"squawk box" begins right now. ♪ good morning. welcome to "squawk box" on cnbc. we're live from the world economic forum in davos, switzerland. i'm becky quick along with joe kernen and andrew ross sorkin. we have a mega lineup of guests. joe mentioned randall stevenson. we'll talk with arnie sorenson, brian moynihan, david cody, marc benioff, matt damon and many, many more guests. before we jump into that, let's check the markets and see what's been happening. the dow has been moving further away from that 20,000 point level. u.s. equity futures are under pressure. right now the dow is down by 62

points. s&p 500 futures look like they would open down by nine points. the nazaresdaq down by 21. in asia, the nikkei kwas down. we saw positive moves in shanghai and the hang seng. things are lightly weaker for europe. the dax is down about 0.9%. if you look at the crude oil markets, you'll see in the natural gas, natural gas has been a bit higher. right now up by 1.5%. wti also up by 1.4%. a andrew? >> british prime minister theresa may will deliver a speak later this morning outlying 12 priorities for upcoming brexit talks with the european union. she is expected to say that britain will not seek a deal

that leaves it half in and half out of the priority. the priorities are gaining full control of the borders. happening moments here in davos, chinese president xi jinping, the first time the chinese president has been to davos, defending globalization at a time that his country's power is coming under pressure from soon to be inaugurated u.s. president-elect donald j. trump. >> there's no point in blaming globalization for the world's problems, that's simply not the case. it will not help solved problems. from the historical perspective, economic globalization results from growing social productivity and is the natural outcome of scientific and technological advances. it is not something created by

any individuals or any countries. >> xi says many people are wondering what has gone wrong with our world. he suggests that globalization has become a pandora's box in the eyes of many, and we'll talk a lot more about this topic and much, much more throughout the show. gm among the top corporate news. general motors will announce plans to invest $1 billion in its u.s. factories. this will include adding more than 1,000 jobs in the united states. the news could come as early as today. the organization received criticism from trump for building vehicles in mexico. sources tell phil lebeau that the invest mment and the new jo have been in the works for some time. yesterday trump threatened german carmakers with a 35% u.s.

import tariff. this is where we have to draw the line. >> finally you hit something. >> this guy is a lunatic. any way, he argues that german carmakers are better off building u.s. factories. we all got to -- we all got to pitch in here. make america great again. >> so the border adjustment tax is not -- you and paul ryan. >> german cars? i don't care about the chevy cruz. in other political news, president-elect trump is taking issue with at least one part of the house republican tax plan. in an interview with the "wall street journal," trump calls the border adjustment provision too complicated. the measures are designed to increase u.s. manufacturing by taxing imports and exempting u.s. business export revenues from corporate taxes. >> it is too tcomplicated. >> but it raises a lot of money. how about the nato stuff.

look at people walking around here. it's cold, maybe that's why there is no blood in their face. >> given the comments about trump saying that -- >> what? >> five members of nato are paying. >> we are in the globalist capital of the world and the trump nainauguration is coming in a week. what were you -- big people making big news. you were up early this morning. >> we had a panel. we had ruth porat of google, martin sorel. >> what was your panel about? >> big business. a rebuke of big business. >> the evils or the good? >> that's what we talked about. whether it's been articulated properly, and whether it's not just the articulation but the reality of this whole debate. the relevance of davos man. >> you had dinner last night. >> with some davos men.

>> and women. >> you have been flat out since you've been here. >> you haven't left the hotel room. >> you even got room service. >> i got caught up on quite a few little house on the prairies. that's all i could find on english. that michael landon died too young. why are you laughing? . i love michael landon. >> he hasn't seen little house on a prairie for a while. french president francois hollande says europe does not need to be told what to do by outsiders this comes after president-elect trump did an interview with london times newspaper in which he described himself as a big fan of britain, endorsed the brexit vote. he was also critical for angela merkel's instance on ref jus, and trump said nato is obsolete because it hasn't defended

itself against terrorist attacks. he thinks only five nations are paying what he thinks they should be paying. the german foreign minister said those comments aroused concerns across the alliance. >> not bad here in terms of the temperature. >> no. >> woke up, it was 6 degrees. minus 14. >> what is it now? >> feels okay here. the sun helps. >> heaters help. >> speak for yourselves. >> three hours later call me. >> i am wearing a lot of layers. >> at&t executives paid a visit to trump tower. there was reportedly no mention of the company's potential merger with time warner. joining us now with some insight into what was discussed at that meeting, the future of the deal, at&t chairman and ceo, randall stevenson. great to see you. >> hello, joe. >> he went to mexico, he said, nope, we didn't talk about the wall. didn't talk about the wall.

later it came out they talked about the wall. really, no talk about this deal at all when you went in to see the president-elect? >> really. >> wow. what were your impressions? what did you talk about? >> did they tell you not to say anything? did your general council say not to say anything? >> no, we have a deal in front of the department of justties. people will be guarded having a conversation with an incoming administration. >> on both sides. >> absolutely. >> probably just good caution. >> did you just in passing say, i don't know, vertical deals that have no overlap just seem like they make sense for consumers, did you throw that out there? didn't even try that. >> we didn't talk about the merger, joe, did i mention that? >> maybe other mergers. so what did you talk about? how long was the meeting? >> geez, probably 40 minutes. >> okay. >> was a good meeting actually. had a lot of conversation about where his administration is going in terms of tax reform.

i was able to say as the largest investor in the united states of america that's important to us. the implications to us if you can get tax reform done as they're describing it, which i think would be something can. >> would it mean you would be spending more money in the united states? it's been five years running that at&t has been the -- >> i mentioned that to him. we spent over the last five years, $140 billion. that's looking back, not forward. a lot of people come in saying they'll spend 140 billion in the future. if you get this tax reform, it would have significant implications to capital investment. to answer your question, we probably would step our capital spending up. >> you have a big business in south america, mexico. did you speak to him about that and the implications of trade policies? >> no, that didn't come up. our mexican investments are really not that affected by his trade policies. >> okay. >> we're investing heavily in mexico. >> those investments were in reaction to the interesting administration's moves.

>> yeah. a lot of what happened in the regulatory front here gave us the impetus to look elsewhere for investment. as a result we looked at mexico. looked like a great place to invest. a different regulatory environment. conducive to investment. that's one of the other things we talked about with the president-elect, the regulatory environment. he asked me, has this regulatory environment been difficult for you guys? i said it's had a huge impact on how we think about investment in the u.s. we talked about the implications of streamlining renovation, and it's important for american business. >> what areas would look for conducive so investing in the united states if some of these policies we heard about come to fruition? >> if you think about -- i'll start with tax reform and go into regulation. on tax reform, all of us are champing at the bit on deploying fifth generation wireless technology and more fiber. tax reform changes the equation

for that. it changes how you think about deploying capital. you would accelerate cap pal investment. >> what is the path for 5g, if nothing happens and if you get tax reform and your tax bill is 20%, whatever number you want to put it at. how much more quickly does that expand? >> i can't tell you exactly how much more quickly we would deploy the technology. right now we're on a path of getting the standards done in a 2018 time horizon. which you begin to preview that, if you will, begin to deploy fiber in anticipation of 5g deployment, yeah, you would. >> there's still this deal. a lot of people that looked at the old at&t and what the new at&t would be, it did sort of resuscitate what some people thought was a -- not as exciting a narrative about where the company goes.

in testimony before congress, analysts cam out sayi s came oul be jeff sessions and the justice department and they have ways of looking at this but during the testimony they said we need to use new ways in judging whether mergers are okay. they thought this went well. the fcc might be a different story. do you feel you're 70/30 in terms of getting done? >> i feel confident the deal gets done. the senate hearings, all they did was highlight what jeff bukus and i have been saying. this is a vertical merger. the competitive environment of telecommunications does not change, the market concentrations are the same. nothing is different. >> you have a populist like steve bannon in trump's ear, they're not talking about

vertical integration, they're talking size. this is too big. thinking about comcast, maybe that should not have happened. it's almost like a visceral response. do you think that timely fades once they see the details? >> i think it begins to fade once the details are put in front of the public. so the filings are at the dodj, people are getting into the middle of it this thing will unfold. people will see it for what it is. a basic vertical merger. >> people thought maybe it would require spinning off cnn. is that something you would be still be interested if cnn was a part of it? >> i don't know why we would talk about it. it doesn't seem relevant to approving a deal like this what would be the competitive issue you're remedying with sp ining

off cnn. >> given trump's comments about the deal, there's a lack of recognition that ultimately it has to go to the justice department. if the deal -- if they attempted to block the deal, you could go to court, you could either stand down or go to court. if there was an attempted block, would you go to court for this transaction? >> of course you would. >> you would. >> some other deals, we heard no noise from the justice department, and the companies would back down. this is different? >> it's like asking about cnn. it's putting the cart way in front of the horse. >> with the way tweets are, he's not president yet, but it might not be insane to think you might get it through if you spun off cnn, just to -- >> i operate under a base iic premise that the law will

dictate this transaction. is it anti-competitive? does it do consumers harm? i think it's a hard case to make that this does harm from a competition standpoint. i have a separate directv question. when you first introduced the product, it was $35 introductory, some people thought that would stay, it's gone up to $60. the price change to go up to $60 makes it less attractive to unbundle in the rest of the world. >> but understand we had an offer that was -- it was an int introductory promotional offer, $35 for 100 channels, now it's $35 for 60 channels. this is 60 premium channels. it's not stuff nobody watches. >> the price has not gone up? >> the number of channels available at 35 has come down.

>> if you want to keep the same number of channels, it's now -- >> if you come in at $60. but people who came in at $35, keep the $35 and 100 channels. $5 for 60 channels is a great deal. i've been pleased with what we've seen. >> across this entire book where we have our guests, again and again individuals that maybe were not trump supporter, many of them will be on today, they gave money to hillary clinton. but almost without exception they're talking about being optimistic about animal spirits, they're hearing antidotal evidence about small business plans, and it's -- it's pretty amazing. have you had any meetings with our european compatriots? have you tried to explain that things actually do -- i think they may look at you incredulously and say trump? i can't imagine -- >> it's an interesting question.

if you think about what we've been saying in the united states, we're growing 2%. what is the theme that would cause 2% to become 3% or better? we've all said you fix this regulatory environment, you get tax reform, that's the stimulus. that's the katdallist for higher growth. president trump comes in. what is he talking about? tax reform and regulatory reform. it shouldn't be a surprise. >> what is this low taxes? what is this regulation. they have no concept over here, do they? >> are you crazy? >> the tax rates over here are lower than in the united states. i can understand why they might look at us that way. >> have you had people saying, you know, what's wrong with you people? i've seen it in the newspapers. they think trump is like a cowboy. of course they thought that about dubya, too. >> i've been asked a lot what do you expect. that's the first question i get from people in europe. what do you expect.

i said, well, the president-elect seems very focused on what he ran on. tax reform, lower regulation, trade. so i think we ought to take him at his word. i'm optimistic we can get tax reform. >> the trade part of that is what has a lot of people concerned. a lot of companies concerned. global economies. may not affect your business as much. what if there are 35% tariffs on goods coming into the united states? >> i think people can get their head around tax reform, around regulatory reform. you mentioned it in the lead in about the border adjustment tax. people you talk to here say we can't figure out what it means. how it works. so people are trying to understand what does that mean? i think people are kind of beginning to think, as you were, andrew, that is that some trade tariffs might be the price to pay for lower tax rates. that's probably an equation we all have to evaluate and assess.

