in america. oil at 53.7. a little more than 9% in nine days. maybe good news on that front, guys. >> continue to watch mexico. thanks a lot from "power lunch" as we eat our lunch. "closing bell" starts right now. hi, everybody, and welcome to the "closing bell." i'm kelly evans at the new york stock exchange. >> and i'm bill griffeth. they ate chicken chalupas, but we don't have to. >> i do think it looks tasty. >> you do. okay. the dow down toward 21,000, i guess. >> we're already at 21,100, so there's a round number for you. >> the big question is where does this market head next? >> we've got top analysts to

tell you whether you should be buying or selling certain dow components, like mcdonald's and visa. how about exxonmobil and coca-cola? >> instant analysis from microsoft, intel, starbuck's and paypal coming your way in the next couple hours here. >> i was trying to go up. >> you learn well. private joke. let's get right to the dow and the stocks that analysts think could be the leaders and the laggers in this next leg, dominic chiu, as we do inch toward 22,000 here. >> as you can see here, names like pfizer and merck, you can see they're tagged in yellow as

dow components, because they're some of the names that could have the most analyst up side, and here's what we're talking about. we looked at average analyst target price and then looked at what the implied up side or maybe down side it could be. if you take a look at some of these names, it's interesting. pfizer, the most potential up side, up about 20%. nike 15. visa shares 14% and merck up 12%, unitedhealth by 11%. this is if these are correct. take a look at some of these names. they're familiar names because they had run-ups over the course of the last year and they're start to go maybe sta start to go maybe stall out a little bit. ibm, 9% downside, caterpillar and boeing had been seeing more strength in the past year. so when he talk about the market

10, 20, 30,000 can continue, these are some of the numbers the analysts are looking for. some of the drug names a big focus, guys. back to you. mcdonald's is one of the down components we're dialing into. it lists number 12 that can outperform this year. not everyone agrees those golden arches will deliver. >> mcdonald's debate time. jason rockman of leo weil advisers. he sees 110 price on that stock, and robert barrow thinks it will go to $130. you guys aren't that far apart, actually, but i was looking at the mcdonald's stock. it's going from the 40s to about 120. that doesn't seem so bad. what are your concerns about mcdonald's right now? >> i would say mcdonald's is slightly overcooked at this point. i think you need to take it out of the oven, let it cool off. you need to sell some shares if

you have them. rebalance, in other words. 110 is a very conservative bearish price target. that's just the recent low from, like, 90 days ago. fundamentally, which is what i really want to focus on, is that revenue was down $300 million from the same time last year. that's a significant 5% downturn, customer traffic declining, sales declining. the one bright spot, really, is the foreign growth, but with trump's policies, the rising interest rates, that's going to provide more headwinds into mcdonald's growth, so i really don't see any major upside here. >> all right, robert, you do have to hand it to mcdonald's. to be looking at the dow components today and how well they've done and the fact that mcdonald's has been in there for so long, what is it that you think repels them for that next growth phase? both for the dow and now for a company that's been around for decades. >> this is a company run by a management team who has come in

and are starting their third year on the job, easterbrook, and i think he recognizes that this has been a very sick patient. he knows that like any 12-step program, first you have to admit you have a problem, which they have, and then you have to begin the evolution and the cure. and ultimately, i think in this year, we're going to begin to see better sales trends versus what we saw this past year, more product evolution. i think the company will continue to generate considerable amount of free cash flow, which it pays out in both dividend and chair repurchase activities. there's no silver bullets in this industry, but i tell you, when i look at mcdonald's and the scenario set up for them, i continue to like the name. >> robert, for a long time, we've been hearing about prices -- it's all about price. people are scrambling to come up with a $2 meal, $3 meal, whatever it is, but surveys show millennials don't mind paying more if they get a better

burger, a fresher burger, whatever. do they have to go on price or quality right now, do you think, robert? >> what i would say is this company -- the one thing that i admire about the management is they know -- they have had historically the worst burgers in the industry. from the level at which the company has come over the last couple years, they're making significant improvement. they're not going to have product revolution, it's going to be evolution. remember, this company has over 30,000 restaurants worldwide. they're going to a refranchising program risking the business model, and i think we'll see more product revolution a little better. if i had known you guys were eating fast food today, i would have had the grand mac sent over. now, there's a mouthful. >> wait a minute, you work for mcdonald's? hang on a minute, jason. you can quibble about burger tastes, i guess, but robert brought up how they're changing this model, going to more of a franchise one. isn't that a reason to, you know, sort of like the company

as it evolves into a more more asset-like strategy from here? >> here's what i have to say about that. i do like that idea, number one. number two, the reason that i don't think that's going to help matters is that you have to look at are people going to the stores? franchise or not, are people walking into mcdonald's and buying things? those numbers are going down. that's the bigger picture. that's more important. so i disagree on it's a price issue versus a quality issue, it's actually neither. it's a concept issue. how come you don't see businesspeople, instead of saying, i'll meet you at starbuck's for a coffee, why don't they say, let's meet at mcdonald's for a discussion? it sounds silly, but if you really think about it, mcdonald's needs to revitalize not the price, not the quality, but the concept. they need to be better at bringing people into the stores. >> very good, guys. that's a good discussion. you guys need to meet for lunch at mcdonald's sometime. >> i'll speak to my green juice.

>> green juice. for lunch? >> following our "closing bell" exchange, we have jp morgan. he's next to market analyst stuart grazzle, and rick from the home of mcdonald's. chicago right there. here we are. down 20,000. now what? what do you do here with this market? i mean, the vix is still at 10, earnings are lower. what do you do with this? >> wii seen this from time to time with markets. we're poised to move higher. you come out of the elections, the market screams higher by 10%. you've seen every sector rally with little exceptions. you see donald trump come out. what did he talk about? repeal of obamacare. the only problem is the market took a stutter step when he started talking that way.

they want to hear about lower regulation, they want to hear about lower taxes, and they want to hear about pro growth. that's what keeps this market on tap, that's what keeps the market moving higher. when he sits down with ceos and manufacturers and automakers, that's when the market wants to move higher. he's not doing any one thing, he's doing everything all at the same time. that's a practitioner, not a politician. that's why the market can continue its trend higher. >> steven, will you guys look at the way that we've gotten to this point? we had that huge run-up after the election, a bit of a breather, and now here we are moving higher again. the dollar index moving higher again. oil moving higher again. are all these trends expected to continue? >> yeah, i think so. steve touched on the fact that we're seeing this momentum given the policy. but i think what drives them higher is the economy and the fundamentals. and that really began in the middle of last year.

