>> good morning, everybody. welcome to "squawk box" here on cnbc. we are live from the at&t pebble beach pro am in pebble beach this morning. i'm becky quick along with joe kernen. sitting in with us is tony krazinzi from pimco. we have a big lineup ahead including glenn hutchins, discovery ceo, david zazlav, at&t ceo, randall stephenson, and we got the chance to speak to actor bill murray, he will talk about investing, entrepreneurship and a lot of other things. michelle caruso-cabrera and mike santoli are holding down the fort at the market nasdaq site in times square. they have the top stories for us. good morning. >> good morning.

how is it going out there? looks great. we're excited about the lineup the. >> going really well, except for the rain for joe. >> i'm glad to be here on the show. yeah. glad to be inside. >> 3:00 in the morning. >> michelle, that quote at the top of the show, i had not seen it, who calls a tax cut phenomenal. could be significant, substantial, helpful, stimulative, only the president could come up with -- >> have you seen the headline about twitter? twitter. sad. that's it. >> some of us do think a tax cut would be phenomenal. not everyone speaks that language. >> no. >> to use that word about a tack cut. phenomenal. >> as a result, the markets soared. >> last week or two weeks ago, austin gullsby is on, hey, only

the first couple of weeks after the election. before it was never going to happen, then they watched in horror, now it's not done anything for a month and it's going to go back down, but now it's moving again. >> it's pooch peachy keen. >> that might be a better word than phenomenal. >> check on the markets which are up again. >> new highs. >> but up the futures today. >> they suggest we'll get another day of gains here. let's show you what's going on with the averages. dow opening higher by almost 37 points. s&p by two. nasdaq 7.5. over in europe, also positive across the beoard last i checke. so much for that. now mixed. consternation what's going on in

greece. overnight in asia. talking later on about the phone call between president trump an president xi jinping of china. the nikkei higher by 2.5%. the hang seng and shanghai marginally positive. oil higher by 1%. brent is higher by 1%. nat gas lower by 11 cents. lower by 3.5%. treasuries have been so interesting. over the last week, we have generally seen yields go down. yesterday a long with stocks rising, yields went up as well, as a result of donald trump talking about the corporate tax plan coming in a couple weeks. the ten-year yield back above 2.4%. dollar mixed this morning, stronger against the you'euro a yen. here are the big stories we're watching today.

breaking overnight, president trump told chinese president xi jinping he intends to honor the one china policy. the leaders spoke by phone last night. president trump had previously suggested the policy was open for negotiation, which upset beijing. a white house statement says the two men had a lengthy and extremely cordial conversation that covered numerous topics. we'll have more from jim mcgregor who will join us at 6:40 a.m. eastern time. a u.s. federal appeals court has upheld a temporary suspension of president trump's order restricting travel from seven muslim majority countries. this means the so-called travel ban remains on hold. in a unanimous ruling, a three-judge panel said the u.s. government has not shown likelihood that it will shown show failing to reinstate the

ban will represent injury. the ruling see you in court. the security of our nation is at stake. in other news, the senate confirmed tom price as secretary of health and human services. the vote took place early this morning. this is the third confirmation of a cabinet official this week. >> here with us is scott sperling, thl partners, co-president and on the board of madison garden. were you at the game? >> i was not. >> do you wish you were at the game? >> heard it was a good game. >> seems the market -- for years we talked about the fed. >> yes. >> the fed what is it going to do. now it's corporate tax reform. are we going to get it or not get it? >> it is more complicated than we may have originally thought. i think the markets are assuming something happens in the next six months. >> on corporate tax reform.

>> on corporate tax reform and more broadly. the two are related when you look at the pass through corporations. everyone knows you can't change corporate tax rates and not deal with individual rates, given that so many small businesses today are taxed on an individual basis. the complexity that we're seeing now with border adjustment taxes, other changes, it's hard to say how that is all going to work out. my own belief is that the deregulation that is occurring rapidly will help stimulate growth in the economy. and i think that's going to be a very big plus. as you do your calculations, as the impact of tax cuts, that's going to have an effect on what we assume the growth rates to be as they do these dynamic scores. the other element is at the end of the day, paul ryan and kevin brady are smart guys. i understand what they're trying to do. but the border adjustment tax -- >> they are the proponents of

the border adjustment tax. >> the riskiness of it to either massive consumer price inflation, or to other changes that effectively offset the fiscal stimulus you get from a tax cut is not worth the risk take that doing that would entail, i suspect. at the end of the day, it may be the case that we get not a 15% tax rate, but maybe something in the 22, 25% cut to corporate taxes. >> what would that mean? >> it puts us right smack at a level that's competitive. i think when you combine that with the energy policy of this administration that will sustain low energy prices, the entire entrepreneurial nature of our country, it makes it an attractive place for people to stay put or come to in order to do business including manufacturing. >> to which degree do you have to bottom line you bet yes it will happen, or no it's not going to happen?

do we have to assume -- it's going to happen in some form or fashion. in the end, by the end of this we're going to have lower corporate taxes. >> i believe that's the case. i believe it's going to go through lots of ups and downs, particularly as it effects -- one issue with the border adjustment tax is that it adversely affects so many elements of the economy that touch consumers unless they're perfectly right about the theory of exchange rate adjustment. >> about the offsets. >> i don't know a single business person who thinks that what wi 's what will happen. >> are the markets saying if we look at the probabilities we get some relief on the rates but not necessarily having this complex structure where it upends supply chains, capital -- >> right. if you look at the move in the market yesterday, it was -- it affirms what you just said. everyone is saying, you know

what? trump wants us to be successful. the president wants to stimulate growth in the economy. to take the risk of the border adjustment tax or doing away with other deductions that might royal the capital markets, interest rate reductions, those are risks that probably are not worth taking. >> scott, stick with us for the next hour and a half, something like that. >> yes. >> he loves it. back out to joe and becky at pebble beach. >> thanks, michelle. i am going to read this here. i was going to talk to tony, but we'll set this up. someone decided that -- >> yes. >> the markets continue to show signs of approval for the new commander in chief. our guest host -- really? in reference to trump, four

golden rules. >> yes. not sure where you're going with that. hopefully not anywhere weird. four golden rules. here's how i would have introed you. we heard the market is not moving anymore. suddenly it's moving again. one thing that has been really well behaved is the ten-year. >> yes. >> i watch it as i watch patient dry. we're below 2.50. been to 2.30. 2.60. same thing with the dollar, orderly and stable. if we're doing all this stuff, maybe it's surprising. >> for good reason. i wrote a blog about this, about dow 20,000 when it reached it. the stock market seemed excited. the bond market not so much. you mentioned the yield, but looking at war the market thinks the federal reserve will put its policy rate which is at 0.5%.

the bond market will be in the low 2s in early 2020. this is really low. the fed put the funds rate at 5.25 in 2006, 6.5% in 2000, and 6 in 1995. the bond market is saying wait a minute, sure there will be a trump bump but don't expect growth to pick up permanently. the bond market saying there are too many obstacles. one of them, the demographics. the population is growing 0.5% per year. we don't have as many people entering the labor force. credit growth. banks are not lending like they used to. numerous things that the bond market is skeptical about. in particular the stimulus, whether it will push up froth permanently. >> we still have a lot of slack globally in the economy. >> that's part of it. >> the minute we go up, more

money comes into the spread. that could be really beneficial. gives us almost time -- we could overheat a little. we could have the best of both worlds. prime the pump here, since the rest of the world is weak, rates are low, maybe stay in this positive investigate environmra. >> we know from the flows we see from investors abroad, particularly in japan and europe, they're interested in owning u.s. bonds. u.s. bonds, ten-year 2.40 versus a 0.3 on the german ten-year. so against the japanese ten-year, 0.1%, yields there, markets think the respective central banks will keep policy rates at zero or negative through 2020. so that prospect is one of the forces keeping yields down here. >> so, did you hear all four

rules or -- >> no. >> let's go through. >> you forgot about that already? >> it's early. >> it is early. how is the stock market and the credit markets which have traded well, treated trump? you could say in look at the policies, not the person -- the person can distract you. a lot of chaos associated with the president. that's just his way. the markets understand because of the republican majority in the house and senate and owning the executive branch, there will be tax cuts on the way. >> and yesterday's announcement reassured them of that. >> the actual crafting will take until at least the summer. reagan tax cuts took until august of 1991. secondly, think of the people in place, look at the people in place. watch gary cohn director of the nec for guidance. these people will be crafting the legislation over time. >> >> to someone like you, that's got to be, wow, this is amazing. someone that might know what they're doing in a position to

make policy. how long has it been since that happened? >> it's important to hear -- coherent to listen to him on one of the shows. >> the other cabinet guys, look. he has a good cabinet. >> these are able people. we know these nec directors have a lot of sway. so expect cohn to. the third thing with respect to trump is to focus on the -- his power, and not necessarily -- what i mean, not the persona. this is the first point, think of oz. he stepped behind -- >> not the prison. >> he stepped out of the curtain -- >> you any he can do a lot of things. this is the guy that signs the legislation. so don't forget. >> the final thing is focus on the economy in and of itself. it has been faring well. it seems with stimulus it will continue faring well. there will be no recession for two years, which is good for

equity vestorsinvestors, keep u overheating. that's a big trick. janet yellen said recently that it is not obvious that fiscal stimulus is needed to drive the jobless rate lower. so we'll get it at a time when we don't need it. that's why the fed will keep moving on rates. >> tony, you'll be sticking around. thank you. back to michelle. sometimes i think about you with things that are happening in the world -- >> don't tease me. >> this week i thought about you with elizabeth warren. and i thought about you with some other comments coming from the left. >> what? >> it's like -- are you laughing at this or crying at what's happening there? probably a combination of both, right? is it satisfying or disturbing to you. >> she's talking into the wind. nobody is listening. have you seen her ratings in massachusetts? she's declining in popularity in

massachusetts. >> i had never seen her explanation of the whole native american thing. i saw it on hannity -- i'm up late out here. the way she explained it. i'm telling you, it was something -- really something to behold. really was when i heard the actual explanation. she just has always felt like a native american, because she had a relative that had high cheekbones. she was sure -- she always identified -- almost like rachel -- the lady that was -- very similar to that. >> judging people how they look. >> identify, therefore i am. i don't know. >> hence those two nicknames that people like to use for her. >> yeah. i don't use that. i don't think i will use that. >> you scolded me, so i won't either. >> thanks, guys. japanese prime minister shinzo abe will meet with president trump today. sara eisen has a look at what is

on the agenda. >> good morning. front and center is the economic relationship when the u.s. and japan. abe is likely to bring goodies, investment in high speed rail. like japan's shinkanzan high speed rail, to build on what is a strong economic bond. here's the key to that. trade investment and jobs. japan is our fourth biggest trading partner and runs the second biggest trade deficit, about $68 billion, number two behind china, something that president trump complained about. prime minister abe will make it clear that economic bond is running deeper. japan has invested more than $400 billion in the u.s. in businesses, assets and projects. only the uk has invested more in america. it's also number two when it comes to u.s. jobs. japanese firms employing 839,000 workers in the united states.

more importantly for president trump, japan is the top source among foreign countries for manufacturing jobs in this country. some of the biggest employers in in the u.s., aeon, gunze electronics, toyota. abe set to stress a lot of the automakers in particular hire thousands of people in small rural towns across, america. lincoln, alabama. russells point, ohio. where this could all go wrong, currencies. last week president trump said you look at what japan has done over the years, they play the devaluation market and we sit there like a bunch of dummies. well, japan maintains it does not manipulate its currency, plays by g20 rules, has not intervened in the markets since 2011, and the weaker yen reflects the weaker japanese currency and a loser central bank policy. both leaders have an interest in cementing this relationship. for president trump, japan is an

important security ally, especially if he becomes more confrontational with china. that's why they will work on the relationship. they're heading south after their joint news conference this afternoon to the winter white house, mar-a-lago, where they will play golf. according to reuters, abe is a 20 handicap, which makes him a decent golferment. >> 20? >> president trump is a remarkable 3 handicap, which could make him america's finest golfer president. >> yeah. yeah. and he would be giving the prime minister about 17 strokes. a stroke a hold. >> hard to overcome. >> i don't know who to pick on that one. on par 3s you're getting strokes. you're in territory i don't understand beyond the trade and the currency relationship here. yes, president looks good. >> i don't know much about golf. that part i guess.