>> what are your retail -- i ran into doug from walmart this morning, you sell your product in some cases through places like walmartment. >> think about our sales. a lot of these tariffs would impact smartphones. i don't think anybody would be immune if you have these tariffs imposed. are you ready to be a media mogul? have you been brought -- who do you like in the oscars this year? did you see meryl streep's speech? are you ready to move left to some extent? you're from oklahoma. this whole thing doesn't make sense. >> you nailed it, i'm from oklahoma, it doesn't make sense. i don't know. >> i think it will be very interesting. you figure if you have this content offer, you can drive down prices for all the stuff you wanted to do in terms of building out things. if you explain it that way, even

to trump, i don't see how that can't resonate. >> we bought directv, so we had access to content relationships. in one year you can launch a $35, over the top, data included in the pricing. but the interesting part is we're getting that content, but all we can do it put it on the mobile device. we can't do anything else with it. we can't innovate around the content, incorporate social media into it. that's the beauty of a time warner thing. now you cannot only innovate on the delivery of the content but on the con ten itseltent itself. >> when you announced the directv now price, stock prices fell. they have come back for the most part. do you think that was the right reaction initially? what do you think the competitive landscape looks like after a deal like this? >> i have said on a panel with

you that the $100 bundle, it's not something that makes sense for the market standpoint. it's an inefficient pricing mechanism. overtime the consumer will be able to buy the content they want, particularly in a world of mobi mobili mobility. a deal like time warner's will open that up. we can get prices that are more attractive to them. we have 20 million people opt out of the traditional linear pay tv model because of price. we're about how do we get those 20 million back in to the model. it won't be by the traditional means. >> you think they come back rather than just turning on netflix or one of these other alternatives? >> depends on the product. what we've shown with directv now, they're prepared to come back in. yes, i do believe they are. not all of them but a significant part of them want back in. >> all right. thank you. if you do have an academy awards

party, or if you get a budge of ticke tickets, should we negotiate that now? >> i would think you want the film screeners, dvds at home. >> we'll follow up. >> okay. thank you. thanks for your time today. >> thank you. when we come back, more coming up from the mountains here in davos. we should just call them the alps. the co of marriott will join us, and the co of bank of american, and later on, matt damon will be with us. before we go, this day in history.

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anything with a screen is a tv. stream 130 live channels, plus 40,000 on demand tv shows and movies, all on the go. you can even download from your x1 dvr and watch it offline. only xfinity gives you more to stream to any screen. download the xfinity tv app today. welcome back to "squawk box" live from the world economic forum in davos, switzerland. here now, joe kernen, becky quick, and andrew ross sorkin. welcome back. earnings just in from dow component united health group. the insurer earned $2.11 a share for the fourth quarter.

that beat estimates on the street by four cents. there was an increase in the number of medical insurance customers. that stock is up slightly, up by 60 cents. on the agenda this week, plenty of economic data and earnings reports. tomorrow you can look for december cpi and industrial production. the monthly housing sentiment survey and the fed beige book. janet yellen is speaking in san francisco about the goals of monetary policy on thursday. she is speaking on tuesdwednesd. on thursday, housing starts and the january philly fed survey. on friday, washington, d.c. and inauguration day for donald trump. about 30 companies in the s&p 500 report results this week. today we hear from morgan stanley, csx. some stocks to watch today, starting with british american

tobacco buying the roughly 58% of reynolds american it doesn't own. $49 billion was the price. noble energy is acquiring clayton williams energy for $2.7 billion. that deal expands noble's presence in west texas and in the permian basin shale oil field. and a merger, wig one. this is another huge merger to tell you about. think glasses. italy's luxottica and france's essilor agreeing to a $49 billion merger to create a global eyewear powerhouse. >> i thought luxottica made every pair. i wonder if that is a combined market cap. >> people think about competition, big business. not many left. >> werby parker. >> wasn't that a "60 minutes"

piece? >> yeah. ratcheting the prices up. but contacts are the way to go, aren't they? some people can't. much more ahead from davos. checking into the red hot hotel sector with the ceo of marriott, arnie sorenson. we'll get his take on how globalization plays a key part in his industry. "squawk box" will be back after a short break.

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♪ welcome back to "squawk box." coming to you live today from the world economic forum in davos, switzerland. it's gorgeous in terms of the sun being out, low-hanging clouds. beautiful, but it's cold. could be worse. could be overcast, could be snow falling. then it's really cold. it's cold, but feels pretty good. u.s. equity futures at this hour, we are down 27, i think, from where it closed yesterday. doesn't look as bad as that 95 number, but down 67 points on the dow. the nasdaq down 18. s&p indicated down almost 9. we're in earnings season now. right in the middle. expecting earnings today from

morgan stanley. that will come within the next half hour or so. the firm is expected to report a first quarter profit of 65 cents a share. ref kne revenue expecteded to be $8.5 million. >> skorean automaker hyundai expected to boost investment in the u.s., and it may build a new us plant. this comes following president-elect trump's threat to impose new import taxes on vehicles built elsewhere for sale in the united states. seemed like a good deal all along, until they started with german cars. >> suddenly they got your attention. >> have you looked around at how many people have a bmw? >> here.

>> around new york city. >> around new york city. >> around communities. >> if the dollar strengthens, you wouldn't have to worry about it any way. that's what some people think the after-effects of this border adjustment will be. >> it is complicated. that's the latest when the president says, i don't know about this tax. it's complicated. >> larry kudlowcomplications, h think it would get past. >> but it raises a lot of revenue. >> we have seen the house, the questions they ask, this could be a problem. seeing some of the -- the level of understanding of this. >> in the meantime, we have a globalist with us, who has a big global business these days, who may be impacted by donald trump. marriott international is the largest hotel chain in the world following the merger with

starwood le starwood last december. here to join us is arnie sorenson. here is a guy who will make it tough on foreign companies and countries to do business in the united states. do you worry about a backdraft to your business all over the world? >> yes and no. we're not building product in one place and shipping it elsewhere to sell it. you can't build a hotel in hong kong and expect it to the same thing in minneapolis. but of concern to us is the questions around immigration really, and trade. whether those are communicated in a way that translate to

you're in the welcome in the united states. >> you don't think if trump makes it difficult for companies in china the next time you're bidding on a project or building you want to build to do a new hotel that it might be more challenging for you? >> in a trade war anything can happen. if we're viewed as an american company, which we are, somebody wants to do damage to an american company or an american economy, they could impact us. on the other hand, we have 6,000 hotels. we don't own more than about 20 of them. every hotel we have in china is with a chinese real estate company. it's not that simple to look at us and say you're an american company, therefore we'll penalize you. you would be penalizing the chinese real estate partner more than us. >> strong dollar. it's a separate issue, but impact of a strong dollar on your business. that is the huge debate as to

whether we have a strong dollar, and what the fed will do. >> works both ways. with a strong dollar, americans traveling abroad, it's a bonanza. europe has never been cheaper. for europeans, particularly coming to the united states,s that been flat in 2016. the currency is a big piece of that. >> are you seeing the animal spirits we talk about on this show impact your business in the united states? we had the ceo of delta on last week, suggesting that the trump effect was meaningful to the business. >> i think we would say that it's not proven yet. we continue to see an economy that's growing, u.s. particularly, albeit at a modest rate. maybe some glimmers of hope. but i think those glimers are not clear enough to overcome bias. if you want to come at it and say i believe it's happening, you may find some evidence. i don't think the evidence is powerful yet. >> you are looking at incredibly

high occupancy rates right now for the industry. is that because people are traveling more or there have not been new ohotels built? >> a bit of both. supply numbers have not come back to the levels we've seen in prior economies. people are traveling. there's a number of trends playing in our favorment you fa. you guys were talking about bmws. people value stuff differently today than 20 years ago. so we see, not just younger people, butessential. and it means travel is growing -- >> how important is corporate versus just leisure? >> varies around the world. for us in the united states, business travel and conferences is 75% of our business. that's kind of weak, isn't it? the growth occupancy in that

sector slowed, did it not? >> it's been steady. >> steady. >> stronger in group than in individual business travelers. again, depends on the industry. >> conferencing, will that take a -- if you could be -- on a huge screen, if you all feel like you're in the same room, would that eventually take a bite? . people have been asking about teleconference's impact on meeting in the past 20 years. we use it all the time to have meetings. they are replacing telephone calls more than they're replacing good, long meetings. if you have a need to be together to talk strategy or launch a new product or recognized great performers, you can't do that by teleconferencing. >> do you know there was a time, about seven, eight years ago after the final crisis where

then new president barack obama talked about don't go to vegas and blow a lot of money. that that wasn't a good use of -- we called the white house when that happened. >> to say thank you? >> also when someone from ritz-carlton or four seasons would be on, we'd ask them. the luxury market is -- do you feel a bit guilty treating yourself? they said people always want to save up and treat themselves. couldn't it swing the other way if suddenly everybody feels that we're in a 4% or 3% world? maybe luxury gets more popular or more acceptable? >> i think the reputation of the hotel business has improved dramatically. a decade ago people would say i would go to vegas. it's privilefrivolous. if we had the share we had

before 9/11 of global travel, we would have another million jobs. i think politicians increasingly realize there's job growth there, there's economic growth, tax revenue, that plays to our favor. there are people that work at ritz-carlton that are not -- there's people that work in the restaurants, people that work in the hotel, that was why it was so misplaced. the guilt associated with it. you can save up for luxluxury. >> i have a tech question for you. will we all have an alexa in our hotel room? when we call the operator or front desk or room service, is that job going away and alexa it taking it? and what about the honey pot, right? it's going to be listening to

everything going on in the room. >> the one place we're likely to see the phones disappear is the h hotel guest room. >> we are heard hotels in vegas installing alexis. >> hotels have always been a good place to start technology. but i don't think that will impact john impact jobs. the bulk of people in hotels services people when they want to be serviced. restaurants, bars, housekeeping. most of those things can't be automated. >> credit card question. is the starwood card ever also going to be like the amex one? >> we'll see. amex and jpmorgan chase are keenly -- >> they're vying. you don't want to tell us. >> both are big programs. we have to get through a process

before we figure out if we have one card, two cards. we want to make sure we protect spg customers. >> and aung bang tried to disrupt your merger with starwood. now they're in talks with jared kushner, what do you think about that? . >> they are buying another hotel from us, they're good partners of ours. >> very politic. thank you. >> thank you. we have a lot more coming up from the alps in davos, a look at snapchat glasses, and some news about the snap ipo. "squawk" returns live from davos in a moment.