you see convenience till the highest level since 2001. coughs value higher than it was in 2004. so you're talking about a market that's shifting from this deflationary mindset of the first four, five years to a pro-growth mindset, and i think that continues even after these massi massive. >> it's up a little bit today, but it's still kind of stuck in this ranger after skyrocketing after the election. what are your expectations? what's it going to take to move it higher? is it going to be something we do here or something that happens overseas that takes other currencies lower. what do you think is going to happen here? >> i think interest rates all over the globe are fwg to

continue to go up, and i think for the most part, well-behaved. but i think the contagion. . i'll even take it a step further. we love technical analysis on these training floors, and there was a bunch of us who spent about an hour today looking at motat torques, you get what you pay for, right? it looks like the left shoulder developed, the head is bhafd md. it comes up to 101 and change comes down. the big key is once you get a

big close around 100, which means europe fwz back up to maybe 110, 111. i would have to say very near term, i think the drlt. >> the interest ratesment many i see what you're talking about there and maybe steve mnuchin will get his wish. >> maybe we just hire in the long term. we have to go, but just real quickly to the point steve is taki talking about protectionism. what do you think about building this wall? now people are up in arms about some trade wars between us and mexico and other nations. are we to take him literally or

seriously? >> and we are tight on time, rick. >> i think you take him seriously. listen, i'm a rules guy, okay? there's certain laws, whether it's about immigration, one person's subsidy is another person's tariff. one person's lobbying is another person's industrial policy from the top. words are powerful, but in the end, i really do think that this administration is not going to have great markets all the time because change is difficult. i think things are broken. it's easier to leave them broken than to put wallpaper under the moving insects underneath. ut binge. pg i don't think it will deter this president for good or for bad. >> gentlemen, we to go. thank you all. appreciate your responses on today's mau vee action.

we have hampton pierce. >> from our way back from philadelphia on board air force i, -- how the wall be paid formed prmd. the border tax would be paid for as part of comprehensive tax reform. obviously, what's the specific tied to that. as we continue to follow this particular piece of not only the trump overall agenda but the tax reform agenda in particular. that it will include some provision thaft, the wall on the

border. heading into the break here, we've got about 45 minutes to go. the dow is up 30, just shy of 20,100 today. it's a mixed bag. we have a lot of techs. the chief investment officer of the world's largest. it shows him how it febttle the $3.7 billion in assets. >> reporter: jeeper and chart. you're watching cnbc. first in business worldwide.

anything worth pursuing hard work and a plan. at baird, we approach your wealth management strategy the same way to create a financial plan built to last from generation to generation. we'll listen. we'll talk. we'll plan. baird.

i'm very proud of that, very proud of that. the business community and the labor community with the labor leaders that came out, one of them said it was the single greatest meeting i ever had with

anybody, it's the highlight of my life. and the dow on top of it just hit 20,000 for the first time in history. i'm very proud of that. now we have to go up, up, up. we don't want it to stay at that. >> that was president trump reacting to the dow reaching 20,000 in his interview with abc last night. the dow was trading in the 18,000 neighborhood on the day after the election and since then it has climbed about 10%. two credit card companies that are part of the dow has performed drastically differently since the election. american express is up around 15% while visa is only up half a percent. >> let's talk about that. which is the better stock to own right now? let's go to james senegal for "morning stoar." he likes visa and john from company research who likes amex. john, clearly they've been through a rough patch. they lost the costco deal. they take a bigger bite out of

transactions than visa does. make the case for amex right now. do you think they're turning things around, or what's going on here? >> sure. i think the main gist of our thesis on american express has been, number one, that it's a bank. visa is a processor. it's a totally different business model. that should work better at different times in the cycle. for american express, since you talked about it, since the election it's up 15%. it's underperformed the banking index. we think that doesn't make a lot of sense, we think there's room for the upside here, but when you look at the performance in the improvement of the business, this is still a stock that i would characterize as a stock that people don't like. and as long as this continues where people are unwilling to accept the fact that, hey, they're starting to turn this thing around, and b -- >> visa has been well liked,

visa and mastercard both doing incredibly well, let's call it over the whole rally we've had over the years. so what makes it change here? >> what we like about visa is it has an extremely long runway for growth. visa is in the company payment industry. we still have the tailwind of cash to economy trail transition, and what american express has not done is they've been able to fend off competition. you look at apple pay, palpay, google wallet. they all incorporated visa. there was a fear of what integrating incomes would do. visa and mastercard have not been hurt at all. we think people are looking at it as a high-priced stock, but when you look at the growth prospects, you look at the cash they're returning to shareholders, we still think

it's an appropriate model to come. >> if i were to ask you, it's dell 30,000 and there is a payments company that's not visa that's kind of led that charge, what company do you think it would be. >> they have the same tailwinds. we like the scale of visa a little bit more and there is some concern that visa changed ceos kind of unexpectedly earlier in the year. we think there is a little more market pessimism towards visa, but on the whole, those companies are very close. >> john, you made the case. payment systems, i mean, it really is a flagship for them, and there's so much competition out there now, so you address what james was just talking about as far as ample pay there.

they are more popular among the younger generation now. >> i think the challenge for amex was, number one, they lost some customers, and number two, they were swimming around on no real direction where they want to take the business. i think what they've done effectively is how long term this is going to be. it's a business that from a stock perspective, because let's face it, we're here to pick stocks, not just good businesses. from the stock perspective, you want to buy things when people absolutely me. as i said, everybody. they've been battling rewords. jp morgan lost $300 million in the fourth quarter on its newer car. they can't do that for ervr.

amex will take a quick step back and they'll get used to it. >> we had lors twice much because of a good number of years. which doesn't necessarily mean they're going to pull back on that stretch, and i think they were seeing. and if it's starting to sfroemd the risk? >> i think they can account from a growth perspective sieve when this cycle is fulfill pulling out and will be the breadwinner in terms of credit claim for this cycle.

