continues to be a theme. we'll see what kind of clarity we get from more earnings. facebook is out after the bell. and with that, i'll send it to you, carl, for "squawk alley." >> sara, thank you. 8:00 a.m. at apple headquarters in cupertino, 11:00 a.m. on wall street, and "squawk alley" is live. ♪ good wednesday morning. welcome to "squawk alley." jon fortt, kayla tausche and myself here at post 9 this morning watching these markets, about a 100-point gain on the dow essentially has been lost. joining us, global technology

managing director walter pryce and piper's tech analyst mike olson. jon? >> and apple snapping three straight quarters of falling sales. the company posting better-than-expected quarterly results thanks to its services business and the iphone 7 plus. our josh lipton is at one market with the details. josh? >> well, jon, apple beating on the top and the bottom, driven by more than 78 million iphone units. apple's stock moving higher this morning, hitting highs it hasn't seen since the summer of 2015. tim cook telling me apple saw more android switchers and upgraders in the december quarter than ever before. and on the conference call, he also touted the company's services business. >> it was our best quarter ever for services with almost $7.2 billion in revenue. app store customers broke all-time records during the holiday quarter, including $3 billion in purchases in december alone, making it the app store's

single best month ever. >> now, i also asked cook about president trump's economic agenda for the year ahead. on repatriation, cook saying, "repatriation is front and center. that is very good for the country, and it is obviously good for apple, as well." perhaps no surprise there. apple does now have $230 billion stashed overseas. on a border tax, cook not a fan. "my view is that hits the consumer, in particular the middle-class consumer and below middle class. i would be surprised if the country went down that path," cook saying. and on any kind of trade war with china, cook saying, "my own belief is that the u.s. needs china and china needs the u.s. the only way each country wins is if the other wins. the world, by the way, desperately needs both the u.s. and china to win. we both need to lead in many areas, in particular, the economic ones." cook is also opposed to trump's

executive order on immigration. apple is now considering its legal options and asking the trump administration to reverse that action. guys, back to you. >> all right, thank you, josh. i'm going to bring in walter and michael now. walter, let's start with you on this apple report. it's got the stock up better than 5%, at least, this morning. which number is the one to focus on, average selling prices, higher pretty much across the board, some weakness in china, depending on whether you're looking at greater china or mainland or something else? >> well, i think the fact that china seems to be stabilizing is a positive for apple, but i think the higher asp show the impact of the iphone 7s and the fact that 7 plus, and the fact that people are opting for higher price phones if they have good features. and this product has a better camera and takes better pictures

and people are upgrading to it. >> mike, does the light q-2 guidance give you any pause? is that something you think wall street will take a few days to digest and then reconsider? >> no, i think apple's being pretty conservative with the guidance. i think in general, the focus for investors over the next few quarters is going to continue to be iphone and services, and they seem to be having a nice trajectory on both fronts with better iphone sales and with services growing in the high teens. so we think they're being, as i mentioned, a bit conservative. i think if you look at some of the things they mentioned about the march quarter, or the december quarter, they had lower channel inventory exiting the quarter, which means they didn't have to pull forward any revenue from the march quarter, and that probably bodes well for the coming quarter. >> we've been having a lot of discussions here, walter, about the eight and whether or not we're heading into a cycle that has been overhyped, overpromised. what's the possibility of delivering on that product.

what are your expectations versus what you think will actually happen? >> well, i think there's -- you know, what we've heard is that there may be a higher-end skew for the 8 that has an l.e.d. screen. and i think consumers will opt for that. there will probably be a shortage of that phone for the first six months or so. they can't get enough screens. and so, i think this could be an elongated product cycle, which could be very positive for the multiple on this stock. i think the multiple will rerate if you look at fiscal '18 being a good year as well as fiscal '17. so you know, i think that's a positive for the company and for the valuation of the company. >> so, as we look at the all-time high around $134, $135, is surpassing that a layup? >> i mean, the company still has to execute on their products and their plans, but if they