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welcome back to "squawk box." coming to you live from the world economic forum in davos, switzerland. snap, the parent company of snapchat, expected to be one of the highly anticipated ipos of 2017. now it is reported that the founders of snap want to keep

more control. they want to own 70% of the voting power, despite owning 40% of the stock. you have been snapping this morning. i ask these are the snapchat glasses. spectacles they call them. so we can put them on. how do they look, okay? >> yeah. >> you hit this button there. >> now i'm snapping. >> yeah. >> then i have to send it out as a story. this is not voe interesting. >> no, but you're seeing what it looks like over there. >> yeah. >> i think we need to step up our -- >> our bar for what we are snapping out. you can put on these cool snap davos things. they geo fenced all of davos. >> if you are talking to somebody in a bar that they can be snapchating you live. >> yes. i'm snapping you right now, joe. >> rocket man.

you look like elton john, andrew. you know? >> elton john is quite successful. i will take that. coming up, are you in the mood for a cheeseburger, guess what? how about one made from plants? the ceo of impossible foods tells us about what's been growing in this $5 billionen industry. "squawk box" will be back in a moment.

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welcome back, everybody. how do you like your burger? maybe medium-well, well done? how about a bloody, plant-based burger? a growing number of companies in silicon valley are disrupting the world thinks about meat, taking on the $5 billion plant-based food industry. joining us now is patrick brown, the founder of impossible foods. that's a start-up that uses biochemistry to create plant-based burgers designed to smell and taste just like it came from a cow. impossible foods was featured on our 2015 cnbc disrupter list. dr. brown, thank you for being here today. >> thanks for having me. >> we need to distinguish, this is not a veggie burger. this is a burger made out of plants, but it looks, feels, and tastes like a real beef burger. >> yeah, in fact, you said we're taking on the $5 billion plant-based meat industry. we're taking on the trillion-dollar animal based meat industry by producing meats more efficiently, directly from

nutrients that we isolate from plants. >> we just spoke with bill gates, i guess about a month ago. he was talking about how a company like this could be beneficial in all kinds of changes, getting us away from having to grow cows for protein. i guess we've seen the burger. it's just been ruolled out in a few places. when can people walk into any restaurant and get one on their plate? >> today we're in four restaurants. one in new york city, san francisco, l.a. next month we'll be adding three more. right now we're just producing out of a pilot facility in redwood city, but we're building a big production facility in oakland. should be up and running late summer. by then, we hope to be in a thousand restaurants around the country. >> and they're good. we had them. it's not like a gross veggie burger, which are not good.

>> i like veggie burgers. >> these are good. sometimes i wish we weren't carnivores, but we are and we do like meat, which has blood in it and it's from a dead animal and we still like that. i'm sorry. you need the iron-carrying molecules in blood. that was the key thing to get the taste of meat into plant-derived components. but you have to make it. otherwise it's environmentally -- it's just as bad as growing cows. so you do it through yeast, right? what does that -- you need scale to make all this? is that why it's still more expensive for these burgers than meat? >> as i said, right now we're just producing out of a tiny facility in redwood city. so we don't have any of the economies in scale. what we discovered was the thing

that makes meat taste unlike anything else in the world is heme. it catalyzes all the chemical reactions that transform the nutrients found in meat, but it's the same nutrients found in plants and other food. the very high levels of heme that are found in meat enable it to catalyze chemical reactions during cooking that produce that explosion of flavors and makes meat so cravable. heme is produced by essentially every organism on earth, but it's super abundant in meat. we just use yeast, use their own sort of machinery that synthesizes heme normally to produce it at scale. >> how easy or hard is it to get restaurants to want to experiment with this? david chang experiments with a lot of interesting food.

do you want to get into the chains? how is that approach going? when do you approach them? what's the tipping point? >> it's been very interesting. we've had a tremendous amount of inbound interest from restaurants ranging from chains, many household name chains have come to us. we've met with them. they're very interested in having our product in their restaurants. as well as many kind of world renowned chefs. we're going to be announcing a couple new restaurants in new york city that are household name chefs. so we haven't had to do a lot of work. >> great. >> wish we had more time to talk about chicken and fish. >> we're on the case. that'll be a couple more years. we have prototypes. our mission is to completely replace animals in the food system. >> thank you very much, patrick. >> more "squawk box" in a couple minutes. work brother dominic.

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"squawk box" live from the world economic forum. heads of state, business leaders, and celebrities meeting in the alps to discuss the issues facing the world. health care, education, the digital economy, energy, and the environment in foe kaus. in this hour, the ceos of ubs, sap, honeywell, and ebay join joe, becky, and andrew to discuss the issues that matter most to your money. the second hour of "squawk box" live from davos, switzerland, begins right now.

good morning. welcome back to "squawk box" here on cnbc, live from the swiss alps. we're in davos, switzerland, at the world economic forum. they say you can't watch water boil. you can watch water freeze. it's so cool. just sitting here, just watching the crystals form. it is cold. i'm joe kernen along with becky quick and andrew ross sorkin. very cold. everything's freezing. the futures at this hour are indicated down about 53 points. thank god the sun is out. nasdaq down about 19. s&p down about eight. the ten-year was down at like 2.32 earlier last we checked. that's interesting that we're supposed to be at about 3% by now, but it never happens the way you think. oil at this hour, back to 53 or

so. the currency markets we maybe should look at, at some point. i saw the yen was 112. it was up at 118. the dollar has weakened a little bit against certain currencies recently. of course, nothing goes straight up or straight down. >> let's get you a look at some of the other headlines this hour. we've just been watching some earnings coming in from morgan stanley. the firm reporting a profit of 81 cents a share. that easily beats the street's estimates of 65 cents. revenue also above estimates. morgan stanley saw strong performances in trading, merger and acquisition activity and other areas as well. that stock is up by 1.8% in the premarket. walmart planning to add about 10,000 retail jobs in the united states as it expands and relocates its walmart and sam's club chains. it will also provide about 24,000 construction jobs. and eyewear maker luxottica is merging with its french rival

essilor. they would have a combined annual revenue of more than $16 billion. both of them under a little bit of pressure. british prime minister theresa may is speaking in london right now outlining her brexit plans. the prime minister says the uk is not seeking partial or associated membership of the eu. may calling the brexit vote the moment the uk chose to build a truly global britain. he adds she doesn't want the eu to unravel, as that would not be in the best interest of britain. of course, theresa may will be coming here, i believe, in the next 24 hours. >> what's the guy's name? klaus schwab? >> i saw him already. >> do you think anybody thought, okay, how about the amalfi coast. >> it is beautiful though.

look around. >> you do want to go to meetings here. >> that's a good point. >> it's nice the breeze you have in here too. >> keeps you on your toes. >> david cody is here. these four quarterbacks. how great is this. if you said super bowl tickets went down in value because dallas is not going to be in, but you have aaron rodgers, roethlisberger, matt ryan. america's team, that's dallas. >> not anymore. >> oh, we're not going to do that. i was going to say something else. i use mid time again. president 11. >> president xi. real quick. president xi was here, spoke, and talked about globalization, the benefits of globalization at a time when clearly there are questions about whether it's working. >> excellent summary, andrew.

honeywell ceo david cody getting ready to step down. he joins us this morning to talk about what's next for honeywell and what he hopes his legacy will be. i like the three things you said. you said you want to be remembered, everybody made money with you, from customers to employees though shareholders. of course, ceo too. that was one thing. what was the second one? the third one was that your successor can continue to be very successful and you need to leave it with good leadership. >> the second one is i wanted the world to look at it and say, gee, if you want a good leader, whether it's a general manager or any function, honeywell is the place to go. they would ping us. but in general, honeywell leaders would not want to stay because number one, they did well, two, they could accomplish something. we had an organization that facilitated achievement and accomplishment as opposed to something that was just stultifying. >> well, you had a hell of a run.

you have. it's not the same company either. we do want to talk about the current -- >> in fact, i think it was on this show where you were questioning whether i would be able to turn it around. wli >> how long ago was that, 14 years ago? >> 15 years. >> that was before my time. >> i had my doubts. i don't know. you were bordering on like a socialist. now you like all this free market stuff. >> i've always liked free markets. >> now you think regulation, maybe less of it might be a good thing. >> i've always been a believer in smart regulation. >> that's like an oxymoron. no, kidding. okay. you've transformed honeywell. i used to think of thermostats and aerospace. now it's the internet of things and software has become almost paramount. i don't think people understand that. >> we've been building software capability for a lot of years.

if you look at how the digital revolution is going to evolve, up to this point it's been more of a digital-to-digital experience. it's going to become a digital-to-physical experience, which means domain knowledge is going to matter. if you talk about honeywell, you'd say, if i look at their engineers, probably chemical, mechanical, electrical. half of them are doing chemical, mechanical, electrical engineering. the other half are developing software. that ability to understand the digital side and the physical side is going to be hugely important in this century. with our new ceo, with his computer science background and what he's already accomplished, i think that puts us in a great position to take advantage of that. >> i don't remember what you're talking about. it might have been the homer instinct in me. we were owned by ge back then. you came from ge.

>> 25 years. >> i want to be at a place where people want to stay. you got out of there. i think that might have been what it was. >> i did say that. no desire to be where i'm at. >> general electric doesn't own us anymore anyway. i like you now. >> well, it's going pretty well. total returns something like 580% versus the s&p, like 220. >> you remember that. i don't remember that. >> i pay attention to what joe says. doesn't everybody? >> this is the sick thing. we were down in d.c. someone -- the most current news that week was some stupid union thing. i don't remember what it was. do you remember? >> that's your ambush question. >> they put it in the prompter. i didn't even know what i was saying. >> he's admitting it? >> yeah, exactly. it was some complaint. >> becky is thinking, not the first time.

>> i got so mad at that producer. geez, what a gotcha question. just to make it timely. >> david, let's talk about the software. one of the things i thought was so interesting is where you talk about the software and the reason that you need to have it is for things in aerospace, where people want wi-fi on planes. it stunned me to hear you had a survey where people would rather have wi-fi than a toilet on a plane. >> on a flight less than three hours. here's what's going on happening. i didn't make this up. i wish i had. but i think it's a great insight. 100 years ago if you bought an appliance, it might say on the package, connected to electricity because electricity was a big deal. well, today we talk about connected to the internet. 30, 40 years from now, that's not the way we're going to talk. everything is going to be connected. it's going to completely change the way we think. when you look at just what happens with computing power, if you assume it continues to double, we'll say over every two years, and you're impressed with the fact that say a play box is

as good as a crate computer from 20 years ago, if it doubles every two years, in ten years you have 32 times the computing power you do today. 20 years from now, you have a thousand times the computing power you do today. so you think about the change that enables in biology and chemistry and digital interaction with things industrial. it's going to be huge. this century will be just as disruptive as the last one in a very different way. >> i like that you said -- tell us when you are making something up and when you're not making something up. you said that at the beginning. you did not make that up, right? >> i don't make any of this stuff up. >> that's what you said at the beginning of your latest speech you just gave. you said, i did not make this up. let us know when you are making it up. now i'm going to think half the stuff he's saying -- >> i was trying to not take credit for the invention of the phrase. it's a great way of getting it across. >> your stock price you didn't make up. >> those are facts. >> i just need to know now.

