>> thank you. i'm still thinking i can't believe we don't have the "new york times" guy on. >> mark. one day. we'll all go to lunch together, how about that? >> all right. do i have to promise to behave myself? >> yes, you would. and that's going to be difficult. >> that might be a problem. >> in the meantime, have a great weekend, everybody -- or wait, we're not on a weekend. feels like it should be friday. it's thursday. make sure you join us tomorrow. "squawk on the street" begins right now. ♪ good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. powerful mix this morning. futures are lower despite the quarterly beat from facebook. president meets with harley davidson today. europe is mixed. bond yields settling back but gold 12.25 is now highest since

mid-november. roadmap begins with business at the white house. trump meeting with ceos, tech leaders drafting a strongly worded letter on immigration. will we see a more contentious tone? >> plus the market reacts, how investors see the president impacting investing. >> and ralph lauren ceo stepping down after a little more than a year. stock's down in premarket. >> and facebook sales beat has stock moving higher, although not that much. but it is up before the open. >> ceo parade continues at the white house today. harley davidson executives and union officials will be meeting with president trump. tomorrow j.p. morgan's jamie dimon, reports of elon musk, mary barra gm, pepsi's indra nooyi among others. recode got hold of a draft which includes a quote, we are concerned that your recent executive order will affect many visa holders who work hard here in the u.s. and contribute to

our country's success. the next 24 hours, 36 hours, jim, a remarkable i don't know if you call it a showdown between the white house and ceos, but it will not be as kumbaya as we've seen in the past. >> no. i think harley david is interesting. they had a really weak quarter. felt the reason why that weak quarter is because of imports. watch out japan. watch out japan. japan has not been targeted yet. if you want to sit down with harley, you say, listen, are the japanese dumping motorcycles here. remember, polaris got out of the motorcycle business. i don't think the motorcycle business is that bad. i think the dumping in the share harley is an unbelievable company. that might be friendly. these others, you're in that situation where i think the president's going to say, hey, i really hear you. that's really terrific. >> moving on. >> yeah. moving on. i mean, i don't think he's actually -- look, he did tell the pharmaceutical guys you guys charge too much. well, let's all work together.

look, i understand you guys have visa, let's work together. but i just feel that the meetings themselves -- he's very disarming in the meetings. he's just disarming. either that or they're scared to death. >> well, i think that's part of it, don't you? >> which one, scared to death? >> yeah. >> that was tom friedman's point earlier in the week. he clearly doesn't have many senate republicans who are as you say break ranks. >> right. >> that maybe ceos are the one group he truly needs or will try to impress. >> that could be. i mean, you did lose, what, collins on education and -- on devos. but i come back and say this is a president so comfortable with ceos that i just don't think he goes to war with them. i think he would play golf with them if he really wanted to go to war with them. say, listen, man, we're going to get to the golf course. that's what we're going to do. if it got nuts with the ceos, this is where he's most comfortable. he really is. he's very comfortable with ceos. >> yeah. well, it will be interesting when walmart goes to the white

house because of course they have a key concern having to do with the border adjustment tax. >> yes. >> as tax reform gets moving, let's call it expect perhaps thigpens will get moving march/april. maybe you start to see more specifics. and that border adjustment tax would be bad for walmart. >> oh, boy sdpl there's two arkansas senators, both republicans people wonder how they are in the senate, but you might want to discuss if you're doug mcmillan. although this is ryan's bill, and kevin brady. but i'm sure they're talking to them too. >> i still think it's too complicated. i agree with you in this whole assessment. >> yeah. >> hatch telling the journal we're not going to rubber stamp the house plan. there's cotton in arkansas, isaacson in georgia, a lot of discussion about depot and all these senators in big box states, burr in north carolina and lowe's. >> you got to do it or not is what a lot of the people close to this process tell me.

in other words, under the wto rules it's also my understanding that you can't have exceptions. in other words, if you do, then you're in violation. so it's got to be all or nothing. everybody's got to be in. by the way for the dynamic scoring they would need for tax reform to have it under reconciliation and therefore be budget neutral, they've got to have that money that is raised from the border tax. and there is a belief that the dollar will adjust. that of course is a key question. >> dollar's been weak now. >> yes, it has been weak. >> well, actually, people think that the fed lightened yesterday. i don't. i'm going with liesman who said this is same old-same old. look, retailers all act as if this thing's a done deal. >> right. >> if anything you'd say buy a retailer because you think buy a dollar general. dollar tree, dollar general, a lot of their stuff is not made -- i don't know how often you go to dollar tree, david, but that is not the bedrock of american -- most of that stuff

is -- you can't get those -- those sunglasses i had look just like raybans, they are not made in united states. i wore five pair for $5 and not once has anything thought i was wearing anything other than rayban. not once. and sugar babies, okay, box small but little good, just a little color there on dollar tree. dollar general is not my cup of tea. dollar tree every holiday. i'm not kidding valentine's day, balloons for my wife, she thinks i went somewhere. she doesn't watch. it's cool. >> you look cool, either way, jim, i don't think you need to worry about that. >> no? >> moving from policy to fund managers, dan lobe betting that president trump will be good for his business in a let tore clients saying, quote, this environment is undoubtedly better for active investing. he continues we do not plan to trade the tweets, but we expect an increasing number of real and even better fake dislocations to create some extremely rewarding investing opportunities. taking the other side this morning, bill miller on squawk

today talked about stocks being underpinned by a lack of options in other markets. take a listen. >> basically the unattra unattractiveness of bonds and the environment we're in, i believe and i think i've said on the show that the great 35-year bond bull market ended this summer with a double bottom. and i think we're looking for a long bear market. it's going to be a benign bear market, i believe, but still it's a bear market. so stocks are underpinned well by the fact that there really isn't much else to do with your money at the short end of the curve. >> he says stocks would be expensive if the ten-year got to 6. obviously nowhere near that. >> he's a bull. he's a bull in everything he's even a bear on. it's interesting. look, if you're in boeing today, dan loeb, boeing has a $66 billion deal with iran. well, iran was on its last legs and ready to collapse until the u.s. came along. when you read the president's tweets, it's not like you feel good about the $16.6 billion boeing deal, right? with iran? you feel good about that after

read thag tweet? >> no. >> is that one dan loeb is going to jump into? >> maybe. maybe. >> unscrutable, dan. we had this ad with ray dalio, he's bullish and by the time the ad comes out he's bearish. they're a little mecurial. i think when we have these hedge fund managers saying what they think, they seem to change their mind with the tweets. >> some do. some do. >> if you were still running your firm. >> right. >> and your desk. what infrastructure would you set up to react to those? >> i would have one person just looking at tweets. i mean literally. hire a guy, you had a guy out of college, you know, get a high school guy who in his spare time he cuts class, i don't know. i mean just, you have to have someone monitoring tweets. it's too crazy. i would be selling boeing right now. i would. i love boeing. boeing one of the keystones of

boeing was this fabulous iran deal. >> come on. really? you'd really be selling boeing on this? >> yes. >> well, that's because you traded like a frantic human being. >> good series by the way, the last fourth year was the best. i just think that, yes, in my hedge fund. >> selling boeing now and buying at 2:00. >> didn't say what i do now on travel trust or something -- >> not advice to give to viewers. >> my head was on a swivel then. now my head is anchored. >> it is anchored. that's true. nobody's throwing computers. >> i wouldn't do that. i was so much older then, i'm younger than that now. >> good song. >> yeah. >> listen, loeb was up 6.1% last year, i think he's probably going to be willing to take more risk this year, take more shots. we'll see whether it pays off. certainly see some opportunities. i don't know. hedge funds -- >> i just find you can't trust

their look because they're not doing it for our show. they're not issuing their outlook for cnbc. they're issuing their outlook for that day, okay? >> right. >> all right? >> right. >> they love and then hate. >> they've been starving for some alpha, right? >> yes. >> for a long time. >> for a long time. >> it's finally here. >> yes. we'll deliver some. macy's, read story in the paper about macy's call. >> yeah. >> remember macy's at 72? >> i do. >> now that split two for one is now for sale. didn't split. >> didn't actually split. >> sometimes you have to stay close to that. >> no alpha delivered there. >> yeah. but johnson delivered alpha. >> yes. meade johnson. >> we haven't even talked about facebook yet. >> by the way how many times has that name been around? >> by the way that thing has been rumored since bristol-myers spun it off. >> forever. we'll see if they get the deal done. >> speaking of individual names this morning, shares of ralph lauren are under pressure

