live from new york where business never sleeps, this is "squawk box." good morning. welcome to "squawk box" here on cn cnbc. i'm melissa lee along with andrew ross sorkin, becky and joe are off today. sitting with us for the hour is joe terranova. >> you guys are going to feel so comfortable. >> we are already talking stocks, price action, technicals. >> are you okay? i do have a cold. we should mention this. the last time -- we talked about this about -- you were on the show. >> i was here. >> i wanted to bring a prop. we had a lot of viewers who went and bought this stuff because i promoted it. >> endorsed it. >> we had a guest from a product called x-clear, a celine spris . which i have been spraying in my

nose successfully. and i have stayed without getting a cold. it's been a wonderful thing. i think this helped me enormously. however i got a cold. the kids got a cold. my wife has a cold. everyone has a cold. i've been flying on airplanes, but this had been saving me. i think it's better than it would have otherwise been, i know it's hard -- >> hard to prove the negative. >> i did want to tell the viewers, we did tell them before -- >> take a little more. >> maybe double down on it. >> on the air? >> you wanted to see? >> yes. >> you spray it up each nostril. >> you're better already. >> two sprays. >> ah. now it does go down your throw a bit. >> that's so going to be in the highlight reel. >> i usually blow it out a little after. >> we can cut away for that. >> we have to do a -- keep going with the show. we'll try to hold it together. >> we'll keep posting on the spray situation.

let's look at u.s. equity futures after this early morning hour. we are looking at a higher open. yesterday was a record setting day, particularly for the nasdaq which saw netflix hit a new high. overnight in asia, a bit of a dip initially when the peoples bank of china had fx reserves dip below $3 trillion. we ended up the session in the green with the hang seng higher by 0.7. shanghai higher as well. look at the picture in europe. a mixed bag. looking at crude, red arrows across the board earlier in the session. we see them again today. wti, brent, nat gas lower so far. on the ajgendagenda, but plenty earnings. before the open results from allergan, time warner, humana. after the close, numbers from prudential financial, whole foods and lions gate. a lot of corporate stories to keep an eye on. the first one disney, reporting

earnings topped estimates, but revenues fell below consensus. and we got more direction from the company on its leadership plans with bob iger giving his first public signal that he may stay beyond his planned retirement next-year. >> i will do what i think is in the best interest of the company, and the board will help determine that. while i believe we have a strong, robust succession process underway, i know a lot of people are curious about it, safe to say it's a strong process. i believe a successor will be chosen under the right circumstances at the right time. if it's in the interest interest of the company for me to stay longer, i'm open minded about that. independent investment film moelis and company scoring big. it's been chosen as an adviser

on the saudi aramco ipo. last month they invited banks to pitch for a position on what is expected to be the biggest offering. the saudis expected it to go for a minimum of $2 trillion. for moelis this would dwarf previous ipos with samsung and poly plastic. but see how far he has come. it's remarkable to start a boutique firm like that and be the lead adviser on a $2 trillion ipo. >> and the template for what others wanted to become. >> sure. >> people raise questions as to whether the boutique model works. this one is. a u.s. federal judge delayed a ruling on whether to dismiss the insider trading case against billionaire leigh cooperman.

the judge said he would take the matter under advisement. the s.e.c. charged cooperman with illegal trading after they found out about the planned sale of a unit. cooperman is said to have made $4 million from his trading on the sale. cooperman said he will defend himself all the way, doesn't believe this is right. independent frequent where you find people in the middle of a case to speak out. he has. we will see where this lands. stocks to watch this morning, yum china topping profits for the fourth quarter. panera bread earnings beating the street thanks to digital improved offerings. saying digital sales account for 24% of total sales. and buffalo wild wings missing analyst estimates.

the company seeing a drop in same-store sales and giving a weak outlook for the current fiscal year. they have been pressured to open up their brand to franchises. they just named four directors to the board, including an ackman protege. >> good to see consumers are eating, because they're not going out and spending in department stores and not spending on apparel me. >> they're buying groceries. >> they're buying groceries and eating out, so we're getting fatter but not supporting retail. >> i don't have a good segue to get to washington. the fate of president trump's immigration order in the hands of a court of appeals. it's likely the matter will end up in the hands of the supreme court. don't know if you listened to this last night. remarkable. a lot of people watching live. eamon javers will get us caught up. he has a lot more.

>> you're right. it was the united states court of appeals for the ninth circuit last night hearing oral arguments streamed live. the department of justice presented its arguments in favor of donald trump's executive order on immigration. the judges on the panel listening a little bit skeptical of the trump administration's arguments during the course of the hearing. not clear where they will come down over the next couple of days. listen to this exchange from judge william c.canby junior, a carter appointee expressing some of that skepticism. >> how many federal offenses have we had being committed by people who came in with visas with these countries? the answer was there haven't been any. >> he said the answer was there haven't been any offenses committed by people with visas from these countries. that may make the bar here for the trump administration higher.

we'll see where all of this goes over the coming days. the president signaled his willing to fight this up to the supreme court if that's what it takes. here in washington, d.c., another blow up on the senate floor. this one involving senator elizabeth warren of massachusetts. reading a letter in opposition to jeff sessions nomination as attorney general. the united states senate has rules, traditional rules about insult insulting another senator. those rules were invoked last night after warren read a letter from coretta scott king from 1996. she read that on the floor to jeff sessions. republicans took offense to that saying she had gone beyond the bounds of senate decorum. here is how that exchange played out last night.

>> mr. president, i'm surprised that the words of coretta scott king are not suitable for debate in the united states senate. i ask leave of the senate to continue my remarks. >> is there objection? >> object. >> i appeal the ruling -- >> objection is heard. the senator will take her seat. >> you heard the objection there coming from mitch mcconnell, the republican leader in the united states senate. that meant the democrats didn't have the votes they needed to keep elizabeth warren involved in the debate. she had to sit down for the rest of it. we are expecting a confirmation vote on jeff sessions as early as this evening. we'll wait and see what that one brings. you can imagine a lot of social media activity today on this one throughout the course of the day. that was a real flashpoint last night. >> one question before we let you go, it's really a question we keep asking you over and over. i know it's hard because every

day we're talking about either some kind of battle or in-fighting or something. but if you take the 30,000 view and try to get up and try to put this in perspective. how much of this is par for the course and how unusual is it? it goes to the issue as to whether the other issues that we talk about, whether it's tax reform or trade or anything else are ultimately going to get don done. >> procedural movement yesterday against elizabeth warren is rare. you rarely see that in the senate. i'm trying to think back to the first time i saw anybody do that. in the house they have something similar. it indicates the emotional tensions here are high on both sides. part of the reason is that democrats don't vice president votes in the senate to get done anything they want, so they're resorting to hard core obstructionist tactics. that's frustrating republicans. they don't like what they're

seeing. all of the people up there on the hill are frustrated. it's not helped by the overnight round the clock sessions that democrats have demanded. when people are low on sleep, they tend to get more cranky. you are seeing real emotions running high here. the democrats ultimately won't be able to get their way. you can tell they're laying down political markers ahead of the next election and forcing republicans to be clear on what they're voting for and why they're voting for it. you can tell now they're waging a social media campaign in defense of coretta scott king saying how is it possible the republicans would shut down the words of a civil rights leader. >> my take away, that lack of sleep equals crankiness which explains a lot to during morning tv. thank you. >> we're all in good moods. we are. we are. >> my take away, it was fascinating where she went afterwards, facebook live. >> yep. >> exactly. >> that's just incredible to me.

just shows directly where we're going in the narrative, and from an investment standpoint. unbelievable. >> sure. optimism over trump's pro business proposal driving up the markets since november, but can that saucontinue to happen? i will pick up where andrew and eamon had left off. that's the notion that as all these battles are getting fought out, that the timeline for corporate tax reform, obamacare is getting pushed out. yesterday we had this example where sean spicer, the white house press secretary said the president is for medicare negotiating drug prices. the reaction in the market you would have thought would have been dramatic in the drug stocks, yet it wasn't. are we seeing this sort of, i don't know, lack of belief that the agenda will get done this

year? >> i think there was an immediate knee jerk reaction. the biotech sector sold off immediately and came back. investors are realizing some more extreme policies, business unfriendly, are going to be walked back a bit. they're choosing to focus more on some of the pro business policies. but i think there's questions about how much of this will actually get done. i think the question we have to ask ourselves as investors is can markets do well even without a lot of these policies being implemented? given the growth in the economy, the answer is yes. >> at the same time, maybe it's good news that the market has been at a standstill with the dow and nasdaq hitting new records. we've been at a standstill since mid-december. is that a good sign for the markets? instead of a selloff we're holding firm here. >> holding firm. we're in a prove it mode. the market wants to see something that will get done. so far it's been a lot of talk. and before we see -- i think we see much movement further ahead,

we'll have to see something on the prove it side. >> how long is the honeymoon? this is the shortest honeymoon in the honeymoon period. even i will give him some time. >> to chris's point, is it a pause or a peak? but really the granddaddy of fiscal policy comes down to the corporate tax cut, and what the size is going to be. can you get it as low as 15%, 20%? i don't believe you will. i think 25% is where you will go with that. that is the put underneath the market for any correction. that's the one fiscal policy wall street cares about. >> ben white quotes goldman sacks this morning saying their view is that this fiscal boost, if it happens, is mostly a 2018 story. i believe that the yield curve, which is one of the most important indicators now is

telling you it believes that corporate tax cut will come later than we expected it would come back in december. when you look at the 2 to 10-year spread which got out to 140, it pulled back to 120, we have seen a reacceleration there. >> i think you have to think about where the opportunities are outside of the policy. as andrew pointed out, we don't know when that will happen, what it will look like. so if focus on where you see grh and earnings. in the u.s. that's looking at sengt sectors like financials, energy. also you want to look internationally. while u.s. markets have been at a standstill you've seen emaernliemaernl i

emerging markets and japan moving higher. one of the things when we look from deflation to reflation, earnings growth outside the u.s. may be the surprise that a lot of investors were not anticipating. >> you like energy picks as well, royal dutch as well as ambridge. apple is just a few dollars away from an all-time high. it's underpinned this rally in technology that we've seen. at this point it wasn't long ago when people were saying apple didn't have the ability to innovate, it's a value stock, a value trap. where are we now on apple? >> it's still a great value. you have a tremendous brand at a great value and a huge beneficiary of corporate tack cut. if they can repatriate some of their foreign cash, you will likely see a big one-time dividend or big buyback in share. >> you are not scared they'll do a stupid acquisition that share

holders don't like? >> apple hasn't done a lot of stupid acquisitions. they much more grow internally. i would see them giving that money back to shareholders. that will increase value. that cash on their book is a drag on earnings. >> so far the surprise to support what staephen has been saying is the recovery of europe. if you had a strategy tethered to u.s. sales directly versus international sales, international sales are outperforming by over 6% year to date. money managers were not prepared for that. they wanted it to be u.s. centric. so the surprise is beyond the borders of the u.s. >> we'lleave it there. thank you both. joe will be with us for the rest of the hour. when we return, we'll talk about disney. bob iger sounding off on the company's quarter. the health of espn and his own succession plan. we have his comments next when

swauk return sidewalk returns.

