good morning and welcome to squawk box here on cnbc. we're wrapping up our week long stay at the world economic forum. there's one story everybody is talking about today. the death of king abdullah. saudi tv making the statement yesterday with a statement from his half brother prince salman. he has taking on his responsibilities from the last year. reaction coming in from around the globe. john kerry traveling here overnight. he said king abdullah was a man of wisdom and said the us. lost a friend. >> prices at this hour look like they are up slightly. just over 1.2%. wti up about 56 points. to 46.87. we'll talk more in just a moment but first a round up of other big stories we're watching this morning.

>> thank you becky one of the key decision makers now defending a decision to launch a program. the launch had now been moved in the right direction and said market reaction was encouraging thus far and next big question a major election in greece this weekend. back in the united states the focus is on earnings and economic data. on the agenda here's what's happening. quarterly results from general electric and mcdonald's before the bell but two data points coming up at 10:00 eastern time. existing home sales and leading economic indicators. stock futures at this hour dow opening up 5 points higher. s&p 500. nasdaq up about a point. now to today's top stories. succession in audi arabwe saudi arabia.

>> brother to brother. >> these are the sons of the original king of saudi arabia. >> the unspoken question is what is next for saudi arabia. >> is this the last brother. >> yes it is. >> king salman. he's a half brother. >> he's 70. >> he's in his 70s. >> that's pretty young at this point. i know that now. >> when we were talking about what comes next what's going to be very interesting is the new crowned prince. he is actually the younger generation. he's in his late 40s. so this is what we're talking about in terms of the age difference but is there going to be a change in the progress of saudi arabia. most people don't think any progress has been made but if you look deeper you'll see that king abdullah was the great

reformer. he was able to bring in jobs and even now to bring the stock market to such a place that they'll open it to foreign incelestement for the first time ever. he changed saudi arabia in a big way but it's going to be the crowned prince that is going to change things because we know that king salman isn't in the best of health. >> i like when you read he was in his 90s, somewhere, like nobody knows i guess. >> right. >> but 90s means one thing. was he involved for the last five years in the day-to-day operations? >> very much so. >> he was. >> very very much so. >> but there's other people behind the scenes. >> there's a lot of people behind the scenes but this man had an agenda for saudi arabia unlike what they had seen since the beginning and he was racing against the clock. you have a younger population there and the fact that their

entire society is based on the price of oil and he knew if he didn't act quickly to make sure that young people were educated and the labor force was able to give them jobs he would have a major problem and that's something we've seen in the last few weeks. paris with the situation there, he knew this would be a problem if it wasn't taken care of. >> alabama they people there do get stipens just from oil. >> they're not not taken care of but he was loved and known as being a benevolent ruler. >> will you stay? thank you. joining us from istanbul richard engle in davos. i feel a little more worthy of tossing to richard now that i'm international as well. good morning richard. >> good to talk to you. i hope you're enjoying davos. >> very much although it's cold

today. >> so yes obviously the big story right now is the transition that is underway in saudi arabia with the new king king salman and the burial of king abdullah which is supposed to take place in about an hour. burials are very quick and usually within hours of the king's death. he's buried in a simple grave marked with a stone. not an elaborate procedure at all which is in adherence with the religious traditions. they are expressing continuity. they're not expecting major changes in policy. oil policy security policy. the new king is well-known. he was governor for about 50 years. he himself is 89 years old. so this is not like we're getting an unknown quantity to

come uproot saudi society. they're talking about managing this transition and making it as smooth as possible and for a lot day-to-day life what it was yesterday and what it will be next week won't be impacted at all. >> thank you richard. we have such a long delay i don't know if it's worth while trying to keep you in the conversation here richard. it's impossible you talk over each other but in the near term what does this mean in terms of oil. >> they want that stability. there's no value in changing the current policy. in a few years they'll be just fine and they all understand

this and are behind the policy. this is a top down society. everything has to come from the ruler. we understand he has been the oil minister for years now but it all comes from the king and when things are frozing, for example in the next three days of mourning and if king salmam's health were to worsen. you have the two top decision makers that may or may not be in the gail. i don't see any changes in the oil policy any time soon. >> joining us now is bill spindle. he's the middle east bureau chief and the last several years have been a time of great upheaval throughout the middle east. the arab spring came to much of the region but not saudi arabia. they used a lot of oil money to make sure they tamp down any potential oil rising right there. how willing are the people to kind of ride this out?

do you foresee changes with this succession? >> what we're seeing both yesterday and again quite dramatically today is the saudi's moving swiftly to deal with any sort of uncertainty. yesterday's decision sort of left open the question or brought to the fore the question of whether the next generation would step up and when the next generation would step up and that introduced an element of uncertainty that the saudi system doesn't deal with well and then today they very quickly dealt with that by appointing a prominent member of the younger generation to be the deputy crowned prince. that puts him in line of succession and puts him above all his peers at the second generation level and that's a

really dramatic move today that's really intended to put a damper on any sort of uncertainty in the situation to make clear that the royal family is determined to prove they can get through this in their usual steady calm way despite speculation about how this works. and members of the royal family are loath to question the next generation or what's coming next but in terms of u.s. foreign policy we have seen such a division in the goals of the u.s. and saudi arabia over the last decade or so do you foresee changes in the coming days? >> i don't really. i think that the saudis king

abdullah despite whatever disagreements they've had with the u.s. and they had a lot of disagreements with the u.s. recently, they worked hard to keep those out of the core security relationship between the saw disand the u.s. the terrorism relationship. those are really things that are at the core of that relationship and not only those not come into question the last couple of days but again the appointment of mohammed as the crowned prince he's closest to the u.s. and worked hard and made his name and viscerating al qaeda and he's a real favorite of the u.s. i think it's a real statement that that will remain a center for both of those countries. >> hey, bill i remember right

at the beginning of the arab spring as it went from state to state some people said that the saudis would be nervous that the same thing can happen there. i remember we asked him about that and he said no the saudi people they love the royal family and some people said well some of that is because they're not exactly bought but they are certainly taken care of pretty well and the saudis did weather that storm. i don't know where it stands but you know better than i do. >> it's an interesting thing because this does raise the question of what about the president of egypt. many saudis i have spoken to are ready to see a more active role from egypt. they're ready to see a more active role and this raises the question, are we going to see egypt take the bigger role in what happens in middle east policy going forward. >> but this won't imboldened the

people of saudi arabia. >> i would say so. >> it's an interesting thing because you have about 20% of the population who are modern educated in the west. they're working in the country. they're involved in the political sphere in that sense but the rest of the population is conservative and religious and they have been following king abdullah like a father figure. that's how they see the king. i wouldn't say any unrest. >> there's no generational distinction? >> they see him as a benevolent father. this is an arab society and in an arab society it's a maternalistic society. >> all right. hadley is going to stay and bill is going to leave. we'll bring in our last remaining oil expert. how will the death of king abdullah impact the oil market? john you're back in vogue. he is back at our global

headquaters. is there any reason to think, john, that the recently deceased king was one of the individuals that said i'm going to teach these frakers a lesson and will that continue to be something that the audis -- was that one of the rationals and will that continue? >> absolutely. this was their brain child. they brought it to the last opec meeting and fought back opposition from iran and venezuela and others and said we have done this before. we did it in '98 and we'll do it again and that's what's happening. i don't see any change in the short-term. they want to break the back of the frakckers here before they retighten their grip on the global supply. things go downhill from here for us with king abdullah's death. the next generation and others while they talk a good game and

a lot of happy talk toward the u.s. and what they want what they want is a sustainable oil price, a higher one than we could benefit from and would work to do that. >> nobody knows where oil is going to go but 46.90 with the death of king at saudi arabia. it looked heavy for a long time when it wouldn't move in the 90s and now it can barely get back to 47 on this. it seems like the supply-demand dynamics are what they are. >> well right now yes, we have this oversupply. yesterday in the weekly inventory report we saw another massive inventory. keeping a lid on what's happening here. this is the saudi play book. this is what they wanted to happen. it's almost as if the future's market here we spiked a dollar

on the news to pay homage to the kick and we'll move to the reality on the ground in the near term future. that's lower prices. that's why i continue to target at least $33 if not lower for a time. they want to shake things up in the global supply chain. >> let me ask you though you're saying that things aren't going to change immediately but if you're in a position if saudi was in a position with the third generation being the ones in power you think they would not go along with the current policy? they would be there to reign in some of the production? >> they're playing long ball. they're totally on board with what's kurnly going on but down the road given what all is going on this civil -- this religious civil war we're all witnessing and what they're trying to do as well if you look at some of the reporting around the king's death you're

reminded about wiki leaks about him urging bush administration to make an attack on iran as he said to cutoff the head of the snake. so there is no love lost there and there's a lot more ahead of us in terms of what saudi interests are going to be including how they see the arab worldcoming along. they were part of helping to overthrow the muslim brotherhood in egypt. they spent hundreds of billions to keep the peace at home as you were discussing a few minutes ago. so i think the next generation will be very much about looking out for their own self-interests which you can't blame them for but it won't be the happy u.s. interests we have come to enjoy. >> all right. long ball. that's baseball. i was going to say underinflated or overinflated balls but i think that was a baseball anlage. not a football anlage. that news even made it all the

way over here to davos. >> do you know who i talked to about that last night? joe montana. >> he probably liked them underinflated too. >> he said everybody likes the balls a certain way. he said it's a little odd that 11 of the 12 balls were underinflated underinflated. he also said the colts and ravens caught them too. >> but like brady said yesterday it's not isis and it's not oil. >> do you believe they can't feel it though? they all claim they have no idea. >> but wouldn't the other offense know it. >> you use different balls. each team brings 12 different balls. check them at the beginning. >> and montana said it's because every quarterback has a different feel they like so they allow them a little bit of leeway. for awhile they came right out

of the box and nobody could hold them. the officials check them at the beginning of the game. when they checked then at the end that was the difference. >> it's ridiculous they don't mix them up. thank you hadley for being here. good to see you on set. normally we have a delay when we talk. becky catches up with mary bara and check out some of our news makers on the agenda. kyle bass lloyd blackfein and jack lew still ahead. when we return live from the world economic forum in the beautiful swiss alps.

