at facebook headquarters in menlo park, california, 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪ good tuesday morning, welcome to "squawk alley." i'm carl quintanilla with john

fortt, morgan brennan. take a look at the markets this hour dow started off with a nice little pop, but has gone red, losing steam following the tax reform rally nasdaq is pulling back after crossing 7,000 for the first time yesterday take a look at the highest percentage gainers since the nasdaq crossed the 6,000 benchmark. joining us this morning for more, russell investment chief strategist steven wood and our own mike santoli guys, good to see you. is this turning into a sell the news phenomenon? >> i don't know. i don't think it's a real sharp sell the news opportunity, necessarily. mostly because i think the effect of the coming tax cuts was mostly kind of one component of this feel good environment. it wasn't so much make or break, this is it, we need this for the market to hold together, but i do think we've built in a lot of good stuff yesterday was interesting, the round number thresholds, not just with the nasdaq index, but the dow hitting 25% year to

date, s&p hitting 20%, nasdaq hitting 30% year to date those are some pretty handy little annual returns that you, you know, you wouldn't necessarily walk away from, but you say does it owe me anymore >> right is it sort of a benchmark numbers story here, steven we've had some others suggest this morning that january might turn into selling as people wait to hold those gains until the new year >> well, they are psychologically pleasing numbers, they are round. i think it is built and the tax bill is priced in. but i think also it's priced in, too, a global growth story expanding. we think the economics is doing well and the earnings cycle is doing well, but increasingly those drivers are coming external to the united states, so it is a u.s. story, but also a broadening global growth story, as well >> do u.s. markets have to coincide with some of the weakness we've seen in some global indexes >> reverse might be true the valuations right now in the

u.s. are something you want to take into consideration. they are very high we could have debates about the cyclically adjusted pe is, but the fundamentals, that's a lot of heavy lifting still for the valuations europe the lift is not so heavy, the earnings are improving, economic cycle is younger. japan is showing signs of not only life, but health, so i think now is a good opportunity for u.s. dollar based investor to continue to diversity and rebalance gains, which are very handsome, but diversifiable. >> what does diversification really mean in a market like this where global markets have seen this big rise is moving into europe or asia enough do investors need to take some dry powder and go into cash for some percentage for a while? >> things seem very, very synchronized in terms of how the world is moving in just a matter of degrees to your point, it's not as if global diversification necessarily is that kind of free

lunch. interestingly, a lot of people, and i'm seeing these charts, bitcoin is not correlated to anything not saying that's a place to go, but the fact people are starved for something that's not tied to the same story is very interesting. i'm watching the bond market, though i think the bond market is very interesting in terms of what it might or might not signal about growth effects of the tax plan '03, 2004 corporate tax cut you saw a steepening of the yield curve for a period of time maybe we'll see something like that seeing small inklings of it today. >> you really just took my question out of my mouth the fact we have continued to see a flattening of the yield curve. what is the expectation next year, especially if you are seeing the fed and central banks tighten even more and you are seeing this economic growth story continue to play out on the fiscal side in the u.s.? >> great questions here. one is, things of quality are expensive. that's why we think active is more helpful than passive, but when in doubt, when the bond market and equity market

disagree, go with the bond market there is more information there. it is a flattening yield curve right now, and if we get a nice economic pop in the u.s. for whatever reason, then the fed will feel more comfortable and confident in raising rates so at the very least the fed wants a rate positive enough and they are beginning to be more confident there's going to be pass through inflation we're more modest on what the effect of this tax bill stimulus is going to be the fed might take away. that is going to be less of a risk if you look at japan is going to be in qe for maybe the rest of our natural lives and the europeans are stretching out and buying time to see how that unfolds in the u.s i think the big wild card going into 2018 is what the fed does in detail with their balance sheet. >> i think at this point the flattening yield curve has been so kind of chewed over for so long, and people have tried to decide if it's different this time i think it just represents where we are in the cycle.