♪ welcome back to "squawk box." some stocks to watch, gilead

sciences reporting better than expected earnings and revenue, but shares are under pressure. gilead projecting disappointing sales for its hepatitis c drug. and zillow saying they expect to surpass $1 billion in annual revenue for the first time. take two interactive cutting profit forecasts for 2017 due to higher royalty payments. the video game publisher reported a 15% jump in third quarter revenue. let's talk walt disney. walt disney reporting mixed first quarter results with the sports network, espn, weighing in on operating income in the cable networks division. bob iger telling cnbc yesterday that he doesn't share the same sense of gloominess about espn that others might. >> i think there's way too much pessimism about espn, because espn is still in demand from three constituents you want to be in demand the most from.

one, distributors. two, consumers. three, advertisers. the reason it's in demand is the brand is still strong. the product is still good. we've invested nicely to keep that product as high quality as possible. >> for more on disney, let's welcome steven cahill, media and entertainment senior analyst with rbc capital markets. good morning. >> thank you. >> should we be worried about espn? >> the question here is one of stability versus instability. our view and based on what the company has talked about the last couple quarters is we're seeing more stability than what shares had been pricing? the important thing to remember is if espn is stable, not losing subscribers at an accelerating rate, cash flow is there. this is a dynamic portfolio where parks are growing, studios are growing and you get cash flow out of espn. stability is enough for rerating. >> rerating would land you where? >> our target price is $130.

it's certainly been near those highs before. when we saw it come down in the summer of 2015, it was all about espn. what we think is getting better with espn is the new virtual cable distribution platforms. hulu set to launch soon, and bob iger saying they will be on google as well as others. that unlocks the stock. >> there's the subscriber story and then the advertising story. which is to say live sports, which we thought was the one last thing that would hold may not be holding. what does that say on the espn side but also more broadly about media? media that's invested in sports. >> i'm not a bull on television advertising long-term when you see what a google of facebook prints in terms of advertising growth. it's fair to price in risk. disney is one of the least exposed names in media when you think about parks, studio, even when you think about espn.

most of that monetization and cash flow does not come from advertising. when you look at the portfolio, you're still talking about double digit earnings growth. >> iger spent some time on the conference call talking about its tie up with bam tech. what are the economics of bam tech? >> it's a little too early to tell. i know -- >> it's launching this year supposedly. >> what we'll initially see is bamtech take content currently not on espn and possibly offer that direct to consumer. that will give disney the ability to price out different options. doesn't mean espn is going to go to directs to consumer. but it puts a toe in the market. but importantly, bam tech has the leading technology for concurrent streaming. if you think of how we might be watching live sports 5, 10 years from now, chances are it will be very digital.

whether or not it owns the sports right or platform we're watching it on will be less important because it will be owning the production of getting that in front of us via bam tech. >> what about the rising costs related to the nba or the nfl? >> this year is one of the highest cost years for espn. they have a new nba rights contract. they have ongoing nfl cost growth. we tend to think about espn as having roughly mid single digit annualized cost growth. so the kind of equation with espn is you have pricing growth, which they indicated last night is 7% a year. subscriber declines, that gets you to 5% rev enue growth. if that holds, you have a stable, high cash flow espn. if one of those components breaks down, you have the

negative. >> and it sounds like iger may be sticking around longer than expected. is that a positive for the stock? >> he said last night he will leave when the time is right for the company long-term. most don't see this succession as a major concern it will play out slowly, but all good frm. >> you want to throw out a name? >> i'm not going to go there. >> worth a try. thanks. >> thanks. >> thank you. coming up, the top issues on the political agenda for your money. congressman todd rokita joins us to talk taxes, healthcare and immigration. as we head to break, yesterday's s&p 500 winners and losers. opportunities aren't always obvious.

sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

companies across the state are york sgrowing the economy,otion. with the help of the lowest taxes in decades, a talented workforce, and world-class innovations. like in plattsburgh, where the most advanced transportation is already en route. and in corning, where the future is materializing. let us help grow your company's tomorrow - today at esd.ny.gov

♪ welcome back. you're watching "squawk box" live from the nasdaq market site in times square. ♪ >> what a lineup we have there. good wednesday morning. a quick look at u.s. equity futures. we'll show you the board right now. looking at the dow, opening up higher by 24 points. s&p 500 looking to open up a point higher. the nasdaq up a point and a half. a bit of news this morning. a group led by edgar brothman junior are moving ahead with the

acquisition of time inc. the wall street journal saying meredith which publishes family circle and better homes and gardens signed a nondisclosure agreement. the bronfman group already met with group. apple reportedly hired the former amazon fire tv boss. the executive joined amazon in 2013 and oversaw the launch of the fire tv products. before that he spent time at netflix. to politics now, the first tiebreaker in cabinet confirmation history. vice president mike pence casting the deciding vote in the senate yesterday to confirm education secretary betsy devos, her support of u.s. tax dollars paying for private and tuition school spark controversy.

congressman todd rokita joins us. thank you for being with us. >> nice to be here. >> looking at a 30,000 foot view of all of this, not just specifically at the devos hearings, are you getting concerned that things are growing more contentious on capitol hill and that will endanger the accomplishment of the republican agenda, particularly marquee pieces like corporate tax reform. >> it's glone slower than it ha been for sure. with the kind of president we have, one of action, with my colleagues on the house side, i think the senators and the senate are marching ahead. there are some delays, and it may delay some of the budget work that we're doing, but there is no lack of commitment to getting it done, however the democrats want to delay. we're on a mission. we'll get this country back on

track. >> i think few would question that notion that the president is a can-do man of action. his flurry of activity the first few weeks in office is stunning. but action at what cost. on the travel ban specifically, the homeland security secretary said he should have delayed the rollout. are there regrets of being so action oriented that you are costing political capital for your party snfrn? >> the underlying premise of the pause and review strategy, which is something that the last administration was also for in terms of what they did in 2011 and then in terms of actually identifying the seven countries that president trump actually went ahead and did the pause on, that's sound strategy. i think a sovereign nation has a right and duty to keep citizens

safe. that's all this was. by definition there wasn't a muslim ban. we there are over 40 muslim countries, we're talking about seven here. it's targeted, it's tailored, and it's what happens when you can't vet who is coming in. this is a prudent measurement i'm glad he did it. >> at the same time you're seeing a president who is conscious and conscientious about meeting with leaders of corporate america. he's billed as a pro-business president. on the other hand you have 127 tech executives fighting this travel ban, executives from 150 healthcare companies fighting this ban. doesn't that endanger that notion that he is pro business when he united the business community against an executive order that he signed? >> i don't know. i can't speak for every one of these companies. it seems to me there's an agenda

here. president obama did a very similar thing back in 2011. president obama is the one who identified these seven countries. i was here in 2011. i don't remember the uproar. i didn't remember -- >> just to put a fine point on it. the distinction and the reason why we're talking about it today and we didn't talk about it as much then is because we weren't stopping people mid flight effectively, midway in the process. it was a different issue. also there wasn't the refugee issue. there's two things going on that do -- >> yeah. >> that create a distinction as to why it's upending peoples lives. >> it could be. if that's the actual concern from these companies, not that there's an actual pause and review, but that implementation had some problems, sure, i agree. the administration needs to make

sure implementation goes smoothly. i understand that part of it. i'm not sure that's what the concern of these companies is i'm not sure why they're having the concern if they didn't have it in 2011. >> congressman, good morning. in the parts of the country that historically did not vote for a republican, they voted for president trump, they did so because they wanted jobs and economic growth. just listening to you this morning, seeing what is going on over the last couple of weeks t seems as though the conversation is away from that. how committed are house republicans, how committed is the trump administration to reengaging that conversation? you have the stated of the union coming up, i believe february 28th. people want to hear about jobs and economic growth. we lost that conversation. >> that may be a fafr point from fair point from an optics

standpoint, but inside the rotunda it's what we're all about, starteding with about, starting with repealing and replacing obama care, and doing that they reconciliation. we are all about focusing on that. on the heels of that will be a second reconciliation bullet that will allow us to get to tax reform through the fiscal year '18 budget. that is job one. we're on it. we're working on it. from a legislative perspective, sometimes i think the president himself has to appreciate this, too, it was designed to work slowly. that's what we're working through now. we're at full speed. you should see healthcare repeal and some replacement in the march time frame. then come pprehensive tax refor for all businesses of any size. >> so, congressman what is your

most optimistic forecast for getting some type of tax reform done? you think full speed? what's the time frame? >> i'm hopeful it will be this calendar year, maybe into next calendar year when you see more of it. it's job one and two based on the reconciliation opportunities we have in fiscal year '17 and '18 budget it has to be coming in the next 12 calendar months. >> two big tax issues that the markets are focused on. one is a board adjustment taxz or any kind of border tax which could represented about a trillion dollars of revenue. where do you stand on that? >> what we're trying to work to do is get rid of the made in america tax. so we're eliminating tax on exporting our goods. i can't believe we're doing that. in order to fund some of those tax cuts, taxing some things that come in as imports seems to

be a reasonable way to do it. >> you are for the border adjustment tax? >> i understand the con september of what we're trying to do. i'm excited to be part of that solution. yes, i like the concept. >> you endorse the border tax. >> no, no. it's the start of a discussion. there's nothing to endorse because we're taking in information from all corners. that's the right way to do it. we're not saying here's a new concept, here's a bill. we need to pass it to find out what's in it. that's what the democrats did with obama care. with tax reform, we're taking time, getting input from your viewers to make sure we get this right. i like the concept of paying for a tax cut, not just lopping it off and thinking we won't solve our debt problem. >> one other big one for the business community, the taxability of interest. where do you stand there? >> i'm for that as well. i think that promotes growth. when you promote growth you help

businesses of all sizes hire more people which gets you more revenue at end of the day. >> congressman, thank you for your time. >> congressman todd rokita. coming up, steve forbes warning that the gop border adjustment tax is dangerous. he'll be our guest host at 7:00 a.m. and jim stewart says it is time for some young guns to step in at disney. and brooklyn nets guard, jeremy lin is here. the team is bringing big data to the nba. stay stay tuned, you're watching "squawk box" on cnbc. safety doesn't come in a box. it's not a banner that goes on a wall. it's not something you do now and then. or when it's convenient.

it's using state-of-the-art simulators to better prepare for any situation. it's giving offshore teams onshore support. and it's empowering anyone to stop a job if something doesn't seem right. at bp, safety is never being satisfied. and always working to be better. at bp, safety is never being satisfied. this is my retirement. retiring retired tires. and i never get tired of it. are you entirely prepared to retire? plan your never tiring retiring retired tires retirement with e*trade. i'm in vests and as a vested investor in vests i invest with e*trade, where investors can investigate and invest in vests... or not in vests. sign up at etrade.com and get up to six hundred dollars.

welcome back to "squawk box." it is time for the executive edge. spotify and accuweather teaming up to bring you the play list of your dream. they bring you climatune. it means happy music on sunny days, and slower music on rainy and snowy days. i think i wanted happy music on the rainy days. >> me, too. >> yeah. why should we be depressed when it's raining and gray out. this is true ai, in terms of

watching the weather, it tells you with the music. there's a computer that's reading newspapers in london, and it does a painting every week on the country's emotion. >> based on the popularity of various articles? >> they read the news, it tries to figure out how people are feeling. and then it draws a painting for you. >> that's nice. i think true ai, though, would be to detect what you're looking at on your phone. they say depressed people are less engaged on their phone, according to their norms. and then create a play list to cheer you up. >> it is generally we're sitting in a depressing time of year, are we not? >> it's definitely that. >> cold, snowstorm coming. some people are getting colds. >> i have one. right. you have ever yused the spotify service, supposedly when you run or do exercise it is supposed to figure out maybe with the iphone

watch -- >> what your activity is? >> it's supposed to speed up the music. >> if it's going too slow. >> there is a thing. it's a new thing. >> we need to focus on these things in this country in terms of jobs, because technology is coming. it's impacting all of us. impactediing the ability to gro our lives. is it a good technology or bad technology. >> we may have overstated the ai required for this. it looks at the weather -- >> and turns it on. >> on rainy days, you might need a different type of mood music, if you know what i mean. you know, generally nine months later on rainy days -- >> oh. >> they should produce one for traders. >> too volatile. >> market is down, you need a certain type of music. >> too volatile. >> maybe we should do a joint venture with spotify. seattle city council voting

yesterday to cut ties with wells fargo over its role as a lender to the dakota access pipeline. the council passed the measure which urges officials to end its contract with the bank. and not to make new investments in wells fargo securities for three years. shares of wells fargo have been doing better along with the entire banking sector but are down 0.4%. coming up, it's going to be a busy year for activists investing. that's according to a new report from moody's, but investing targets may be hard to come by. the author of that report is next. as we head to break a quick check of european markets right now. this car is traveling over 200 miles per hour. to win, every millisecond matters.

both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision. because no one knows & like at&t. gave us the power to turn this enemy into an ally? microsoft and its partners are using smart traps to capture mosquitoes and sequence their dna to fight disease. there are over 100 million pieces of dna in every sample. with the microsoft cloud, we can analyze the data faster than ever before. if we can detect new viruses before they spread, we may someday prevent outbreaks before they begin.

welcome back to "squawk box." moody's out with its annual report on activism. it's predicting an uptick, but attractive targets could be hard to find. joining us now is the author of that report. this is the piece i want you to put together for me. you say there's going to be more

activism, yet you say there's not going to be enough good targets. so why is there going to be more? >> not enough good targets and large caps. so what we sort of saw the last couple years was sort of big headline, blue chip targets like dupont a couple years ago. those targets are fewer and far between for a variety of reasons. >> but you've seen, you know, some say they're going after big whales now. you think that doesn't work anymore. >> well, i think there's always going to be some activity in the big whale area, but again, it's few and far between. there's always going to be underperforming companies somewhere that are sort of right for being targeted. but the bread and butter of activism has always been in the small mid-cap space. >> so we're not at peak activism. i remember those e-mails. >> that's hard to say. i thought we might have been there a couple years ago, but i think it has some room to run.

