know what they're going to get. the challenge will be to really overcome some of those obstacles. the real interesting thing is that bernie sanders is not getting the air time he should. if donald trump was not in t i think bernie sanders would be the real story. but if hillary clinton doesn't make it and you had a sanders, cruz, or trump and mike bloomberg, i think mike bloomberg would be the adult on the stage and could pull through. >> i saw some numbers yesterday. he doesn't get more than 10%, even if it was sanders and trump. >> that's before he spends a billion dollars. >> his rise and fall is largely going to depend on who the nominees of the parties are. you know, if it's hillary and

mike bloomberg got in, he would be to the left of hillary. if it's bernie sanders, then he looks like the centrist and he's in a much more favorable position, in my view. >> i think -- i don't know. i don't think bloomberg hurts both democrats. i would think. republicans aren't going to vote for -- anyway. >> depends on who the candidates are. if it is donald trump or cruz, i think bloomberg would be very formidable. >> we'll see. the independents, for some reason, we're a two party. >> it's worked. >> an independent has never won. once you get to the house, you lose. >> i think that's a technical side. if you have a guy like mike bloomberg who can spent $3 billion, $4 billion, $5 billion and you have two candidates on the right and left that are untraditional for both parties, a trump or bernie sanders, this is a guy who might be able to

squeak something out because it will be a very different feel. it's not the same election at that time. >> and remember that the percentage of independents in this country is at a 75-year high. the country is ripe for an independent candidate. but andrew, you're right. it is a very high hurdle to get elected outside of the two-party system. but if there is ever a time in the country's history, it's probably right now. >> and the resources. let's not down play the resources. you've got to be able to spend the money. bloomberg has proven that he will spend the money. donald trump, i'm not for sure. but mike bloomberg will certainly spend the money to make the candidacy. >> all right. sara, thank you. morris, thank you. it's always -- i mean, again, another incredible night because of -- and things to talk about because of donald trump. >> the guy who wasn't even there. >> made it interesting. >> when we come back today, a tale of two technology stocks. why amazon's stock is under pressure and microsoft is trading higher. we'll get to that next. also later today, the maker of the world's strongest coffee is getting a big break. the founder of death wish coffee

is here to explain how he won a 30-second ad during this year's super bowl. right now, though, as we head to the break, take a look at yesterday's s&p 500 winners and losers. ♪ okay, so you launched your bank's app.

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welcome back to "squawk box." time for today's executive edge. two big tech names on the move this morning, and they're going in very different directions. shares of amazon plunging. the internet retail giant reporting a huge earnings shortfall on revenue that also miss the the street's expectations. microsoft on the other hand beating street estimates, with growing demand for its cloud products helping results. >> and check this out. we know 18-time olympic gold medal swimmer michael phelps can dominate the pool, but he's a good free throw defender as well. he's tall. arizona state students and the infamous curtain of distraction were behind the basket last night in the game against oregon stated. phelps was a surprise guest. gold medals and all. the ploy worked. the oregon state players missed both free throws in what you see right there. phelps moved to arizona last year to train with an asu swim coach in preparation for 2016 in

the olympic games. >> he's very tan relative to the other gentlemen. >> i'm amazed at how closely that resembles when i take my shirt off. >> you, i know. >> not exactly. >> you're showing a couple more abs. >> i certainly am. not really a six pack. more like a kegger, unfortunately. >> nice. >> wow. >> i don't know who won that game. i do know oregon beat arizona. i'm telling you, i'm up to speed on this. you just watch when that pool comes out. >> fear my finger. i'm going to beat you with one stroke, one key stroke. pick the bracket. >> pick the favorite team. >> i'm not doing it that way. i'm picking upsets. i'm going all the way. >> we shall see. we should have a little wager. ten bucks? >> i saw last year. >> and there's a new perfume promising to help you lose weight.

it has a feel-good chemical that releases endorphins and apparently results in less emotional eating. there's a waiting list for this fragrance. it already has more than 6,000 people on it. >> i thought it worked a different way. i thought it smelled like exkramt or something and i couldn't possibly eat. that might offset the reason for wearing a perfume. >> might be hard to sit next to you on the set for three hours. >> it's already hard. >> we got to go. we're going to talk coffee when we come back. the world's strongest coffee is getting a tv ad in the world's biggest football game. death wish coffee winning a spot during the super bowl. company's owner joins us with bill rancic. we're going to talk to him after the break. so you're a small business expert from at&t? yeah, give me a problem and i've got the solution.

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welcome back to "squawk box" this morning. the bank of japan surprising global markets this morning by cutting rates below zero for the first time in its history. stocks in asia traded sharply higher on that news. as we flip that board around, take a look at what's going on in u.s. equity futures. came off some of those numbers. the dow would open higher about 100 points. the s&p looking to open 7.5 points higher. the nasdaq marginally down. that's an amazon story. >> one small business getting a big break. death wish coffee is the winner of intuit quick books annual small business big game contestant. ad spots many this year's super bowl getting snapped up for a record-breaking $5 million.

the maker of the world's strongest coffee is getting its 30 seconds of super bowl fame for free here on set. mike brown. to a cincinnati bengals fan, that's a bad name. founder of death wish coffee. i'm sorry. >> fair enough. >> sorry. then bill rancic. handsome man. advocate and spokesperson for intuit's contest for the past few years. the first apprentice to win. you're still getting it done. >> trying. >> so this is -- we were talking about this other coffee we had on. this is just getting a jolt. is that -- >> yes. >> that's it? we got to try it. >> i need a jolt. >> we have some for you here actually. it's the world's strongest coffee or your money back. >> have you ever had anyone ask for their money back?

>> no, most customers love it. >> how do you concentrate the caffeine? >> it's the type of beans. the beans and the roasting process. >> what does that do? it just jacks up the caffeine? >> yeah, the beans typically have double the caffeine. we blend it with some arabica beans to have a mellow, smooth taste. our customers love it. >> you were here how long ago when -- >> i was here in late november. we were down to the final three. >> how many did it start with? >> tens of thousands of people applied. narrowed it down, narrowed it down. whittled it down to the final ten. the final three. then mike and death wish are the ultimate winners. >> what's the -- how does it work? >> america voted. i came on in november and said, america, you know, go to the website and vote. everyone, you know, voted. they liked mike's story.

it's a great american entrepreneurial story. he moved home with his mom, put his life savings on the line, literally risked it all. now he's going to have an ad that's going to run with the big motor companies and beer companies and snack companies. >> when that happens, you're going to have thousands and millions of customers who are going to be turning to you. are you ready for that kind of flood? >> yeah, we're aware millions of people are going to see death wish coffee for the first time. yesterday the commercial was released. we did our best day of sales. >> who did the commercial? >> intuit quick books. >> how does it work? what's the theme? this is it, okay. that's cool. >> i will say this. brad smith, the ceo, has made sure mike is armed with the right tools. we've got a team around him. we've got him ready to really capture this opportunity of a lifetime. that's what quick books is all about. it's about fueling the success of small business. we're going to make sure that on february 7th when this ad runs -- >> that was cool. >> how much does it cost? did the ad cost to make.

forget about the cost to run. >> it wasn't cheap. >> in the ad, where does it stress the double caffeine component? >> it says fiercely caffeinated, which it is. really embodies the -- >> i like that. lots of caffeine subpoena -- is politically incorrect. just go for it. that's why i drink this stuff. >> you chug it. you don't saver it. >> no, i do it for the caffeine. beer i don't drink for the taste either. >> just have to break in real quick. the xerox news just crossed the wire. just worth telling everybody. xerox will be breaking into two separate companies. they will be announcing this -- or just announced it rather. an $11 billion document technology company and a $7 million business processing outsourcing company.

we will be talking to ursula burns about all this. really does raise some questions about how this got this way. obviously carl icahn is behind this. he'll get three board seats on one of these companies. we'll speak with ursula burns about how this deal transpired in a little bit. >> so where can i buy this? how many places? >> you can buy it on deathwishcoffee.com, amazon.com. >> is there going to be another way? >> we're going to hopefully get him a new big retailer. i'd love to see this in a target, whole foods, a walmart would be a great home. major retailer. this would be perfect. >> do you have to put all the stuff in the store before the super bowl? is this all online? >> we're going to kind of build this as he goes. right now it's going to be online in a few small retailers. i think after february 7th, we're going to make the rounds and hopefully see this in major retailers across the country. >> you talked about donald trump last time you were here.

i was reading something. who was the guy down in washington that said -- oh, it was tucker carlson. around his block down in d.c., trump's name is worse than paul potts or something. it's weird. people like you, then ivanka and his great kids and other people that know him. it you would say he's -- >> he knows how to hire people. he hired me. >> when you see his characterization in the mainstream media, what do you attribute that to? you're an admirer. you think he has great management skills an you're a fan. >> the guy changed my life. >> is that why? >> no, no. but i got to see the inside of how things work. i always say, you can tell a lot about a man by the children he raises. >> right. >> if you look at his kids, those kids are spectacular. i'll tell you this, they're the first ones in the office, last ones to leave. there's no free ride. >> ivanka is amazing. >> ivanka is brilliant.