the start war lunch, when you think about the aversions that have happened, specific banks work with airlines and specific hotels now, they're a model that lets you use points anywhere you would like, and i think the pendulum is going to swing back for that in a couple years. meantime, the dow does continue. any plausible close will be a nye many. the, and and p down strm. if they finish positive, the russells lagging, no. she's aski >> the dow is higher simply because the companies have better an expected earnings,

like johnson ask jo& johnson. >> intel, starbuck's are all numbe numbers. deal or no deal? the latest elements. that's coming up.

if you tax that 50%, 20% of

imports, which is, by the way, a practice that 160 other countries do. right now our country's policies is to tax exports and let imports flow freely in, which is ridiculous. but by doing it that way, we can do $10 million a year and easily pay for the wall just through that mechanism alone. >> white house press secretary sean spicer, they're on air force one, to philadelphia to the retreat talking about this possible border tax. i think it's just the negotiations have begun. >> it's also spinning the corporate world. there is a border tax and a border adjustment. but at least in one case you've got sort of ge and boeing on the one hand fighting with walmart and some others over the potential of this border thing. it's going to come down in many cases to home state senators. >> you knew that mexico wasn't just going to write a check, right? they don't want to pay for this wall. but there are other ways that the money can come to the treasury to pay for it.

>> that's the one piece of it, and at the same time you have the corporate tax report, which is going to be funded by the board of disability which is a different issue. you see the plan they are trying to push forward. >> they're getting underway. and the rally is underway as well. >> how about the dow? >> if you call 30 points a rally here. >> half the index is higher right now. at one point we had boeing, caterpillar, microsoft and dupont all at all-time highs, including s&p, charter which we'll talk about in a moment, the airlines including southwest, and google all at all-time highs as well. >> let's talk about charter right now. some of the movers we're highlighting at the moment, check out charter and verizon. no significant talks are taking place between the two companies. earlier the wall street journal reported that verizon had approached officials close to

charter about a possible combination, and it was maybe going to make a deal. they had a combined amount of 400 at yesterday's close. since reporting its net loss since 2009, the auto giant is heading toward a change in pensions. it also took a $2 million charge to abandon a factory in mexico targeted by mr. trump during the campaign last year. the 2015 profits would be leowe than last year. kelly? it's time for the cnbc update with sue herrera. president trump approached congressional republicans at the retreat in philadelphia earlier today. he said his now canceled meeting with mexican president nieto

would have been fruitless if mexico wouldn't agree to treat america with respect. >> the president of mexico and myself have agreed to cancel our planned meeting schedule for next week. unless mexico is going to treat the united states fairly, with respect, such a meeting would be fruitless, and i want to go a different route. we have no choice. >> for the first time, scientists have grown an embryo that is part pig, part human. the experiment involves injecting human stem cells into the embryo of the pig and it raises the possibility of interspecies organ transplants. one in four americans admit being late for work at least once a month. career builder has compiled a list of the most outrageous excuses. i forgot it wasn't the weekend. my mother-in-law wouldn't stop talking. and my personal favorite, i was cornered by a moose.

that one must be popular up in beautiful maine. that's all i can say. >> you don't see a lot of that in new york city. i wasn't late for work, but i was late for -- this was years ago -- i was late for a racketball game because i was stopped by a parade. a parade was going by, and i had to wait for the parade to go by so i could proceed on. >> you probably didn't have cell phones way back then. >> no, we didn't have cell phones. it was a tin can with a string. >> want quite that bad, bill. >> we can't be late for work. we have no excuses. 27 minutes to the trading session. the dow is up to the highest at all time. also ahead, the chief investment officer of the nation's largest pension, cowper speaks with us exclusively on where the dow goes next and on

his investment strategy. stay with us. hey nicole. hey! i just wanted to thank your support team for walking me through my first options trade. we only do it for everyone gary. well, i feel pretty smart. well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias. get help on options trading with thinkorswim, only at td ameritrade.

24 minutes till the end of the session. really in the thick of it, aren't we? let's establish things. are you still out of the market? >> yes. >> okay. so -- you've said you wouldn't mind, and you're missing it right now, right? let me add here, there is the sentiment in the options market of maybe setting ourselves up for decline sometimes and the vix would seem to indicate that. >> i would hate to trade off what the vix is doing, but that's a pretty good sign, really. when i saw 10.75, i thought, is it really that low? it tells me the market is getting ready for a little bit of a turnover.

right now the financials are doing well. >> how is it the reporters earnings in the dow have done very well. >> people are expecting earnings to be okay, and they're a little better than okay. >> if you're willing to be patient. >> absolutely. i think there will be an opportunity to get back in. maybe not at the level like last time, but a 5 or 6% move in the dow. i'm willing to wait. i don't think we'll see too much more trajectory here. >> thank you, peter. see you later. kelly? the dow continues to rally past 20,000 today. joining us now to tell us how his funds are gaining capital, ted, he wi ted eliopolous.

>> thank you for talking to me again. >> thank you so much for being here. two things happened yesterday in tandem. one is the dow went to 20,000, and the other is that harbour was firing half its staff. what do those two things in combination tell you about investing in this environment? >> as a long-term investor, we try not to focus too much on day-to-day events, and certainly the dow hitting 20,000 is an important milestone, a psychological milestone. that tells us that there is quite a bit of optimism and positive sentiment in the equity market. so we pay attention to that and look more to our strategic asset allocation for the long term and don't focus on a kicker. it's a well respected endowment and it shows you how difficult and challenging it is to invest

your portfolio and at the same time have a business model that you can execute through over long periods of time. >> ted, bill griffeth here. good to see you again. i know you're a long-term investor. but you got to admit what's going on in washington, i have to imagine you're paying attention to. if donald trump gets everything he wants, we're going to see sharply lower taxes, we're going to see bilateral trade agreements, we're going to see border taxes, we're going to see more jobs here in the united states. isn't that enough to even get your attention to maybe rethink a portion of your portfolio if they have long-term consequences? >> well, absolutely. all eyes are on the new administration. much of the focus purely on monetary policy for the last five to eight years of divided government is now turning for the potential of policy change both in the fiscal arena as well as government policy.