>> the s.e.c. changes the rules a couple years ago. the proxy rules. it makes the environment so favorable for activism itself. it continues to rise and rise and rise. you mentioned those small and midcaps before and look at the sectors. obviously retail stands out right now tremendously. do you see any potential activism in retail? >> right. well, we saw a lot of activism in retail a couple years ago, some last year, but i think that sector is ripe. i don't know if there's going to be tremendous growth, but there's such a bifurcation of the companies doing well and not doing well. the ones at the fringe of the herd, they're always ripe for being targeted. >> what industry would you suggest is top right now? >> tech has been top for the last three years. >> no, top in terms of where activists are going to go. >> i still think it's going to be tech. there's plenty of opportunities there. there's a lot of cash on the balance sheet.

m&a going on. companies pay low dividends. there's room for buybacks. >> when you think about a potential repatriation tax break of some sort, money coming in, does that make activism activity greater in your view, potentially? >> well, in the report we said we're not forecasting any additional activity from changes in tax policy because that just hasn't crystallized yet. everybody still is trying to figure that out. not only does that have to crystallize, which we think is probably later this year, a 2018 event, but then you have to see what companies are going to do with that cash. that's a board of director decision. >> tell us about the potential new head of the s.e.c., jim clayton, and what you think he may or may not do in terms of rules that would be beneficial or not to activists or maybe perhaps the corporations. >> right. in this report, we didn't look

at changes to regulato regulato, but certainly there's going to be some changes. for example, you have carl icahn as one of trump's advisers. on the other hand, you have the business lobbies that obviously don't like activist, so that interplay is going to be something to watch. >> you were just talking about some of the changes in obama land -- or under obama that made it easier for activists to do business. clayton has historically been a corporate guy. i wonder whether he's going to be more on the defense side. >> well, and the argument being made that the sea suite has not done enough to defend off a lot of these activist progressions over the last couple years, and they could be adopting strategy and structure to kind of defend against it. so i think he talks a lot with them. you wonder if we'll get something implemented, but i kientd of agree with chris. i don't know if it's going to be rather quickly or fast enough to

counter the rise that we're seeing. and i think there's things i think you would agree corporations could and should be doing in the new environment but seems as though they're not. >> in terms of defending themselves? >> yes, for sure. >> you know, i think it's an issue not only for credit investors but long-term shareholders as well. they've been voicing concerns about activism. there's just a lot going on in the space. >> separately and apart from all this, is there a new crop of activists? we have heard about the same names which we talk about incessa incessantly. is there a new crop out there? you haven't see a whole new set of young guns. >> i sort of call them the copy cat activists. they've been appearing in the

small cap space. these companies are easier to target, easier to build a position. i wouldn't say anybody could do it, but it's just easier. you see a different variety of activism in that space. that's helping propel some of the numbers higher. >> okay. >> and also some of the long-term, frustrated shareholders, they just get to a point where we got to say something public and then they go active. >> all right, chris, thank you. >> and thank you, joe. >> oh, you're not sticking around? >> no. i think wilfred is coming in. >> you have business to do. but you look better. >> maybe you should do it again. close out the show. >> we're talking about the cold. >> it might be the motrin. >> we have a treat in terms of guest hosts. steve forbes will weigh in on president trump's policy proposals. he's warning the border tax is dangerous and disruptive. and later, big data and basketball. jeremy lin explains how new

technology is bringing a moneyball approach to the nba. stay tuned. whether it's connecting one of the world's most innovative campuses.

or bringing wifi to 65,000 fans. businesses count on communication, and communication counts on centurylink. what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter.

morgan stanley

trumponomics, the battle heating up over president trump's travel ban as investors look for clues about tax reform and trade. our special guest this hour, steve forbes. disney gets dragged down by espn. what ceo bob iger said about the future and the brooklyn nets announcing a new high-tech deal. jeremy lin will be here to explain. we hit the court as the second hour of "squawk box" begins right now. live from the beating part of business, new york city, this

is "squawk box." good morning. welcome back to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm andrew ross sorkin along with melissa lee and wilfred frost. joe and becky are off today. let's get a look at futures. looks like the dow would open 19 points higher. nasdaq looking to open just marginally down. take a look at oil prices right now. if you want to buy one, buy the barrel. here's what it's going to cost you. wti crude, 51.83. melissa? in the headlines this morning, the u.s. army is giving final approval for the controversial dakota access pipeline. the granting of the last required permit could allow the $3.8 billion pipeline to begin operation as soon as june. japan's sharp corporation may begin building a $7 billion plant in the u.s. before the end of june. that news comes ahead of prime

minister shinzo abe's visit to the u.s. and we are watching shares of magazine publisher time incorporated. "the wall street journal" reporting that meredith corp. have accelerated their push to buy "time." previous overtures have been rejected. a couple stocks to watch that are on the move right now. disney out with quarterly results after the bell yesterday. the media giant earnings topping wall street estimates but revenue fell short of consensus. rising costs and declining viewership at espn weighing on the company's results again. we're going to talk to "new york times" columnist jim stewart about disney in the next half hour. he has views on succession, which bob iger mentioned in his interview yesterday. shares of mondolez, a strong dollar hitting the value of

sales outside the u.s. now expecting full revenue growth to be hit by 1%. now to politics. the fight over president trump's travel ban continued last night as an appeals court pressed the justice department lawyer on whether the executive order is discriminatory. the judges from the ninth circuit court of appeal in san francisco did not immediately make a decision on the controversial travel ban, but they say a ruling should come this week. if the court judges agree with the government, the order, which suspends u.s. entry from seven predominantly muslim countries, would go back into effect. and house republicans pushing for an adjustable tax. our next guest says it will cost american consumers at least a trillion dollars over the next ten years. steve forbes, of course, chairman and editor in chief of forbes media. sir, it's a trillion dollars. what do you do? >> don't do it. >> what do you do? >> well, cut taxes. the whole point of cutting taxes

is to reduce the tax burden, not to replace cutting taxes with a bran brand new tax. >> you also believe in revenue neutrality. >> not in the sense that if you reduce the corporate tax rate, make an investment in a plant, it's going to be online overnight. no, it's going to be down the road. get the obstacles out of the way to get the economy growing. not only will you see better equity values, but the assets of the nation will grow. back in the 1980s, the national debt thanks to the defense build-up went up $1.7 trillion, more than doubled. the net wealth of the nation went up $17 trillion. so the republicans are now proposing this crazy tax. na they're going to punish american consumers over $100 billion a year. so we're going to help foreign consumers in china and iran, punish american consumers. it's insane. >> what do you really think?

>> but these are republicans doing it. >> you don't buy this notion that the dollar will rise, so therefore it'll all -- >> so now these washington politicians are becoming currency swap traders and experts. it's preposterous. oh, we're going to manipulate the dollar so you don't feel the fact your gallon of gasoline is going to go up 30 cents a gallon, which is what it will if they put in this border tax. plus, if you want to get a quick tax cut, introducing a whole new tax that people haven't thought through, people forget in washington we have these elaborate global supply chains. you're going to disrupt all of that. and you don't know what the consequences are. >> you mentioned consumers will get hurt by this sort of measure. is there a bit of a zero-sum game to play here, and does the trump administration have a mandate to deliver it in terms of implementing some form of protectionist measure? yes, it will hurt consumers, but it will help workers on the flip side. is that a trade that he has a mandate to deliver on? >> the people who will be hurt

the most, working families, middle-class americans, are the ones who elected donald trump. the first thing the trump administration is going to do is hurt those very people struggling anyway? no, economically it's wrong, politically it's wrong. if you have problems on trade, you want to go after specific companies. if you want to enforce the rules that we have on the books now, we have a lot of remedies now. you think you need new remedy, put it before congress and get it passed. but the sweeping thing -- and these taxes, what's bad about this tax, as we've seen in europe and elsewhere, they're embedded in prices. you don't see it directly like you do a sales tax. it's very easy to raise. >> but there's a little bit of a breakdown in the republican party, which is to say there are folks on your side that suggest don't touch the tax, you don't like the protectionist measures and what that ultimately means. there's others who say they care about the debt and they're deficit hawks. can you be both? >> deficit? how about a little bit of spending restraint. you can't tell me out of a near

$4 trillion budget, former senator coburn came up with a lot of idiot programs that amounted to ftens of billions o programs. you can't start nicking on that? again, the key thing is, the national debt, bad, but as we've seen in the past and you see with any company, if you get the asset side growing, these liabilities become much more easy to cope with than when you have a stagnant economy, assets not growing the way they should. >> what i worry about is that you will be right and succeed, yet at the same time, we will have whatever this planned tax cuts were, they'll continue. they'll be dynamically scored such that someone will just put in more aggressive numbers into the model and say, guess what, this is revenue neutral now. >> the key thing is, i don't worry about washington. i worry about the american economy. if you get a tax code in or at least tax rates cut so it

stimulates the american economy, washington can take care of itself. >> when it comes to the border adjustment tax, it's creating divisions and rifts within the republican party. as you see this play out, you get more concerned about the viability overall of corporate tax reform. >> that's exactly right. to introduce a whole new tax with implications you don't fully realize in terms of global supply chain, what you do realize is it's going to hit the very people who put you in office. put that out there. divide your own ranks. it's preposterous. just to straight forward rate cuts across the board so people can see right away things are going in the right direction. already now they're backing off on health care. they're backing off on the tax thing. they don't get something done soon, they're going to be in big trouble economically and politically, especially in 2018. they could lose the house if they botch this thing on taxes. >> we're literally less than a month into the game here. you know, even i was -- joe's

not here. you can't declare it a failure already. >> no, but you can see they're already bringing about unnecessary divisions on the tax side. i mean, we've been in this tax game for years. we could have rolled out easily a well thought-out series of tax cuts. democrats for years have been -- >> your friend paul ryan has been trying to roll this out the whole time, but his includes the border adjustment tax. >> which is what he should leave out. on the corporate side, a lot of democrats know we have to make changes on this thing. the simpson-bowles commission, you saw a lot of support. you do them personal, do them big, and don't get in these unnecessary fights. >> how much time do you really think he has? you got to have a plan announced when? by when? >> you have to make sure this thing is enacted at the latest by summertime. >> enacted by summertime? we just had a congressman on in the last hour who was talking 2018.

goldman sachs this morning saying -- >> yeah, they're beginning to realize they've stepped into a real beehive on this one. >> you mentioned unintended consequences of things like the border tax, unintentional consequences. what about the stronger dollar? would it cause a spike in the dollar? what's your thoughts on that more generally? clearly, president trump seems to suggest he wants a weaker dollar, but the policies point in the other direction. >> again, we don't know what the consequences are. the idea these guys in washington know what the dollar is going to do in the exchange markets when there's so many zillions of factors determining exchange rates. the volume in currencies each day is over $5.3 trillion. these guys are going to figure that out? so yeah, the dollar gets strong. well, that'll help make the tax less burdensome for consumers. well, the higher dollar has other consequences. they haven't thought this thing through. so drop it. do a straight vanilla tax cut. we've done that before. it works.