>> they're not in rehab. >> no, no. they don't drink, they don't smoke. >> just watching the characterization. that shows you how powerful a certain part of the media can be in defining a narrative. >> captivating america. there's no doubt about it. >> we had to. >> mike, i like your coffee. it's really good. >> this is a guy, you're going to follow his story. a year from now, it's going to be an incredible 2016 for him. >> when did you move into your mom's house? >> when i was 30. >> how long ago was that? >> five years ago. it was tough. >> single guy who's 30 moves into the back of his mom's house. >> good luck with it. death wish coffee. come on back after all this so we can -- >> i'd love to. >> keep an update. >> thanks, guys. >> when we return, crude prices continuing to build on yesterday's gains, but analysts at citigroup warning those gains will be met with a ramp-up in shale production, driving prices

back down. we're going to talk to john killduff after the break. don't forget, we have the ceo of xerox at 7:00 a.m. back in a moment.

welcome back to "squawk box" this morning. oil prices bouncing off their loss to get back in the low 30s. should the crude market believe that opec is ready to cut production.

what's going on here? you thought prices would go even lower. >> i still do. >> you still do. >> i still do. the boat got loaded to one side. record short interest on futures. whenever that happens on the upside when the longs get too loaded on one side that's what we're going through. this whole story there being a production cut plan is rubbish. >> up think the price goes down to what? >> i think 18. i still think we'll get that low. things are going to get real ugly over the next several weeks now as we get into the heart of refinery maintenance season. they have to retool to make a different type of gasoline and emphasize gasoline for the summer driving season. crude oil is backing up already in the weekly reports and that's only going to get worse and worse until their back gets

broken. >> equities decouple. we're going strap ourselves in for what happens with the stock market. >> some of the support this morning is from that bank of japan move. the oil market hassing liked the prospect of a yuan devaluation. that's in it as well. it could reseveveseverreverbera commodities. >> if we go down from 33 to 18, i don't know how many down days in the stock market that would be. >> i don't know why there's such negativity in the stock market around this oil price. i filled up my car for 25 bucks yesterday. >> anything related oil. they got to get -- >> it's not systemic. it's not big enough. even the job losses. >> you're losing your assets.

>> do you think that there's a situation where every time we see oil prices come down the stock comes down. when oil goes up stocks go up. if oil really comes back up it's bad news all the way around and it breaks. you don't see equities come up. >> i do, because whatever stimulus we're getting from the low oil prices and cheap gasoline will be lost to us. remember back in the first bush administration they sent out checks of $200 to everybody. this is the equivalent to that or more so, ten times over. >> it's a damn if you do, damn if you don't situation. >> it shouldn't be taking down the stock market as it has. there's more worries in terms of manufacturing slow down and other things. this is nothing but positive for the economy. just is. >> john, thanks again.

>> did you see what's happening in politico. >> those three plus a whole other group of people. we should talk about after the break. they are leaving at the end of '16 which is even stranger to me. where are they going. they talk about a new venture. >> they won't compete with politico. >> supposedly. >> instead of a "huffington post" clone they could change. >> consolidate your operations. what was the other thing. so they are still pouring money into it. so this is the hill win too, isn't it? >> when we come back a first on

cnbc severe you about with xerox ceo ursula burns. the company will split in two. "squawk box" will be right back.

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copy that. xerox splitting into dwoes. news announced moments ago. ceo ursula burns joins us on the decision and the role carl icahn will play. >> jeff bezos losing big after a earnings miss. we'll go inside and get a scorecard. zika virus could hit 4 million americans by tend of the year. the world health organization sounding the alarm saying the disease is spreading explosively. the second hour of "squawk box" starts right now.

>> announcer: live from the beating heart of business, new york city, this is "squawk box". welcome back to "squawk box" here on cnbc, first in business worldwide. the boj cutting rates below zero for the first time in its history. japanese stocks swinging wildly in the wake of the announcement, but finally with a big gain. nikkei had been down before the news and then spiked by 3.5% before dropping 1% and then surging to close higher by 2.8%. the rest of asia closing with some big gains. shanghai, been a while since that market had a good day. our futures this morning are up triple digits part of the morning. they are again up 112 on the

dow. the s&p up nearly 9 and the nasdaq is now back in positive territory, been struggling to try to overcome the 60 point drop that amazon is expected to take. there's the oil markets today. we just had john kilduff on again from capital. >> he was good. >> he is. the 20er people that we used to talk about all said it would bottom at 80 then 70 then 60 then 50 then 40. i look at them when they come on. they come on other shows. the other shows -- they should look to see -- >> we got it right. >> who is in the ballpark or same sport. find somebody in the same sport. >> possible it could go lower. >> limited group. in the meantime some big news to get to this morning. xerox just announcing moments

ago it will split its business into two publicly traded companies one containing its hardaway operation and the other service business. carl icahn will be getting three seats on the board. joining us first on cnbc xerox chairman, ursula burns. we thank you for being with us this morning to help us walk through what this deal means and how it happened. perhaps we should just start with that very question which is what does it mean and how did it happen? >> well, thank you. i'm happy to be here and explain the future for xerox. about early in october my board and the management team initiated a structural and portfolio view of the company. i'm trying to see how we can respond to shift and changes in the market around us. we initiated that review in october and came to a conclusion in early january.

mr. icahn became public. i spoke to him specifically and told him what our decision was. he's pleased with the outcome. we're happy he's in support it. but he had nothing to do with the initiation, the contemplation, the analysis or any discussion around the deal. it is good and happy. we are happy that he's in agreement with it but he did not drive it as is being reported in the news. >> of course the narrative oftentimes around activist situations and he did an interview yesterday the afternoon role that carl icahn played in this. to put a fine point on it he had not talked to the company before you initiated the review, and do you look at this and say to your self he saw you were going to pursue the review and then jumped in afterwards to take advantage of it? >> he did not peak to the company before we initiated the review. i don't know when he jumped in.

he did not speak to us when we initiated the review. he did not peak to us before we made a decision on the review. i am as i said please when i did speak with him and did engage him he was in support of the decision we did make. he has been a very nice gentleman and has given us his opinion. as far as the governance of the company goes current xerox will be governed as is by our current board with me as the chairman only split into two companies. the document technology will be governed by the ceo and its board and the service company mr. icahn will have three seats on that board. remaining seats will be determined, remaining six seats will be determined by xerox corporation, two will be held by current board members. >> has your role in either company for the future been determined yet? >> no. one of the things that was important when i decided to actually head down this path was

that we would move that variable from the discussion. what i wanted our board and management team and me to do was to think about what the best past for the company is going forward not what the best role is for me. now that we made that decision and we're into implementation phase i will pass some recommendations for the board and we'll discuss that and obviously one of the discussions will be my role. >> do you anticipate staying with one of the companies? >> i will not comment on that primarily because as i said we need to actually discuss it more with the board and, you know, see how it proceeds. we'll have great leadership on both sides, a great board on both side. both side of the company have great management teams in them so i'm very confident about the future as it goes forward. >> you said that part of the reason that you went ahead and initiated this review is because you saw some shifts in the marketplace. can you describe what those shifts are? >> i think there are a couple