execute, i think that given the valuation of the company, if you say they're going to do $10 to surpass that, that would mean a 14 multiple on that. i don't think that's extravagant. >> michael, a problem, though, perhaps, in that there's so much being put on this iphone 8, as people are calling it, though it would be a departure for apple to call it that. if apple does move to oled, as many expect and other competitors have, samsung display makes 95% of those across the world. no selling whether they'll be able to get the supply they want. should investors be expecting sales of the 8 to power the stock when we don't even know componentwise whether they'll be able to make enough of them to make more than they made in the 7 this year? >> it's a good point. as we look out to the next few months or next few quarters, really, i don't know that it matters, just because i think the stock will be powered by the anticipation into the iphone 8

launch. after we get through the launch, there's going to be a new set of questions, which is can they deliver the units that are in demand. and i think as walter mentioned, it could result in an elongated product cycle, but we think there will be high demand, given we think there's going to be change in both form and function for the iphone for the first time in a long time. i mean, if you look at your iphone today compared to the original iphone, stand up next to each other, they really don't look all that different and we think any change in form factor could be helpful in creating a lot of demand for the phone. >> apart from earnings, guys, you heard josh talk about cook's comments as it relates to the executive order on immigration. cook said that he's heard heart-wrenching stories from employees that were affected by that order. compare that language to that of president trump's chief strategist, steve bannon, when it comes to immigration and h1v visas. this is bannon on his former radio show back in march.

>> they want unlimited -- unlimited -- ability to go throughout the world and have people come here and compete with kids coming out of engineering schools and i.t. jobs. if you're in your 40s or 50s right now, people will tell you, they haven't had a raise in decades in i.t. what was supposed to be a great career turned out not to be a great career. it is because these visas. and now you've got all the engineering schools are all full of people from south asia and east asia. it is not that people have any problem with those folks learning, but they're coming here to take these jobs. >> that's the highlight of a "washington post" article today. walter, do investors need to worry about a clash between tech, maybe specifically apple, over this immigration eo over h1b, over a combination of the two? >> well, i think fundamentally there's a shortage of engineers, software engineers, in the world. and the fact that h1b relieves

some of the pressure on companies that need to hire people to do software for them, i think it's actually a pressure relief. so, i don't think that these high-end engineers are taking away jobs from u.s. graduates. there are not enough u.s. graduates. you talk to any company that's trying recruit engineers, it's tough. >> but michael, it's not just high-end engineers here. we're talk being midlevel, i.t. workers, and i mean, steve bannon, despite the rhetoric, has a point here. after being in silicon valley for several years, i can tell you, there's age discrimination-type issues, midlevel tech folks are finding themselves kind of pushed out of the market by younger workers who are often brought in from overseas. doesn't tech perhaps need to change its approach to this issue? >> well, i think technology companies, whether it be apple, amazon, google, others, they

just want the best engineers in the world, and there could be a bit of a conflict there in the sense that we're going to see apple wanting to continue to hire those immigrants. and i think there's obviously some issues at play here that could fly in the face of that. so regardless of whether or not it takes jobs from american graduates, the reality of it is we want these tech companies to have, you know, the best resources that they can get. and this could create some bit of conflict between big tech companies and the government as it really already has started to. >> well, walter, during the campaign season, the tech community was extremely vocal on this issue then, but it was treated just as noise. and i'm wondering if you think that this time around, now that there is real policy to debate, that the tech approach to this will be more bite than bark. >> well, i think tech does have to think about retraining

engineers. you know, one of the issues that jon brought up is older engineers becoming obsolete as, you know, you move to mobile applications, different languages that you have to learn, the idea of retraining your engineers and helping them remain relevant, i think that is an issue for older engineers, and the tech industry needs to address that. so there's a little bit of truth in what bannon's saying about older engineers being replaced with younger ones that know java script and mobile applications. that's the nature of the industry. and tech probably does need to do a better job of it. >> yeah. walter, michael, thank you. it's not just that, though, it's workers being replaced by other workers doing exactly the same job that don't have additional and new skills. thank you guys for joining us. >> interestingly, a list of companies that rely most on h1 visas out today -- tata