>> using non-fake news trump question, which relates to whether you think there's going to be pressure on you and others given some of the comments he's made to boeing and lockheed and others around the defense piece of things and how we're going to spend money. >> i'm not sure where things are going to evolve there. defense for us is more of a -- we really -- we have minimal number products that are geared just to defense. most of our stuff, defense is a sales channel. we make a jet engine, some we sell into the commercial environment, some we sell into the defense channel. so it's less of a market for us. >> same price? >> well, depends on what the application is and what bells and whistles they put on it. yeah, in general, commercial pricing is what we do. >> have you spoken with anyone from the trump transition team or been in contact with the president-elect himself? >> generally, i never talk about that, you know, one way or the other. so i'm not going to here either. >> i only ask because you were

in close contact with the obama administration. i think i read a "wall street journal" article back in 2012 that said you talked with valerie jarrett every day. i don't know if that was an exaggeration. >> i like them. i thought they were working hard to do a great job for the country. yeah, "the wall street journal," apparently there's a lot more public records than i ever realized. >> you can't believe it. look what happens when you're going to deregulate and lower taxes. things are really cranking now. it's like a miracle for you. >> what i said is the animal spirits are better. there's no doubt about it. nobody can deny that. the animal spirits are clearly better. >> did you mention to her when you were talking every day -- >> sometimes change matters. just change. >> so you're optimistic. >> yeah, based on the animal spirits, i'd say yes, there's cause for optimism. now, we'll see what happens. you actually have to do something. it can't just be the psychology gets better and everybody's happy now. there's got to be something that

reinforces it. so with some of the things they're talking about, yeah, i mean, if they really got meaningful tax reform, if companies could repatriate their cash and invest in infrastructure, which by the way is an idea appealing to both democrats and republicans, i mean, that's a hell of a jump start to get people saying, yeah, you know, i don't want to miss this, i got to invest. >> can i ask you a repatriation question? you could repatriate the money, does it go back into some kind of infrastructure spending in the way you think about it, or do you think about it in the context of dividends, buybacks, or m&a? by the way, i will proceed that by saying most people have said, actually, in truth, it will probably be buybacks and dividends. >> i would say whenever -- if you go back to the american jobs creation act, whatever they called it in the last one, and they came up with a the lo of si -- a lot of silly things. if you look at something and say, well, you know, their cap ex is up so it's got to be

because of that. well, it could be totally separate from that. we have some big projects that are going to pay off really well, totally independent of anything going on. i think any caveat put on like that doesn't make sense. you either ought to do it or not do it. >> david, you were on the council, president obama's jobs council. were you not? >> no. >> but you talked a lot. >> some think so, yes. >> he had his own council. >> did any of these things occur to you to urge them to do over the past eight years? >> to do what? >> any of these things now you're seeing suddenly. wow, this might work. >> if you take a look at the simpson-bowles proposal, that tax reform package in there is largely work that was done by me and judd greg. so i'm still very much in favor of that. i've always felt that was a big jump starter and that we need both sides to come together and agree. the debt problem, i think i've

been pretty vocal about that one. richard haas mentions it in his new book. we need to address these sort of things. if we start fixing some of these issues, addressing some of them, i think that's a boost to the animal spirits. >> yeah, could be good. could be good for the next few years. we'll see. maybe things are dependent on some of the stuff coming to fruition, but there's a different feeling right now. >> no doubt about it. you'd be silly to deny it. you talk to small company, big company ceos, everybody's more optimistic than they were a month ago. >> they can't believe it either, i guess. >> but facts are facts. it's one thing to maybe not want something to be true, but you got to look at the facts and say that's the facts. >> it's exciting times. a anyway, thank you. >> always fun. enjoyed it. >> thank you for being here. >> i was just happy to hear joe

admit -- >> you did a good job. >> no, that you were just reading what was on the teleprompter. you weren't thinking for yourself. >> that never happens, actually. >> i usually don't read. in that one case, that was the intro. that was like eight years ago. i still haven't lived it down. >> are we still on the air? >> okay. i'll be careful what i say. >> still to come on "squawk box" -- >> but i could see it on the teleprompter. so you're right. >> yes. >> nice try, joe. >> still to come, s.a.p. ceo bill mcdermott on the state of tech and what he's expecting to change under president-elect trump. plus, the ubs group ceo will be here to talk about the impact of brexit on the banking sector. then later, a lot going on today. the ceo of ebay on how they plan to remain competitive with amazon and others. stay tuned. you're watching "squawk box" live from the world economic forum on cnbc.

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welcome back, everybody. british prime minister theresa may is speaking in london right now. she's outlining her brexit plans. she says that the uk government will put its new brexit

agreement to a parliamentary vote. the prime minister says the uk is not seeking partial or associate membership of the eu. this is what people have been calling the hard brexit out. she argues that the uk must be free to strike trade deals with countries outside the eu. as a result, we have seen some movement in the currency markets. the pound up by 1.75% on this news. some suspect she may be going further than the markets anticipated. the pound is sharper on this. the united states is about to get a new president, one with an uneven relationship with the tech world. joining us right now is bill mcdermott, ceo of s.a.p. bill, thanks so much for joining us. >> thank you for having me, becky. >> we have talked about the unusual relationship that donald trump has had with trump leaders as he was running on the election. he has been meeting with some of those technology leaders since then. just wonder, what do you think this new administration will mean for technology in general? >> well, it's hard to grow without using technology, right.

he's b only going to be pro-growth, pro-jobs, make america great again. i don't know how you could do it without tech. i think tech will be at the forefront of helping him with his agenda. >> have you had any conversations with trump transition? >> i have not. we are proud, though. soon-to-be vice president pence took down infant mortality rates and ran a good operation with technology in indiana. as you know, in the government, whether it's department of defense, defense logistics agency, army, navy, they all run s.a.p. we feel like we have a hand in the success of the united states. >> let's talk about what's going around the globe. i realize you're in a quiet period, so you can't talk specifically about the results you'll be reporting in a few days. we've been trying to get a feel for what's been happening around the globe. in the united states, there are these animal spirits that are taking place. larry fink came on the other day and said, look, most investors have a global portfolio on what's happening around the

globe is not as great. you're a global company. what are you seeing? >> the first thing is that this is the generation we have to unleash people. if you want to run a great company, you got to get young people into the company. you have to initiate them in this new economy and empower people. so as much as technology can do, it's no replacement for human beings. hiring great people is the fore front of every successful company. so massive online computer training, bringing young people into jobs and really creating opportunities for them. so there's this spirit that we're trying to create around a higher purpose in our company, but externally what i see everywhere is the notion of your consumer. it is a consumer-to-business economy. so every company and every industry has to have that single view of the customer in every channel. you see bricks and mortar disappearing right in front of you. so how do you get control of that consumer and that

relationship. this is changing all industries, including health care. it's kind of like if you don't have personalized medicine and a view on creating a healthier future for people, you're not too relevant. so everywhere we go, it's all about precision or personalization. >> what would you say the demand picture is overseas? >> we're seeing a very robust environment out there. every one of these issues, whether it's brexit, eu, global trade, s.a.p., because we do diversify in 25 industries in 193 countries, we're at the forefront of change. when you have change, you need technology to make it happen. the one thing that's really critical is how do you connect with the consumer but then also automate the supply chain. you're seeing now there's going to be massive disruption and involvement of s.a.p. on that supply chain. goods coming from different countries. this morning i was in a panel, and we were talking about jet engines. obviously with jet engines you

have to fix them. so you could procure a part in china, pay for it in a business network, ship it to new york city, and have it preventively maintained by a worker all on demand using an s.a.p. system. why is that relevant? that consumer doesn't want that plane to be late. now the business models for all these companies are changing. they used to make money on the hardware. now they're not making any money on the hardware, they make it all on the services. that's where the margin optimization comes in. it's okay to focus on the consumer as long as you optimize the supply chain. that's how companies grow and grow profitably. >> do you see any trade issues coming up in terms of your own business, vis-a-vis the trump administration, vis-a-vis what's happened with brexit? i'd love to hear your view of what's happening in germany and whether you think angela merkel, who's not here this year, is going to make it and what happens in france and how this impacts all of us. >> i have the one distinction of being the only american on the european round table as well as

the business round table. so i think that i end up in a lot of these conversations, and i enjoy them all. i spent a lot of time with the european round table colleagues, convincing them that america was a growth country, that it was an optimistic place, and that innovation would always prevail in the end. the negotiations are always tougher in the beginning because everybody wants that $20 trillion honey pot. but it will get rational. as it relates to chancellor markel, we have great relations with her and across the eu, we'd like to see the eu work efficiently. we don't want to see it disrupted by these elections and we don't want to see it come apart. certainly there was a lot of fear with brexit that it could, especially with elections in the netherlands, france, and germany. in any event, we are worried a little bit that in the united states if you started to put tariffs and taxes on things, that could be problematic. so what we want to do is remind the administration we have 25,000 jobs in america.

the government entities that really matter run our software and so, too, do all the international and global companies that operate out of the united states. we're going to put 10,000 jobs in the united states in the next 13 months. so we obviously don't want to get into any difficulties on tariffs. we want to create jobs, create economic opportunity. so yeah, do we worry about it? yes. do we contingency plan for it? yes. do i think in the end it'll be a real issue? no. >> what does that mean, exactly? what does it mean to s.a.p.? is it here and now? i'm going to start using it. we have a dinner tonight. i'm going to talk a little bit about it. >> perfect, joe. >> it sounds smart. >> it is here, it is now. let me give to you a simple application. in every single company, they're hiring people and they're matching the resume of the person to the job profile. normally humans do that. the problem with humans doing that is they have certain bias. birds of a feather flock

together. but with machines, computers don't have a bias. and they learn and know exactly what the requirement is for the job. they take out the bias, hire the right person. >> bill, thank you. appreciate it. coming back, we have the ceos of ubs, ebay, and the accounting giant ey. i am benedict arnold, the infamous traitor. and i know a thing or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't. (cannon sound)

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welcome back to "squawk box," everybody. this is cnbc, and we are live from davos, switzerland, at the world economic forum. among the stories front and center this morning, we're watching shares of morgan stanley after the firm came up with earnings better than expected for the fourth quarter. morgan stanley earned 81 cents a share, beating estimates of 65 centings. revenue also exceeding the forecast with the firm benefitting from a post-election trading surge. that stock has been higher today. it's up by about 1.3%. in the meantime, tiffany's says comparable sales fell, partly due to traffic disruption at its location near trump tower.

however, the stock is higher in premarket trading. you can understand why they might have had a little trouble getting into the flagship store there. with the next fed meeting wi just two weeks away, people will be paying special attention to the public appearances. okay. >> more hot air from you, joseph? come on. >> when we return -- >> we don't need to be in davos to see the hot air. >> well, you can see it instead of just hear it. the ceo of ubs will join us to talk global banking, brexit, and the trump transition. then at the top of the hour, at 8:00 a.m., bank of america ceo brian moynahan will join us live from davos. as we head to break, take a look at u.s. equity futures. improving just a little. down just 27 now.