so yes, we're very focused on the changes that could be eminating from washington, the most important economy in the world, as well as other political changes across the globe. and our view is that those changes provide both opportunity for positive surprises as well as negative surprises, and we're evaluating them very closely. >> it's our pension funds that have the most impact on these markets. you guys did something incredibly significant in lowering your target. tell us why that's happening and what it means for the beneficiaries. >> sure. the motivation for lowering our expected rate of return really focused on the intermediate view of the capital market. for us intermediate means over the next 10 years. an investor looking out 40, 50

years, our immediate view is 10 years. it really drove our reduction and expected rate of return over the 10-year period is really the current setting in the market. by that i mean a fairly modest growth rate in the united states, 2%-ish, 3%-ish around the globe, a very low interest rate setting. so that context speaks to a lower return environment over the next 10 years, like i said. there is a potential for a much higher growth in the u.s., but there are also potentials for many negative consequences internationally that you have to keep your eye on in constructing a diversified portfolio. >> there is a feeling out there that the last chips auction for those treasury in place protected securities, tremendous demand. somebody believes that inflation is going higher, maybe a lot higher from here, maybe in part

because of the low monetary policy we've had for the last several years. you're the long-term guy. do you see inflation picking up in the next intermediate time for you, in the 10-year period you're talking about? >> we do. in fact, we are major players in the kickboxing market over the course of the last quarter. we've increased our exposure to inflation protection security as well as commodity from 3% up to 9% of the portfolio over the course of the last six months. that's a very significant move, and for us, in addition to the opportunity that you mentioned, protection securities offer many benefits like pension funds, and that is my ability to be so sensitive toward inflation. >> very good. we see the inflation coming. ted, thank you. we appreciate it. >> thank you so much for having

me. >> you bet. ted he wieliopolous from calper. >> as soon as calpers says it, everybody follows it. they have a huge impact. >> they do. we're keeping the dow above 20,000. up 42 points right now. >> we're continuing our close-up on the dow today. up next we'll take a look at oil giant exxonmobil and if it is right for your portfolio. stay with us.

welcome back. starbuck's serving up some numbers and we'll have those, too. let's begin with diedre and alphabet. >> they're expected to remain healthy, but look for this number that's been on the decline. the smartphone, google home and

the daydream view all came out. we'll be looking to see if more financial discipline under cfo lou pratt is paying off at this moment. >> josh, what about microsoft? what are you expecting? >> bill, here's what the street wants to see. revenue of 25.3. the real focus for investors will be that cloud business. the commercial cloud annualized runway jumped to 14 billion with a gross margin of 50%. the office 365 adoption is maintaining its momentum. and azure could see revenue growth of more than 100%. microsoft stock up 10% in the past month, and that stock touched a new high this morning. guys, back to you.

>> a different view of the bridge. >> i didn't know we had three cameras in san francisco. >> after all that, it is time for a coffee break. diedre, what's on tap for starbuck's? >> the main numbers that are checking out right now, they're looking for 3% growth in sales year after year. they are projecting 9% for u.s. stores. if the global comp number falls below 4%, it will be the lowest percentage increase since net 2009. they're looking for eps of 52 cents. it's also howard schultz's last day beforehanding the reins over to kevin johnson. as you guys know, he was a local supporter of hillary clinton. >> indeed. all right, guys, thank you. they have the best view of the whole news business, all three of them. we'll check back with them in

san francisco on the earnings when they come up. before all of that begins, the dow hanging onto gains every year here. and which stock in the industrial average should you be considering? we're going to look at that, when we come back. american exprn help you take on a new job, or fill a big order or expand your office and take on whatever comes next. find out how american express cards and services can help prepare you for growth at open.com. find out how american express cards and services it's not just a car... it's your daily retreat. go ahead, spoil yourself. the es and es hybrid. this is the pursuit of perfection.

>> up 20 points still on the industrial average. >> the day after hitting 20,000, which would you rather own, exxonmobil or chevron? >> joining us now, founder of financial group making a case for exxonmobil. he is an oil analyst talking to us about chevron. scott, i love this. you like exxon. you say if it was a man suit, it would be brooks brothers. what do you mean? >> it's kind of true. in the face of having a new president today, brooks brothers

has dressed more u.s. presidents than any other brand. living in houston here, exxon is a brand. they have a history of excellent management, being cautious but 70% of their revenue comes from upstream business, which would mean from the well to the pump, predominantly exploration. they pay about a 3.5% dividend, and in our practice, we work predominantly with baby boomers, people 50ish to 60ish. they're going to need that dividend for income and they're going to need equity. >> shawn, you prefer chevron here. why? >> i think exxon will be the stock here, actually. chevron is just a little bit put together for the times. they have more leverage to the oil price immediately, and they're reporting tomorrow. last quarter they got a lot of

positive momentum from disclosing some information about their position in west texas where they're really a leader in the u.s. onshore space. there has been a segment of that business that i think they'll have positive updates tomorrow and they can continue to get momentum from their position and kind of the natural position of oil prices. i do think that they have low-hanging fruits, too. >> we're getting pressed for time as we head toward the close. gentlemen, thank you both on exxonmobil and on chevron. we will take a quick break and come back with the closing countdown in just a moment. caug, the investment managers at pgim take a long term view, teaming specialized active investing with risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way,

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continues lower as well. that is the market that's suffered back and forth between the united states and mexico. there it is. let's go to wti oil. a three-week high now, but it's at 90% the last few days even though u.s. producers to continue to put more rigs on line. nobody knows that more than domin domin dominic chew. but it continues here at an all-time low. >> you make out like a bandit compared to those buying volatility. >> people are buying volatility expecting it to crop up. >> it's gotten cheaper and cheaper. right now we've heard in the last few days about the market. we think about 25 or 30 points higher in the dow. they represent all of that gain.