announcing ceo stefan larson will leave the company in may just over a year into the job. company reports profits of $1.86. that's above $1.64 but clearly the ceo news is impacting the stock. in the release mr. lauren still executive chairman says, quote, we have found we have different views on how to evolve the creative and consumer facing parts of the business. that's a big deal. along with anf with the new ceo today. a lot going on. >> plus, the retailers, the changes at the top of retail. i mean, geez, you can't keep track of these guys. they're running from that border tax. >> i know. this is fascinating. ralph lauren obviously the man controls the company owns 80%. he has 80% of the votes. apparently larson was free to be ceo, but mr. lauren wanted to continue to run the creative side of the business and from what i understand at least larce larsson moved a little more quickly to take over the design

side of the business. >> he was good on getting supply chain to be more like max mar ra, like zarra, but i would say that when you take that job, guys, did it not occur to you that the name is ralph lauren and ralph lauren's there? what he just sits at the restaurant? come on. it's ralph lauren. >> it does sound like, okay, you're done, you can't take the design part. it's not working. but he's not leaving. he's staying for three months until they find another ceo. >> no, fabulous. i love this stuff. i wear ralph lauren. i love his stuff. >> i wear it too. it's very nice. >> yeah, ralph lauren's ralph lauren, it's not called the jc penney lauren company. >> and he still walks the halls in his bomber jacket. when workers -- when he's coming through workers know it in advance. >> you got more ralph lauren i'll be happy. let me get some larsson. >> they brought this guy in with great fanfare a year and a half ago, journal wrote up a big

story about the turnaround and now he's gone. >> okay. didn't work. they did have differing views. but it's not the ralph larsson company. >> good man. >> when we come back facebook beating the street. what mark zuckerberg had to say about the social network's latest quarter. also ahead panera ceo ron shaich and what the trump presidency could mean for his company. dow's on track for worst week in about three months, s&p on track for the worst week in a year. back in a minute.

facebook reporting earnings yesterday after the bell topping wall street estimates. the results were bolstered by a 53% year on year increase in ad revenue. on the call mark zuckerberg says he plans to ramp up hiring and spending this year as facebook invests more in video. >> we're looking for ways to grow the ecosystem of video content on facebook. we want people to think of facebook as a place for interesting and relevant video content from professional creators as well as their friends. last year we started to invest in more original video content and help seed the ecosystem. and we're planning to do more in 2017. >> by more he means expenses up 47 to 57 this year. street's around 41. >> yeah, that's why the arc of the call the stock went down, plummeted right then when the cfo gave this that the gap expense will be 40%, 50%, there's $1.3 billion for

whatsapp. the previous call 30% to 35%. didn't give 2017. so that is a big ramp up. look, i think this is the most -- the idea selling the stock on the ramp up, they have to build more data centers because they're going very big into video. i thought this was a remarkable call. very nonpromotional call. they own this space. the numbers -- i mean, what should you really care about? care about ins grahtagram 600 million -- snap only 150 million, facebook 1.23 billion. this was a remarkable call. people say i heard someone say to me yesterday they said, but jim, it's really just about advertising we have to get rid of. i said, oh, yes, and apple is just about cell phones we have to get rid of. there was a guy got rid of right before the quarter, i don't want to mention his name because it's too brutal, but i think the rap against facebook is exactly the rap against apple. it's a one-trick pony. will you give me a break? they don't have enough salespeople to meet the incoming

phone calls. there isn't a ceo that i have that doesn't say we are shifting, shifting rapidly to online. some of it's going to be google, but most of it is facebook. so i just thought people want to sell the stock, go ahead, the multiple is shrinking. zuckerberg and sandberg -- i wasn't saying to myself when i'm listening to the call, okay, i'm stupid. all right. that's okay. they're comp side geniuses. it's all right. it's a humbling call. >> yeah. >> because of how good they are. and you wish -- i don't wish i were them because that would be wrong. envy, all that stuff is bad, right? comparisons erroneous, you get that. but this is a great call. but people want to sell it. go ahead. knock yourself out. just go sell it. >> bill miller this morning saying they bought on the deal and sold it way too soon. >> there you go. >> maybe lamenting in his face. >> oh, my god, there's a lot of people feel that way and those who bought on the deal right and sold that day. >> my travel trust has owned

this for a hundred points. >> early on until that key turn where they came to mobile and suddenly got it right. >> the mobile. >> now he talks, that is zuckerberg, about video as being as important if not more important than mobile was. in other words, as this megatrend. >> he's so right. when 5g comes -- >> he keeps this up in the ante -- >> 5g, he will be so ready for 5g, even if you're 20/20 thing with the 5g, i'm using 2019, but he will be so ready. go look at facebook. go look at their ads. their ads are things of beauty. they don't junk it up. in the call sheryl sandberg talks about flying to berlin and saving a major retailer. this is small business, medium business, large business, everybody wants to use facebook. but the hedge funds, no, they're selling. they're so smart. they're so smart. is there a hedge fund guy who could be in the room with zuckerberg? man, i don't want to be in a room with him, he's too smart. even larry somers, didn't larry

somers get pants by him? >> did he? i don't remember. >> i am smarter than him, did he tweet i am smarter than him? no, zuckerberg is smart, sandberg is smart. what can you do? they're really smart. >> we're going to watch facebook it did exceed all-time high after hours last night. we'll get cramer's mad dash, count down to the opening bell, one more look at the premarket. more "squawk on the street" from the nyse straight ahead. em t fth retififhtp wd f innt vecze rige a tionllis, em t fth

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with trading here. mad dash. >> semiconductors sell more than just into apple. a lot of the apple people who sell into apple, big companies, were doing great. the semis yesterday. but then after the close qrvo, i think they have actually transition issues internally and are losing business to skyworks and broadcom because of a transition problem that they have. but they also said three other customers kind of pulled back. so that one's going down. and then siricirrus logic, theyo were very, very cautious on their next quarter. i think too cautious. they're a remarkable company, but both of these gave guidance that was so frightening to people that they're frantic. >> well, what's behind that lowered guidance? >> i think it's the other guys. i think it's the other companies besides apple that we forget are doing quite poorly. samsung doing quite poorly. >> right. when you say transition, can you explain what that means?

>> a waiver, you have to get a smaller form fact. i mean, i don't want to overstate my knowledge of qrvo other than to say skyworks and broadcom some feel have leapfrogged over them. this is a very competitive business. and there are people who say, listen, qrvo made a lot of money, don't go, cirrus logic made a lot of money, they said we're approaching the next quarter with humility, which freaked people out. but i would say every time you sold cirrus logic has actually not been that smart. >> yeah. >> by the way, they have something called voice. they're going to do voice biometrics so they can identify you, you know, your own voice. which is going to be really cool. >> you know, steve wynn is putting in alexa in every one of his hotels. >> is it? then it's going to go. >> when you walk in, alexa will recognize your voice. >> well, this is key. >> say hello, jim. >> by the way, i have wing stop on tonight. they have teamed up with alexa, when you're having a lot of beer, you're like, hey, alexa, send me some wings.

>> yeah, send more beer. >> wing me. >> oh, yeah, that's the world that's coming. >> yeah, it is. it's almost here. >> i say to lisa, hey, how about more wings. >> she says go get them yourself. >> well, if she watched the show ever it would be alexa instead of lisa. >> what do you think i'm here for? we got five minutes to the opening bell. we got a lot of things to cover. cbs doing a radio deal. we'll do that. sirius satellite radio out with earnings. >> is that cirrus logic? cirrus logic to sirius satellite? >> oh, no, you're confusing people. which we don't want to do. we're back after this. uswiwiaset