>> i would have -- years ago i would have said do you think 20 is a good golfer? i would have laughed, 20 is a good golfer. 20 handicap. >> what's your handicap now? i don't feel like -- if i had to count every stroke -- >> i was going to ask, what are you? nota revealing? i don't think he wants to talk about it. sara, thank you. when we come back, stocks to watch. we also have the biggest movers. plus ceos and celebrities meeting up on the links at pebble beach. up next, i caught up with a "squawk box" fan favorite and he gave me a few pointers on my horrific, nonexistent golf swing. >> too far. too far.

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welcome back to swx "squawk box." joe and i are at the at&t pro am where business leaders, celebrities and pro golfers meet on the golf course. got a chance to catch up with actor bill murray yesterday. here's what he said about his new clothing line and about being an unexpected entrepreneur. >> bill, thanks for being here today. >> you're welcome. >> how did it go on the golf course? >> well, we were doing pretty well through 11.

6 under through 11. i made a birdie on the 10th hole. and then we were 6 under, then the rain came. and because the wind was already there. then the rain came. then our upbringing kicked in, we started pouting, kicking our feet. i don't know how we finished. we did finish. >> that's good on a day like today. >> yeah. >> it doesn't matter how you shot because how you amazing. >> you're fishing for compliments. stop it. this is your new clothing line for sale here. >> it's not like the j.lo line. so, the whole -- don't grab your phones. >> how did this happen? you're an entrepreneur now. this is your line of golf clothing. >> against all my better instincts and best wishes. i don't know. i kind of noticed a few years ago, all of a sudden i started seeing t-shirts with my face on

them. i thought, well, that's so sweet. occasionally you would say that's not a very good picture of me. or that's as good as i'll help to look. both of those were reactions. then it was a few years of that. i would see stuff everywhere. my friends would say, what's going on? you doing this? i said i don't know what it is. it turns out one of my friends checked up on this one group that was the most prominent one, and they said we've been expecting to hear from you. here's the book. >> what took you so long? >> here's the books, here's how many shirts we have sold. >> was it a lot? >> i think i have a lot of t-shirts. they sold more t-shirts than i have. >> at that point, you said what? >> at that point, what do you do? there's some expression that i would have known if i weren't in pain, it's easier to join them than get in a thing about it.

they seemed like nice people and the fact they kept their books. they said, we would like to make some clothes. all you house wives out there, i'm sure when you say, don't have a good pair ofov overalls, what could i look good in? these are like maternity overalls, i wore these a few years ago at pebble beach. we won the respect of the tournament that day. i always liked overalls. i always liked girls in overalls, for that matter. >> note to self. >> note to self. they made these clothes. this is my family's tartan. they put this stuff on it. they make some shirts. this is a shirt. this is a shirt. >> you're on the shirt.

>> that's a picture that i did -- a picture when i won the tournament with d.a. points. i threw a golf ball up in the air, made it somebody. they put my name on it. my name is on the butt or somewhere. >> right here. >> in case i misplace my overalls at an airport or something. >> you know -- >> excuse me, are those your overalls? they got my name on them. >> do you like being an entrepreneur? >> it's kind of passive. i don't have to do so much. occasionally chip in with an idea. obviously i have to keep in top physical condition. it's a life of denial. >> we will have more from bill murray later in the show. joe, he brought something for you. >> he did? >> he left it here for you. we'll reveal that later. . that's nice. the way his mind works -- >> tough to keep up with.

>> you can see how with "caddyshack" a lot of that was -- you know, if i lose my pants in an airport, you know those have my name on it. he's so wacky, where his mind is going. half of what he's thinking probably never comes out. >> self-editing? >> probably. which we all have problems with. >> the royal we? >> the royal we. >> love him. >> we talked about how he picks scripts and some of these things, i want to show what he brought for you. >> really? it's a surprise. >> it's a surprise. we're waiting for it. we caught up with huey lewis and kenny g. to talk investing. coming up, fed chair janet yellen talks to congress next week. we'll talk rate hikes and the fed under president trump with david henderson from the hoover institute. as we head to break, here's a look at yesterday's s&p 500

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♪ good morning. welcome back to "squawk box." live from the at&t pro am at pebble beach. u.s. equity futures at this hour after big gains yesterday are not weakening. up again. up about 37 points. another new high. the s&p is indicated up 2.

the nasdaq indicated up 7. in corporate news it is official. reckitt benckiser is buying mead johnson for 16.6 billion in cash. reckitt which makes products such as lysol and durex condoms, if you didn't know, will pay $90 a share for mead. so lysol and condoms. and they make enfimil baby formula. >> when the other stuff doesn't work, this is where you go. >> the real stuff? the lysol. a 30% premium to the closing price. the day before reckitt said last week that they were in contention to buy mead.

i just don't like the name reckitt. and private equity funds affiliated with blackstone are buying aon's business for 4$4 billion. it processes work benefits for about 15% of the u.s. population. janet yellen is set to deliver her first -- next monetary policy to congress next week. we'll look for hins about the timing of the next rate hike, whether that will be happening in march or beyond. joining us with more on this is david henderson, hoover institution fellow. david, thank you for joining us. >> thanks, becky. thanks, joe. >> we can talk about timing in a moment. do you expect a march hike? >> i don't think much about it, i don't think it's the biggest thing they do.

the thing that they do for the economy or thing i want them to avoid is high inflation, and i want them to avoid high deflation. so i don't pay a lot of attention to those little wiggles. >> is that a concern at this point? most people relaxed about any concerns where the fed needs to step in. >> about inflation? >> yeah. >> i don't think it's a big concern. >> you're like -- you're old-fashioned. so price stability is something the fed needs to look at. they have 15 different things they look at now. what a concept. >> there's a theorem in economics, if you have one tool, you have one goal if they have 15, it's not good. >> it's impossible to do, which we have sort of seen. >> isn't it likely the fed will have to shift given the unemployment rate is 4.8% from one side of the dual mandate, employment, to the other, which is inflation, because the u.s. economy is growing faster than its potential. the potential for the u.s. economy to grow is in the high ones. we've been growing in the low

twos, saying in the low twos because of upcoming physical stimulus. and that will put upward pressure on rates. a typical phillips curve stuff. >> i'm not a big fan of the phillips curve. the phillips curve in the long run is vertical. there's not a tradeoff. again, i don't worry a lot about those things. but also we don't what the potential gdp growth is. you say it's under 2. it could be 3. >> isn't the math -- it's based upon adding up new numbers in the labor force based upon how productive they were. these days it seems, based on the labor reports statistics, a half percent from labor, and productive 2in the last five years has grown a half percent each year. >> but productivity is forward

looking. what if we get deregulation and that frees things up, you build that dakota pipeline, you get productivi productivity. >> this is one of your big points, we don't know. regulatory overhang is more significant than people give it credit for. >> i'm not a big fan of president trump, but my big hope is his two for one thing, every new regulation you get rid of two old ones. it matters which two old ones. but there's a lot of things that the epa is doing now that are hampering productivity. they are telling farmers, this little pond on your farm, you thought it was a pond. no it's a waterway. >> if you didn't know it was donald trump and you said that cabinet and his policies, you would be in pig heaven. >> yeah. i did a blog post about this comparing hispicks to reagan's. his picks except for the attorney general are better, i think. >> but you can't get the personality out of the way?

that's still nagging you? >> personality -- i'm never going to meet him probably, i don't care. >> you realize the alternative. >> yes, i do. >> higher taxes, higher regulation. you should be so happy. >> he's a loose canon. that's the problem. we don't know. we don't know. >> okay. >> but i like some of the moves to deregulation. i don't want this fancy tax thing, too many things can go wrong. just cut the corporate tax from 35 to 25 or 15, and do not much else. by the way, this not revenue -- it's not revenue losing as much as it looks. because it brings back a lot of capital into the united states. that would be a good tax cut right now. >> what do you think then, do you subscribe to the lapper curve, which during the reagan yields meant -- >> right. 100% tax rate, zero revenue, somewhere in between you get

more. the question is what side of the curve are we on? i don't think a tax cut would increase tax revenues. i'm just saying it would decrease them less than you think. >> david, thank you very much for joining us today. >> that went fast. >> it did. >> thank you. >> dave henderson. michelle, what do you have coming up for us in new york? >> lots of stuff. news breaking overnight, president trump telling china's president that the united states will respect the one china policy. we'll talk to jim mcgregor, chairman of apco china. then we'll get back to pebble beach where ceos and celebrities are meeting up for the at&t pro am. here's what huey lewis told them about his investment strategy. >> i invest myself a bit. blendfunds, close your eyes, let it go. you let it go, even after the run up we've seen?

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. news breaking overnight,

president trump speaking with chinese president xi jinping in a late-night phone call, and pledging to respect the one china policy. different from what he said earlier where perhaps it was under negotiation, the relationship. james mcgregor is chairman of apco worldwide. what do you make of this phone call? >> i think there's been a lot of business people who passed through the white house in the last couple weeks. i think they schooled president trump a bit on that it's complicated with china. and don't get in a battle. we do have an opportunity, because china is rattled. china's economy is fragile, they have a leadership meeting coming up where xi has to consolidate power. it's been amazing how soft china has been to the provocations. it's good, and i think it's necessary. >> you have seen firsthand the effects of china's toolbox on foreign companies. cybertheft, physical theft,

military contractors, from u.s. multinationals, capital requirements, protectionism, it goes on and on. and if they complain, dawn raids, antitrust actions, why should we not try to rattle china if that's what they do to us? >> we need a reset, but a smart reset. my concern is that what's going on now are trade remedy lawyers, heavy industry, steel and aluminum people, that's necessary because of capacity and dumping. if we're not focused on bio farm, aerospace, new materials, semicon du semic semiconducters, we may get tied up with -- china is looking 30, 40, 50. >> how do we combat these things? >> res porosiresiprocity.