at this point in the cycle when the fed's pretty far along in a tightening mode, it's going to flatten. if we did get it to resteepen after the tax move, it probably would be a temporary thing, but give you that much more breathing room before you get fully flat and inverted. >> you think a resteepening would be an indicator the recovery, although old, is going into extra innings >> right or it's going to rekindle inflation somehow. there's going to be a nominal growth bump going into next year and i think that's one of the scenarios you have to look at for 2018, how the market deals with more heat, right, in terms of kind of tight labor market and all the kind of draw on the resources, the home building sector, of course, things like that >> have we got a surprise on inflationary heat your first turn in terms of asset allocation would be to >> looking at advancing our u.s. equities interest rate sensitives would be an issue. might have a different view on financials and i think the relative attractiveness on

non-u.s. asset valuations outside the u.s. are okay. that might make the relative attractiveness that much more attractive >> i would think consumer stocks look more attractive if that happens, too, and you have workers with more earning power. >> that would be one way within u.s. equity space. that's a granularity maybe global portfolios can't get in, but that would be some part of it i know we've talked before, i think the inflationary curve, did amazon kill the phillips curve argument, i think the fed doesn't buy it doesn't matter if it's true, it matters if the fed buys it >> interesting tactical moves to talk about over the next few weeks. stephen, michael, thank you very much, guys when we come back, shares of apple are slipping on this rare downgrade. also a hot holiday item from apple apparently sold out. we have the latest facebook's problem just got worse, why germany is targeting the company over privacy concerns

and the white house blaming north korea for the massive cyberattack that cost billions the ceo of crowd strike is going to join us, plus the biggest cyb cyber threats he's watching for 2018 when "squawk alley" comes back zar: one of our investors was in his late 50s right in the heart of the financial crisis, and saw his portfolio drop by double digits. it really scared him out of the markets. his advisor ran the numbers and showed that he wouldn't be able to retire until he was 68. the client realized, "i need to get back into the markets- i need to get back on track with my plan." the financial advisor was able to work with this client. he's now on track to retire when he's 65.

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♪ ♪ on a relatively subdued day for the markets, the nasdaq

staying close to that 7,000 mark, which crossed for the first time yesterday the tech-heavy index up 30% so far this year. joining us now to look into next year, bob peck, head of global internet investment banking at credit sweeps. bob, thanks for being here >> thanks for having me. first how 2017 was, s&p up 20%, nasdaq you mentioned about 30, i.t. up about, 40, and faang up about 50%. you had a great ipo market, right, so year over year, 37 tech ipos up from around 33, give or take and the performance of those ipos, 75% are up from where they priced and the average return is somewhere around 30% pretty strong tech market. looking towards 2018, what investors are actually looking for, they are looking to capitalize on big themes, whether it be machine learning,

big data, a.i., vr, ar, autonomous that's what's been driving the faang stocks so far. they are also looking for more access to growth the big tech names grow on average 10%, so they want that alpha, they want that growth you couple that with the backdrop of the number of investable ideas has been shrinking. in tech over the last five, six years you've had the investable company market decline about 20%, 25% fewer ideas give you exposure to these big secular themes >> because they've been swallowed up by giants or what >> because of m & a, share buybacks, you've had that pool also the private side, private capital, push out the ipo market from the time the average tech company takes its first round of funding it's about nine years to go public. that number used to be around seven, smaller than that before that, so you have this lengthening of the process and large pools of capital that are out there.

the interesting thing about that, this large pool of capital is investing in fewer ideas, but more capital towards those ideas. think of say the softbank fund out there with $100 billion in investable capital >> certainly seen that in other sectors, as well, the search for yield right now. i cover insurance and we've seen that play out there. in terms of the ipo market looking at 2018, what are the expectations in terms of what we could get going public next year air bnb, lyft, other things? and how important given the valuations we have seen in the tech sector so far is profitability going to be? >> three big buckets in tech, application, software, infrastructure, and consumer, as well when you look at those buckets, there's a good pool and a lot of demand for the companies to go public our point of view is you want to go public fora couple reasons, one, that liquidity. think about how facebook was able to buy what's app, because it was a public company able to do that.

two, liquidity for your employees, as well and three, added layer of discipline when you're public. we think that sets up well for 2018 to your point on valuations, what i think has changed here that's incremental is the absolute values, the multiples, have gone up, but when you look at them relative to growth, they've stayed about the same. there hasn't been that much of a multiple inflation relative to growth and with technology you have to look at it relative to growth >> you talked about some of the positive themes, but what are the icebergs, whether it's government regulation, hacking, maybe m & a on the media side that increases hollywood over tech >> data protection has been a big theme. i talked about it last time i was on, regulation, had news today around facebook, those are very big ones. navigating that consumer experience, the whole fake news phenomenon and how you clean that process up. what's interesting, too, for the media properties, is you're seeing this roi on the

