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 record, espn weighs on media

giant. >> plus, courtroom grilling the trump administration defending its use of executive power and the travel ban before a federal appeals court. >> social media's in focus. facebook and twitter getting some upgrades ahead of earnings tomorrow. first up though, a bunch of earnings to get to, time warner a beat on both the top and bottom line. alaska air also beating the street announcing an increase in the quarterly dividend ahead of the meeting with airline ceos at the white house tomorrow. big report focused on is disney, revenue falls short of consensus, rising costs as we said, declining viewership at espn weighing on the results. here is bob iger last night talking to our julia boorstin. >> 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, and three, advertisers. and 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. >> cable revenue down 2, opera net down 11 all with espn despite what iger says. >> preponderance of the evidence says you can't sell the stock because you've got this brand new pandora, the new theme park that if you have kids you're listening saying i haven't visited that, i want to go back. you've got this incredible movie schedule. these $800 million franchises, they're terrific. he talks about derisking the movie business, which everyone would love to do. bewkes has tried to do that. but i think the most important thing is he just literally just won't go there when it comes to anything espn other than stay tuned we're going to be a technology company with bamtech. mentioned that several times. in the end he said if you're so worried about espn, you really haven't figured out the disney story. even to the point where he says that if it's a skinny bundle, there will be more money leftover to buy more disney products. >> wait, what? >> yeah. you get that part of the call he

says the skinny bundle it's good, there will be more money leftover and people will buy some other disney stuff. >> right. >> it's kind of surreal in the sense that that was the one where i just said he is saying to you, okay, look, go ahead, make my day, sell espn, sell it on espn. i will buy back more than i already have 15 million shares at $1.5 billion, i will buy back 7 billion to 8 billion, i will continue to buy back stock, i've got the cash flow, you really don't know what you're doing. you're focused on espn, you don't get it. this is a theme park that has also this great cable business. and just shut up. >> right. but it's not working really. well, actually -- >> well, it's working. >> in some ways it is. the stock has performed well. >> there is houdini thing going on here? >> you do? you think it's more about magic. >> magic kingdom. >> it is the magic kingdom. not the tragic kingdom. >> no. i felt the key number to the magic kingdom because you had this hurricane matthew, i'm not being facetious, they had 7% per

capita growth for people -- >> to the extent there was a miss the hurricane was probably responsible. >> right. i come back and i say i want to believe that this espn technology issue will make it so that we stop one day thinking about espn. in the interim he makes it so hard to sell. there's so many good things coming. china by the way shanghai sold out. but everyone was talking about espn. but what i'm saying is he's saying that's not the narrative and grow up. >> right. journal this morning says the deal's in the works with youtube and that channel coming up pretty soon here. he says we do not need to make an acquisition to accomplish what we need to in digital. and as far as comps go, hard to come off a year where the force awakens makes $2 billion and rogue one only makes one. >> yeah, year over year comps were tough for them no doubt. on that, on the studio front. >> i have to tell you, disney animation marvell, lucas films,

they make movie, tide, gillette, pampers and crest, they keep pumping. there's derisking the film business. >> they do. but back to the bigger picture here which we've been discussing for the last couple of years which is, i mean, right now you've got directv's over the top offer. >> right. >> you've got the one from sling which was really the first out. you've got hulu soon to be launched. let's call it march, i believe is hulu. youtube, which the journal says is actually a deal that iger was referring to but did not by name. and so many others coming. this is going to break a par through to traditional bundle. it may take time, but it is happening. every one of these guys tells you not to worry we're going to be on all of them. i don't believe it. >> the stock is saying don't worry. >> i don't believe that given the high price you're going to be on every single one of these over the top bundles. there's going to be some that may be entertainment focused because not everybody's a sports fan and doesn't want to pay that much. >> down $2 in the headline number and when you listen to

iger you start feeling good and then you start feeling fabulous and then you say would you please book my ticket for the new theme park. david, it's a little more atherial, a little more mindful than you feel about. >> i quote, the cable bundle was god's gift to disney. they are never going to replicate something that is that profitable. you disagree? >> look, espn was unbelievable as long as it lasted. in the interim they have franchises that just generate a huge amount of capital. >> they do. they have incredible franchises. we love -- i love going to disney. i'll just keep going even as my kids age out. >> there you go. six times for me. >> it's the best. >> right. >> shanghai seems to be doing well. they've got an incredible movie studio. but if you're going to tell me that the stock price does not reflect the contribution of its cable networks led by espn and that there's not going to be continued con stern nation amongst investors, come on, man?

>> how about bamtech? >> oh, will you stop with the bamtech? that's all you ever hear from him bamtech. [ laughter ] >> i'm just going to let that hang. >> me too. >> bam. >> the conversation last night did pivot on some macro issues, specifically corporate tax. here's what iger had to say about that. >> i think a real strong or good opportunity to be the sole representative of our industry a number of very important issues, intellectual property protection, trade-related issues, specifically for disney obviously any changes in the tax law could have a profound impact on our bottom line. the corporate tax rate is the highest in the world and we pay, you know, very high corporate tax rate. and believe it is time for that to be re-examined and that could potentially be a real boom to the walt disney company. >> helps us pivot to the debate over corporate tax. steve forbes on squawk this morning calling border adjustment insane. >> yeah, i think that border

adjustment just depends on the day about how insane it is versus not, but this 2018 analysis is making people say they want to stay with disney. the cash flow's big. look, i'm not denying that espn -- it's like when i listen to it i said, wow, this is really going to hurt. but at the same time the multiple's been shrinking. they do have a lot of cash flow. we're short the number of -- we're short senior growth stocks away from tech. time warner is going away which was a class senior growth stock so we're defaulting to disney. we can't use nike anymore. starbucks is challenged by the mobile making it so there's a mosh pit by the way panera solved. so i come back and say, all right, you know what, it's not as great as i'd like, but it's still better than the other guys. that's how i'm looking at it, okay? how about that? >> i like that. >> do you like that? >> absolutely. listen, stock's been moving the way you said it would. >> thank you. >> you're welcome. >> when it was down two bucks i was saying i wish "mad money" were live i would go buy it

because i absolutely love -- it's so great he makes espn as a total throwaway. i was waiting for him to say, hey, by the way, i wish chris berman the best. it was so not a factor. analysts want to keep bringing it back, and i totally understand, david, it should be the factor, but he did make you feel i'm going to the theme park spending a fortune. this is unbelievable. he's got these other things while he figures out how to deal with the decline of espn. he gives you a gap and then 2018 got taxes, he gives you a reason not to sell. do i think the stock should be up? i mean that's kind of unbelievable. gives you reason -- you feel like a chump. >> got it. >> if you're a long-term shareholder you feel like a chump. hi ho hi ho i'm not a seller. the seven dwarves are -- >> we're going to see how it affects the dow at the open for sure. meanwhile, the fight over the president's travel ban continues as this appeals court approaches justice department order on whether the order is

discriminatory. judges from the ninth circuit court of appeals did not make a decision buzz said ruling should come this week. the president tweet ths morning, if the u.s. does not win this case as it so obviously should we can never have the safety entitled -- setting up the judiciary as a fall guy if there is any attack, jim. >> i know this is kind of on the throwback. these are distinguished jurists trying to discuss this on the merits. the questions i felt were very realistic. they're trying to really drill down in a way that is very empirical and very emotionless. and i don't think an emotional appeal by the president of the united states is going to play a role in the decision that he wants. argue it on the merits. if the merits are as he says, he's going to win. >> justice said no harm to the state, potus has broad discretion when it comes to national security.