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british prime minister theresa may just wrapping up her speech in london today, outlining her brexit plan. she says the uk government will put its new brexit agreement to a parliamentary vote. the prime minister says the uk is not seeking partial or

associate member of the eu. she argues the ux must be free to strike trade deals outside the eu, but she does not want the eu to fall apart. >> june the 23rd was not the moment britain chose to step back from the world. it was the moment we chose to build a truly global britain. i know that this and the other reasons britain took such a decision is not always well understood among our friends and allies in europe. and i know many fear that this might herald the beginning of a greater unraveling of the eu. but let me be clear. i do not want that to happen. >> okay. we're going to try to make some sense of all this. >> check out the pound. >> that is a good idea. >> i think it's nice she doesn't want that to happen, but you know, she's not voting. >> now we're going to continue to try to make sense of all

this. the european banking sector has been in a lot of focus following that brexit vote as banks plan to scale back from london in a bid to reignite profitability into the region's financial system. joining us now to talk about the health of the banking system, the global macro predictions for the year ahead, and brexit, sergio armati, the ubs group ceo. we only get to see you once a year usual, right out here in the cold. it's great to see you. >> thank you. >> you just heard what theresa may had to say. i know you've been struggling with trying to figure out what to do with your business in the uk, as have just about every bank in europe. does that give you more confidence, less confidence? what are you thinking? >> well, not much more confidence. i do see this as an official opening position. i expect a hard tone into the first round of negotiations. we still need time to see. first of all, i like to

understand exactly where and how they're going to call for article 50. then we can count 24 months. i saw she said she doesn't want to have a hard exit. she's looking for a phase out of brexit. we will see. in order to assess how to respond, we will need to get more details. taking actions before may be expensive and not necessarily the right step to do. runs on intel?

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welcome back to "squawk box" here on cnbc. you have been watching and listening to our live coverage from davos, switzerland, for the world economic forum. we wanted to catch you up to speed on some of the other stories front and center this morning. we're watching right now shares of morgan stanley after the firm reported a better than expected fourth quarter. morgan stanley earned 81 cents a share, beating estimates of 65 cents. revenues also competed forecasts with the firm benefits from a post-election trading surge. bonds play a big part of that story as well. also, tiffany's says comparable store sales in the u.s. fell by 4% in november and december. the holiday shopping season. is says sales at its flagship store in new york city fell 14%, partly due to traffic disruptions at its location near, yes, trump tower. however, the stock is higher in premarket trading, as you can see. they're now down by about 5% in the move here for tiffany's. those little blue boxes certainly taking a hit in extended hours trading right

now. with the next fed meeting two weeks away, investors will no doubt pay attention to three different fed speakers today. you got new york fed president william dudley, also fed governor and the san francisco fed president john williams. they all have public appearances. so we'll be watching closely for those comments. and earlier this morning, chinese president xi jinping speaking at the world economic forum in davos, defending globalization at a time his country's power is coming under extreme pressure from soon-to-be inaugurated u.s. president-elect donald trump. >> translator: there's no point in blaming economic globalization for the world's problems, as that is simply not the case, and it will not help solve the problems. from the historical perspective, economic globalization results from growing social productivity and is the natural outcome of scientific and technological

advances. it is not something created by any individuals or any countries. >> president xi jinping also says many people are wondering what has gone wrong with our world. he suggests globalization has become a quote/unquote pandora's box in the eyes of many. we're going to talk more about this topic throughout today's show. he also talked about in idea that income disparities were perhaps part of the problem as well, so china's xi jinping, the first chinese president ever to speak at the world economic forum in davos. certainly catching a lot of headlines so far in this morning's trade. also, general motors expected to announce plans to invest about a billion dollars in its u.s. factories. this will include adding more than a thousand jobs in the united states. the news could come as early as today. the automaker has faced criticism from president-elect donald trump for building vehicles in mexico. sources tell our own phil lebeau that the investment and new jobs have been in the works for some time now. meanwhile, in an interview with

a german newspaper published yesterday, president-elect donald trump threatened german car makers with a 35% u.s. import tariff. he argues german car makers are better off building factories here in the united states. turning to politics now. president-elect donald trump is taking issue with at least one part of the house republican tax plan. in an interview with "the wall street journal," trump calls the border adjustment provision quote/unquote too complicated. the measure is designed to increase u.s. manufacturing by taxing imports while exempting u.s. business export revenues from corporate taxes. now let's get it back to the gang over in davos, switzerland. back over to you. >> okay. thanks, dom. great to see you. we appreciate that very, very much. in the meantime, we were so rudely cut off in the midst of our interview here with sergio. dom was just talking about donald trump. one of the thing i was going to ask you is what your reaction in

response has been to trump's election. >> well, look, you know, we don't really take some political views. we are happy to see that post election we see both people that supported trump, neutral people, and people that were supporting clinton becoming more positive about the economic outlook, being willing to consider investments going forward. we need to see that desire turn into reality, not only in financial markets, also in the way of entrepreneurs investing in their own companies and businesses. >> sergio, you've said that it's not brexit, it's not any of these things. it's the low interest rates in europe caused by the tepid growth and no structural reforms. what you're seeing happen with the animal spirits in the united states might be possible in europe if you do some of the same things. i think that could be something that the continent could look at what's happening over there and

say maybe we can do some of this stuff over here. then rates go up and you get a yield curve and everything else starts happening again. >> what you guys have is a united states. europe is not so united. >> less so. >> actually, 2017 will be a very challenging year for europe. you see what's going on with the theresa may speech today. also, we have elections coming. it's most likely going to come out that the populist party will have a relative majority. you will see france elections. you will see german elections, italian elections. they're all pointing out to a lot of divide within the eu on how to tackle decisions. >> i've got to tell you, these helicopters are so rude. trying to interrupt our interview this way. >> sergio, let's talk about the interest rates in europe and how big of a challenge that is. with interest rates coming down and not rising like we're seeing

in the united states at this point, what does that mean for you from a business perspective? >> i think if the collateral damage of low rates or relative rates would only affect banks, it would be okay, but it's starting to affect savings, most the pension fund systems, insurance company, and the confidence of people who have been saving money, thinking they can leave a little bit out of their income to continue to prosper. that's creating this sense of inequality that goes on in europe. >> okay. sergio, thank you. thank you for bearing with us. is this your helicopter? >> and we're glad. there's security coming out the -- can you say yin-yang? >> out the wazoo. >> thanks, sergio. when we come back, the ceo of ebay is our guest. nice work brother dominic.

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welcome back to "squawk box." this morning we're at the world economic forum in davos. joining us for the latest trends and challenges in the online retail space, we want to bring in ebay ceo. i want to start with this. we've been talking about trade and trump all morning. a number of the retailers obviously will get hit depending on how this all goes. how do you think about the trade issue, and how will that impact ebay? >> well, we're pro-trade. obviously we're one of thecilit

cross-border trade. we like tax reform. we like stimulus. there's things we're watching. we're not even sure exactly how some of the trade evolution may work, but particularly for a company that is a very large exporter of chinese goods around the world and u.s. goods outside the world. we obviously want free trade. we hope that the rhetoric will dampen down and that we'll continue to be allowed to be a huge facilitator of cross-border trade. >> have you had conversations with the administration? >> i have not, but we look forward to it. >> you did write a note to your employees after donald trump's election, where you pointed out some of the issues you're concerned about. >> i wanted to ask that question too. it irritates me when -- you talked about immigration and conflated overall immigration

with illegal immigration and securing a southern border. >> i didn't say that. >> well, what did you say? >> there are three issues i think are really important. and we're not unique in that. i think silicon valley is concerned about three issues. one is responsible immigration, allowing more people that have unique skills that are in shortage in the valley to come into the united states to help promulgate our industries and trade. both of those are important issues to be able to continue to grow the u.s. >> but it was looking at the trump immigration issue in a negative way, saying -- sort of like trying to calm down your employees about this guy got ele elected. it was about securing the southern border. that just perpetuates the idea that -- and then afterward, you say look how good things are going. i think you contributed to hillary's campaign. suddenly you're saying, wow, things are going great all the sudden. d do you feel like you were wrong about misjudging? >> no, because i never said

anything about the new administration or the incoming president-elect. what i said is that it's important for companies that have been built on trade and immigration, like ours, to stand for those values. so we fully understand on issues like immigration it's not a black or white issue. we didn't get into all the nuance. there has to be responsible immigration. we're not saying, let's open the borders and let everybody in. never said that. but the rhetoric matters. it matters to our employees. it matters to policymakers. and somebody's going to stand for responsible immigration. we'll be one of the parties that does that. >> where is ebay based? >> san jose. >> so did you have a lot of people that needed safe spaces and calming down? >> we're one of the largest tech companies in the world. we have people around the world. so i don't think it's about giving them a hug. it's about saying, what do we stand for and what we stand for is trade and responsible

immigration. >> so on the trade front, the implications for ebay directly and maybe the retailers and even the country at large, if there is a real border adjustment tax, if there is a tax or tariff that makes it more difficult, what do you think the true implication of that it? the flip side it, would we start manufacturing any of this stuff here? >> maybe. it's hard to tell. it's an interesting question for us as a digital manufacturer. when we make software, when we build internet sites and mobile apps, we build them in realtime around the world. so it's not as simple as a manufacturing scenario where there's a plant that stamps out a car. we're making software in locations around the world collaboratively. so it's not at all clear how a border tax would work in a digital world. but if goods, the goods that we import were taxed or tariffed, i think what's interesting is as an open marketplace, goods come and go and trade flows change based on foreign exchange and based on tariffs. so it's not necessarily a bad thing, although i believe that

the pie gets bigger when trade is free. i look at the millions of u.s. jobs that ebay supports and the hiring they're doing. one of the reasons they're able to hire is because ebay has given them a platform around the world. they're not selling locally in indiana. they're selling to 170 million people around the world. the more we take friction out of trade, the more those people can hire. >> devin, when we were here a year ago, i think we talked to you about the split between ebay and paypal. carl icahn wanted those two spun off. maybe it surprised a lot of people, the performance of ebay versus the performance of paypal shares since then. ebay has outperformed. what do you do to keep that momentum going at this point? >> i think you asked me, how do we survive in a competitive world. you mentioned some of our competitors specifically. what i said a year ago is i never understood why people wanted to chase other strategy or be like them. we wanted to be different, sharply different. in the year since we spoke, we worked really hard on differentiating our brand and

our inventory and being a really important place where people shop all year round. as we've done that, the more we differentiated ourself, the faster we've grown this year. >> jack ma is here from alibaba. i'm interviewing him tomorrow night. he just met with donald trump, announced a plan to create a million jobs. farmers, people in the midwest who are going to effect port, effectively, to china. is that a competitive threat to what you're doing? >> it's a super competitive industry. alibaba has done a great job bringing goods into china. ebay's a global company. we bring chinese goods out and u.s. goods around the world. so i expect it'll be more competitive. i just say on the jobs front, there are probably 12 million or more entrepreneurs that support themselves wholly or largely on ebay. millions of jobs created. >> i wish we could have talked about this. i get some crappy stuff for christmas. there's a way you partner with skim where i can get rid of the

gifts i don't want. >> make it easy to sell and then direct those funds to the charity of your choice. >> 50% crappy gifts, don't you think? >> who is giving you these crappy gifts? >> not family members. >> we got to go. thank you very, very much. we're going to come back from davos. we have a big hour ahead.