that are pretty significant. one was around health care. we're a major provider of health care solutions both commercial health care solutions and government health care solutions and we saw a big change, a big shift in the health care market. aca. the shift to medicaid, big move as well. we saw massive shifts in how quickly the markets outside of the united states developed particularly around services and how just unsettled the environments were, the strengthening of the dollar, how technology is used and people worked and our business as a service business and as a technology business were impacted by both of those, all of those shifts. interestingly enough many of them to our benefit. what we found is that having two companies that had fundamentally different kind of ethos different movement one grows slower than the other, one needed more investment in development and developing its market than the other, one threw off a lot more cash than the

other. it was better we split so we could be more flexible, more spnsive and essentially more fit and focused for the markets. >> can you explain how the shift in the dollar affects both companies that will exist after the split? >> the strengthening of the dollar makes some of our products significantly more costly in markets that they go after, and the impact on our services business from a wage basis is a big move as well. we have over 100,000 employees in our services business and more than half of those employees work outside of the united states. so we had to move -- big benefit for services and a downplay for our technology business. impact of currency on our technology business where we make and import goods have had an opposite effect. we have businesses that are moving in different ways. in the past, seven or eight years ago that would have been a benefit to have that kind of

portfolio view. but as competition is becoming more focused, as customers are becoming significantly more acute and specific about what their needs are and as investors are becoming more focused we found this averaging of this story is actually more confusing than having two distinct stories for both employees, for our customer base and for our investors to choose from. >> does that mean you're betting the strength of the dollar is a trend that will continue for some time to come, if that's one of the reasons you're actually moving to break up the company? >> it's not that we're betting on any currency moments in the future to go either way. what we want to do is be able to react more quickly to move that do happen not predict them. a company as big as we were with these two diverging goals it was very difficult for us to act as quickly. >> strategic question. you bought effectively the

outsourcing business that will be spun off back in 2010 and for some period, to some degree it seemed like you defended that decision as the right strategic decision. now depending on how you look at it that's being undone. was it a mistake to buy that business? >> not at all. seven years ago i call it business years are like dog years. seven years was a long time ago. at the time it was a great move. by the way it helped and strengthened xerox brand. our office to customers. we innovated around services very significantly and moved up the value chain in our document technology business as well with this portfolio that we have. what we have to do on a go forward basis is to make sure all of that value we brought to these two companies when they came together remain. we innovate in service, we continue to take a broader view on our document technology business and figure out and changing the way that work gets done. seven years ago long time ago. we're looking forward and moving

these two businesses forward. >> we're showing the stock on the screen right now. it's up 3%. in terms of the multiples, i know when you sit in the boardroom the bankers come in and give you a presentation what the multiples look lying. how do you see it if this works properly? >> if it works properly, both companies will be able to serve its clients better. have better performance against their industry, their industry comparatives and the companies will do well fwrot the shareholder perspective, employee perspective and customer perspective. >> i wonder if either company will be maybe a better portion, one of the largest competitors. there's only so much, i guess room in both of these areas and you just wonder whether is that the best way to do it to remain

independent or be part of a bigger venture to control market share. >> we've talked about how these two independent companies, this is internal with the board and as we do with the management teams we'll perform as we go forward. i expect them to perform well into the future. whether or not they are interesting to some other entity is something the other entity would have to determine and then speak to us if they are interested in that. our document tech business is a leader. it's number one revenue share. so we're formidable in and of ourselves. i think that we'll be a market pace setter not a follower at all. >> currently, i assume there's a tax-free spin off. if somebody emerges how do you engaging that conversation. would you be open to a potential

buyer right now? >> our board, its responsibility is to lead our company and create value for shareholders. as chairman of the board if we have a reasonable, good offer, we'll field all of those offers, and deal with it as they come. our plan is to run these two independent companies to success. >> totally separate topic maybe you saw the news this morning. japan central bank lowered its key interest rate to zero. curious if you have a view on that and what that might do to your business? >> you know it's interesting -- it sounds like it should be helpful. it's a little bit like the oil prices being as low as they are should be helpful to the global economy. but we're not quite seeing that flow through. the whole economy is not seeing it play out that it was

purported to play out. i think that the interest rate move by japan will, should help spark that economy which would be able to help our business be successful. i'm hoping that's the way it plays out but i can't predict that future. >> what do you see happening around the globe right now? how are markets when you're concerned when you try to figure out the economies in different areas? >> it's interesting that for a long time we looked at the united states as a place that didn't have a lot of growth left in it. what we're finding out is that the u.s. is a really strong market for us outside of the united states is a little bit weaker. the developing economies in particular, eurasia very slow. the asian pact very slow. we're seeing through emerging markets being a little bit of a drag on our performance and growth. and we're seeing a european markets kind of playing in the middle, in the average and our best economy right now is the

u.s. >> okay. ursula burns, we appreciate you coming on first to explain all of this. congratulations on the move and we hope to keep talking about this as it progresses. >> thank you very much. >> good luck with it. in other headlines this morning we'll be getting the first look at the fourth quarter gdp coming up at 8:30 eastern time. initiative >> and we're watching amazon shares. the stock under pressure after they reported a quarterly profit of $1 a share bell below what the street was looking for. amazon down $70. that's a decline of 11%. >> we'll return with just over one-third of the s&p 500 reporting results. we'll find out which sectors have impressed wall street and

which sectors missed the mark. plus tracking the zika virus. world health organization said its spreading explosively. how worried should travellers be about the disease. that's coming up. "squawk box" will be right back. actions. they speak louder. we like that. not just because we're doers. because we're changing. big things. small things. spur of the moment things.

changes you'll notice. wherever you are in the world. sheraton.

the s&p 500 is currently on track for a second straight quarterly decline in earnings

growth. meaning a decline in earnings. no surprise the energy sector is leading the way lower contracting over 73%. materials, financial, utilities and consumer staples also lower. joining us now with their latest earnings scorecard mike thompson and cnbc senior market commentator. walk us through very quickly mike what do we mean when we say negative earnings. >> down same -- >> it's decline. >> yeah. >> how big. >> basically right now we're down 6%. so last year 6% in terms of growth. >> mike what does that tell us? are people panic. >> it doesn't tell us anything we didn't know coming into the year. mo mostly concentrated -- the last two weeks has been the meat of the earnings season. i'm not everybody is celebrating

earnings results but you had them mostly priced in and some interesting stuff going on, for example, industrial earnings where they were so beaten down, expectations and the stocks you actually had a little bit of relief when the numbers have come out. >> part of what we're waiting to hear is the outlook for these. it's much more difficult for a company to say we feel confident about this. not that you ever have clarity but after turmoil like we've seen it makes these ceos more reluctant to say what's coming. >> their global business is saying it's massive slow down. what's interesting, those when you get into this cycle when my competitors tempering guidance there's really no -- you don't want to be a hero and say we'll try to stretch to make these numbers and so the whole sector gets in hunkering down mode. guidance has been weak. i don't know that's a surprise to the markets considering how they have behaved. >> when can we expect i guess

like at the end of the tunnel? >> well not next quarter. expectations right now are down just under 4% for the next quarter. a little perspective. for the year of 2015 if you basically flip energy's drag out of it and material, you're actually up 6.3%. you know it's really interesting. if you think about this historically you're trading roughly in line relative to where energy growth is to forward 12 price multiple. that correction was an interesting thing. we talked about this over many quarters how we couldn't figure how the 12 month valuation was so high approximate. there's something else going on. dollars of earnings is coming out of oil. what's happening not a dollar is going back because it's

discretionary. housing market looks like it's being the beneficiary. credit quality for the consumer is beneficiary. >> people are saving up for down payments and houses -- >> finally getting there. . i have this money but not enough to do anything. go a restaurant or buy small. now you're seeing house. look at pulte homes. ford, car sales. bigger ticket items are being bought. housing, existing home sales. new home starts. these are breaking out of cyclical trends. we're prernting a case that says you're not going see it feedback into the s&p you're feeding it into alternative asset classes. >> mike, we keep hearing this debate whether multiples will contract or expand. where do you come out on that? >> it's hard for multiples to re-expand unless the credit markets calm down. that was the center of the storm late last year.

everyone wants to say it's all energy high yield. it's largely that. i think that will give the green light if that starts to firm up. if credit conditions firm up. that to me is what's going to get the multiples back up unless for some reason you can see a re-acceleration of earnings growth on the horizon coming zoon. very hard to see that. >> mike and mike, thank you guys. >> when we come back this morning sparks flying at the final showdown at the final iowa caucus. >> then the u.s. military c.