it's not religious based, right? obviously things that washington state and minnesota disagree with. >> now does it go to the supreme court? the supreme court split. i just think in the end -- not that i'm an advisor to the president because i most certainly am not, unlike ker ri and homeland -- i think there's absolutely no edge to bullying. and that's what i think he's doing. the federal judiciary. >> do you think these tweets are undermining the judiciary? >> yes. bingo. this is not what i would do. i would say, listen, you know what, let the chips fall, but we know which way they should fall. kind of like when you have so-called judge, judiciary, they're united in the concept of what they do for a living. which is keep a check on the executive branch. >> you made that point yesterday. >> so i just -- no more tweets, mr. president. you're killing the case here, man. >> there's a sense that a lot of

this is going to end up in the courts being -- certain parts of the trump agenda so this may not be the last time. >> do you know any federal judges? >> i do, actually. i know one. >> do you like it they were called so-called? >> no. she's a very capable person. >> yeah. it rankles them. >> yes. >> he hasn't called them clowns. that is -- he hasn't called them clowns. that maybe comes for when he loses. but i just feel like this is just playing with fire. there's a way to win, you speak softly and let the judiciary carry the big stick. anyway, i just read these tweets and say, oh, man, these federal judges probably calling each other saying listen we can't have this. we got to shut this downright now. >> perhaps the good news is the viewership on the streaming of the hearings last night unbelievable. cable networks, i mean americans actively listening into the intricacies of our judicial process. >> bad news travel numbers are way up. >> when we come back, a lot more on facebook and twitter and how snap's upcoming ipo may affect those companies.

upgrades for both of those. today on "mad money" don't miss jim's exclusive with jeff immelt of general electric. look at the premarket, s&p is up four of five, dow alternating between losses and gains for six straight days. back in a minute. is it because so many go after it the same way? chasing after short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view, teaming specialized active investing with risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way, attracting many of the world's leading investors. partner with pgim. the global investment management businesses of prudential

two interesting calls this morning, b of a adds facebook to its u.s. 1 list making itd top

pick in internet media and btig upgrades twitter noting daily active users. reports earnings tomorrow morning before the bell. on the b of a calls they say we came into the year with three concerns on facebook, expenses, ad load and snap. they say the first two have been well telegraphed and snap's filing shows not as big of a threat as they might have thought. >> yeah, i really think the big decline that day was for facebook when it touched 130 was a realization that holy cow snap's coming out and snap's going to blow away because they didn't really understand the impact of instagram stories, which is an exact crib, i think, of snap. what i liked about this upgrade to focus 1 list was it gave you some numbers. i want to compare this to 1999 when you have something like seth saying stocks are overvalued. here's facebook selling at, i'm not going to use the nongap number, david, because i know we

don't like nongap. >> right. >> in gap it's selling at 22 times 2018 numbers. now, i have -- i literally have 499 companies growing slower than facebook that have multiples that are comparable. >> yeah. >> and that's just not right. so, i mean, this is an inexpensive growth stock is what i come back and say. >> why does it stay inexpensive? >> i think because people feel in the end it's an advertising company and there's no way an advertising company can really grow beyond that. that's the same reason why i think alphabet has capped. facebook can do virtual reality, but that's not a needle mover. in the end if you are someone that has to spend a lot of money on data centers, spend a lot of money on whatsapp, do a lot of what i regard as being things that make it so you have more viewers but not pay viewers, that in the end you're stuck with the four walls of will advertisers keep advertising. >> right. alphabet's multiple is similar, right? >> yeah. >> 20s? >> yeah. >> and then obviously it is

interesting to note three of the largest market cap companies in the world really trade at multiples versus their growth rates apple being the other one, that are and have been and continue to be low. >> thank you. because you know all day today i was trying to figure out what the top of my show should be. thank you. >> you're welcome. >> i know you don't get it you're busy walking the dog, but that's it. i want to compare these to the multiples of stocks in 1999, the three largest cap stocks. these are companies that are valued at less than one of my absolute favorites clorox. >> microsoft, cisco and ge were probably your three top in '99. >> you were watching. >> a 95 multiple, remember that? >> cisco had like an 80 multiple. wow. so we're going to examine that about how valuations are perilously high. and i come back and i say you know what, i look at these multiples and i say, geez, ge's more expensive. >> as for twitter, as we said

earlier first time buy rating for btig on that name $25 target. they talk about daus, i think they are hinting there's a potus element here. >> yeah, potus bump. definitely potus bump. hard to disagree with that. one of the things with twitter people can't figure out is it a takeover stock, is it a company that's on the make? >> right. >> or is it just not a really large company and happens to have a president that really likes it. >> it's all those things, right? $13 billion market value. >> where would it be without -- no, it's got the president. let's say someone took away -- >> a lot of hedge funds have been talking lately about maybe a bit of a rebound coming, engagement and active users. he talks to a lot of them. >> i feel like for my users there was an acceleration in the last month. definitely an acceleration, for what it's worth. not that i'm the, you know, i'm anecdotal. but i feel like people feel like

they have to check what the president's saying. and it's like for every failing "new york times," just the president page view that's lost they go to twitter. i just wish -- i mean, twitter's not going to replace argue say in front of the supreme court. >> you know who has a million followers now? >> who? >> jim cramer. >> wow. >> crossed the one million mark overnight. take a look. >> thank you. >> that's impressive. >> you think so? >> i do. >> my wife said, good, are you done, you idiot? this thing distracts us, it's meaningless, someone says something bad, you're upset. just done. just call it finished. lisa says that's it. she doesn't watch the show, so i don't have to necessarily end it. but that was it. she said last night we were actually with a friend in tech, said he's going to quit right now because i am tired of him talking to them and not me. >> sounds like a reasonable -- >> we are proud of you. >> the wife wins. >> we love seeing it.

congratulations by the way. we'll get cramer's mad dash. we'll count down to the opening bell after the break. 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.

hey nicole. hey! i just wanted to thank your support team for walking me through my first options trade. we only do it for everyone gary. well, i feel pretty smart. well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias.

get help on options trading with thinkorswim, only at td ameritrade. ♪ back for mad dash. of course ahead of trading on this wednesday. it is wednesday, right? >> hump day. >> thank you. gilead is a name i always enjoyed talking about, sometimes overlooked. at one point remember when this thing had -- it was one of the largest market caps in pharma, no longer. >> well, because they had a hep

c. this is really -- there's two things at play here, a definitive value trap because they didn't put the money to work buying growth, which is what big pharma knows how to do. pfizer knows how to do it. okay. bristol-myers knows how to do it. but gilead didn't do anything. but the second thing, david, is it's a cure. it's not maintenance. what wall street likes is unfortunately we always want cures, but they want a long steady biogen like stream for ms. >> or lipitor. >> oh, my. now lipitor you're supposed to have like 70 on your cholesterol -- that is like the ultimate drug. because you're just going to take it forever and all that happens is every news study says you should take even more of it. >> right. >> david, people are looking for 10 billion to 12 billion from the hep c. it's going to come in at 7.5 billion to 9 billion this year. so that is a haircut to end all haircuts and people were really upset on the call particularly because the company was kind of like, hey, you know, we're like doing good and it's okay.

>> $84,000 for 12-week course sns. >> i'm not sure. there's a price competition everywhere they've admitted to that. but i have to tell you, david, had they taken the cash horde and bought something that would give them a future -- look, i'll even use cellgene, people thought they paid too much for future, no, now the pipe takes over. the pipe has to take over. gilead doesn't have a pipe that people want. >> i'm told we have to go. we have an opening bell. >> we didn't talk about -- >> but we will. we will. with saudi aramco. >> i thought that was a huge thing. >> yeah, opening bell about five minutes away. stay with us here on "squawk on the street."