consulting, cognizant, infosys and ibm, not many of the companies we tend to talk about. >> exactly. when we come back, details behind amazon's plan to further cut out u.p.s. and fedex when it comes to shipping. plus, more on apple helping lift the dow higher, at least earlier this morning. and later, why san francisco's casting the first stone in the fight over sanctuary cities. when "squawk alley" comes back. ♪

the president promising to cut corporate tax rates, propose a tax holiday to bring overseas cash back to the u.s. which companies and sectors have the most to gain from that? our seema mody's at hq with some answers. >> hi, carl. that's right, the tax holiday could see billions of foreign earnings coming home, and the hope is for multinationals to use the repatriated cash to grow their businesses, but history has shown that during the last tax holiday, companies spent most of it on buybacks. s&p 500 companies have about $1 trillion in cash held overseas, and goldman sachs is expecting $200 billion of that to be repatriated this year. now, about 75% of that cash to be used towards buybacks and dividends. that would boost the total buybacks to $800 billion in 2017, up 24% from last year, which, of course, has been a big source of demand for stocks since 2010. which sectors could benefit? think technology and health care, which in total account for 51% of the total of cash held in

foreign countries. over the past three years, apple, microsoft, cisco, oracle and intel have been allocating a lot of capital towards buybacks and dividends, but they've been funding their payouts with debt. apple's debtload has been growing. cisco's has nearly tripled. so this repatriated cash could help them pay down their debt. the biggest wild card in all this is what restrictions trump ties to the tax holiday. that will be key, carl. >> it's going to be a deal, whatever it is, that's for sure, seema. thank you. for more on taxes and trade, we're joined now by the chairman of the national foreign trade council, former u.s. deputy trade representative ambassador allen wolf, as well as former u.s. undersecretary of state and founder of the george w. bush institute, a.m. boss doctor james glassman. good to have you both with us. >> good morning. >> ambassador glassman, how do you think this is going to play out? as seema set it up, is it as he's done several times, do you expect the president to offer something in exchange for something else?

>> i think so. and i have to say, a tax holiday is not the answer. the answer is real tax reform. and i don't understand why the president doesn't get on with it quickly. you know, this is just a band-aid, and it makes very little sense. >> still, though, ambassador wolf, those wonder how are you going to pay for a decrease in the actual rate. do you have expectations as to how that will be done? >> well, i think kevin brady, the chairman of the ways and means committee, the tax-writing committee in the house, does have a plan to, besides lowering the overall tax rate, bring money back home through repatriation, which would be taxable to a certain degree, and have elimination of a lot of loopholes, simplification of the tax system. the idea is to have the tax reform to be tax-neutral.

the details aren't available yet, but that is the plan, and it's designed to be something that will help u.s. trade. >> ambassador glassman, though, there's a question of what happens to that money once it comes back, whether companies would just give it back to shareholders in the stock market, use it to pursue mergers and acquisitions, which usually result in layoffs, and i'm wondering if there is precedent for putting strings attached to that money and restricting what it can be used for to clarify the intention that companies, if they're going to bring that money back, that they have to use it for some sort of capital investment in this country. what do you think? >> well, i think that would be a big mistake. i mean, ultimately, buybacks get used for capital investment, and i really just don't think it's the job of the government to decide how companies should spend their money. and you know, this is -- the notion of lowering corporate tax rates is something that both democrats and republicans agree

on. we realize that our corporate tax system is out of sync with the recess of the world. we should get on with actually making a change. the votes are there. it ought to be done. >> ambassador wolf, when you look at this question of repatriation in combination with overall tax reform, is your expectation that they're going to be tied together in a way that balances one against the other? is that wise, if so? >> money, of course, is fungible, so it's difficult to say what repatriation would be used for. more important is -- and that's a one-time deal. repatriation happens once, even if it's phased in. what is necessary is a tax, corporate tax rate that is competitive with the rest of the world, and it has to be paired with work on immigration, work on workforce training,