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in a couple of minutes. we've talked a lot about the president, national prayer breakfast is going on right now. >> right. >> we could get some data out. productivity in the quarter up 1.3. claims down 14 to 246, jim. >> look, i remain convinced that the fed has to raise three times and that the banks, which are in stay wait until that increases. i can't wait until tomorrow. i think it's a very important number. auto sales were bet ner germany plus 10% than they were in the

united states. i think europe is so strong. europe is so strong. >> one of our smart market watchers john malloy did a piece last night looking at dow kpe components you want to own when the jobs number beats by 20,000 or more. >> oh. >> and the number one pick is boeing. >> boeing? >> boeing on a day where nfpb beats. >> i've already sold boeing because of the tweet. i guess i can buy it back now. >> yes, you can. i told you you would, but i thought it'd be later. i didn't know it would be later. >> too good. that's an interesting -- wow. i don't know. sometimes i see those relationships like from our friend kensho. but i always come back to this case by case because if the president tweets i want to nix that boeing deal at 833. huh-uh. i mean, like i don't know, probably praying for schwarzenegger and knocking boeing. >> the president did make what appears to be a light hearted joke at the prayer breakfast today about praying for

schwarzenegger's ratings on "celebrity apprentice". >> that's a wide raising beneficial whatever -- i don't know. >> here's the opening bell on the s&p. the bottom of your screen. at the big board today it's teach for america recruiting promising teachers to serve in low income communities. at the nasdaq the breast cancer research foundation. so we'll watch -- people want to know, jim, whether facebook can carry an index the way apple carried an index yesterday. >> no, it can't. because hedge funds don't like facebook. they keep saying this is peak, peak, peak and the stock will be down and that's because i think these guys don't understand the model. anyone who's done facebook video, facebook live understands that this thing -- they haven't figured out how to monetize it. they don't have to because there's so many other things. hedge funds don't use facebook, they ask their kids about instagram. they should. hedge fund managers, go ask your

kids about instagram. they split it between snap and instagram, but instagram's big. my daughter does fashion shows on both of them. and i've got to tell you that because they don't have any knowledge of how it works, they sell it off that gap expense number. because that's what they know. they look at expenses. oh, man, that expense out of control. if you build data centers and don't just use data center reit, it costs money. >> right. but it's not as though people weren't anticipating they were going to spend lots of money. it's just they're spending more than they might have anticipated. >> the stock did run off of apple. now, i think that -- look, i reiterate that they don't understand facebook. they haven't understood ever since it went mobile and that's because they don't use it, they don't know how it works. >> can we get back to fundamentals? >> what am i doing? >> you're talking about people not knowing anything about facebook. i want to get back to the numbers themselves. >> i'm doing authentic hedge fund gibberish, is that what i was doing? >> i wouldn't ever call anything you say is gibberish, but you

might. >> you're fine. go ahead. >> 20 times 2018 numbers gets you on 765 nongap 22 times, that gets you to 170 -- >> my friend, partner, buddy, you see the growth there? >> a lot of growth. >> how about at 53%? so you get a 22 multiple and 53% growth, what do you get for parker haninfen. >> i make my case. >> i was allowing you to make your case. >> very helpful. >> i'm here to help. >> i'm sorry. i step aside. faber report me. >> macy's is moving. >> i got nothing on it, carl. i mean, the story in the "new york post" this morning has stock up 4% at macy's talking about a possibility of a buyout. starboard did try and call them, haven't gotten anywhere. would they try? the last time we heard from them remember they owned a little less than 1% of the stock at the last filings and jim was referring earlier to the

delivering alpha from 2015 where they originally took the position in july that year. >> they were early. they were very early. >> last time we heard from them was about a year ago. they put a new presentation out middle of january last year. i don't believe we've heard from them since. i might be wrong. who knows. >> who wouldn't want macy's? >> the real estate value is significant. hudson bay did a great deal when they bought saks. >> right. that's true. >> worked well. >> street.com says ross stores would actually be a natural suitor. i don't know who would be a natural suitor. i just think these are problematic institutions right now. and i don't want to -- especially with the border tax that you have drilled into my head is going to happen. >> the border tax, i mean, yeah, tax reform is so important. and it really in my world that's all anybody seems to want to talk about. everybody's still grappling with what will be the timeline. >> sure. >> speaker ryan on fox this morning said health care is

still first. and they'll get to taxes in the spring. >> they got to get there fast. nordstrom downgraded to a sell. nordstrom a great company. >> part of my understanding on tax reform, guys, and the timing of it and why they need to potentially do the aca first does have to do with the fact that they're going to raise money from eliminating the aca and whatever they're going to replace it with. >> oh, okay. >> and that's going to help them when they move to tax reform. so one needed to be sequenced prior to the other. >> okay. it's supposed to be bad for hospitals but hospital stocks haven't come down. i remain convinced only way to play that repeal is unh. >> repeal of obamacare. >> unh is the way that stock went down 158 after that great quarter people wait five days and buy it, bingo, 16 3 and now it's above and going to 170 on

the deal. cigna was up. >> yeah. we're still waiting on the anthem deal and the judge -- we're still waiting for that deal to die. it will die and then the question's going to be -- i mean, i don't want to prejudge but the expectation is it's going to be stopped. and then the question is the breakup fee and whether these two guys at anthem and cigna start to have a big argument about that. did cigna use its best efforts? will anthem pay them? we haven't even gotten to that. i'm getting ahead of myself, but just mentioning it. >> well, i have seen more mergers go bad. >> well, we knew aetna, humana and cigna were problematic from day one. >> yeah. halliburton-baker hughes, hey, lawyers say it's fine. where do you get lawyers that say everything's fine, right? >> right. >> how about the qualcomm nxpi.

>> apple claims it's a commercial dispute where apple is trying to pay less. >> i thought it was funny they said apple thinks we're a bully, we're like nobody. >> right. apple's the largest company in the world and they're beating on us as they do on all their suppliers and that's what this is about. >> well, that's what the cirrus -- one of the things you go through. there's a great chart in the cirrus logic list of their customers and it has a little craft paper box, international paper on tonight on "mad money," that just says number one client. because you're not allowed to say who it is. number one client. it's a little box with craft paper. i don't know. >> as we're talking, the president's speaking at the national prayer breakfast and i'm quoting here, the world's in trouble but we're going to straighten it oult, okay, that's what i do. i fix things, believe me. when you hear about the tough phone calls i've been having, don't worry about it, just don't worry about it. they're tough. we have to be tough. we've been taken advantage of by

virtually every nation in the world, it's not going to happen before. look at policy, flynn on a run, this mission in yemen. whatever the truth is about these phone calls with mexico and australia. >> bannon also apparently quoted as saying at some point the south china sea is going to be something that requires attention. >> yes. do you synthesize that at all? >> i did have a piece this morning saying i've got apple but then i've got australia, i've got facebook but then i've got iran. there are people say i've got to go into cash because i can't process this. but the overall nature of it is so let's say volatile, being a good neutral word, right? volatile. i got to take a break from stocks. i think everyday people are saying that. >> is that misguided or not? or do we know yet? >> i think it's too early to know. i think there's a style we got to get used to. it's a new style. you know, i'm reading about the yemen thing this morning and i'm thinking, wow, there's got to be investigation of yemen.

but then i think to myself, okay, shouldn't i be in merck? what does merck's keytruda numbers have to do with the australian phone call, right? >> right. >> that's what i'm saying that's why loeb's analysis, do i really want to miss merck? but maybe i should have sold edwards life sciences because -- and use the australian thing had nothing to do with australia. only commonality duking it out for lng. merck was good. frazier was good. >> ken frazier, ceo of merck sitting next to president trump the other day. >> nonpromotional. >> guys, this is the radio portion of the broadcast. i'm going to talk about radio now, couple things to mention. >> okay. >> precluding sirius satellite radio earnings out looks pretty good. people forget just how large sirius is -- see those people are happy. $23 billion market value for sirius, only $4.80 a share

stock. >> netflix and harmon, i'm over it. >> you can't arrange deals. >> i'm done with apple. here's the deal. >> one of the questions continues to be as i reported a while ago that pandora had engaged advisors and was looking at potential acquirers of it will sirius come to play there. on the call, jimmier, the company ceo said, quote, our management team and board also spend considerable effort evaluating strategic options and new areas of potential investment. this is, again, sirius xm's jim meyer. we will always remain disciplined in how we look at these options to avoid becoming distracted or bogged down with things that risk our laser focus on our immensely profitable and growing satellite bid, bogged down, not bugged down. and he went onto say we look elsewhere search new opportunities in scaleable areas adjacent to our own with good business models. sirius has interest here. cfo at a conference not that

long ago seemed to indicate otherwise. controlling shareholder liberty continues to have interest. but for its part pandora at this point continues to have advisors surveying the market trying to engage other potential buyers prior to really fully engaging with sirius to see if there's a deal to be done. so that's kind of where things stand. there are some people and you have three big owners here hoping next week could get something announced. that doesn't seem likely based on what i'm hearing from people familiar with the situation. in fact, that process continues in terms of is there somebody else who might be willing to step up for pandora, give us the leverage as we enter into potential negotiations with sirius. and you can take those comments from jim meyer for what they are. finally, on radio also, guys, cbs does a reverse trust with entercom no longer going to be spinning off their radio business to shareholders at cbs. they're going to be spinning it into a new co run by the entercom team, but really controlled by cbs holders, at

least those who opt in to receiving cbs radio shares, which are then going to be converted to entercom shares when this reverse trust takes place. going to give them a nationwide or national footprint, entercom in a lot of smaller markets, cbs in bigger markets, so this apparently was preferable to simply spinning off cbs radio. just to give you some sense as to size. i did notice something i thought was a bit odd they chose to share with us as well, i don't have it here but put it up if you can, they give us $1.7 billion, right, pro forma revenues in the last 12 months makes the second largest radio station owner in the u.s., but get this, they also say, and, by the way, we do about adjusted ebitda of nearly $500 million. >> geez. >> but look, that includes expected transaction synergies. that's the oddest thing i've seen in a press release. our previous 12 months, $500 million adjusted ebitda includes the synergies from a deal that hasn't happened yet.

