really big show. really big show. we're not going anywhere by the way here because we're going to be on in just a moment with jamie dimon and lloyd blankfein later. >> yeah, we're stuck. we're not like done. but we're done with this show. but then we'll be back. >> almost. >> we want to be back. >> we do. i do. that does it. make sure you join us a little later. right now it's time for "squawk on the street." ♪ good wednesday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. dow looks to gain at the open after falling five out of six. lots to watch, goldman and citi's earnings, target warning, netflix tonight, trump on taxes, ftse and pound lower this morning, 10-year 2.37 as cpi biggest annual jump in six years. ro roadmap begins with can the rally rally?

awaiting janet yellen at 2:00. >> plus, trump versus the house gop or not, two days until the inauguration and the president-elect now suggesting that the border tax could be back. trouble at target, retail stocks moving lower after target cuts its outlook on weak holiday sales. but stocks are looking to rebound one day after the dow and nasdaq each posted their lowest closes of the new year. wall street digesting bank earnings today, citi beats on bottom line but misses on revenue, goldman exceeds consensus estimates. stay tuned for exclusives with goldman lloyd blankfein and j.p. morgan jamie dimon. that's coming up later today on "squawk on the street." jim, you tweeted earlier today nothing is good enough mode on the fins. >> yeah, look, these stocks ran a great deal and i thought the goldman quarter was exceptional. my travel strus owns this next one, if you adjust revenue for citi for international because they have a huge international business, if you adjust for the dollar turns out they did the inline number better than

expected earnings and better than expected expenses and i don't know if it matters because people look at these stocks and say wait a second. these stocks have had an unbelievable quarter in terms of the stocks. the companies i look at morgan stanley yesterday and i go back over what gorman said i know he's going to be on, that was a magnificent quarter. and those that think that stock went down because of anything he said, no, the quarter was very clear. there were some people speculating maybe gorman didn't give his forecast. gorman is saying, listen, we've got a great business model, we're doing incredibly well, we're going to return a lot of capital. if we get deregulation you want to buy morgan stanley. i think what matters yesterday interest rates went down. people don't want to buy the financials. today, interest rates go up so there are people who might come in. remember goldman sachs the window opens for partners to sell so i just think in the end what happens here is that there's a tug of war between the algorithmic buyers who buy these when interest rates go higher and people want to take profits because what a run. >> stock's got ahead of

themselves at least in terms of whatever the earnings from the last quarter were showing. >> bingo. >> but you still seem to be in the belief that future earnings based on higher rates, less regulation and lower tax rate are going to be beneficial for the stocks. >> live long and prosper. total mind melt. i don't need to say what i was going to say. >> i'm with you, baby. >> we're talking about -- >> ying. >> yeah, exactly. if you get ccar, little more transparency, look, citi bought back 7% of the company last year, they can buy back 7% again. if you had an industrial that can buy back say 50% of its stock in the next couple of years, you'd be buying the thing. citi's going to earn five, maybe five, ten, you want to sell it, fine. >> you're not a believer in outsized policy expectations? in citi's case big global bank running into protectionist headwinds.

that's one reason some argue it's underperformed. >> i think citi does have some issues because they have a mexican division which i think is mexico's -- if you stay in mexico, mexico's doing pretty well. but i understand that concern. sells below book value, but i look at someone downgraded wells fargo today and i said did you read the call? wells fargo had an amazing december and that's what matters. wells fargo like it or not did not get wiped out by cross selling. it just didn't. the american people don't have that kind of memory. wells has a gigantic deposit base. all these companies if they're allowed to buy more stock back and raise the dividend, you'll sit there and say why do i need to be at a drug stock where i can get tweeted any minute where i have a treasury secretary made a killing in the savings and loans business? >> right. we're going to be hearing from him. >> thursday. >> thursday. >> tomorrow. >> tomorrow in his testimony. steve mnuchin we're talking about. potential incoming secretary

general of the united states. 11.4% was the return on equity. so solidly above that double digit mark that we talk about that we doudbted in some ways nt that long ago whether these banks would ever be able to attain it. >> steals the mantle from jpm. amazing. >> that's an important measurement still annualized r.o.e. >> see how much they bought back? >> yes. >> see the price they bought it back at? >> no. >> 168. >> yeah. not a bad price to do that at, right? >> yeah. >> then you have analysts come out talk about ubs $28 is our price target 11.5 times our '18 target. >> why shouldn't it be 11.5 times? that's too cheap in deregulation mode. >> really? you want to pay 11.5 earnings for a bank? people were paying three or four times book value at one point. >> people were idiots. >> nothing says that was smart. >> look, market multiple's gone up substantially.

>> unless you were a seller like what's his name at payne and weber or the guys that sold cowen and company four times or any of those other people took the trade at four times book. >> they're looking good. but i think we have to go back to the idea reasonable expectation -- >> donl marin. >> smart guy. great art collection. i don't think these things should trade at a 40 to 50, 60%, 70%, some case 80% discount. >> okay. >> i just don't think they should in terms of market mull pl. >> but that's what they have historically done, isn't it? >> the capital gorman has now versus coming in is gigantic. more return in capital means these stocks can go higher after they settle down. wells can go higher right here because wells hasn't participated because of the cross selling. and i tell you the december month was good. go read the calls since nobody else did. >> don't give them too much rope. they always find a way to hang themselves. >> really? >> yes. again, if history is any guide. >> how about if you change the

makeup of different panels? >> different what? >> well, you change the makeup of some of the regulatory organizations -- >> well, that's going to happen. >> that's one of the reasons i think you can pay more for wells fargo than it's trading at. >> okay. >> i believe that. stock was at 58. stock was at 58 not that long ago. why can't you pay 58? >> well, on that note we are getting some comments this morning from the president-elect signaling a key part of that house gop tax reform plan back on the table. mr. trump telling mike allen that border adjustment is, quote, certainly something that's going to be discussed. previously told the journal that it was, quote, too complicated. at the same time speaker ryan talks to mike allen says i want to be the mailman and by that he means deliver on some of the promises they made in '16. so we wake up one day it's too complicated, next day it's going to be discussed. >> except for today we have target which tells you not only you do not want to own the retail but don't own doubly because they can't make money --

this is cannibalism. >> right now even in the current environment they can't really make money. >> target, mark my words, it's the donner party. total cannibalization themselves. donner party didn't end well by the way. >> yeah. you're referring to the costs they cite in shift to online. >> i think they had incredible growth online. amazing. you had 40% in the month of december, but it came out of the bricks and mortar. this was the quarter where people should be thinking not that -- you know, people aren't going to the mall. it's, no, they're using the dot com and the dot com is killing the bricks and mortar. we saw this in urban outfitters. that was the first one you realize holy cow they're getting killed by themselves. target is getting killed by themselves. they did have toys plus three, home did well, electronics and entertain down high single digit. main takeaway is, wow, people are shopping at target, shopping big, but they're not going to target. >> as for tax reform and the back and forth from yesterday to

today to what may be tomorrow, i mean there are three main issues in the house ways and means blueprint, one of course of which is this border tax and no tax on exports whatsoever, the other is getting rid of deductibility of interest and the other is being able to writeoff your investment in the u.s. immediately, capital investment gets written off, expensed immediately. no depreciation over any amount of time. >> sounds complicated. >> these are all key things. hugely important things. and i'm sure there's going to be so much back and forth every day we're going to be going yes, no, yes, no. >> yesterday trump said it was complicated. did it get more fathomable? >> i have no idea. i am not connected with the president-elect. >> i think it was shared by many guests of the people in davos, the most i heard from the people in davos was i had no idea. >> his tweets backing lawmakers into corners and in some cases

sending them bag to the drawing board on legislation, others asking them whether or not medicare and entitlement reform is going to set up a big clash between the president-elect and speaker, does that complicate other channels. there's a lot going on. >> people should read the unh conference call. it was an unbelievably great conference call, but in there they say, look, we are closer than anybody to this and it's still very difficult to fathom. >> as you might expect it would be. he's yet to even take office, but i mean when it comes to tax reform which as you guys know, so many people are focused on for obvious reasons. >> they should be. >> because it could dramatically change the landscape of american business in some ways. >> right. >> who's -- we're not going to know for a long time. and so we're going to have a lot of days where we come in and we hear one thing and then i'm sure we're going to hear another and yet another. we'll see. >> but it reminds -- look, we've had periods where we thought the government was going to shut down and not shut down. i mean, you have to put it in that camp. but ultimately, david, there are the representatives, the senate and the president are all

republicans. >> yes. >> so there is going to be more -- this is not going to be all logger heads for ever. >> no, i think that's why there's still an expectation that we're going to get it. and that is why stocks to a certain extent have performed as well as they have since election day. >> right. i think deregulation could happen now because you see -- look at this fellow who might be the head of the epa, gary pruitt, the energy protection agency. now, see, you thought it was the environmental protection agency. >> did they officially change the name? >> they don't need to. that's the point of this revolution. >> right. >> nothing changes, in terms of titles. everything changes in terms of impact. >> finally, let's just put a quo ta on this with cpi, the biggest gain since '11 when we had a 3% jump year on year. >> we're in some nutty world but that means more rate hikes. if we get more, i want to take j.p. morgan higher. everything has flipped now. cpi higher, good, that means the fed has to show its medal, bank