you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in just under two minutes. busy morning obviously of earnings. we'll watch oil inventories 10:30. last night api has the second biggest build on record at 14 million barrels. >> yeah, that was -- the stocks have been going down. i question whether you're not at some sort of point where the --

where all these longs get broken. i don't want to go with oil down here. i think as much as we are producing too much in this country, we're not at enough to offset what i think are realistic cuts and worldwide growth. and i think there is worldwide growth. and i think people forget that there is a kind of by country by country with the exception of venezuela i could make a case that growth is breaking out everywhere. i know the rig count's going to be up but i remain steadfast that oil's not going to crash here. >> so even though as reported today u.s. is on pace to have production levels we haven't seen since '70. and cashin arguing yesterday that a crack below 52 did damage to the charts. >> look, you go below 50 and what happens they shut off the wells again. i mean, only the permian and scoop and stack, you know, oklahoma, make a lot of money here below 50. that's why i'm more bullish than others. >> let's get to the opening bell and s&p at the bottom of your

screen. a lot to watch, obviously, at the big board. alcohol beverage company diageo doing the honors. nasdaq, maker of mixed signal semiconductor solutions. [ bell ringing ] >> they make wireless chargers rumored to be big with apple. >> we're going to watch as far as dow components go disney of course at the open, which at the moment will be the top performing component. apple meanwhile, guys, is going to start the morning $3 from an all-time high. an all-time high of $134 and change, goes back to i think 2015. >> wow. >> april 28, 2015. >> you know, i continue to see people who say is it too late to buy, is it too late to buy. obviously i've been saying own

it. it's not a great level to come in, but it's still inexpensive. yes, david, you need 2018 tax relief. to justify taking the stock well above these levels. >> uh-huh. >> and i don't hear people talking that that's -- look, the talk's been muddled on tax relief right now. >> it has. i mean, listen, every day we can discuss tax reform as perhaps we should given just how incredible -- important it is for corporate america. but doing it every day doesn't really help. there's still an expectation you're going to get a bill some time perhaps in the spring out of ways and means, make its way to the senate. we'll see how the administration weighs in. yes, i guess the border tax opposition seems to be -- >> growing. >> -- growing. but you know how this goes. i mean, the deal making that will take place as you get closer, who knows. who knows. who knows if democrats were to come over in some way for something they could get in the

senate to help support. >> do you think that's possible after rankle? >> who knows. >> it's like 1861 down there. >> there are some senators up, right? there are some senators up. you could make an argument that it's beneficial for the working -- >> that's a very interesting argument. >> -- class. >> when i had the second largest tv stations in the country, they are saying there's going to be huge ad dollars against targeting these democrats that came in from the states that trump won. >> right. >> and that they're already seeing big media plans to defeat these people. that is a really good call by you. >> who knows. i'm just saying we'll see. but you're right, the market is playing off every single day the data points that you can get in terms of border tax looks bad, looks like maybe there's a little momentum, we don't know what the trump administration says, gary cohn's like we're not going to include it but we're not going to exclude it but we're not going to include it.

>> it's hard to understand where it stops, where it goes. i just feel like it's too complex. i came back with what the president initially said. i think they have to come up with some standard that makes some money. they're not going to give in. there's going to be some money if you bring in stuff, i believe. i do. >> yeah. right. >> we talked to costin, david costin of goldman yesterday, who argued that the point of maximum optimism will come next month as we get closer to the debt limit and budgets become concrete and then the market -- his year end target's 2,300, about where we are now. >> i don't think things are that optimistic. i think things have kind of dissolved because of the rancor. >> bull sentiment -- >> no. i meant on the president. there's a feeling that business is getting better and that is not going to be defeated by congress. the congress versus the president getting what he wants, i think we are underrating deregulation. underrating the talk about

deregulation. because as he staffs the nlrb and the firk, as he staffs all these different agencies, the s.e.c., the ftc, the fcc, you keep raising numbers. the fcc, i was listening to the fella today said this is fabulous for the networks. i'm thinking, well, it's not in the numbers yet. so i'm looking at deregulation being far more important. i still think repatriation happens. but deregulation is undervalued here because i think people don't know how to particularly value these agencies just de-f.a.n.g.ing itself. i'm not speaking about amazon, facebook, google, i'm talking about fang we're not going to come in and look at these things and do what we used to do because we're not anticapital and don't want to get in trouble with the president. somebody was targeted, he was talking about some legislator -- >> said give me his name. he said state senator. in this meeting with sheriffs yesterday. he said do you want to give his name? we'll destroy his career. >> i thought that was significant. you don't really want the

president targeting you if you're like some nlrb person. i mean, it's the president of the united states, still a president. >> yeah, he still is. and will be for a lot longer. >> you're fired. you're fired. >> no. >> especially when he thinks schwarzenegger doesn't know how to fire. >> what's interesting is you still think he's got this juice even though gallup 20 days in -- >> i think he has regulation juice. i think regulators right now are really trying to figure out, wow, we can't stay with this labor department. we got to leave. we got to get out of here. this is not like any change in administration we've ever seen. this guy is saying we don't want you regulators. and he's like de-fanging the compliance people. i feel that he has made it so if you're a regulator he's saying, listen, why don't you go do something else. i don't know, go enjoy your hobbies. maybe enjoy some hobbies. >> activism is part of the landscape again in our

conversations. >> okay. >> you've been doing a lot of work of course on arconic and elliott there and the back and forth, which has gotten fairly heated already. this morning though elliott's settles with cognizant. remember wasn't that long ago that one got a little, well, not nasty, but was active. three new board members going to be appointed there, three independent directors two appointed prior to the proxy for the '17 annual meeting and one of which will be named in connection with the '18 annual meeting. so the three existing members of the board will not stand for re-election. over at elliott, jesse, frank and his team have been terrific partners in this process and thought of balanced attractive plan and cognizant must continue to invest for growth in the digital transition, they say, jim. and the stock is up over 5% on news -- >> that's a big win for them. >> -- of this. >> now, david, dr. klaus

kleinfeld, they always insist calling him, the new arconic letter from elliott is not what you want if you're klaus kleinfeld. >> do you think they're using the doctor as a derisive way -- >> i think they are. i think the whole thing is meant to say this is a proef sor yal cfo and i think we -- i think it's weighing -- think already have their board seats. so i don't know. i mean, this is one of those -- this is very james bond gold finger, right? they don't want klaus to talk. >> they expect him to. >> and i just think when you read this letter, david, there's not -- they're making it tougher to have a little -- they're making it tougher to really kind of break bread, break aluminum. it's ratcheted up, is the way i look. and you've taught me that elliott does not necessarily -- they are tough guys. >> they are tough guys.

paul singer's a tough guy. yeah. >> but this is one getting a little nastier is what i'm saying. >> yeah, they get nasty sometimes and back off, sometimes they don't get what they want, doesn't go there way, sometimes it does. >> for being that rigorous about their own numbers so they push back. they obviously like to stay in the news. >> very much so. >> the stock's been doing well. now one of the things they disagree about by the way is whether how klaus has done since the split. they're saying, listen, you think it's been great but we're looking at it from another point of view. >> and has different numbers i can remember the fight between trion and dupont and the endless different sides and looking at this and no you're looking at that. if you want to be an engaged investor in one of these battles, it can become somewhat difficult to figure out where the truth really lies. >> right. but this is really quite an indictment of just taking all these different statements. one elliott pulls from a statement he made -- they say he made on cnbc in may he said alcoa corporation would not exist if it hadn't been for me

basically creating it. and they call that an audacious argument which turns history on its head. dr. kleinfeld needs to come back again. it's one of these things where it's like -- >> i know. back ward. >> is that an elliott thing that makes it so they do rope-a-dope, goat kind of thing. >> when you go on the attack, you just kind of stay on offense. i think arconic views it the same way though. right now they'll tell you they got their board members where they need them to be. >> right. >> i'm not sure about the shareholders things. >> who's the falcons and patriots here? >> great question. >> pretty good action out of panera on a beat by a nickel at 205. menu revamp appears to be paying off. same story out of mondelez, up 2%. >> that's funny, i felt mondelez would go down because they lowered growth rate from 2 to 1. panera which conference call now i don't like -- travel trust name, i hate the fact that they had their conference call the day -- the morning after they

announced last night because you really want all the data, but they did talk about 11% to 14% growth. there's not a lot of casual that has that kind of number. they raised the 3.5 to 4.5. if it had been 3 to 4.5 in terms of same-store sales. they've really figured out how to do digital, how to do ordering, how to do takeout. memo to chipotle, just study what ron shaich is doing. memo to starbucks, ron shaich who at one point was worried he was not going to catch up to starbucks on digital, has now leapfrogged starbucks, i believe. they won't like that, but i'm saying in terms of ease of use. and by the way -- >> howard schultz on line one for you, toupt take it? >> it's not about friends. it's about money. starbucks has to solve thauz baa comp stores sales going down -- it's a great problem. mobile earnings too successful but then you get there and guys cutting in front of you, you need another register, two milk

steamers is my view. but panera solved it. look what happens when you do. ron shaich had kind of a crisis of confidence when he came on "mad money." i was telling him how much i like the asian chicken salad comes in at 437 calories and it is delicious. don't have the roll, take the fruit. he would say, no, there's a big mosh pit. my son was there and he didn't like it. i said, no, you're really good, ron, i like -- there's a whole bunch of things i like including the soup bowl and bread. >> he goes, no, no, we're not really delivering. so when the ceo talks the customer out of it, he's solved all those problems. ron shaich, congratulations. and i think howard schultz is going to solve it too. and adam brockman will solve it. they'll solve it. that's why my travel trust is stallward on starbucks. >> that's why -- have it ready. >> mock soon. >> you're on broadway. >> but i also do starbucks. >> yes, i'm aware you do starbucks. >> well, triple -- cappuccino -- you need that, you need that.