anyway. i don't know who wrote that press release or why they stuck it in there. gives you a sense if they can do $500 million in adjusted ebitda, put a multiple, not that small a company four times levered versus iheart radio which is ten times levered. >> oh, iheart radio. it's funny i had next star media which is local it have, local radio, people still listen and people still watch. look at the news. >> there's a lot of it. let's get to more. dow's down 35. bob pisani's on the floor. hey, bob. >> good morning, carl, good morning everyone. about even on the opening on the advance/decline line, europe mixed, nikkei down 1%. dollar at the lowest level since mid november, that's interesting. a lot more the narcotics to deal with iran, global trade, immigration, supreme court and earnings, remember. take a look at what we're talking about in terms of sectors there's the s&p. that's the semiconductor index on the top there.

that's been weak. cirrus and qrvo's been down on earnings, banks down, industrials on the weak side, united rentals and snappon been weak, defensive names like consumer staples only things notably on the upside. as for state of the markets here despite a weak day yesterday fundamentals and technicals still indicate trend is up, we're at record highs essentially on indices, breadth bullish, sentiment mixed, u abashedly mixed and now bullish, that's a good sign and reflation trade is still very much on everybody's mind. nobody's looking to really sell a lot. everyone's looking for the markets to drop 5% to 10% so they can buy more. that's why i'm saying the trend still is up. but the markets at these highs means we're very susceptible to selloffs particularly on earnings news. and you see this again today here so the qrvo for example had poor guidance, shutterfly missing guidance, below expectations. ralph lauren, we talked about

the ceo leaving. ryder is one of the more interesting things, essentially dealing with truck leasing here, but used vehicle sales were disappointing overall. and what's interesting is this is one of the big winners in the whole reflation trade. remember ryder went from $70 to $80 on the whole trump trade between november and december on expectations that we would see this reflation trade and a company like ryder truck leasing company would naturally benefit. that made some sense. but they're not dramatically raising any of the guidance out there. it's been some disappointment and some realization what we've been talking about everyone is now realizing perhaps we can't move the numbers up as aggressively as we want. this is why we're getting this market pause right now. as for trump and the markets, a lot of hope around two meetings that are happening today and tomorrow. president hosting a meeting on tax reform, orrin hatch and others will be there, and tomorrow the ceo roundtable, jamie dimon, other people meeting in, remember markets will move when they get news on a timetable for tax reform, on a

timetable for infrastructure spending of any kind. the hope is maybe in the next two days we'll get some flesh on those bones. right now the dow down 25 points. carl, back to you. >> bob, thank you very much. bob pisani. let's get to the bond pits. rick santelli at the cme in chicago. good morning. >> good morning, carl. you know, when it comes to things like fed meetings, unemployment data, we get pulses in the marketplace that are almost somewhat predictable. yesterday was no exception. the evidence look at a two-day of twos. boy, you popped up to 1.24 then slipped slowly. you continue to slip. here's the complexion here. the short end has issues with the fed. twos are only down two. but fives, tens, 30s are all down four basis points. look at one-week of tens, yes, we're at the bottom of a range, but keep in mind 2.27 to 2.30 is a key technical level for many, maybe we'll get there. we haven't as of yet. the low 2.40s bottom of the range pay close attention on a closing basis.

you know, when it comes to the stock market, especially those who have survived and remember and were active during the 1987 the crash, there was a relationship that was cemented there between weak equities or weaker equities or drifting equities and interest rates addressing that by moving to the downside as well. well, after a lot of volatility it seems like for the moment we're getting back to that to some extent. look at a year-to-date of the s&p 500 versus ten-year note yields. they are starting to move in the same direction. that isn't surprising. it's just stocks seem to be really leading the charge for a while. if we look at a one-week of the dollar index, this is very important. because the dollar index has many issues even outside of the fed and maybe the notion that it was more dovish than many think or it's dragging its feet with regard to normalization, a lot of this is with regard to the relative value issues of overseas economies. you heard jim cramer and i agree, europe is actually, actually this time starting to

get better. and its inflation, i don't know if better is the word, but be r better can be applied here in terms of the upside look at the yen the japanese market is also mirroring the dollar index. we know the euro is the highest value, but everything seems to be working against the dollar, at least for now. david, carl, jim, back to you. >> all right. rick, thank you very much. when we come back, amazon reporting earnings after the bell, what to expect straight ahead dow's down 32. y use sponno

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take a look at shares of amazon reporting earnings after the bell. a lot of discussion about what may be like tonight. we'll talk more about that. stop trading in a moment.

time for cramer and stop trading. >> those who have pets and if a pet gets hurt, you know it's the end of the world because it's so important. idxx, that is the humanization of pet story. look at that. that stock's not done. they do everything all it is about is health care of pets. remember, when you do that, there's no medicare. you just write the check. anyone who's ever had a problem with a dog, you write the check.

and idex labs is the supplier to the vets. it's not done. it's been one of my absolute favorite stocks. humanization of pets is a continued theme. bug in everest, wife went downstairs because i snore, they have a better spot in the bed than i do. >> well, now everybody on this desk has a lifestyle that includes a pet. >> yes. yes. >> they don't take -- you ever see those vets say they don't do a copay. >> i know. i know. i mean, we can't own stocks, but i think you need to buy one of these things to offset the cost if in fact it is doing what you say it's going to do by going up. >> these things like a pet or like idexx labs. >> you have to buy one of these stocks benefitting from the humanization of pets your theme in order to profit potentially to pay all those bills. it is expensive. >> they are expensive as all get out. i thought everest swallowed something yesterday. i figured it was just a g, a g every time that guy does something stupid. g's a thousand. >> speaking of retail, two

things we didn't mention costco with their 5% january comp. >> oh. >> talk about mojo. >> smoke. >> and then amazon tonight, jim. >> i think you have to listen to bill miller on amazon. it's going to be a trillion dollar company. if they spend too much in order to be able -- like facebook, they spend too much to dominate the world, that's your chance to get in. if you're waiting for that chance, you got to get in. i think amazon has revolutionized everything. it's everywhere you go. now alexa with the wing stop i got tonight. >> amazon, listen, don't forget artificial intelligence. we mentioned alexa earlier, mentioned this idea -- >> machine learning. >> they have a lot of people working on a.i. at that company in a very significant way. this is going to be potentially enormous business for amazon. >> right. >> this lease in northern kentucky, 50-year lease. >> on the drone? >> yeah, 900 acres. >> yeah. i mean, i think that amazon may -- i bet you when trump meets with amazon, it's going to be a love fest. honestly. >> you think so? >> i think it's going to go better.

"the washington post" got to be careful. but i'm just saying innovation u.s. they hire -- is anyone hiring near the number of people in the u.s. as amazon? anywhere? >> 100,000 over 18 months is a big number. >> they've got to be the biggest hirer of americans. >> yeah, well, they also -- you still -- they employ a lot of people. facebook for example has very few employees for being -- >> gross margins. >> -- enormous company. >> you create the content. that's why i love the gross margins there. look, amazon may have political issues that are different from trump. i'm saying that the hiring at amazon is extraordinary whether it be northern kentucky, the plants in jersey, just a juggernaut. >> what's on mad tonight? >> we got some controversial ones. snappon down seven, international paper, talk about corrugated, that stock is down. remember, plastic -- card boor dud board does, that's younger people. and wing stop, yes, alexa, i'll take the hot atomic wings. >> big weekend ahead, jim. we'll see you tonight. >> i'm just going to collapse.