>> do you pick up the phone and call congress? >> i've been agitating on this. >> i'm sure. what's the reception? >> even though a lot of the house members have dug in on this, i think others are beginning to realize this is not such a great idea, especially in the senate. >> so your prediction is the border adjustment tax goes away? >> i think at the end of the day, they will drop it. even if they pass the tax cut late in the year, if they make it retroactive to january 1st, that'll give them -- that'll cover a lot of sins. >> okay. steve is going to be sticking around. we have to talk a lot more about a number of issues. i want to talk about the deductibility of interest, which has become another hot button for folks. >> steve is with us for the rest of the hour. much more to come this hour on "squawk box." riding the trump rally. we'll talk market strategy after the break. plus, disney disappoints. "new york times" columnist jim stewart on what's next for the magic kingdom and ceo bob iger. and the brooklyn nets are bringing big data to the court.

point guard jeremy lin will join us with all the details. stay tuned. you're watching "squawk box" on cnbc.

welcome back to "squawk box." time warner out with earnings. the media giant beating estimates on the top and bottom lines for its fourth quarter. you're looking at that stock up

marginally in the premarket after those results. most of that stock movement, the premium built in on at&t's planned acquisition. of course, big questions about whether the trump administration is ultimately going to allow that through, given trump's comments during the campaign that he wouldn't. however, some other reporting that they may soften their stance. meantime yesterday, the dow and nasdaq both hitting all-time intraday highs. the nasdaq closing at a record high itself. the dow not quite so. joining us to discuss markets is heidi richardson from blackrock and dennis gartman, cnbc contributor. good morning to you both. dennis, i'll start with you. oil prices have slid meaningfully the start of this week. they're down again today. it's definitely weighed on stocks. the s&p on a sector basis, energy the worst performer week to date. what's your view on that recent move? is it something just a slight

pullback or the start of something more meaningful? >> i think there's something material taking place here. one, crude is bidding for storage. clearly there's been increases in the supply of crude oil. the eia has reduced demand numbers for the coming year. and more importantly perhaps the hedge funds find themselves within egregiously large long position. so we've broken down technically. i think this is a meaningful start to the downside. i fear that something material is about to develop here. if we put into effect -- the market is disturbed by, as mr. forbes was talking about, the prospects of a border tax. i think that has pushed people to the sidelines who might have been bullish on the market, wondering what's going to happen. it's created confusion. i think something material is taking place. we have broken down technically and prices are heading lower.

>> heidi, despite oil prices being soft, the other bearish factor has been bonds. we have seen a lot of purchasing of bonds, yields coming down. despite that, equities remain resilient. the fact we're sort of treading water for equities at the moment, do to you see that as a positive sign of resilience, or a negative sign that they're due to pull back a bit more sm. >> i think some areas of the market have gotten ahead of themselves. the market is pricing in that all of these things trump is talking about are actually going to happen at some point this year. i think some of the areas focused on infrastructure spending, like transportation and copper, i do think some of those have gotten ahead of themselves and are likely to have a pullback. i think other areas are geared for greatness. i think you need to be selective this year. >> not just selective. domestic domestically, you have a preference. >> we're talking about this reflation trade in the u.s. marketplace, but the reflation trade is going on globally. i think there are some great opportunities in europe. it's been underowned. i think there are great opportunities in japan and even some select emerging markets. >> dennis, your own view on

europe slightly less constructive. >> the political circumstances there are breaking apart at the seams. the euro is breaking to new lows here or shall be soon. the euro is breaking down relative to the swiss franc. i think it tells you informed money is moving out of europe as fast as it can despite the fact the swiss national bank is doing everything it can to help the euro. hasn't helped at all. we have elections coming on us in france. we're going to likely have elections this year in italy. we may have elections in other countries that the far right wing is going to win. the politics are breaking apart, and that can't be a good sign. >> heidi was just talking about certain elements of the reflation trade getting ahead of themselves. you were on "fast money" the other day talking about steel stocks. do you still believe -- even since the last time i talked to you, because since then we've

had the immigration ban hearing streamed on live tv, a contentious nomination of betsy devos. are you on board this notion that the reflation trade will happen, that infrastructure spending will happen as well? >> i think what we need to understand is, yes, the infrastructure is coming at us. there's no question it would be a very, very bad sign on the part of the administration not to push ahead with infrastructure. so i think that owning steel, owning copper, owning the incumbent things in economic growth and infrastructure are the right places to go, but you may want to hedge those by owning derivatives. you may want to own those stocks and act like a hedge fund, hedging away the broad market risk. i think that's the what i to trade this year. own infrastructure and be short of the broad market, having not an egregious exposure to the broad market openly but own infrastructure. own steel, own copper, own railroads. >> but dennis, that assumes a major infrastructure plan is coming when we keep saying it's

not. >> it's coming. he cannot back down at this. the republicans can not back down at this. mr. forbes argued the same thing. >> i hope you're right too. you look at the reports, the delays even in obamacare. look at goldman sachs this morning, whether you think they're right or wrong, they're saying look at that as a signal to what's going to happen on the fiscal side. getting infrastructure seems like it's the last piece of this. i'm not saying it should be the last piece. the question is how you get there. >> to that point -- not to glom on, but i don't get the hedge of being short the markets but long infrastructure. infrastructure is the last thing to happen, that presumes all these other things will happen like corporate tax reforms and the overall markets would, i think, rise. so that hedge wouldn't necessarily work. >> well, it may not work. if it doesn't work, i will admit it and move to the sidelines. but thus far, it has clearly been the place to be. it has worked since november demonstrably. it's still working now. it may not work in the future. let's admit, we are only two weeks into the administration.

it's early to say, gee, infrastructure is off the table. no, infrastructure shall be on the table, as shall i hope tax cuts, but i certainly hope that the border tax is not on the table. i hope that's taken off. >> heidi, infrastructure clearly a sector with a lot of political risk attached to it, as it health care. that's your top pick. >> for infrastructure, this is what makes markets. we agree to disagree in terms of the outlook on that. if i think about the tax repatriati repatriation, i think the biggest beneficiaries are health care. biotech has been down since hillary clinton tweeted about pricing control. we saw a nice bump after the election because donald trump hadn't spoken about pricing control. he was so focused on the affordable care act. now he's talking more about pricing control, but i do think the valuations there are really attractive. if we look at the biotech market, it's seling at a considerable discount to health care as well as the overall market. i think if we look at the earnings quality of some of

those companies, if we look at ageing demographics here in the u.s. and outside of the u.s., i think health care bodes well, particularly biotech. >> medicare is a lot to negotiate. does that change your stance? >> no. >> it doesn't? >> no, it doesn't. i mean, i think there's risk inherent, but looking at valuations and earnings, traditional fundamentals of how we think about investing. >> heidi, thank you. dennis, thank you very much. >> thank you. coming up, just how unproductive are you at work because of politics? data from a new survey next. later, hear what ceo bob iger had to say about disney's latest quarter and the company's succession plan. stay tuned. hey steve check out this guys leg. yeah looks like a real nasty moving back in with his parents. what? no. i just broke my leg. no, this is a full blown move in to the basement, you're gonna be out of work without that money from... aflac! you might miss your rent. aww i just moved out. bummer man. hey i used to have my own place. yeah? no, no i live with my mom, but it's cool.

health can change but the life you love doesn't have to, keep your lifestyle healthy with... aflac! ♪ king arthur: ready! washington: charge! empress wu: charge! (in chinese) king arthur: charge! ♪ let your reign begin. evony, the mobile game. download now.

we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $6.95 per trade? uhhh- and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering

$6.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab. welcome back to "squawk box" this morning. youtube taking on facebook live. the google owned video network rolling out mobile live streaming for its top content creators or users who have more than 10,000 subscribers. live videos will have similar features to regular youtube videos. you can search for them via recommendations or play lists. so the live space getting a little more interesting. also, apple now reportedly hired the former amazon fire tv boss to run the apple tv division. this according to the verge. the executive joined amazon in 2013 and oversaw the launch of

fire tv products. before that, he spent time at netflix. of course, all of this raising some questions about whether apple is ultimately going to get into the original content business the way netflix and of course amazon and amazon prime have already done. services, the cloud, all of that has been a boon so far. >> the area is competitive. when we come back, investors getting more details about disney's succession plan. my good friend jim stewart from "the new york times" is going to join us with his take on all this next. later, you're not going to want to miss this. the brooklyn nets investing in technology to collect more data on its players. point guard jeremy lin is going to be here. we'll be back to explain.

good morning. welcome back to "squawk box" right here on cnbc. we're live from the nasdaq market site in times square. among the stories front and center at this hour, a number of

notable earnings reports. time warner reported fourth quarter profit of $1.25 per share. that's 6 cents above estimates. revenue also beat forecasts. the company also says its deal to be acquired by at&t still on track to close later this year despite the comments we heard from donald trump on the campaign trail with his ambition to block that deal. we're not sure whether things have changed, but we'll see. in the meantime, drug maker alergan earning $3.90 a share. that compares to estimates of $3.76. revenue also came in above street estimates. alaska air posting a street beating quarter profit of $1.56 per share. that's 16 cents above estimates. alaska air also raised its quarterly dividend to 30 cents per share from 27.5 cents earlier. i like alaska air. >> i've never been on it. >> it's good. i always thought they'd merge with delta. we'll see. disney out with fiscal fourth quarter results earnings

topping estimates. declining viewership dragging down results. bob iger also weighing in on a succession plan with a cnbc interview with julia boorstin. >> we'll do what is in the best interest of the company, and the board will help determine that. while i believe that we have a strong robust succession process under way, i know a lot of people are curious about it. safe to say it is a strong process. i believe a successor will be chosen under the right circumstances at the right time. if it's in the best interest of the company for me to stay longer, i'm open minded about that. >> joining us now, jim stewart, "new york times" columnist and cnbc contributor. he's also the author of "disney war." great to have you with us. >> nice to be here. >> a lot can be gleaned from a stock's reaction to earnings. in the after hours session, the stock was down as much as 2%. premarket, it's flat at this point. investors seem to be looking through the espn problem as if there was no problem at all. what's why r take? >> well, investors know there's

an espn problem. we didn't really get much visibility on that here. i think the good news is disney is not going off a cliff. this is going to be a gradual transition, but nonetheless, this is a huge story going on here. the breakdown of the cable bundle. the cable bundle was god's gift to cable channels and disney and espn in particular. they are never going to replicate something that is that profitable where millions of people pay $10 a month for something they really don't want. i think the other story here is succession, calming investors. again, no big upheaval. they basically above bob iger. why wouldn't they? look at the record over his tenure there. at the same time, it just kind of pushes that issue down the road. he's talked there's a succession process under way. that's disney magic because this is the ultimate stealth process. if there's a process going on, i mean, there are no fingerprints,

no search firm being hired. they said they were going to plunge into it a year ago. no evidence of that. >> i was surprised. i was thinking, well, what is this process? you've lost two guys, right. >> i think it's fine more bob ooiger to stay a few more years. he's 65 or 66. that's the new 45 or 50 or something. speaking from my perspective. he seems like a very young and dynamic guy. disney does not have the greatest track record when it comes to grooming successors. i've often wondered about that. is that job just so great and fun you don't want to leave? i think there's some possibility there. >> you like my idea of sheryl sandberg? >> well, maybe you know sheryl sandberg better than i do. she certainly that is a great profile. she's on the board, so she knows