of america, you talk to these ceos off record, what are they talking about? bring them on. we're all set. in the j.p. morgan conference call, which again nobody read because it's really long and boring, there's a moment where he says we are set up for rate hikes. so if you're set up for rate hikes, you get a cpi hot, interest rates going higher, get your rate hikes, do you want to own j.p. morgan or target, my friend? my friend. has he ever been to a target? >> i don't think so. >> i have. i have. i've been to a target. what? >> we're not sure he's been to the grocery store before. >> i luckily avoided it this weekend. it was a close call. haven't been in years. >> is that true? traffic was not you. >> the list wasn't complete. it was our anniversary, i said maybe i'll go, but then i managed to get out of it. >> wow, that's a lot of detail. a level of granularity that's shocking. >> figured i'd share all of it with you. >> i supported local merchants this weekend. local jewelry store, local furniture store. just felt like doing something for the people. >> you should. when we come back some exclusive interviews you do not want to

miss. j.p. morgan's jamie dimon, goldman's lloyd blankfein. take another look at the futures. nasdaq's down two out of three, lowest close of the year. more "squawk on the street" from post nine in a moment. ofri..itancene s hihiof sut.

well, we got cpi. let's get industrial production with rick santelli. rick. >> yes, industrial production for the month of december was up 0.8, that's a solid number.

but we did see a 0.3 revision the wrong way last month, november, originally released it down 0.4, now stands at down 0.7. let's look at utilization rate. 75.5 is what we received. darn close to expectations. we lost a tenth last month from 75 to 74.9. that up 0.8 is very respectful here. as a matter of fact it is the best number month over month change going back to november of 2014. of course cpi was on the hot side. we'll discuss that throughout the day. we still have more data coming up later in the session, carl, back to you. >> thank you very much, rick santelli. the world economic forum continues in davos, switzerland. today a global warning from joe biden in his final speech as u.s. vice president. our sara eisen joins us this morning from davos with the latest. hey, sara. >> hi, good morning, carl. today's headliner v.p. joe biden very much echoing china's

president xi jinping's defense of globalization here at davos yesterday. biden though took it one step further, pointing his finger at russia for what he calls testing the fault lines between western nations. also warning that europe should expect attempts to meddle in the democratic process in their elections this year. france and germany both up. here's how biden characterizes the world right now. >> borders seem less real to people, terrorist attacks feel inescapable, fears mount as people continue to flee violence and depravation in their homelands. in the wake of these understandable fears, we've seen a series of alarming responses. popular moves both on the left and right have demonstrated a dangerous willingness to revert to political small mindedness. the same nationalist protectionist isolationist

agendas that led the world to consume itself in war during the past century. >> biden basically refuting trump's world views. and even plugging the importance of nato after trump's criticisms earlier this week. the debatd here, guys, is ilt m ultimately one of optimism for the global economy versus pessimism not unlike what you're having on the desk. and what we're hearing from our guests, long term there is worry about trade wars, about the strong dollar, about rising protectionism. we hear that from many global hedge funds and ceos and leaders. hedge fund heavyweight ray dalo for one saying he is scared of populism. so will the optimistic stock market give way ultimately to greater uncertainties as many of these bankers and executive leaders expect? one thing i can tell you, carl, this group was on the wrong side of the election of donald trump, of brexit, both on the predictions and on support.

will they be wrong in their pessimism that is being reflected in these conversations, too? that's one of the biggest questions. one thing everybody agrees on as jim mentioned earlier is they refuse to make predictions anymore because they've got it completely wrong. >> yeah. i think it was sorken yesterday, sara, who wrote in the times that a year ago davos trump was written off as a bad joke. and they have definitely been schooled since then. one thing to keep in mind, jim, speaking of europe is we will get ecb tomorrow. and there's questions about whether draghi needs to offer a steady hand in the midst of all of this. >> i have to tell you if you go listen to that j.p. morgan conference call, you sure think they should let rates rise there. europe's pretty strong. i mean, it's a major point. now, there are pockets of weakness like italy because of certain structural issues involving their banking system. but it's very clear that germany's going to have to do more expansion fiscally because there are more, you know, million mie migrants, but in general i think that i'm with the bankers. europe is good. europe is very good.

and i don't understand other than desire to manipulate the currency, you're not supposed to say that with europe, but i just did, europe's good. >> now we have an incoming administration, a president who's not unwilling to discuss the dollar also. >> well, he's -- there's nothing off the table. >> no. >> everything's on the table. mercedes, i mean, attack mercedes and bmw. i thought that was very significant. these companies are building huge numbers and huge amount of cars in mexico. he's saying, listen, forget it. you're not going to build them there, you're going to build them in our country. >> well, they have german u.s. auto production is up like 4x. >> i think you have to come out and say you're going to build another car, build a 760 -- it's like -- >> if you get the border adjustment tax as part of tax reform or if trump backs and that goes through just a tariff, it's going to have an influence on behavior. >> yes, it is. very big influence. that's why your focus on corporate tax reform is probably the most important story of 2017 and '18. >> sara, you had one more point?

>> just on the dollar conversation that you just mentioned. very unusual for president-elect to be weighing in on the value of the dollar saying he wants it weaker. if he wants it weaker then he should rethink some of the policies i think david mentioned which are all pro strong dollar, whether it's the border tax adjustment, we don't know that strong dollar, fiscal stimulus, could be inflationary, could lead to higher rates, all of that for a stronger u.s. dollar. and on the europe question, europe is looking a lot better as people here are talking about. the question is is it good enough economically with high unemployment numbers to prevent what trump is predicting, which is another member votes to exit. >> yeah, uk jobless at ten-year low today down to 4.8. sara, thank you. we'll come back to you later on. when we come back we'll get cramer's mad dash, countdown to the opening bell. don't go away. is ierme?? teshterm r

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♪ little less than six minutes before we get to an opening bell for this wednesday. and you want to talk a little disney. >> yes, by the way, i did see sheik perform two years ago. still got it. david, bemo downgrades disney to underperform and here's the thesis, too early to own for fiscal year 2018. too early to own espn. too early to own studio, too early on the parks.

undertone here? too early to know what iger's going to do, in real life what's he going to do? and i think this is going to neilsen monthly cable network subscriber says this goes back to what got the stock down here saying none of this has really changed. all that's changed is sentiment in the one conference call iger is feeling better about espn. >> yes. >> so i think they're saying, wait a second, this thing got ahead of itself. can we listen to numbers before we go crazy? >> i'll match your upgrade with an updated estimates and a raise of target at citi saying it's the best position media name within their coverage universe if tax reform occurs. >> yes, it is. >> and they raise their target to 124. >> holy cow. push me, pull you. that's incredible. and that's a very good analyst at citi. >> yeah. >> all i can say is that like the financials this stock did go up a lot, but i think that if

you take a longer term view which i know is completely preposterous, espn is no longer as much a drag as people thought because there's optionalty. >> we will see. somebody fell there. i was going to help her if she needed help. >> really? >> that's me. running where i'm needed. right now i'm needed here. stay with us, we got the opening bell coming up next. ÷

you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in about a minute. busy wednesday. cpi and ip run hot, forex quieting down after that crazy day yesterday. we'll get the president's final press conference at 2:00 p.m. yellen at 3:00. but it's going to be about goldman at the open, which is the highest price weighted stock responsible for about a quarter of the dow's run. >> right. and what we need to me more important for goldman is what janet yellen says. if janet yellen says, listen, we feel things have gotten very strong in the fourth quarter, then interest rates are going to go higher and you're going to

want to buy goldman. it's in the grips right now of rates. >> goldman as you can see up a little bit in the premarket. let's get the opening bell here and the s&p at the bottom of your screen. at the big board today it's glad promoting acceptance and advancing equality of the lgbtq community. over at the nasdaq, novanta. interestingly goldman's up 33% since the election. street has ten buys and 12 holds, jim. when are they going to come around if at all? >> i think that they're all kind of hoping that it would come in. i think there was a tremendous number of people who missed this bank rally or felt that, well, you know what, goldman goes up, it's up too much, maybe it comes in, i'll change my view. and they didn't. a lot of people for the regional banks, wow, they really missed it. and now their penchant is to say i missed it and i'll downgrade

more. trying to make themselves look right. look, is goldman expensive on 2017 numbers? i don't know. they can blow things away if you get total deregulation. they could blow things away. >> what is total deregulation? >> meaning that they can go buy back as much -- they bought back a lot of stock, but meaning volcker rollback. volcker rollback means they can position securities, go into the large, the tia crafts, the giant accounts and say from now on you got to deal with us because we can position your sales. we're the place to go for equities. and then they also get a lot of the equity ipo business if that gets a little bit better. but, yeah, i'm just saying the tone. the tone is better. tone. tone matters. >> yeah. >> i mean look at the morgan stanley call. what are they talking about? people are starting to come back to equities again. we see it ourselves. >> did you see bull sentiment? >> pretty high. >> 60.6. that's an 18-month high. >> i wish that were not like