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welcome back to "squawk". watching prices of oil this morning. recent trading session suggest markets moving in sync with crude. crude right now 33.50. when we return former deputy assistant secretary for energy diplomacy will be here, our special guest. later spread of the zika virus the who with a serious work about the disease. ey just drop . cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

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xerox's big split. the company's ceo speaking to us a short time ago. why they were splitting up the company and the role that carl icahn played or didn't play in the decision. that's straight ahead. isis, iran and energy prices. energy diplomacy official amos hochstein joins us to talk middle east policy and where prices are headed. the spread of the zika virus the new warning and how many americans could be infected. let's back that up. how many americans could be infected. it is friday, january 29th and you're watching "squawk box" on cnbc, first in business

worldwide. welcome back to "squawk box," everyone. this is cnbc first in business worldwide. among the stories front and center xerox will split into two separate companies one focusing on document technology the other on business services. we spoke to xerox's ceo ursula burns about this move just moments ago. >> what we found is that having two companies that had fundamentally different kind of ethos, different moments, one grows slower than the other, one needed more investment in development and developing its market than the other. one threw off a lot more cash than the other that it was better we split so we could be more flexible, more responsive and essentially more fit and focused for the markets that we're attacking. >> xerox hopes to complete the split by tend of the year. the shares are up after this

announcement. right now you see a gain of 1.8%. in a surprise above bank of japan moved to negative interest rates for the first time. the bank tries to keep the economy from sliding in too recession. an hour away from the latest reading on the u.s. economy. fourth quarter gdp figures are expected to show an annual growth of .8%. >> the show had to go on and it did. last night's gop debate went on without the front-runner donald trump but his absence did not go unnoticed. >> i'm a maniac. everyone on this stage is stupid, fat and ugly. and ben you're a terrible surgeon. now that we've gotten the donald trump portion out of the way -- [ laughter ] >> after the candidates tossed jabs at trump senators cruz and rubio and jeb bush sparred over immigration and amnesty for illegal immigrants. >> we both made the identical

promises but when we came to washington we made a different choice. marco made the choice to go the direction of the major donors to support amnesty because he thought it was politically advantageous. >> when you're elected you need to do things pep thread charge to fix this immigration problem that's existed now as marco says for 30 years. then he cut and run because it wasn't popular amongst conservatives i guess. >> interesting he mentioned the book. that's the book you changed your position on imfrag. you used to support a path to citizenship. >> so did you, marco. meanwhile donald trump hosted an event for veterans just a few miles away at drake university. he said his foundation for veterans which was a pretty recent foundation managed to raise almost $6 million in just one day and trump joked about timing his event to steal viewers from the fox news debate. >> fox has been extremely nice

and the last number of hours, actually. [ laughter ] and they've wanted me there and they said how about now. they called a few minutes. how about now. i said hasn't it already started. we actually thought we would let them start and we wanted to be about 15 minutes into that hour so that by now they are all tuned in. look at all the cameras like the academy award. this is like the academy awards. this is the academy awards. >> he said fox news apologized to him and wanted to do the debate but after he announced the event was for veterans there was nothing he could do. supposedly ask fox you put up 5 million i'll still do it and they don't pay people to appear in debates so everybody was back in their own respective corners. meanwhile the u.s. and coalition forces starting to aggressively target the energy infrastructure fueling the terror operations of sistine middle east.

at the same time the energy department is also trying to figure out how iran's crude production will impact opec and other oil producing nations. joining us now, amos hochstein act being special envoy at the state department's bureau of energy resources and just in making that statement, i think the first question would be now. we haven't been doing this with isis? that's the lion's share of their funding. seems we should have been doing this for months if not years. >> so we have. i would disagree that we started now. we've been taking a look at this for quite some time. but it takes a while. so right after they took over the areas of mosul when they went into iraq we started looking at what exactly are they doing, how are they after the wild days of the beginning and we saw that they were setting up these mobile refineries and using the infrastructure that they had taken over and we took

those out many months ago. what we're trying to do is in an oh, a terrorist oh, like isis that can adapt is to address it more fundamentally and more strategically. over the last three, four months we've been able to take out a majority of their earnings and their ability to gain profit from the oil sector. and that's been done largely because we also are able in the raid we were able to take seven terri terrabytes of data. we were able to under better how exactly they nake money. >> how do they? >> look they have field they took over the infrastructure. as long as they have the territory that has the oil field they can produce. you don't bomb the fields. that won't work. >> why not >> because they can fix them right away. they won't spend a billion dollars to take out fields they can fix. instead of that what you can do is how do you make money off of

that barrel. how do you degrade the value of each barrel they produce. make it impossible for them to make it a valuable asset. you can't refine it or turn it into anything usable. can't export it. take out the truck routes. that way you take that value whatever they were selling a barrel of oil for when they were producing it and move it significantly lower. that's been an effective strategy in the last few months. >> some of the criticism was that we were hesitant because of collateral or civilian damage to hit certain areas of the infrastructure, you see guys driving trucks that are part of -- they are not soldiers. civilians all around the wells, et cetera. any truth in that we were too timid in doing what needed to to be done. >> the last thing we want to do is hit innocent civilians who are suffering under the brutal

governing of isil in those territories. but the fact is we did hit the trucks. we did several hundred of them. the idea is not to take out every truck operating in syria or iraq the idea is how do you send a message there's no safe zone in the oil industry, in the oil petroleum. at the right amount of times. we were able to do it in a way that we did not kill the truck drivers. we took out the trucks. there's various ways of doing that. text message. you can let them know you have a few minutes to go. they are oil trucks. get far when those come. we'll take out those trubs. trucks are the veins of the operation. the vast majority of the oil is being consumed inside isil controlled territories. it's not going out into international markets or cross border. >> you text the drivers to run out of the trucks? >> we leaflet, text the trucks. >> saying today is the day. >> up have a very short period

of time. the idea to take out the trucks. the idea is to make sure the drivers know this isn't a business you want to be in and make that again -- what that means that barrel of oil that profit delta just got smaller, more expensive to operate because you have to pay me a lot more if i'm going to take the risk if the u.s. is going to start bombing my trucks. i can congregate in large groupings of truck. if you look at google earth or use some of our images you can see thousands of trucks lining up ahead of these wells. you don't see that any more. that's gone. now they have to be further away from the well which means time, effort, less revenue. and they have to be in small groups further away. what you do in that one instance you take out ability to make money. second piece is taking out the kind of infrastructure and understanding which are the ones that are not only important to the operation, but expensive and very difficult to replace. and we had several people on my team that's all they do, they

look at the adaptability of isil, what are they doing. every time they attack we figure out how they adapt. we'll thereabout. while they adapt and everybody talks about their adaptability we adapt a lot faster. that's why they are having a hard time recovering from that. >> do you know -- does turkey buy oil from these guys? >> they do not. the russians put out a lot of this stuff. >> speaking of russians, we had a guy earlier say oil is heading to 18. makes this world safer or less safe if russia is dealing with $18 oil. >> it depends where you look fun look at russia that's a lot of pressure. hopefully that convince them some of their entanglements in ukraine are not beneficial to them at a time when their economy is collapsing. >> does it make them lash out to divert attention. >> the pressure is starting to really hit between the oil prices and the sanctions on

parts of the energy sector which are making it difficult in this kind of environment to adapt to the oil prices. i got to tell you there are other countries in the world, not the countries that have billion, hundreds of billions of dollars in reserve. but those that rely on 80%, 90% for their revenues -- i won't name countries. there's several of them who rely 80%, 90% on revenue on oil. no reserves. what happens if this continues for a while. >> iran is how far along in terms of re-entering the supply of oil. >> they couldn't have picked a worse time to enter the market. what people are trying to figure out in opec and outside of opec how much they can increase and how fast. most experts don't know anything about fields in iran. they have been cannalbalized. they can bring on several

hundred thousands of dollars in the next two or three months. >> some of that money will go paris. >> look, it's shocking to hear. it is. got toad mitt some of that money could go there. >> mr. special envoy. trying to figure out -- >> i'm trying to get over the texting. i can't fathom. how do you get everybody's phone number? >> that's for another interview. >> i like idea it really is like homeland. we're looking at satellite stuff. we know when a guy goes out to the bathroom. we know what dethere. coming up -- thank you. the world health organization sounding the alarm on the global threat posed by, what is this thing? is it bad for people -- just pregnant people? i don't want to get this thing. >> it's not bad if you're not pregnant. >> 4 million people in america