>> "mad money" 6:00 p.m. eastern. when we come back, manufacturing in focus. ceos continue to make their way to the white house. today it's harley's turn. we'll speak with the alliance for american manufacturing director and the president of the committee of economic development steve odland. don't go away. u toleewur pa

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♪ good thursday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, david faber at the new york stock exchange. dow's down about 22 points. a lot going on as we weigh foreign policy news, economic news, of course earnings news led by facebook. >> but our roadmap today begins with the ceo president donald trump expected to meet with industry leaders tomorrow including jamie dimon and harley davidson executives today. we'll have the latest for you from washington. as we said facebook reporting revenue up 51% from a year ago thanks in large part to mobile. we're going to dive deep into their earnings. >> and then we'll talk to panera bread founder and ceo on how the

president's policies will affect his restaurant business. but first, let's get straight to eamon javers who is at the white house with what will be a busy 24 hours for corporate america in washington, eamon. >> yeah, you're right, sara. i think the theme of the day is learning to deal with a president trump negotiating with him one-on-one both foreign leaders and ceos of businesses are adjusting to this new administration, the personal style of the president. we saw a lot of reporting last night about this conversation that the president had with the prime minister of australia. said to be a very blunt conversation, shorter than expected, some tensions over this issue of immigrants from australia coming to the united states of america. we're going to see those ceos tomorrow here at the white house. and the question is what kind of treatment will they receive from the president of the united states. we've got a list of the -- some of the folks we know are expected to be here including jamie dimon, elon musk, stephen swarzman, ginni romett, daniel

yergen mark weinberger all expected to be here. the president was at the national prayer service this morning and he discussed some of his blunt tough talk with foreign leaders. here's what he had to say just this morning. >> the world is in trouble, but we're going to straighten it out, okay? that's what i do. i fix things. we're going to straighten it out. believe me. when you hear about the tough phone calls i'm having, don't worry about it. just don't worry about it. they're tough. we have to be tough. it's time we're going to be a little tough, folks. >> the president saying don't worry about it. it's time to be a little tough, folks. we'll see whether hi u he takes that attitude with the ceos and top executives who will be here tomorrow, guys. i've talked to some folks at the white house about this this morning, they say the reporting of the australia phone call was a little bit overblown, but they do concede that the president was in their words strong with the prime minister of australia

this morning. but they also point out that the president is a businessman and they point to some of his previous interactions with ceos already here at the white house in terms of the expectations for tomorrow's meeting. those interactions so far have been relatively smooth. tomorrow though on the agenda could be the president's executive order on immigration and that could be more of a flash point between some of the executives and the president than we've seen so far. so a lot of anticipation building now about that meeting tomorrow, guys, back over to you, david. >> thank you, eamon. we're going to stay on that topic. in fact, joining us for more on president trump's ceo outreach, we're joined by former office depot ceo and cnbc contributor steve odland. and the president for alliance american manufacturing scott paul. steve, let me start with you. we've seen a lot of ceos marching in and out of this white house. we get the photo op, president has some words and then they send the press out. do you think anything is actually taking place behind what are closed doors in terms of real interchange between these ceos, or are they sort of

just in listen mode? >> no, i think it's going both way. this is great two-way communication. over the course of history business leaders and our elected officials have engaged very carefully. but that hasn't been happening over the past decade. so now with a new administration and a new congress business leaders have an opportunity to stand up once again and re-engage in the public square and to talk about how we can get this economy growing again. but it is a two-way street. this administration comes in with a strong point of view, but it's very transparent point of view. he's making his objectives known. and business leaders are engaging, i think, in a very constructive fashion. >> well, the other day when he had the pharmaceutical execs in there certainly struck by how many of them in their public comments just kept talking about things they know the president wants to hear, manufacturing jobs that we're creating, research and development, the spending in the u.s. i mean, do you think that ceos feel as though they have free reign to actually challenge the president at all, particularly to eamon's point tomorrow on the

immigration ban? you may have some people in the white house who disagree with it. or is that not a good strategy when you're the ceo of a company challenging this president? >> no, look, i think that ceos have always had to deal with governments whether it's new laws or regulatory tsunami they've been dealing with for the past decade always they have to deal with it, but they also need to give feedback and make sure that there is this great productive tension and that we are in fact doing the right things, taking on the right policies in order to create jobs and grow our economy again. so it is definitely a two-way conversation. >> scott, let me rephrase that question and put it to you. ceos clearly have to choose their battles when it comes to interaction with this president. uber ceo travis kalinick is going to be at the white house tomorrow. he's objected to this order. is this one fight worth fighting for them, the immigration ban? >> it's a good question. i think each ceo is going to look at their obligations and

make up their own minds about that. i imagine given the tenor of these conversations so far they're going to focus on the commonalities and things like tax reform, rebuilding our infrastructure, having a trade policy that's going to be more beneficial to american workers, these types of things we know the white house and large swaths of the business community are aligned. and also in large part what the white house has promised to deliver to those voters in the industrial midwest. you know, you've got to create those jobs and deliver some of those commitments that you made in november. >> hey, scott, what would be your advice to someone at the table with the president who runs a company that is a net importer, right? how can you push back on a policy that seems to have so much wind at its back? >> well, in the past i think a lot of these folks have said, look, if the policies are more friendly towards business in the united states we'll locate more

production here. that's obviously something that the president and his advisors want to hear. so if you look at some of the tax proposals, if you look at trade policy, and you've seen ceos respond to this already, the auto companies that if you're going to raise costs in mexico, you know, we may have no choice but to relocate production back to the united states. i mean, corporations like anybody else are going to respond to incentives. there may be some pushback, but ultimately they're going to see that i think a lot of their interests are aligned and it may result in some shifts in supply chains, but again, you know the top priority economically of this white house is to deliver those jobs and deliver those manufacturing jobs. and it is going to take a change in course and some new thinking in corporate boardrooms as well. >> steve, if you're the ceo of walmart, doug mcmillan, you ran a retailer obviously, and you are facing this potential border

tax adjustment and a lot of your goods are imported, i don't know if that was the case at office depot, but certainly is at walmart. what do you say? what argument do you try to make there if one at all with the president and his team? >> no, it's a great point. and i think scott made a really important point, which is the people of the united states sent president trump to washington in order to bring our jobs back. and ceos will be foolish not to listen to the american citizens who are calling for their jobs to be brought back. at the same time we need to understand that we are in a global supply chain and that most of the stuff that retailers sell in america is in fact manufactured overseas and retailers don't manufacture, they simply sell what they can get their hands on and what consumers want. so there is a global supply chain and there needs to be some consideration that border taxes will just then become increased prices and will hurt the american consumer. so this is part of the two-way conversation that will happen here. >> scott, i did want to ask you about one of those players in

the global supply chain and that is japan. prime minister abe comes to visit the white house and president trump next friday. there's been some rattling of nerves at least, taking a few jabs at japan. you are the representative from the manufacturing council, is japan a trade threat? >> look, i think japan is a competitor. japan is a friend. there are longstanding issues with access to the japanese market that go back to the 1980s. i mean you'll recall president reagan put tariffs on japanese motorcycles. he entered into the plaza to do a currency revaluation of the yen. he threatened tariffs on japanese cars. >> a lot has changed since then. >> so did bill clinton, by the way. these are longstanding issues. this was one of the hangups with the transpacific partnership that a lot of folks were concerned about. and to the extent that foreign direct investment can come into the united states and japan can

sell in this market and make in this market, that's going to improve the relationships. i think that the president has been very transparent about that. there is no question we have a lopsided trade relationship with japan. and i think he's right to raise that point. how you proceed, you know, you have to use some caution. you have to be strategic about it. but ultimately i think there's a lot to be gained for both sides. and i see advertisements every day of toyota and honda emphasizing their made in america credentials. they do have a long way to go still i think to convince more american people. but that's a conversation that's long overdue in my mind. >> well, gentlemen, we'll leave it there for now. appreciate both of your thoughts. steve odland and scott paul. thank you. >> thank you. we'll switch to facebook this morning reporting a revenue jump of 51%. that beat expectations on both the top and bottom line largely driven by robust growth in

mobile ad sales weighing -- weighing in on the stock mark may senior internet analyst at citi, guys, good morning to you both. mark, people may wake up and wonder why the stock doesn't look like it did in the afterhours. is this about the expense cycle? is this about their guidance on ad load? what do you think? >> yeah, i think the ad load commentary is nothing new. it's something they've been talking about since q-2 of last year. but the expense girth guidance came in higher than people were forecasting. i'd say consensus was for around 45% growth this year. they're guiding 47% to 57% growth. i think that is what is limiting the upside on what otherwise was another spectacular quarter from facebook in q-4. i think at the end of the year when we look back on this the company will not spend out to the levels it's guiding to. and i think as the market realizes this, the stock will work. but there is going to be, you know, a period here where investors are going to have to

digest this guidance and come to their own conclusions. >> so, eric, is that your view as well? got to be a lit l patient here. >> yeah, i think we've seen this now play out over the last three years. we've seen this wall of fear built up in the beginning of the year somewhere between november and january of revenue growth is going to come down, expenses are going to be more than expected. i think there's a cadence of they outperform on revenue growth, they underperform on expense growth, i think it will play out over the next couple of quarters. i think investors are very much focused on those long term drivers, the extent which video, e-commerce ad units and the model will continue to drive price per ad up over time. i think as that plays out from q-1 to q-3 the stock will outperform the market. >> hey, eric, you had a great report this week on vr looking at the potential and tipping point that we may be at now. what does it say when zuckerberg, when a $500 million judgment is immaterial to