that. you get animal spirits into the inauguration, but then you see a stock like apple. i mean everyday someone says listen i'm worried about apple's quarter. what does apple do? stock goes up. >> i know. >> what would happen if they weren't worried where would that thing go? apple's corporate tax reform. >> china though. china. and apple. it's really important to apple, i think. i have a keen sense for the obvious there. >> yes. >> and if it becomes a point of great contention between our two countries in terms of trade and other things, which is certainly a possibility. isn't apple going to suffer? >> well, i think yes. and that's why it doesn't have a very high multiple. >> all right. but it didn't have a high multiple previously because of other reasons. now you're saying that's the reason it doesn't have a high multiple? come on. >> trade war is bad, it's bad for caterpillar and the stock goes up. it's really bad for a company like cummings and that stock goes up. >> a border adjustment tax is bad for apple too, or a tariff is bad for apple also as far as

i know iphones are an imported product. >> we're going to hear more about that perhaps from wilbur ross who has been said along with peter navarro to be in favor of tariffs and heavy presence on the china policy. >> then again are there any wireless phones that are made in this country? >> no. >> none, right? >> no. what are we going to do? like the world did not anticipate president trump. world was anticipating president clinton. and the idea would be that somehow china picks and targets something. what are they going to target? >> well, that's the question. >> is it kfc? >> i don't know. apple plays a lot of people there through fox con. >> they hurt employment. >> they do, but it's an incredibly important market for the largest market cap company in the world. it would certainly send a message if -- who knows. >> there's many ways to send messages. many ways. >> yes. >> you could send some aircraft carriers -- they have a navy. they could send their navy somewhere. maybe that's what they'll do. >> oh, that's great.

good, okay. why not have an all out war? >> that was the takeaway from tillerson last week, right? >> yes. i'm just saying that i don't necessarily want to reach the conclusion that apple is going to be targeted. they targeted qualcomm. but everyone was targeted qualcomm. >> south korea, the chinese, they said -- >> what a pinata qualcomm's become, huh? >> that is likely to be abandoned, isn't it, under a trump ftc? >> yes, ftc, that's going to change the makeup. >> it's going to change the ftc makeup very soon. >> and maybe qualcomm fights it tooth and nail. >> they do say they will vigorously contest, that it's based on flawed legal theory. talk about a complaint that happened just as current staff was heading out the door. >> yeah, that was a midnight ruling against qualcomm. qualcomm really had been beaten down here. >> they're working right to the very end though. i would already be like out. i mean come on. >> well, i don't know.

you've disagreed with me on everything today so i don't know. i'm going to agree with you, i'd be out. >> okay. they were selling retailers yesterday like they were buying them, jim? is that border adjustment back on the table? >> matthew boss who's been absolutely spot-on scarily right. make it a point for all these quarters. he's been saying that the structure was built around the store. so when the business moves online, you open yourself to countless competitors and you lose whatever competitive advantage service and experience provided in-store, right? so going to target it's like, look, i can go find out who's cheapest, oftentimes amazon is cheapest. david, you taught me about amazon web services. i can look and say, well, why should i go to target? if i go to target for toys, which they've done very well, then i'd do well and people aren't going to the store. okay, so let's say -- target, i'm exaggerating. people are not going in the numbers they used to and that's hurting food. food is down low single digit.

disappointing traffic. so you get food in that target and go into target there's a lot of food, you know, that's a turnover business. food is a turnover business. >> it is. no, it really is. and they always put the milk all the way at the back, got to walk every aisle to get it. >> you know your supermarkets. >> merchandising is what it's called. >> my wife sends me to the supermarket. >> really? >> grim experience. yeah. >> i remember from walmart when i did my documents arearies tal about the layout. >> which a gallon of milk or gallon of gasoline? which is more expensive? you don't fill up and you don't go to the store. >> it was the bar coding that got him, if you remember. he was a good man, he is a good man. >> oh, that's a good segue. >> he is. >> ual does beat by a nickel. prasm down but recently guided

that would go green. >> the stock has been up gigantically. one of the things you have to be careful with all of these guys and it's good that it's holding in there because it's down two bucks in the after hours is the very low cost carriers on certain routes, the european routes have been terrible. but look, this stock has run up big and it's not coming off as much as some might expect. that's kind of bullish. but be careful of the airlines because there are a lot of low cost competitors coming in and it's hurting the store after a very big run. >> meanwhile csx not only misses by a penny, upper net was in line but elevated expectations, more worries about borders. >> well, i mean, i think they actually had a lot of lines that were up. many more than i'm used to. chemicals not. coal -- i mean, one of the things you elect a president who's pro coal, that does not mean the utilities then start using more coal. but one of the reasons why csx has gone up so much is it's expected that coal will not be

phased out as aggressively with an environmental protection agency that's much more pro energy. >> or as you put it the energy protection agency. >> you're coming around. >> i am. >> coming around to my view. next you know you'll be going to the store for me. >> but to your point you're going to use as utility what best serves your needs what's cheapest and most efficient. >> look, csx is another one of these examples where i like the quarter. but it doesn't matter. the stock ran up so much. how do you like it this much? you can't. so it comes off. it's the store. >> worth mentioning mattel's new incoming ceo. >> from google. >> from google. yeah. george -- i'm not sure i'm pronouncing her name properly. she's been president of the americas at alphabet leading the internet company's commercial operations and advertising sales. and will take over on february 8th as ceo of mattel. interesting choice on their part. >> yes. >> you can see the stock is up. of course they'll be dealing

with the same issues if they come to the fore in terms of border tax adjustments and tariffs. >> right, the stock has been hit from that. >> you know where your toys come from most often at least. >> interesting choice because when i spent time with mattel in the last couple years always been involving salesforce.com and being in touch with the custom customer, google admittedly again is what the consumer wants. i think it's a brilliant hire. >> you do? >> yes. it's about knowing your customer. i have splunk on tonight, it's about knowing your customer. people who don't know their customer are getting killed in this market. matters. >> dow's down 73. this is a six-week low now for the dow. goldman negative for the year. let's get to bob pisani, bob. >> good morning, carl. happy wednesday everybody. yields up, ten-year yields, dollar's generally up right now, mixed over in europe, cpi's heating up a little bit, generally to the downside on the open for stocks. let's take a look at sectors here. very defensive tone so your

consumer staples, health care doing a little bit better, banks still not catching much of a bid. citi, goldman to the downside, energy, again, $51 on oil isn't exciting anybody. we haven't gone anywhere with energy at all this year. exxonmobil still down on the year. we talked about retail, target cutting full year 2016 outlook, but you see kohl's and jc penney down, they got downgraded at credit suisse so they're down big as well. if you look at target's comments and look at their sales here, down 3%, they made a big deal about the fact that digital sales were up 30%. most of these retailers their digital sales are high single digits, low teens. so it's not enough to really impact the overall numbers in any big way. that's the big problem right now flt target joins a very long list of retailers that have negative comps. long list. so take a look, target, tiffany, gamestop, express, barnes & noble, stein mart, bonn ton, macy's, more negative numbers

than positive numbers. we got a small group that reported positive holiday sales. children's place did well, lululemon, urban outfitters, but folks, that's about it. i couldn't find anybody else who had positive numbers. overall according to retail metrics, orders for retailers down about 3.5%. the market knew this. this is the only defense i would say for the market. there you see retail etf for the last couple months there. that's the white line. drop notably in december as everybody realized that the store sales were not that great. the s&p 500 the orange line continued to move on the upside. so the market sold off. the retailer sold off in anticipation of these kinds of numbers would be coming. let's move on, united airlines beat by a nickel, revenues were slightly above forecast. the airlines generally turning slightly positive right now. i think the interesting thing is osc oscar munoz comments about infrastructure, like bridges and roads, add airports. he wants airport updates, what's important for us is air traffic

control and modernization that's been such a critical need for our nation for so long. are you listening, mr. president-elect? upgrade the airports, oscar munoz says. elsewhere finally it's been another lousy year for active management. we talk a lot about active management versus passive management. in the etf business. j.p. morgan note this morning, the number of active managers who outperformed their benchmarks in 2016 only 32%. and look at the fund flows. active had $200 billion in outflows. passive had $150 billion in inflows. this is fundamental in kwaund funds and 32% outperformed that's before fees. so part of the problem was they were just caught in the cross winds. so the first half of the year low volatility stocks very popular and high yield very popular, but there was a very, very shift by june, july we saw a shift in to cyclicals and what