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welcome back to "squawk box". the world health organization sounding the alarm on the zika virus. the agency predicting as many as

4 million people could be infected by the end of the year in north and south america. >> reporter: the world health organization saying this has the potential to expand explosivesly throughout the americas. what we know now there's active transmission in more than 20 countries in central and south america. the focal set point brazil which had more than a million cases since last year. this has spread into the united states, but there's no local transmission here in the u.s. only from travellers traveling from these affected countries into the u.s.. 11 states and d.c. had travel associated cases. cdc said 30 cases have been reported in the united states. again no local transmission here from people being bitten from mosquitoes. in terms of symptoms, generally they are mild. one in five become ill. things like fever, rash, joint pain, red eyes and symptoms go away a few days to a week. things that are a real concern

are these birth defects seen in pregnant women who get zika. a lot of cases tolzien in brazil. that's very concerning and they are trying to plum out the link between them the other is guillain-barre syndrome which could cause paralysis. people are trying to prevent the spread of the mosquito. back to you. meg, thank you very much. for more on this virus we're joined by the co-director of the center for infectious disease at georgetown medical center. thank you for being here. a lot of concern what's happening. americans wondering how much they are at risk. where do you think it stands just from the perspective of americans right now? >> for u.s. population, i think

we have to have a very healthy degree of respect for this virus, but i don't think we need to be unduly alarmed just yet. there was a very google introduction to the topic. no local transmission or transmission on our shores just yet. i think we can understand a lot of the potential risks by understanding a bit more about the mosquito. the only way you can get zika is by the bite of the mosquito. that mosquito has to pick it up from an infected person. it's spreading rapidly in central and south america because a lot of people are infected and a lot of no, sir quitos. we have very local distribution of mosquitos. the largest concern is related species which has a much broader range in the united states that's pretty much throughout the southeastern u.s. and in the warmer months all the way on up the east coast to even new york. so, there are documented cases

in the scientific literature of zika transmission but that's not the preferred method just yet. one of the concerns might be if a transmission through this other species becomes even more common. that would change the dynamic of what we might want to be concerned about in the united states. >> is it true that once you have the zika virus even once your symptoms clear up you always have the zika virus? >> there's been an awful lot of basic research to do. that's going to depend a lot on people. but best guess now, no. the highest level of virus in your system only lasts for a couple of days and then dissipates. so the virus goes way, way down and most of these infections self-resolve and as your instruction stated in about a

week or so. >> it doesn't go into your dna, it's a positive sense rna, right? >> yes. >> does it use reverse to go into your genome >> that's a good question. generally these services have to replicate through reverse but integration -- you're talking about integration -- >> whether you always have it. >> i'm just wonder if you have it and then years later you're pregnant could you potentially pass it on to your child or if you have it and your symptoms clear up but bitten by a mosquito a year later could the mosquito carry the virus to somebody else? >> i don't think so. i don't think this will be transmitted. >> i wonder if tamiflu, if any

antiviral stuff works on that thing. >> i don't know. >> i was just looking. there's a forest in uganda, zika forest and this thing has been around since 1947. first isolated from a monkey in 1947. this just didn't come out of nowhere, right? >> that's right. it illustrates an important point. it would be better, perhaps, if we were less reactive to these sorts of things and a bit more proactive. >> scary name number one, zika virus. that's the last thing you want to get is the zika virus it sound like. >> it's not the worst thing out there. some others are a lot worse. there's a concern with pregnant women, of course. but for the large majority of people that are not pregnant dengy is a larger concern.

>> thank you. coming up after the break, stocks to watch plus a look at companies that will be driving disruption in 2016. and the music industry has lost a legend, paul cantor a founding member of jefferson airplane and jefferson starship. he stayed with the san francisco band through its transformation. eventually led that successive group jefferson starship. guitarist and song writer survived close brushes with death including a motorcycle accident and a heart attack last year. paul kantner dead at age of 74. ♪

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as we put out calls to our annual list of 50 most disruptive companies julie boorstin is taking a look at hi-tech trends that will be driving disruption. she joins us now from los angeles. >> reporter: soon every device you own will be connected to the internet. your refrigerator, smoke detector, doorbell and air freshener may already be connected but how about your clothes, traffic lights and pedestrian walk buttons. shopping cart in the grocery store in every part of the factory. it's projected 6.4 billion

connected things will be in use world wide up 30% from last year and that number is projected to grow by more than three times to nearly 21 billion connected things by 2020. the internet has attracted $7.5 billion in investment through nearly 900 deals in the past six years. the possibilities for consumer and corporate applications are massive. tech giants intel, cisco and others are making big investments in the space. as our vcs which is why we expect a lot of start ups in the running for this year's disruptor list in the business of making, supporting and securing connected devices. we're looking for nominations now. go to disruptor50.cnbc.com. >> don't leave anyone ever.

>> no man left behind. >> no. we don't do that. coming up this morning, global market surprise, bank of japan instituting outrest rates. >> looks better in print than the way you say it. negative interest rates. >> oil is up, but a dismal month for stocks. we'll talk market strategy after the break.

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copy that. new this morning, carl icahn wins a major battle with xerox. the company now splitting in two and giving the activist three board seats. >> our plan is to run these two independent companies to success. >> good riddance january. wall street closing the book on an awful month for stocks today. so as goes january so does the year. and a pharma bad boy's new rap. >> going to be done. >> he says he has a posse and going after the clan. he has been indicted and subpoenaed to face a grilling on

capitol hill. final hour of "squawk box" begins right now. >> announcer: live from the most powerful city in the world, new york, this is "squawk box". welcome back to box right here on cnbc first in business worldwide. i'm andrew ross sorkin say long with becky quick and joe kernen. the futures are looking up for the dow up about 95 points. s&p 500 looking to open higher as well six points up. nasdaq looking to open up down two points in large part because of those results from amazon that disappointed yesterday. our top stories at this hour, bank of japan stunning the global markets today adopting negative interest rate policy. the yen dropping sharply on that news hitting its lowest level in more than a year and global stocks rallying and big corporate story of the morning broke right here on "squawk box," xerox was split into two

separate companies one focusing on document technology the other on business services. we spoke ceo ursula burns about that move just moments ago. >> what we found is that having two companies that have fundamentally different kind of ethos, different moments, one grows slower than the other, one need more investment in development and developing its market than the other, one threw off a lot more cash than the other, it was better that we split so we could be more flexible, more responsive and essentially more fit and focused for the markets that we're attacking. >> xerox hopes to complete that split up by tend of the year. the shares are up following that announcement. she tried to push back on some of the narrative that this was pushed by carl icahn, they had decided to do this earlier but there's a big issue that ursula burns will play in either of these companies in the future. another big stock movers. the market gives and take away. amazon is a clear example. that stock down by over $70 this

morning after the earnings fell far short of what wall street was expecting. this was the highest quarterly profit ever posted by the online retail giant but it fell far short. this drop of $70 sounds pretty stunning but it takes the back to where it was in october. microsoft earnings and revenue beating estimates. bottom line was helped by improvement in its cloud services and cost-cutting that came in. that dow component is up by 4.5%. visa earnings beat it by a penny. this is another dow component. up 2%. credit card issuer affirmed its full year earnings forecast. that surprised some analysts who had been expecting a cut. amgen easily topping estimates on highest sales of its arthritis drug. the stock is up by 65 cents. video game sales heaping sony report a big jump in quarterly earnings. the tokyo based company kept its full year profit outlook steady and that stock is up 6%.