>> that means what? >> if you can't do it there, you can't do it here. if yu we could wake up and china could own robotics and all kinds of industries. >> that will look like protectionism by another name. >> industrial policy and protectionism worked for america for 150 years. not so strong on protectionism, but having a policy, looking at china and what they're doing. there's two parts to china. there's the -- i call it the general electric side of china, you have all these people well educated, they follow the rules, the communist party is a strong corporate, and they're doing all the trade negotiations. then you have the china inc side, you will have a dawn raid so people don't file wto cases. you have to look at what china is doing, move ahead, face that, counter it.

>> what about the currency? is that a third rail in terms of a trigger from the chinese perspective? >> if we talk about them on currency, that's so yesterday. they can filibuster for 50 minutes on that. don't do currency. it's not today's issue. >> how vulnerable is china to the trillions of dollars of debt and focussed on industries and companies that don't make any money. they have hundreds of millions of people that have not benefitted from the uplift that many chinese have. how worried should we be that china is more fragile than we see from the outside? >> china is fragile t won't blow up, it can go on for quite some time, but china is fragile. they would never let people talk like this, as president trump has. they need stability. they can go along like they are

for quite awhile. but they're just brushing the problems under -- to keep the debt going. they can't keep doing that. they know it. >> but the question is when does it all break. james, so good to have you. >> okay. >> james mcgregor. coming up, kenny g. is in pebble beach. is he an active investor who will reveal some of his smoothest stock picks, get it? that's straight ahead. and later, randall stephenson will join becky and joe to talk media, the trump economy and the merger with time warner. 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

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welcome back to "squawk box," everybody. joe and i are in pebble beach, california, this morning at the at&t pro am. there are plenty of people here you can get the chance to talk with. we did get to talk with the legendary musician kenny g. yesterday. he's not just a fantastic musician, he's also a really smart investor. >> i'd say more lucky than smart. not lucky that starbucks became successful but that i decided to invest. my uncle was one of the first to give starr buck the money to get going. howard schulze w was looking to expand. my uncle said, you should meet this guy howard schulz, you

should invest in this thing. everybody knew about starbucks in seattle. it had a reputation for being the best coffee. i met howard. honestly, i thought, this guy is incredible. he's charismatic. he's a winner. i said, whatever you're doing, i want to be part of. i invested more because of him being such a dynamic guy. i'm sure you've spoken to him before. he's an amazing guy. >> he's stepping down now as ceo. going to be stepping back a little bit. as an investor, what do you think? >> if that's what howard decides is best for starbucks, he's done great so far for making the right decisions. i would never question anything he thinks is the right thing to do. >> his step back in the past, the chain really needed him to step back in. you think it's a different situation this time around? >> knowing howard, if that happened in the past and he felt like there needed to be changes, he's probably got everything in place. i'm sure he's not going to want to -- if it was a mistake, i don't know. he won't want to repeat anything that wasn't perfectly in favor of starbucks. so i would imagine that he's

smart enough to figure out that if this is the right time, then this is the right time. >> you're more than just an investor, right. we all know about the albums for sale at starbucks. you were the very first album that they showcased there. >> i think it was 1994. my christmas album "miracles" was the first time starbucks gave is a try to sell music. it was a huge success. it was very good for me. starbucks obviously felt it was good for them. they decided to continue selling music. so yeah, i was happy to be part of the very first of that. >> are you an investor beyond starbucks? do you have other stocks you really look at? is there a way you go about investing? >> yeah, i have todd morgan from bel air investments. he's smart, helps give me advice. i call him with my little stock picks and say got to pbuy some f

this. about 80% of the time i'm correct. i'm doing pretty well. >> what are your other favorite stocks? >> you want me to really say? >> yeah, seriously. >> united was down like $39 a share, something like that. i thought, okay, maybe it's going to go up. now it's at $74. so that was a good one. >> that's great. >> that's just one example. i've got some losers. mostly winners. >> do you think the art of investing is at all related to music too when it comes to that, or is it a left brain, right brain type of thing? >> i wish i could get my sax, play music while watching the stock report. doesn't work like that. i guess i'm lucky in a lot of ways. but i ask smart people what they think before i would invest a large amount of money into anything. >> do you know what he went to school for, what he got his degree in? >> i don't. >> accounting. >> really? >> he went to school for accounting and said, actually, the mathematics kind of worked. people who are musicians tend to be good with math.

>> did he talk about his golf swing? he's got a really good tempo. i envy his -- he's got a good golf swing. really good. >> in 2014 -- he's won here before at pebble beach. >> todd morgan used to come on "squawk" all the time. >> his adviser. >> haven't had him on in 10, 12 -- i don't know why. he's a money manager to the stars. >> maybe that's why. michelle, back to you. >> lots of stuff coming up. great stuff you've had from california. meantime, japanese prime minister shinzo abe meeting with the president today. we're going to get a live report from washington. this is video from last night as he arrived. later, red point ventures geoffrey yang will join you guys.

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the trump rally. markets surge after the president's tax vow. we are live in pebble beach with pimco. abe comes to washington. the japanese prime minister will meet with president trump today. we'll tell you what's on the agenda. plus, a lesson on the links with huey lewis. >> this is golf speak. birdies come in what? >> twos? >> bunches. >> the second hour of "squawk box" begins right now. ♪ good morning and welcome back to walk squawk here on cnbc. i'm joe kernen along with becky quick. we're live from the at&t pebble beach pro am. we have a big show ahead. in just a couple minutes, we're going to hear from red point ventures geoff yang.

also, at&t ceo randall stephenson. much, much more. first, let's send it back to michelle caruso-cabrera in new york for today's top stories. hello again, michelle. >> bicoastal edition of "squawk box." >> yes, that's true. >> hopefully not bipolar. >> snow and rain. >> today's top stories, crude oil prices gaining ground this morning. that follows word from the international energy agency that opec members are complying with their agreement to cut production and that non-opec producers are also following suit. president donald trump's proposed border wall would cost as much as $21.6 billion, according to a homeland security internal report seen by reuters. it's higher than the recent estimates of about $15 billion. remember, that $15 billion was for a fence, not a wall. it would also take more than three years to build a wall.

walt disney has tightened etc. control over the euro disney operation. saudi arabia's kingdom holdings has swapped 90% of its shares in the company in exchange for walt disney's stock. now to politics. japanese prime minister shinzo abe will meet with president trump today. eamon javers joins us with more. >> good morning. the prime minister arrived last night for this meeting with president trump today. it'll be the second time he's met with president trump. he met with the president-elect back at trump tower after the election. today, though, a senior administration official briefing reporters yesterday was reluctant to say what the specific deliverables are from this particular meeting. here's what we know of the schedule. they're said to be meeting at noon in the oval office. the president and the prime minister. then they'll break out into a larger working group for a working lunch at the white house.

a senior administration official saying that's going to focus very much on economics. the trump white house says the japanese delegation knows they're focused on jobs, jobs, jobs. then later on in the afternoon, they're going to fly to mar-a-lago for what an official calls a fair bit of golf, some relaxing, some eating down in florida, enjoying the warmer weather. we also know overnight, michelle, the president took a call from the president of china, xi jinping. we're told that was a lengthy conversation and that president trump agreed to honor the one-china policy. that had been something that had been sort of a flash point amid some deteriorating relations between the united states and china. so overnight that phone call taking place in advance of this meeting today with the prime minister of japan. and michelle, officials say the prime minister of japan is going to be comped for the visit to mar-a-lago. >> he's shown a great emotional

intelligence, saying he's going to bring tweetable investments. >> yeah, it's a fascinating dynamic. both ceos and foreign leaders wi are learning how to deal with this new president. what he wants is action items related to his agenda. you can expect the prime minister of japan is going to bring some of those today. we might see some announcements throughout the afternoon. >> we'll be watching for them, eamon. thank you. >> you bet. now back to joe and becky in pebble beach. >> michelle, we're dealing with the perennial two shot. have you ever been -- the way the cameras are set up, we're always on. >> together. two of you are in the shot. >> i'm going like this sometimes. >> we're making awkward facial -- >> but i'm smiling. oh, that was a good point, becky. smiling and nodding. it's very disconcerting. you ever had to do that? oh, you're a pro.

can we get another camera? would it kill you if we had another camera? >> we do have another camera. it's right here. >> who's that pointing at? >> we're trying to make sure we have room for all our guests. we're rolling with it. >> we're actually talking too much about the workings of -- >> inside baseball. >> let's turn to our guest host. tony has his off cwn camera. >> i'm off camera and i'm always keeping a smile. you have to assume a mike is hot, a camera is hot. >> everything has sort of a political spin to it now days. what do you think president trump really wants? higher rates or -- he's a real estate guy. he should love janet yellen. he ought to put her in for the next, you know -- he ought to make it a lifetime appointment. >> the answer to that question is really important. there are a lot of appointees he could make. there's seven members of the

board of governors, including the fed chair. there are two empty seats now. they could be filled, theoretically, with people who are hawkish, who would rather see rates higher than lower, than janet yellen, whose term is up next february and could leave. the vice chair's position is up middle of next year. then this talk of lyle brainard leaving and perhaps others. chances are the president could fill more than half of the seats. these are voting members of the federal open market committee. there are 12 voting members. they include the board of governors and five fed presidents. they're very powerful. you'd think the president would want rates to be lower to accommodate his agenda. there will be higher indebtedness from all the fiscal stimulus he has planned. and lower rates tend to be conducive toward stronger growth. even though his views before the election seemed to be in favor

of replacing janet yellen with someone in favor of higher interest rates, once in that seat, it's tougher to advocate. >> as a real estate guy, he does like lower rates. particularly, if you're facing a headwind like that as a president, in terms of saying here's my proof of my economy that i've been able to deliver. >> even if a person were appointed that leans toward higher interest rates, it would be difficult for that individual to push rates higher given the global scene. if the fed were to push rates higher -- >> that's a good question. is the fed almost irrelevant at that point? if you're looking at a global interest rate that you don't think is going to be higher through 2020. >> the fed is constrained by reality. the fact rates are likely to stay near zero through 2020 in japan and europe, that's what markets are priced for. if the fed pushes rates up, u.s. interest rates move much higher than those rates. money flows from there to here, pushing up the value of the dollar, hurting the economy. a 10% move in the trade-weighted value of the dollar could hurt the gdp by half a percentage point. that's a big hit when you're

only growing by 2% per year. that would be constraining influence. so no matter who's in place, they'll be constrained by reality on the ground and the global scene. >> in your view, who's right about the participation rate and whether we've got a lot of slack still? because this last report seemed to indicate that if people do start coming back, we don't immediately go into a wage price -- there's people that will come back, so you don't automatically -- you don't think so? you think it's tight? you think it's really 4.8 or whatever it is. >> there is an alternative measure. the one you mentioned is the u-3 rate. the u-6, which means all unemployment, plus people working part time who would rather work full time, that's low nines. that's where it normally is. where are they? one could look at entrance plus re-entrance to the labor market, a number in the low millions.