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it returns it into clean water, electricity and ash. >> first showed you that video a coup of weeks ago. bill gates demonstrating confidence in a new technology that turns waste into drinking water. now he's challenging jimmy fallon to a taste test. here's what's followed. [ applause ] >> i'm pretty confident that that was -- this was the bottled water. >> well, that was rigged. it was all poop water. >> that was both poop water. >> absolutely. >> you're unbelievable bill gates. i can't believe you did that to

me. gosh really that was it. >> but that's as pure as any water you've ever had. >> it tasted really good. >> that was good poop. >> fiji water. the machine that changes waste into water is called an omni processor. it's the latest project of the bill and melinda gates foundation. they're here. i just saw him talking to al gore in the hallway. we're teaming one facebook to bring you face to face with influential thinkers. today we'll sit down with melinda gates and sheryl sandberg. >> earlier this morning i caught up with gm ceo mary bara. >> we'll be investing in technology and over the horizon we'll want to take advantage and be able to offer the vehicles that customers want with this environment but there's a lot of uncertainty as everyone knows so

our agenda doesn't change and we'll look to provide customer what is they want. >> when we talk to mike jackson it's like a whistle, when gas prices come down they want to come in and buy big cars and trucks. >> in general it's a shift but they look at it. the average length of ownership of a car is going up so they're going to look at it over the long-term but it provides disposable system that they may be able to buy a richer vehicle. >> we've seen a lot of volatility in marketing. the dollar is strengthening, day by day, sometimes hour by hour especially when you look at what the ecb just did. what does the stronger dollar mean to you and how worried are you about what may happen later this year. >> our philosophy is build where we sell. we're looking to make sure we have the right globalization. we have -- there's wind falls and there's, you know

challenges for others so we continue to execute that strategy and we'll continue to look at it. >> when consumer confidence gets rocked you're some of the fist to see it right? >> we are. over the last couple of years as the global influences have become more prevalent in impacting local markets, we've seen people get used to a little higher level of volatility but if it gets too high definitely. consumers will say i'll put this purchase off. >> mary gm just maintained it's dividend. ford raised it's dividend. they just put out a note questioning whether that was the right thing. some shareholders were looking to say more. they raised if question of whether that increases the possibility for activism. >> our vision for the company is to make sure that we become the most valid company. so we remain on that path.

we want to look -- have the right reinvestment so we have a long-term strategy so definitely plan to return excess earnings over the long-term and that's what we're intent on working on. >> i think of uber or somebody that makes it less likely for young people to buy cars. >> we're seeing trends especially in the u.s. and other urban areas where people are putting off that purchase but i think that's one of the things when we talk about the industry is changing and will change more in the next five to ten years than in the last 50 and general motors is looking hard to lead in what will provide true customer value. >> we just saw the numbers this week. toyota was the number one vehicle sales in the world followed up by volkswagen third place was gm. is that a trend that concerns you or bothers you or do you even look at numbers like that? >> of course we look at them. we want to grow but we want to

grow profitably. it gets a lot of attention. more importantly is the quality of earnings and the quality of growth. that's what we're focused on. >> guys again this was probably half an hour ago. maybe 45 minutes ago we were talking to her. we did get the chance to ask her which car she prefers and while she said she loves all gm cars we got her to admit they're both camero people. >> you were up again this morning. >> yeah. >> what time was your first panel. >> that was just at 11:00. >> so you slept in today? >> kind of. >> i slept in and had a meeting with mark carney of the bank of england. it was interesting. >> what did he say? >> we'll talk about it maybe after the break. >> what a tease. what a tease. coming up, quarterly results from dow component general electric plus more on the future of saudi arabia and the oil markets following the death of king abdullah.

we'll talk to daniel an expert in all things energy. we'll find out about bank of england. >> maybe. >> when squawk box comes right back from the world economic forum in davos. opportunities aren't always obvious. sometimes they just drop in. 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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earnings coming out now from general electric. if it's friday it must be ge. 50 cents a share. one penny above estimates. revenue at 42.0. 42.2 was apparently if first call estimate of all the different analysts. ge's results were pressured by a

drop in orders in the oil and gas segment but there were some highlights like industrial up 23%. is that t yeah the profit in industrial is up 9% i think. maybe that's revenue that was up 23%. >> operating earnings per share. >> operating earnings per share. 50 basis points that was flat and fourth quarter margins and full year was up 50 basis points as well. chairman and ceo says end of the year was strong. fourth quarter industrial earnings and margin growth. the environment remains volatile but we continue to see infrastructure growth, opportunities and we're pleased with our execution in 2014. >> okay. >> so 24.20 hasn't had a great recent 12 months and it has been affected to some extent by the

large investments made in the past three or four years in oil and gas. you wonder with a some of the assets -- they must be worth less than six months ago. >> they have a lot of ge people but they don't come here. >> john rice. >> let's get back to our top story this morning. the death of king abdullah. joining us now -- you get lucky when you're in davos because you can walk right on the set. m he's an expert on the middle east and energy complex. that sounded awful. >> that really did. >> let's move on. >> it's nice to see you. help us try to understand what you think the implications are politically and in the context of the price of oil.

>> clearly king abdullah made impacts in the country but i think what it means in terms of oil policy was a consensus. what does get highlighted is the geo political risk in the region and a country hah hasn't got a lot of attention but has a border is yeme in where a group is now moving into. >> you think they did? >> it's remarkable that a year ago you had a lot of geopolitics in the price. i think some of that may come back. >> saudi is trying to maintain market share. how long do you think they can do this? what are your numbers? >> now that the new swing producer is not saudi arabia but the united states i think all eyes will be on what happens to u.s. production over the next

several months and that will determine what happens with the price. but this is a strategy that we'll leave it to the market. >> we just had hadley on and she thinks that saudi can go three years with the price where it is today without having a real problem. >> three years would just about go through their foreign exchange. it's 150 beside a year. that's what they do have. >> do you think they would be willing to do that? >> i think they would like not to do that. they probably see this as a year year and a half. this may not be done because we'll come out of the winter and go into the spring. you have countries that have a lot of problems and don't have these resources and there will be pressure about having discussions. >> we're talking about the arab spring did not go. >> the spring is over. >> but it never made it to saudi arabia but yet if you're a

citizen there it's not as bad as other places but can women drive yet? it's quite a repressive regime? and there are young people. >> almost half the population is under the age of 24. >> is this the time when it happens? they have twitter and facebook and all of this stuff now too don't they? >> well i mean anything is possible. i don't think so. i think the king was actually personally pretty popular. >> so the order they maintained was it more from oil revenue than a oppressive society. >> they put a lot of money in the time of the arab spring the amount of money they put into saudi arabia was double our stimulus. >> wow. >> in real dollars. >> yeah very real dollars. >> very real dollars. >> so just make a quick prediction. where is oil 12 months from now. >> higher than it is today. >> can i ask you though if they used that much money in stimulus

they're fine for the short haul with continuing to live with lower oil prices. is there a point? two years down the road or three years where they say we can't continue? >> they were willing to cut if other people were willing to cut two days before the meeting the russians said we won't cut and the saudis said we're not going to cut either. the secretary on the floor opec said we'd have to cut in march. >> it's thousands of individuals. the independent producers and is saudis come conspired to bring down prices not likely. >> thank you. >> saying higher is saying something. >> but he said that's in a shorter run than a year from now. >> in a year who knows.

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the health care industry is going through a major overhaul right now. he was on the show saying it's undergoing the biggest transformation in 100 years. shifting from taking care of someone when they're sick to keeping them healthy and away

from hospitals. joining us is bernard tyson. bernard would you agree with the statement on that? that this is the biggest change we have undergone in 100 years in the health care system? >> i can't speak for the whole 100 years because i'm not that old. but there's no question that we're in the midst of dramatic change in the health care industry. >> what does it mean in particular? >> in a lot of ways as you know, many of the things we do is being replicated in the industry so we always focused on trying to keep people out of the hospital and when needed they're a high intervention center and very appropriate when needed. i think also the incentives are changing where we're starting to see a move away from the fifa service to more of a value based

or prepayment, whatever title you want to put to it is starting to change behaviors inside of it. >> recently kaiser took a look and it's relative with the case of disney land and measles spreading across the country. more parents aren't immunizing their children and that's lead to what. >> we have seen a decline. we made that a big push. it certainly helps and it's the right preventive steps and we have outreach program to reach out to parents and children and hopefully we'll see this happening much more across the nation. i think the measles and what is happening there is just another sign of what can happen very quickly when something reaches, if you will epidemic

proportion. >> how many children aren't immunizing their children right now? what percentage? >> i don't have the exact number on the top of my head but there's no question there's been a decline. >> and the parents that worry about the impact of potentially getting autism from that what do you tell them? >> these are concerns. i don't want to excuse away responsible parents asking responsible questions. we have the latest evidence to show that the connection is very slim if at all but the questions are very appropriate and we need to continue to figure out how to engage in the right conversations so people are make informed decisions. >> how long have you been ceo? >> since july of 2013 now. >> but you've been there how long? >> 31 years. >> so in watching what's happened could you just from anecdotal evidence being there, can you tell that utilization

dropped? that people are coming less? or -- because that's happened in the last three or four years. can you explain how it's happened? why? >> i wouldn't call it a drop. it's been shifting. >> how? >> in our environment when you're in the hospital we're already preparing for you in the outpatient setting. so someone today at kaiser kaiser permanente will see what we have around the patient and the skill level and physicians and i.t. technology we can get someone out of the hospital faster. however they are handed off to the outpatient side of the organization. >> and cheaper. >> and cheaper. >> and we're also traditionally, back to 30 years the whole mindset was people came to us. now we're distributing care out.