>> wait for more earnings now. we have some big names tonight with microsoft, with intel, starbuck's, some of those. thanks, dom. the dow is up 32 points. look at this, kelly. they're ringing it at the nasdaq. stay tuned for the second hour of "closing bell" with kelly. celebrating 30 years of gift standards. welcome to "closing bell," everybody. i'm kelly evans. we can close at a new record high. 21,100 on doubt here. that's good enough for new levels. the s&p 500, can't stay the same. they moved lower to 2296.

the nasdaq 5655, and russell 2000, 1375. they have yet to reclaim their prior record closing high. we turn our attention to earnings after hours. diedre standing by to begin this parade of coverage that we have. she'll be covering alphabet. jeff will be covering microsoft and aditi roy will be covering starbuck's. just a moment, these are already starting to cross. michael from destination management joining me as well, mike, what are you concentrating on here? >> it was kind of winning after not losing yesterday, breaking some new highs. i will say below the service of the index, there is more determination selling. you have more volume in declining stock. it's not that big of a surprise.

i think we reinforced the idea that yesterday's rally had merit, but it didn't seem like it represented a huge gain in money. >> what about you here? there is actually a number of names at all-time highs today. we're talking just in the dow about boeing, caterpillar, microsoft. a bunch more in the s&p 500. do you like the way you're seeing the action play out here? >> i think the market is in a consolidation range. if we consolidate around 19.5 or 20,000, that's not a lot to complain about. the market right now, everyone wants to know, is the market expensive? if you go back to early 2000 and interest rates were at 5%, now

the market is at 21 with interest rates of 20.5%. the markets are kpexuberant. i don't know what this means for the deficit long term, but i think the market still has some stability around these levels. >> hi, everybody. the first round of intel. hi, john. >> it looks like a repeat for intel on the top line. earnings per share came in at 79 cents. revenue came in at $16.3 million. we were expecting 15.7 billion gross margin. the guidance also looks pretty good. but i think we're a little short on the revenue line. the street was looking for 14.8 billion on the guide for q12117.

the street was looking for 14.52 guiding to 14.8. and on eps, the street was looking for a consensus of 61 guiding to 65 cents. on both q4 and the guide for q1, gross margin at 63.1%. a little lower than last year but within the range, kelly. >> we're just looking, jonathan, it's moving lower and we'll continue to sift through the results to see perhaps why, mike. from what we can see on the top and bottom numbers, it looks okay. >> perhaps revenue's guidance looking light. i'm not sure if that's the case or if the stocks may be backing up. the stocks are at an interesting level and bumping up to another high. i would view intel as really kind of going along for the ride which is outperformed in intel. it's kind of not the favorite

high for stock in that sector. >> i don't know if you have a view on intel specifically, but we're going to hear from a lot of big cat companies. perhaps they can show leadership in this market as we continue to look for the next phase. >> the market had a great run. we think earnings overall are actually coming in pretty good. intel's number, what you were just talking about, looks good. we wouldn't read too much into the stocks initially. a lot of algorithms kick off, but the earnings look good, the outlook is good. that should be a positive for intel and overall should be a positive for the group, but you'll have more reporting momentarily that will really set the tone. >> where are you a buyer generally here? >> you mentioned the market is at an all-time high. there are lots of stock in really good companies that have sold off because they've been out of favorite. qualcomm just got the stuffing knocked out of it today. we think they have a pretty good

6 to 12-month timeline. oil prices have rebounded pretty significantly. they've not been doing a heck of a lot. we think that's a good place to put money. we also like health care here, so a company like merck or pfizer, we think, will have a good 2017. z >> the google shares are moving lower. i think diedre has more details for us now. diedre? >> those numbers coming through, and as you mentioned it was a negative on the bottom lip. $9.64 was expected, so that is a significant miss. as you can see, alphabet shares down. they just moved a little higher, however. revenue was a beat. 26.06 billion. 25.25 billion was expected. also, the metrics we want to look at, cost per class.

they were down 15%. these are amounts that advertisers pay per ad. it was expected to be down only 11%. this is maybe disappointing for investment analysts watching this. they were expecting that to be up. it was actually up by 36%. we'll continue looking at these numbers, including what's come through on alphabet at the moonshot factory as well as how much it's losing there under cfo will pratt. we'll look at this report and bring you more details shortly. back to you. they're down about half a percent now, mike. >> it closed at 8.44 on monday. it seems that maybe the expectations are pretty high. but it's holding it.

i think people look at core holding in chief. >> michael, i was reading that google has 30% and it has been trading at all-time highs. what do you think about their prospect here? >> i think google has great prospects. i think the moonshot items that google is working on are good long term for the company. but again, as the economy grows, if we have stronger gdp growth, our advertising business is going to grow as well. i also want to comment about intel. one of the advantages intel perhaps has is the controversy that apple has with qualcomm right now, so that could lead to opportunities for intel going forward as apple appears to be really setting the stage for diversifying their modem business and their iphone,

particularly in a 10th anniversary year for the iphone, really. >> michael, why don't we go back to google for just a second. it seems like they've shut down some operations but recently named their self-driving car as kind of elevating that. they've got the core advertising numbers to focus on, they've got some new projects as well. what do you think this company needs to show to keep on? >> they have a core advertising business that you alluded to, but we really do need to see the next driver forward in this company. i think there is a driver there. i wasn't really clear what that driver might be. is it artificial intelligence? perhaps so. is it autonomous driving? perhaps so. it's really hard to say at this point. in the meantime, it's a huge cash flow business, and they're going to participate in any increase in economic activity.

in the meantime, we'll see which direction they head to get the additional revenue. >> as rich peterson points out, it's been in the last four quarters. let's move to starbuck's where aditi roy has the coffee giant. aditi? >> the top lines, the actual revenues came in at 5.73 billion versus is 5.5 billion on starbuck's. earnings, however, were 52 cents. another important metric that analysts are checking out and looking at. both the global and u.s. numbers are a 3% increase over last year, but that's also a miss on both counts with the global number. they were looking for 3.8% and 3.9% for the u.s. number. if the global comps number falls below 4%, which it did significantly, it will be the lowest increase since 2009. we should also note that the

last earnings call coming up at 5:00 p.m. eastern will be handing the reins over to ceo giant kevin johnson. stock, by the way, slightly down 2% on slow volume. back to you guys. >> thank you, aditi. they're still growing, they have a huge international presence, but that global comp is going to be the lowest going back to an economic reason. >> they're going to still have to prove they deserve it over time. a lot of companies in the general retail area wouldn't mind other comps. 3% is not necessarily going to cut it for them longer term. it doesn't mean this is a new trend. look, it's a company that's struggling with immaturity at this point. >> there's much more to come on that. let's get to microsoft with josh l

lipton. josh, first i saw 72 cents, then i saw 38. a lot of things going on in this report. >> kelly, we're reporting 83 cents versus expectations of 79%. revenue 6.7 billion. the street was looking for 7.9 billion. business processes, 7.4 billion. that was an increase of about 10%. within that division, it looks like commercial revenue growth, 3.44 cent and 25.9 million. there was a cloud division taish as your revenue growth at about 9% 2 percent. >> windows revenue from computer makers, that increased about 5%. the companies called for micro soflt guidance and that starts

at 5:30 eastern and we'll be highway shyack. keep marble what's driving marvin? so i think it's a positive report, obviously. back to starbuck's, if i could. a couple things about starbuck's that i want to make sure investors are aware of. the way they could enhance margins is there are two initiatives. we actually talked about an an litz today, or should they wait. they're in the process of trying to use technology. you ought to get enjoyment.