education, and an effort to open up foreign markets in a major way. >> is it better or worse if they try to do all of that together, though? >> well, i mean, these are things that can be done together and should be done together. having the tax system reformed is absolutely essential, but if foreign markets are not open further, that will be a really, a great missed opportunity. the united states can't abdicate its position to others, such as china or european union to set the international tax rules, international trade rules. we have to work with other countries to put into effect rules that will favor openness for u.s. exports. >> ambassador glassman -- >> let me just say, i agree with what ambassador wolf just said. i want to frame it a little bit differently, though. the trump administration has two good ideas that it has not put

into effect yet. that is, tax reform and regulatory reform. sort of started to move on regulatory reform. it has two bad ideas that it's already begun to move on. one is restricting immigration. that's going to harm the economy. and the second is restricting trade. and it's already begun to at least talk about that and spook one of our most important trading partners, mexico, as well as canada, as well as i think a lot of the europeans. so, i think it needs to get on with the part that will actually help the economy and reverse course on the part that's going to hurt the economy. >> yeah, now you sound like our friend, larry kudlow, who's been preaching that bible but hasn't gotten very far lately. one last word, ambassador wolf? >> well, we're about to have a meeting between prime minister abe of japan and the president. just had a meeting with prime

minister may of the united kingdom. i think the administration is going to now shift into high gear on international trade, get the u.s. trade representative appointed, confirmed by the congress, and begin a positive agenda. that will make a major change in terms of the overall trade policy of the united states. >> ambassador wolf, ambassador glassman, the market obviously has a lot to digest and only a certain number of days in which to do it. we appreciate your time. please come back. >> thank you. >> thank you very much. still to come on "squawk alley," the details behind amazon's latest plans to compete with u.p.s. and fedex. and later, president trump's supreme court justice pick is in, but what impact will it have on business? we'll discuss when "squawk alley" returns. ♪

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amazon's planning to build a $1.5 billion worldwide air

services hub at cincinnati northern kentucky international airport, cvg. the company's prime air hub will be its largest in the world. officials say the project will bring up to 2,700 jobs and 40 boeing 767s to the airport, 900 acres, guys. this is a major effort in an important part of the country. and now analysts are trying to read into whether or not it points to larger plans in terms of third-party logistics. >> important in a couple of ways. proctor and gamble is right there by cincinnati, an important customer for amazon right now, or supplier for amazon when it comes to moving further into the home, but also, kentucky is one of those spots where early on amazon was putting these distribution centers because so many roads do run through there. so, just logistically very important spot. >> centrally located. you can get a lot of space there. but also interesting for critics who say that the prime services are only used by people in big cities like new york, san francisco, seattle.

to be smack dab right in the middle of the country. >> of course, we know u.p.s. had a rough day yesterday on their own quarter and compensation costs and the product mix. we talked to the cfo on "squawk on the street," but how interesting would it be if amazon took even a small slice of that business that could be material in the way kind of web services snuck up on us over the years. >> absolutely. and they say we're not going into that business, but i mean, more and more, the car that i see showing up to my door does not have fedex or u.p.s. on it. >> s&p's in the red to the tune of about three points and dow's on the cusp of the same thing. when we come back, the major averages looking to rebound potentially after yesterday's broad sell-off. the ceo of cantor fitzgerald will weigh in. and lateer why the tesla model s may no longer be one of the safest cars on the road on a day when tesla changes names from tesla motors to tesla inc. ing i. where, in all of this, is the stuff that matters?

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hi, everybody. i'm sue herera. here's your "cnbc news update" at this hour. at least one more soldier has been killed and nine injured in eastern ukraine as heavy fighting between government troops and russian-backed rebels continues. the flare-up in fighting began over the weekend. german police searching dozens of homes, businesses and mosques in frankfurt and other neighboring towns, arresting a tunisian man suspected of planning a terrorist attack. he is suspected of recruiting for isis in germany. israeli forces evacuating settlers from a west bank