news makers and news breakers. join us at the world economic forum. up next, bank of america ceo brian monaghynahan. plus, water, water everywhere, but not a drop to drink. academy award winning actor matt damon and his water.org co-founder gary white join us on set with details. the final hour of "squawk box" begins right now. ♪ good morning and welcome back to "squawk box" here on

cnbc. we're live in davos at the world economic forum. it has gotten a little balmy here. i think it's double digits. >> i feel like rudolph. my nose is getting red. a little drippy. >> when i woke up and it said like zero, i thought that wouldn't make sense either. i was thinking, it switched over to celsius or something. no, that would be 32. i was so confused. then the real feel was minus 14. >> then you went outside and you're like, oh, i get it. >> exactly. i'm joe kernen along with becky quick and andrew ross sorkin. i think that helicopter of president xi. >> it was a swiss security helicopter watching president xi. >> he's supposed to be doing a lunch right now. i don't think he's leaving just yet. >> no, i think it was while he was on the move. >> i'm surprised you're not hosting him or something. >> we have a show to host. that's why. otherwise, of course i'd be with president xi. >> because you're a davos man. we need like four of you here at

this point. the futures right now are only down ten. they were down 70, i think, when we started. there's been a gradual improvement. it's still all red though. the s&p down just over four. the nasdaq down 10 1/2 at this point. a little other news to bring you this morning. british prime minister theresa may making a speech in the uk. big talk about it here in davos. she says the uk will put its new agreement to a parliamentary vote. she did speak in london earlier this morning. she's going to be coming to davos in the 24 hours. she outlined her plans for leaving the eu. >> we seek a new and equal partnership between an independent, self-governing global britain and our friends and allies in the eu. not partial membership of the european union, associate membership of the you're european union, or anything that leaves us half in, half out.

the united kingdom is leaving the european union, and my job is to get the right deal for britain as we do. >> we take a look, the pound on the move this morning. gaining a little strength. actually, a lot of strength. up over 2% this morning. a little bit of political and corporate news as well to bring you this morning. general motors expected to announce plans to invest about a billion dollars in its u.s. factory, including adding more than a thousand jobs in the u.s. the automaker has faced criticism from president-elect trump for building vehicles in mexico. we'll see whether this does the trick and maybe makes him feel better. at least keeps the tweets from coming. also, earnings central. morgan stanley topping estimates this morning on the top and bottom line as the firm saw strong performance in trading, mergers and acquisition activity. also other areas in addition to that. seems like their wealth management business did pretty well. okay. just three more days now until president-elect donald trump officially takes office. first on the agenda, jobs,

regulation rollback, and tax reform. joining us now to discuss is mark weinberger, chairman and ceo of ey he was recently tapped to be a part of the president-elect's newly created strategic plan. that's what everybody is talking about now, what's in this tax plan. where does it stand, who's going to write it, will there be a border adjustment tax. that's the key takeaway this morning. it's too complicated, i guess, the president-elect said about the border adjustment tax. do you have any idea what the final product is going to look like? >> no. bottom line is if anybody tells you they do, i think they're kidding you. this is the beginning of a longer process. donald trump has his opinion. the house representatives have their blueprint. you got a senate that hasn't weighed in yet at all. you got politics that's going to play into this. bottom line is lower rates are coming, a more territorial

system. how do you pay for that? one way is this border adjustability proposal. other ways are getting rid of deductions credits. we'll see some mixture of that. >> i don't remember the exact time frame, but reagan didn't have quite the -- he didn't have the house and senate, and it's done in three or four months. w had, i don't know, very similar amount of time. very short period of time between when he took office and when they were able to do it. neither one had as friendly representation in the house and senate at that time. so this should be -- people who say this isn't going to get done, it's going to get bogged down, they're not looking at history. this should be relatively quick to do. >> i'm not so sure. that was way back in '86 it was quick. there were two years with senator bradley working together with kempe and others to bring it forward. it took really three years from beginning to end for that bill. i think you're going to see tax legislation this year, but you got to go through a budget reconciliation process first.

then you got to go ahead and lay out the specifics of the plan. there's some things here, joe, like the border adjustability, like complete deductibility immediately expensing for all plan equipment and denial of interest deduction that haven't been tried anywhere else in the world. those are things you've really got to look at and figure out, you know, i know brian moynahan is coming on. how are financial services going to be taxed? they got to work through that. >> so you're saying that even if it's not something that happens in the first three or four months, you think it still happens this year. that doesn't bring down the likelihood of it actually eventually getting passed. >> absolutely. i think it's going to happen this year. they got the first budget e reconciliation dealing with health care. the same committee has to look at the tax bills. it's all through the ways and means committee, the finance committee. that'll be next up. i think you'll be running up to the summer, then probably be into the fall before you have final legislation. >> given you have clients all over the world with all sorts of different interests, what kind of position would you take on the border adjustment tax? >> right now i think the key is

to get tax reform done. we have to get to the low 20s. >> but the question is whether this border adjustment tax is the trade-off for those lower taxes. >> it is. that's what we're waiting to hear. they haven't written it yet. we don't know what it's going to be other than two or three sentences. you have the retailers looking at it. you have the high-tech companies looking at it, financial services. they're all doing modeling. andrew, it's too early to say. >> austin golesby tweeted out something yesterday. maybe they just do it without the border taxed ed ed a adjust. would that be acceptable? >> we started the year before this last election as 20% rate and complete, ability to bring money back overseas and have a territorial system would be a home run. border adjustability, if it worked, if we had a tax similar to the european countries where you could tax imports and not exports, it would be great. this is something that's knnot

like a value added tax overseas. they're working through it. i think there's a lot of questions you're raising and other people are raising. we got some time to get the answers. >> are those lawyers doing with this? or does eny have to do that to comply? >> we do some of that. lawyers do some of it as well. >> what should we do there? what's the most important thing? is it financial regulation that's overshot? is it in the energy sector that's overshot? it's all over. >> yeah, there's going to be -- the real question is how are they layered in. this committee you reference when you opened is really going to look at some of those and try and weigh in what we think -- >> he can do that with the sign of a pen. >> some of it. but some of it you really have to evaluate longer term what the consequences are going to be.

it's easy to say you're going to do. when you get down to doing it, you have to do the analysis. i think donald trump has picked some very qualified, very smart people. steve mnuchin is very qualified. he's already in the middle of these tax issues. you have rex tillerson, some of these other people really understand this stuff. they're going to get in quickly and work on these issues. >> great. all right. thanks, mark. appreciate it. >> great to be with you. >> good luck. coming up, bank of america ceo brian moynihan is going to be here. he's got stuff going on here. plus, the chairman and ceo of russia's vtb bank will join us to talk about business and the global economy during a trump administration. that should be interesting. talking about russia, what has it been recently? russia's been in the news. i know that. that's all we talk about. then at 8:30 eastern, we'll talk tech with sales force chairman and ceo. >> this is a biggie. >> anyway, stay tuned. you're watching "squawk box" on cnbc. your insurance company

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tadirectv now. stream all your entertainment! anywhere! anytime! can we lose the 'all'. there's no cbs and we don't have a ton of sports. anywhere, any... let's lose the 'anywhere, anytime' too. you can't download on-the-go, there's no dvr, yada yada yada. stream some stuff! somewhere! sometimes! you totally nailed that buddy. simple. don't let directv now limit your entertainment. only xfinity gives you more to stream to any screen. welcome back to "squawk box" live from the world economic forum in davos, switzerland. one of the key questions donald trump will take when he takes

office is what to do about new hacking related sanctions on russia imposed by the obama administration. even if this most recent round is rolled back, there are still companies and individuals who have been dealing with sanctions for years. for more about one of those companies, let's welcome right now the chairman and ceo of russia's vtb bank. andre, thank you for joining us today. >> thank you. >> so let's talk about the change, the inauguration of donald trump is the end of this week. at that point, there's already been much talk about the potential to roll back some of these sanctions that have been put in. what would that mean for you as a business in russia? >> at the moment, we don't know yet, of course. what we've heard from mr. trump, statements, interviews, it's quite encouraging. he would like to have business with russia to put relationship back to normal, to discuss different issues starting from economic relationship to disarmament. i think that's quite important. for a long time our countries were in a bad state of relationship. we should improve it definitely. we see a lot of potential to work together with the united states in different areas.

sanctions is a by-product of this. if you have reasonable relationship, i think they will be removed. but we don't expect it to happen tomorrow or the day after, but that will substantially help to re-establish our relationship. >> you know, this closeness with russia is coming at the expense of the united states' relationships with its european partners. there were already comments this weekend -- >> i don't think that should be at the expense of relationship with europe. i think europe was under pressure of american administration for some time to have sanctions and to act like it acted. we very much believe if there's no such pressure, europe might also review its pressure. >> there have been some european countries have have been concerned about the pullback of nato, the united states not standing in for that. that's certainly something we've heard. you don't get that sense? >> i don't know. we don't very much understand why there should be increase in

europe, for example. >> i think it's the annexation of crimea. >> i'm afraid it'll be reciprocal issue for russia. so we very much would like to see how we can reduce tension. since the collapse of the soviet union, i think there was not a very conflicting situation in you're. we hope we can re-establish trust and good relationship with europea europeans. for example, germany, italy. i don't think they would like to see more confrontation with russia. >> what's your reaction to the u.s. intelligence officials and actually now donald trump himself that the russians were involved in hacking at least these e-mails in relation to the election? >> i'm not very big expert in this area. secret service in many cases play their own games. maybe not. i don't know. but i very much doubt that

russia can substantially influence the results of american elections. i think it's nonsense. at the moment in russia, we haven't heard about any proof or any facts about how russia, who did it. so for us, at the moment, that's something which has not very much ground. we think it's probably more fake information. i can't comment on this. i'm not a big expert on this. >> would oil prices going back to 100 mean more to the russian economy than sanctions coming off? >> we'd love it, but we don't think it will come to this level. we have to accept the level, which is reasonable for russian economy. that's reasonable. we can do reasonably well with this level of oil prices. even with sanctions, which didn't benefit russian economy. we still were doing reasonably well. this year, expect going from negative to positive growth of

around maybe 1.5%. it's reasonably good. >> you know, the -- when it happened with crimea, there are those that said the obama administration really didn't do very much in terms of red lines. if you saw rex tillerson's testimony, he said he would have done a lot more. actually side by side, at least with aid to crimea and much more confrontation confrontational, i think. maybe you don't realize how good you had it for the last eight years. there could have been much more confrontation when putin made those moves, if you believe rex tillerson. >> well, we don't think that the new administration would necessarily love russia, what russia is doing. what we expect, that the reasonable business relations p relationship, we understand you can't ignore a country like russia today in international politics as well as economy. >> you expect president putin to

test the new administration in making inroads in the ukraine? do you expect it to continue? >> i think people should talk. if you don't talk, you'll never find a solution. there's an opportunity to find a solution for other issues between russia and the united states. >> and you would privatize some day with the -- it would be easier if the sanctions were off. >> yeah, definitely. the sanctions put some restraint on privatization. >> we should point out, for those viewers back home who don't realize it, vtb, 60% stake is owned by the russian government. what does that mean to have the russian government own such a large stake? does it change the way you do business? >> well, for us, privatization was a big step forward because we became a company with a foreign partner, foreign shareholders. we're now acting as any joint stock company, for disclosure,

for anything else. that's a questionable issue. there's a big debate among shareholders, whether we need to do it, because many shareholders would like to see government playing an important role. we'll have to decide on this issue when sanctions are lifted. >> andre, thank you for your time today. >> thank you very much. all right. coming up, in just a moment, sales force chairman and ceo mark benioff will be here. shares of his company up nearly 11% since the beginning of the year. stay tuned. you're watching "squawk box" live from the world economic forum in davos, switzerland. we'll be right back.