earnings and second have to tell people not going to make money for a while. >> vr has been for mark and the team a long term plight. we think this past holiday season was a bit of a tipping point based on our report on consumer adoption of vr. and mark last night talked about more gear vr being sold from samsung, oculus and hdc as they were late to getting to the market in the market and selling well, next is the investment round content and application systems for vr. so i think the way mark and management team at facebook talk about it is in these multi-year buckets for growth, long term growth one of the big drivers is going to be vr. i think the report we had earlier this week is supportive of that. >> hey, mark, i wanted to ask you about beyonce gracing the covers of many newspapers this morning posting on instagram yesterday that she's pregnant with twins. highest ever likes, 7.5 million and counting. but instagram seriously is a big

part of this growth strategy. and we did get -- there it is. anything to show that picture. we did get word there's 400 million daily active users. can you bring us up to speed on the fight here between instagram and snapchat as we await that ipo. >> sure. well, congratulations to beyonce. instagram is also -- instagram is also a great story. we think the revenues there are approaching or exceeding probably $3 billion this year roughly doubling year on year. and we're really just scratching the surface. if you think about ad load or how much they're monetizing property they're probably about a third of the way towards where facebook is today. and the audience is still growing rapidly, engagement growing rapidly. you know, we really like what facebook is doing with this property continuing to innovate on the product side. yes, copying some of the best features of their peers but doing -- being a fast follower

and copying and seeing a lot of success from that. so 150 million users of their stories product almost overnight. and like i said, the monetization story, instagram is important and important driver of the facebook story. so one thing that i would back up and encourage investors to look at is facebook is now much more than just the big blue app. instagram, messenger, whatsapp and way down the road i think it's not a 2017 or even '18 story but oculus and virtual reality, it's really a portfolio play. and lots of ways of generating income revenue for facebook over the next several years. >> guys, sara was going to get a beyonce reference in one way or another. >> oh, yes. >> we appreciate your patience on that. eric and mark, thanks so much. appreciate it. >> thanks. >> when we return, the federal reserve deciding not to raise rates in the first meeting under a trump administration. we'll tell you what did change

next -- actually, we're going to instead take you to rex tillerson, secretary of state and listen in. >> but i certainly welcome them all. thank you for such a warm reception. and it's a pleasure to be here. obviously i've been anxious to be here and i'm so pleased to have my wife of more than 30 years. and she has been just steadfast through this process. encouraging me on and reminding me what this is really all about. so thank you. [ applause ] also want to thank acting secretary tom shannon who's just been superb through this entire process. and, tom, thank you so much.

[ applause ] it was truly indeed an honor that tom joined us in the oval office last night for my swearing in and appreciated that he was there. obviously i also want to recognize and thank all of you here at headquarters of our state department, the staff and partners around the world who have faithfully performed your duties regardless of who was in charge. it was so important. i know many of you have assisted ambassadors and other officials during the senate confirmation process and indeed some of you have been through it yourself having just come through it for the first time i can assure you the senate still takes it as serious as ever. they're as energetic as ever. they're as thorough as ever. but we're here. [ applause ] so in the days and weeks ahead

we're going to have plenty of opportunity to discuss in more detail the goals, the priorities and the strategic direction for our organization. but for now i really want to take a few minutes to communicate my high regard for the men and women of the state department and share with you some principles for all of us to dl live by as we pursue our shared mission. the individuals who comp prize this department are among the finest public servants in the world. many of you serve our nation abroad and have served our nation abroad. state department staffers in the field are not just conduits for policies and plans, you are our emissaries of our nation and the ideals we stand for. when people see you, they see america. when i wake up each morning the very first thing i ask myself is are all of our people safe. the safety of every single member of our state department family regardless of where he or

she is posted is not just a priority for me. it's a core value. and it will become a core value of this department. [ applause ] this means the state department family here in the u.s. and all those agencies serving under chief of missions abroad including civil service, foreign service officers and specialists, locally engaged staff of host country and third country nationals, interns, fellows, support contractors and implementing partners, and not least of all the family members who support us at home and in our service to our country overseas. the foreign service is not the only component of the state department. the civil service workforce at the state department plays an indispensable role in all we achieve. and we cannot attain success without the mission critical services that you provide. though we often live in a world

of headlines, working outside of the public eye does not make you any less essential to our operations. your dedication, your intelligence and your sound judgment are the brick and mortar elements of all we do. we all depend on your good work. and i know it will continue. one of the great -- [ applause ] one of the great challenges and thrills for the state department staff is deciding how to confront changing conditions in every corner of the world. and i encourage all of you to use your natural and well-developed skills to adapt to changes here at home as well. i know this was a hotly contested election and we do not all feel the same way about the outcome. each of us is entitled to the expression of our political beliefs, but we cannot let our personal convictions overwhelm our ability to work as one team.

let us be understanding with each other about the times we live in as we focus our energies on our departmental goals. as secretary i will deploy the talent and resources of the state department in the most efficient ways possible. that may entail making some changes to how things are traditionally done in this department. change for the sake of change can be counterproductive, and that will never be my approach. but we cannot sustain ineffective traditions over optimal outcomes. i will gather information on what processes should be reformed and do my part to make sure we are functioning in the most productive and efficient way possible. regardless of the circumstances shaping our country or our department, we must all remain focused on the mission at hand before us. i'll remind you that our undertakings are larger than ourselves or our personal careers. our duty is to faithfully represent our nation in the arena of foreign affairs.

if we stay focused on the work before us, i promise i will work to ensure you achieve your own personal success and your professional satisfaction in what you are doing. for every individual who works at the state department, i ask that we adopt a few core principles. first, i believe that any organization runs best when all of its members embrace accountability. from the mail room to the boardroom every member of a team has a job to do. i know nobody will always be perfect and that certainly includes me, but i ask everyone strive for excellence and assume responsibility for their actions and their decisions. the new england patriots have signs posted all over their team facilities that simply say, do your job. it is a brief message, but one with profound importance. if we all do our jobs and embrace a willingness to be held accountable for our performance,

we work better as a unit, move closer to attaining our goals. it's worked pretty well for the patriots over the years as i must admit. secondly, i want us to be honest with one another. we're on the same team. we share the same mission. honesty will undergird our foreign policy and we'll start by making it the basis of how we interact with each other. lastly, we're going to treat each other with respect. no one will tolerate disrespect of anyone. before we are employees of the state department, we are human beings first. let us extend respect to each other, especially when we may disagree. what i ask of you and what i demand of myself i will embrace accountability, honesty and respect no less than anyone. before president trump called me i thought i'd be in retirement

this spring after four decades of business experience. we were ready to head off to the ranch and enjoy our grandchildren. but when i came back from my first meeting with president trump and he asked me to do this, renda said you didn't know it but you've been in a 41-year training program for this job. [ applause ] so despite our own dreams, she said you're supposed to do this. while my first days here, i'm on the job, hi. i'm the new guy. [ applause ] as such, i will depend on the expertise of this institution. there are over 75,000 members of

the state department workforce, both foreign and civil service employees with an average of over 11 years of service in the department. i have 25 minutes. you have accumulated knowledge and experience that cannot be replicated anywhere else. your wisdom, your work ethic and patriotism is as important as ever. and as your secretary, i will be proud to draw upon all these qualities in my decision making. i ask that you join me in upholding high standards of ethics and professionalism, committing to personal accountability and honesty and respecting your colleagues. there will undoubtedly be times of victory, but there will also be many times of difficulty. let's go forward as a team through all of it. let's make the american people proud of what we do in this building and beyond. in scribed on the walls of this lobby are the names of fallen

foreign service personnel who in the words of abraham lincoln gave their last full measure of devotion. they died in service of causes far greater than themselves. as we move forward in a new era, it is important to honor the sacrifices of those who have come before us and reflect on the legacy that we inherit. in closing, i'm honored to be serving alongside each of you as i serve our nation as the secretary of state. so now i'm going to take a moment, pay my respects to those individuals that are memorialized on this wall, and then i look forward to making the rounds and fwregreeting you personally. may take me a few days. but in all sincerity, i do hope to have the opportunity to shake the hand of every one of you that's here. thank you so much. [ applause ] >> from the chief executive officer of exxonmobile to now

america's top diplomat, that was secretary of state rex tillerson making some remarks to the employees of the state department at the state department laying out some principles for them. do your job, be honest, be respectful and even making light of the fact that he was in the private sector, alluded to it. said i had 41-year training program for this job. hi. i'm the new guy. >> multiple issues on his desk on this first day on the job of course, foreign policy all over the news, the dissent cable discussion within the state department. but as it's been pointed out. >> yeah. >> dealing with countries today on this first day that he's been dealing with as the head of exxon for years and this kind of wave of news not foreign to him at all. >> no. and it's interesting that when we talk about the ceos that are coming to the white house tomorrow, i mean, this is the ultimate sort of change that we've seen in the government which is chief executive officers running the government as secretary of state and as

president. we're going to continue to talk about this. up next, panera bread following through with one of their promises, 100% clean ingredients. but how will donald trump propose border tax affect the price of imports like tomatoes or avocados? that's one issue we'll tackle with the founder and ceo of panera, the trump effect on restaurants and much more coming up. of d d kfasins. plerce ortiy erriizp grmptoowy yo