outpost slated for destruction. minor scuffles broke out between some activists and police as the protesters tried to block officers. the amona outpost is the largest of some 100 unauthorized settlements in the west bank. and a fall hazard has prompted the recall of about 2 million swivel chairs sold exclusively at home depot. it involves hampton bay as well as martha stewart branded chairs. there have been 25 reports of the base of those chairs breaking. that's the "news update" this hour. back downtown to "squawk alley." carl, back to you. >> all right. sue, as we're talking, sessions is out of committee. let's get to john harwood in washington. john? >> reporter: carl, jeff sessions has become the third donald trump cabinet pick to make his way to the senate floor for a vote coming up at some point. don't know how quickly that will come. the judiciary committee on a party-line vote approved jeff sessions earlier today. the finance committee sent both tom price for hhs, steven

mnuchin for secretary to the floor on all cases over bitter resistance from democrats. in the case of mnuchin and price, you had a democratic boycott of the committee vote. republicans sent it on anyway. in the case of jeff sessions, you had a party-line 11-9 vote in judiciary but a very strong speech by al franken of minnesota assailing the honesty of jeff sessions in his speech before that vote. we've now gotten into a situation where the two parties are in a state of complete warfare right now just a few days into the donald trump administration. democrats are not likely to be able to stop neil gorsuch from the supreme court, but this is an indication that it's going to get dragged out, and we're just going to have to see whether or not this continues indefinitely. some signs that president trump likes that churn, likes that continuous warfare to rally his own base against democrats, but it could get ugly at times,

guys, and that's where we are. >> a busy and bitter day on the hill. john harwood in washington. john, we'll check back with you. thank you. meanwhile, stocks have been losing steam throughout the session here in the markets. the dow briefly dipping into the red. the s&p is there right now. we did get the close in the uk and europe just a few minutes ago. largely, markets there driven by upbeat earnings news and manufacturing data out of the uk, eurozone and china, giving a lift to stocks on this first trading day of february. sweden's volvo up sharply after posting an 86% jump in net profit and lifting the company's dividend. that stock up about 5%. siemens raising full-year guidance after quarterly earnings beat on strong performance in the company's industrial group. that stock up better than 5%. and take a look at roche, up close to 2%. the swiss pharma giant also conceding consensus, up by drugs and diagnostics. the uk parliament debating a brexit bill giving prime

minister theresa may authority to begin the process of leaving the european union. lawmakers are expected to begin voting around 2:00 p.m. eastern time today, but earlier there were some fireworks between the prime minister and labor party leader jeremy corbyn over inviting president trump to the uk for a state visit. take a listen. >> president trump has torn up international agreements on refugees. he's threatened to dump international agreements on climate change. he's praised the use of torture. he's incited hatred against muslims. he's directly attacked women's rights. just what more does president trump have to do before the prime minister will listen to the 1.8 million people who have already called for his state visit invitation to be withdrawn? >> he can lead a protest. i'm leading a country. when we come back this morning, why trump's scotus pick

may be heard as good news in some board rooms across the country. we're watching the markets. don't forget, it is fed day. rick santelli, i assume you're going to watch that. >> absolutely! we're by the white board. you can't see what i'm writing down. it's fed day! second day of a two-day meeting. we don't expect the fed to move rates, but that doesn't mean the markets aren't moving because of the fed. we'll talk about all that after the break. hey gary, what are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade.

i'm scott wapner. today on "the halftime report"

from right here at the new york stock exchange, is apple back? the stock is soaring today. should you buy it or has the opportunity now passed? plus, will facebook be the next to report blockbuster earnings today? and will it send the stock higher? top-rated analyst mark mahaney will join us. and the financial names kevin o'leary says you must sell right now if you own them. "the halftime report" starts behind me at post 9 in about 20 minutes. kayla, see you then. >> scott wapner in the house. see you soon. meanwhile, president trump and the white house making waves with a series of controversial executive orders. markets remaining volatile as investors digest how the administration will institute some pro business policies that appear to be shelved for now. joining us on the cnbc news line, shawn matthews is the ceo of cantor fitzgerald. shawn, you told us in december you wanted to see what congress did when it came back in session, but so far, the big financial plans have remained somewhat elusive. >> i think that's why the markets are volatile, because right now they're trying to understand the difference between fact and reality, and no one knows what the facts are at