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welcome back to "squawk box," live from the world economic forum in davos, switzerland. among the stocks to watch this morning, this afternoon, morning probably back in the states -- >> it is. it's 8:22. >> morgan stanley beating the street on the top and bottom lines. not up much. wilfred frost just spoke with morgan's cfo and joins us with

more. you are a davos man. the mantle has been passed. >> i'm a davos virgin. not yet. maybe in a decade. >> you're doing well this morning. >> let's breakthrough these numbers. big beat for morgan stanley, mainly through sales and trading. they didn't get the typical q-4 slowdown, which is in contrast to bank of american's earnings on friday. the cfo saying fixed income continued from q-3 with good client activity. that was the main reason for the beat. he also said on the equity front that they are taking share from their rivals. there's further opportunity to do so moving forward. investment banking slightly beat. wealth management was in line. in terms of 2017 outlook, he said clients are seeing the world now much more in a glass half full rather than glass half empty view. he was very optimistic about things like tact changes. going to switch and cover the brexit headlines. that's the other big market mover. the pound up sharply following theresa may's speech. weirdly, she did deliver the two

key hard brexit tones in the speech that the market feared. no single market membership. that's the first time she's explicitly stated that. also, no membership of the us can too ma-- customs union. >> the more she talked, the more the pound strengthened. >> three factors for why. first, sort of buy the rumor, sell the fact. we saw about a percent of pound strength even before she started speaking. then a further percent since. she also confirmed there would be a parliamentary vote at the end once the deal is struck before it goes through. we knew that was going to happen, but it was explicit confirmation. then she used very calming language throughout. obviously she always wants to dodge this hard brexit term. she kept using the word smooth. the final thing, there was clarity. there was a clear response from theresa may that she's going to go into negotiations with a plan and have her sort of cards close to the chest as she does it. either way, the pound is up. >> great. wilf, great to see you here. >> great to be here. thanks for letting me join the

set. >> thank you. >> you're in an apartment, right? >> i am. >> tell everyone what you get to do. >> it is a very smart and lovely apartment inside, but i have to walk through a petrol station to get there. >> that beats what we've done in the past. >> i'm not complaining. i like it very much. it's great to be here. when we come back, we're going to continue talking banking. bank of america ceo brian moynihan is going to join us. also, marc benioff. and you don't want to miss this. steve liesman is going to have an exclusive exit interview with treasury secretary jack lew. that's coming up later today at 10:10 exactly, eastern time. stay tuned. you're watching "squawk box" here on cnbc.

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welcome back to "squawk box." we're continuing our live coverage this morning. we're in davos, switzerland, with the head of one of the most

talked about companies in the tech space today, salesforce.com. it's coming off a record acquisition year, spending nearly $5 billion. stock up 11% just from the beginning of the year. marc benioff is here, chairman and ceo. what are we attributing this stock performance to? >> i think last year was not our banner year in the stock. we had a great year last year from the performance of the company. last year was not a banner year on the stock performance. i've been waiting for the stock performance from last year. so i'm hoping this is a little bit of last year's, you know, fiscal performance coming out in the stock now. >> when you sat down, becky had asked you one of the things you came out recently and said, you plan to double annual revenue growth. we were all trying to understand sort of the timeline for how you think about that. >> yeah, yeah. well, i mean, you know, like i said to becky, sales force is the fastest growing enterprise

software company of all time, and we're still growing at that rate. for us to exactly predict where we're going to be in three years or four years, we don't know. but our dream is to, in short order, double the company once again. it's exciting. you can see we had an exciting quarter last quarter. the numbers blew us away. >> all organic, or do you think acquisitions have to come with that? i know last year there was a lot of speculation around whether you wanted to buy twitter. >> yeah, well, the thing about innovation and driving an enterprise software company is you have your organic growth and inorganic growth. both of them kind of work into the success of the company. we've had some very successful acquisitions. three years ago we bought this amazing company in indiana called exact target. we've turned that into a billion-dollar business. that's our marketing cloud. this year we got very lucky to be able to buy -- a great holiday season with

that, where we drove incredible success for stores. pretty cool. >> when people heard you even thinking about twitter, they thought to themselves, is there a strategy shift here? are we going away from the b-to-b business and veering to the b-to-c business. is there any thought shift in your mind? >> no, not at all, actually. we look at everything. we look at every single deal, but we buy very few. we're looking for those gems, those jewels that are going to let us continue to have this amazing growth. we have a singular mission, which is to help our customers connect with their customers in new ways. that's all we do. then we're looking for what kind of things that we can build inside the company or acquire like this commerce cloud that helped us to connect with these customers in new ways. that's what's exciting. >> were reports of your interest dramatically exaggerated? >> well, i just think that, you

know, when you get to the size of company that salings force is today, you're going to be in these deals. that's just how it is. he's always said to me, make sure you call me. can't do that. can't do that. but now you can expect us to look at anything exciting that's out there, but it's really just part of our innovation and growth focus, which is that we're growing so much internally, we have tremendous organic growth internally, and then we look every now and then to complement it. >> but there's scarcity. that's the other thing to point out. big acquisitions. there's nothing around. >> well, at our size and scale, it's really hard. you can see, i think, we've done an incredible year. we've given guidance this year. we're going to do more than 8.3 billion in the year that's going to end at the end of this month. then we have this unbelievable situation for next year, where we've given guidance for more than $10 billion for next year, which is, you know, blows me

away that that's where sales force is. yet, the growth rate continues. but we're very committed to this mission, and because we have a very, i would say, narrow focus, the kind of things we can buy are somewhat narrow too. >> i just want to talk about your overall strategy. you guys are in the forefront of these companies that are in the cloud. you're selling services, customers can get in and out any time they want. i think about warren buffett buying into ibm. the reason he bought that is because once they're in there, he thinks they can't get out. the customer is kind of trapped. what you've been doing is the antithesis of that old line software company. >> i'll tell you why that is. you can look at these great companies here at this event in davos, and it could be a great bank like bank of america or great cpg company like unilever. it could be a great media company. all of these companies have to connect with their customers in new ways. they're all going through incredible transformation and change.

that's when they bring in sales force. they bring in sales force because they're like, gee, we need to connect with this customer more deeply, more intimately in sales, in service, in marketing, and communities, in analytics. that's where we're going to come in and help them make that change. >> you've come to davos for many, many years. >> 2020 -- 2002. >> you talk about the role of technology in creating jobs or potentially taking jobs out of the system. where are you right now? >> well, technology has always taken jobs out of the system. what you hope is technology will put those jobs back in too. that's what we call productivity. you get productivity from amazing new technology. what you hope is the technology doesn't outpace the system so that it starts to strip the jobs away. that's the fear of artificial intelligence. >> but a lot of the conversation about trumpism or brexit was about how globalization had effectively failed people.

then other people say that's not globalization, it's technology. >> well, i think what you have to look at is this. you're going through a very big transformation in technology in the world today. here at the world economic forum, it's called the fourth industrial revolution. that big swath of technology change are things like artificial intelligence, robotics, cloud computing, mobile, and also biotechnology, things like genetic engineering, that kind of thing. so now the question really is, you know, with all this new technology, how do we get growth? but that growth has to be balanced against trust. when you have all this new technology, i think that the big question that's getting asked here is can we trust it. and can we maintain trust with the technology, or is it going to get out of hand and will it outpace us. >> if you have this conversation in ten years, do you think you'll have more employees or less? >> more. >> better. >> dunli indoubling revenue.

>> so ai becomes a real part of everything in how many years? >> oh, now. >> really now? >> i think a lot of people understand how deep ai already is in so many things. i was having this amazing conversation last night with one of the leaders of ai at this conference. they're looking at how they're taking energy systems, like big data centers or big control systems. they've applied artificial intelligence techniques to it, and they make it that much more efficient, that much more capable. they use the artificial intelligence as able to say, hey, you're making this mistake, this mistake, and this mistake, do this. i'll give you a better example. we haven't released this to our customers yet, but inside our company we have a new version of our sales force einstein product, which gives us guidance. so it tells us, we're either going to make the quarter or not make the quarter ahead of time. that's amazing. >> and it's right? >> if it's right, it's a good product to sell. >> did it forget to put its

pants on like einstein used to do? not completely like einstein. kidding. >> i think that's the whole point. who's running this company anyway? is it me or the software? >> marc benioff, thrilled to have you. appreciate it. thank you so much. coming up, bank of america ceo brian moynihan. stay tuned. you're watchi ining "squawk box cnbc.