weak outlook from electronic arts. the video game maker reporting sales that were below the street's estimates and the stock is down by 4.7%. joe. futures signalling a boost on the final trading day of a pretty brutal start to 2016 as we've been telling you all three major indices are down sharply this month. the dow down almost 8%. the s&p 500 over 7% and nasdaq 10%. currently on pace for its worse january ever. joining us now is kate warning, edward jones principal and investment strategist mark ricota. mark, in the past we've talked to you about things other than just equities so maybe you're a good guy to get some input from today on the dynamics of this because a lot of it has to do with high yield and things like the jmk etf and whenever oil goes down seems like people sell

other things to cover losses although we don't think it's systemic. >> so let's start with stocks. last time i was on the show i said that the dollar was going to go up, especially against the yuan. you would see stocks sell off. that's happened. stocks are really kind of coming back to where credit has been for a while. so that dislocation and then that coming back to where the credit market is telling you things are going certainly something that makes a lot of sense. the question really, joe, across all of this is whether we're heading in to a version. is the stock market telling us a signal we're going into version. i don't think stocks are. i think stocks are looking at a profit recession and you're seeing it today in a lot of this reporting we've had in the last couple of weeks. a lot of companies are struggling with a stronger dollar. and those big winners, these growth stocks that have been driving the stock market are

coming off, amazon is a great example of that. i think investors are trying to grapple with that. how do you pivot entire asset allocation away from growth that's working and if it doesn't work where do you go. you have to go into value somewhere. as we saw this morning in japan by going negative with rates, it seems to what i do which is credit. credit is a market that in general will work in time. you'll go back -- not much growth. we got to search for yield. we'll get that. now it's early, right? we have to be a little cautious, a little defensive. >> what kind of stuff are you looking for? >> double bs. they look good. >> broadly? not by industry. >> pick your spots. this is a stock pickers market. always been and always will be. not every company will win and

lose, but there are much more winners than losers when the market is cheap. >> that's why i started you know a lot about credit. you never did answer about what is it you're seeing in the credit markets to account for what basically looks like it passes to the equity markets. it looks like it starts in credit markets with junk and if oil related junk or wherever it could be 400 companies go bankrupt. >> that shouldn't be a problem for the rest of the market unless you have to sell something. >> in junk, right, we have a liquidity premium that's building rapidly and it's massive. you need it because the market is not as liquid as it used to be. when that pushes up the cost of capital across credit it's got to be reflected somewhere else. it's coming into earnings but earnings and the pe and higher cost of capital is also being reflected in the fact earnings are challenged with a stronger dollar. >> can it be contained in that

sector. i guess that's the question. how much of it is, you know, the change in direction for our simple bank here versus everybody else and how much of it is related to that. i'm trying to figure out the real cause of this angst that made at any time worst january i can remember. >> it's three things. the worries about slower growth which is tied into the credit conditions that we just heard about because it's slower growth as well as low oil prices which is the second factor that are leading to those higher spread on junk and that does translate into worries about earnings for companies but more so in particular sectors not across the board. i would say lower oil prices not only lead to worries about some of the oil companies struggling but actually are helping earnings in non-energy companies, ones that use energy it's part of the lower costar and helping them beat on the earnings side even though their revenues are weak.

so the third piece of that global angst that you were talking about that led to the worst january is central banks. do they have enough ammunition to continue to keep helping markets and economic growth in a world where growth is clearly slowing down. we think the answer is yes. the angst came from those three source. credit is an indicator. it frequently does lead what happens in the equity market. >> i would take the other side on central banks a little bit. i think the wealth effect that really has driven the inflation we've seen over the last five or six years is petering out. it's hard to get a wealth effect when earnings are challenged by a stronger dollar. so they are stuck already they have more bullets in the gun. i think you're going to see it. you'll see they do what they have to do. they have one move and that's qe or negative rates. whether it's much more effective is what people are trying to

handicap in here. that's a good question. i think we'll be struggling with this for a bit. but there are opportunities, right. there are higher quality pieces of the credit market like bank loans, floating rate. they don't have the exposure to energy, very little. and yet they are down to 7% as far as the yield. >> kate, what is the canary in the coal mine that we should keep an eye on if you had to say one thing to decide whether february will be like january or february is going to be, you know, a thawing and leading to march and then april. spring comes eventually. >> spring does come eventually. two things. we're continuing to see okay earnings from companies. they aren't great. so earnings are the first one. second, we all know fourth quarter growth is weak. do we continue to see signs that growth is rebounding a little bit. especially around the world.

we actually got better numbers from europe this morning. so it's economic growth and earnings growth that you are going to drive the market higher. we need to see signs that's stabilizing and moving up. >> mark, what about you? >> i'm watching pmi. pmi coming out next week. great signal to watch. it's turned down in the u.s. since june. if that bounces and comes back, if this low inflation that's low to oil price starts stimulating the economy here in the u.s. we'll see it. those are big numbers for people to watch. it's a great indicator where growth is going in this economy and how it's struggling with a lot of the head wind we're talking about. >> was carolina? where was that team? can denver's defense stop cam newton? >> no. no way.

i'm an old guy. but old guys have no chance against someone like that. he's too young. too tall and too talented. it's amazing. it's going to be interesting to watch. >> i'm not a gender -- could be an original member or current member. do you think denver's defense can take on cam newton. >> i was going to say i actually think they can. we're disappointed about the rams. denver's defense can take them on so i actually think it will be a good contest. >> up stole him from l.a. >> yes, exactly. >> you should have known. nothing is permanent when you do that. thank you. >> that's true. >> is it warne. >> don't pronounce the e. >> get rid of the e.

it confuses everybody. why is it there? >> okay. mark, thank you. we got some political news to talk about because attention was divided last night in des moines, iowa. leading gop candidates faced off in the final debate before the iowa caucus except for front-runner donald trump. he hosted an event to raise money for veterans. john. >> reporter: andrew, it was an interesting night because it was split as you mentioned and donald trump who has been the cam newton of this republican race so far decided not to show up. he had a tiff with fox and by doing so he managed to avoid some of the hits that other candidates took. now, once the debate actually started ted cruz started by making light of his absence which as megyn kelly the moderator said the elephant not in the room. >> let me say i'm a maniac. and everyone on this stage is

stupid, fat and ugly. and ben, you're a terrible surgeon. now that we've gotten the donald trump portion out of the way -- [ laughter ] >> reporter: now that joke went over pretty well. another one that cruz said about leaving stage if he got mean questions. he took a lot of flack because he was the leading guy on stage. ted cruz had a chance to go back at marco rubio who hopes to rise as a rival especially in new hampshire when cruz played clips of rubio as past statements on immigration. >> we both made the identical promises. but when we came to washington we made a different choice. marco made the choice to go the direction of the major donors to support amnesty because he thought it was politically advantageous. >> reporter: now that was an uncomfortable moment for rubio.

he got another one when jeb bush, once his mentor in state of florida, who also had supported amnesty and flip flopped tried to explain to rubio that they both had done precisely the same thing. >> it's interesting, jeb mentions the book. that's the book where you changed your position on immigration. you used to support a path to citizenship. >> so did you. >> reporter: now, that was another uncomfortable moment for rubio. now, the interesting thing was that by playing those past clips, fox was able to highlight change of positions. they could have done a lot of that with donald trump because you got attack ads running right now in the republican race about his past statements about being pro choice for example in the past but that wasn't played because donald trump wasn't on stage and interestingly people like jeb bush and rand paul did very well with trump not on the stage, but it's very late in the contest for them and when you

look at local news in des moines, guys, after this debate, the lead story was not the debate, it was donald trump and that event with veterans. >> john harwood, thank you. hard to know what's going to happen here. very hard to know. are people going to look at him and look at donald trump and think he was petulant for not participating. >> we'll find out very shortly. when we come back this morning preparing for a downturn, trucking companies are holding back on expansion plans. what a shipping slow down says about the u.s. economy next. ♪ we got a long way go and a short time to get there ♪ but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find