it's actually declined significantly. it's hardly rebounded. data going back 60 years looking forward 40 based on demographics suggests that the participation rate will continue to decline into the next decade because of people like us, joe, the baby boomers, those born between 1946 and '64. we will be turning 65 through 2029. that's the most significant influence. the camp that says it's on a downward trend is most likely to be right. the jobless rate will stay under downward pressure in the likelihood of a return -- just one quick example. many people who were double income families, working to support indebtedness. that mood, that mind set is over. people don't want to work to support the type of indebtedness they had before the financial crisis. >> not so far. there's a story on drudge today that scientists say it's possible for a man to live to 1,000 if we do a couple things. this whole participation rate, all these people may be coming back into the work force.

baby boomers may be booming. >> you're betting on that, a thousand years? >> i just want to get refurbished and stuff, get some new stuff. i don't know. tony, stick around. single shot. look what they did. just for me. thank you. that's great. but i didn't want it on me. >> this is for me. >> i want to be the one who's not paying attention. >> oh, wow. a lot still ahead on "squawk box" live from pebble beach. what's coming up? >> we're going to talk tech and media with red point ventures. later, becky caught up with cinderella boy himself, bill murray. hear what he had to say about the future of content. stay tuned. you're watching "squawk box" on cnbc.

welcome back to "squawk box." we are live from the nasdaq market site in times square. one of the most controversial topics in tax reform is the proposal by speaker paul ryan and house ways and means chairman kevin brady to adopt what's called the border adjustment tax. it's not a punitive import tax, not a border tax, it's a provision in the corporate tax reform they want to change dramatically.

tax imports, not exports. alex brill is with the research institute. he knows a lot about the entire tax code proposal. we're going to focus on the border adjustment tax. good to have you here. >> thanks for having me on. >> first, i want to talk a little process. market rallies yesterday when donald trump mentions two to three weeks there's going to be a corporate tax plan. there had been criticism that congress was going to do obamacare first, get stuck in a quagmire, never get to corporate tax reform. you know washington. are we seeing a reversal in the chronology here? are they going to do corporate tax reform first? >> i think they may. for a long time, folks who have been watching this debate and the health care debate have understood that these are two issues that are competing with each other. there's only so many days in the legislative calendar. there's only so much any member of congress can process. both those issues, health care reform as well as tax reform, go through the same congressional committees. they got stuck on health care right out of the gate. there's a lot more interest, i think, among republicans are in

tax reform. quite frankly, republicans are very good at tax policy. health care is a little trickier. >> the border adjustment tax, i would agree with you on those, except there are this b.a.t., which has led to a right on right fight. feels like civil war within the gop about this provision. >> no question it's controversial. democrats are playing it smart politically. they're sitting back, letting that fight go on among republicans, within the industries. it's a new idea. it's not a new idea like it's something academics have never thought of before, but it's a new idea in washington. tax reform is by definition a game about winners and losers. if there aren't winners and losers, it's not tax reform. there should be no surprise there are people who are upset about the things being discussed, but that doesn't make it a bad idea. >> but if in the losers' camp are consumers who have to pay more, that's something that maybe makes it difficult to swallow down the road. i wonder if people are just

concluding, look, the complexity of it, the potential unintended consequences means the costs are too high as part of this process. i just wonder how it's going to shake out. >> sometimes there are fights left versus right in washington. all the time, in fact. when we talk about this question about what are the consequences of the border adjustment tax, it's not about democrats versus republicans, it's about economists versus everybody else. economists left and right are predicting an exchange rate adjustment that will offset the impact of the border adjustment tax. >> can i explain that? the dollar is going to get so much stronger that walmart is going to be able to buy a lot more stuff for the same dollar and therefore their consumers in theory don't pay anymore. correct? >> that's correct. >> that's the idea. larry summers endorsed that here the other morning. >> but it's not just a theory. it's a theory that if you're wrong has an enormous impact both in terms of the economy, because it drains the economy in that consumers are paying significantly more for goods that they had paid -- that are not made in the u.s. we don't make consumer electronics. it's not a great business. it's a very low-margin business.

fine to have it. so everyone buys their tv. but this would cause them to have to pay a lot more for that tv. >> if there's no exchange rate. >> if there is an exchange rate adjustment, then the issue the president has been worried about, which is people manipulating rates overseas, actually comes back into play. by definition, in the exchange rate rises, that makes our exports more expensive. so the question is, is it worth it to take the risk on something like border adjustment when the reality is if you take a little bit less in terms of the rate reduction, let's see how that works, it's highly stimulative, and it's again all about growth as opposed to, as you say, winners and losers. when there's winners and losers, i'm not sure what we're doing. we're just spinning our wheels. >> sure. the behiidea behind the winners losers is to create a level playing field. if we can clean that system up, we can create fairness between debt and equity, between corporate and noncorporate,

between domestically domicile corporations and foreign competitors. that's the winners and losers, creating fairness by cleaning up the tax code. the other thing i would say is don't just focus on the border adjustment tax in isolation. it's part of a comprehensive plan. so there are other things that are happening that are good for the economy, that are good for individuals. rates are coming down. people will be getting tax breaks. if you want to ask, well, what does this mean for someone going into a walmart, you've got to understand what the whole package is. >> but can you answer -- the first concern that scott raised, which is donald trump has said he doesn't like a strong dollar. right? he said that in an interview. so why would he endorse a policy that would strengthen the dollar? >> donald trump said a couple different things about the border adjustment tax in a couple different days. seems to be that the administration is digesting this idea. i think they see the advantages from a budget perspective of bringing a trillion or trillion and a half dollars to the table.

i can't interpret his views on the dollar, but i think that when -- if there's going to be a commitment from the white house to do tax reform, they're going to need to find a source of revenue to offset that. >> that's the key. there are these principles that say, okay, let's eliminate a lot of these advantages and maybe make it a cleaner tax code. the reason it's there tactically is because they have to show revenue in order to make it appear on paper deficit neutral. >> there's two issues. first, yes, that's part of the issue. it raises over a trillion dollars. that will offset the cost of a 10 or 12-point reduction in the corporate rate. there's another reason, which is it shuts off the ability for u.s. multinationals to manipulate the source of their income offshore. and that -- the inversion issue that's been hot from time to time and a whole bunch of games that are played by businesses, that gets shut down. >> can i try to put that in less economist lingo? instead of taxing profits, which are very movable when dealing with your balance sheet and incomes, if you move to sales,

it's much harder to shift them overseas. they happen in a geographic region. >> absolutely. >> don't you think if you reduce tax rates and you have a better environment here and there are other things that you can do to make inversions not very popular -- and we just saw one of those things happen, which was the bully pulpit effectively of the presidency. you can accomplish what you're just describing as an objective, which is a reasonable objective, without taking the kinds of risks that if we look back in three or four years, you might have somebody saying what bill clinton said about obamacare, which is this is the craziest thing i've ever seen. 90% of the people pay more and get less for 10% of the people to benefit. the same potential could exist here with some of these tax policies that completely change our capital markets if we make interest not deductible or change or risk much higher consumer prices. >> i disagree. i think there's a reasonable debate among economists if the exchange rate effect will be instantaneous and perfect or

whether there will be a lag and it won't get perfectly to where it's supposed to be. i think we debate that. the notion there won't be an adjustment in the exchange rate is to say that's not a market. i think it is a market, and i think we will see that adjustment. net interest deduction, yeah, that's going to cause a reordering. i think the tax writing committees as they put together a final package are going to think about those issues and we're going to see a lot of transition. we have an outline for a plan that would take effect on day one. at the end of the day, we're going to see these rules come into effect over time and that will smooth out a lot of the concerns. >> this overshadows what i think is another very exciting part of tax reform, which is immediate expensing instead of spreading it out over decades. you build a factory, you invest right now, and you can immediately deduct those costs from your tax bill. that would be incredibly powerful, wouldn't it? >> it's a big, powerful stimulant for investment and a big simplification for small and medium size businesses as well. >> we good, guys?

anything else? has he convinced you the dollar is going to rise? no? >> what do we do with the emerging markets crash when the dollar goes up? >> there's that economic term, all else being equal. that's a little bit of what comes into play on that. it assumes nobody responds. >> larry summers raises this question a lot. >> that's a fair point. i wouldn't say the dollar strengthening is without consequence. the emerging markets will be affected, assets held overseas will be affected as well. >> and just live with it. e checs 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,

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welcome back, everybody. we are live from the at&t pro am at pebble beach this morning. this is a place where you get to see all kinds of celebrities and ceos who are walking around. bill murray may be the most iconic celebrity who is here. he's been here for over 25 years. we got the chance to catch up with him this week. he talked to us about working with wes anderson and about the future of content. >> well, with wes anderson now, he pretty much says do you want to come over and, you know, like do the dishes. i say, yeah, that sounds like fun. we can do that. he's my friend. he's a great moviemaker.

i just do what i like. there's no real plan. i don't have a plan. and i'm basically lazy. you know, there's a certain amount of conscious that kicks in. i think we all know what i'm talking about. it's like, am i going to ever clean up this room or not? am i ever going to do those dishes? am i ever going to work again? then it hits you kind of. then all the sudden there's an idea there that's good. i've met a lot of nice people making movies. people that you just would throw in with because they're game. they'll take a chance on something. i was just thinking about it because i got a message from someone saying tim robbins is looking for you. tim robbins will do nothing that's easy. if it's not almost impossible, you don't hear from him. i know he's got some miserable job that won't pay that's going to be almost impossible. >> does that make you excited to think about it, excited at the challenge? or are you going to run from him? >> well, i shouldn't have

brought up his name. now he can triangulate where i am now. >> track you down. >> pebble beach, it's california. no, he's just a nice guy. he's very smart, nice guy. plays golf. >> how come you never wanted to do a "ghostbusters 3"? >> well, we did a "ghostbusters." >> with the all-female cast. >> then a "ghostbusters 2." even though it had some wonderful stuff, very funny stuff, it just wasn't quite as good, deep a cut as that first one. that first one was pretty great. second one was pretty good. i just thought -- and the ideas, i just never really warmed to the ideas. when they had the idea of the girls doing it, i thought that's great. i know some of them anyway kind of well. they're some of the funniest people. kristen and melissa.