this point, so it's still about fiscal policy and tax reform. and people will buy the dips because there's still some euphoria out there, but there is clear concern in the marketplace what is going it happen in those two areas. >> this morning, congressman kevin brady said, don't worry, tax reform will happen in 2017. there is a commitment to do it. but my question for you is does the market trade sideways until that happens? >> i think you'll see volatility in the marketplace, and we've already started to see some. we've had a big move, so this is a digestion period for the marketplace as well, but you're starting to look at interest rates have backed up a little bit, the equity market has done really well. so i think, yes, it probably trades sideways until we get better clarity on what's on tap. >> kind of sounds like january's been, shawn. i mean, 2.5% move. that includes intraday for january. it is the smallest january range ever and in the bottom 1% for

all months. do you expect february to be the same? >> i think so. we had a big move after trump was elected, so clearly, that was put in place already. and i think people are concerned. you have levels at reasonably high areas, you have interest rates backing up, so obviously that's going to affect the multiple on earnings as far as expectations going forward. and it's really about inflation expectation, what's going to happen with the administration, and how does that really change the dynamic of the structure of treasuries. >> so, shawn, how patient should investors be to see some of the moves that benefit business coming out of congress? are you looking at march, april? at what point should folks get nervous? >> i think march or april you'll have at least some clarity on what the thoughts are, because it's understanding the scope of what fiscal policy's going to be. this bill is how big tax reform

will be, and those things are important to understand what the earnings power will be for these companies. then you have protectionist issues as well, which has to be an overhang on the marketplace because there are some people out there, rightfully so, are thinking that the market, because of protectionism, will do worse over time because that will just create lower gdp growth for a significant period. >> but you've had the likes of warren buffett putting $12 billion into equities right after the election. we'll get in a couple weeks some names of the stocks he bought, but are you seeing people broadly putting money into equities? and has that continued beyond just the post election immediate knee-jerk rally? >> people are looking to buy dips, so that's the theme out there right now. i think money gets put to work in the equity space and in riskier assets. because if you really look at it, it's expectation of inflation will back up the fixed income market. so you're seeing treasuries back up.

if we have significant fiscal policy, tax reform, that will continue to happen, so that money has to go somewhere. it will look to go to riskier assets in the fixed income market. it will go to the equity market as well. so we're seeing the first signs of that. we're just not understanding how big the policy in tax reform will be. >> and we'll see at what point the fed feels emboldened to move again, if not today. shawn matthews from cantor, always appreciate hearing from you. >> pleasure. have a good day. let's get over to the cme group this morning, check in with rick santelli and get "the santelli exchange." rick? >> good morning, carl. well, it's the second day of a two-day fed meeting. we had bob heller on. he thinks feds fund rates ought to be higher, with a three handle. that makes my head dizzy thinking about it. adding 100 basis points for 10%, does that mean 4% or does it mean trend will be inverted and 10s will be where they're at? counterfactual. but the fact is adp data today was better than expected.

and of course, everybody copies their neighbor's homework because all the expectations for friday's number have moved up. the point, is look at an intraday chart of 2-year note yields, real sensitive to better data, almost more than i would have thought, but given that it didn't really trade above the range -- we've seen this 1.24-1.25. it's the fact that they did it at all that's important. listen, uncertainty. there's many levels of uncertainty. when i look at the dow, and for better or for worse, it is a barometer to some extent, like the t.a.r.p. vote, about feelings, about feelings about this president. real quickly, on november 8th, the dow was at 18,332, okay? now, since then, we've touched 20,000 the end of january. i'm not going to use that. i'm going to use the first high, 19,974, and the lowest level after that was on the 19th, and that was 19,732. let's get past the math real quickly. so, basically, we had a