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welcome back to "squawk box" this morning. oil prices this morning are looking up a little bit. wti crude at 33.71. >> the transports are on a rough road. morgan brennan spoke exclufsly with the president of one trucking company to get a snapshot of the industry's troubles. >> reporter: so in an exclusive interview david leather telling me despite another solid quarter for earnings growth he's concerned about slowing economic growth especially in like of

weaker than connected holiday season. >> i'm a little confused on the consumer. if you think about the fuel dividend that they all received in '15 and continue to receive in '16 i would have thought we would see more spending from the consumer. they are nervous whether to spend the money that they are receiving as a benefit through this lower fuel or not. we haven't seen that sort of robust consumer spike if you will in terms of their behavior in the marketplace. >> reporter: he says he's a big fan of low oil prices. they are a tail wind for the trucking industry. while industrial production has taken hit, he says the freight moved for dollar store and discount retailers remains strong. also erch commerce is still the fastest growing business and that's why he and the rest of the industry is watching amazon's push to build a transportation and logistics network including a trucking fleet very closely. >> i think you'll see a trend towards branded trailers and branded visibility of their

products moving down the road. there's still trucks that need haul that. we can provide a solution to them that's a better economic alternative than them doing it themselves. >> reporter: bottom line trucking still doing better relative to other transportation sect jobs but with freight demand slowing, as economic growth stalls analysts that cover these stocks are wondering how much worse all of this could get in 2016. >> thank you very much. all getting worse for the drivers when they become driverless. >> he says it's never going to be no one there. you're sitting there. >> trucks will be the first one driverless. no one there. their own lanes. 100%. >> nobody there at all? >> in five years. >> i'll take that bet. >> we got it on video. >> ten bucks. bet you ten bucks and you ten bucks. >> what your betting me. >> i'm betting you on march

madness. >> that's right. >> coming up -- we'll talk about this when we come back. why apple is recalling some chargers. could a billionaire's yacht causing some major trouble in the cayman. we'll tell you about who that is and what that's all about. >> announcer: you're watching "squawk box" on cnbc. first in business worldwide. of d

a rough start to 2016, and how. look at the nasdaq. just in one month correction. the dow as you can see and the s&p almost, you know, 7 and 8% respectively. worst january since the s&p, since 2009 and the nasdaq is down 10%. futures right now are in rebound mode. tlefb triple digits most of the morning. now up 76 on the dow. almost five on the s&p. nasdaq is negative again. amazon down 60 points last time we checked it. 79. >> that's not helping the nasdaq. >> making headlines apple recalling iphone, ifad and imac chargers sold out of the u.s.

due to electric shock. recalling items that were shipped between 2003 and 2015 in argentina, australia, brazil, europe, new zealand and south korea. our international viewers should take a look what they got plugged in right now. this isn't an apple issue. others have had this problem, microsoft and a number of other companies. also a super yacht not belonging to me but belonging to paul allen being blamed for destroying a coral reef in the cayman ooilds. the 300--foot yacht destroyed 300,000 square feet of a reef. company tweeting yesterday they are deeply committed to ocean health and we have to see what that means. trying to protect the climate and they go on the planes and have the yachts. this is one of those things you can be deeply committed but it's

hard to fix. very hard to fix. kind of impossible to fix that. >> when we come back is the fed -- >> you can't say it's not yours. you would like one. >> the maintenance on a yacht is not for me and depreshiation is difficult. >> the federal having a communication breakdown with the markets. we'll talk about that. steve liesman is here. stick around. on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivatives pricing model, honey? td ameritrade.

. >> reporter: welcome back to "squawk box". breaking news we have fourth quarter employment cost index up .6, exactly as expected. maybe the more important data, let's get our first look at fourth quarter gdp, shall we. up .7 of 1%. that's a little bit efficient to be up .8. we go through the numbers personal consumption up 2.2. not bad. better than expected but following 3%. we look at the price index up .8 exactly as expected but following 1.3. if you look at personal consumption expenditure on a quarter over quarter basis dropped 1.2. following a 1.4.

while this pretty much cements it i didn't even have this number this low. i was siphoning. what we had so for gdp .6, 2.0 our first read which could get revised, my lowest was up.8. when you add it up on the annual basis it's up 1.82% the economy. you know what it would have had to have bern to come up with exactly 2% for 2015? it would have had to have been 1.5. 1.5 would have nailed 2%. basically we got about half. it's all going to be about japan today. the catalyst most likely for enhanced currency wars talked about that on "closing bell" yesterday. very important to watch the dynamics of how this filters out. what the europeans do, german export markets slowing. no more german exports are going to now that china is really been

coming to the bottom of the list on that. us. the united states of america. it's not necessarily a bad thing. but the bank of japan is doing underscores the hubris of individuals throughout the world who think they know better than all the markets. by the way, the wage side was also up .6 of 1%. we see yields going down. japanese yields go down. boy oh, boy what happened? two scenarios. what happens if we go into a prolonged slow down? how much more negative will they get? i don't know. i would leave all of you with one common wisdom. unless we get growth there's no pricing pressure. what the bank of japan is about as good for growth as a meteor storm. >> let's bring in steve liesman with more reaction. what tuning? >> the consumer amid the world of mr.ed expectations was stronger. 2.2%. about the best can you say about

this report. business investment down 1.8%. people thought that would be higher. looking at equipment minus 2.5 after a very strong third quarter. structures down 5.3. housing vecht also ki-- investmo strong. exports down 2.5% as the strength of the dollar takes a toll on the manufacturing exports sector of the economy. sna mike thompson was here earlier and said consumers are spending that savings on things like housing and giving people -- they built up down payments that they can buy house. >> i've gone missouri on gas prices as you know, becky. i was holding out hope all of last year. show me the spending by the consumer from the gas price and i'll believe it. right now i've gotten to the point where i'm looking at the effects of gdp from lower oil investment, lower cap x in the

oil patch and i'm thinking we one estimated the impact. i want to show you our fed survey numbers on the gdp forecast. what's significant about this look where we started. january 2015, we thought 2016 would be 2.8. now we start the year much more down beat, 2.17%. we basically -- people who respond to this survey, 40 economists, they have given up the ghost on 3%. we started the year with the least amount of optimism. all other years we started with hoping for 3%. we came down. no more hope for 3%. i want to bring in michele. your thoughts on this gdp number. i didn't know if i'm supposed to do that or not. you're an anchor. you look at the prompter. >> make the most of your three minutes. >> michele myer is here head of u.s. economics at bank of america and merrill lynch. >> so i agree with steve.

one of the things about this report was consumer spending numbers looked better. we were tracking 1.5% for real consumer spend being and it came in above 2%. the big one known is what service is spending does. we knew good spending was a little bit weak in q4. auto sales had softened. service spending presumably did pick up a little bit. i think that's what we learned from the consumer about last year is that maybe they weren't out spending at department stores, buy agnew wardrobe, but they were out at restaurants spending on services, spending on bigger ticket items. >> what do you think about this idea they are spending on homes and the other theory they are spending morn health care than they used to. >> you see that. if you look at a breakdown of the consumer budget you've seen an increasing share spent on health care. that's because we changed the way we're consuming health care, a lot more people have deductible plans, more out of pocket spending. that's one factor. also an ageing population.

as the population ages we'll be spending more on health care. another big factor is house. there i think there is also this move towards a little bit more spending on housing both in terms of maintenance and putting some money back into the home now that home prices have increased. >> steve, what do you think about this idea that consumers are actually spending much more out of pocket on health care. >> i think that's a piece of it. you had increases. mandated for some people who weren't mandated before. they weren't buying health care now they are. i'm not sure -- michele emp. net negative on gdp because some of these costs is somebody's income. i think that zeros out but may shift from the consumer. overall until you got to this last quarter, consumer spending has been remarkably healthy. up near 3%. i did some work on this. the four quarters or eight quarters trailing has been the

best since 2007. they came back strong. given no credit i think in part you didn't see the earnings in the, you know, most popular stocks because some went to the internet, some went to services. some went to health care. if you look at walmart it looked terrible. but the overall consumer spending numbers in the gdp they are pretty decent. >> we had deflation in things like clothing. so you're right. if you look at real consumer spending last year was the strongest year we've had since the recovery started. nominal spending was about average. >> a good example is amazon. amazon had 20% sales growth but missed earnings. from a macro standpoint that's fantastic. i want to pivot to japan and talk about what's happened there. it's very significant. two of the three major central banks in the world now have negative interest rates. for me, michele, it takes march

completely off the table and if you look -- i want to show you the probabilities that happened for december 2016, they've come down now about 54 basis points for december. so that's like one cut maybe or one hike maybe. michele what is your thought. >> one mike maybe between now and december. >> the fed has four baked in. the market had to. while this market has come down they dialed out that last one. michele? >> i agree. i think march at this point is pretty low probability. and i think the fed is taking into account what's happening from other central banks which are continuing to ease and that will impact the there are and create tighter financial conditions for the u.s. but i think you can also make the argument that the fed is probably content or at least relieved that you are seeing other central banks fight the problems in those economies. so when you take a prolong term perspective what it means for the global economy you can have

a glass half full and perhaps because those central banks are being force actual and supporting their economy it could look better. >> that's what head of xerox said. that's good for business. in the near term what you have is a stronger yen. i'm sorry weaker yen, stronger dollar and that's going to hurt u.s. manufacturers even more, circling back to the gdp accounts where we saw -- we're seeing continuously this weakness in manufacturing. >> she also said, look they used to look at the u.s. as a low growth area for them not a great market right now they are the best market for them. >> the u.s. that's true. one thing to point out when japan moves the way it did, when the ecb moves in march the way it's expected to, the u.s. gets relatively tighter. they don't have to do nothing and policy tightens here in the u.s. >> that was two negatives. >> i know. >> that hanes they have to do something. >> which is something.