you might call the reflation trade where we saw industrials do better, materials do better in general. and the active managers did not catch that in time. that was a simple problem, move very quickly and they weren't there. another idea for staying fully invested overall in long-term funds here. right now the dow jones industrial average down 55 points. and we're 230 points away from dow 20,000 right now. carl, back to you. >> just about break even for the year here at these levels, bob. thank you very much. let's get to the bond pits. rick santelli at the cme in chicago. hey, rick. >> good morning, carl. you know, sometimes things just are what they are. today's cpi really has some notable features to it. we all know that year over year core has been above -- at or above 2% for awhile. today marked actually the 14th month in a row 2% or higher. but if you just look at headline year over year, this is the first time it popped over 2% and indeed the highest level going

all the way back to may of 2014 at 2.1. now, think about that. think about all the seeding of inflation done. parts of europe are showing some inflation movement to the upside. the uk for sure. listen, we all talk about policies and all three branches of government under the same banner, but let's keep it even more simple than that. if our policies tightening and the rest of the world is still thinking qe like carney and draghi, but yet inflation numbers are picking up, this could be the start of something to pay close attention to. look at a two-day of tens, pretty much came back and got what it lost yesterday in terms of lower yields. open the chart to around end of november last time we settled under 2.30, you can see where it's holding 2.27 is important level as well where we settled 2015. if we look at gilts, two-day of gilts they're moving higher. august 1st, been a heck of a ride. in july 1.35, on august 1st post

brexit yields trading 50 basis points, high since then is 100 basis points higher and now sit at 132. look at a two-day of the dollar index, everything was about trump, trump, trump, trump, but the dollar index came back a bit. i'm not sure he really hates a strong dollar, which normally associated with a strong economy. my guess is he just thinks others have kept their currency too weak. it's kind of relative, isn't it? strong/weak, it's a comparison term. if we look at the dollar since the election, certainly it's given some back, how about 50%? so it kept half and it's the biggest retracements of any of the markets going back to the election. and probably the one that's going to be the most volatile going forward. carl, back to you. >> all right, rick, thank you very much. rick santelli. when we come back, some heavy hitters in the banking world, exclusives with j.p. morgan's jamie dimon, goldman sachs ceo lloyd blankfein. break even for the dow for the year's 19,762 and just about 20

points above that. watching that closely. back in a minute. l orothec. notr atedages orothec. persedh h ro tne s notr atedages

busy day on capitol hill for the president-elect's cabinet picks. today's hearings include nicki hailey, scott pruitt at epa. commerce secretary designate wilbur ross appearing before the senate commerce committee and tom price trump's pick for hhs secretary set to go before the health education labor pension committee. expected to face tough questions about trades in health care stocks, axios yesterday, guys, had some reporting on concerns within the team about mnuchin bringing in extra people to help him get prepared in advance of the tough questioning he'll get. >> look, there was a very long article about mnuchin and, you know, you could read that article two ways. i mean, i think there are a lot of banks -- a lot of larger banks were into the fdic saying

please let me buy these institutions. i didn't see it as what i would say negative as the spin, but you got to hear what they say -- what he says on capitol hill. there are things happening in this market that are extraordinary every minute. even times since we've been talking united airlines is up because people like some of the commentary on the conference call. things are moving very fast, like david said. i urge people to get conviction, if you don't have conviction or worried about what the treasury secretary is going to say or worry pruitt is going to have trouble, make some sales. because you need conviction here. i'm not recommending sales, but you have to understand if yesterday was border -- no border and today's border, maybe you have to have conviction that your portfolio's not involved in these things. >> do you have it? >> yes. yes, i do. because i think that the idea of trying to get out of disney at 106 and back in at 100 is too hard. bank of america get out at 22 get back in at 22 too hard, citi, too hard. people at home can't do that.

>> so hang in there through it all, whatever's coming. >> for when depending upon -- depends on the group. it's not the s&p. for the banks, yes. for the retailers, no. for the semiconductors, yes. semiconductors absolutely because they have very low valuations. we'll talk about during stop trading asml and how that is controlling everything today in tech. huge call. huge conference call. >> what? >> it is worth noting that tech has been -- the growth names have been the best performers so far. >> qualcomm up today. asml, a company that makes semiconductor, one of the greatest supporters in the semiconductor, there's only a couple companies left, lam, kla10 that's the demand on semis to make more semis. but you'll sequal come go up, see nvidia go up, this is a conference call basically saying business is incredibly strong.

if you don't know asml, then you don't know the semiconductors. >> okay. >> what do you mean okay? >> okay. >> i got another one for stop trading. don't worry. watch the show. or you can go to switzerland. one day i'll get there. the went the streets are very clean. no gum on the streets. >> yeah, good skiing. snowball fights as "squawk box" likes to show us from time to time. dow's down 50. we'll get another stop trading with jim in just a moment. don't go away. uthintobp tedo k y al

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time for cramer and top trading. >> every day there's a brokerage firm that comes out and comments about the supply chain and how apple's doing yesterday morgan stanley said this quarter going to be weak but hold on for 2018. comes out and say they have a monthly iphone update saying fear is not supported and talk about iphone 10 still likely huge. apple is a company when it was at 93 and i pounded the table saying, listen, don't tray u trade it, own it, and was laughed out of the building, it's still a good situation. but what is the first line of this piece? while border adjustment creates uncertainty, and then we go into the china uncertainty, but the

fact is that apple's driving a lot of the semis today too including a stock like skyworks. so just be ware that the cross currents here are amazing, but in the end if you had conviction to owning apple, you did well. you did not even though many people think the best days are behind it. that's what you're supposed to say with apple, all the best days are behind it and you are who you say it into, you say it into your iphone to cnbc. >> oh, to cnbc. not to siri? you don't ask siri are the best days behind it? >> no, there's a lot of other devices that you ask and they take it down and they send -- >> there are. >> if you like that, then we're going to send you a book right now. >> $200 billion in cash could come back under repatriation. >> that's why i say corporate tax reform is the most important issue. >> it is. >> you agree? >> without a doubt. thank you for agreeing with me. >> you're going to have netflix earnings to watch. >> yes. netflix, boy, every day they've got some absolute new -- >> "seinfeld" today.

>> yeah. splunk start with a great anecdote in analyst day about wanting a particular toy and how little people really know about their customers. it's kind of like a really, really interesting company that is in another environment. i don't know. >> jim, we'll see you tonight, "mad money" 6:00 p.m. eastern. when we come back, exclusives with jamie dimon and lloyd blankfein. dow's down 46. don't go away. inanry ÷÷e opat

tme xponoislpl infr is hnie r xt meo to e ♪ good wednesday morning. welcome back to "squawk on the street." i'm carl quintanilla with kayla tausche and david faber at the new york stock exchange. sara eisen will join us from davos shortly. we're watching capitol hill for number of nominees. we're going to monitor those and go there live later in the hour.

in the meantime, dow's down 31, briefly dips negative for 2017. vix at a two-week high. a lot going on this morning, kayla. >> yeah, we have data hitting the tape as well. diana olick has those numbers for us now. diana. >> kayla, home builder confidence fell two points in january, december's seven pf point jump was revised down by one and add it up and the index now stands at 67, still well above the positive line of 50. the index was at 61 one year ago. so why the pullback? well, the reality of now rising mortgage rates and a potentially slow road to deregulation. builder costs have soared over the past few years thanks to the high cost of land, labor and increased regulation. labor's only getting tighter and new immigration policies under donald trump could make it worse. of the index's three components current sales conditions fell three points to 72. sales expectations over the next six months fell two points to 76. and buyer traffic fell one point to 51 very close to negative

territory. all the numbers online cnbc.com. back to you. >> thank you very much, diana. an apparent aboutface from donald trump when it comes to corporate tax reform after calling the house gop border tax proposal too complicated. the president-elect now says it will be discussed. and this uncertainty has some investors anxious. this is bridgewater's ray dalio on "squawk box" this morning. >> i think the real question is what is a trump administration? is it going to be wise and thoughtful and well calculating? so when you have something like the border tax, is the border tax on? is the border tax off? is that going to be worked out intelligently? how will the 1.3 trillion that was supposed to be raised in the border tax and then pay for other taxes, where will that come through? >> joining us this morning evercore isi head of political analysis terry haines.