240-point retracement on a move that was 1,642 points, so roughly 15%-16%. you know, if you're an elliott waiver beganer, you know that 38% is the fwoer pay attention to. why is any of this important? because i think everybody's missing one level of uncertainty. to go from an administration that had much less business-friendly versus one that has much more business-friendly, that uncertainty was worth 1,462 dow points, of which we've only retraced 15% and made a whole new high. there's a whole new level here, and this is the battle going on in the senate. it's not all about implementation. the second level of uncertainty. but let's look at it half full and half empty. that could definitely make a dent in this. but it also could mean maybe an extra 1,600 points, should the implemgts go better than expected. we've left off the leg of this three-legged stool. back to you. >> good stuff, rick. thank you very much. >> thank you, rick santelli.

and president trump nominating u.s. appeals court judge neil gorsuch to the supreme court, raising some eyebrows in board rooms and state capitals across the country. our eamon javers is in d.c. >> reporter: hey, jon. i think the phrase everybody's got to get used to is the chevron doctrine. that is a phrase that judge neil gorsuch has been talking about over the years. that's the doctrine under which the courts are supposed to give some deference to federal bureaucrats and regulators in terms of their interpretation of the laws. gorsuch, though, doesn't feel that that's necessarily the right thing to do. he thinks that that gives bureaucrats too much power, almost elevates them to their own sort of circuit court of appeals level. he thinks that power rightly ought to belong to lawmakers up on capitol hill and to jurors who are deciding on those issues. so that's something to watch. that could be a benefit here for companies that see bureaucracy as in the way, creating too much red tape, anything that knocks down the power of those

bureaucrats here in washington could be a benefit to companies that are tangling with them. so in terms of the business implications, jon, that's one we'll definitely look at. >> eamon, there's another thing that caught my eye about gorsuch's tendency and his opinions -- he's not backing the dormant commerce clause, this idea that if anything a state wants to do has a perhaps negative impact on interstate commerce -- if california wants to make a change or a law or regulation that impacts colorado, that maybe they can't do it. he thinks states should have more leeway to do what they want to do, even if it impacts others. might that give silicon valley and california more power to lead the nation on things like emissions standards, in things like the use of green energy? in a way, might this pick be good for them? >> that's an interesting point, jon, because traditionally that's something embraced by conservatives. you know, you sort of send power from washington down to the

state level has been a standard line of conservative thinking for decades. but your point is that, ironically, it could give more power to liberals in a big state like california or in new york state, obviously, states that didn't go for mr. trump. right now, conservatives are backing this nominee big time. they're not necessarily thinking of the second and third knock-on effects that you're tacking about. and talking to officials here at the white house, you get the sense their initial soft count in terms of votes on the hill is somewhere between 58 and 59. it's very early, very soft count, but they'll need 60, and they think that they're making some progress already. but if they hear that idea up on capitol hill, jon, maybe they won't like it so much. >> yeah, the story today is definitely about process, nuclear options and filibusters, and chuck schumer expressing regret for the strategy that the democrats took a while ago, certainly a victory for mcconnell. we'll get to that. eamon, a "washington post" congressional reporter saying

that gorsuch's first call after the announcement was to merrick garland in respect -- >> i just heard that. i just heard that as well. >> circuit court judge. >> reporter: judge gorsuch had also written a piece years ago suggesting that merrick garland had been unfairly treated early on in his career as well. so, you know, that is a sore spot in american politics right now, the way republicans handled the merrick garland nomination by president obama last year by simply not allowing him to have a hearing, not allowing him to have a vote. that really, really frustrated democrats who thought that the president was well within his rights to nominate somebody in his second term. republicans obviously disagreed, but you can tell there is a feeling among democrats that they're about to get some payback. the problem is that democrats last year had a lot more power than they do this year. they don't control the senate and they're not going to be able to control this process. >> i think gorsuch in that piece lamented -- and i'm paraphrasing -- treating judges just like politicians in black

robes. he's very much against that. >> reporter: yeah. >> we'll see who he's really a friend of when these issues come to the court, if he is confirmed, eamon. >> reporter: it turns out there is some politics in washington, jon. >> eamon, thanks. eamon javers. switching gears, still to come, tesla and bmw fell short in the latest round of government crash tests. our phil lebeau will get details on that and the video as well. then, why san francisco is the first city to challenge the president's executive order against sanctuary cities and what that means, after a break.