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a trump economic agenda of lower taxes and fewer regulations good for american companies, right? well, let's discuss that. joining us now panera ceo ron shaich. ron, good to see you. >> good to see you. >> i know you're here to talk about the 100% clean ingredients. this is a promise you made a few years ago. a lot of your competitors are doing similar thing, mcdonald's, subway all have put out an announcement. so where are you right now in that race versus the others? >> well, sara, it's not a race. for us it's been a 20-year journey which began with the removal of transfats which began with the removal of antibiotics, began with posting caloric information. but simply put, we're done. we're the only restaurant

company in america that's announced and now delivered on a comprehensive all-inclusive removal of all artificial flavors, preservatives, sweeteners and colors from artificial sources across our u.s. menu. the only one. nobody's done it. lots of people are talking about it. lots of people are taking certain ingredients, but they're not doing the whole thing. we have -- you can walk into a panera and like a good housekeeping seal of approval know our menu is 100% clean today. >> so how does that impact your business for investors? you up your marketing on that message, and does it really resonate? do consumers know what they're eat sng do they look at the ingredients to make sure they're clean? >> i'll say this, we've been at this for two decades and it's never been about marketing. it's about our fundamental pledge, our fundamental relationship with our guests. that's what we do. we want to serve food quite frankly that we ourselves want to eat, my daughter and my son,

a 13-year-old and 17-year-old, they are at panera five to ten times a week. i'm in there 15 to 20 times a week. i want to serve in panera food that i want to serve my own children. that's the way we think about our guests. we want to give them that quality food. and that's why we do it. >> let's talk taxes, ron. big issue for you. >> sure. >> you pay i think an effective rate of 36%. so what are your expectations for corporate tax reform, which would theoretically slash that? and would you do with the tax savings? >> well, to be clear, i don't think anybody knows what's going to happen. and, you know, i've run a public company now for 26 years, i've done a hundred quarterly earnings reports and i learned a lesson. we'll let the folks in washington set the policy and then folks like us will react and deal within the context of those policies. you tell me what's going to happen with taxes, i'll tell you what we're going to do. but certainly if there are tax reductions, it is going to open up more capital for investment.

>> yeah, on that front, rbc put out a note saying especially if you're able to deduct cap x we could be looking at a 35% to 40% bump in your earnings. is that realistic? we don't see that in the stock price. >> well, we're spending somewhere between 200 and 225 million a year in cap x. we're continuing to grow make major investments. so to the degree that's true, that's a benefit to panera. and we will take advantage of it. having said that, i think that the folks that are seen as benefitting the greatest from what could be the trump policies are operators like us that are almost entirely domestic, that don't have dollars abroad. and then secondly, folks that run company operations, which we have about 45% of the system. so i think compared to other restaurant companies all else being -- we're seeing benefitting to a greater degree than many other companies. again, as i said to you, sara,

we'll all see. you tell me what washington's going to do next week and i'll tell you what we're going to do. >> yeah, we're all working on that over here too, ron, that's for sure. one question on the menu, as you make these changes at what point does sourcing ever become difficult, more complex, more expensive? >> well, this is all been really difficult. i mean we've been working at doing this trending to 100% clean for a decade. for the last two years we've had a team of seven, eight, nine people working almost full-time on this initiative. we had to go back and change one out of three of our ingredients, that's 450 ingredients. we changed approximately 150 ingredients. we had to deal with 300 different suppliers. in the case of panera we have to go back multiple layers into the supply chain. this didn't just happen. we didn't end up with chemicals and preservatives that maybe we wouldn't want on our menu by chance. this happened over many years as manufacturers tried to drive longer shelf life as we tried to

have products that were more consistent for manufacturing, and as distribution tried to reach the larger and larger parts of the country. the point is it's only in recent years have we come to realize that maybe we don't want a food scientist and maybe we don't want to bring a dictionary with us when we go into a restaurant. what we're trying to do is say come in, get simpler food, less processed and know it's 100% clean. >> any of it from mexico? >> i'm sorry? >> any of it from mexico? we're wondering because the white house just floated a 20% tax -- border tax on imports. >> yeah, we buy avocados from mexico. we buy some of our produce from mexico. but much of it is coming from the united states already. i think that, again, compared to our competitors we'll be less at the effect generally than others might suggest. i think that we feel that as a restaurant company ceo, as a ceo in american commerce my job is

not to try to figure out how the policies going to effect me. my job is to wait for the policymakers to set it and then as ever we'll figure out how to resolve it, how to deal with it in a context that puts panera at a competitive advantage. >> ron, thank you for joining us as always. >> thank you. >> ron shaich, the ceo and founder of panera. let's get over to sue herera and get a news update. hey, sue. >> hi, carl. good morning everybody. here's what's happening at this hour. australian prime minister malcolm turnbull is insisting that a muslim refugee deal struck with the obama administration is still on despite president trump calling it dumb and vowing to refute it. today in an interview he denied that trump hung up on him during their phone call. >> as far as the call is concerned, i'm not -- i'm very disappointed that there has been a leak of purported details of the call in washington, but i want to make one observation about it.

the report that the president hung up is not correct. >> the hostage situation at a delaware state prison is over with one guard dead and the other rescued. this after police breached the maximum security correctional facility earlier this morning ending the 24-hour standoff. a shock hazard has prompted barnes & noble to recall thousands of power adapters sold with the nook tablet 7. its casing can break when plugged into an electrical outlet exposing its metal prongs and that's a shock hazard. that's the news update this hour. carl, back downtown to you. sue, thank you very much. meanwhile markets down about 19 points, keeping our eye on gold, 1,222, on pace for seven weeks up hasn't happened in about four years but it's off the highs. back in a minute.

welcome back. let's send it over now to courtney reagan, she has more on ralph lauren and the departure of its ceo. courtney. >> yeah, that's exactly right, david. so wonder kid stefan larsson on

his way out of ralph lauren after two years, creative differences is the reason for what the company called mutual decision to part ways. larsson will stay on until may and the search for new ceo is underway. while larsson was ceo and founder is executive chairman and chief creative officer, seemed larsson also exerted influence over creative that ralph lauren disagreed with. the morning after the news of larsson's hire in 2015 an internal memo lauren sent to employees leaked out saying in part i will continue to lead the company as i have for almost 50 years, i'm not stepping down nor am i stepping back, i am stepping up. the brand did also report better than expected earnings this morning on light revenue. comparable sales fell less than anticipated, but on the earnings call the first question asked for was a little bit more on the creative differences. larsson said it came down to differing on decisions related to product, marketing and shopping experience, adding he spent his whole career in family-controlled businesses working hard to find common

ground but couldn't get there this time. ralph lauren shares are down more than 11% today. shares had gained 7% the day after the announcement that larsson would take over in september 2015. the market seems to want larsson in that role despite the fact that shares have lost more than 20% since stefan larsson began. he launched the ovrhaul of the business in june of 2016. he called the plan the way forward and that included closing stores, quickening the supply chain, focusing down the brands on the core three and the company says the board agrees it will continue that strategy. back to you, sara. >> another sign of retail's troubles. courtney, thank you. president trump vowing to change dodd/frank financial regulation earlier this week while signing an executive order on federal regulations. take a listen. >> dodd/frank is a disaster. we're going to be doing a big number on dodd/frank. so that's one big reason why i'm taking this action and i'll be taking an action later this morning. if you'd like you can join me at the signing to begin our effort

to dramatically reduce federal regulations and we'll be reducing that bigly. and their damaging effects on our small businesses, our economy, our entrepreneurial spirit. >> joining us now to discuss what that means, ju young lee of fitch ratings. >> thank you. thank you for having me. >> you do the numbers and analysis, how do you quantify expectations around what doing a number on dodd/frank actually means? >> so we haven't actually done -- no one's actually done a direct study on all of the implications. what we've done is we've looked at the financial choice act which was introduced by the house financial services chairman. and we did try to assess if there is a regulatory off ramp and you were to choose sort of the 10% leverage ratio as an option to get out of the all the rules, we estimated that for the big at least it would be a $400 billion number, roughly.