i've worked with those two. they're pretty damn funny. so i just thought, well, okay, that's a good widea. i can sleep with that idea. then, you know, we'll go into outer space. it wasn't one of those kinds of things. just some funny girls doing it. and i enjoyed them a lot. so i did a little scene in the movie. i got to watch them work. they had fun. >> any other plans with either of them? >> you know, i'm in trouble with myself because that kristen wiig, who i think is so wonderful, sent me something, said would you look at this thing. i'm just not very organized. >> so you've lost it? >> well, i haven't misplaced -- for a while i lost it. then i found it. i'm actually trailing. i didn't get around to watching this thing she wanted me to watch. then she said, well, jack nicholson took the job. that guy's a poacher. >> there are all different ways

of watching stuff these days. i just got into netflix myself. i hadn't been there before. do you do netflix, amazon? do you do cable? >> not exactly. somehow i was given netflix because -- i don't know. i bought a floor mat somewhere and they gave me netflix. i don't know. then i didn't use it for whatever the hell the three months was. sorry, your netflix is expired. then they say would you like to join again? the hell with you. you guys can't keep up with my slow pace. go away. but i did a show for netflix. they were nice people. i did this christmas show a couple years ago. they were very nice to work with. >> so you can't even see it because you're not on netflix? >> i sort of was there. i kind of know how it goes. but we had a screening in a movie theater, which was really sweet, to watch a musical in a movie theater. really old fashioned. you know the paris theater over by the plaza.

so we had it in the paris theater. it was like the '40s. people clapped after each song. it was really a nice experience. i'll try. i'm trying to get organized. i'm lagging in the technical area. >> he said he was lagging in the technical area. joe, he actually uses a blackberry that he brought with him. >> still does. >> carries around a blackberry with a cut-up face. >> i'm not -- yeah, he's going to get a new phone some day. i was thinking, you couldn't really do a "groundhog day 2." that would be too weird. suddenly he wakes up again. oh, no, not again. that won't work. that was a great movie. >> he did talk about that movie too. >> i think you could do a "what about bob 2." where is bob right now? >> they're talking about with an all female cast.

>> they are? bob wylie's not in it. what about gill the fish? >> i don't know any of the details. i just heard -- >> dr. leo marvin and his family. is bob still insane? is he still neurotic? does he think his heart's going to explode? does he still think -- what happened to bob? >> anyway, more from bill murray in the next hour. michelle, we'll send it back to you. >> we're happy about that. it's been great so far. one of the morning's big stock winners, activision r beating estimates on the top and bottom lines. it also has a new stock buyback plan and a 15% dividend hike. that stock is higher by 9% in the premarket. samsung is reportedly planning to introduce its new galaxy s-8 smartphone in a new york event in late march. that's according to "the wall street journal."

the launch will be closely watched, not only because of comparisons to apple's iphone, but also to gauge reaction to samsung products following the massive gal accuracy note 7 recall last year. and a handful of economic reports on today's calendar. january export and import prices. also, figures on consumer sentiment. we're so happy joe sperling has been able to join us this morning. come back any time. >> thank you. when we return, redpoint ventures geoff yang will join becky and joe in pebble beach. "squawk box" will be right back.

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welcome back to "squawk box." levi strauss, maker of the world's first blue jeans, out with fourth quarter results. it's a privately held company, but income fell 5% in the latest quarter due to expansion of its stores and ecommerce. this marks the fourth year of growth and earnings and revenue growth. joining us now is the levi strauss cfo. good to have you here. >> thank you for having me.

good morning to michelle and mike. >> why do you guys release results when you're privately held? i'm very curious about that. >> yeah, we have a great hybrid structure. we're a private company, but we have public debt. as a result, we need to report results. the good news is the structure of the private company allows us to grow the business for the long term. but we have all the elements that a public company has. that's why we release results every quarter. >> and so how have you been able to achieve growth over these last four years? >> our overall strategies are working. we have a diversified global business model. we're able to sell through wholesalers. we are brick and mortar stores. we sell to the franchisees as well as through the ecommerce channel. as a result, growth is broad and diversified.

for example, a direct to consumer business in '16 was up close to 12%, offset some of the softness in the u.s. so that's the first piece of the strategy that's working. the second piece is levi's is a national and international brand. for the third year in a row, it's grown approximately 3%. the year in '16 actually demonstrated growth was broad based. we were able to grow and expand into other categories as we develop levi's into more of a lifestyle brand. women was up 12%. so again, broad based growth across different categories and geographies. >> there's no way to know for sure, but maybe you're okay not being publicly traded as a stock right now. if i look at your competitors like hanes, other companies you compete with, they've had a hard time in the market. do you expect you're getting mark share gains? is there anything going on in the overall business that

basically leads to any longer term concern about the demand, the pricing, any of the other elements? >> yeah, so i'd say denim as a category is solid. because we are market leaders, we've been able to maintain a gross share in different parts of the world, including the u.s. the category is clearly under pressure, especially as the retail sector experiences consistent decline in traffic as well as the fact in the u.s. the general belief that we are overstored. some of the department stores announced some closures. the good news for us is as market leaders and being a national brand, we are able to drive traffic as well as concert, you know, the folks coming into the store as well as sell more units per transaction. so direct to consumer business globally is up despite traffic

declines. and we're broadening into other categories. >> it looks like you've signed on to this coalition that's against the border adjustment tax proposal, which would tax imports but not exports. i have to tell you that you're now the subject of opposition research that's being circulated saying levi's and the '80s had 63 manufacturing plants in the united states. now they have no u.s. factories, save a small factory that produces specialty jeans that sell for only $260. you've now walked into the crosshairs of this big corporate tax battle going on in washington, d.c. what would you say to critics out there who say you should be manufacturing more here in the u.s.? >> yeah, what i'd say is we're all supportive of tax reform that simplifies the tax code and reduces the tax burden so as to enable economic and job growth. but paying for it by imposing something like a border adjustment tax actually

adversely impacts the consumer. 98% of the products that are sold in the apparel industry in the u.s. are actually imported from outside the u.s. that's why if we do impose the border adjustment tax, it will have the unfortunate effect of passing the prices down to the consumer. we believe, along with the rest of the retail folks in the u.s., that this could translate to as high as 20% price hike. and that's probably not good for the consumer. you know, that's not the intent that any tax reform is intended to have. going back to your question about manufacturing, we do manufacture, you know, some premium products and collections in the u.s. being a global company, we have a global supply chain. for us, it's more important to ensure that the quality of our products are sustainable.

we do invest in the u.s. we're investing over 50% of our capital in the u.s. of our 13,000 employees, about half are based in the u.s. >> okay. got it. thanks so much for joining us. getting up early in san francisco. really appreciate that. >> thank you and again, thanks for having me on the show. coming up, redpoint ventures' geoff yang will join becky and joe in pebble beach. we'll be right back.

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welcome back to "squawk box." we're live from the at&t pebble beach pro am. now turning to media and tech. the merger of over-the-top content and traditional entertainment might have media companies scrambling. joining us now is geoff yang, a founding partner and managing director of redpoint ventures. we can start there and then talk about just the whole backdrop of

the current -- in terms of animal spirits. would you say you feel it in tech land? >> the changing media landscape? yeah, for sure. >> changing political landscape as well, in terms of deal making and prospects for, you know, 2.5%, 3% growth. is it real? >> well, it feels pretty good. certainly the president's growth policies are felt here. the optimism and the yeuphoria around an improved economy is definitely felt out here. >> obviously cnbc is owned by nbc and comcast. the latest comcast numbers, net adds. so the over the top thing, it's real, but would you call it glacial? is suddenly something going to happen? or is the demise of the cable box greatly exaggerated? >> no, i mean -- well, i think the demise of traditional

television is a little bit overexaggerated in terms of the timing. the reason it's been so -- it's had so much impact in the public market, i think, is that historically people say eventually it's going to happen when things turn in technology they turn very quickly. whenever people see ingl inklin that things are going to change, traditional television will erode the way we know it. but when it comes, it'll come quickly. you look at millennials and gen z and their viewing habits. >> you say you think it's been put off a little bit, maybe it's overexaggerated. are you talking a couple years? the market is a couple years ahead of where we should be? >> i think -- so part of it is you see -- i think the decline in traditional bundles is a little bit overexaggerated. i think there are certain demographics, people like me that aren't really going to go for skinny bundles because my

viewing habits are set. i think if you look at people coming up, the rise of the millennials, and what their viewing habits are, i think they're very different. as that demo starts to become more a bigger and bigger audience, both from a pay perspective but also an advertising perspective, i think you see the switch coming. so how long? i don't know, five, ten years. i think you still see a more rapid growth in the consumption of digital. last year i think digital consumption grew like 40% to 50%. >> so you've made investments in the past. you're still making investments in this move, this transition. >> yes. >> if someone comes to you now with an idea, there's things that are complete start-ups that you're investing in. how do you -- are you smart enough yourself to figure this out? you have people telling you how this is going to play out? >> i'm definitely not smart enough myself to figure it out. >> you find the right people.

>> typically if a trend is happening, it tends to last longer and take longer than most people think. so as an investor, you know, you look at major waves that are coming and try to -- you can play the wave for a while. >> when is the last time someone came in and you went, wow, this is going to be important and i want to do something here. was it in the last month? was it in the last six months? >> i'd say every two or three years you see something that says -- you think, wow, that's really powerful. >> what was the last thing? >> i don't know. maybe the last one i really -- that really opened my eyes was meeting with we work. i used to think it was really kind of a real estate company. they talk about themselves as the operating system of real estate. you go into a facility, and it feels different. then you start thinking of the dynamics of what's happening, how people work, where they work. there's definitely a change coming. it's more than just efficiency of office space.

there's a culture and a spirit and an energy in these places that really opened my eyes. >> there's a we work just down the street from us by the nasdaq. >> really? you're a board member of at&t, right? >> yeah. >> is that just to play in the tournament? it helps to get invited. >> i'm not sure. >> content instead of expanding wireless, the whole deal makes sense to you. the future is very daunting for media companies. that's what i was trying to figure out, how it's going to play out. but that's the right move for at&t in your view. >> well, i think it is. i think the future of media is no longer just traditional and digital. i think it's a hybrid combined world. i think people are going to view content on every piece of glass. they'll view it on their mobile device. they'll view it on their tablet, view it on their tv. they'll be able to start on one

platform and move to another. so the distinction between, well, that's digital and that's traditional in the sense that, you know, one is on your phone and the other is on your tv, i think goes away. over time, consumers want to watch what they want to watch in the time they have available, whether it's 30 seconds or five seconds or ten minutes or 44 minutes or it's 2 1/2 hours. i think that content is going to be available on any device. as randall stephenson is fond of saying, the future of mobile is video, and the future of video is mobile. i believe that. i think people are going to find what they want to watch because there are going to be people that offer it to them. if you believe that, you can't -- you know, if you're a distributor or if you own a pipe, you want to be tightly integrated, not only to be able to offer the kind of content that people want to view and

that makes sense for the audience but also this case. >> do you have a view on labor market resources, specifically with respect to the political changing landscape and the h1b visas, which limit the amount of people that can come into the labor market, into the tech sector. >> historic technology companies really rely on talent. we rely on the best talent in the world. the availability of that talent is really important. i don't think there is really a discrimination about where those people are from. so to that extent, you know, having some of the brightest people come from all over the world to come study and eventually work in the united states is a big plus. if anything, i think there's a talent shortage in silicon valley. silicon valley generically, not just the location. if there's really good talent, we'll try to find a way to take advantage of it and bring them

into our companies. so i think there's a dollar and cents in the numbers piece of it, but there's also the emotional, fphilosophical piece of it. the spirit and culture of silicon valley is a story where anybody can come from anywhere and achieve anything. at least that's what people like to believe in the ethos. so there's that, and it's very emotional and very -- aside from being -- from the numbers, there is a big part that is kind of what everybody is about culturally. >> sometimes directors get paid. is it just here it's the invite? is that all? >> no, at&t is a very generous and fair company. >> you don't ask for that. you just ask for that letter. that helps. >> i'm very grateful if it comes. >> practice rounds at pebble. who gets to do that? >> exactly. >> unbelievable. all right.