in the government's latest round of crash tests as bmw and tesla among them. our phil lebeau is busy today in chicago with more on that. >> take a look at this video. this is from the insurance institute highway safety which ran a battery of tests with electric vehicles. this is getting attention because the bmwi-3 was not as top safety pick. bmw apparently had problems with the rear crash test. it points out in a statement to cnbc that the i-3 does exceed global safety standards. the other crash test getting attention is this one. tesla model s. it is not a top safety pick according to the i,hs. they say it falls short in a key crash test. here's the iihs talking about what happened with the model s. >> the forces that we measured on the head suggests that an injury might be possible had that been a human being.

similarly we measured elevated forces on one of the legs that raised concerns about the possibility of an injury to the leg. neither of these were so high we would expect life-threatening injuries but they are too high in our opinion to earn good ratings for those body regions. >> we reached out to tesla and it says, one of the improvements recently introduced in january 2017 specifically addresses the acceptable, or second highest, rating of the model s that achieved in the small overlap frontal crash test. and we expect new tests to yield the highest possible rating, which would be a good rating, in the crash worthyness category. keep in mind even though the two models did not get top safety ratings they did not fail the tests. they got acceptable ratings but they did not get the highest greatings possible and that's why they are not top safety picks. >> all right. thank you, phil lebeau.

phil in chicago. coming up, it's san francisco, not new york. why san francisco is the first city to challenge the president's sanctuary city executive order. we'll bring you that right after this break.

word that president is commentsing on his supreme court pick neil gor shuch at the white house a few moments ago. a word, essentially sounds like laying down the gauntlet to democratic senators that he expects gorsuch to have a respectful nomination, in his view, fconfirmation process. in the meantime, dow has crossed into the red, down 14 points. this supreme court showdown is going to be certainly a story the average path to confirmations 40, 45 days rejections end up taking a little bit longer. not surprisingly. we'll see what we're in for. >> we remember well what happened when eric garland was nominated last year. he took several months off the bench which is a formality for judges when they are nominated. we'll see how quickly or how protracted this nomination process for gorsuch ends up being. >> merit garland's shatt dough cast for this process because

there's a lot of pressure on democrats to treat gorsuch no better than garland was treated. even if they do eventually allow this to go ahead, not to make it easy. so if the president is arguing otherwise, could be tough. >> this is the president. >> one person that likes me at this table, i can tell you that. >> more than one. >> i have a lot of them. great friends and supporters. and i appreciate it, for number one, the election, and i appreciate all the help in deciding who to pick for the united states supreme court. and leonard, you were fantastic, all of your work. and jim demint, i don't know if jim is here or not, but they were great. you really did, you really helped. the rollout has been fantastic. i don't know how anybody could oppose it, frankly. i don't know how anybody can oppose it but it really has been

a beautiful thing to see. so we had a very successful event. he's a terrific person, by the way. got to know him reasonably well before the -- before we did the announcement. and he is just a spectacular man. i think he will be a spectacu r spectacular -- you know, you tell me how will -- leonard, how will they go about deposing him? he's perfect in almost every way. they'll look for the old most, what's that? >> he's got an impeccable record. >> federalists really did a great job. so we're going to be talking about working with the judge and maybe making this a fast process. and nominating a justice of the supreme court is one of the most important things that i can do as president. i've always said this, as i watch presidents i say, the most

important thing, i want to refine that a little bit, i think probably defense of our country might be now, you know, otherwise we don't need the supreme court so badly, right? and we're doing well in that regard, very well. i think we have problems that are a lot bigger than people understood. i think i was left something that is -- got a lot of problems. but i think we'll straighten out those problems. i think we'll straighten it out very strongly. judge gorsuch is an exceptionally qualified person from the standpoint of experience and education. columbia with honors. harvard law school with honors. oxford at the highest level. great, great student. great intellect. supreme court justices white and kennedy, he clerked. so i just think that it's really great that we're having this meeting because we want to -- we want to have him go through an elegant pro