that's how starbucks is david catz, any thoughts on microsoft or starbuck's? >> we like the microsoft number. we think it does set the stage for as long as they need it. we are businessmen and we think the stock could be 15% higher next month. >> kayla, tell us about paypal. >> this is right in line of what the company was expecting. it reported $42.9 billion. that was just a tick higher than expected. the number of. i'm sure it was accepting $7.1

billion below expectation. . it lower by about 2 thoerls the revenue put out its guidance for the company for the first quarter of 2017 as well as the full year of 2017 and. the. >> it grew from 15 to 16%. 17% in the fourth quarter. and they're also saying where the bottom line is concerned, from a gas perspective, they are expecting some stock-based compensation for their employees w who, once they go public in the reporting, some of our own

larmgly. it could be the guidance moving this dog after hours, and the expectation from this company is going to be as assertive as he has in the past. >> t >>. >> it's been about a year and a half, they've been separate right now. they have different consistencies. paypal traded at 35 last year. it shows sentiment does play a fair bit of it. there is also -- i do think that explains part of it. down 2% or so on slightly wider guidance doesn't seem too far away. >> i use paypal a lot. i don't have to put all my information in all over again. all the earnings we've gotten now will help set a tone for the

session now. that includes alphabet, intel, microsoft and starbuck's, as you can see there. microsoft and intel is actually up 2%. michael yoshikami, this has a bearing on the whole market, seeing where it can take us from here. >> nasdaq has obviously been bumping up and the stock maybe not done as well, the high-tech stocks you named. yodsaenklai as well as a transition with. those with a written off technology, it may start getting longer in terms of innovation. i'm here in silicon valley, and i'm telling you there is.

the hagt 1980s. david, we have to go. just give us your thoughts here, tech versus everybody else. >> i think tech would be fine this year, but we would be very diversified in certain areas. we bought health care, and we're shy of the utilities. all right, guys. thajs for joining us. a very busy earning session here. coming up, we'll have much more reaction to all these big earnings, including whether you should be buying or selling shares of alphabet right now. and coke shares have also gone flat over the past year. coming up, we'll debate whether the dow swup.

this is nirs. many

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there is a brand new chief information officer. what i heard in the area we've been looking for growth, it actually did pretty well, but it was despite the softness in enterprise. cloud and communications did well, but enterprise was a bit weak. enterprise was about 50% of that business, so intel doubling down on cloud. also strong and a little bit of a surprise, perhaps, is how strong the pc business was for intel. bob swann telling me it was particularly average selling prices with pcs doing well for intel, the cloud computing business was up 4% for the year. pc pricing strong. he reminds investors that the money out of that group gets inducted into data centers, into areas that are growing. but even though the overall market in pcs in declining revenues grew 2%, profit grew

30% when you're looking at this on an annual basis. intel pretty happy with that, and as you can see, intel investors are happier after hours, digesting the fact this is end of the quarter and it looks well with expectations. >> alphabet, meantime, reporting its fourth quarter earnings and that's currently trading lower by about 2.5%. here with us, google we just pointed out are in a transition period. how would you describe google here? >> i agree, kelly. google is definitely in a transition period. 90% of their revenue still comes down to digital advertising. when you look at the bottom line, it clearly sounds like it came from a lowering of those costs there. at the end of the day, this is

still a market-dominating company trading at only 20 times forward earnings, which is a market multiple, and they have a lot of good things going on. i think the cloud is a big area of opportunity for google. they don't break those numbers out, but the estimates of revenue are actually south of a billion dollars. when you compare that to a zurich or microsoft at $8 billion, there is a lot of room to grow there. they're creating scaleable platforms that i think are going to be dominating, and there's a lot of opportunity there that i think is yet to be unlocked in google. i would hang tight with the company. >> a $900 price target on google here. what do you make of this patchy quarter? >> i'm still optimistic, but there's good news and bad news. you're seeing acceleration on core areas. the cloud unit, which is another re n revenue accelerated and on the

flip side, can't say the same about the margin. it could be on the cloud side which they have more marketing with their hardware and is they want this to balloon to 1.1 billion which is what it was last year up 70 million. >> wasn't is more profitable, more efficient? >> i think people were expecting a lot more discipline. you saw the curtailing of scaling back efforts within the fiber unit, now the reorganization, and there's spinning off some other satellite images. there should be more discipline. unfortunately, without seeing revenue correlate with their efforts, they're not blooming. >> diedre has more on these results. she joins us now. diedre? >> i just got off the phone with a google representative and explaining a little bit more

about these results. as you notice the eps was a mess. 9.36 versus 9.64. they attribute this to a one-time tax affecting the u.s. tax rate. also a little more color around costs per click because this might be an area that investors are disappointed with. they expected this to be at 11%, but it was down 15%. they said this is due to the ads on youtube. youtube has been a little slower to attract the advertising for ads, but the number of clicks is growing. also a little bit more color on the other unit, which i know you guys were just talking about, the operating loss was bigger than a year before in revenue, although the representative was optimistic and positive saying that -- reiterating that this unit is really a long-term bet and they're really trying to foster innovation here. back over to you.