>> you confused the issue. >> they don't have to do anything. >> they don't have to do anything. nowhere anywhere zmoosh i got criticized yesterday for saying wither. >> or a balding ken. i think there should be a george kazanza. what about little boys who think they have to see ken. >> they don't play ken. >> did you see "toy story"? he's not changed at all. he's still the coolest not every little boy can be as cool as ken. why can't we have george kastanza. not everybody looks like you. >> okay. >> steve and michele thank you both. >> a george kastan za ken. >> what in the world is martin

shkreli up to? >> who is it? >> what he is up to? he's making videos directing rappers and talking about vice. he should be getting ready to face congress next and we have the congressman who is chairing a hearing with the former bad boy today. he'll join us to break down the drug pricing issue and what he'll ask next.

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we've been watching the futures. dow futures still sitting below triple digits by 93 points above fair value. s&p futures up by close to six. nasdaq down slightly by 5.5 which is fairly impressive when you consider amazon is down by $70. check out shares of chevron. posting a lost of 31 cents per share. revenue also above estimates. chevron also says its cutting operating expenses and capital spending by $9 billion last year and expects similar cuts this year. okay. martin shkreli the poster child for off the chart drug pricing not acting like a former ceo facing security fraud charges. here's a video of him

athletening rapper ghost face scully. he purchased the latest album for $2 million. he's riding a however board in new york city while carrying a $15,000 both of bordeaux. >> i think almost a thing where i want to agree to do it like participate in it and same yeah i am evil. let me be the bad guy. i started to do funny and fun stuff that extended that concept of yeah sure i'm evil. i'll be the villain. the reality is you're talking to someone that cares deeply about helping people's lives. so i think i represent a firm that's insane i don't. i don't like most drug companies. i think most of them do a bad job. i think that i'm different.

>> the correspondent is drinking. >> she's going oh, my god drinking yeah, yeah. martin shkreli, youth is wachted on the young. >> that guy is not just young. >> people will look back -- >> no. i don't think that's just youth idiocy. nobody i know is that stupid. >> he's subpoenaed to appear on capitol hill next week. his hike of 5,000% on a drug shined a spotlight, i guess, according to mainstream media on the issue of all drug prices. it's become a hot topic in d.c. and the man chairing the proceedings is with us this morning, representative jason chaffetz. welcome. good to see you. >> thanks for having me.

>> we talk about this a lot. we like free markets and we understand that drug companies spend a lot of money and nine out of ten drugs fail. it's not a free market because medicare can't negotiate which would happen if it wasn't part of the aca where they got excluded from that. is trump on to something that maybe we let medicare -- >> i'm opposed personally to government price controls. >> if medicare is negotiating because they have a big buying -- >> the focus of what we're trying to get here is generics. what martin shkreli is an opportunity he exploited. when you have generic you get these drug review certificates that they turn around and sell to people. why is the fda not able to turn around approval. if somebody jacks up the price from less $20 to over $700

others will get in the market. if the fda shoulding back there's an opportunity to let the marketplace compete, that's why we want to look at this. because these drug companies are taking these and selling these certificates for hundreds of millions of dollars. and just to have a four month advantage. so how do we accelerate what's happening at the fda? that's what i'm interested in. >> just overall, it's an arbitrary number, the 12 years whatever it is and then things for biotechnology and stuff in the tpp that goes five years other places. none of this is -- there's some arbitrary time periods here to try to allow companies to recoup their investment. how do you do it in a way that doesn't allow a gaming of the system one way or the other where they stay high too long or people come in too early and drug companies go out of business and don't innovate. >> you're talking about generics. here in this case this drug has been on the market for decades.

>> because to allow hillary clinton to somehow think that j and j or pfizer is in anyway similar -- >> they are not. that's why we didn't call them to the hearing. look they spend billions of dollars in research and development. >> that's a bigger issue. this martin shkreli issue -- >> it's not about him. it is about how we can get the fda to accelerate this process so that there is increased competition particularly -- >> it's a problem. if hillary clinton gets elected or bernie sanders -- >> the last whole -- >> they have to -- it's just the overall notion, you tell someone a drug costs $300,000 a year they are getting taken to the cleaners. >> back to the idea of being able to negotiate.

you're opposed to that. >> what i don't want is the government to come in and create these price controls. so that begins a dangerous market. and i want to see increased competition. i want increased competition competition. i want them to lower those costs and i think that will create a better market place. particularly in the generic market. >> it strikes me it might be a good allower to negotiate just like a private. >> if they come in with abarbitrary number, i think you'll see a decrease in comp tis titian and investment. >> other governments do this all the time and that's why the united states pays the bulk of the government. >> well, there's a good argument to say we're not competing on

the world market place as an accelerant, because the fda process will cost a billion dollars for the drug. >> americans are paying for the bulk of it. >> we're trying to fight back obama care and we can do a lot of different things to drive down the cost of health care. who is your candidate? >> marco rubio. >> if you were a poor person, you would prefer to be in our care system than any other country in the world? >> oh, yeah, i think so. it's the greatest country on the face of the planet. >> that's a loaded question. >> when it comes to health care services, there's an argument that you might want to live in the u.k. if you had a terrible disease -- thats arer the question i'm asking.

if you were poor and had a terrible disease, would you prefer to live here or anybody else? >> have the best doctors, compassionate society. i look at shriners, i love what they do. if you're born with a birth defect, is -- >> there's a lot to the argument on all sides. >> thanks for having me. >> appreciate it. jim cramer is down that new york stock exchange. ♪ 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.

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we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. fed funds futures pricing no rate hikes in 2016. and jim cramer joins us frunl the new york stock exchange. and i'd love to hear your view of what's going on with xerox. >> japan, this is another one of these cases that i saw our futures jump huge when they announced this. no, this is about them taking share from us. they keep thinking if you stimulate the economy in europe or japan, it's good for us. this is nonsense.

th this is about taking our jobs away. this is other worldly. don't people understand it's meant to be targeting us. a lot of these split ups have been really bad lately. and the hardware, sold to you, who needs that? we saw that when the oil companies split up and marathon gave away the important part and kept the wrong part. give me a better business and you don't need to break it up. you break up businesses that aren't good, not businesses that are good. >> jim cramer, we will see you in just a minute. and changes for the s & p 500 after the close today. those details ahead. announcer s solutions to enable global commerce that can help your company grow steadily and quickly. great job. (mandarin) ♪

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can a business have a spirit? can a business have a soul? can a business be...alive? welcome back. we're about 30 minutes away prom it opening bell and we're going to get a final read at 10:00 eastern time and at 1:00 eastern, the north american rotary account and after the close, we get citizens financial that will be replacing cast parts in the s and p 500.

>> and we're learning yesterday that carl icon owns a stake in xerox. >> so, he kept buying ahead of the split the company announced today. make sure you join us on monday. have a great weekend everybody. it's time for "squawk on the street." ♪ good friday morning. welcome to "squawk on the street." here at the new york stock exchange, final trading day of january is here as we put this awful month to bed. premarket is solid as asia pops higher on the bank of japan introducing negative interest rates for the first time. watch the tenure here as our own gdp