the company. she knows technology. i think they need somebody who knows technology. she's the right age. she's a woman, that's great. whenever i bring up the name sheryl sandberg inside of disney, they flip out and say absolutely not. throw cold water on that. >> because? >> i don't know. maybe she wasn't really interested. they haven't gone much farther than that. they cut off the conversation, saying no. maybe that means yes in this strange world. at the least -- and everyone has told me she's not a top candidate. but then there aren't any top candidates right now, obviously. i think one thing they can do is continue to groom people inside for a few years. i hear there are some very good people. they're way too young to be making any bets on. there's a lot to be said for internal grooming there. disney has a terrible record of bringing somebody from the outside and putting them in as a quote/unquote heir apparent. that's a kiss of death in that

particular kingdom. you do not want to be the designated hero ed heir apparen. >> can we touch back on the espn point of view because clearly that's a declining part of business. incrementally, are you more bearish about the espn part just this quarter, or this is something that's already been quite well forecast that's declining. is it just too far away? >> it's a long-term process. if i was an investor, i would be concerned about the long-term prospects. like i said, i don't see how you ever replicate the model they had. iger also mentioned they're going to continue to get revenue from these different streams. it's not like cable is going away. he talks about a skinny bundle that includes disney. skinny bundle is bad for disney. what we're soon going to learn is if people aren't force fed espn on their cable menu, how

much are they going to be willing to pay for it? i've seen some modeling on what kind of numbers they're going to have to get. $80 to $100 per subscribe. to people love it that much? we're going to find out. how much is the skinny bundle with espn? how much can they pay disney in fees? there's still a question mark. this is a model in a long-term revolution. it's fascinating. where it's all going to end up, i don't know. it's all driven by consumer choice, the arrival of netflix, amazon, competitors over the top. >> bob iger has made a number of large acquisitions recently over the past couple years. do you think there's more on the horizon, and what do those look like? >> well, he's done great acquisitions. he paid a lot of money for some very valuable intellectual property. i think there are two big questions here. i think there are no obvious other giant brands in the entertainment world sitting out

there, but who knows. a it's very striking to me and somewhat surprising they didn't get the potter franchise for the theme parks. they let that one go. i think if they had to do it all over again, they wouldn't do that. but no, he's had a great eye for that. another big question is can you milk marvel and star wars more than they already are? i mean, they've done a fabulous job with that. they're delivering -- executing on that brilliantly well, which is not an easy thing to do. >> that's the big question. what's the next big thing in terms of original products. >> yeah, where is the growth going to come in this company. we're all just talking about keeping the plateau going and stemming the decline. investors at some point want growth. >> steve, how do you rate bob iger? >> excellent. he's done a great job. that's why i don't think there's going to be pressure to push him out. the pressure is going to be he was good in animation and other things, what's the next big thing. >> okay. they're playing us out. i got to put you on the spot,

jim. there's a person on twitter. i think this is easy money. they say $5,000 to your charity of choice, which is mine, so i'm going with the alzheimer's association. if i ask you about bloomberg's deleted madoff financials. do you know what this is about? i hope we can get $5,000 to the alzheimer's association. do you know what i'm talking about? >> i'm afraid i can't answer it. >> do you know what we're talking about? >> no. >> neither do i. i thought we could get money to charity. we might help ourselves. thank you. >> well, you asked. >> i'm saying, i asked. richard rosen, i asked. send the check in. thank you very much. coming up, "squawk box" meets lynn s meets linsanity. jer dear predictable, there's no other way to say this. it's over. i've found a permanent escape from monotony. together, we are perfectly balanced, our senses awake,

our hearts racing as one. i know this is sudden, but they say: if you love something... set it free. see you around, giulia ♪

back to "squawk box." a quick look at the futures. a great lineup of guests to get to. we're calling higher following a record close for the nasdaq yesterday. an intraday record high for the dow. slight gains yesterday. the dow is up by eight points.

the s&p and nasdaq just below flat. essentially flat before the market open today. okay. we're talking linsanity. this is a linsanity moment right now. the brooklyn nets announcing a big partnership with enterprise software company. the nets companies will wear the logo on their jerseys and take advantage of big data analytics. joining us now, the ceo of brooklyn nets and nba player r jeremy lin is here. you came in from charlotte last night. thank you. what time did you get in? >> around 2:00. >> 2:00 a.m. so we appreciate it. let's talk about this partnership and what it means and what big data means for basketball. tell us about it. >> well, first of all, we're thrilled for the partnership. obviously the nba has afforded teams throughout the league to sell a very appropriate patch on the jersey, starting next season. we looked at that in a very

serious way. we look to identify not only a great strategic partner but one that was substantive enough to help us with performance both on and off the court. we've had an existing relationship. this was an opportunity to really amplify that, tap into their data and analytics, their software, and to drive our business. we're very excited about it. >> so we want to show the jersey real quick. by the way, ge just did a deal, talking about big data, on the other end, with the celtics. >> they did. absolutely. >> so this used to be -- you look for nike up there. now it's big data companies. >> nike will be on the jersey next year. they take over that position from adidas. so when you think about great company alignment between infor, brooklyn nets, not sure it gets much better. >> still a small logo on the shirt. do you think this is something the nba is going to allow -- >> he's from europe though. they rename the teams basically.

>> well, yeah, but we were close to allow naming of the stadiums. either way, is this the tip of an iceberg for how much more you're going to be able to monetize moving forward? >> i'm not sure. i think right now it's very appropriate. it's tasteful. it does amplify and create great visibility on the court. from where we sit, any time you can infuse a brand on to the playing field, it's a big-time opportunity. infor saw that. >> jeremy, in terms of what this means for you as a player, how do you use data? what kind of stuff are you getting from the team? is it changing your play? >> yeah, i think going forward you see the league just changing towards analytics, stats. so for example, we have to track our sleep or we track our weight and everything, like how your muscles feel on a daily basis. every day when practicing or working out, we have these things we wear. constant data.

how fast you're moving. >> do you wear something at night like a jawbone or fitbit? >> no, you just track how many hours you get then log it in there. then when you're working out, you wear something on your back that measures all that. during every game, there's cameras in each arena that have a ridiculous amount of data. being able it pull that all together. >> is it helping you recover from injury? you've had hamstring problems. is that helping you get back on your feet and back on the game? >> yeah, literally every day. if we work out the day before, the next day they're looking at all the numbers. how long was i on the court, how many jumps did i take, how much steps did i take, how much distance i covered. everything down to all that to try to help you minimize further injury basically. >> what's the most surprising piece of data you think you've collected that suggested something you didn't think? >> first off, we're gathering all the behavioral analytics. for us at infor, there's just a great cultural alignment with

brooklyn sports and infor. it's that brooklyn grit for us that has allowed us to become, you know, the largest enterprise software company based out of new york, headquartered out of new york. so we're just excited with the partnership, excited about working with the players. we've done this before. when you think about the work we've done at formula 1 with ferrari the last couple years, we're working with triumph motorcycles and a land speed record to break that. we're bringing behavioral analytics to the table. we're crunching all that information with 65 behavioral scientist ph.d. individuals at m.i.t. that are building the algorithms, crunching the behavioral data from the players, the courtside tvs. we're going game time analytics. this has to be presented into the most beautiful, easy to use software. >> is it still early? big data is only as good as how big the data is. so you need more and more data points, right, in order to actually come up with

conclusions that are valid. so at this early stage, if the nets are just using this information within the nets team, does that give you robust enough information to say, you know what, jeremy's got to do x, y, and z to improve his game? >> 100%. as you heard jeremy just talk about, what he's wearing during practice time, we want to mimic as much during practice time. are you ten points down? what's the five-person team on the court when you're on the court versus the five-person team when you're ten points up. >> are you going to be able to apply this data to draft choice, being able to see at the college level something that can fit in? also, in talking about sleep, in baseball they're discovering if you go from west to east t affects how you pitch, how you bat, how you field. are you finding that in terms of travel, in terms of the performance of players? are you able to get data for that? >> for us, this is -- you've all heard the term moneyball for baseball. this is the next iteration of that. it incorporates more of the behavioral aspects. it's great to measure the speed

of the ball and all those great things, but how did you get there? what's the behavior of that team and how did they interoperate? you have to understand the eq. there's also 40 different attributes we track. 40 different attributes about the behavioral components of an individual. when you interview somebody, it's hard. as you know in the business world, how do yu you interview someone in a 45-minute window and know how good that person is? >> is there a moment when you're on the court and the coach has looked at some numbers and done something they might not otherwise have done? >> yeah, they tell me to get off the court sometimes based on the number. once you hit a certain -- so basically, it's like the minute restrictions of practice. if you hit a certain -- it's called a load. if you hit a certain load, you got to get off. mid practice, whatever it is. you hit your load, all right, you're going to sit out the rest of the time. >> and they weren't doing this. would they have told you to get off the court five years ago?

>> no. five years ago it was the longer, the better. that's always been the mentality. as you see the league progress, a lot of it is really going towards injury prevention just because injuries are such a big part of our game. >> jeremy, i was reading in an article, an interview you did last year in june. you said in the future you want to do big, big things off the court. what do you have in mind after you finish playing the game? >> a lot of philanthropy stuff, to be honest, working with underprivileged kids. >> brett, i want to ask a separate question. there's been a lot of talk over recent years that the nfl wants to potentially expand internationally. london's been a big focus. what do you think about the nba potentially doing that? asia is a huge market for you. >> i think the nba is one of, if not the most global sport right now. we play games all over the world right now. our game is delivered through social media and different forms all over the world. from a nets perspective, we probably have been one of the most active teams playing in

london, china. next year we're looking to play somewhere in europe or international. i think all teams aspire to be global. not sure when a team will reside in europe or not. but certainly this is a global sport. we're pushing that agenda every day. >> when we were in rio over the summer, adam silver came on. we were talking about whether we thought there would be teams ultimately that would live in london, stationed around the world. he said he used to think that, but that maybe it's changed with vr. the idea that we all might around the world be able just to watch it as if we're sitting right on the front row there. >> that's exactly right. with technology today, you could experience that game even though you might be somewhat displaced. >> so you mean i don't have to come on friday? >> no, no, you have to come. >> but it's going to help jeremy lin sleep because he's not flying west to east across the world. >> but there's nothing like the real experience.

>> does the barclays tie-up give you a bigger edge when it comes to london? >> not necessarily, but given the halo it provides us, the building and our team have that global presence and appeal. we do look at the uk as a sec d secondary market for us. >> okay. thank you, guys. thank you for waking up early for us and flying in late last night. very grateful. coming up in the next hour, where the pipes are. 50% of the pipe needed to complete the keystone pipeline are sitting idle at this plant in arkansas. a live report coming up. ♪ it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation?

why invest in average?

time for the last word from our guest host this area, steve forbes. you've been very outspoken about corporate tax reform. i want to ask you a broader question about president trump. is he a pro-business president in your view, from what you've seen so far overall? >> i think he's pro economic growth. i think he realizes that this economy doesn't grow, his presidency will be finished. he's got to do it in a way where people who felt left behind in the '80s and '90s feel this is beginning to work for them. that's why i think he's got to move fast on the tax cuts, get things moving. he's already gotten what you might say is the symbol capital, going after carrier and others. but now he's got to deliver the big stuff. >> is that pro business?