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good morning, everybody, and welcome back to "squawk box." take a look at shares of bank of america. they've been up more than 30%, actually closer to 35% just since donald trump's election. the fourth quarter closed out the bank's most profitable year since 2006. we saw those earnings last week beating expectations. joining us right now is brian moynihan, chairman and ceo of bank of america. thanks for being here. >> my pleasure. thanks for having us again in this wonderful setting. >> it's beautiful today. the sun is out. we certainly appreciate that. looks like things have been pretty sunny at your company too. watching your stock, you've been one of the biggest gainers that we've seen since the election. you want to talk a little bit about what's going on, why you think that's happening? >> a couple things. one is the team's done a great job with the clients and customers and getting expenses down, revenues stabilized. the idea that there could be more growth, the idea that the rates could go up, and obviously the fed increased rates in december, those all have a big

impact to us. so you take improving operating performance, the past legacy issues behind you, and the prospect for rates going up. we told people that our net income would go up $600 million per quarter, which is strong rise. >> that's amazing. you also talked a little bit about expenses. everyone i've talked to has given you massive kudos for the expense cutting along the way. your goal is to get to $52 billion. what do you need to do to get that last bit of the way there? >> the goal at the end of this year is to be at the $53 billion run rate and work from there. what it was is a whole bunch of things, some of which is a topic at davos, supplying technology and reducie inine ining costs a. that's worked to our advantage, as well as just -- we shed 60 businesses. we did a lot of other things. a lot of it was down to real hard work. we still spend $5 billion moving cash and checks around our company. so we got a lot of room to go. that's 8%, 9% of our expense

base. so there's a lot of work to be done. >> that's how you eventually get to some of the return on equity, return on asset goals that still aren't up to industry standards and to your own internal goals. >> we want to get to a hundred. we're moving towards that. first quarter we have a little more revenue from trading, you'll start to see us make another move. if you think about on the expense side, we still have to get it down a little bit. that's where we told people that we'd be at 53 billion at year end. we're running 13 and change per quarter now, and you got to add some stuff on seasonality. we're getting close. >> i love -- how much -- you get one percent an point, it's like $6 billion or something. >> in interest rates. >> as of september 30th, it was

5 billion and change. it's now down to about 3 billion and change. it just happened by the rate rise. >> there's this great expectation that donald trump wants rates to rise. ultimately, a year from now, depending on who he's going to put in there, it may be hard for him to raise rates, given a lot of things he wants to have happen in the economy, no? >> well, i think the things joe was talking about already happened. the fed raised return rates, so we get the benefit of that. you want rates to rise for the right reason. i think this is -- many years i've been doing this show with you. i think we've had this discussion about rates are going to rise next year. they've risen maybe twice since. it's for the right reasons. there's good demand, wages are rising in america. the economy is growing in america. that's the right reason. if you had it because of a wrong reason, inflation got out of control and things like that, that would be concerning. right now i think we're a long

way away from that. >> what do you think the future of dodd-frank looks like, and how are you preparing yourself for it? >> there's a lot of discussion. i think if you think about the capital liquidity activities, the outlines of the changes there are more than dodd-frank. they're on the regulatory side. they're in international rules. we're comfortable within that. what you like to see is a balance between the constraint on growth that's caused by some of these rules and the amount of work that goes into complying with them and try to figure out if there's a better way to do it. it's not that it was wrong. we're just learning as we go along there's better ways to do this stuff. we'd like to see that change. in terms of the overall sort of posture in small banks, you know, i think -- >> you think small banks would be a bigger beneficiary? >> they should be. the largest banks obviously are large, but we have the high interest in having the whole industry well regulate because we end up paying for the cleanup. >> real quickly, you're one of fire co-chairs for the world economic forum. what we've seen with donald trump's election, with brexit,

is the antithesis of what globalization and davos is kind of all about. how do you deal with that here and what ru yo hearing from people? >> president xi spoke earlier this morning. he's quoting abraham lincoln in the gettysburg address about development being for the people, by the people. you start to say this is a pretty interesting world where you have the president of china quoting a great american president. we just had a lunch with him. he's very much concerned that there will be a retraction from trade and the ability of trade to help the world grow and the ability to rebalance the economies and stuff. i think that's the fear out there. we just got to let it play out for a while. there's always around elections -- we forget because you have eight years, we forget eight years ago when the administration changed. i think when you get into it, everything takes more time. people have to think it through. but i think there's a concern generally about trade and other things being less than the rest of the world would like it to

be. >> if you take your jacket off and you're sitting there in your shirt -- it is cold. you're making us -- >> he's a manly man. >> there's a space heater towards me, which i'm very happy about. >> it's not fake news. it's cold. you're just wearing, you know -- >> he's a former rugby player. >> and you're going back inside. we're stuck outside. >> being around you warms me up. >> brian, thank you very much for your time today. >> thank you. >> really appreciate it. >> we've already made the hot air joke. coming up, academy award winning actor matt damon and his water.org co-founder gary white will join us on set. we're going to talk about their charity's latest work, including a new partnership with a belgian beer brand, stella. stay tuned. you're watching "squawk box" here on cnbc live from davos.

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world economic forum named access to clean water and sanitation as the top global risk just a couple years ago. this water crisis affects one in ten people worldwide. for more, let's bring in two crusaders leading the fight for clean water. water.org co-founders gary white and academy award winning actor matt damon. whenever we talk about this, i

read that it's not sexy and there's these other, you know, green initiatives that are sexier. then you read the details and i get -- i get furious that something that's so here and now continues right under our noses because people don't understand what's happening. just to summarize, right now, there are people that walk four miles, women that walk four miles every day to get clean water. there's 700 million people that don't have access to -- >> just about, yeah. >> -- toilets. >> 2.4 billion who don't have access. 660 lack access to clean water, yeah. >> so you need $200 billion a year to solve it right now. only $8 billion goes towards it. that's $1 trillion. you'd fix everything with $1 trillion in five years. that's not going to happen. but there is a way -- >> what are you trying to say? >> the way you're doing it right now, where you're doing micro loans, makes absolute sense because these people can take it upon themselves. you know, it is $200 or $300 to

get access, right? >> exactly right. there was an insight gary had years ago from spending his adult life in these communities. he realized that the extremely poor not only were paying for water but they were paying more than the middle class. if you could just take the market and nudge it towards them a little bit, front them the money, and then it is about a $215 loan, front them the money to connect to an existing water source, you'd buy their time back. they could -- these women who -- >> they do -- they have little -- >> they have jobs. you live in india, urban areas -- >> bottom of the pyramid, they're able to make enough once they get the infrastructure, they can pay it off. 99% get paid back. >> over 99% are getting paid back which is exciting. then you loan the money back out. you're driving down the fiprice

per person. >> you need a bigger amount of p money for the micro loan to go from water credit to water equity now. this is the new thing for this year, right? >> when we were here three years ago with you guys, we talked about launching the social impact fund. we wanted to raise $10 million. we raised $11 million. social impact investors have come in. we've taken the money, deployed it to our partners in india. right now, people are getting safe water because of that. about 730,000 will get water. that money will be repaid. the investors will be repaid. about 2% financial return. a huge social return. that has led us to say, okay, we can do this. it is real. we've already reached more than 5 million people with the model. the repayment rates are 99% on the micro loans. now, we've spun off a new entity called water equity, where we'll do a series of the funds. the next fund we're announcing at davos is a $50 million fund that we'll raise and deploy with

partners in india and indonesia, cambodia and the philippines. >> the people looking to raise the money from, is this corporate, philanthropist or tpg started a new fund, rise, $1 billion going towards things like this? >> exactly. high network individuals, foundations. hilton foundation came into the first fund. the ikea foundation. we also see, you know, individuals as being a key part of this. >> i think we gave out your e-mail address last time we were here. >> i think so. >> get your principal back, and we can actually get a return on your principal. it is not like you're giving the money away. i mean, 3%, that's not really that bad in today's market. >> yeah. >> and you're doing such good with the money, too. it makes sense. >> yeah. >> i still get, just thinking about the way other people live, we have no idea.

so per day, 150 million hours wasted per day by mostly women, just getting clean water to live on with their family. >> yeah. >> so the 150 million hours they're doing with that per day could be spent on what, knees b there is a girl, first in her class and now she'll have more time. she said, i might have time to play a little. >> that was a 13-year-old girl in haiti i talked to a few years ago. it literally buckled my knees. i had a 13-year-old at that time. >> you have four daughters. >> i do. i have a daughter pretty much every age you want. but, yeah, so it is not just a needless stat. not just every 90 seconds a child under the age of 5 is dying because they lack access to clean water and sanitation. that is a fact. but it is also the outcomes people can expect.

you know, if you have time to go to savaging for water, you're not in school, which is a huge problem for girls. if they don't savage for the water, they're in school and can expect a different life outcome. >> girls won't go to the bathroom at night because they're at risk. this is my own personal pet peeve. but everything is about co2. that's all we hear about. 50 years from now, these flawed models are predicting something. this is here and now. this is right now. why is so much oxygen sucked out of the room by -- i guess that's sexy. that part of the green lobby, that's the sexy part. this isn't sexy? >> i think people have seen this problem for so long. maybe they feel there aren't solutions. it is the reverse. the world economic global refum -- forum on water, they're about to put out a report.

the money people spent on bottled water, the health impact, direct and indirect, premature death, that equals about $674 billion a year. that money is in the system. people are paying that money right now. how do we just redirect that so we can solve the problem? the problem actually contains its own solution. if you can get this working from the bottom up, which we're doing with water credit and water equity, but also the top down to put the money into the infrastructure. >> is there a way and does it matter what the return is? you said the return on this is 3%? >> targeting 3%, yeah. >> the question is, is there a way to get it higher to bring in other types of investors? >> i think there is. we have to start here. i mean, we're starting from a point of, it's all been charity in the past. 100% give away. at least we've got it up to to modest financial return, which nobody thought we could really do, and still help people living on as little as $1.25 a day. can we get the next delta in

there? possibly. as we bring down the management fees possibly on it, we can hopefully drive that up. >> mostly, the four or five countries in africa, right? where is it now? >> several countries in asia, also in africa, ethiopia, kenya, peru. >> yeah, close to home. this is even in our hemisphere. >> sure, absolutely. haiti. >> south america, there are places with no access to water and no access to toilet. >> i think one of the other things, back to your other point, it is hard for people to relate to it. that might be another roadblock. that's kind of the first hurdle. >> relate to freaking polar bears? you talk to dicaprio, making these stupid movies about this. >> if you think i'm going to call leo's movies stupid, you're out of your mind. >> no, no, global warming movie. >> but i think people look at that as an issue that might affect them directly. i think this is not an issue

people really -- when you see people out raising money for cancer research, for aids, these are things we can relate to in the western world. we all have friends and family members. but clean water, i mean, none of us really know anybody who has been thirsty, you know what i mean? >> you don't know anyone who has gone to an outhouse. >> never in america, yeah. >> 4 degrees. >> have you thought about doing a film like this or relating about it in a media forum? >> i'm always looking at films on issues i'm interested in. it is always about finding a way in. as you know, you have to -- >> but this is one of those things if you could find the right story and talk about it, making it relatable, this is one of the ways you could do it. >> yeah. we're always looking for ways to message and connect. it's very hard to do it because it is complex and hard to get everything you need to say into a digestible sound bite. >> the free market, market

oriented ways of solving it. if you had enough money, you'd do it. >> we want to democratize it. when we come next time to davos, we want anyone to come into the platform, make a loan and get repaid. >> that's huge. what will it mean? >> it will let people know it is important to donate to this so we can fund innovative ideas like water credit and water ek we -- equity, but it means you can come in as an investor. the problems that face the globe can be addressed through the markets and lending. >> when you're in athens, off the grid, there's nothing else you could do except fight for money? there's no other jobs available? that's all you can do? serbian guys that look at it, twice, that's all you can do? >> a guy who seems to be smart and speaks about 12 languages, think i could have found something else. >> other than getting your ass kicked. >> i think it was a penance. >> is there going to be a bourne

6 no. >> i don't know. we left it open. there could be or may not be. i think we'll wait to see if a great story came along. i think we'd definitely jump on it. >> gentlemen, thank you. >> appreciate it. >> working for you, if we can, in any way. thanks. that's it. we'll be here again tomorrow. make sure you join us tomorrow. "squawk on the street" is next. >> thank you, guys. >> thank you, sir. >> appreciate it. ♪ so it begins, the countdown ♪ think of a reason why it's in the downtown ♪ ♪ met you in the middle of the center ♪ >> good tuesday morning. welcome to "squawk on the street." what a morning on this inauguration week. markets off the loulows. vladimir putin, theresa may on a hard brexit. pounds of more than 2%.