and good morning to you both. teri, in light of what we just showed people regarding trump's positions today and yesterday on tax, how would you evaluate market policy expectations right now? >> well, good morning, carl. and how i would evaluate them is market time and political time are very different time. markets are justifiably impatient. and at the same time we're in the third week of a congress. president-elect has not been inaugurated yet and we have four confirmation hearings going on on capitol hill. doesn't have his team around him yet. this is going to take awhile and that was the core of the trump acknowledgment in the interview this morning was this is going to take a little while. let's remember what the fundamentals are, both trump and congress want an aggressive tax reform. they want it this year. what we're discussing now are details. and these folks are working with each other to try to get on the same page about how that goes. so they're not small details, but they are details. >> teri, is it just that it will

take awhile or is it the proposal and policy will fundamentally change? trump seems to be approaching everything like a negotiation starting with floating the most onerous stance and then potentially backing away from that. is that what we should expect with border tax? >> well, what we should expect with border tax, kayla, is that everything's a negotiation. it's been a long time since the markets have seen sausage made, and they're about to see quite a lot of sausage being made this year. and, you know, these are the beginning of negotiations. president-elect has talked about a big border tax. that proposal's actually not on the table. that thought is in tweets and a few public comments. meanwhile, the house has its own propos proposal. the senate does not have its own proposal yet. this is going to be a three-party negotiation essentially between the house and the senate and the president. and, again, this is going to take awhile. and trump acknowledged that. it's something we've been saying for quite a while. >> and it's not just here in the states. yesterday what a crazy day for

the pound and forex. was yesterday's volatility going to be the benchmark going forward do you think, el sa? >> going forward we have a very uncertain political situation. it's going to be the start of a very long drawn out negotiation process once article 50 is triggered. i don't think yesterday's kind of the benchmark what every day is going to be like, but clearly there's a lot of short positioning in the market. that's why people reacted as they did yesterday suddenly rallied when theresa may didn't say anything too aggressive and at the same time we think the pound has a lot of room to go lower over the next three to six months. >> lot has been written in the past 24 hours about trump's comments on the dollar to the journal. did it strike you different as somehow revolutionary when the president-elect said that? >> absolutely. it's a break of the past 20 years, started with secretary ruben. but the problem trump has at the moment when it comes to china,

the chinese are trying to defend their currency to stop it from weakening. the real problem is that his policies are at odds with his goals. if he does implement corporate tax reform, big cuts to corporate tax, that's going to be dollar positive, not dollar negative. >> so what about what the fed will do? because one of the places in the economy where the president can have the most noticeable effect at least on monetary policy is through the nomination of fed governors and the way the makeup of the fed goes forward. what are you expecting there? >> so janet yellen's term as chairwoman doesn't expire until early 2018. she's already made it very clear she's not going to step down. and even after that she may stay on as a governor. you know, it's very difficult for the fed to lose its independence under the new president. the fed is really going to react more than anything to inflation expectations and projections for inflation rather than what the president demands. >> terry, i think reports like yours, i was reading yours yesterday are going to be widely read by you and your competit s

competitors. i'm going to put you on the spot this morning, goldman sachs comes out saying we think a chance of the border tax adjustment passing is 20%. i don't know how they get to 20%, but they do. if you had to put a percentage on it, what would it be? >> you know, we've always said, and i mean always, that we thought the -- we think the house's consumption based plan with the border adjustment provision is less than odds on, make me pick, i'll pick 40% to 45%. and between president-elect's comments yesterday and today, i'll stick to 35% or 40%. markets need to understand we are in the first innings of this. we continue to be very bullish the tax reform happens. 80% in calendar 2017, but the earliest it happens we think is august. and the latest it happens is at the end of the year or beginning of next. >> all right. we'll tell people maybe they should be patient. terry and elsa, thanks, guys, good to see you both.

>> likewise. >> we want to mention we are keeping an eye on capitol hill. the hearings are getting underway. and we're going to show them to you. we can monitor -- there they are right there. of course we'll be monitoring them bring you the latest as they continue to move along. in the meantime let's send it over to sara. she's in davos. gives us a look at what's coming up, sara. >> david, when we come back from here, the economic world order under a president trump. we're going to talk to the ceo of hilton next. and later, the bankers are here exclusive interviews with j.p. morgan chase ceo jamie dimon, goldman sachs ceo lloyd blankfein. that's all coming up here on "squawk on the street" live from the world economic forum in davos, switzerland. "squawk on the street" will be right back.

♪ welcome back to "squawk on the street" live from davos, switzerland. trade tensions, geopolitical threats front and center here as chinese president xi jinping and u.s. vice president joe biden this morning defend globalism in stark contrast to president-elect donald trump's america first policies. joining us here at the world economic forum to discuss that and more, we've got a global ceo chris nasetta, ceo of hilton worldwide. good to see you. >> good to see you, sara.

thank you for having me. >> so what does this mean? america first attitude potentially from the next administration for a global company like hilton? >> i'm going to say i'm in the optimistic bunch right now in the sense we're coming off frankly a great year for our company. we just split the company into three pieces after going public in 2013. we had one of the best years ever and one of the best brand launches in the history of the company. we had the best growth we've ever seen in the sense that we signed over 100,000 new rooms, we started construction on over 75,000. we added a hotel a day in the world last year. >> you think the market's giving you credit for some of these moves? >> of course not. i always say i don't think so. and part of what i think is going on right now is the market's trying to figure out the three new companies. and hilton today is a very different company than it was even two weeks ago in the sense that the hilton i run is a pure play consumer branded business 13 of the best brands in hospitality, 13 incredible consumer brands. my optimism going into this year

is like i'm sure a lot of people you're talking to, certainly there's reasons for concern. and here in davos plenty of discussion about that. >> but i think especially as a global company hearing talk of trade tensions rising, protectionism, populism, walls going up, has to be a source of concern. >> right. i think there's a lot of talk of that. i think, you know, my own belief is that as things settle down it's not going to be as bad as people think. >> you think it's just an opening salvo on negotiations. >> i don't think donald trump anything i'm hearing talking to him or anybody coming into the administration is saying that they're not free trade. i think they're saying they want more balance to trade. if i look fundamentally at our business over 70% almost 75% of our business as a u.s. based business still in terms of the earnings potential and if you think about what's going on in the u.s. economy, it's a little bit early to judge how, you know, how this is all going to play out. i will say this in a very simplistic way, the psychology's positive in the sense what we

saw last year in our business realtime was corporate america was very nervous for a whole bunch of reasons. you know, what was going on in the election, what was going on with terrorism around the world. and they stopped traveling. we saw, you know, other parts of the business ironically leisure continued to be very strong, but the corporate business really got quite weak. >> is that coming back? >> it's coming back. >> already? >> it's a little bit early days, but here's my fundamental belief. if you look at the numbers, the thing that drives demand in our business on the business side and by the way 75% of our business is business travel is really nonresidential fixed investment which was going backwards last year. i think there's an expectation that it's going to go up this year. i think the optimism you could debate it here, but i think broadly american ceos there's a more optimistic view. >> well, corporate tax reform high on the list. >> high on the list. the lower -- you know, sort of regulatory reform, some talk of infrastructure spend, all of those things to me portend

reasonably good things that you're going to see optimism build a bit, you're going to see capital spending go up, you're going to see employment go up with that. and when you see those things happening, demand in hotel rooms go up. i'm not saying it's going to be necessarily a bonanza, we do see early telltale signs corporate america is becoming more optimistic and making more decisions to spend more money as a consequence of that optimism. >> i would imagine you would like to see some of that infrastructure spending go toward airports, would that help? >> we would. i think as somebody that runs a global business and travels the world for a living, there's a lot of work if you travel around america that you see needs to be done. we're falling behind a loft of the infrastructure spend that was done in america was done in the '50s, '60s and '70s. if you look at airport infrastructure, rail infrastructure, highway inf infrastructure, even port infrastructure, we've fallen behind. so we really need to do that. obviously selfishly it's great for our business both in the

sense of capital spending but also allowing people the moeblgt to get around the country. but i think to remain competitive long term we absolutely have to do it. we have to improve the airports. we have to improve all of our infrastructure. >> is your optimism going to translate into more hirings? more jobs in the u.s.? we know the president-elect likes to see those press releases come from companies, whether it's because of the optimism in the markets from him or you've already got plans. >> i think the answer is yes of course. when you're opening a hotel a day in the world, you're hiring people. >> but in the u.s. >> in the u.s. we're opening a lot of hotels. so we're hiring people. last year we hired 20,000 net new people into our system. i would guess more than half of that was in the united states, so 10,000-plus jobs. my expectation this year is we'll probably hire 25,000 to 30,000 net new people, more than half of which will be in the u.s. so we're definitely in the business of hiring and growth. >> i do want to ask you about china because you do have a good view into that market as well.