>> but would you say that you were a leader in doing this and that aca copied you? would you be in any differ position if it hasn't been passed? other places might be using kaiser's model. >> there's no question that there are benefits to our model against the backdrop of the aca. however, even with the aca is requiring us to continue to change as well. we still have a major issue of afford affordability in our country so we're also both under pressure and committed to affordability. if we can put more of the care in the home and leverage the technology. e-health visits was a big hit. last year we had almost 20 million where the members don't have to come in. they have a relationship with their physician and they can

talk to their physicians on the ipad or iphone and get what they need for basic health care needs. that's a different value loved by the member and starts to help us with our cost structure. >> if you could do one thing to lower health care costs right now, we were talking about drug costs, what is the one place you think you could challenge? >> to lower health care costs, work more and more with the individual and eventually hopefully turn the corner on the behavior. >> it's not about drug costs or insurance costs? >> obviously if you look at the health care system it's a fix me system and it's a high intervention system so people get sick we provide care. i'm saying to your question we now need to work our way upstream to say how do we help people to stay healthy. diet and exercise are the starting points. so if i can influence one thing, if i can change the eating

habits in our country, that will go a long way towards helping people to live a healthier life. >> thank you so much for joining us today. >> i enjoyed it. >> appreciate it. >> even though it's cold. >> it is cold. >> thank you. >> when we come back he's a hard charging investigator in congress. no company too big. no individual too powerful. what is he bringing to world leaders here in davos? we'll ask him that question and a lot more. with efficiency? why innovate for a future without accidents? why do any of it? why do all of it? because if it matters to you it's everything to us. the xc60 crossover. from volvo. lease the well-equipped volvo xc60 today. visit your local volvo showroom for details.

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from d.c. to davos. politicians are here discussing issues around the globe. joining us now to share his thoughts on topics and the republican agenda in 2015 california congressman darrell issa. congressman, it's great to have you here. >> thanks for having me here. >> i don't think we've talked to you since the election number one. or since the sotu. i think they're related. have you been a little bit surprised at -- i mean the media does love the president. but he's a new man. he's emboldened he's moving forward. >> and elections don't have consequences. >> have you noticed that?

he's just a much better president now -- >> he's free of all responsibility in either the house or the senate. the reality is that he's trying to figure out how he's going to address the house and the senate that are going to send him bipartisan bills. over a hundred that left the house that died in the senate that had broad support by republicans and democrats. and so far he hasn't had to face those. that's what he didn't address in the state of the union. >> he was able to do the paid leave for government employees. so what's left that he can do unilaterally? he's done almost everything he can do at this point. >> there's always something new some lawyer will justify. paid leave for government employees sounds like a great idea, but that will reduce the number of full-time employees. the reality is although you may think that's a great idea what he was really saying is i'm going to make sure you have less people to do jobs. the same amount of dollars will go less far at the irs. it will go less far at other

agencies. so he's made a decision. it doesn't happen to be a decision that necessarily is cost effective for the american people. >> he says he's going to raise the capital gains rate. he wants to do the minimum wage. he wants to do for them as well. you're going to pass the pipeline. you're going to go to 40 hours on obamacare instead of 30 hours. and everybody is going to do all these things. and there's going to be nothing done. we're going to do trade promotion. a majority of the votes coming from republicans in all likelihood. because it's important that america stop falling behind. >> democrats and a lot of those guys don't. >> if nancy pelosi and harry reid had their choice they'd sit on their hands like in the past. but they don't have their choice. i think we're going to start doing the free trade agreement again. yes the pipeline is important and it's going to be sent to the president's desk. we're cautiously optimistic that

he's decided to move on. but there are so many other issues that are not insignificant for the technology community and for that matter the companies here at the economic forum. they'd like to see in copyright all around the world people's media of being stolen in just a few countries. but it's a huge economic loss. there are lots of areas. whistle blower and freedom of information act passed out of the house and senate last time. >> why didn't he talk about corporate tax reform many the state of the union? >> because he was talking about a tax increase. and ultimately tax reform is not an increase or decrease, it's really right sizing it so there's less gaming of some corporations paying very little while others are paying huge premiums for being americans. >> you're against raising the minimum wage.

what do you think? >> for the 3 million people mostly young adults that are making minimum wage your goal is to get off minimum wage. >> what about families that are on? >> that's a good question. i'm from california. any state can have its own minimum wage. san francisco i think is $15. the arithmetic doesn't come out to $15. but the real question is how do we get people jobs that are far beyond minimum wage? at $10 an hour you can't support a family. at $16 an hour you probably can't. so the question is how do we get the high paying jobs back to america? right now the energy renaissance is giving america a chance to start making things in america that we stopped making in america. auto steel, rubber. the are relate is there's a lot happening. if you look at dow, because of low cost natural gas, they're

making a decision to make chemicals in america again. and these are the jobs that you don't talk about minimum wage. you talk about do you have the skills for that $100,000 job. and if you don't, the companies will help get them to you. there's good things happening. i'm filibustering because i'm in davos and this is an exciting time. >> but you travel incognito over here, i'm sure. i think you get heckled in this place. this is like san francisco on steroids. >> no. this is a free thinking area. >> that's for sure. coming up global reaction to the death of the saudi king. plus famed hedge fund manager kyle bass sounds off on the world economy.

good morning from davos, switzerland. a developing story this morning. saudi king abdullah died this morning at 90. >> we have another great lineup of business executives. mike freese lloyd blankfein, and jack lew. the second hour of "squawk box" begins right now.

welcome back to "squawk box" here on cnbc first in business worldwide. i'm becky quick along with joe kernen and andrew ross sorkin. we are wrapping up our week-long stay at the economic world forum. everybody is talking about the death of king abdullah. saudi tv making the announcement yesterday. salman has taken on the responsibilities for the past year. it's something we've been watching for impacts in the markets. so far not big impacts. probably because it is a succession that was expected. you can see that crude oil is up slightly. wti has a gain of close to 70 cents. still just sitting at $47 a barrel. more on the story in a moment. meantime there is another conversation about to start in davos. here's a live peek inside the conference hall. lye chatter of a global currency

war. he just began talking with the panel of fiscal and monetary policy leaders. we will monitor that discussion and bring you the highlights. i imagine we're talking about the currency wars with jack lew who will be on about 8:15 this morning. >> he's got his beats. incredible. >> i think those are bose. >> oh, i can't see. all right. probably different people speaking different languages, that's what's happening. i'm hip to this. i got it. but now back to today's stop story. succession in saudi arabia following the death of king abdullah. she's back spending some more time with us. did you go make calls and stuff? i mean you got more stuff? >> i was actually hanging out with congressman issa before he went on. i was saying how is it playing a at home. he said they're not awake yet. >> 47 is 47.

i guess it is what it is. >> it's certainly the younger generation when you're talking about gulf society arab society. >> right. so how long will we be talking about this story. >> well i'll certainly be talking about it for awhile. i'm going to saudi arabia in the next 24 hours. how long will you be talking about this story? i think this is something that's not going to move markets that much in the sense that this is a system whereby it is frozen. there's blackout on the television, in the markout, and the radio even. so no decision quickly. but i think this is a long-term story. and i think that when you look at all of the reforms that king abdullah attempted when he was in office for two decades and the fact that we don't have a clear read yet on whether the new king and whether the crown prince are going to be in line

with those kinds of reforms. you have a huge population in saudi arabia. there is some poverty. not everyone is a billionaire in saudi arabia. and off huge young population who need jobs. and this is the same problem we saw in paris with the terrorists and across the board, they need opportunity. it's how quickly that opportunity is going to come. >> we never have enough time and with issa we haven't talked about this whole boehner invites netanyahu and then the president is you know didn't want netanyahu around because it would hurt in negotiations with iran. and he's going to address communists. >> it's purely political, isn't it? >> it's a huge ker full -- kerfuffle kerfuffle. it used to be netanyahu would come here and there was a red carpet. it's strange. >> certainly last year. >> are we worried about it looking bad for iran? >> it's interesting that i was

asking the congressman about that ahead of his guest spot. i said to him what's going on with that? what's he doing? is he just really trying to antagonize the white house here? >> netanyahu isn't just going to talk about iraq. and of course there are elections coming up in israel. >> that's what they're worried about. >> this is a good time for him to get some positive air time with his biggest and best audience which is the united states. that's exactly what he's doing. >> i think the republicans get some mileage when it looks like we -- it looks like netanyahu is not welcome. it's crazy. >> stay where you are. joining us now is ian bremmer, foreign affairs columnist at "time" magazine. good morning to you, ian. usually we see you right here. but you're back in new york. >> i know. first time i missed in a decade. crazy to be in new york. >> i know that you don't believe that what's going on in saudi right now is going to disrupt things. you said overnight that you

expect there would be royal family competition that will intensify over the coming 18 months. what do you mean by that and what is the implications? >> the top four positions, the ones that really run the country, it's the king the crown prince, the head of the national guard and interior. king abdullah before he died certainly understanding his health problems were becoming more severe. he wasn't getting younger. he did an awful lot to make some significant moves to ensure a stable transition. the one place he didn't quite do that is the person he appointed as deputy crown prince who is now crown prince who is capable but doesn't have the tribal support. in saudi circles that counts for something. over the short to medium term it will be if salman decides he actually wants to get rid of the crown prince muqrin.

that would be a big deal. and he'd be able to do it without a lot of backlash within the family. so that's the one thing worth watching. it could lead to a more cohesive and probably more reformist oriented set of policies in saudi arabia. but on oil policy which is the only thing the markets frankly care about unless you're investing directly in the kingdom, you're going to see no change whatsoever from the past months. >> ian, real quick, how long do you think that saudi from an economic perspective can try to hold its market share at these prices? >> they can try to hold it i think right through the end of 2015 2016. but i don't think they're going to. oil is something like -- i think it's 56% of all of saudi's gdp. they're clearly taking a massive hit by refusing to defend price whatsoever. my expectation would be -- and it's a very hard thing to read. it's not like they're going to tell you anything about this. they understand it. i would think at some point in

the coming months they'll move a bit. frankly the one thing is the death of the king does mean if they had been thinking of taking a little oil off the market in the near term they have to wait a respectable distance right now. just as everyone is focused on the morning. but that's not going to get you more than a month. and beyond that i think that the saudis are going to be one of a few pieces that should be taking a little bit off the markets. there are some other issues as well like libya that we'll also be watching. >> all right, ian. thank you very much for joining us. sorry you're not here but we'll see you back in new york very soon. hadley, thank you. when we come back this morning, famed hedge fund manager kyle bass sounding off on the world economy. today we'll see what he thinks about europe in the wake of the ecb's qe announcement from yesterday. stick around. "squawk box" will be ragt back. [woman] can it make a dentist appointment

when my teeth are ready? [girl] can it tell the doctor how long i have to wear this thing? [man] can it tell the flight attendant to please not wake me this time? the answer is yes, it can. so, the question your customers are really asking is can your business deliver?