you don't do that i have to have like a monster beverage. >> close to an all-time high there on panera. financials are lagging, that's why the dow's down 44. let's get to bob pisani. hey, bob. >> hello, carl, and you're right. that's because rates have been down this week. there's a short term downward trend in rates. look at sectors here you see the influence of short term move in rates to the downside. so banks are weet and martin has a slightly defensive tone. you see realize for example, utilities on the upside, consumer staples, kind of defensive tones to the market with the banks on the downside. it's been two months since the election, i'm amazed how many people are saying trump trade over, tax cut 2018 event. really? i don't see it. i don't see any heavy selling. i see a lot of people wanting markets to go down 5% to 10% to buy more. but look where we are on the reflation trade, that's the trump trade here. i see fundamentals improving. i see the trend overall for rates are up with inflation fairly moderate.

stocks are at record high, the leadership -- hey, this is reflation, folks. techs, materials and industrials. i don't see any big changes going on here. yes, you got sideways moves for a while but not in the overall trend. look at the sector since the election. if this isn't a reflation trade, i don't know what is with the financials, materials and industrials are the leadership group and reits and utilities are the lagging groups that are out there. heck, this is reflation. if you really want to get granular, look at very specific stocks, there's no sign of people selling or getting out here. the leadership groups whether you look at infrastructure or construction stocks like united rentals or u.s. steel or the financials like j.p. morgan or aerospace and defense like general dynamics or the industrials like caterpillar, this is the reflation trade and it's still very much intact. what people are whining about is there are long periods in the s&p 500 where essentially we have been moving sideways in the last couple of months. and that got people kind of bored. you know it's 81 days since we've seen a 1% down move in the

s&p 500? 81 days. that's remarkable. this is sideways and it's called consolidation and it's healthy for the market. it doesn't mean that the trump trade, the reflation trade is over. as for sentiment, well, bullishness isn't going away. some has moderated a little bit, but look at this from investors intelligence today. 62% bullish. this is the highest level since 2005. bears are down to 16%. that's the lowest since 2015. certainly no sign anybody's sowering on the markets here. i think people should calm down and recognize consolidation is good thing for the markets. as for an ipo, nothing real big here. we had a big one taken off the calendar in new york. but mexico is pricing a big ipo. we don't normally talk about the merks can ipos, but jose cuervo will be posting tonight. they have 30% of the global market share and 71% of the revenue is in the united states. this is a big hot topic because they could be effected by any

border tax or tariff and they specifically cite that in their ipo report here. they're seeking to raise 700 million a share. they own bushnels and rack and rum. right now the dow recovering a bit down 38 points. 2-to-1 advance/declining for every one advancing. carl, back to you. >> talk to you soon, bob pisani. let's get to rick santelli at the cme group in chicago. good morning, rick. >> good morning, carl. what a fascinating day in dollar and treasuries. look at an intraday of tens. definitely a lot of downside action in yield, upside in price. look at a one-week of tens. it is a deterioration, a melting, whatever you'd like to call it. and look at how the intraday of the dollar index is influenced, coming with that same type of activity. so exactly what's going on? we could make a lot oof cases. we could try to hook in various american political issues, but

really i think you have to look overseas. remember, if you take tens minus bunds, we keep holding that 200 level. so the spread isn't changing much on bunds versus u.s. think the relative value trade. okay. when yields on the best quality sovereigns not that long ago were going down big, u.s. rates were getting dragged down with it. the relative value trade. it's similar right now except for the driving force are other securities in europe. let's look at the spread between france and the bund. it keeps going wider. let's look at italian versus the bund. going wider. let's look at spain versus the bund. going wider. so if you're a trader, you're basically selling some of the riskier sovereigns in europe. and you're buying some of the better ones. that activity along with buying some of the better ones in the united states is causing our rates to go down. and the dollar which is already on pretty thin ice is definitely mindful of that activity.

and finally, let's look at a one-year of very negative rate in europe, their two-year. the record is minus 81 basis points from december of last year, getting very close now is that dynamic if buying is overtaking the entire bund curve. carl, david, jim, back to you. >> all right, rick, thank you very much. rick santelli. when we come back, jeff bezos responding to the "new york post" over that story about robot run supermarkets. we'll talk about that. later on "mad money" don't miss jim's exclusive with ge ceo jeff immelt, 10-year now 2.346, not far from the lows of the year. back in just a minute. it's an important question you ask, but one i think with a simple answer. we have this need to peek over our neighbor's fence.

and once we do, we see wonder waiting. every step you take, narrows the influence of narrow minds. bridges continents and brings this world one step closer. so, the question you asked me. what is the key? it's you. everything in one place, so you can travel the world better. ♪ to err is human. to anticipate is lexus. experience the lexus rx with advanced safety standard. experience amazing.

i am benedict arnold, the infamous traitor. and i know a thing or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't. (cannon sound) jeff bezos responding to the "new york post" after it publishes a story saying amazon's thinking about building a two-story automated grocery store staffed by robots. the story claims the prototype discussed calls for operating margins north of 20%.

bezos responds,@nypost, whoever your anonymous source is on this story, they've mixed up their meds. if anyone knows how to get 20% margins in groceries, call me. >> i think it was meant -- >> notoriously single -- >> 2% margins. if they can get 3% margins that would be worth doing. i mean, the grocery -- i would never go in that business. that is the worst business than the restaurant business. remember, i'm a bar, that's a terrible -- well, whatever, off the meds is kind of funny. maybe like, you know, bezos, trump, they really know how to tweet. they just rack up the followers. me, it's step by step, inch by inch, slowly i build the followers. >> you're doing okay. certainly better than david or me. >> damn right. >> we'll get stop trading with jim in a moment. dow's down 60. worst loss of the month so far. miles per hour. 0 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. ♪

time for cramer and stop trading. >> 14 times earnings with high single digit growth on the top line and double digit growth on the bottom line, i'm talking about allergan, brent saunders delivering what i think is a terrific quarter. he talks about how one day he's not going to be a long-term holder of the teva he got.

been reduced dramatically when he got it from selling generics. but talking about not putting through big price increases, president trump should listen to that call or summary of it. the guidance, he reset everything back when the stock went down to 180 from what he was saying about the pfizer memo. and now he's got six drugs that are about to come out that he thinks could be big. a lot of stuff in the pipe. and i've got to tell you, this is going to be the new favorite of the growth guys given the come-ups of the gileads. >> pursuing different strategy of peers going after smaller companies. people recall that incredible premium they paid but a small number for a deal not long ago. >> for life cell. >> these are going to be the way they go. >> right. >> because if you get one, just one that hits, you're done, right? >> yes. >> as opposed to pfizer strategy of spending real money on some of these things and getting more developed. >> and i have them on tonight i'm going to talk about because

i think the pipeline is extraordinary. by the way bought back $12.3 billion in q-4 out of toe al of $15 billion? >> you have brent saunders on tonight? >> yeah. >> and immelt on also? >> yeah, well, what do you think i do? i'm a booking machine. oh, strauss zelnick is no slouch. i got him from the rafters. david, this is what i do for a living. i tweet and i book the show and my wife says, listen, don't come home tonight. she told me not to come home tonight. >> what do you want to hear from immelt? >> i think we have to talk about making america great again. we have to talk about trade war, but we have to talk about the numbers. we have to talk about total shareholder return, okay? it's not about friends. it's about money. >> jim, we will see you tonight. "mad money" 6:00 p.m. there's a lot to get to. dow's down 58, banks down for the third day in a row. back in a moment.

this is where i trade andrs. manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you. [ girl giggles ] when you have an equity summary score that consolidates the stock ratings of top analysts into a single score, you realize the smartest investing idea isn't just what you invest in, but who you invest with. isn't just what you invest in, if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points

and can help protect your potential profits. fidelity -- where smarter investors will always be.