the common feeling here seems to be the chinese economy's going to be okay in 2017. less scarier than it looked at this time last year. what are you seeing? >> i agree. ironically last year we had a pretty good year in china. so in the beginning of the year things were a little bit weaker, but they've picked up as the year went on. i think china's got very sensible policies to keep driving growth. we have some really important relationships in china that are helping us. with the participant ner we just announced recently the hna group represented here going to be buying 25% of our company, so we're going to have another important chinese partner in the hna group. we're growing at a very rapid pace. >> is it more competitive now that you have a much bigger competitor in starwood marriott, now that combination is going through? >> i don't think so. i think, you know, marriott, now marriott starwood is a great company, i think we're a great company. the truth of the matter is we're focused on a bit different strategy which is more organic

growth strategy taking our existing brands, deploying those around the world. as we're adding brands instead of buying them we're organically launching new brands because we think that's a better way to serve our customers, a better way to drive growth and better way to drive shareholder value. that doesn't mean we're right and they're wrong, just means bit different strategy. we're both doing well. >> maybe i should ask this way, what about the airbnb competition and threat there? we've asked you about this before. >> you have. everybody has. >> popularity. >> i think the best sort of way to look at that is they're clearly a great business and they're going to be growing, we don't think it's really directly competitive. we think it's serving customers needs but a need but a different need. if you look at it in terms of the statistics, we're at the highest level of occupy si both as an industry and company than we've ever had in the recorded history of our business. so the real answer is they're not impacting us in any meaningful way. and i think there's plenty of room for them to succeed and for

us to succeed. >> especially if some of your forecasts come true. thank you. >> i hope they do. thank you, sara. >> ceo of hilton worldwide and really his view there, carl, stands in contrast to some of what we're hearing from some of the global ceos when it comes to rising protectionism and trade 2e7x u tensions. >> great stuff, sara. thank you very much for that. our sara eisen in davos. when we come back, banks in the age of trump, jamie dimon and goldman's lloyd blankfein live with us from davos as well. keeping an eye on capitol hill as well. we're going to monitor those and go there live. dow working its way back now just down 11. don't go away. hnor ouchevnte .

taking a look at shares of target this morning. the retailer reporting softer than expected holiday season sales and as a result it is cutting its full year outlook. target now expecting adjusted earnings between $5 to $5.10 per share. that's compared to analyst estimates of $5.20. target is pointing to disappointing traffic and sales trends in its store. the stock is down close to 5%,

and it is bringing other retailers down with it as if retailers hadn't had a tough enough time in the market in the weeks prior that we have seen. the company said that strong digital and black friday sales were not strong enough to overcome a slump in november and december in electronics, in entertainment, in food and other essentials. competition is heating up. and it seems like they're not able to keep up fast enough online to keep up with the competition there. >> santoli was tweeting about their logo being a target, which is exactly what they are given the retail landscape right now. we'll watch all that. when we come back j.p. morgan chase ceo and chairman jamie dimon, his take on trump, the economy and a lot more. dow's down three. "squawk on the street" continues after this. ♪ ' i.

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open. currently down about ten as a couple of big names have managed to find their legs. disney downgraded today at bmo to underperform. david, jim was talking about this call earlier today. disney managing to go into the green a few moments ago. goldman also started the morning relatively weak. one of the dow components that are positive although not as much as axp, 3m and j.p. morgan. >> yeah, disney you also had a rebuttal in the sense of that downgrade from citi which raised its target for the company citing what it believes also will be some strong attendance at the east coast theme parks. and, yeah, goldman interestingly started off like morgan stanley did yesterday, kayla, which was down after better than expected results. they were strong. but all of these stocks have had such an incredible run since the election based on the prospects for tax reform. so lower rates, less regulation and of course higher interest rates, which we haven't seen lately but certainly have over the last few months. >> right. i mean, there was a question of whether expectations for that group were in fact too high going into earnings whether what

goes up must eventually come down. we did see that sector come back to earth a little bit yesterday, but we'll see if the incoming administration and any talk coming out of policy land will end up changing that. >> worth noting that morgan stanley is up over 2% this morning. so a nice rebound after yesterday's decline. >> bear in mind yellen does speak today at 3:00 out in san francisco. so we'll be watching for that. let's get a news update over with sue herera at headquarters. >> hi, carl. good morning everybody. here's what's happening at this hour in the news update. british prime minister theresa may accused of sigs leader jeremy corp vin of not having a clue about that country's exit strategy from the european union. the two clashed in the house of commons. >> what i sent out yesterday was a plan for a global britain bringing prosperity to this country. and jobs to people. and spreading economic growth across the country. i've got a plan. he doesn't have a clue. >> israeli police say an

arab-israeli rammed his car into a group of policemen in southern region killing one before he was shot dead. a local resident however accused the police of using excessive force claiming the driver lost control of his vehicle after he was shot. and george h.w. bush was admitted to a houston hospital late last night. a statement from his staff said it was a precaution after he experienced shortness of breath. the 92-year-old former president is resting comfortably. we send our best wishes to him. that's the news update this hour. i'll send it back downtown, kayla, back to you. >> thanks so much, sue. and now we want to get out to davos where becky, joe and andrew are at the world economic forum sitting down with j.p. morgan chase chairman and ceo jamie dimon. guys, over to you. >> kayla, thank you very much. and, jamie, thank you for joining us here today. it's great to see you. >> pleasure to be here. >> this is your first interview since your earnings report last week. >> right. >> and it was a very strong report. got kudos all across wall street for those numbers that were in. but you also said that the

economy is building momentum, that things are really getting started. so where can we expect things to go from here? >> so we see -- thrilled to be here and thrilled to have you back becky after that long break and congratulations. so if you look at the economy, we have 15 million more people working, wages are going up, home formations are going up, companies are flush with cash, capital markets are wide open, sales are going up. everything looks to be pretty good. the balance sheet of the average consumer is in pretty good shape. the balance sheet of the company is in good shape. credit is very good. my view it could actually be strengthening. and i'm hoping, by the way, if you get a little bit of tax reform and revenue reform we'll have accelerate in revenue in the economy. >> people are expecting that. it's kind of why we've seen your stock, the financials run up so sharply on the expectation not only of higher interest rates but also of things really changing in the regulatory environment. >> right. >> where do we see the stock right now? is that already baked in for

financials in general? >> i think in banks and for general interest rates obviously we benefit by that, we've always disclosed that. i think a stronger economy, banks benefit from that. and the third is reduced regulatory environment. you know, banks may benefit from that. remains to be seen. i think the market pretty much anticipates some of it, not all of it because it hantd happened yet. some things may take six months. >> that's the opposite of we've already gotten too much because we don't know what it's going to be. i was going to drill down on that with you because how much of the appreciation in either at j.p. morgan -- you saw goldman sachs since november 9th, i mean, i know the economy's getting better, but there's something else that happened there. >> right. >> now, how much of that can be done with a pen? day one that will help you? how much of it is assuming the economy gets stronger? how much is assuming rates go up? and how much is assuming dodd/frank totally gets redone? >> it's hard to separate them. so we need tax reform.

and we've been talking about this for a long time. we've been driving capital and brands overseas for eight years. you know, american companies are disadvantaged, tax reform, repatriation would bring capital back here and plants back here. it is possible some people are starting to spend in anticipation of that. i've heard some ceos here say i'm going to invest faster now. >> already. >> already in anticipation. >> in advance of. >> in advance of. i think if you look at the regulatory side there are things which legislative, dodd/frank is legislative, and there are things with just regulation which can be reduced. you look at compliance cost or bsa, aml, kyc, certain liquidity requirements i think make it harder for banks to lend. so there are things when you look at them the regulators will look at and maybe make a bunch of changes which also would be good for the economy. and the important part is it's going to be good for the economy. forget about just banks, it's good for the whole economy. which means all working americans. >> does it help the bigger banks though or the smaller bank sns because one of the things is all the stocks have moved. >> yeah.

>> do you think they move d disproportiona disproportionately? >> no, i want to help the smaller banks. i think maybe some of these costs have hurt them disproportionately so may actually benefit them more this time. but if you talk to any small bank, they are clambering for reform, reduced costs, the ability to be a little more aggressive lending. i can't prove -- i think these things have held back lending. lending is a critical part to growth. >> to put a fine point on it you don't think everything is baked into the cake already. >> that's what i was trying to get at too. >> no. i'm talking about general economy. i believe the economy could grow at 3% or 4% with proper policy, tax, immigration, trade, tax, tax, regulatory. i believe that. >> you think this year? >> yeah, i think it could be this year. >> yeah. >> we know when economists talk they talk about somehow relegates low growth and i just don't believe that. we've had wars. we've had government shutdowns. we've had ceilings, we've had crises. a lot of the bad things have

happened we shot ourselves in the foot. so if we reduce some of these things i think we can grow faster. >> this is just a good start for j.p. morgan stock and maybe the stock market in general. it's a good start and it doesn't necessarily assume everything goes perfectly. this is just assuming that, you know, that something happens at this point. and if something good does happen, we can go further, right? >> i totally agree with that. >> good. >> but we build the company not for quarter or year, we would do the same things next year if it's 2% growth or 4% growth. so the results of this quarter are based upon things we've been doing for ten years. >> uh-huh. >> the last three years were record years, not just this year. obviously this quarter is better than some this year, but we build branches, we hire people, spend a huge amount of technology. we have a lot of great technological stuff coming this year. 57% of our new accounts are millennials. they always say millennials don't like banks, until they get that first paycheck. and then they like banks. >> who knows when that's going to be for most of these millennials. >> exactly. >> that's not consensus, jamie, right now. i don't know what consensus is, but say 50/50, i hear sugar