welcome back, everybody. our next guest made his name by accurately predicting and betting against the house bubble. joining us right now is kyle bass. kyle, it's great to have you here today. >> thanks. >> we have been talking all morning about what's been happening with oil prices. particularly after the saudi king passing. this morning there hasn't been a huge dislocation in that market. it's up but just barely. $47 a barrel for oil prices. what do you think happens next? >> i think the oversupply is around a million barrels a day. i think there's 2 million barrels a day that's known supplied that's offline.

whether it's libya, iraq and syria. so if global gdp grows at 3.5% the next two years, that will be demand of about 1.1 million. i think in two years we'll be close to a semblance of balance. now we have more than we know what to do with. on the front end, i don't know where it goes. >> does india and china have to do 40% gdp? >> no. the imf just downgraded their gdp number. >> 7.4. yeah. >> not europe. >> i mean what's draghi do and what he's doing -- >> that's what i want to ask you. i want to get to that. >> i think you'll see 3% still. >> really? no one's ever satisfied. the stuff i read afterwards is they don't have bonds to buy.

there's no euro-backed bonds in the first place. there's in fannie and freddie. >> i had a conversation with someone wofs in the room with the ecb board members this morning. saying the ceos of european finance companies were pushing back saying this is going to be an ineffective move. they were pushing inging back on the regulators. >> if you're a bank last thing you want is 0% interest rate. if you're a bank you're always going to push back on the zero. i get that. but i think from the perspective of what draghi's doing and trying to get to, you know, euro parity, that's what it looks like. >> they can do the overall stock market. someone said it's like the government buying a bunch of california bonds. >> it's a bunch of rich people that own stock. haven't we learned that here? it doesn't do anything for the middle class. interestingly enough their policy becomes distributed. and it goes to the rich. >> right. >> is the only gain though to

try to devalue the euro? >> typically when you're in a recession, you have to drop interest rates 200 basis points. and you can't. so this is the only area. >> is there anything you're making right now? >> no. today not making a bet. >> what does that mean? tomorrow -- what are you looking at then? >> well you know the effects of qe are going -- the size of this program is going to be pretty impressive. there are 11 countries now at zero rates. think of the absurdity of it all today. you have 11 countries at 0% interest rate policies. >> if you're looking at a currency war essentially around the globe, how do you look and

play that out? which industries are you looking at? >> we've been focused for a long time on the yen. so now you have the boj going about 80 trillion a year. the u.s. now the problem the fed has now, you have a deflationary environment because of oil. even though you have close to full employment or let's say the way they calculate you three. so now i was a believer that you'd see liftoff in june and now maybe you won't. october or november. >> the first rate increase. >> so it's really difficult. it's really difficult to play in the rates marketplace. >> with all this do you ever -- is there any risk that this money is not being allocated in an efficient manner where it would normally go because it was supposed to go there? it's just going where it can find places. i mean, don't you worry?

>> given your political beliefs, is that a loaded question? are you asking me whether the government is the problem? >> i don't think we've ever talked politics. but -- >> i watch you. >> aren't you from texas? hopefully you're nodding as i'm talking. but as we move out the risk curve to the developed countries, the minute we stopped qe they made a lot of investments that probably wouldn't have been made if there wasn't so much printing going on. in the notes to the release they said they will buy bonds at negative rates. >> right. >> sure made germany happy. wait a minute. they're going to buy bonds with a negative trait and insure a loss. and what's that? it's to drive currency lower. and to try to generate some kind of inflation. >> so have we seen the euro

wasn't anticipating a lot of this. which is why we saw it under pressure. sthast the end of where it goes? >> no. it was 1.16 on the announcement. it's almost down four points in the day and a half. >> where do we end? >> i think after parity. >> and you think we'll get there in the next six months? >> i think quickly. >> will that allow the mediterranean countries to finally recover? i mean, they should have devalued their own individual currency. >> we still have the greek elections coming. you have the opposition party is most likely to win. in the official sector of greece you have 160 of gdp in debt. if you remember pre-crisis the imf could lend the rainy day fund to you if you had a problem.

there needs to be a official sector solution. they have to either write it off, eliminate interest. or extend maturities. they have to get rid of this debt one way or another. if i were them i'd make the interest payments much less. take the debt way down. >> i know you're a hedge fund guy. you want make all the money for yourself. but can you give us something to make -- i have no idea what to do now with what you've told us. >> so what i just said is you want to be long. you want to be long oil companies, but you don't want to buy them yet. >> there must be other stuff. country-specific. japan, you're flat there now? >> no no. i still think the yen is headed to 140. >> euro to parity. yen to -- okay. >> back in the u.s. what do you think of the u.s. banks right

now? >> we're at zero interest rate policy. i think the regulatory environment is difficult. >> you think the banks are safe? we had jamie dimon on. are they under assault? >> it sure looks like it. look at the different state regulators and federal regulators assessing fines. >> if you were running a big bank today would you stay where you are or break yourself up as a better model? >> i think breaking up depository institutions would be a good thing. >> would be a good thing? >> yes. i think some of the parts would be greater than the whole. >> and you don't buy the argument that jamie dimon would make in terms of the synergistic value of keeping it together? >> there's synergistic value in jamie dimon keeping the bank together. you're asking me what i would do if i were looking after shareholders. it's just my opinion. i think partss would be worth more than the whole.

think about the new tax that obama was talking about in the state of the union. assessing a tax on banks with over 50 billion -- >> you think that passes though? >> no. >> a lot of people wrote that off. >> no. the intent is what's scarier than the result. >> do you think other banks will follow your advice? and i imagine you must have the same feeling that other shareholders have. do you manage them the next two or three years. you'll see a fundamental business model change. >> no. >> it's a view of yours but -- >> i don't think it's going to happen. >> okay. >> do you think at all about the stock market in the u.s.? in valuation terms it's not extraordinarily high right now. there's a lot of sweet spots in -- >> what i think in the u.s. i think you'll see wages start to move. i think the labor force -- the people out of the workforce i think are likely to technically stay out of the workforce for awhile. so you look at the percent -- the workers that are insured and unemployed, those are the workers that can come back.

it's 1.8%. it's the lowest in the last 20 years. so the skilled workers, you're going to start to see skilled wages move up. >> so there's less slack. it was krueger, remember? they yelled at him for that. because yellen has less room because there's less slack than people were assuming. >> the big question is should she be focusing on unemployment or focusing on wages, actual wages moving? >> so you think the fed waits until later in the year maybe november or something. and is that the right call? >> i think it is. but i also don't think the fed can move more than a hundred basis points. >> before we let you go can you tell us. there's a pop culture story he's involved in. "american sniper." i'm told you're behind it to some degree. what happened? >> yeah. chris kyle became a friend of mine when he came out of the s.e.a.l. teams and he lived with me and we helped start his company and try to give him a better life. and unfortunately he was

murdered by you know, someone that was deranged. but i think the person really behind it was dan loeb introduced chris to the people in hollywood and wanted to get this movie made. so yeah i was a conduit. i wasn't technically behind it. >> have you seen the movie? >> i haven't yet. >> you must. it's a terrific movie. >> i know the story pretty well. >> yeah. >> i actually know the actual story. there are things that aren't in the movie that are better. >> but if you told us you'd have to kill us. just like all the other stuff. >> kyle thank you for stopping by today. >> appreciate it. coming up there are more than 5200 miles between davos and denver. so what brings the governor of colorado to the swiss alps? here's a hint. it has to do with something that's green, but doesn't everything in davos? we'll be right back.

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welcome back everybody. kyle bass thought he was escaping. we have one more question for him before we let him go. i forgot to ask you about general motors. i ran into mary barra this morning, spent time talking to her. i know you own a position in the company. what do you think about where the company's headed right now?

>> i think that the company has too much capital on its balance sheet. i think with $27 billion in cash and doing $15 billion in ebita and free cash flow they could literally double their dividend if they pay another $1.6 billion, add another dollar. i think if gm -- if she's really going to be shareholder focused, i think you could see a different capital allocation policy by the company. which would be kind of an easy thing to do. share a little bit more of the profits with the shareholders. and as you know the uaw contracts are about to be renegotiated. and the doj still hasn't fined gm for the product recall for last year. i think once those two i think thes are behind them -- >> it makes sense to have a lot of money in the books right now, right? >> you want it before all that gets resolved? >> what i'm saying is they have $27 billion of cash on balance

sheet. they have $10 billion available on -- >> they just raised their capital expenditure this year. >> yeah. >> say that again. >> call it $16 billion in ebita. >> what do they have in 2005? >> okay 2005 is a different story. right? >> you remember ford played it cool. >> it was a junk yard back in 2005. right? you had -- anyway. >> they don't want to go through that again. >> so publicly if they went back to crisis levels of $11 million they could still break even. if that's true then we should reallocate. >> how much do you own in the stock right now? >> 4 million shares. >> all right. we'll talk more about this but kyle thank you for being here. >> thank you. >> i wish i had 4 million shares. right now it is time for a quick break. but first check out some of our news makers on our last day in davos. lloyd blankfein yet to come.

also jack lew. stay tuned.