♪ good wednesday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, david faber at post nine of the new york stock exchange. market having a tough time

getting out of the gate. all three major averages are seeing their worst losses for february so far. dow's down 60 as the banks lag for the third day in a row. >> our roadmap for the hour begins in washington. disgraceful and political, the words from president trump this morning delivering a tough rebuke of the court challenge to his controversial travel ban. >> disney's bob iger urging caution when it comes to tough china talk. >> and from a border wall to $1 trillion in new government spending new ceo of giant engineer aecom why trump's plans are bullish for his business. but first up, the president addressing the court challenge to his travel ban in a speech to a major law enforcement group in washington just moments ago. let's get to eamon javers with the latest in washington. eamon. >> hi, sara. this was a law enforcement group here in washington as you mentioned. so friendly territory for the president who talked about a range of issues this morning. everything from violence in chicago to sort of how he feels

his immigration order is playing out nationally. he did take a moment though to refer to the immigration executive order which has prompted so much controversy, as a weapon that law enforcement should be able to use. here's what the president had to say. >> we have to give you the weapons that you need. and this is a weapon that you need. and they're trying to take it away from you. maybe because of politics or maybe because of political views, we can't let that happen. >> we also had a tweet from the president this morning as you guys mentioned. he said if the u.s. does not win this case as it so obviously should, we can never have the security and safety to which we are entitled. politics! now, we heard the u.s. court of appeals for the ninth circuit last night holding oral arguments on the president's executive order and the legality of it. we're expecting a decision from them in several days, but it's possible, guys, that this could go all the way to a divided supreme court.

so this fight might be not over yet any time soon, guys. >> eamon javers in washington. eamon, thank you very much. weighing in on the ripple effects of travel ban are ambassador fred katooh and former ambassador and, the former u.s. chief technology officer during the obama administration. great to have you with us. thanks for joining us. >> thanks for having us. >> ambassador, obviously this is going to be a process that the president is committed to. we'll see what the courts say about this temporary relief. how should companies -- let's try this through a business prism. how are businesses supposed to plan over the short to medium term as we await this ruling? >> well, i think that's a good question. you know, during the obama years i used to hear on your show and

others that business leaders and other leaders weren't sure because they were unsure about the tax environment. seems we're facing a lot of uncertainty, immigration just being one of them. and, you know, in terms of my own organization, we bring foreign students from the middle east and north africa to this country. they study here, they get an education, they get a good education, they get exposed to american values, and i think it's a win-win. i would note that president george w. bush and the late king of saudi arabia, king abdullah, agreed to bring tens of thousands of saudi students here. and let's face it the saudis were the prime perpetrators of 9/11, saudi individuals, not the saudi government of course. >> yep. >> and yet we've had 80,000 saudi students at one time in this country, nobody said anything.

>> anish, this morning the president says i've learned a lot in the last two weeks and terrorism is a far greater threat than the people of our country understand. kind of difficult to second guess the president who's getting intelligence none of the rest of us are. >> well, what i would suggest to you is that the evidence that has been publicly reported suggests that the root cause are remitted related to some of the actions the president has moved forward and been some of our policy debate that we look at costs and benefits as we make major decisions on anything that's regulatory. and i would argue that perhaps on this circumstance we've got the balance wrong. costs to the economy are far greater than added benefits to security for this shift in how we handle immigration procedures. this doesn't mean we're not vetting people, it's just a complete shift in how we vet people. and our default model actually has been reasonably sound in its

approach. >> aneesh, can you elaborate on that point about the cost to business and the economy? because a number of studies have looked at these particular seven countries in question. and it's not a huge source of talent for silicon valley versus say the stand they're taking against this, more than 100 companies. so is this really a threat to business, or do you think it's more of a stand on principles? sgr well, let me be very clear, the executive order makes it explicit that they may look beyond these very seven countries. it sets the precedent with these seven. and has an explicit instructions to the team to look anywhere under any circumstance. and so the problem is not just the seven countries although they're not insignificant. the problem is the uncertainty this means for the broader -- if you're recruiting someone today to be a chief data scientist at one of your companies given this level of uncertainty, what confidence do you have regardless of which country they're from from around the world that they can actually

bring their families and move here? i think this is going to have a terrible effect on recruiting and incredibly terrible effect for long-term economic dynamism. centers of excellence will likely locate outside of the country in this period of uncertainty. you have to. you got to take the talent that's out there and apply the best talent to the problems. and if you can't bring the talent here, you're going to have to invest elsewhere and locate talent centers elsewhere and that's terrible for the country. >> mr. ambassador, on aneesh's point, we know canada has essentially doubled down on welcoming immigrants. i noticed today the chinese foreign ministers in australia ostensibly try to take advantage in the rift in short-term relations between the president and prime minister there. is it possible other countries really use this as leverage? attempt to grab talent away from us? >> sure they will. and already we're hearing from many students under our auspices

studying here in the u.s. who by the way are u.s. government funded that they're very worried about their status, afraid to go out of the country for fear they won't be allowed back in and starting to have a chilling effect on people applying for these prestigious scholarship programs. if i could go a little just slightly off the question. syria's one of the countries of course that has been targeted. i was the former u.s. ambassador to syria. i doubt many of your viewers know that we have about 6,000 syrian doctors practicing medicine in this country who were born in syria, got their medical degrees in syria and then came here on medical residencies. and often work in areas where there are very few doctors serving the communities. and, you know, so we never talk about the lives that are saved by these people. >> yeah, i mean clearly this is going to impact a lot of different industries, not just technology. but, aneesh, to your world, technology may be the most

impacted here. what do you predict for this relationship between silicon valley and the trump administration? we had that meeting back in december at trump tower. and now this standoff. how contentious is it going to get? >> well, i hope it moves from contention to engagement. it may not necessarily mean engagement with a specific trump administration because the details of how the policies are shaped may not be influenced by that type of engagement. but rather the conversation to be had with many of those who support these policies out in the part of america that haven't had the benefits of these new technologies. i think the opportunity for engagement now is to listen to people in parts of the country that have struggled to gain access to these kinds of economic benefits. and frankly the opportunity now is for the tech community among many others to find ways to harness all of these new cape n abilities from our tech sector and point them to helping people lift up their economic prospects. when more people in this country feel like their kids are going to be worse off than they are,

that doesn't bode well. whether or not trump writes a certain sentence or tweet is sort of secondary to the fundamental issue that we have this growing divide between those who've been able to benefit from the modern economy and those who've been left behind. i'd like to see us double down and engage to help those that may have the longer term benefit that we need. listen to people who are anxious and find ways to help them address those anxieties. >> aneesh, mr. ambassador, we appreciate your time. not the last time we're going to discuss all of this. thanks very much. >> thank you. >> thank you. turning to disney this morning, the company topped wall street earnings estimates although revenue did fall a bit short of expectations. the declining subscribers at espn of course continue to weigh on the company's results and certainly create a lot of concern for some investors. disney ceo bob iger though spoke with julia boorstin about what is next for espn. >> i'm not suggesting at this point that we ever will fully break it from those other bundles. we'll see what direction the business goes.

what we do intend to do through partnership that we have and ownership position in bamtech is to launch a sports service, multisports service direct to the consumer on the bamtech platform some point in 2017. that will include a number of espn product in it. and then we'll see where that takes us. >> right now it's taken the stock a bit higher. it had been up a bit more in the early trading this morning, but mr. iger apparently winning that argument at least today based on the strength of theme parks, the studio which had tough compares, theme parks did suffer a bit from some weather related issues. but overall strong. and he continues to focus on that and tell people stop being so concerned about espn. it is going to be fine. and we're going to find other platforms and are succeeding in actually placing it on the proliferation of over the top platforms that we talk so often about here, whether it be directv now or whether it be the coming offerings from hulu or

youtube and on and on. >> piper jaffry actually suggests that what might be helping the stock is clarity from bob iger himself talking about openness to extending his contract. we heard that pretty clearly in the conference call. he also talked to julia about that. but that question looming, some uncertainty as he's set to retire june 2018? >> yeah, end of june 2018. of course he already has extended his employment at disney twice. about a year ago tom stags who was widely expected to be the heir apparent was summarily dismissed from the company. that was a surprise to many. and so it is not clear that there is an heir apparent. and for a company as large as disney, as seemingly complex in certain areas, you do want somebody to have a lot of time to get ready for the job. that's certainly what the board would want. and so that's a main role of the board of directors. we'll see what they come up with. he of course is the chairman of that board. >> yeah, turned 66 on friday, i

think i read. up next, we'll talk to goldman sachs chief asia equity strategist on how to interpret president trump's tough talk with china. but first, take a look at shares of gilead. big mover today. weak outlook weighing on this stock. one of the worst performing stocks in early trading down more than 9%. much more "squawk on the street" with the dow down 61. we'll be right back.