high, i hear it's assuming perfection for all these things that may not go well once we get started and the devil's in the details and tax reform. you know, this border adjustment thing might not go smoothly. so there is a whole group of people that think we've gone way too far and we're not really gauging the risks to this scenario. you think that this is -- >> i think the market's smarter than that. >> i do too. >> they know the sausage is going to be made in taxes. it's going to take nine months, 12 months, the real detail work has to get done. it's one thing to say tax reform, it's another thing to do it. i'm hoping we'll have real reform. at a minimum some tax rates, maybe some repatriation, something to help infrastructure. but there are things that can be done right away. around regulatory things. around, you know, getting people to invest a little more. >> has this situation trump's election made you rethink some of your own political views? the reason i ask is you were not a fan of donald trump earlier

on. >> but he was also just barely a democrat. >> barely a democrat a couple years ago. >> the second -- >> i am -- should be independent of mine. once you label yourself something you become a knee jerk supporter of certain points of view. try to think about things independently. i do think mistakes were made and i think things had to be changed. people talk about reform, well, any rational person would look at what was done -- i'm not talking about just banks but all of them and say it can't all be consistent, coordinated, good for growth, good for safety and soundness. so it makes perfect sense to open these things up and relook at them. so to me that is a rational thing to do. it's got nothing to do with democrats or republicans. >> let's look at this administration though. i think you had some concerns early on. >> but i think is very important whether you're a democrat or republican, the growth agenda. you know, we all know that people need more income. we all know about the wage inequality. we all know about lower skills, we all know about some of these problems. it's not just handouts but growth, jobs, skills, training,

growth, investment, capital. >> but both parties disagree on how to get to that growth. >> i'm not sure you've heard a democratic growth agenda. >> did you have conversations with trump about being treasury secretary? >> i'm not going to tell you, but you wi was not offered the - >> you were not offered? >> i didn't want it and i was not offered. but also offered to help. i called up -- i was called by steve schwartzman and asked me to be part of that advisory group, said absolutely. i'm chairman of the business roundtable. part of the reason i'm doing that is i think it will be helpful to a growth agenda. >> but there were lots of different reports which i'm sure you read. >> a lot of them were wrong. >> that suggested you wanted the job and that he went back and forth -- >> whoever did that was making it up or lying. >> fake news. there's been none of that. let me ask a different question. we're here in davos, people talk about globalization, you represent have a lot of clients that are multinational businesses that are thinking and

are worried and concerned they talk about it here about more nationalistic approach in the united states. what do you think? >> first of all, big companies are huge drivers of growth. that helps all americans. okay. something like 50% of all capital expenditures done by the largest 1,000 companies in the america. capital expenditures is ultimately driver of jobs and income and you need that. globalization, i don't think it should be reversed. i think people pointing out that there were flaws and maybe some unfair trading practices. and they're pointing out people were hurt by it. so you go to some towns in america and people lost their jobs. and if they didn't lose them, they went from earning $40 an hour to $10 an hour. and then we need to recognize that and do something about it. it's called trade adjustment assistance, but think of retraining, relocation, business redevelopment, all these things which you know can work if they're properly done. >> you know, i think -- >> get the benefits of trade and

eliminate the negatives as opposed to kill the golden goose. because it has been a golden goose. it's lifted 2 billion people out of poverty. if you were a bleeding heart 2 billion people out of poverty. okay. probably going to lift another 2 billion people out of poverty in the next 20 years. >> one thing we can talk about too, i think the united states has kind of led the way with globalization. at times we've been taken advantage of. yesterday in a veiled reference to donald trump the president of china was talking about don't be too nation centric about things. don't just be thinking about your own country. to me that rang a little bit hollow because if anybody has been single minded about putting their country's interests first over the last 20 years, i think it's been china. i mean, did you have that feeling? >> i don't want to put it that way. they have serious issues, okay. so when you're -- >> i feel for them. >> you have -- >> but they look out for number one pretty well over there. >> they've done a good job trying to build their nation. and that is their job. i don't hold that against them something like that. >> he's quoting abraham lincoln. >> i think it's legitimate to

say in any trade deal parts weren't fair. i won't go through the specifics but you can look at almost any trade and say this wasn't fair to that group -- >> a lot of times america wound up on the wrong side. >> we're patsies, we're so rich and nice and global that people take advantage of us. >> i think that's an exaggeration, but yeah. i can't imagine any american company out there saying i'm being taken advantage of. >> in chichina? >> actually, i have a few -- >> i have a domestic question. fannie and freddie, steve mnuchin has suggested we're finally going to get to a privatization of that? do you think that's in the cards and what would that look like? >> i will leave that sto tooef. the people i know picked by trump, steve mnuchin, gary cohn, wilbur ross, rex tillerson, experienced professional people who are going to go to work to try to fix any problem that america has. that's one of them. there are multiple fixes that work, but i think it's good to fix it. >> executive experience.

>> and executive experience. >> what a concept. let's try it. see what happens. >> jamie, you talked a little bit about where you see things headed in the united states. can we drill down a little bit on just what you see happening in the u.s. housing market at this point too? >> yeah. it looks pretty -- so homes for sale -- inventory of homes are way down. and household formation is going up. not quite up to where it was before the great recession, but it is moving up. kids are moving out of the basements. kids are getting out of college. mijs are going back to work. just look at rough things with incomes going up, household formation going up, housing in short supply, we're going to have to start building more homes. right now it's in apartments. look at balance between rentals, apartments and homes that may shift a little bit, but that's still fine. we need more housing. >> we've seen statistics on consumer confidence and on business confidence that have both been very strong since the election. do you see that sort of optimism in your business lines already? or is it just something you kind of hear at this point?

>> no, exact same things you do, which i think is good. it's kind of a secret sauce when you measure those things. what does it mean, but it does mean something when people -- individual wants to buy a home or buy a car or do an addition or corporation is going to build a new plant. so i think those things are important. >> are you anticipating a wave of m&a, merge herb and acquisition activity if and when we get this repacetriation to happen? >> i think if it happens it will probably be more, it will be more of a wave. it's hard to pick those things. >> jamie, i want to thank you very much for your time. it's always a pleasure to see you. we really appreciate it. >> pleasure to be here. thank you. >> thanks for that great credit card andrew likes. >> hold on, hold on, was that a good deal for you? you've lost $200 million or $ -- >> why did i do that? >> first i want to tell the public because you all heard wilf couldn't get his card, when i heard that i e-mailed my friend to tell him to get the card and now he says he doesn't really want it. >> that was a very -- this is a very successful card, but it's

costing you money. >> yeah. >> do you look at that as success? >> one of the fictions here is that the marketing cost, effectively marketing cost gets booked over 12 months to benefit the card get booked over seven years. card so successful no $200 million but we expect that to have a good return on it. >> more fake news. >> i wish it was a $400 million loss. >> jamie, thank you. >> thank you. >> david, we'll send it back to you. >> all right, i'll take it. thank you, becky. always a pleasure listening to jamie dimon. we of course are continuing to watch key hearings for donald trump's cabinet nominees on capitol hill right now. in the hot seat commerce secretary designate wilbur ross. he's appearing before the senate finance committee. and congressman tom price you see him on the right, he's trump's pick of course for hhs secretary. he's taking questions before the senate health education, labor and pensions committee. price also expected to face some criticism about trades he made in health care stocks. we're going to monitor these

hearings and bring them to you live as warranted. when we come back, goldman sachs reporting earnings this morning. they beat on both the top and bottom line. firm says after a challenging first half the operating environment improved during the remainder of the year. we'll talk to goldman sachs ceo lloyd blankfein 11:30 a.m. eastern. you don't want to miss that. dow's down 15. carel00ur

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the confirmation hearing underway for wilbur ross at the senate committee for commerce, science and transportation. of course the post would be the secretary of the department of commerce. it was delayed from last week so that the financial closures could be completed. let's listen in. >> -- has the burden of proving to the court that it is not reorganizable without dealing with the pension and retiree health liabilities. the court makes that

determination. in every case where we've bought and where the pension plan was terminated, that decision had been made by the court prior to our advent on the scene. so the idea that we terminated anybody's pension plan is simply false. >> i'm not asking that. i'm out of time, but if you can't -- right now we can come back in round two, but i want to know now as wearing that hat, you know, as a commerce secretary, i want to know what your viewpoint is from the worker perspective and whether you support shoring up that aspect of the pension program. and you can -- since i'm out of time, mr. chair, we can go to round two or we can get a written answer on those questions. >> should i answer the question, sir? >> well, can you be very, very brief? >> i will. i'm quite familiar with pension benefit guarantee corp. and as you know commerce has a board seat on pbgc.

they are the ensuinsurer of las resort. i think they need to be even more scrupulous about list base pricing so they themselves don't run out of money as further pension obligations find their way to them. >> thank you, senator cantwell. >> thank you, chairman. thank you, mr. ross, for being here, for being willing to serve. and i look forward to your leadership at commerce and what i think from everything i read would be an expanded role beyond commerce because of the president-elect's confidence in you -- >> listening in to wilbur ross's testimony of course for his confirmation hearing. i want to now take a look on the right side of the screen there. of course hhs nominee tom price. >> -- i would point out that our health care system is continually evolving. and should. we ought to be always looking at how it's working, whether it's working for patients, whether

it's working for the individuals that are working to provide the highest quality care for folks. and when it is, that's fine. when it isn't, then it's incumbent upon policymakers to make certain that we do the kinds of things to adjust that policy so that it can work especially for patients. >> my last question is about this individual market, the 6%, the obamacare exchanges are about 4% of all of us who have insurance. our insurance commissioner in tennessee says the market is virtually collapsing. i'm told by many people that we need to basically have a rescue plan or reform plan for the individual market in place by march 1st to that insurance companies who make their decisions about the year 2018 can make those plans so that people have insurance to buy in all these states. do you agree that the market is collapsing? that we need a rescue plan? and that march 1st is an important approximate date for a decision of action?