thank you, geoff. when we come back, tony's final call on the markets. first, as we head to a break, here's what huey lewis taught me about golf. >> this is golf speak. birdies come in what? >> twos? >> bunches. a bunch of birdies. >> a flock? >> it's a barrage.

a quick thought from our guest host. a lot to talk about. >> well, there will be a trump

bump. the u.s. economy will fare better in the next few years because of added stimulus. but we have to ask ourselves about the quality of it. think about the eisenhower in r interstate highway system. 50,000 miles of roadway you and i still use today. long-term benefit from things we did a long time ago. but think of the 2009 american recovery and reinvestment act. about 50 billion was spent on various projects. money that states would otherwise have spent. in some cases simply to make roads look better. so what will the quality of the spending be? that's really important. janet yellen, august 26th said if productivity were to pick up, it would, quote, raise the average level of interest rates, unquote. in other words, for u.s. growth to pick up permanently, we need to have a pick up in productivity. that requires a high-quality spending. so investors, focus on that quality, not just the quantity look beyond the trump bump to see that trajectory and growth has moved permanently.

that will affect the economy, markets for a long time. >> all right. thanks for joining us. >> great to see you. when we return, we're going to talk to discovery communications chief david zaslaw. we'll be right back.

news makers and news breakers. an all-star lineup of leaders and investors. the final hour of "squawk box" live from pebble beach tees off and goes straight left right now. welcome back. "squawk box" here on cnbc. i'm joe kernen along with becky quick. we're reporting from the at&t pebble beach pro am. we've had two or three segments with bill murray. he hasn't changed a lot. you see he kind of falls into that mode occasionally, just a normal conversation. amazing guy. >> as do you. >> yeah, yeah. we talked about that, whack i

can thought processes. i don't know how it happens. i think i'm tired. we have a great lineup of investors and business leaders with us this hour. first, let's send it back to michelle caruso-cabrera. she's in new york at the nasdaq. >> we're looking forward to your guests. president trump will meet with prime minister shinzo abe at the white house. the leaders will hold a joint news conference at 1:00 p.m. eastern time. there's also deal news. reckitt is buying immediate johnson for $90 a share. take a look at meade johnson, hiker by another 5%. there had been talk about this deal. and shares of sears holdings. a comprehensive restructuring will reduce outstanding debt. that stock is higher by 15% in premarket trading. now back to you in pebble beach.

>> michelle, thank you very much. president trump promising a phenomenal tax plan in the next two weeks, or three weeks that, we could be getting a glimpse of it. joining us now to talk about that and much more is glen hitchens, the chairman of north island, also director at at&t and at the nasdaq. glen, great to see you this morning. >> good morning. nice to be here. >> the market yesterday responded very quickly when president trump talked about this tax plan, maybe being a little sooner than some people had been expecting. a lot of naysayers saying we weren't going to get it. we saw the s&p 500, the nasdaq, and the dow all close at new highs yesterday on the idea we could get some sort of a plan. how important is this, and how likely does it get done? >> i was playing golf, not paying a lot of attention yesterday. i still think the markets are overreacting to day-to-day news in this cycle. we've learned -- and a point i've made to you in the past, we've learned that the political changes necessary to do things like change taxes, reform

obamacare, get a big infrastructure bill passed, et cetera, are going to -- change the trade agreements. you see what's going on with immigration. they're going to take a long time. joe emphasized during the -- right after the election that we didn't need to worry about a strong man in america because we had madisonian democracy, checks and balances. he's right about that. but this is what it looks like in practice. >> fits and starts? >> it takes time. the court gets to review decisions you make. congress gets to be involved. interest groups get to petition congress. there are now 100 retailers opposing the border tax. >> and another senator who jumped on board with opposing it too. >> look, someone told me there are seven republican senators from four states that expanded medicaid under obamacare and are not going to sort of be for rolling it back. >> i was trying to make you feel

better. >> my point is that -- >> you remember, i was trying to talk you down, talk you off the ledge. there are checks and balances. democracy works. >> this is my point. but if you translate the mechanism democracy into the market, the issue here is that just because trump wants to do something and just because you think it would be the right thing to do doesn't mean it happens right away or the way they want it to occur. that's why i think the market is reacting to statements like that by the president are not instructive. >> let's forget about the day-to-day stuff. let's talk about a longer term trend. since the election, we have seen an upward move. not only could we see tax reform, we could see things like other issues helped along the way, like regulation. that's something he can do with executive order. an executive order he's already signed in terms of stripping back regulation. do you think the markets are fairly valued with that general trend of things, or do you think that as in the day to day, the

market has gotten ahead of itself? >> i think two things. one is the market values have resorted themselves. you had a sort of obama trade on, which was the f.a.n.g. group. facebook, amazon, net flflix an google. the health care service providers and renewable energy, and you go through the list. you had to have a trump trade on, which was financial services, fossil fuels, banks, big network companies like at&t, big networks with the net neutrality thing. and pharma. first of all, there was a resort that occurred in terms of which way the policy tilted. it wasn't like one set of policies was good for the economy. the tech investors had a terrible period between the election and today, for

instance. so that's one. the second is we're in a -- one of the things to remember is that people will criticize the obama administration with respect to its economic policies. the stock market tripled from the period of his inauguration to today. the s&p 500 went from 800 to 2400. >> the operative term -- between 1999 and 2017, the dow doubled, which is to the rule of 72. that just shows you how much -- and i use -- i'm not disparaging jeff immelt. i think he's a great ceo. if you were to time his tenure at ge from the bottom of the financial crisis, ge went from 6 back to 30. if you time it from when he came in 2001, it went from 48 to 30. it depends on the timing. so the market hasn't done much

since 1999. 72 divided by, what is it, the rule of -- i mean, it's a crappy return that we've got. >> my point is that a stock market is -- in the cycles of the stock market, we're at what you could consider to be a reasonably high level. >> maybe. >> people like robert shiller are saying we're extended, cap rates for real estate. we've talked about this. so yes, there are some important sectors of the markets, and there's some buoying of the economy that could come. but do we have a run like that ahead of us like the sort we had over the last eight years? i'm skeptical about that. >> we went from 800 to, you know, 20,000 in my lifetime. we're both very young men. >> you're trying to convince becky of that. i'm not buying it. >> you're young, and you're

older than i am. i hang my hat on that. we're going to go to break, but have you talked to geoff yang about your father-in-law? >> so i told geoff my father-in-law is the most famous chinese-american in the history of golf, geoff being chinese-american. >> do you know this story? >> no. >> the clue was he'd never played a round of golf. he is -- he played the character wang in "caddyshack." >> i did know this. you told me this. >> that's where bill murray comes in. he was in "caddyshack" with bill murray. >> and that was rodney dangerfield's golf buddy. >> it might well have been he was a professor of history and philosophy and it might well have been the first movie he ever went to. >> someone saw him and said, you got to be in this. >> they cast him off campus. >> that thing happened at the

last minute. it's amazing. so i told geoff he's only the second most famous chinese-american in golf. >> shows you what a small world this is. >> it all makes sense, all comes together. >> thanks, glenn. still to come, david daslav, ceo of discovery communications. then at&t's chairman and ceo randall stephenson. later, dave dorman is going to be here. he's the nonexecutive chairman of cvs health. that's a job i want. chairman of something, nonexecutive. just show up once in a while. anyway, founding partner at center view capital technologies. stay tuned. >> that is the job you have. >> yeah, that kind of is. stay tuned. you're watching "squawk box" on cnbc.

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welcome back to "squawk box." we're live from at&t's pebble beach pro am. joining us now is david zaslav, ceo of discovery communications. we had a conversation a couple minutes ago about over the top type stuff.

i think about if i were running discovery, which i'm not but you are, i think of it as any bundle that i had i would want to have most of your properties. i don't know. maybe there comes a day where not all of them would be in a bundle. so you have thought about this. i know you. i know how smart you are. i've known you for 30 years. you have an ott strategy for discovery, right? >> the kocore to the strategy i making sure your channels and ip are really compelling and you have a superfan group. got to have it. so if you look around the world, we're the largest international media company. every skinny bundle we've been on. we kind of stacked up -- we have an average of 10 to 12 channels in every country. in some cases, we only have six to seven chabnnels on a skinny bundle. if it's a skinny bundle, it means it's usually a new group, usually lower priced. sometimes it's a younger generation.

or it's a way of getting the c-class, for instance, in b brazil. here in the u.s., the product that directv launched, which is quite a good product, directv now -- >> you don't have to say that just because you're at the tournament. you'll probably be invited back. >> it's not a skinny bundle, but it's not fully flush. the viewership we're seeing on that platform is actually better for us. >> even though you're doing well with all the skinny bundles, you have a strategy. why have a strategy if you're always going to be, you know, must-see tv, which is an nbc term, if you're always going to be that at discovery, why develop the strategy? >> well, one strategy for us, as i said, discovery now is the number one channel for men over the last year. we have i.d. and tlc, number one and number four channel for women. oprah is number one for african-americans with o.w.n.

so owning ip that people really want when they could watch anything. the skinny bundle is really about offering people an opportunity sometimes when you go over the top to look at content on other platforms. that really is our strategy. we've -- right now we reach over a billion people on the tv set, but there are 7 billion screens. the hand held screens or the screen you're sitting and looking at before you go into class. we need to be on those 7 billion screens. so we have kind of softly transitioned. not only are we the leader in nonfiction around the world, but we're now loot eder the leader in europe. we own olympics for the next decade. all the tennis, winter starts. we're taking that direct to consumer. we make money on euro sport, where we have three channels in each country. then we're taking all that ip that's paid for and we're going direct to consumer with a sports netflix type product. we're doing well with it.

but the core of that is when we buy ip, like all of our sports rights in europe, 750 million people, we own all that ip on every platform. so here in the u.s., when you see verizon has the nfl, for us we said, no, we're going to buy that whole chain of rights. so if you see the olympics with deutsche telecom or vodafone, it's because we own those rights for the next decade and said, okay, here's how we're going to sell it. i think it's becoming more compelling. you see it in europe and you see it in randall's strategy here in the u.s. this quad play. you go to at&t. it's very compelling. you can buy -- you buy everything. i think that's the way -- and you go to europe now. whoever is your provider for your phone is also your provider for broadband, your provider for multichannel television. malone started it in chile. it's sweeping across europe.