the relationship this company has with china certainly

is important from movie perspective, consumer products -- would be damaging to disney's business and business in general, is something we have to be careful about. not to suggest there shouldn't be things on the table to improve the trade relationship with china, but i think it would be unfortunate if we entered into a trade war that i think would do a lot of short-term damage to our businesses. >> that was disney's bob iger last night warning of the effects of a trade war with china. earlier this week it was alibaba's jack ma saying, quote, everyone is concerned about trade wars. if trade stops, war starts. but worry doesn't solve the problem. the chinese foreign minister echoing similar comments this week. joining us now to make sense of all this is timothy moe, chief asia equity strategist. welcome back, tim, good to see you. >> great to be here, sara, thanks. >> so how much does the election of donald trump change your

economic outlook on china? >> well, there's clearly a greater risk in terms of trade barriers from the united states. i'm sure it's been much discussed, but it's basically either tariffs or some sort of border adjustment tax. we don't know yet the scope, the magnitude or the timing of this, but we've done some pro forma work in terms of what the impact could be and a couple of parameters here, we estimate asia has the highest so-called production multiplier to a reduction in u.s. imports. so if u.s. imports whent e went down 1%, how much production would go down in various parts of the world? figure for asia is 2.6 times whereas for europe it's like 1.8. within asia china is the greatest at about 3.1, but korea and taiwan are also very high in the mid 2s. so the impact either from a direct trade effect or how that maps through to gdp would be really consequential for china and also related counterparties such as taiwan and korea. >> perhaps not that surprising because china is our biggest trading partner. we have the biggest trade deficit with china.

>> for sure. >> how much potential is there to shrink that number as president trump seems like he wants to do? >> right. there's going to be various modalities through which that could happen. either you could put selective import tariffs which reduce imports from certain key industries viewed as being highly competitive to the united states and where there's an immediate offset, or there could be a blanket tariff or there could be some sort of tax adjustment. i think the specifics of that would be worked out over the next weeks and months. and we don't know. but i think from an equity market standpoint it's important to note is we've estimated if there was a 5% drawdown in u.s. exports, say a 5% hit to u.s. growth, that could map onto an 8% drawdown in the aggregate regional index. and the markets that would be most affected would be korea, china and taiwan, which very much echoes the macroeconomic point i was making earlier. >> 8% of equity response. >> roughly 5% u.s. imports a three-month view shock response could be 8% drawdown in the

index. now, for certain key sectors that would be more likely targeted, let's take automobiles, which would be -- it's highest on our probability list of a sector that could be affected, why? because there's plenty of u.s. domestic manufacturers who could take up share and could have greater employment if you curtail imports of autos in. and historical precedent in the mid 1980s under reagan curtailed of japanese and they fell something like 30% within a year or two as a consequence of the import tariffs. i think 45% tariffs levied on japan auto imports. there is some historical precedence for this and historical ep sodic evidence shows consequential impact on those sectors. >> trying to understand the impact on china itself. >> yeah. >> for example, what percent of overall gdp is exports to the u.s.? do we know? >> so the u.s. accounts for 2.8% in china of gdp in terms of exports roughly. you could do simple math say cut

exports by x and some sort of supply chain or ripple effect then reduce overall growth by y. so we have some rough rules of thumb to parameterize this. i think the broader conceptual point is that trade is important for china. and if there is a -- an imposition of u.s. tariffs, that would clearly have consequential effects. we also think and we just put out a piece on this recently that although the u.s. is more important to china than china is to the united states, china still is important to the united states as a trading partner. so if a conflict did develop, it's not just one side that would be bloodied. both sides would be taking some hits. >> 20% of gdp while large is not necessarily something that would plunge them into recession if you were to cut it significantly, is it? >> depends upon the numbers you run. but we reckon if you had for example the 45% tariff imposition that was threatened during the campaign, that that could reduce china's gdp by close to a percentage point. going from 6.5%, which is their

threshold level being targeted to 5.5, that still sounds very large in absolute terms but that's basically a hard landing or recession in chinese parameters. and i think that would mean an even greater reliance on infrastructure spending and domestic offsets, which might be a little bit more difficult to do given the backdrop of high debt levels and so forth. >> what about policy response from china toward us? how would they try to hit back? >> right. our sense is that given the political dynamic now you may recall that there's the 19th party congress which takes place in november that it would be politically domestically expedient and important for china to have a robust response to a u.s. trade action. so our sense is there would be more or less tit-for-tat. an exchange that would be complimentary barriers that could be soft or hard ones but something would -- it wouldn't go unanswered. >> targeting companies already in place? >> could be. this is all guesstimation of course. >> sure. >> but the logical areas would

be sources of large already imports into china, either manufacturing goods or service. >> i want to ask you about japan quickly because we've got a big meeting on friday between prime minister abe and president trump. >> yes. >> this trade relationship is key as well. >> correct. >> they're in the top five u.s. trading partners. japan is. >> yes. >> where do you expect that to go? trump has made some noise against japan. he's just met with u.s. automakers that have complained about the weaker japanese yen. do you expect action on that front? >> i'm summing up various news flow items that have just recently come out. it looks as though prime minister abe is trying to aggregate understanding about or a total of investment that japanese companies might make in the united states to give a so-called tweetable figure, a stat that would be helpful. >> is that going to work? >> well, i mean, i think if the margin could be helpful we've already seen a fact pattern of announcements of incremental shifts in investment.

you mentioned jack ma earlier, head of softbank, masa son has been here, we've seen this in terms of japanese -- i think at the margin if there are announcements more beneficial to production in the united states, those would be helpful for the overall ambience off the e of the trade negotiations. >> a lot to watch. tim, not enough time. come back on your next trip from asia. tim moe, chief asia equity strategist for goldman sachs. laidter in the hour william isaac will join rick santelli talking about housing reform in a trump administration. but first give you a look at where we are in the markets right now. see down across all the major averages. stay with us.

some pretty notable bearish comments earlier from larry fink of blackrock at the first-ever yahoo finance all market summit in new york. our very own wilfred frost is uptown with the latest headlines and the speakers. good to see you, wilf. >> hey, sara. yes, indeed. as you say here at the yahoo

finance all market conference larry fink speaking earlier. he started talking about the meeting he and other ceos had with donald trump last friday saying it was a good meeting, it was a constructive meeting. he said that he personally spoke most about the need for more infrastructure spend. then his tone changed a little bit. he made a veiled swipe against president trump's immigration ban where he said that, quote, as a global firm we have to make sure our employees believe in inclusiveness and working together. he went onto speak about being a global citizen. as you rightly said on the markets he was fairly bearish. he said, quote, he sees dark shadows that could impact the direction of the marketplace. and he said that he could make a stronger case for the ten-year yield to hit 2% before it hits 4% from here. in terms of janet yellen and the federal reserve, larry fink said they've done a good job over the last seven years, but he feels that her job could get harder

from here. take a listen. >> i think there's going to be a huge tension between the federal reserve this year and the president. we already have a very strong dollar. and obviously if the ecb and the bank of japan keeps its policies of very loose monetary policy, and we begin a period of increased tightenings, our dollar's going to get stronger and stronger. and obviously that will disrupt our manufacturing platform. >> he framed the current stance of the federal reserve as one of caution, guys. >> everybody's talking about currencies. ceos, politicians, front and center. wilfred, thank you. see you in a bit. wilfred frost at the yahoo! all market summit. >> shares of mondelez moving higher depispite the earnings

miss. we'll talk about the numbers and how rosenfeld characterized the order. we'll talk to aecom, border tax, infrastructure, hard to get any equities when the ten-year yield and oil are down. i'm connecting our brains so we can share our amazing trading knowledge. why don't you just go to thinkorswim's chat rooms, where you can share strategies with thousands of other traders? mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade.