>> thank you, diedre. robert, we don't talk enough about youtube because intel is one of the biggest companies in this country and they're doing well in terms of the advertising business. does that change your perspective here at all? >> obviously i'm still bullish on the company, but i think that's great insight on what's going on with youtube, because when you look at the numbers, you saw, as the other guest said, you saw volume growth in the clicks but there was that margin impression there. google has really been beaten up for a long time with monetizing youtube. if they continue to get some momentum and increase that top line volume for video, i think that's a good sign for google. >> anything you want to add, mike? >> a year or two ago, james, there was a lot of talk about a function. is there any indication that either that's going on or that's

still a concern, or that that's why google doesn't trade in more of a premium valuation? >> i think it is a concern. you have to think, what is a post-tech world going to look like? you can say google and amazon aren't operating on that paradigm because of their operations, learning and so forth, more so than apple. they're doing the right thing to navigate on that front. >> what if they wanted to get more serious about that? they do obviously have speaking assistance and capabilities they're working on. >> i don't think it's up to them, it's the consumer getting to that level, not putting the cart before the horse. i don't mean to sound too negative on this because the margin looks a little bit alike, but the demand is flourishing. that's something that continues to provide confidence, and when you look at a post-trump administration world, i don't

think you can argue there is any country more politically savvy than google. that's another reason to be bullish. >> it certainly was savvy with the obama administration. robert, talking about a.i., not just a.i., but some of these virtual systems that could replace text, we have to talk again about the wamo industry. people know google sa heis aheat can this move the needle for the company overall? >> i think it's early for all the technologies. at the end of the day, it's going to be up to the consumer. the fact that they're investing in wamo, the fact they're investing in artificial intelligence, the fact that they're out in the forefront of these companies, i think whatever choice the consumer made, they're going to be well positioned for it there. ultimately when you're looking at the numbers, it slightly may be a little lackluster, but again, a lot of opportunity for google. i wouldn't get too discouraged with what's going on now with

the company. >> robert and chuck, thank you both. kelly, here's what's happening this hour. the british prime minister arriving a day before her meeting with trump in washington. she addresses them at the retreat. >> i've been invited to be the first serving head of government and it is an honor indeed. i defy any person to travel to this great country at any time and not to be inspired by its promise. >> president trump gig repoving reporters a look at his office on air force one. on the same flight, sean spicer saying the president wants a 20% tax for all imports from mexico to pay for the border wall.

some officers receiving some puppy love after a van carrying more than 100 puppies crashed earlier this week in new york state. five puppies suffered just minor injuries. they were treated by the local spca. the rest of the puppies were transported by the officers but not before these cute, close-up photos. >> aw. i have to admit i ordered the nypd dog calendar this year, too. if they were the puppies, i might have donated 40. >> a lot of people have offered to adopt those puppies, so they'll all go to good homes. >> excellent. thank you, sue. sue herrera. microsoft shares reported higher than expected earnings. and later, an analyst bullish on starbuck's tells us whether he's changing his tune on the stock after the coffee house changes revenue. stay with us.

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commercial cloud annualized revenue rate right now seeing 14 billion. that's a jump. of course, investors not just concerned about the growth of that business but the profitability as well, microsoft saying growth margins on the cloud 48% in q2. that is a slight deseceleration when they clocked in at 42.

>> joining us with his reaction is chris johnson from ak investment group who has holding in microsoft stock. chris, we've talked about the renaissance microsoft has pulled out here. that's start to go play out. intel had some comments about the pc cycle a little bit separately from that and then the softness on the enterprise side. how would read these results from microsoft? >> i would look at them as overwhelmingly positive, really, kelly. if you see the pc business start to come back in for microsoft along with their building of the cloud, and then they've got that office 365 on the enterprise side they're starting to push, i think you'll see focus back on their core concentration start to go pay off here. i think we'll see the trend in terms of the price here. investors will be a little bit not overwhelmed but a little bit impressed with the results. >> you know, expand our horizons a little bit.

how much bigger could cloud computing get for microsoft, chris? >> let's think about it. the big dog in the room is amazon and everybody is going after amazon web services if it's google, if it's microsoft. they have about an 8% growth, 10% growth from that. it will chip away from amazon right now. the other side of it, if you look at thit, it has become a ce concentration, and i think it will be a tunot a turnaround bu core consideration. gone are the days of itunes, they're really going back to this competency as a company. >> the question is where have they gone as a company? it's been as bullish as it's been in a few years and the stock is up more than 2%. i think it's one of those questions has everybody absorbed the story? i think also with microsoft,

what are you going to do with tens of billions of cash you might be able to bring back? that might be more of a balance sheet story. >> i'm sure that's going to come up. we need more details from washington on that. what do you say? real quick, chris. >> i was going to say real quick, on the sentiment side, mike, you point out the annualizations at 10%. the other thing i would point out, with microsoft we have higher interests going up. it is showing growth potential. i think that is a magical combination for 2017 right now when everybody is afraid about utilities and other things entering the stocks. >> chris johnson from jk investment group. thank you for joining us. talking about starbuck's shares now. those are meanwhile slumping after reported earnings. up next, we'll discuss whether to buy the stock on this dip.

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welcome back. another 30 points higher for the dow. errors for the rest of the markets, though. starbuck's was just now with s earnings as we turn to these movers after hours. that stock falling 30%. he's got a bye rating, $50.68 price target. that's pretty specific. anyway, peter, 3% global comps. what do you think? that's a miss from what the stream was expecting. >> yeah, the price target was 64. you're right, the comp was weaker than we expected globally. the earnings number did come in line with our expectations. the guidance is reiterated so we're happy to see that. i would tell you that the entire restaurant space in the month of december seemed to have fallen off a cliff. while starbuck's is insulated given their digital technology, they're not immune to these pressures in the space. so i think clearly they felt

some pressure in the month of december. i think investors should focus on the trends throughout the quarter to see if this really was isolated to just one month in the month of december or if this was an entire quarter issue. you're right, the comp trends were definitely weaker than what we were anticipating in the streak. >> starbuck's has proven it can operate in a bunch of different environments, but howard schultz is leaving the day-to-day operations. does this make you nervous? >> i will say i'm a little nervous about the transition. every time howard has left the business, it's faltered a the bit. he is the visionary. i think they have a great management team in total, and i think it will be somewhat seamless, but it does make investors nervous that howard is stepping away. i think this has been the rest of the story for many years and it's finally coming to fruition. >> a $64 price target. peter, thanks for joining us this afternoon. from btig.

don't miss the exclusive interview with howard schultz. that will be tomorrow night at 9:00 eastern on "straquawk on t street." he ships to the u.s. and he's extremely angry about donald trump's rhetoric for his call for a border tax. next, you're watching cnbc, first in business worldwide. this car is traveling over 200 miles per hour. to win, every millisecond matters.