>> well, we're clearly seeing changes in the individual and small group market that are adverse to the patient, whether it's decreasing access to coverage, whether it's increasing premiums, whether it's higher deductibles, something is going badly wrong out there. and it's it's imperative, i believe, for us to recognize that and then to put in place the kinds of solutions that we believe to be most appropriate. >> and your plan that we're likely to see in february will include recommendations for how to do that? >> we look forward to, should i be given the honor of leading it, the health and human services, along with the president, we look forward to working with congress to come forward with that plan. >> thank you, dr. price. senator murray. >> thank you, mr. chairman. before i start, i want to ask consent to put a letter to chairman alexander from all 11 democrats on this committee on the importance of a second round of questions on this nominee, and i ask unanimous consent to put in the record 25 letters signed by 193 organizations opposing congressman price's nomination to lead the department of health and human services, and i also have a

petition signed by 500,000 people from across the country opposing this nomination. i ask to put it in the record. congressman price, recent press reports about your investments in the australian biotech company innate immunotherapeutics raises some serious questions about your judgment, and i want to review the facts. you purchased stock in innate immunotherapeutics, a company working to develop new drugs on four separate occasions between january 2015 and august 2016. you made the decision to purchase that stock, not to broker, yes or no? >> that was a decision that i made, yes. >> you were offered an opportunity to purchase stock at a lower price than was available to the general public, yes or no? >> the initial purchase in january of 2015 was at the market price. the secondary purchase in june

through august/september of 2016 was at a price that was available to individuals who were participating in a private placement offering. >> it was lower than was available to the general public, correct? >> i don't know that it was. it was the same price that everybody paid for the private placement offering. >> well, congressman chris collins, who sits on president-elect trump's transition team is both an investor and a board member of the company. he was reportedly overheard just last week off the house floor bragging about how he had made people millionaires from a stock tip. congressman price, in our meeting, you informed me that you made these purchases based on conversations with representative collins. is that correct? >> no. what i -- >> that is what you said to me in my office. >> what i believe i said to you was that i learned of the company from congressman collins. >> what i recall our conversation was that you had a conversation with collins and then decided to purchase the

stock. >> no, that's not correct. >> well, that is what i remember you hearing it saying in my office. in that conversation, did representative collins tell you anything that could be considered, quote, a stock tip, yes or no? >> i don't believe so, no. >> well, if you're telling me he gave you information about a company, you were offered shares in the company at prices not available to the public, you bought those shares, is that not a stock tip? >> well, that's not what happened. what happened was he talked about the company and the work that they were doing in trying to solve the challenge of progressive second retail multip multiple sclerosis, which is a debilitating disease and i had an opportunity to treat patients while i was in practice. >> i'm aware -- >> i studied the company for a period of time and felt it had significant merit and promise and purchased the initial shares on the stock exchange itself. >> congressman price, i have very limited time. let me go on. your purchases occurred while the 21st century cures act, which had several provisions

that could impact drug developers like innate immunotherapeutics was being negotiated, and again, days before you were notified to prepare for a final note on the bill. congressman, do you believe it is appropriate for a senior member of congress actively involved in policy making in the health sector to repeatedly, personally invest in a drug company that could benefit from those actions, yes or no? >> well, that's not what happened. >> let me just say that i believe it's inappropriate and we need answers to this regarding whether you and congressman collins used your access to nonpublic information when you bought at prices that were unavailable to the public -- >> i had no access to nonpublic information. >> well, we will go on. congressman price, just last week, you and republicans in congress voted to begin ripping apart our health care system, which would cause nearly 30 million people to lose their coverage and raise health care

costs for families, without telling the american people specifically what you plan to do instead. president-elect trump and republicans in congress have promised to deliver a plan that prevents anyone from losing coverage and leaves no one worse off. just days ago, president-elect trump said his plans would provide insurance for everybody. do you share those goals? >> i think it's absolutely imperative that we make -- have a system in place that has patients at the center and allows for every single american to have the opportunity to gain access to the kind of coverage that they want. >> you share his goal of insurance for everybody? >> that's been always my stated goal. it's what we've worked on throughout my entire public career. >> okay. if your repeal plan -- the empowering patients first act -- was signed into law, would you consider these commitments to insure all americans and leave no one worse off be met? >> the goal of the bills i've worked on here in congress, and understanding that the role that if i'm given the privilege to lead at hhs is different, but my

role in congress was to always make certain individuals had the opportunity to gain access to the kind of coverage they desired and that they had the financial feasibility to do so. that's what's different about the plans that we've put forth. >> well, i think it's really important we have clear answers, so let me just say this. your bill only allows people with pre-existing conditions to obtain health insurance if they maintained continuous insurance for 18 months prior. millions of americans with pre-existing health conditions lack insurance for short periods of time. under your plan, insurance companies could deny those americans coverage for pre-existing conditions, yes or no, under your bill? >> it's a broader question than that, because we would put in place high-risk pools and individual health pools that would allow every single person in the individual and small-group market, who are the ones challenged with pre-existing illness, to be able to gain access to the coverage they want. so, we believe through that plan that every single person would have the opportunity and financial feasibility to gain the coverage that they want for themselves and for their families. >> well, i think we disagree on the consequences of that.

your bill would also -- your bill would repeal dependent coverage available to young adults up to age 26. that is correct, right? >> the bill that i authored did not include coverage up to age 26. the insurance companies have said that they were working that, that they were including that in their plans going forward. and so, we felt it was covered. >> okay. and your bill takes away current benefits which include prescription drugs, mental health and substance use disorder benefits and maternity coverage, among others, correct, right? >> again, it is different in the legislative arena than the administrative arena, but there are other factors that we would put in place to make certain that individuals -- >> this is congressman tom price testifying in front of the senate for the hhs secretary job. we'll continue to monitor this hearing for you as well as the other hearings going on today on capitol hill. meanwhile, the most expensive home for sale in the u.s. is being unveiled in los angeles. our robert frank is there and joins us now with a tour. robert.

>> reporter: hey, good morning. well, the high-end real estate market getting increasingly competitive. this house sets a whole new bar! we're going to tell you why it cost $250 million. we're going to start here in the game room. game-entertainment area. this is the ultimate billionaire man cave with a bowling alley, gold and silver bowling pins. talk about eye candy, a $250,000 wall of candy! you've got foosball tables, a $12,000 pool table. now, the wealthy, they have garages. the super rich, they have auto galleries. now, this auto gallery has $30 million worth of supercars and rare collectibles. all these cars come with the house! this $2 million picani comes with the house. this, the holy grail of collectible cars, $50,000 mercedes, that comes with the house as well. this is hollywood, all about glitz and glamour and screens. this house has the biggest screen of any in america,

including this, the biggest tv ever put in a home in america. nearly 30 feet long. now, we're going to go upstairs really quick. it's got four floors, 38,000 square feet in total. you can take one of the two elevators. they're lined in crocodile skin. or you can take the stairs. now, the stairs has this cool, 20-foot safe, because if you're rich enough to buy this house, you've got a lot of stuff you've got to keep safe. we're going to the second floor, and this house has 12 bedrooms, 21 bathrooms, and check this out. it's got 130 pieces of art, including this, a $1 million leica camera replica. the stairs cost $2 million to build. and are you ready for the show-stopper? check this out! you've got an 85-foot infinity pool, a jacuzzi, and a 20-foot tv that rises up in front of the pool, all of it overlooking los angeles. and of course, with six bars in

this house, drinking a lot of champagne, guys. back over to you. >> that is a live shot to end all live shots, robert frank. our thanks to you. i'm glad we squeezed that into the end of the hour. good morning. welcome to "squawk alley." with me, jon fortt, kayla tausche here at post 9. dow's down 12 points on a busy day. as you may know by now, at this hour, a number of trump cabinet hearings are under way on capitol hill. congress secretary designate wilbur ross testifying before the senate commerce committee, tom price before the health education, labor and pensions committee. price will also appear before senate finance, which will vote on his nomination. that is scheduled for next week. u.n. ambassador designate governor nikki haley on the hill today as well. we're watching all of that. you heard tom price asking questions about his investments and various health care stocks. wilbur ross answering questions regarding trade, tariffs, some of his own housekeepers that he's had on staff and has now had to fire. so a lot going on tonight. >> yeah, and