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welcome back to "squawk

box," everybody. we are live in davos, switzerland from the world economic forum. in our headlines this morning, we'll be getting a fresh read on the housing market later this morning when the national association of realtors releases december existing home sales. analysts are looking for a 3% increase. we are about 30 minutes away from the latest quarterly earnings from mcdonald's. investors waiting to see if mcdonald's is looking to reverse a sales slump. and we've already heard from general electric. beat what the street was expecting by a penny. revenue was just shy of what the street had expected. that stock looks like it last traded at $24.38. and it's the only state where recreational marijuana is legal and the fight continues on exactly how to regulate it. we're learning as we go along here. we're joined by the man who's responsible for its legality. i don't know if i'd say that. but colorado governor john hickenlooper. where i saw the lincoln quote that you need public sentiment

to do anything -- >> with public sentiment, anything can happen. >> gay marriage for example. they didn't realize until the public was behind it. >> some of us with us supporting it. >> it seems to happen when it needs to happen. >> public sentiment. the words are truer today. he said that before his first lincoln/douglas debate. >> and i think that that is what happened with pot as well. and you know i told you i went to boulder. i thought it was legal in the '70s. i'm not sure but that's neither here nor there. once it's done it's suddenly whoa, we better figure out how to do this. then you have to think about what if the kid picks up a brownie that's four years old or

something? there's some regulation that in this case i would say we really need to think this through. >> well and i voted against it. i opposed it as publicly as was humanly possible. but it passed 55-45. so that is the will of the people. we said we'll roll up our sleeves. we spent a year creating the framework of regulation. then a year ago it became legal. people could go buy it. we had more work to do. we've made great progress. there's a great many people who really put -- i mean worked 80 hours a week to make this happen. >> has it been an easier transition than you expected or a tougher with un? >> we thought it was going to be tough and it was. you don't want to be the first to do this. i was in the craft beer business. colorado's got i think 285 craft breweries now. federally licensed. but there is a whole regulatory environment run by the bureau of alcohol and tobacco and firearms

that really regulates alcohol. there's nothing. we're starting from scratch and we don't have a federal partner. >> what do you think should happen federally? and do you think that other states should follow your lead? >> i tell the other governors that they probably should wait a couple years. the jury's still out. we don't know the unintended consequences. can we keep it out of the hands of kids? many said this could diminish long-term memory in teenagers. it's a cash business right now. we do have a credit union that's trying to work its way through. it's got approval in the state. we think it might get federal approval on that same basis that we'll let it go through and no one wants it to be a cash business. you want to guarantee corruption, what better way than to make it a cash business. if i could have made a magic incantation, waved a wand after the election i would have reversed the election and said

this is a bad idea. >> but then -- think about it. you get to tax it. there's a whole criminal understructure -- >> the old -- >> everybody's got it anyway. everybody's got it anyway. why not tax it regulate it make sure it's safe. it's hard work. >> we're doing it by ourselves. and i think we're making progress. >> but people driving across the state lines, they're all coming over to colorado. how do you do that? are they smuggling it back to their states? >> there's some indication that's happening. but i don't think in a large scale. >> really? >> yeah. the studies we've seen are the people in colorado that were smoking before it was legal still are. the people that weren't still aren't. >> what happened to denver airport? do you have people trying to leave the state all the time? i mean how many people are picked up every day for that? >> well there's 51 or 52 million people a year that go through the airport there. they still have dogs you know

trained to smell narcotics. you know is it against the law to get anywhere close to getting on an airplane they'd throw a book at you. >> the other bad thing is i think it's the greatest place on earth, boulder. it's got more start-ups. all you talk about is pot now. nobody even asks you anything else. it's a great place for business. as the governor you wanted to come in there and you didn't get to talk about it. say a couple words. high-tech. >> well, four of the top ten communities in america for technology start-ups per capita are in colorado. we're the number one workforce by any measure one of the fastest growing economies. we tried to -- what we've got, we've got millennials coming in droves. so we have got more live music venues in metropolitan denver than in austin or nashville. that's why pot got legalized. we got all these young kids that come and it's great. we love all the businesses. we weren't so crazy about being on the cutting edge the

bleeding edge of legalizing marijuana. you have to take the bad with the good. >> it's -- you know 300 days of sunshine. no humidity. even when it's 20 it's not cold. i mean i wouldn't even ski on the east coast. >> with landscapes -- we're almost the switzerland of america. we have landscapes like you've got here. >> everything's new. everything's run down -- i love it here but it's not vail. >> we're working hard to attract these young entrepreneurs. we are the healthiest state for a few years. we're one of the top states for education reform. but you're right everyone wants to talk about marijuana. >> are you going to run for president? >> my gosh. look at my quality of life. i have about as great a job as anybody could have. >> you do. >> governor thanks for being with us. >> because of the pot? oh, no no. >> can't smoke pot legally in washington, d.c.

>> all right. when we come back this morning, an ebola vaccine set for testing in liberia. mel tirrell joins us with the ceo of glaxo smith klein. and then jack lew. "squawk box" will be right back. tdd# 1-800-345-2550 [ male announcer ] your love for trading never stops tdd# 1-800-345-2550 even on the go. tdd# 1-800-345-2550 open a schwab account, and you could earn tdd# 1-800-345-2550 300 commission-free online trades. tdd# 1-800-345-2550 so if you get a trade idea schwab can help you take it on. tdd# 1-800-345-2550

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let's get back to cnbc headquarters where meg tirrell joins us with a special guest. meg? >> thanks so much. clinical trials of two experimental vaccines for ebola will be tested in the next couple weeks. joining me now, ceo of gsk. mr. witty, thanks for joining us. >> thanks, meg. >> the ebola vaccine, you're starting phase three trials. tell me how you were able to speed this up so quickly. >> really two or three things. first of all, some terrific coordination between the companies rb regulators and cdc, and world health organization. we took a lot of the space out of the decision making process firstly. secondly we made some very

early to parallel process. we just completed four parallel phase one trials. that really expedited the speed at which we could build some knowledge. and then we made some risk decisions way back in august to start to expand our manufacturing capacity so we could move from lap scale to a much expanded capacity much more quickly. which means we're now in a position where we can start to deliver potentially tens of thousands of doses into these trials. so those three things are really how we got to where we got to so fast. >> and so you're starting with a high risk people. so health care workers in the communities where this is spreading. but also simultaneously i think doing maybe some phase two trials also testing more of the safety. can you tell me about when we can expect data? >> yes. so of course the trials today in liberia with being mon tord by the nih from the u.s. they're in control of when those would start. my expectation is that all being

equal, we should start to say data over the next four to five months. a little timing of that is going to depend on what the continued intensity of the epidemic really is. but i think as we move through to the middle of the year we're going to know more about these vaccines and we're going to know pretty much exactly what we have. >> right. and you mentioned just the continuing intensity of the ebola outbreak. i mean we are seeing new cases starting to decline. however, it is still a huge problem. but how does that complicate a trial that could seek to enroll 30,000 people. >> it's great news that the case load looks like it's beginning to slow down or drop. that's very positive. it may take a little bit longer for it to achieve end points. the reality is that this is a key opportunity for us to first of all quickly develop a potential vaccine that could work but also to understand what we have. so that whether it's going to be used in this epidemic or whether

in fact this epidemic dies down we will then have a vaccine that's ready for the next outbreak. ebola isn't going to go away completely. so this is a key opportunity. the timing of how quickly we get the data is going to be determined by the disease. >> right. and if it does work how do you expect it might be deployed? i mean to whom? how broadly, and when? >> i think it's a little premature to answer that question. it's not really for me to answer it, if i'm honest. i think this is a decision for the world health organization with all of the various technical advisers that they have. once they know what the profile of the vaccines actually are. so i think we have to take this one step at a time. we are at gsk expanding our capacity so we're ready for various scenarios of that question, if you will. but the precise target audience i think it's too early to make that call. >> right. and glaxo smith kline is working

on a malaria vax sooenccine, working to speed up ebola. tell us the capitalist reason for investing in these diseases. >> so we see this as part of our overall portfolio. we're the largest max seen manufacturer. we've been first 11 times in the last 30 years. we discovered the breakthrough vaccine on 11 different occasions. i'm very proud of the work we've done and not just in diseases that are common in the west or in developed world, but also those which are in the developing world. ebola and malaria are two good examples. when we look at our overall business it's a highly successful business and i think absolutely strikes the balance of generating a strong economic return, a reward for the risk that we're taking and our shareholders are taking and investing in these vaccine discoveries. but we're also ensuring that the supply isn't just going to the rich countries. in fact, 70% of our volume goes

to the poorest countries in the world. that balance i think is exactly where you need to be when you're operating in a space like health care and pharmaceuticals and vaccines. it's not tenable in the long run only to be the one that supplies the richest countries in the world. we've got that balance well where we can develop medicines in this case at very affordable prices. to give you an example, polio vaccine of which we've delivered almost 16 billion doses over the last two or three decades. we now supply it just 13 cents per dose. so that really demonstrates how we're striking those balances to ensure that people in the developing world get the protection they need against lethal disease and at the same time we're able to be the largest vax sooenccine company in the world. >> andrew witty, thank you so much. >> thank you. >> becky, back to you. >> all right meg. thank you very much. when we come back this

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welcome back to "squawk box" live from davos, switzerland. the media has been a state of never ending consolidation.

resulted in giants that now dominate the business are often incredibly complex. joining us with one of those complex companies to talk about the future of media. mike freese great to see you. >> nice to be here. >> the debate you're having in europe for your company is the same debate we're having in the u.s. in large part about net neutrality. >> sure. >> you just got into a debate over this issue of net neutrality. is there a distinction, though in terms of how you think that is going to play out in the u.s. versus in europe? >> i think there is. the u.s. as you know has been trending towards this title two, 1934 act which is when we actually held phones with two hands. i don't think it personally makes any sense. fortunately for me i don't operate in that market. much more sensible and practical about how to do this. they see the benefits of specialized services in some

instances. at davos we've been talking about driverless cars. that's going to be hard to do on a best efforted internet where everybody is competing for band width. so the idea for certain applications shouldn't have some kind of priority is kind of sill silly silly. and i think the second point is there's a "b" to "b" component. snun going to prevent consumers from doing what they want. he's really talking about ip connectivity in the peering level. he's looking for a certain outcome. >> the result is "b" to "c." if he gets stopped and consumers don't get it. i'm not on that side of this argument, but just to point it out. >> it's never been about stopping. it's just been about -- he's relied on third parties to get to us. and those third parties are the problem, not us. and so he wants to come directly to us which is fine. it's really not a big issue. that's going to get sorted. and i think europe has been very

practical and sensible about this. >> as you look across the pond from here back to the united states, what do you think is going to happen to the big transactions on the table both comcast time warner cable and at&t directv? >> i think they both get done. >> do you want them to get done with any type of provisions? meaning -- because i know you would have loved to get time warner cable. pieces of it. >> you're speaking the other side. personally i think liberty media wins either way. whether they end up with pieces of time warner cable or whether the transaction fails. they win either way. i think it's good for industry. i think it's smart. we need scale. in the cable industry we're competing with google and netflix. these hyper giants that have global scale. and we are bulk in cities. we talk about a single digital market. how about a single european market or single u.s. market.