randall is leading here in the u.s. the second piece of that, which we think could be the driver for content and for our strategy over the last five years of owning really compelling content, is one of the consequences of everybody rushing to the quad play is that the pipe starts to look like somewhat of a commodity. you can get it -- in europe, you can get it from two or three people. you can get all of your service. then the question is, how do you dekmodtize that pipe? >> what's the answer? >> the answer is what randall is doing with time warner, which is a great strategy. now he's got this extraordinary pipe with all this flexibility. he also has great ip to go along with it. we're not -- i'm sure they're not even sure how they're going to use that altogether, but it's compelling. you're seeing it in europe. bt bought all the champions league and epl rights.

they bought it to decommoditize their pipe. you see it all across europe. we think that by owning great ip in europe, latin america, here in the u.s., that the next step is going to be every mobile player in europe and latin america doesn't have the means that at&t has to go out and buy all the ip, but they can do deals for exclusive rights. for instance, we've done exclusive deals in france, portugal, and israel. we've done exclusive deals with a lot of the mobile players. that never existed a year ago. it's only in the last year that the cable guys, the phone guys are becoming one and they're raising their hand saying, what do you have that could make my pipe special? so i think that's going to be one of the transition kind of revolutions over the next couple of years. who has the good stuff to

decommoditize that pipe? >> somehow we have to go. i was going to ask you a bunch of stuff. things are moving fast with at&t/time warner. will that help discovery? >> i think it helps content. it's an affirmation that time warner has very compelling content. >> but comcast cgot very big. if your view, if they had gotten bigger, would it have been a negative for discovery? do you worry about that and pricing? >> well, i think when there's a lot of consolidation, when there's not a lot of competition, it creates issues for content players. we've seen that around the world. on the other hand, if you have two or three big players and each of them wants to have some special stuff, then having oprah and tyler for the african-american community or having special ip with discovery or sports or kids could be very -- we think we could be the

winners with a lot of the great content we have. >> i think i have that vest. >> we all have it. we got it in the room. >> i didn't know it looked -- i wonder if it will look that good on me. i think i'll wear that today now that you've sort of modeled it for us. >> wear it on the way home together. >> all right. thank you, david. great to have you on. >> good to see you guys. >> good luck. three to finish today, right. then 18 to go. >> we were out there soaking wet together yesterday. >> oh, my god. soaking is not -- rain gear does not work. it doesn't. if there's enough rain -- >> don't show anyone the hat you were wearing yesterday. >> i was wearing that on top of a hat. all right. let's not talk about it. wow. >> great to see you. thanks, david. when with e coe come back t morning, we had the pleasure of spending a little time on the course with funny man bill murray. up next, we'll show you his gift for joe. stay tuned. you're watching squa"squawk box

live from pebble beach.

welcome back to "squawk box," everyone, where we're live from pebble beach. there's a lot of celebrities here, a lot of golfers, a lot of ceos. yesterday we got the chance to catch up with golfing funny man bill murray. >> what were you doing on groundhog day? i know what i was doing. >> why don't you tell us and

maybe it will remind me. >> i was watching "groundhog day." there was an amc marathon. why do you think that has such longevity? >> well, because i think amc can get away with showing it all day long. i'm trying to cover all the holidays, the major ones and the minor ones. why is it that it's on? >> why do you think it has such longevity? i wasn't the only person watching it. i talked to at least 40 or 50 people who watched it. >> i think it's an extraordinary movie. it's in the library of congress. it's a very important movie. the premise of that film is a great one. the execution is very, very good. i don't take a lot of credit for it. the kid whose idea it was, danny reuben, he was touched by god when he wrote that. he really was. >> i noticed yesterday when i saw you that you're using a blackberry. i think we're two of the last people on the planet who still have these things. >> that a girl. >> why?

are you just a technophobe like i am? >> well, i don't really like talking on the phone. i got a phone so i can communicate with my son. you know they don't answer the phone. but they will respond to a text because it's just a little bit hipper. they can appear as if they're talking to a friend and not a parent. >> right. >> so i have one of those. it has a keyboard. but someone told me i'm -- your shoulders are tight, do you text a lot? well, i have these kids. i like it. they say it's much more secure than the other phones. i don't know if i'm insecure, but i really don't like phones that are insecure. >> so i guess tweeting is out of the question. there's a guy who owns @billmurray who's tweeting on that. he's got over half a million followers. >> does he really? i know, i see these things written on walls that i wrote. not exactly. the tense is wrong. >> that would never be you. >> the grammar is incorrect, but it's not bad.

well, it's sometimes funny. i think he's collecting, but i don't know where it's coming from. some of it may be mine, i don't know. i don't follow him. i have enough trouble following myself and you. >> me too. i see you brought a bottle with you. >> i did. >> what are you going to do with it? >> this baby was polished yesterday in the name of -- he's not here, is he? >> he's not. >> anyway, after we finished our round -- and we missed joe so much. we thought, is there any way we can make him here without his being here? like seven people at once said great idea. so we started ordereriing up. we ordered six really expensive bottles of wine. we broke the others. some were just spilled and given to people at other tables. we do a lot of kidding about joe, but he's an incredibly generous man. and he's not even aware of it. so i just thought we'd sign this

one and thank him for everything. >> he bought us lunch yesterday. >> i can't read my writing from another day. >> it was too wet yesterday. but joe, thank you for lunch. >> and you know, if we're having lunch on joe, there's no forks or silverware involved. here. you can sign your name on the bottom. >> thanks for loving us all so much. we broke the others and the one we got for you. bill and becky. all right. we'll save this for him right here. >> don't tell him. we didn't really break the one we got for him. we drank it. >> so bill -- or this is your gift from bill, joe. >> this is cool. >> we did have lunch and did charge it to your room.

>> that's fine. that's on cnbc. i'm not paying for any of it. he's insane, isn't he? his son, i think, is still one of the coaches at xavier university. >> big game on saturday. >> they played at msg. we had a preparty. my daughter actually tasted a little alcohol with bill, had their armed intertwined. a very funny -- he's insane. >> so he was thinking of you. >> i think 1979 i won a contest imitating him, that long ago. i was in a lab at m.i.t. i went down and got to meet him and saw "saturday night live." that's how far back this goes. i might be a fan boy with him. he's amazing. coming up, at&t chairman and ceo randall stephenson joins us live. we'll talk business, his deal for time warner, and washington's plan for deregulation. stay tuned. you're watching "squawk box" live from pebble beach. say carl, 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. we're drowning in information.

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good morning. welcome back to "squawk box"

here on cnbc. we are live from the nasdaq market site in times square. much more from joe and becky, who are in pebble beach. first, we want to tell you the headlines this morning. ahead of his meeting with president trump at the white house, japanese prime minister shinzo abe met with members of the u.s.-japanese business council. cisco ceo chuck robbins is chairman of that council. he said it was an honor to meet with abe and the council is committed to enhancing the long-term partnership between japan and the united states. apple watch had its best quarter yet in the fourth quarter of 2016. that's according to figures from research. apple shipped 6 million watches, up 12% over a year earlier. fitbit sold the second most popular watch. morgan stanley may be shopping for a new headquarters. the bank is considering buying 2 million square feet at the new hudson yards project on the west side. asset manager blackrock is also expected to move there. morgan stanley currently has its

headquarters in midtown manhattan. >> michelle, thank you very much. joining us now is the host of the pebble beach pro am, at&t chairman and ceo randall stephenson. thank you for hosting us and joining us. >> good to be merhere. >> we have talked to a lot of different things this morning. we want to dig through a bunch of issues. one of the things we've heard again and again from some of the guests we've been talking with recently is how this is a new environment for the companies with the pipes. especially because of net neutrality and how that's going to change under the new fcc chairman. how do you see all this laying out at this point? >> it's changing fast. you call it the pipes. we don't even think of it in terms of pipes. we think of it as wireless. it's going over the air. you think about a world where people are consuming content more and more on the mobile device. the volumes in terms of how much content is being consumed, i'm talking premium content, not just youtube cat videos. people watching "game of

thrones" and so forth on mobile devices, the volumes are exploding. so that's why we thought we ought to get ahead of this. we built, engineered a network that can deliver a lot of bandwidth over the wireless networks to the mobile device. that's why we did the time warner deal. it was the opportunity to now take premium content and curate it, format it, and give customers a different experience. their broadband device and their tv and home experience. it's all kind of jumbling together. they're all starting to look the same. that's what we're trying to accomplish here. >> we know that the network is such an important part of all that and being able to keep up with the demand. you've talked to us in years past about how much is being consumed and how quickly the pipes or the air waves, whatever it is, has to grow in order to accommodate that. where do we stand right now just in terms of how much and how fast this is happening? >> there's an arms race going on, right. we're all laying up a lot of

capacity to accommodate this. we, at&t, have been going really hard for the last eight years in terms of acquiring licenses to air waves. capacity in this world is, do you have enough air wave licenses to accommodate this type of capacity? so we have been purchasing a lot of licenses from for these air waves. we feel like we're in a unique place. we have today a large block of fallow spectrum that's prepared, ready for us to start provisioning and deploying capacity into. in fact, we're going to -- we're opening austin and indianapolis this year. we have a big block of this spectrum. we're going to light up this spectrum and deploy 500 meg type services on a wireless device. think about that. that's as fast of speeds as you're going to find in the world right now. there isn't a lot of new technology required. this is something that's here, ready, available. we'll turn up a couple of cities this year. what we will do is pair that

kind of high bandwidth speeds on a mobile device with our directv now product, which is a purely over the top stream tv product with a wireless service. it is going to be really exciting. >> on the board, glenn, how much time do you spend talking about the technical aspects of this? how much time do you spend talking about the content aspects? what's it like around the table? >> randall runs a great board. it's really a great pleasure to be on it. but let me come at it from a slightly different angle. one of the things you've got to do in the technology community -- the thing to remember about this business now is it's a technology company. people look at us and see the at&t name and think telecom. this is a technology business randall has created. we're heading toward 5g for wireless service, which will be 50 to 100 times faster than what we have right now. as fast as what most people get in their homes.

the capacity as a consumer, rather than a board member, i try to think about what it's like to be a consumer and a shareholders of the company and look at it from that perspective. for a consumer, it's an extraordinary opportunity to have a whole suite of services and content we can't even imagine. if you look at it from a fiduciary of the company, you have to be prepared to put fundamental parts of your business at risk in order to get to the next phase. you have to disrupt yourself because someone else is going to disrupt you. so this directv now and the directv everywhere product they've introduced is -- people look at it and say a traditional cable tv provider would not do that because you're actually taking your own business and putting it at risk, but you're also racing toward the future in ways that benefit consumers. so that's what's kind of fun and exciting about this. the transformation from a telecom company to a technology company, from an analog company to a digital company, from a wireline company to a wireless company, from a connectivity business to a content provider. it's just a really exciting time to be around the business.