>> well, is it pro big business? some parts yes, some parts no. the king thing is the economy is propelled by businesses we probably haven't even heard of that become the big ones of tomorrow. that's the environment you have to create. the no names today become the big names today. >> quick question following the executive order we saw friday. what's your view on the cfpb and what should be done with that? >> i think it's unconstitutional. i think eventually it's going to go. there's an interesting piece in the journal today about how you can get rid of the director by directing him to drop the appeal on that court. if he disobeys, the president has the right to fire him. if he tries to hold out, he's out. he will go, but the key thing is that agency's got to be accountable. >> we got to go, but real quick, interest deductibility. a fascinating piece taking aim

at steve schwarzman. >> one nice thing about the flat tax, it's pure. >> it always comes back to the flat tax. >> hey, come on, you got to have the opportunity here. but it's got to be full circle. if you're going to do away with the deductibility, you can't tax it. >> steve forbes, thank you. >> been great. still to come, the go-to senator for all things taxes. ohio senator rob portman will join us to talk about the road to reform. and later, activate's michael wolf on tech, media, and his bet on e-sports. lots more to come here on "squawk box." we're back in a couple minutes. shift in human history n is happening before our eyes. sixty to seventy million people are moving to cities every year. at pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets.

partner with pgim the global investment management businesses of prudential.

we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500,

and, can deliver insight person to person, on what matters to you. morgan stanley. trumponomics. will tax reform get done, and in what form? we're going to ask republican senator rob portman snp glaxosmithkline's ceo joins us to talk quarterly results, the company's pipeline, and the politics of drug prices. plus, let the games begin. the 2018 winter olympics are just a year away. we'll begin the countdown to pyeongchang as "squawk box" begins right now. live from the most powerful city in the world, new york,

this is "squawk box." welcome back to "squawk box" right here on cnbc. we're live from the nasdaq market site in times square. i'm andrew ross sorkin along with maielissa lee. and wilfred frost is adding his sophistication. >> just the way i say the words, not in the content. >> however, i should note the markets looked up before you joined us at 7:00 a.m. now they're looking down. dow looks like it would open off about six points. >> that is my fault. >> s&p off about three points. the nasdaq looking like it would open down about five points. treasury yields as well. the ten-year note right now. it's 2.367. making headlines today, mortgage applications rising 2.3% in the last week, but applications are still running 23% below year ago levels because of a huge drop in loan refinancing. we're also watching oil prices very closely this morning. yesterday the api data showed a

much bigger than expected build in crude stockpiles. this morning we'll get weekly inventory data from the energy department. wti at 51.77. brent is also trading lower. independent investment firm has been chosen as an adviser on the ipo. last month they invited banks to pitch for a position on what's expected to be the world's biggest offering. they expect the ipo to value at a minimum of $2 trillion. some stocks to watch today. a mixed quarter for walt disney. earnings beat the street, but revenues fell short. a drop in ad revenue and tougher comparisons in the movie business. shares, as you can see, are basically flat now. they had declined about 2.5% immediately after the results hit at 4:00 p.m. eastern yesterday. mondolez international missing on top and bottom line. results impacted by a number of short-term issues as well as weakness in its business abroad. as you can see, shares off 1.5%.

meantime, twitter upgraded to buy from neutral at btig. the firm notes an acceleration in daily active users. it's especially true in the u.s., which has a disproportionate impact on the company's revenues and profits. twitter is up 2.7%. buffalo wild wings missed analyst estimates, seeing a drop in same-store sales and giving a weak outlook for the current fiscal year. panera bread earnings beating the street thanks to improved digital offerings at its store. digital sales now account for 24% of total sales. the shares are up 2.6%. >> the carbs are winning. >> i know. gilead projecting didn'ting sales for its hepatitis c drug. shares off 6.7%. president trump's executive order on the keystone pipeline

could mean construction will soon begin, but there are restrictions on where the pipeline has to be made, in america that is. jackie deangelis joins us with more. >> reporter: hi. good morning to you, andrew. about 50% of the pipeline needed to complete the keystone xl, that's more than 300 miles of pipe, sits idle here in arkansas. actually, it's been sitting here since before president obama vetoed the project in 2015. so the question now, if and when this pipe will go into the ground. trans-canada has reapplied for approval, and it's assumed that it'll probably get it pretty quickly. but president trump said in his executive order two things, that not only must the pipe be made here, which some of it is right now. he also said the steel must be sourced in the united states. presently, pipes of this scale, they are not made with steel that comes from the u.s. actually, it's coming from places like korea, japan, china,

india, turkey, some from mexico. so all international sources. now, u.s. steel makers say that they can make this type of pipe, but they're not doing it right now. now, remember, analysts are also saying for them to start and ramp up, to meet the demand efficiently, that could take several years' time. meantime, everyone's unsure at this point. there's not very clear answers. did the president mean that pipe for future projects must be made 100% in the usa? is this pipe actually usable? we need more clarity on that executive order. but it's such an important right now, guys because president trump has vowed to move forward with an america-first energy plan. it's important to note that stamping these pipes made in the usa 100% may be a little more difficult than previously anticipated. and i will say this. each one of these pipes is nearly 20,000 pounds. that's a lot of steel to get in the united states. back to you. >> jackie, thank you for that.

great images, by the way, just walking around, hanging out with the pipes. in the meantime, comprehensive tax reform was a key campaign trump promise, and house speaker paul ryan says reform will come in spring. joining us now is senator rob portman of ohio, who serves on the finance budget and foreign relations committees. good morning to you. >> good morning, andrew. >> thank you for joining us. we've been trying to understand all morning and frankly for the past couple weeks, but at this point in terms of the timing on tax reform, which the market has priced in as if it's happening relatively soon, but increasingly there have been reports and murmurs and other things that have suggested maybe this is going to take longer than we thought. what do you think? >> well, we need to do it. it's urgent. it's one way we know we can give the economy a shot in the arm. you and i have talked about this before on this program. the reality is that the code is inefficient. it's antiquated. it's a great opportunity. timing will depend on a couple things. one, i think having a budget done, which usually happens in the april/may time frame.

you have a process you talked about before on the show called reconciliation, where with fewer than 60 votes, you can get it done. i think that'll probably be necessary, honestly, to get the kind of tax reform done we're looking at. pro growth, pro jobs. it's probably early summertime. the point is we're moving forward. it seems as though there's a consensus among democrats and republicans that the current code is broken and there seems to be more working with done with the new administration coming and with the ways an means committee and the finance committee. i think it's moving forward. >> just to put a fine point on it in terms of timing, you think this summer. that is 2017, not a 2018 project. >> no, i think it should be done this year and can be. we've done a lot of research on this already. we've had, as you know, dozens of hearings. i was involved with chuck schumer actually, the new minority leader, and co-chairing a working group on this international tax reform issue a year and a half ago. we came out with our report that said basically the code is punishing u.s. companies and

leading to jobs and investment going overseas. there's some pretty simple things that can be done to stop that. so i think there's an opportunity here. >> senator, we just had a conversation with steve forbes in the last hour about the border adjustment tax. also, though, importantly, the issue of whether the tax reform package is ultimately going to be revenue neutral. does it have to be revenue neutral for you? >> i think it can be because it will generate a lot of revenue if it's properly analyzed. this is by using a so-called dynamic score rather than the static score that doesn't assume the changes in behavior we know are going to occur. we have the highest rate in the world now on our businesses of 35, really 39% when you average in the state taxes. at one point, we were at the low end of that. now we're at the high end. that's resulting in a lot of jobs going overseas, but also it's resulting in companies not bringing their earnings back from overseas. if there's $2.5 trillion locked up overseas, there's a great opportunitily lowering the rate, having repatriation bringing

that back, which will bring up revenue. i think it should be revenue neutral so it can be so-called permanent tax reform, not subject to the limitations of the budget, which is what otherwise would happen. but we should use the kind of scoring that actually shows the dynamic nature of good tax reform. >> so senator, does that mean that a border adjustment tax is not a necessary part of tax reform? >> well, i don't know if that matters one way or the other. >> are you for it? >> well, i do think there's some benefits to it. all the other competitors around the world do use a v.a.t. type tax in order to tax our exports to them and not tax our exports to them. i think currencies will adjust somewhat. i think what is most important is we simplify the code, take away some of this complexity. the compliance costs are growing every year. and put in place pro growth policies that encourage investment in america. there are various ways. one would be the proposal the house has. we have different ideas here in the senate. the administration has their

views as well. >> it seems though that the idea the border adjustment tax has really created divides, even within the republican party. these divides could be obstacles to implementing tax reform at the speed at which you're suggesting, early summer. so within the ranks, is there any agitation for dropping this part and passing just straight forward tax reform, a straight forward cut to the corporate tax, to the personal incomes tax? this is what steve forbes is saying to us. get that done, figure out the rest later, but get that done quickly so the economy and markets can move forward. that's what we banked a rally on. >> melissa, i think that's an interesting point. lowering the rate of tax and broadening the base, meaning getting rid of some of the underbrush in the code, is the more traditional approach the republicans have had, and democrats as well who are interested in growth and jobs. economists would agree that would give the economy a shot in the arm. but that's part of what is done in the blueprint of the house plan. i think there's a way to square the circle and to bring people together on tax reform.

we do have to come together because this is one of those issues that the american people deserve to have addressed. we have talked about it for a long time, melissa. we know the code needs to be fixed. we know that if we do that, we'll create more jobs and more investment over here and begin to see wages come up, which is ultimately what i think the american people are looking for. >> senator, we haven't had an opportunity to speak with you, i don't think, since the executive order on immigration was brought down, which of course has become a big controversy. we heard the ninth circuit court last night. i want to understand where you stood on that issue. >> well, the next morning i was on one of your programs. it wasn't cnbc, i'm sorry to say. i said the very simple truth, which is that the extreme vetting proposal was not properly vetted. i regret that because i think a lot of the confusion and a lot of the problems have resulted from, you know, not taking the time to actually consult with folks, including the agencies involved, including the department of homeland security.

i think now with general kelly there in place and with his leadership, things will be different. i think most americans agree that our vetting ought to be tightened up, particularly with regard to visas, particularly with regard to visa waiver countries, which were not included in that order, actually. and that we ought to know who's in this country. we ought to know who comes in and leaves and why. i think those are all things that we should be able to figure out on a bipartisan basis how to accomplish. >> senator, clear positioning from the administration on friday with their executive order towards financial regulation. from your point of view, how long before that actually gets carried out and how much of it will require a broad consensus across congress? >> it depends. some things can be done by executive order, so it won't require the congress. with regard to restructuring the dodd-frank legislation, that would require 60 votes. it's knot one of those things like a tax reform we've talked about, but also the congressional review act,

individual regulations put in place in the last nine months can be handled through a different mechanism. it will require a bipartisan group of senators to get together. by the way, there is some bipartisan interest in this. if you talk to our community banks who are being hit hard by these regulations, this week, in fact yesterday, i introduced legislation with a democrat to change a part of dodd-frank that perhaps inadvertently but classic of the federal government does not allow good groups like habitat for humanity and other nonprofits to be able to get a free appraisal, which they have done traditionally and cannot do under the dodd-frank regulation. there are aspects that can be done on a bipartisan basis. legislation will be required. >> one area a lot have been talking about since friday which may require executive order to act on is the cfpb. steve forbes just joined us and called it unconstitutional. what's your view?

>> look, i've made my positions clear on this. i have three big problems with it. one is you do not have an ability to have the oversight you do with other regulatory agencies because their funding does not come through the appropriations process and through the elected representatives being able to have the oversight to ask questions. i think that's wrong. second, they don't have a board. if you look at the other financial regulators, there's a commission or board. in this case, there's not. there's just a single head. finally, the part that the d.c. circuit court in a decision that was with democrat appointed judges as well as republican appointed judges agreeing, saying that the director actually needs to be removable at the discretion of the president. that's why, as you know, that court case was successful. so i think the way it was structured was wrong. i think it doesn't have the accountability that's needed. i think as a result, you see a lot more duplication with other financial regulators than you would otherwise see.