we need scale on the cable industry. i think that makes a lot of sense. >> is the market in europe -- it's an argument that barry dillard has made before. there's faster internet at cheaper speeds in europe than they are in the united states. how do you think about that? is that accurate? >> it is accurate. our average cable customer today on broad band is getting 65 megabits speeds and consuming 65 megabytes a month. >> and you do that cheaper? >> it's cheaper. now, there's lots of reasons for that. we have a bit more competition here. our bundles are cheaper because our video costs are cheaper. >> why is there more competition? >> because they have forced to unbundle networks. you could become a reseller tomorrow of british telecom. >> was that a good policy? >> it's been good and bad. it's hindered. good for us. >> you say you're offering

faster speeds for cheaper prices. >> good and bad in some level. >> when you say it's hindered investment, does that mean it's going to catch up at some point? >> i think regulators just generally in europe are backing off. if you think about what's happening in the mobile space, you know i think that's behind them. they feel and i think they're right. they need healthy telcos in europe if europe wants to be competitive. you're going to see less regulation in european telecos. >> your argument was you don't looics the duopolies. you're not for the 1932 rules. >> no. . i don't like the rules at all. >> but what mike seems to be saying is there's a lighter regulatory touch in europe. and we're headed to sort of a stronger -- and the result of the lighter regulatory touch has been faster speeds. so why do we want to trend the other way if it's obvious that the lighter touch is what brings -- >> but oddly enough we haven't

trended the other way yet. >> you're saying there's no competition. >> they seem to be doing better in europe for now. >> yeah. >> personally i think the entire industry is headed in the same place. it's all about 200 megabyte speeds. so nowhere but up. >> we're not crazy enough to do the -- wheeler's not crazy enough to do that. and obama is probably not serious about it. >> i saw an estimate that could cost $15 billion just in regulatory hurdles. >> we've got to run, but is john ever going to ever put together a global operating cable empire? >> i don't know. right now our business in europe is thriving. we're doing really well. and the u.s. is also doing well. we'll see. maybe some day. >> we're going to leave it there. thanks. appreciate it. coming up when we return another big hour from davos. we'll kick it off with lloyd blankfein. then treasury secretary jack lew's turn at the table. another big hour from davos,

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his assessment of the global financial markets. the take on tax reform treasury secretary jack lew joins us to discuss the issues facing american businesses. >> plus the cofounder of wikipedia on net neutrality and the next big thing for the web. the final hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. take a look at the futures at this hour. we are indicated up 30 so far. posting $1.13. revenue was also short.

global comp sales fell .9%. and the near term lows mcdonald's we talked about quite a bit, great advertising campaign. whether that's the beginning of a sustained rebound or comeback we'll see. i wouldn't know in this day and age. i don't see mcdonald's food here in davos. >> i drove by one the other day. >> but this is the antithesis of mcdonald's here in terms of signs and food and everything else. i wouldn't be walking around with a mcdonald's bag in davos. let's get you caught up on other headlines this morning. saudi king abdullah has died. his successor and brother salman. he's now been the governor for 50 years? and president obama releasing a statement saying that he was a leader -- as a leader he was always candid and had the

courage of his convictions. one of those was his steadfast and passionate belief in the importance of the u.s./saudi relationship as a force of stability and security in the middle east and beyond. oil moving slightly higher. wti crude at $46.27. maher ray -- mary barra telling becky gm this morning. >> obviously we want to respond to what customers want. so we're going to seize a channel of not having enough of a certain vehicle. and we just launched a brand new mid-size truck. so we'll seize those opportunities. but long-term, you know it's been interesting being here. because for about as many people we have here there's that many opinions of when the price will change. it doesn't affect our long-term strategy because it's broader

than when we're looking at fuel efficiency. it's solving broader problems than the cost of fuelcongestion et cetera. we're not changing our long-term strategy at all. of course we're going to continue to sense and respond and learn as we all will. then we'll be focused on meeting customers' needs in the long-term. >> the fall of gasoline prices is one of the swiftest on record. pump prices now down about 40% since last june. >> let's look at the euro this morning. dropping to the lowest level in years against the dollar. the move comes in the wake of the ecb's decision to launch a qe program. speaking to cnbc here in davos, one of the central bank's key decision makers is defending the move. who put that in there with that -- can you imagine? how did you like that benoit

cure -- >> i'm told cure. >> argued that the trillion euro launch had had been the right call and said the market reaction was encouraging. and all of our viewers needed to know his name to get the true gist of that story. anyway joining us now, lloyd flavrng blankfein. senators called you blankenfein. >> you did that well. >> we'll talk about the ecb in a second. i just want to start out just thinking about goldman sachs and what kind of year it was. because we're all trying to -- we had morgan stanley on. and i think what was called a goodish year but he wasn't -- you know he wasn't really raving about it. and you've navigated through stormy years in the past. last year there wasn't quite as much to navigate through. but on a scale of one to ten, what kind of year really was it to try to be an investment bank or a trading bank? >> i hope it was a lower second

year. it wasn't a terrible year but if we look back at this nostalgically, that would be a bad thing. all of our businesses especially our businesses correlate with growth. so we manage risky assets for people. we advise companies that have the confidence to go out and do deals. we finance those deals. we intermediate change trades. and so all those things correlate with confidence and growth. united states definitely confidence is picking up. but we know europe is still in a very slow growth mode. and the whole growth scene is very ambiguous in china. and i'd say around the world the big driver of all our businesses has been at a lowish end. that being said it wasn't bad. no bad shocks. got us a chance. we worked on our costs. basically we had slightly higher

revenue, but slightly each of the last three years but our earnings were substantially higher. our eps was 10% higher in '14 and '13 even though our revenue was 1% higher. >> so we divide year performance into years. it's not really -- you know there's no reason that january 1st would be any different than last year. that's what i was trying to set up and get at. is there any reason to think that 2015 will be anything more than middling? >> there's little visibility in this market. two months ago, maybe even last month, all the headlines in the paper were this is the end of volatility. remember the only articles about fixed incomes going out of style, there's no volumes. there's no volumes because there's no volatility. there's no volatility because central banks and liquidity has put a blanket on all the markets. >> there's a lot of volatility -- >> you can't even remember that. go out and look at the

headlines. today the world is -- all it is is volatile and it will be that way forever. neither one will be forever. but that kind of change on a dime. and the thing is when sentiment shifts, it erases your memory. nobody can remember thinking the world was never going to be volatile again. look at the flows. look at the volumes. so the answer is yes, things can change on a dime. look at the market in the last month with oil prices devaluation, qe. in other words, europe opting for growth over austerity. those are very big things in the last month. >> when you see volatility like that, it does have an impact on the consumer. i spoke with mary barra today and she said gm is like a canary in a coal mine. when you see big moves, maybe they push off some of those things. have you seen that? >> look they push off those big purchases. on the other hand, people get a little bit less sensitive to the price of oil so when they do buy a car, they buy a bigger car

because they're not thinking the same way. a lot of changes, we don't know what they'll all be but i'm just saying to your point, joe, it's a market. in the sense that there are people on both sides now. people think that it's overdone. people think it's underdone. people think it's a catastrophe. people think that we're in a 20-year growth cycle. and that's what people have to adjust their portfolios. but people make plans and execute them. >> what is your reaction to what mario draghi has done? too late? too much? >> to be in my position you have to be a very highly accomplished second guesser. so you have to let the things happen. so i don't know for sure. i'll put it this way. i would have done what he'd done -- i hope i would have had the courage to do what he'd done. he does this against the backdrop of a lot of controversy. and, you know, he sets himself up obviously for second guessing down the road. but he's all in. at this point you're not going

to necessarily shrink yourself and deflate yourself. at some point you have to grow and generate revenues. and of course one of the motifs of this conference is income inequality. but you have to grow the pie in order to get that and you have to create jobs. so for a variety of reasons, some political, but i think economic as well you have to provide some stimulus and it's not going to come yet from the fiscal side. it has to be accompanied by the other side of it with using this opportunity to also get some restructuring so that you can -- that the growth is also a accompanyied by some discipline and not just bigger and bigger financing obligation by these countries. >> do you think about the regulatory environment in the united states very much anymore? i'm harkening back to jamie dimon's comments. >> of course we do. we think about it because we have to respond to it. we think of it in a million ways. we can't just think about our technology spent without thinking about what we have to

do to adapt to the requirements of regulatory reporting. everything is informed by conforming to regulatory. but somebody said what percentage, but it's there but it's just background noise. it's like listening to music. you can listen to music and do something else at the same time. >> or it can be really horrible music that makes you want to throw up. or it could be the former. >> it could be one or the other. at the same time it's not all you do. >> goelly >> goldilocks. he said that it is under assault spp it under assault? >> look. first of all, no choice no problem. i don't have to sit here and illuminate whether it's good or bad. it is what it is. i know why it's gone as far as it did.

people want to be safe. but there's a tradeoff always between safety and risk and to drive growth. at some point the cost of excessive regulation if you know the word excessive is applied in a different way. but there's a cost to it. and when that cost becomes part of the consciousness of the user of the markets, they'll complain and then and only then will the pendulum start to swing back a little. there are a lot of different themes and approaches to regulation. you know everybody should use clearinghouses. everybody should have more capital. everybody should have limits on liquidity. everybody should have limits on the absolute size. everybody should design themselves. let's do all of them. some of these redundant features are probably in excess. not a surprise why that would be. better to ere on that side. i understand that's the social political decision. but over time the users of the

market have to pay more for their liquidity. we'll re-examine it. and so i'm patient. i'm going to be around for awhile. >> two quick things. i want your reaction. there was a piece in "the new york times" about the volcker rule about effectively buying through the merchant bank. and the spirit of the volcker rule was to avoid that. what's your view? >> i know "the new york times" occupies a special place. i didn't quite understand it. >> it certainly does. >> we're in compliance with the volcker rule. we're an investment bank. people come to us to raise capital. sometimes it's in the form of loans, equity hybrid like convertible or preferred. and we do all sorts of the -- we do all parts of the capital structure. and sometimes we invest in

equities. i could list a list of companies that wouldn't exist today if it weren't for us being the seed equity. like a number of companies wouldn't survive if we weren't lending them money. to me equity and debt are all on a continuum. >> thank you. >> that was only one. >> i was going to ask him about compensation, but we're running out to have time. >> you know, we talked to our shareholders and they talked to us. and they like to see more compensation in future performance. so that's what we did. >> and so when you get the number number. >> we didn't release the number. >> does the board just come to you and say 24 million. is that a good number or bad number? how does that happen? i'm just curious. >> at this stage i'm just grateful the board comes to you at all. >> we'll leave it there. >> lloyd thank you. >> bye-bye. oh it's my turn.