good morning everyone. i'm sue herera. here's your cnbc news update at this hour. senate democrats pulling another all-nighter, this time to highlight their opposition to jeff sessions' nomination to be attorney general. the senate vote on sessions is expected to occur this evening. seattle has become the first major city to cut financial ties with wells fargo over that bank's involvement in financing the dakota access pipeline project. in a unanimous vote on tuesday city council members divested $3 million from the bank. the move prompted chants from crowds packing the council's chambers. a russian court found opposition

leader alexi nalvani guilty disqualifying him to run for president next year. nalvany was found guilty of embezzling tem e timber worth about $270,000 and given a five-year suspended sentence. and a sinkhole opened up near australian prime minister malcolm turnbull's home in an exclusive sydney suburb. police cordoned off the area which was less than a mile from prime minister turnbull's residence. that is the news update this hour. carl, i'll send it back down to you. >> all right, sue, thank you very much. sue herera. infrastructure and engineering giant aecom saying it plans to spend $115 million in 2017 as the president promises big infrastructure spending including the construction of that border wall and a trillion in spending to improve roads and bridges over the next decade. shares of aecom are up nearly 35% since the election. joining us this morning is ceo mike burke, mike, good to have you with us.

good morning. >> good morning. thank you for having me. >> president suggested this morning the wall at least is being designed even as we speak. and secretary kelly yesterday said he expects it to be well underway within two years. do you agree? >> oh, i don't know if that will be built and what time schedule, but, you know, we have a long history of providing national defense and border security for the u.s. government and governments around the world. and so certainly we'll look at those projects as they come up. >> as you prioritize what's likely, is it wall, roads, is it bridges, what's number one? >> we think the number one project that needs to be done in this country is transportation. in fact, in december aecom prepared a report for the treasury department of the 40 top transportation and water projects that need to be completed here in this country. those projects require about $330 billion of capital expenditures. and the good news is there is by

our estimates those projects will generate two to three times the cap x and economic benefit. so it's good for the country. and alleviates some of the traffic congestion issues we have around this country. >> you know, one thing, mike, that you must have been excited about is that this for the first time in a long time seemed like something that both parties could get behind, a bipartisan, we had the senate democrats presenting a proposal, president talking about big infrastructure package. but with democrats increasingly blocking confirmations from going through and all sorts of actions including this new immigration order from president trump, do you worry that that sort of bipartisan support for infrastructure could be lost or hurt? >> sara, i don't worry about that. i think we are at a unique moment in history here where we have all the stars aligned. we have broad bipartisan political support for infrastructure from both sides of the aisle. we have broad public support. and we have a lot of capital that's waiting to be deployed in

this market. when i look at the broad bipartisan support, we saw it in the election cycle, we're seeing it now in washington in public support, we saw the ballot measures in the november elections across various municipalities around the country where we saw taxpayers willing to increase their tax rates to pay for infrastructure. and then third n today's low interest rate environment there are large pools of private capital that are waiting to be deployed into long dated infrastructure assets. so we are at a unique moment here that i think will get us through some of the consternation we have in washington right now. >> there are still some who believe, you know, next month, debt, the national debt, is going to become the main story as we start talking about the debt limit, the deficit. republicans will have to decide how to argue that they're for fiscal discipline if border adjustment can't pay for a tax cut. why is that not going to be a complication? >> oh, it will certainly be a

complication. and i think there's a lot of details that need to be worked out, but we have the international repatriation, tax repatriation issue, national tax reform that will be one source of capital. and i think there's plenty of legislators on both sides of the aisle that are supporting the utilization of the international tax reform benefits for infrastructure. there are also plenty of ideas to bring private capital to the market that will produce economic benefit and produce the requisite tax revenues on the backside. so i'm confident that over the next six months we will come together on infrastructure. if there's one issue in washington right now where both sides can come together in a bipartisan way, i believe it's infrastructure. >> right. well, you mentioned, i guess private-public partnerships is what you're getting at, which is what we've heard a lot about maybe part of any infrastructure plan that really does come to fruition, mr. burke, how would aecom play in such a thing?

do you operate under any of these assets already that we've looked at? >> we are the largest engineering firm in the world in transportation, which is the prime beneficiary of p3 assets. so we have designed, built and invested in a number of these assets here in the united states and around the world. so it is something that is very important to us. and we would be a significant player in that when it does come to fruition. and i'm very confident that it will. it's worked around the world. the rest of the world has a long history of p3 assets. here in the u.s. we're only investing 1% of all of our infrastructure is done through the p3 model, we have a lot of room for expansion of the p3 model here in the united states. >> a lot of discussion about what happens with concrete prices and orders and copper and steel. what happens to contractor salaries whether there are enough engineers available to work on stuff like this.

h how elastic is that? >> you know, the long-dated nature of these projects giffs us plenty of time to ramp up. so we are not concerned about the supply of labor for these projects. many of these projects take a decade to build. we have an opportunity now to get started and put people to work right away. if you look at some of these infrastructure projects, 44% of the capital expenditures on these projects go towards labor. so this is an opportunity to put people to work in this country and put them to work right away and well paying jobs, implementing infrastructure that will reduce some of the friction that we currently have on the economy. so all of this is at the forefront of the discussion in washington. and i'm confident that it will come to fruition over the coming 12 months. >> a lot of people looking for that kind of job creation in this country right now. mike, we appreciate your time. hope you'll come back. >> great, thank you for having me. >> mike burke of aecom talking

infrastructure. wanted to take a look at shares of mondelez. this has been an earnings mover. the company unusually reported after the bell yesterday and it was a miss on profit, but mainly on sales for the fourth quarter. the stock is actually turned around opened lower, was trading lower overnight, and is now higher. i talked to irene rosenfeld, the ceo, right after the quarter. she said some of the problems they faced and she said it was a tougher quarter than we had anticipated, she said the problems though were short term in nature and potentially convinced some investors of that which is why we're seeing the stock higher this morning. they dealt with the india demonetization which happened about 50 days ago where some of the cash came out of circulation, changing consumer behavior. mondelez is a company that gets more than 3/4 of sales abroad. big exposure to emerging markets. this was a key factor behind that top line miss. she also referenced increased promotions across snack makers. said some of the competitors were taking down prices. so when that happens a company like mondelez has to fight also

for market share, take down prices as well. some potential reasons behind the miss. as far as the outlook for 2017, it was conservative. rosenfeld called it a prudent outlook of revenue growth of 1%, but david, this is an industry that continues to struggle with volume growth and revenue growth not to mention macro factors like foreign exchange rate, the strong dollar continuing to weigh on the results. mondelez is one name in this group that investors continue to like because of the margin increase story, those cost cuts, squeezing out costs from the business has driven margins. and she reiterated her margin commitment to about 15% to 16% for this year, potentially another reason the stock is up. but always is always speculated on when it comes to deal activity in the space when it comes to 3g and -- >> well, yeah, kraft heinz more than 3g. we'll see, if there's consolidation to your point

about top line growth being tough to come by. one of the key reasons why companies do choose to consolidate. and i think there is an expectation as this year moves along that we may see some consolidation generally speaking in this part of the world. consumer. but we'll see. >> yeah. >> and what kraft heinz does at this point i think is unclear. and it's not clear that it would be mondelez which by the way includes on its board nelson peltz and trian is one of its large investors and bill ackman. >> who recently upped his stake in the stock. but the stock has done well. >> it has. >> up 23% in the last 12 months. >> and the president has stopped tweeting and saying anything about oreos. >> talked to her about this last night. i said have you had any follow-up on that since the campaign when he blasted mondelez for nabisco plants in mexico? no, no contact. >> axios did report in fact the president did stop eating them. >> i read that story. >> continues to consume diet

coke and lay's potato chips. >> yeah, oreos he stopped. unclear. nelson peltz who speaks to him i think with some frequently made it clear that many oreos are produced here in the united states. >> well, they're continuing their business operations. no word from the government. as we head to break, take a quick look at the markets here. stocks are selling off. the dow down about 67 points, s&p off 0.2%. we'll continue to monitor the selloff. later zillow ceo spencer rascoff will join us to talk president's actions and earnings. stay with us.