>> senator, before we let you go, i want to ask you about a comment that seth klarman, a famed investor, put out a letter that he sent to his investors recently. it's gotten a lot of attention. i wrote about it in "the new york times" yesterday. he said something and i wanted to hear your view on this. he said prurp may be able to temporarily hold off the sweet of automation and globalization by cajoling companies to keep jobs at home but bolstering inefficient and uncompetitive enterprises is only likely to temporarily stave up a market forces. the u.s. long ago abandoned protectionist trade policies because they not only don't work, they actually leave society worse off. what do you think about that? >> well, i think seth is restating basic economic theory. so there's a lot to that. i would not say that that's what president trump is doing. certainly not exclusively. he's increasing the amount of manufacturing here in america. my home state of ohio is an example of that. the ford motor company brings

jobs back, as they have to build the f-350 trucks, they were supplementing what they were doing. that does add jobs. that does make the united states, you know, a stronger country economically, significantly. it also increases wages and demand for workers. i do think you can bring back jobs. yes, there will be more automation. yes, there will be more efficiency. that's certainly happening. if you increase the volume, the amount of manufacturing done here, which we can do, particularly with our energy opportunities we have now in this country and the fact that the differential between wages is not as great as it once was. we have a great opportunity here to bring back manufacturing jobs. i think that's where the sweet spot is. >> okay. senator portman, always great to see you. always sober on so many of these issues and candid as well. we appreciate your time and look forward to seeing you again. >> it's early in the morning, so i'm definitely sober. and i hope candid. >> thank you, sir. great to see you. >> take care. coming up, glaxosmithkline

posting better than expected quarterly results. the company's ceo will join us live next. then, the winter olympics will begin one year from today. we'll tell you how the athletes and pyeongchang are getting ready. and later, why u.s. visitors may have to hand over their social media passwords. stay tuned. you're watching "squawk box" on cnbc. i laugh, i sneeze... there goes my sensitive bladder. sound familiar? then you'll love this. incredible protection in a pad this thin. i didn't think it would work, but it does. it's called always discreet

watch this. this super absorbent core turns liquid to gel, for incredible protection that's surprisingly thin. so i know i'm wearing it, but no one else will. always discreet for bladder leaks

glaxosmithkline out with earnings this morning, beating earnings on the top and bottom line. meg terrell is here with the numbers. >> looking at earnings per share of 21.6. revenue at 27.6 billion pounds. that beat driven by both performance from new drugs in hiv, respiratory, and vaccines. and of course a weaker pound. the company giving 2017 guidance. a lot of that hinging on generic competition to their big asthma drug. the company saying without competition in the u.s. this year, they expect eps to rise

5.7%. with an introduction of that drug this year, they say core eps will be flat to a slight decline. a big sort of shadow looming over them. the company reporting for 2016 its breakout between pharma, consumer, and vaccine seeing big growth from vaccine. >> meg, stick around. a big interview here. let's bring in the glaxosmithkline ceo sir andrew witty. thank you for joining us. >> thank you. >> and this is your last quarterly report as ceo, so we appreciate your time. i want to talk first about the political environment and drug pricing. i know you've said drug pricing pressure is nothing new. at the same time, we have a new sort of salvo in this whole battle. that is the white house spokesperson sean spicer just said that the president is for medicare negotiating on behalf of the u.s. government drug prices. how does that change the equation, if at all? >> well, i think for sure the whole issue of affordability of health care generally and drug pricing in particular is not a

new issue. we saw that before the election from both sides of the campaign. and it's been there over the last couple of administrations in reality. i think what's critical now is we need to see all of the key players, whether it's from industry or the insurance companies, as well as the administration, sit down and let's rel start to work out what's practical to do two things. one is definitely to try and ensure that we're making it possible for americans to get access to the medicine they need and at the same time ensure that innovation remains stimulated. i think everybody in america wants to see the next generation of new medicines. to do that, we need a price and environment which rewards it. but we also need a price and environment which people can afford their medicines. i think this is resolvable. if we look at the u.s. system, it would benefit frankly from more transparency so that we could really understand what the true costs are. if you look at gsk over the last couple of years, net prices have been coming down, but list prices don't always reflect that. i think there is real common ground here for something to be worked out. i think a market-based solution makes a lot of sense in the u.s.

environment. and hopefully we'll start to make progress on that over the next couple years. >> has there been a back of the envelope calculation done, though, on what the impact could be on, let's just say, advair, one of the most prescribed drugs under the medicare program? it's already facing generic competition. investors are already looking beyond that. if that were somehow taken down, let's say even 5% or 10%, what that could mean for a company like yours. >> actually, from a gsk perspective, and it depends which part of the medicare environment you talk about, but if for example you talked about part b, which is more the injectable side of the market place, we have almost no material exposure to that part. if you talk about part d, products like advair would be there. if we get generics later this year, then obviously that exposure is going to fall away anyway. we've guided that we can maintain essentially flat earnings even if we have that gener generic. if we don't have a generic,

we'll have the upside. if you're talking price pressure, you might talk a few hundred million dollars. for us, we do not have a very big materially exposure to that part of the marketplace. >> sir andrew, i want to ask you about something that you've talked about before a lot in the industry. donald trump has started focusing on it. the difference between cost of drugs in the united states versus the rest of the world. donald trump saying he wants to maybe use trade policy to lessen that delta. what do you think about that? the idea that the u.s. does pay more. how would that impact your business? >> well, i think clearly all the countries need to take their fair share of responsibility for helping to support and incentivize innovation. the industry needs to take its share of responsibility, have prices that are affordable. i do think there probably is a worthwhile conversation to have between the united states and the rest of the world. i think there is opportunity for a bit of rebalancing to go on here. to be fair, within the united states there is a real spectrum

of prices. as i've said already, the list price isn't always the price that people are paying. in fact, a recent study, i think, from berkeley, came out and said of $100 of list price, drug innovating companies only receive about $63 of that price, on average. so i think within the u.s., there's a lot of work to be done to really understand what the cost structure really is and what the prices that people really are. on a global basis, i think it's worthwhile there being a conversation about how does the whole world share its burden. what we've done at gsk is we've implemented a really clear tiered pricing policy, where we think the richer countries should contribute more to innovation, the poorer countries, something in the middle. we think that's a something and tenable way to go forward. what's not right is when we see very rich or middle-income countries trying to essentially get the prices the lowest. we need to make sure on a worldwide basis people share the burden of this and companies need to be committed to helping

work out schemes which allow access for patients. >> well, i want to ask you about your time at gsk. this may be the last time you're joining us, at least in this can pass passty. you've been ceo for almost ten years, at the company for more than 30. what do you think is next? >> well, it's going to be a sad day to leave the company, obviously, but i feel that we're in good shape. just on a couple of metrics, the momentum that we're delivering good, strong numbers today, 6% on the top line at cr, 12% at the bottom line. more importantly, when you look at the distribution of our business, so 16 billion of that 28 billion coming from pharma, 7.5 from consumer, 4.5 from vaccines. all growing, all growing their profit margin. those businesses distributed very nicely across the world. so ten billion or so from america, about ten billion from international and seven billion from the european theater. so a good geographic balance, a good balance of the three businesses, all in growth, all

growing margin. and crucially, even if there is a generic to advair, which to be honest we know has been a debate for the last decade over gsk, even if that generic does come this year, we're confident that we can essentially deliver something at or very close to flat eps. if you'd said to me four or five years ago in the year that advair goes generic, do you think you could achieve that, i think it would have been difficult to answer this with a straight face. we're in a strong position. we're in a resilient position. between 20 to 30 new medicines reporting out in the next couple years. my successor is going to have a full entree to drive future growth. >> well, we really appreciate you coming in. we look forward to seeing what's next for you. >> thank you very much. it's been a pleasure. >> thank you, meg. coming up when we return, the countdown is on. just one year to go until the winter olympics. why it could be the most technologically advanced olympic

event ever. stay tuned. you're watching "squawk box" here on cnbc. back in a moment. ng stuff. like what? like a second bee helmet with protective netting. or like a balm? you know? or a cooling ointment for the skin. how about a motorcycle? or some bee repellant. i'm just spit-balling here. nothing stops us from doing right by our customers. ally. do it right. told you not to swat 'em. ally. do it right. bp gives its offshore teams 24/7 support from onshore experts, so we have extra sets of eyes on our wells every day. because safety is never being satisfied. and always working to be better.

because safety is never being satisfied. i'm vern, the orange money retirement rabbit, from voya. i'm the money you save for retirement. who's he? he's green money, for spending today. makes it easy to tell you apart. that, and i am better looking. i heard that. when it's time to get organized for retirement, it's time to get voya.

welcome back to "squawk box" right here on cnbc. we're live from the nasdaq

market site in times square. among the stories front and center, tax season may be under way, but it's not immediately helping results at intuit. the company behind the best-selling turbo tax program has cut its current quarter outlook, reflecting slower than usual purchases. it expects sales to catch up and reiterated its full-year guidance. also, fedex has launched a new service which takes direct aim at amazon. it's aimed at small and medium sized companies that do significant businesses online. it handles entire order fulfillment processes. at, car rental giant avis budget struck a deal with uber. they will provide cars for those who want to drive for uber. cars will be available for reservation by the hour. you'll basically rent a car by the hour, which you'll then use for uber. >> uber drive for an hour? >> i don't know if it's -- i don't know if you become an uber

driver for an hour. you have to really hustle to get the rides. >> definitely don't need to own a car. >> that's the bottom line. winter olympics are just one year away. nbc's keir simmons reports. >> reporter: hey there. good morning. i'm. pyeongchang, south korea. admittedly a place many folks may not have heard of. but this, they're promising, will be the stage for the biggest, most technologically advanced winter olympics in history. they're promising new events, including a thrilling snowboard event called big air, and guests will be met at the airport, get this, by robots. the olympic clock will start ticking today in a special ceremony. this winter, at least, as you can see, there is plenty of snow. so we're hoping that will be the same in a year's time. for now, i may head back on to the slopes, guys. >> have fun.

keir simmons of nbc. you can watch the olympic games on nbc. back to corporate news. a global leader in content delivery network services delivers nearly 3 trillion internet interactions daily. the company out with fourth quarter results last night, beating on both the top and the bottom line. joining us now is the ceo. tom, good morning to you. thank you for joining us. >> good morning. >> the numbers, looking through the growth rates in some of these subsectors, security and security within web services growing incredibly fast. this is something that's perhaps a threat to most people out there, but it's a boon for you. >> well, we do protact the world's leading banks, intersurpriinte governments from attacks. attacks where you're trying to steal something or corrupt the information on the site. >> in terms of where we go from here, in terms of threats of major cyber attacks going forward, what should people be doing in terms of a response.

we've talked about an election in and around there. can people only respond in kind, or do you think we're going to get to a point where we might see a military response to some form of cyber attack? >> you know, the attacks are getting worse. you have nation states participating, organized crime is very big with attacks. it's hard to predict how governments are going to respond. but the attacks can be very serious to a nation's infrastructure. >> i want to talk about the stock and stock reaction. it's been a monster performer, up 73% or so over the reactions there, you see it. some of the analyst criticism, that the quarter was so strong your guidance didn't carry over that optimism for the first quarter. the guidance you gave basically bracketed consensus. give us some color as to whether you see the same momentum coming out of the fourth quarter or there some sort of seasonal slowdown that's happening? >> well, the fourth quarter can be stronger with seasonal

traffic. you know, we did reach near l50 tr trillion bits a second of traffic. as i look forward, i'm very bullish. our growth rates are accelerating. security is doing fantastic as a business. one of the messages we gave during the call was we're going to be doubling down on investment. we see enormous opportunity ahead. this is a great time to be plowing back in profits. >> doctor, we talk about the trump administration and what it means to business all the time. in your particular instance, i imagine one of the big issues is net neutrality given your clients are streaming content all over the internet. what do you think is going to happen? >> i think a lot of the rules we've had are going to go away. i think that'll help the carriers. carriers are very important partners for us. i don't think there will be any interact impact. we weren't regulated in the first place. but it will help our carrier partners. >> so it helps the carriers. you have other partners, which

are the content partners. >> yeah. >> when you look at netflix, amazon prime, those are the big guys using a lot of this stuff. then the independent players. >> i think the independent players are going to be just fine. we've been delivering their content before. we'll be delivering it in the future. i don't think there will be a real impact to the broadcasters. >> you're being inducted into the innovators' hall of fame. congratulations on that. >> thank you. >> that was in part due to your work on allowing greater web traffic and freeing up congestion in terms of delivery of web traffic. where are we now in terms of capacity and in terms of some of the priorities of the new administration's infrastructure spend, do you think some of it should be in this area? should there be a 5g network prioritized in terms of spending? >> i think we've increased capacity dramatically, but we're at the tip of the iceberg. there's a factor of a hundred in video traffic waiting to come online. you think about mobile devices, there are billions and billions of devices coming online.