>> it is fun. >> and you throw in the pebble beach golf tournament. can't be beat. >> cherry on top. >> at this point in time, randall, what's the latest information on at&t/time warner? where are we? >> the latest information is the filing has been made with the department of justice. the review is ongoing right now. there will not be a filing with the fcc. we're going to assume no licenses from time warner, which means there will be no filing with the fcc. so it will be a one-track review. the department of justice will review it. that's going at pace. it's going according to what you typically see with one of these deals. we still think we're going to be closed by end of year. >> jeff sessions has said that politics will not play a part in this. what does that say to you? >> that's good news. at the end of the day, you review this transaction on the legal merits of the transaction, it is -- we've said it over and over -- a vertical merger. >> any merger this size will get a lot of talk and a lot of --

>> sure. >> people say this, people say that. sources are telling me this. you throw in that one of the assets is cnn and you throw in president trump and what's happening there and his comments before -- during the campaign and it's at risk for all types of speculation. i would imagine that some of it you might call rampant and totally false. i would maybe even call it -- i don't know whether it's fake news or not, but there's been things written, i won't mention any names, but that you've actually called trump to try and talk him into the deal. i just don't think anyone in your position would ever do that. you'd be so careful with where we are right now. any truth to those reports? >> you would be thinking right if you thought somebody in my position would be very careful about that kind of thing. there was an article out about it, which was inherently wrong. >> wrong. just dead wrong. >> i've had conversations with

president trump and his administration. in neither one of those conversations was there any discussion about this deal. so those kind of conversations would not happen. we have to be very, very cautious. >> so you couldn't -- the other thing the article said was that you said, you know, cnn will take care of them. that would be part of the deal. so that could not have happened either. >> we would not have that conversation. in fact, we're just very guarded and very cautious right now. >> who would make that up? that's insane. >> to your point, it is a large transaction, and there are a lot of interesting variables, media and so forth included in it. it's a little juicy for people to write about and to talk about. at the end of the day, while as big and juicy as it seems, it's a pretty straight forward transaction. it's a telecom company buying a media and entertainment company. we compete nowhere. it is totally vertical. the day after we close this, the telecom industry is going to look exactly as it does today. the media and entertainment industry is going to look exactly as it does today.

it's a clean transaction. we feel pretty good about it. >> the politics of that deal aside, what about some of the things you're seeing on the regulatory front with -- i mean, there were six things that were supposed to happen, i think, that would have maybe not been great for at&t. they just were shelved, weren't they. >> you thought they wouldn't be great for at&t, joe. they would have been bad for investment, bad for the industry, bad for innovation. yeah, there were a half dozen issues queued up with this fcc. literally just after the election, those six issues dissipated. they went away. you saw the fcc this week came out and addressed zero rating, which for those who don't know, that says if you buy directv now, which is our over the top product from at&t, when you buy that, as you watch it, it doesn't count against your data on your wireless service. in other words, the data was included. $35 a month for all these channels. from a consumer's mind, free

data? that's not a good thing? just a lot of issues like this that were queued up that one had to ask, is this good for the consumer or bad for the consumer. >> and that investigation went away from the fcc. >> the fcc set that aside just last week, in fact, and said that's not an issue for the fcc to deal with. >> randall, thank you so much for joining us. >> good to be here. >> thank you. still ahead, our all-star lineup of business leaders keeps coming. we've got former at&t boss and nonexecutive chairman of cvs health dave dorman joining us. stay tuned. you're watching "squawk box" live from pebble beach.

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the pharma pricing debate rages on in washington. our next guest says he feels strongly about what cvs is doing to help its customers. dave dorman is nonexecutive chairman of the board. i guess we've heard president trump talk about prescription drug prices. we're all talking about it again. during the campaign we saw hillary clinton talk about it as well. trump's might be a little different in that he wants medicare to negotiate. is there a way to deal with drug prices letting the free market become freer somehow? at this point, are consumers not getting the benefits of a purely free market with drug prices, and do you have the answer? >> i can tell you there is a free market.

the pbms are in large part negotiating on behalf of health plans, employers, and government customers. medicare has a very large contract that gets bid very frequently. every year prices come down. the difficulty is that you have pharma companies raising prices on drugs before they come off patent. the pattern is undeniable over the last eight years. if you look at what pbms do to intercede, we're able to negotiate where there's competition. if you have two drugs that do largely the same thing, the outcomes are different. like the hep c treatment that came out. that was a $100,000 cure. through negotiation, cvs was able to say, if you want to be in the form lair, you've got to be well priced. you have two competitors. we saw the price come down by more than 50%. >> so then it's not true that prices are not being negotiated?

>> they are being negotiated aggressively. frankly, health plans who are cvs' customers bid their businesses as frequently as annually. if you're in the giving them good prices -- think about it. if we weren't doing a good job for at&t as their prescription benefit manager, they'd fire us and get someone else. >> i guess he's talking about medicare negotiating. >> medicare and the government has even stricter rules about what can go in the formulary, what you have to return. the rebate word is a bad word, bad connotation. people think, oh, there are rebates. where are the rebates going? well, they're going to the payer. they're not coming to us, except maybe a tiny fraction of what we end up saving. >> you don't think that it's a good idea for medicare to be able to negotiate more openly though and to be able to say -- >> well, they actually are. they hire people like cvs or united health care to manage a prescription benefit. the reason this started, there are 1.2 million doctors who can

prescribe medicine. there are about 8,000 prescription drugs unduplicated, 40,000 if you count the ones that do largely the same thing. so the reason pbms came to be was that the average company who's covering -- well, not an average company. take at&t with 300,000 or 400,000 covered lives. they're not going to be able to make individual decisions every time someone gets a script. this should be the generic equivalent. should it be a competing their. we drive to get the lowest cost without sacrificing outcomes for the patient. >> if we were ever to go to a nationalized health care system, i guess there would be no need for pharmacy benefits managers. >> the government would have to replace the expertise that exists in the private sector today. you know, withe don't just independently decide we're going to take drug "a" versus drug

"b." our formulary is created by studying the outcome. we have the ability to substitute. if you go to cvs today and you have a drug that is a patented ethical pharmaceutical and there's a generic equivalent, we'll tell you that. the price differences are huge. >> if you were asked how to fix obamacare and if glenn were asked, glenn's got a lot of ideas on how to fix it, but he definitely wants to fix it. would you fix it or replace it? >> i don't know that i can tell you exactly. my gut is there's enough there to work with that you could fix it. there's some emotional thing about let's repeal it and replace it with something else. i think that some of the bones of obamacare certainly could be used, and i think as a practical matter, if it's too hard to fix, then it will be replaced. the too hard to fix gets into political questions. you know, what's acceptable to the democrats? >> does it have to be a mandate?

that's one of glenn's things. if you get rid of the mandate, the whole thing falls apart. that's what people want to do. >> actuarily, you need everyone to participate. young and healthy need to pay, even though they're not necessarily -- >> that's not happening. >> switch gears a bit. i ask a quick question. e-commerce and drugstores. how does it affect your business? >> oh, it's affecting it. obviously today flr categories cvs has as a convenience store with a pharmacy bolted onto it. if someone comes into the store to pick up prescriptions, we're going to sell other things. we have a ring of additional items they pick up just conveniently. as a destination in certain communities cvs is a destination store. you go pick up milk late at night or some other item that you need to have. categories like diapers, you know, that you can order from

amazon and you can do it in advance, those categories get hurt by e-commerce. at the same time we have a website and we're trying to make it super easy to use cvs. you can order online, pick up at the store, pick up at the curb, pick up at the window. and so we think there's a long tail on our brick and mortar stores. if you include the partner stores we bought, we have 10,000 locations. so we need to make that an advantage competing against guys like amazon versus a weakness. >> thank you. >> you bet. >> great to see you. when we come back, jim cramer's going to join us live from the new york stock exchange. we will get his take on the day's top stories. stay with us, you're watching "squawk box" right here on cnbc. whether it's connecting one of the world's most innovative campuses.

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we got to get to the birthday boy, jim cramer joining us now from the new york stock exchange. hey, jim. sears is up 40% on your birthday. >> you know, it's funny. it's like as you get older you're like dread 'em. oh, man, how many more of these? they just add up and the mileage. and i'm thinking, well, i want to turn back the odometer but there's no way to do that. >> mine was yesterday, jim, so i know exactly how you feel.

>> oh, my! okay, from now on we celebrate. >> we're aquarius. listen, what do you think about what's going on with sears? up 40%? is that all the good news, is there short squeeze like san tolley thinks? >> it's rabbit out of the hat. eddie lam pert say bet against us it's a mistake. lasts until you're able to see the next same-store sales numbers. first time really merging the operations. i can't believe they weren't merged before. but this is a big short squeeze. you can always pull off a short squeeze. in the end the customers decide. in the end you got to have people go there. and i know they feel like they've got a big club going. maybe they do in the stores that i don't see. >> stuff people want to buy. i know you're going to talk about it because i cheated and looked at your rundown to see what topics are coming up. we'll see you in a few minutes. >> well, you know, one of the things that's happening with eddie, look, eddie's goal is always the same, which is to keep the balls in the air.

longer you keep the balls in the air, well, i don't know, that's what you do. >> see you in a few minutes, jim. >> no end game there. >> much more from him in the next hour. joe and becky will be back from pebble beach right after this. n. 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.

anything i can do for you recently? >> yeah, i need a "squawk box" coffee cup. the only reason i'm doing the interview is for a "squawk box" coffee cup. it's my favorite coffee cup, the one with your face and joe kernen's face. >> and carl's. >> yeah. it's perfect size and i broke it. >> how'd you break it? >> i was in a steam bath. i take steam baths because it's really good for my voice, and i forgot it was so steamy i knocked it on the ground. >> okay. new one coming your way. by the way that's like a collector's item. i may have to take one out of my own cabinet, but i promise i'll get you one. >> had i known i would have glued all the pieces together. >> that was huey lewis chatting here with us at pebble beach. >> he used it and broke it and misses it. that's really funny. glenn, thank you. >> great to be here. we got to get becky to play next year. >> no. never. >> i hear you got some lessons.

>> i took some swings. i'm terrible. never. >> you got that one to the hole, right? it went like 80 feet past the hole, that wone putt, didn't it? >> yeah, little over. >> one journey starts with one step. >> 90% of putts that are short don't go in. it's a joke. make sure you join us monday. "squawk on the street" is next. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. stocks working to build on those record highs as the s&p goes for four straight wins. that would bed first such streak of the year. more talk about what tax announcement the white house has in mind as the president responds to the appeals court. europe is mixed. dollar's stronger. yields up, oil almost back to 54. roadmap begins with a trump rally after the president promises a phenomenal tax plan