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.

are athletic wear stocks all worn out? that's what one technical analyst says. find out why on tradingnation.cnbc.com. more "squawk on the street" coming up.

dow's cutting its losses here down 42. let's get over to rick santelli with the "santelli exchange." good morning, rick.

>> good morning, sara. like to welcome bill isaac. bill, thanks for taking the time. you know, former head of the fdic, former chair, you're going to have some wisdom in an area i want to go into, and that of course is gses, government sponsored enterprises. in my opinion freddie and fannie were the sausage factories created by the government that allowed a landscape to be used by many including banks, but boy they were at the epicenter. so now we've gone from needing a bailout to almost cash cows. let's look at the charts, bill. they're each up as you've written about 130% since the election. what's going on? >> well, i think a lot of people are believing that fannie and freddie are going to be bailed out and returned to the private sector. and continue to operate in the ways they have in the past. i sure hope that doesn't happen. but i think we do owe something to the shareholders who were

wiped out. i don't think we can just take that money from them. but i do think -- so i think they need to be treated fairly, but it's time to wind fannie and freddie down. and return to the private markets. we are the only major country in the world that has this kind of freddie/fannie operation going on. every other country gets along quite well without it. >> all right. now, let's hold that thought for a minute and jump to steve mnuchin, nominee for treasury secretary, many down here listen very intently to some of the things he said in november in recent statements regarding he thinks that freddie and fannie should be pulled out from government public taking all the risk. but there's some disagreement about what to do with all those profits i described. maybe you can tell us this dual nature of the treasury secretary nominee. >> i'm not sure i understand what you mean by the dual nature. >> well, the current

stockholders he wants them -- where will the money go, basically, for these two entities? it seems though hedge funds have large positions. >> that's true. and that's a problem. we have people who have invested in fannie and freddie -- shareholders i'm talking about. and the government came in and under the obama administration and took, just confiscated all of their capital. i don't think that's the way america works. i don't think that's -- i don't think that's appropriate. so i do think we have to take care of the existing shareholders. but i do think it's also time to wind freddie and fannie down. we do not need freddie and fannie. they've been a source of problem. we've been warning that this was going to happen for decades. and finally it did. it blew up. it caused incredible damage to our financial system and our economy. and it's time to proceed with winding these institutions down.

>> now, in our last minute quickly maybe the most important part there are many in washington who say that the government's presence is essential, essential in the element of housing finance. do you or do you not agree? and are there any ways to prove that we could get along without it and better left to the private sector? finish this up, bill. >> i don't agree. i look at every other major country in the world and you'll see that these institutions don't exist there. we can get along quite well without these institutions. i do think we may need to have some kind of government assistance for lower income people to be able to afford housing and the fha would be a good entity to do that. but we don't need these monstrous -- fannie and freddie, these monstrous firms to provide housing. private sector can do it all. >> i like what you said, bill. i'm going to get the final word here. whether it's health insurance or

housing, there are those less fortunate that need assistance. but making all the entire program subservient to that notion doesn't seem to be very efficient. bill isaac, thank you for being our guest today. david faber, back to you. >> okay. and thank you, rick santelli. now let's send it over to jon fortt for a look at what's coming up on "squawk alley." jon. >> good morning, david. well, we're going to have zillow ceo spencer rascoff. the stock is down more than 7% after a shaky outlook, but he's going to tell us what's good there as well as what's coming for the housing market. also, checking in on apple near all-time highs. and jeff bezos shooting down rumors about grocery retail. all that and more coming up on "squawk alley."

why pause a spontaneous moment? cialis for daily use treats ed and the urinary symptoms of bph. tell your doctor about your medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, or adempas® for pulmonary hypertension, as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis.

donald trump, president of the united states, tweeting seconds ago about nordstrom -- "my daughter, ivanka, has been treated so unfairly by nordstrom. she is a great person, always pushing me to do the right thing. terrible." you'll start to see the retweets pile up on that one. we're watching for a downtick on jwn. i think we just did. >> we see it there a bit lower. of course, during the course of the day, many of these tweeted-about companies -- and this was not a direct attack on

nordstrom -- do seem to rebound. speaking of rebounds, are bad trade deals really helping china and mexico catch up to the wealth of the united states? senior economics reporter steve liesman has been crunching the numbers and finds -- i don't want to steal your thunder here, so i'll let you say it, steve. what did you find? >> well, david, to hear the president tell it, the u.s. is losing ground relative to mexico and china on the well front. here's the president from a meeting with harley-davidson. >> we're redoing nafta. we're redoing a lot of our trade deals, and we're negotiating properly with countries, even countries that are allies. a lot of people taking advantage of us. a lot of countries taking advantage of us. >> but the data tell a different story. the u.s. is actually pulling away from mexico, and it's going to take decades for china even to get close. u.s. per-capita gdp around $52,000 compared with $10,000 for mexico, $6,200 for china. so it's five times greater in

the u.s. than mexico and seven times more than china. the gap with mexico -- the yellow bars -- they've narrowed from '06 to 2012, but it's widened the past few years. that is, whatever the unfairness in trade deal might be, the u.s. is getting wealthier than china and for mexico, it's the story of bad education and the weak productivity growth of the worker. there are northern manufacturing companies that do some of these that are doing better. china's growth has slowed. still higher than the u.s. that means they're on a track to catch up. but get this, it's going to take 20 years for per capita gdp in china to be on par where it is with mexico right now relative to u.s. so, 20 years from now, u.s. gdp will still be five times greater than it is in china, sara. >> yeah, how about that for leverage? steve, thank you. we'll have to leave it there. steve liesman. much more "squawk on the street" after this as stocks make a little bit of a comeback here. oil going positive.

and don't miss this interview tonight. jeff immelt, ge, "mad money" 6:00 p.m. with jim cramer. we'll be right back. 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 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 to "squawk on the street."

i'm jackie deangelis reporting in little rock, arkansas, where over 300 miles of pipeline for the keystone xl is sitting here. it's waiting to be shipped, and it's ready to go in the ground. now remember, president trump's america first energy plan included fast-tracking pipeline projects, but president trump said in the executive order that the pipelines needed to be made here. now some of them have been, at the well spun tubular facility in little rock, arkansas. in fact, in 2012, trans-canada said that more than 50% of the pipe would be made in the usa, and it was. but president trump also said that the steel must be sourced in the united states, which right now, it isn't. it comes from places like japan, korea, india, italy, even some from turkey. united states steel companies say that they can make this type of pipe, but they're not doing it right now. these projects fast-tracked mean it could take some time to ramp up to meet demand. so, does this pipe actually go into the ground? does the executive order apply

to future projects only? well, even the industry right now is scratching its head and says that it's unclear at this point. they need more detail on this executive order. trump's goal to get pipes like these stamped made in the usa 100% is certainly noble. it just may be more difficult than anticipated. and of curourse, the question becomes, if this doesn't only apply to future projects, do you take a pipe like this, almost 20,000 pounds piece, and sell it for scrap? then the question of oil prices, which have recently stabilized but on a down tick today because of the huge inventory number. as you build pipeline projects like this more generally speaking, do you have the problem where you flood the market with oil and depress those prices again? is there a little cautionary aspect here where we move too far, too fast? a lot of questions when it comes to energy, carl. back over to you. >> big story on your beat, jackie, that's for sure. jackie deangelis, thanks to you. good morning.

it is 8:00 a.m. at disney headquarters in burbank, california. it is 11:00 a.m. on wall street, and "squawk alley" is live. ♪ good wednesday morning. welcome to "squawk alley." sara eisen, jon fortt and myself at post 9. joining us this morning, zillow group ceo spencer rascoff, talking about earnings and a whole lot more on a day where we're seeing oil go positive. we'll see if equities follow suit. first up, the president singling out another american business on twitter. this time, it's retailer nordstrom. our courtney reagan has the latest on that. happened minutes ago back at hq.