it's not just a traffic problem, it's a performance problem and it's a security problem. these same devices are now being used to attack infrastructure. >> i have one last question. it's a wireless question. we've talked about the time warner/at&t deal earlier today because time warner came out with its earnings, beating the street handily on both ends. one of the things that at&t has talked about is this idea of delivering content wirelessly, directly to the home. so bypassing cable. you understand the physics of this better than anybody i know in terms of the actual technology. is there a day where you think the wireless technology, i'm not talking about satellites, but straight wireless, the next generation of lte, 5g, will be able to do it as well, if not better than cable would ever? will there ever be a tipping point? >> you know, i think that's going to be really important for large parts of the world that doesn't have the fixed infrastructure. whether that crosses over here, harder to say. you're going to need additional technology and the kind of things we're developing to make

that be possible because you won't be able to give a different signal into every home. you're going to have to have a lot of the content be shared and stored in the neighborhoods then distributed within the neighborhoods. that's the kind of stuff that we're working on here with our carrier partners. also, there's billions of people coming online without land line infrastructure. >> okay. >> dr. tom, thank you for joining us. when we return, activate's michael wolf on the next big thing in tech and media. plus, his take on the trump administration's impact on silicon valley. we're going to talk to him in just a moment when "squawk" returns. 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.

coming up, the developing relationship between big tech and president trump. ak vat founder and ceo michael wolf will be our special guest next. ♪ why do so many businesses rely on the u.s. postal service? because when they ship with us, their business becomes our business. ♪ that's why we make more e-commerce deliveries to homes

than anyone else in the country. ♪ here, there, everywhere. united states postal service priority : you

dearthere's no other way to say this. it's over. i've found a permanent escape from monotony. together, we are perfectly balanced, our senses awake, our hearts racing as one. i know this is sudden, but they say: if you love something... set it free. see you around, giulia ♪

welcome back to "squawk box." the fate of president trump's immigration order is in the hands now of the ninth circuit court of appeals, at least for now. a decision expected this week, but the matter will likely end up in the hands of supreme court. more than 100 technology companies have now signed on to a legal brief opposing the ban. for more on the tech community's relationship with the new administration, michael wolf is here. he's the ceo and founder of activate. good morning to you. >> morning. great to be here. >> so there's been this sort of bipolar relationship between business and the trump administration. they want him to succeed on so many issues when it relates to tech and other things, yet this has really muddied the waters. and an anxiety, by the way, he's

going to go on twitter and go after them. which he has not done in this instance yet. >> no, he hasn't. you have to put it in perspective. one of the big issues that's facing the tech industry is this question about h1b visas. there's been a lot of criticism that companies have used these to hire low-wage workers. we did the analysis, and it shows all of those top companies, whether it's ibm or apple, they're paying over $100,000 apiece to those companies. yes, the outsourcing firms have abused this by paying lower wages. but the other issue here is that the people who are part of these companies, they're very progressive. they have employees that are affected. once again, when you look at the number of founders from these companies who are emigrants themselves, they feel like this is not who we are. >> is it symbolic, is it about the actual ban itself, is it about the implementation of the

ban? what do you assign all of this to? >> i think it's about the ban itself and their concern that what that ban will mean for the biggest issue, which is their ability to bring in highly talented people from outside this country. >> did travis kalenick do the right or wrong thing by stepping away from the president's council? >> i think he did the right thing because it's really not for their customers. i think it's more about their employees. there's a concern from their employees themselves. in the tech business, you have two constituents. one, you have your customers. the other, you have your own employees. those people can work anywhere. >> but the other side of it, just to take the other side, elon musk was able to convince, maybe not successfully, i don't know, but his constituency that having a seat at the table was more important. >> it's very different. they're serving different audiences. their customer bases are entirely different in terms of

the number of people that buy their products, the number of people that participate in their ecosystem. >> very unusual for 127 tech companies to get together and oppose something. you made clear they're opposing the travel ban. the h1b visa clampdown could be in the making. we don't know yet. do you think this is wise for the tech company ceos and even biotech firms at this point to fight this ban when the bigger fight could be coming down the road? or are they just sort of muddying the waters and getting involved in a row that they're not necessarily part of right now? >> part of the philosophy is to go after this early and to show that it just doesn't make sense. they do have a number of their own employees that are affected, but -- >> it's like in the tens. it's very small. >> it's not significant, but what will be significant is future bans against other countries. >> i want to switch focus and talk about e-sports, if we can. earlier we had members of the

brooklyn nets on. we were talking briefly about that. how much of a growth driver is e-sports? how much growth is it going to see? is that a direct threat to traditional sports, or is it organic in its own right? >> we believe e-sports is going to be a $3 billion business in the next three years. it's not really about a threat to traditional sports. it's really another occasion for people to not only watch something but participate. a lot of people who are watching are also people who play these games. >> is it a threat to the likes of espn that broadcast traditional sports and what was your take on their numbers coming out overnight? >> espn is likely to be one of the companies that's going to be broadcasting e-sports. i think there's this concern about espn's distribution. when you look at a lot of the over-the-top platforms, whether it's sling and others, they're going to be featuring espn. they've gone down.

they're likely to go back up. >> one other question. maybe takes us back to trump a little bit, which is to say we had a conversation a little while earlier. net neutrality. how is that going to change the game, both for the big guys and the small guys? >> the big guys, they can pay. the small guys, this is a big concern. is their traffic going to get throttled? are they going to have to pay for fast lanes? i don't believe that it's going to make much of a difference in the long term because a lot of those new companies will keep growing, they'll keep being launched, and the isps don't want to block new innovation. >> but just to put a finer point on it, margins for a netflix or an amazon prime or hulu go down because they're having to pay larger fees? >> some of them are already paying fees. do their margins go down? this is really the -- the costs are not going to be that significant in terms of their costs. what's going to be more

important is about smaller players. can company be launched, and can they have equal footing? >> any new views on at&t/time warner? time warner with good earnings this morning. >> great earnings. at&t/time warner makes a lot of sense. i think we're going to see a lot more consolidations. >> and it gets done. they say the deal is still on track to get done. where do you stand? >> i think it's going to get done. i think the package, the $35 package makes a lot of sense. and the deal makes a lot of sense in the industry. >> and donald trump will say it's okay? >> i think eventually, yes. >> okay. michael wolf, thank you. always great to see you. >> great to be here. when we return, jim cramer will join us live from the new york stock exchange. as we head to break, let's look at futures. yesterday we set a record on the dow and nasdaq intraday. here we are looking at a lower open. dow looking to open lower by 13 points, s&p down by 3, nasdaq down by 6. "squawk box" will be right back. this is the food system.

but what if it didn't have to be? at blue apron, we're building a better food system. where we value quality and flavor over quantity and shelf-life.

where chefs and farmers work together to make farms healthier, grow higher quality ingredients, and deliver them in-season, ripe and ready to cook. because food is better when you start from scratch. blue apron. what are the top performing assets after the dollar drops over 3% in a month? the consumer discretionary, energy and materials my name is jamir dixon and i'm a locate and mark fieldman for pg&e. most people in the community recognize the blue trucks as pg&e. my truck is something new... it's an 811 truck. when you call 811, i come out to your house and i mark out our gas lines and our electric lines to make sure that you don't

hit them when you're digging. 811 is a free service. i'm passionate about it because every time i go on the street i think about my own kids. they're the reason that i want to protect our community and our environment, and if me driving a that truck means that somebody gets to go home safer, then i'll drive it every day of the week. together, we're building a better california. we want to get down to the new york stock exchange, see our good friend jim cramer. good morning, jim. >> andrew. >> so much to talk, i haven't seen you in a while. i want to know, what do you think of disney? >> i think that iger makes it very tough to sell. he gives you enough that's about to happen that you feel like a dope if you just continue to dwell on espn.

he gives you the technology with bamtech. he gives you the new -- all new part of a theme park that's pandora that makes you want to go. i feel like booking. he gives you a movie slate that makes you feel like they've got tide, gillette, pampers, they've got these franchises that are just unbelievable generating $800 million. so in the end you say i can't sell it. it doesn't give you enough to reach for it play 115, 120, but you feel like a sucker if you let it go because there's so much that's good. >> hey, jim, i got to ask you about gilead. those disappointing results yesterday, the stock is down 7% premarket. what do you make of the move? >> you know, it is kind of a shocking guidance. now, if you go over the call, the company seems very sanguine until at the end the questions get deeper and deeper about what happened to the guidance. but the guidance from $10 billion to $12 billion for this year and they're dramatically under that. i think we've all been saying they need to do an acquisition,

melissa, and they didn't do one. so now people are saying it's a dead value stock. they used to say it's a value stock maybe they do something, and people are shocked how quickly this franchise eroded. still a huge franchise, but if i were long i would be questioning where is the bottom. maybe 64, 65. >> jim, time warner had some great earnings today, but still the only way to play it is to think about the at&t transaction. where do you stand? >> i think that bewkes gives you a lot of ways to win. i was shocked at how good that quarter was. i shouldn't be because bewkes keeps delivering. i felt with trump's antipathy maybe you had to jump off it, but there's less risk than i thought given how fabulous the quarter was. >> okay. jim, great to see you, sir. we're going to see you -- >> bewkes is a great american. >> -- in just a couple minutes. programming note, don't want to miss olympic swimmer michael phelps going to join the gang on "halftime report." that's happening 12:30 eastern time. stay tuned, "squawk box" returns in just a moment.

across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, creative business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. let us help grow your company's tomorrow - today at esd.ny.gov ♪ some things are simply impossible to ignore. the strikingly designed lexus nx turbo and hybrid. the suv that dares to go beyond utility. experience amazing.

welcome back to "squawk box." u.s. visitors may have to hand over their social media passwords. homeland security secretary john kelly tells congress this is one of several measures being considered to vet refugees and visa applicants from seven

muslim majority countries. if i were asked for my password, i would have no idea what it is. there are so many passwords. >> do you feel comfortable with this situation? >> oh, you mean just in general asking for passwords? >> yeah, by the way most of the passwords you use on one site you probably use on another site. >> i also feel either way when they're doing security vetting and they consider someone as potentially a terrorist target, then already they're searching even without your passwords. they're already looking at tracking them anyway. a slightly odd development and worrying they put it front and center. they're already eavesdropping. >> i would hope the only thing they were able to access -- oh, we've got your password, we've got you nailed. that doesn't really make any sense really. >> i don't see this as new development odd one. >> i assume tech companies will hate this. >> right. >> okay, warning for anyone who is connected in-home appliances

to -- they could be vulnerable to hackers. one test by nbc news a hacker was able to easily get into the wi-fi and then track online shopping, e-mails and even bank accounts. that's scary. >> very worrying. again, i think it's kind of out there that we've got to be more careful. none of us are, alas, but opening a front door is a particularly worrying one if you've got an electric lock as that video suggested. >> i mean having an echo could be an issue. >> we have echo, we have a google home thing. >> and you're hackable. >> do you want a thing over the camera? >> yes. >> you do? >> absolutely. >> on your laptop or whatever? >> i did a documentary on cyber security, i will always tape over that little hole in the screen. yeah. for sure. >> there we go. third troubling story, this one out of florida this morning. thousands of dead and dying bees are washing up on a beach. locals say the problem started just this week. so what's cause b the issue? bee experts say it could be

anything to nearby pesticide to a swarm of bees that got tired and flew into the water. now you have to be particularly careful. >> guys, want to thank you. we're going to hang out tomorrow. >> i'll see you tomorrow. >> thank you for hanging out with us. in the meantime, join us tomorrow. "squawk box" begins right now. ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. pretty steady premarket as earnings dominate the headlines, namely disney last night. keeping our eye on any response to the appellate court hearing on immigration, tax reform debate rages on today. mixed morning in europe. the ten-year now 2.36 and oil is down on the second biggest api build on record. roadmap begins with disney's difficulties, bob iger on