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another one we're following is coca-cola. we're with the senior analyst covering coke. to talk about the prospects of this company which has been lacking in the dow, we talked about the challenges for the soda business. what do you think could get coca-cola flying again? >> i think the big potential for coca-cola is cannotexactly that. it's recognizing the problem the industry has, recognizing the problem coca-cola has and the key is recognizing before the market does. >> steve, do you see that transformation playing out? would you be a buyer of coca-cola here? >> kelly, this is simple. when is the last time you opened up a can of coca-cola? >> about three months ago. >> there is a war on sugar going on right now, and coke produces sugar water.

philadelphia was the latest city to come out and put a tax on car carbonated soft drinks. they're not the last one. what's happening in the united states, it's just going to trickle to europe. we have 11 years of carbonated soft drinks declining. how do you get a share in that product when everything is going the other direction. >> in the last year it has not been as much of a lopsided story. but dr. pepper-snapple in the same industry, they've done great in the same business with these overhangs about sugar and carb carbonated drinks not doing well. what's the difference ? >> it's cut a lot of their costs. they realize it's not going to grow as much as it has before, so it's cutting costs. coca-cola is doing the same thing. it's recognition of a

tobacco-esque type business. there is no elasticity in this business. if you want to drink it, you're not going to care about the price. >> come see me in the summer, it's more of a daily thing. that's why berkshire really loved this business. steve, what about the fact dr. pepper has done so well? that makes it sound like it's moran operational issue for coke. >> i think you nailed it, though. it's just like cigarettes. everybody is getting away from that. is that something you want to get on just because the cigarette companies are doing okay? i know they're going to transfer out the bottling sector, but that goes to a couple years ago when they had a different ceo, they were ge sintegrating all t distribute torz. it's just like your normal ceo trick here. look at all the big things i'm doing, i'm going to be the new ceo. don't mind the fact this company isn't really in a good industry anymore, and how do you buy into

something that's in a dying industry? >> we'll see if they accelerate into other types of drinks. thank you for being here. as we continue to go through the dow components. president trump wants a border tax to help pay for the wall with mexico. up next we'll hear from a businessman who says trump's moves could end up hurting both countries. tony dwyer is calling for a market pullback. he says there is one thing that could pull it back. he'll explain at 5:00 p.m. eastern. you do all this research

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the united states fairly, with respect, such a meeting would be fruitless and i want to go a different route. we have no choice. >> well the white house is quickly down playing some comments by a spoekzman apparently suggesting president trump's border wall would be paid for a 20% tariff on mexican tariffs. they're now saying that was not a policy proposal just one idea out of many about how to pay for a wall. let's get some reaction now from ner nan dough turner junior. who joins us now by phone and thank you for joining us, sir and you heard this news and what went through your mind? >> thank you for having me. well, we just think that this is one more of mr. president trump's ideas that are floated to twitter and the media without

having his advisors, you know, show him some numbers and some, you know, consequences of an action of this kind. obviously a 20% border tax, you know, would hurt the bilateral economy and trade for sure. >> how much would it hurt? talk about your business and what that would mean? >> in our case from many years ago when there were, you know, tariffs and duties we understand that the 20% would be on mexico. if we import for a bicycle, if we import the chain and the frame and then we add the tires and 20% i'm hoping the 20% will be on that. it will hurt badly. the american people are the customers of the import. we'll start paying for for their trucks and cars and products that are made or significantly

manufactured in mexico. >> if you're making these car parts in mexico and then you're shipping them to detroit, if all of a sudden there's a 20% let's just use the number because it's out there, 20% tax on that, what does it mean if i'm buying a ford or a gm car, what am i the consumer going to see if all of this goes through. >> if the car starts where they are in and a 20% tax or duty in the border, for a pickup truck it will take you for three, four or $5,000 in price increases that the american buyer would pay and obviously the jobs would be hurt in both sides of the border because everybody knows there's at least 15 or 16 states which in the united states which they're main trading partner is mexico. there's millions of jobs in the u.s. as well as in mexico. it will hurt mexico more problem but i think this is bad for

everybody. >> and fernando the white house is saying maybe it's not going to be 20% but the impetus is clear. you've seen the rhetoric from this administration. your president cancelled this meeting and he says he wants mexico to help pay for this wall. so even if it's not 20%, what effect do you think this is already going to have on your business? >> well, it is like having a sales tax higher than one state than another. you can buy whatever you want in one state of texas and it's going to be different in connecticut and that's the same. you lose competitiveness with taxes but in this case, in our particular case, we sell most of our parts so the buyer in this case the automaker and then later the client is going to pay for that. it is i think it is wrong to think that mexico will pay for that because, really, whomever

is importing that is going to pay for that and it's a horrible idea for many countries, i think. >> that's true. could be the consumer. thank you so much for joining us on this short notice. that's fernando turner junior. he's the global chairman. >> thanks so much for having me. >> we'll get a check on some after-hours move and tell you what to listen for when we come right back. get off the computer traitor! i won't. (cannon sound) mobility is very important to me. that's why i use e*trade mobile. it's on all my mobile devices, so it suits my mobile lifestyle and it keeps my investments fully mobile... even when i'm on the move. sign up at etrade.com and get up to six hundred dollars.

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welcome back. here's some earnings movers for you after hours. it's been a big one. we've got starbucks anywhere from them being down 3%, mike, alphabet also being down. microsoft and intel holding up and intel's been moving around quite a bit. now it's barely positive. >> people obviously looking at the silver lining. but i do think they felt as if it justified what the outlook is. it's good enough. i think good enough to me is the theme for earning season this time. it wasn't as if the stakes were that high for the fourth quarter. you're seeing some sell in the news responses in general. but that doesn't really mean anything more than a market pause which really is what we've been having. >> and we talked about the dow got us over the 20,000 mark so it will be important to see if

we can maintain this momentum. >> without a doubt. that's okay. in terms of the market as a whole the question remains how much of that was already figured out. you might have a problem with some complacency. but the market looks intact. >> you've had a long day. we'll let you go. that does it for "closing bell" and "fast money" begins now. >> "fast money" starts right now. live from the nasdaq market in new york city's times square. dow lives on. the dow jumping to new highs. s&p and nasdaq making new intraday highs. the we start off with the biggest story that would be earnings. alphabet, microsoft, intel, starbucks all reporting after the bell all on the move. we got full team coverage of all this action. deidra