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welcome back to "squawk box" in davos, switzerland. the euro dipping below 1.12 for the first time in 11 years. at what point does it become a

problem for the economy? joining us now is the secretary of u.s. treasury. jack lew is with at the table. thank you for being with us. >> good to be with you. >> gary cohn said there's a currency war going on across the globe. do you think we're having a currency war? >> i think we're at a moment when the u.s. economy is doing much better than other economies. we have a strong growing economy. the projections for next year is good. the conversation i've heard around here is very optimistic. other parts of the globe aren't doing as well. that leads to some movement in currencies. i'm not going to comment on any specific movements in day-to-day basis or policies. but i think a couple of principles are clear. what we did in the united states was very important to move our economy forward. we took decisive action on fiscal policy. our fed took the decisive action on monetary policy. we reformed our financial system. and now here we are and we're

doing better. there are a lot of countries with b a lot of regions where there has not been decisive action. all of the levers need to be used. you need to use fiscal policy. you need to use monetary policy and you need to do reforms. in a lot of countries -- >> when does the strong dollar become a problem? is there a tipping point? >> a strong dollar is all of my predecessors have joined me in saying is a good thing. it's good for america. if it's the result of a strong economy, it's good for the u.s. it's good for the world. what we've also said is when -- if there are policies that are unfair whether there's interventions that are designed to gain advantage, that's a different story. we have been very clear in multilateral and bilateral settings that that's not acceptable. there's been an agreement that there's a difference between domestic tools for domestic purposes. and what are the unfair practices? and i think we just have to be very alert in the difference between the two. >> are you talking about the

chinese peg to the dollar? >> i wasn't referring to any specific country. i think there are, you know there are practices which are domestic tools for domestic purposes. and others for where you're intervening in foreign currencies for the purpose of taking advantage. it's not every that has those characteristics. we have raised this issue vigorously with china for years. and china has moved. china has said they're going to comply with the requirements at the im fx. they have said they're not going to intervene. we've seen a change in practice. that doesn't mean it's entirely where it needs to be. but this kind of bilateral engagement does really make a difference. and we do it vigorously wherever we see the need for it. >> we saw last week just here in switzerland with the swiss national bank making a move to let the swiss frank rise. that was a very rapid rise. it startled people. it startled markets and showed

us how unsettling movements like that could be. >> i'm not going to comment on any specific monetary policy. but i will say that when the dust settled, the global financial system you know was solid. we've seen things settle down in markets. we've seen a couple of incidents in the last few months where people said oh is this going to kind of blow the pipes. and the pipes have held. >> what do you think is happening to the swiss economy as a result of this? >> there's been a lot of discussion about slower growth or lack of growth in switzerland. i think it could be a challenging period. >> lagarde said the imf -- what did they tell the treasury? you got a phone call and it's like, oh my god. >> were you watching "squawk box"? what happened? >> did we get an update at all? >> i'm not going to comment. >> you'd have to tell us wouldn't you? >> i think that monetary authorities have to be able to

make their decisions in an independent way. >> all right. let's talk about u.s. domestic policy for a second. there was the state of the union. we have talked and you have come on our air and talked a lot about a corporate tax reform. and yet it was -- >> i always talk about business tax reform. >> it was conspicuously absent from the state of the union. he did not mention a corporate tax reform. >> there was a paragraph that included removing loopholes and leveling the playing field. it's something that touches on a lot of themes. the reason i went out the day after, it was my job to talk in detail about this. the president's been clear for three years now that there's a path here where we can work together on a bipartisan basis to fix our broken tax code. it is something that i don't think you're going to find very many people to defend right now. i mean this last year with the enormous attention on inversions, even people who didn't used to pay attention to business taxes say do something

to fix it. why is it important? it's important because our economy will do better if we get rid of the loopholes and skew investment decisions and businesses concentrate on what they should be focusing on. >> but in a bipartisan way, remove the loopholes after your lower the overall rate to get us more in line with the rest of the world. >> that's the premise. pay for a lower rate by removing the loopholes. >> he didn't mention the lower rate. >> that's been part of his plan for three years, joe. right now what is the problem we have? we have on paper a statutory rate that's the high oes in the developed world. but some companies pay nothing and others are paying the full rate. now, if we can get rid of all the special provisions lower the rate so we're in the same kind of league as the rest of the competitors that we deal with, you won't be seeing companies moving their headquarters overseas. >> it wasn't a change in the prior conversations that we had. >> no. on the contrary i think if you

look at the comments that i made the next day, the comments that paul ryan made the next day, no one said this is going to be easy. it's never easy to take away loopholes. it just is never easy. whatever takes advantage of them will fight fiercely forthem. but it's better for our economy. better for creating jobs for working americans. better for being competitive in the world economy. that's what i spoke to the other day at some length. >> let me ask you a totally different question which is also the last time i talked to you. we talked about antonio weiss. and you thought he was going to get confirmed. he withdrew. richard cohen says that weiss was a scapegoat for elizabeth warren. was he a scapegoat? >> first, antonio weiss will be starting on monday as a counselor in the treasury -- >> without going through the process. >> we will get the benefit of his enormous talent. when he made the decision to ask that his name not be resubmitted because that's what has to happen at the beginning of a new congress you know i still

thought that there was a pathway for him to be confirmed. my concern when he said he didn't want to be renominated was that we'd get the benefit of his talent. >> do you think there are those you would not go to given people like elizabeth warren's views on wall street and elsewhere? >> i think it's important to have people who come from a career in finance, for people who come from a career in law, a career in education and teaching. >> did she win or you win? "the wall street journal" suggested you won, actually. >> i think that the process was very unfair in terms of how he was treated by the congress. but i do think that the signal should be that we very much want people with the credentials and the background to add real value to serve. and i'm delighted antonio will be joining us on monday. >> real briefly, capital gains

taxes, all of the things the president talked about in the state of the union. what are the chances any of that gets through? putting the corporate tax stuff off on the side. >> i think there are quite a number of things that the president spoke about in the state of the union that will be presented in more detail in our budget the week after next which should be the basis for good bipartisan conversations. you've got to get started somewhere. we said the areas that there's most clearly the basis for working together right now to get started are trade and business tax reform. i think there's a lot of things we could do. the case for the proposal that we have put forward on capital gains, on stepped up basis, we think is fair. we think it would be a better tax system and certainly to pay for what we need to create middle class opportunities so that we have education and skills training and child care so that people can have the better future. >> jamie dimon said last week

that banks were under assault by regulators. he kind of walked it back here but do you think that banks are under assault by regulators? i assume you're going to say no. >> i think what's happened the last few years, we came out of a financial crisis that was caused by a failure on many levels. it was a failure at the business level and regulators did not catch it in time. they didn't see it. the financial reforms were designed to make sure that never happens again. to make sure we have the ability to stop that from happening. i think we accomplished a great deal even in the last two years both in the u.s. and internationally. and i think that the tradeoff between the regulations being perhaps a bit more burdensome in some cases versus the fragility of our financial system and the financial crisis we had in 2007 2008. it's not a close call. we can't go back. >> but even when we started the

process, we always say, you know, we're always going to overshoot. and we're going to go a little bit too far. then we need to re-examine it and take a look back perhaps, at times. it's just human nature to overshoot. we just had lloyd blankfein on. he said if it causes someone not to get a mortgage or causes someone not to be able to act like he normally would, it hurts the economy. >> so we have in some cases said that what we intended is not necessarily happening in the markets the way it was intended. so we have said we think that lenders have put a tighter box on mortgage credit that was intended. so we're trying to work our way through that through some changes and guidance and rules. to make sure that there's not that overshooting. so people have access to the credit that they can afford. but what we can't do is roll back revisions of dodd-frank and be in a place where we start to open up the expo showers that left us in such a fragile and

dangerous place. >> and you don't think that you've let any of those core feature gos even in the past month or two when -- you've seen the articles. there are people who said you allowed pieces of it to be gutted. >> i think if you look at our record we've been consistent in provisions that would weaken dodd-frank. last year there was a provision we opposed that was put into -- in fairness it was presented to us presented by congress in a bill that was worked out between republicans and democrats and our choice was signing a bill with a provision that we would have on its own not just opposed but vetoed or close down the government and have a big fight. we went through shutting down the government. we saw what happened. it was bad for confidence. it was bad for the economy. i think it was a mistake to repeal the swap pushout provision. but it did not give us the ability to see what's happening in the derivative market and

take away something safe. it didn't take away everything we have by a long shot. >> the secretary of the irs will never call someone on the phone and say give me a credit card number. can i say that with certainty now? that was a tax scam correct? >> i think what you just describes is a tax scam. >> and you said you found out they didn't call you and say you owed money, did they? you weren't subject to one of those scams? >> i have actually gotten those calls like others do. >> serious will i? >> i have confidence that the irs doesn't do that. >> but you yourself actually got one? >> i did. >> that'sly hilarious. >> it turned out it was a well known scam. >> did you get scared for a second? >> i did look it up. i think americans have to be very careful when they get either in the mail on their e-mail, phone calls like that. the irs doesn't work that way.

and i think that if everyone took a deep breath and checked, they wouldn't fall for those. >> the easily way is to look up the phone number. >> that's what i did. >> you told the story before we started the interview, i was like wait a second. did you actually get a call. the guy called you and said is this jack lew. >> it was a phone message. the same script you got, probably. >> return this call. and the guy had no idea. beautiful. there you have it. >> okay. jack lew thank you very being with us. appreciate it very much. still to come new technology making trading lightning fast. we're going to ask nyse boss how they're taking on the future. and then the pulse on the consumer outside of the united states from the worldest fastest growing retailer. the ceo of walmart international will be here.

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we talk so much about the american economy and the impact oil prices are having on the consumer, but what's happening around the globe? what is impacting consumers the most. joining us now is david cheese cheesewright. he is ceo of walmart international. for people who don't know where the operations are, give us the geographical breakdown of the most important areas we're talking about. >> nice to be here. thanks for inviting me.