that's what we estimate. it's a pretty large number for them to be able to opt out. so we think it's pretty unlikely. >> does it effect certain banks more than others? >> yeah. so we think the smaller banks are probably the most likely to benefit. where they're actually probably not going to have capital markets activities, where they're very domestic focused where it's easier for them to meet that leverage ratio. >> have you seen real clarity as to whether or not all banks, some banks would see rules changed when it comes to say the volcker rule? >> so with the volcker rule there's clearly been some talk about repealing it. we think that the net impact would be that there would be some benefit in terms of earnings, in terms of being able to cut costs on compliance. we don't think that the big banks are likely to return to prop trading just because you have to remember the capital rules are still pretty unfavorable when it comes to having inventory. >> i mean we've seen a tremendous rally in bank stocks since the election on this and other factors. >> yes. >> what are the credit implications here for what you do?

have you increased their credit worthiness to the same extent? >> so i think from our perspective the way we look at it is that regulation is actually been pretty closely aligned with creditor interest which may be different than shareholder interest. so from our perspective we're thinking about bondholders and many of these rules are protecting capital and liquidity, which are all good for creditors. on the flip side you will see some earnings benefit, which is good for creditors, right? and they can build capital if they have more earnings. >> so no changes yet. >> no changes yet. until we see how banks ultimately respond, i think we need to see, a, what the regulations are, and then b, really how do the banks respond. if they start reducing capital and liquidity as a result, then you might see some negative implications. >> although i don't think there's an expectation that capital's going to come down even under some of the various plans out there. even hensarling capital remains to be the one key standard. >> yes. i think as far as i know we're still a basel country so capital rules are likely to remain in

place. it's just a matter of whether they allow more flexibility for example on ccar which they've already implemented new rules around. so they've been tiering some of the rules based on the size of the banks. smaller banks tend to be the biggest beneficiary of some of those rule changes and we think that will likely continue. it's really the big banks that probably won't get out very much. >> so bottom line it for us. what would you have to see out of the regulations to actually downgrade the credit worthiness? it sounds like that's where the risk is tilted based on what you're looking at. >> so i think it really depends on whether they decide to reduce capital and liquidity rules or they do something that would change the governance of the banks. and then if the banks respond in kind by reducing, you know, with lower capital and liquidity. we think that's fairly unlikely right now. and we do still have a stable outlook on banks. >> well, we will wait to hear details from doing a number on dodd/frank means, but in the meantime thank you for joining us. >> thank you for having me. >> joo-yung lee managing

director at fitch ratings. >> we'll speeng to the chairman and president of the cme group, don't go away.

well, treasuries certainly have taken it on the chin recently, but high yield bonds are moving higher. could high yield be your best bet? find out at tradingnation.cnbc.com. more "squawk on the street" coming up.

the cme group reporting fourth-quarter earnings. let's get over to rick santelli, who has a special guest for us. rick? >> definitely do. terry duffy, thanks for taking the time. obviously, the ceo and executive chairman of the cme group! the exchange floor which i'm standing. terry, it seems you've had a pretty darn good quarter and year, just highlighting key numbers on a year-over basis. average daily buy-in was $15.6 million per day, just quarter over quarter. it was even better, i believe, close to a little over $16

million. and on revenues, year over year up 8%, quarter over quarter up 12%. why don't you highlight some of the issues that you would like to dig deeper into on the quarterly sheets? >> well, you've got all the numbers correct, rick, so i appreciate you doing that. when you look at the year 2016, it was really a good year for us, but when you look at the last quarter, there was a lot of circumstances that factored into the quarter, one obviously being the election. you know, there was a single day where we did 43 million contracts the night that president trump was elected, and prior to that, even that evening we did contracts higher than our daily volume. then you had all the brexit dislocation going on, and that also added to the volume and to the quarter, so that was a big part of the quarter, but it just goes to show you that we're here to do the risk management and as

flawlessly as possible. >> so you bring up an interesting issue, because for every major topic that affects your users, in certain ways it affects the exchange as well. so, yes, average daily volume was enhanced by much of the political world. on the election day, i do believe cme's stock was around $104, $105, currently a whiskey und er under $112, and your high in '07 was in the low $140s, is that correct, terry? >> yeah, that's correct, rick. and if you put it into dividends or write about the all-time high of the stock around $714 if you back in the dividends post split. so yes, the stock has performed really well. we're happy for our shareholders. we're delivering value. you know, it's about the client, and that's what i'm focused on in my role as ceo and chairman. i want to make sure that we can continue to add benefits to the client, which in return will add

benefits to our shareholders. >> all right, let's stick with that. do you think, yes or no, or you know, even longer answer, how much affected are your clients going to be should we see the dodd/frank and regulatory rollback that seems to be on the table, terry? >> well, i think we've seen a lot of uptick in the overall market, because you've got to remember, rick, the dodd/frank regulation, roughly 80% at both the cftc and the s.e.c. has been enacted, meaning 40% of the regulation had never got enacted. so in effect, we have deregulation right there without doing anything. also, i think the market is looking at no new regulation coming down the pike, which in turn gives clarity to the participants, and i think that's what's really helped accelerate the rally we've seen since the president took office. so customers feel confident. about you know the rules of the road, that's always more comfortable for an investor and a trader.

so i think that's exactly what we're seeing, and i think we're going to continue to see that. now, whether we're going to roll back any of dodd/frank is yet to be seen. you know, the president says it's a disaster. i remember back in '03 during sarbanes-oxley, they said that was a disaster and nobody could live with it. now we don't even talk about it. i'm not saying there's parts of dodd/frank that don't need to be adjusted, because there are, but at the same time, i think we need to remember that '08 did happen. there were a lot of reasons why it happened, whether it was bad lending practices or whatever, but i think rules and regs are good. they lend credibility to the marketplace, which lends stability to the marketplace, but they need to be good. we can't spend $2 trillion a year in the businesses to be in compliance in the united states, and that's not our world, that's throughout when you put everything together. so there's a lot there other than just dodd/frank. >> terry, thank you for your thoughts and continued success running an exchange that seems to be doing quite well. sara, back to you. >> all right, rick santelli.

rick, thank you. let's send it out now to jon fortt, who's on the floor with a look at what's coming up next on "squawk alley." good morning, jon. >> good morning, sara. some companies, including in tech, are drafting an open letter to trump about that executive order. we'll dig into what it says. plus, facebook earnings to cover and the president of the united steelworkers union. all that and more coming up. s lw bo otrsawi hulcihaformioev

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with the super bowl only three kays away, how's the nfl been answering questions about its ratings decline this season? our own jane wells has more from houston. good morning, jane. >> reporter: hi, sara. yeah, we were just talking to some falcons players, which is why i'm here. we'll have that for you later. look, the commissioner's well aware of the issues, especially the ratings, which started the season unseasonably low, then after the election came back, then sputtered off during the playoffs. then there are dissatisfaction issues off the field. the chargers and the rams in los angeles, a move critics say may be motivated more by tv revenues than the fan base. now sheldon adelson and goldman sachs pulling out of a stadium in las vegas for the raiders. it's unclear whether the casino owners would have been allowed

to do that anyhow. the commissioner addressed those issues. and when it comes to ratings, they says they're looking at all kinds of things, including time management, so these games don't go on forever. >> there are a number of things where we think we can shorten the management of the game, focus less on stoppages of the game and more on action. from a commercial standpoint, we did test in week 16, and we tested it in the yahoo! game last year, we want to look at should we have the same number of breaks? we have five breaks per quarter. we think we can do it in four. >> reporter: all right, it's still the biggest game in town. people are going to be spending all kinds of money on it, especially on food, but even on tvs and some furniture. by the way, the league announced another game in mexico this season, so the patriots and the raiders will have to climb over the new wall to go there. and guys, as much as we are divided as a nation, public policy polling says america is getting united around hating the

patriots, and the patriots are united around hating roger goodell. back to you. >> although they just got a shout-out from rex tillerson. jane wells, thank you very much. now to carl for "squawk alley." >> all right, sara, thank you very much. good morning. it is 8:00 a.m. at facebook headquarters in menlo park, 11:00 a.m. on wall street, and "squawk alley" is live. ♪ ♪ good thursday morning. welcome to "squawk alley." jon fortt, kayla tausche and myself at post 9. henry