>> thanks for coming out. it's freezing. >> it's cold. walmart international, we operate in 26 different countries around the world. so we have a business in asia primarily china, japan, and india. then a business in europe middle east, canada. we put canada in that region. so biggest business in canada and uk. we have businesses in south africa. and also in latin-america. >> so to answer that question, how are they doing in walmart international, we'd have 20 pimpbt answers. >> there are some common friends i think everywhere around the globe. we're seeing similar issues around pretty high levels of unemployment particularly with youth. and low growth rates. friends at walmart i'd say it's a good time for us.

>> then i think about how many times we talk about walmart buys from china with their currency where it is. we're able to get these great things to pass on to consumers. that's how walmart is able to maintain some amount of margin. but the currencies around the world with -- i mean what can you count on? >> how do you do that in china? >> and how do you do it based for the next 12 months. >> it's a diverse portfolio. luckily you find some things going up and some going down. we do import a reasonable amount from china. but it's a relatively small part of the mix. we're a very efficient business. and we use scale wherever we can. we try to keep costs low. particularly in those emerging markets, there's been supply chains. how do you deal with that? >> we put a lot of investment into supply chain security in particular. and it starts by a world class

network. most importantly our fresh supply chain. and the second of it is the stores. we need to make sure they're looked after in stores. of making sure the equipment there is good. the third bit you add to it is a comprehensive compliance program around the globe. we invested a lot in the food security over the last year. and mobile labs which allow us to get to remote stores and train them pretty quickly. >> we've got to go, but do you know the lowest per hour rate you pay any employee internationally in dollar terms? is there a $3 an hour employee anywhere? >> i don't know the answer to that. i think the way, look at our business is we try to pay a fair wage. i think the most important thing about walmart and i think doug

talked to you about this when he was with you recently is the opportunity we provide. all the stats you hear in the u.s. we promote around 170,000 people a year. but the managers that start out are the same across most of our markets. between all our managers come in with no background. >> thank you. >> appreciate it. when we come back, we have a lot to talk about. bitcoin funding and a lot more. nyse president and a member of 40 under 40 thomas farley is going to join us after the break.

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welcome back, everybody. right now it's time to talk about the future of the big board. how is technology changing the way we trade? thomas farley is the president of the new york stock exchange and he joins us right now. great to have you here. >> thanks for having me here. >> we have not talked to you since we read a report in the new york post that said ice was going to be fixing things up and closing the trading floor there. is there any truth to that? >> no. no. we are continuing to improve the business, but the floor is a very important part of pit as is the whole of the new york stock exchange business. >> where do you think that story came from? >> i don't know. it was bad reporting. >> when did you learn about it? >> i was on a flight with my

family to costa rica for the holidays and i was flipping through a copy of the new york post on the plane and i read the article and i laughed. but it absolutely isn't true. we're committed in the new york stock exchange business. it's doing great. and we're very committed to the floor also. >> let's talk a bit about the changes in technology. we have seen rapid changes. there's some good and bad parts to all of that. why don't you talk about where you think things are headed right now? >> i think to some extent exchanges and our colleagues lost our way a bit with respect to technology. the focus was exclusively about the incremental trade and high frequency trader and the next order type. and our emphasis with technology is to really focus in on the core users of the market. and the listed company. so that's what we're doing. we're building new technology that will allow us to reduce the number order types.

and not make the order more accessible accessible. >> when you think of high frequency trades they have been blamed for a lot of ills over the years. and it's about whether it's possible to see a rapid drop in stock prices. how do you assure investors that they can be confident in the system? >> well everybody likes a scapegoat. herbert hoover blamed it on speculators. sop people like to point the finger at high frequency traders. but also i'll mention that perception is reality. and tlgs a prer acception that the markets aren't fair enough. that they're not easy enough to understand that they're not focused on the core users of the markets. and the high frequency traders or proprietary trading firms i talk to the firms that show up and provide liquidity in good times and bad, they want to be part of that. they want to be part of simplifying the market because it will be good for us. >> what about a fat finger trade

that can't be taken back? and it's a billion dollars and something happens. are we less likely to have that now? seems we're more interconnected and there's more and more -- things are bigger than ever. i mean can that happen? >> it is less likely to answer your question. but it's not impossible. i mean my job running three stock exchanges is in part to be paranoid about risks. and that's one of the top two risks that i think about. we've gotten a lot smarter as an industry post-the flash crash and a few of the other episodes we've had over the last five years about having the right risk protections in place. as we saw with the problems that knight had, it can happen very quickly. >> you said that's one of the top two risks. what's the other? >> cyber. we worry about cyber. we're paranoid about cyber making sure we're always protecting our exchanges and our customers. i would also put in there just as a third is the market structure issue that i've raised

twice. i think the markets are too confusing for customers and we're going to change that. >> tom, we want to thank you for joining us today. we hope o to see you back in new york city too. >> are you just on autopilot back there? don't you have a job back there or something? >> i have a job. can i just mention that i have a job which is running the new york stock exchange and getting new listing customers. we had a great listing today. box priced yesterday. which with is an exciting company. and i want to point out because at lo of people are hanging their head here around davos that box is the first billion-dollar-plus ip o rks oo of the year. and there are more with a billion-dollar valuation. so we're winning the large technology ipos. >> all right. >> thanks guys. when we come back we have jim cramer. back in a moment.

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welcome back to "squawk box," live in davos, switzerland. shares of u.p.s. slammed after the shipper guided lower. down to the new york stock exchange where jim cramer joins us now. your view on what to think about u.s.? >> management needs to be changed and changed yesterday. embarrassment. my charitable trust owns it, i'm

right out of the closet on this i'm can nod not believe they've been this wrong. spent a fortune trying to do e-commerce last year. i'd be embarrassed. this is a great american company that lost i don't have any other explanation for it they've lost their way. >> mcdonald's, real quick, 20 seconds. >> a case where they cut down cap x, if you back out china 9 cents you get a number that wasn't a big miss. stock up in premarket. i don't think it will be sustained because the operating income is sustained. maybe they realize they have a real problem and address. both companies undermanaged mcdonald's and u.p.s. both in need of a change. >> we'll see you on jacques on the street. i imagine you'll be talking about that. see you in a couple of minutes. >> next, future of the web. wikipedia founder will join us

his latest venture, right after this break. t say thank you enough. you have made my life special by being apart of it. (everyone) cheers! glad you made it buddy. thanks for inviting me. thanks again my friends. for everything for all your help. through all life's milestones our trusted advisors are with you every step of the way. congratulations! thanks for helping me plan for my retirement. you should come celebrate with us. i'd be honored. plan for your goals with advisors you know and trust. so you can celebrate today and feel confident about tomorrow. chase. so you can.

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encyclopedia launched nine years ago, boasting almost 3500 million monthly readers worldwide. come under censorship pressures. our next guest firmly stand his ground. jimmy wales co-founder of wikipedia. explain what happened. there was some statements that came out from david cameron, the uk prime minister and people started thinking what happens going on with encryption. why don't you explain the encryption and the story. >> basically, david cameron came out and said it's very problematic that people have private conversations that we can't in principle listen in on and we should ban services that allow that. it sounds plausible on the face of it, but to a technologist it's total nonsense. encryption is mathematics, you can't ban encryption. the trend is increasing encryption and security people are worried about cybertheft. we recently moved to having all secure connections to wikipedia in the uk many countries, not

finishes with the process. so i mean the only thing i said we're not going to unencrypt wikipedia. good luck. >> what are you protecting? what are you doing by encrypting? >> so anybody who is snooping on your internet connection, when you go to your bank it's https, and that's a private connection between you and the bank. if you go to a site that's not https, everything you send see, is readable so people can be on your wi-fi listening to packets and see what you're seeing. >> let's talk about the growth of wikipedia. 500 million users a month, amazing. >> it's higher than that. nearly 350, depends on -- 550, depends on the month, when college kids go up for a while. >> really? >> at the end of the summer we see a spike in traffic. it's incredible. seeing fast growth in mobile as

everybody is but wikipedia's a natural match for mobile because you're on about, want to know something, go to wikipedia. and a lot of growth in the developing world. that's what i'm personally excited about, language in the world is booming and doing well. >> i'll admit, when looking something up wikipedia is the first place i go. i found a lot of things wrong on wikipedia. i go on i'll check things out but i go from there. what do you say to people who argue -- >> if you see something wrong on wikipedia, fix it tell us about it, the community's passionate about trying to get it right. but it's a difficult thing to get everything right. so, he yeah there are problems. but the best academic studies show the accuracy of wikipedia is similar to traditional encyclopedias, we want it to be better. it's not disastrous. >> you've been an advocate of net neutrality. what do you say to the argument that the cable companies would have, was that a company like a netflix is taking certain hours

of the day, a third of all of the band with and they should pay for some of that? >> well my -- my isp in florida is verizon, i have fios i pay for 150 megabit connection it's great, it's fast. if i paid them 150 megabits i want 150. for them to say, no netflix has to pay us too, we're not going to deliver the service i'm paying for, i'm not happy about that as a consumer. >> if they don't towards netflix, you have to pay 1500 for your megabits at some point. >> it wouldn't be 1500. >> 1500 hyperbole, something's got to give or they're not going to build out their networks. >> it's a fantastic network. they're crying wolf. >> you've got to charge for to recoup -- >> my view's on net neutrality are complicated. it's a very complicated issue. and i think very sim liftplistic

questions they don't address all of the nuances on peering relationships and all of those kind of things. it's complicated. >> right. going back to 1932 probably isn't a great idea either. >> it's never a good idea. >> jimmy, we want to thank you for being with us here today. you're our final guest on the last day of our coverage here from davos. >> you go inside get warm. >> we are leaded there in a moment. but it's wonderful talking with you. thank you for joining us. >> thank you. this has been fun, guys. >> it has. >> it has been. >> we'll be back in the big city monday. >> we go back to a place that's new, cool too that we love. barely got to enjoy our new york digs, midtown. >> jimmy, in new york come to the new digs. make sure you join us on monday. "squawk on the street" begins right now. ♪

big morning here at nyse courtesy of a long-await ipo. online data storage company box going public today. we'll talk with the ceo in our next hour. in the meantime, good morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer at new york stock exchange. david faber is off today. take a look at premarket. it's not just box making news. earnings from ge mcdonald's, starbucks, a warning from u.p.s. futures are roughly flat. same story with