advertising that the advertising are following that they are not getting other places you're seeing more and more add dollars come to fuel the larger and larger stories one last thing on those platforms, they are not just media, but they are distribution when you think about the m & a activity in the media world, it's very rare you get a media property that is also distribution facebook's 2 billion monthly users. >> should netflix be concerned about disney if this deal goes through? >> i think there's a general concern for the pricing of content, right, as you see more scale and larger competitors out there and more affordability to pay for that content, you can have the price wage increase >> finally, i wonder if there's a product or a launch or something that will go live next year that you think will be a test for either vr, ar, mobility, cloud, anything in tech >> vr i think is further off i think definitely ar is much closer than that and cloud, we're in the heart right now,

that market is just taking off and booming across the globe you marry that with ai and machine learning and that's where it starts to get interesting. we talked before about the concept of ambient computing and that's just starting today, where computers are doing the searching and thinking for you on your behalf >> all right, bob peck from credit sweeps. a lot to look forward to in 2018 appreciate you joining us. coming up, microsoft making big moves to combat sexual misconduct in the workplace. those details plus the results of a cnbc survey that puts an astonishing number on just how dere haseninhe workplace actually is. "squawk alley" will be back after this

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eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade welcome back to "squawk alley. cnbc senior economics reporter steve liesman joins us now pretty staggering numbers. >> morgan, some really interesting results.

i want you to pay attention because there's good news in this and bad news. the first thing we ask people is with all the firings and other actions by companies, did you think the management of these companies acted appropriately when faced with sexual misconduct or harassment 74% of all adults, 800 americans surveyed around the country, say yes, companies acted appropriately. men 72%, women 75% the rest who said not appropriately were split some thought the companies were too lenient, others thought too harsh. let's move on. does your management take sexual harassment seriously in your workplace? 87% of adults said yes men 85%, and women again 88% say yes, so that seems to be reasonably good news what about have you been a victim of sexual harassment or misconduct in your workplace 19% of all adults say yes, 1 in 5 americans. very different, 10% of men, 27%

of women i have to point out, guys, this is a low number compared to other polls that have asked it in a different way when they've stressed have they been verbal or not, 20 points lower. we just asked about sexual misconduct or harassment, so we get perhaps a lower number, which is quite amazing, morgan, because it's still in my book a pretty high number morgan >> it does seem like a high number to me, as well. were there other findings or -- i know you worked very hard in terms of the way you phrased these questions. do you think those results would have been different if you asked that last question differently >> do you think we reveal to viewers you sit next to me in your cubicle and hear me going through this it's a very touchy question to ask. i was concerned about -- we have an anonymous pollster calling and asking this question we think there's some evidence in the survey, morgan, that older women are more likely to experience sexual harassment, and it could be for two reasons.

one is a good one, one is a bad one. one may be, reason number one could be that women who have been in the workforce longer are more likely to encounter this type of conduct. the other thing could be that women who have been in the workforce longer are experiencing the norms of an earlier generation or earlier time period. hopefully, that's true, that things have changed, but it could also be that they've been around and more likely their experiences longer the data is not clear on that issue, morgan. >> steve, this is very fascinating and looking at those numbers disturbing stuff the anthropologist in me finds this fascinating thank you for your hard work on this, steve liesman. microsoft announcing it's eliminating forced arbitration agreements with employees who make sexual harassment claims, saying it will support a proposed federal law that will ban those types of agreements. >> interesting precedent brad smith at microsoft said that their support of this move in the senate is what caused

them to go back and say if we support the elimination of these arbitration agreements, then we need to do it ourselves first. very interesting move. as we head to break, taking a look at shares of apple. it's weighing down the nasdaq after a rare downgrade we're going to discuss concerns overpp f 28 ensqwk aleor01wh "ua alley" returns d you think about her? it's definitely a new idea, but there's no business track record. well, have you seen her work? no. is it good? good? at cognizant, we're helping today's leading banks make better lending decisions with new sources of data- so, multiply that by her followers, speaking engagements, work experience... credit history. that more accurately assess a business' chances of success. this is a good investment. she's a good investment. get ready, because we're helping leading companies see it- and see it through-with digital.

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carl, hello.

european stocks moving lower after the best daily performance in five months take a look at ermany, stocks pulling back after monday's 1.5% gain business sentiment falling unexpectedly in december, that according to efo the report there says companies are no longer quite as euphoric as they were in november switch to tech, where a dialogue semiconductor is one of today's standouts. china's group has raised its stake in the chip maker to 9%, almost a 1% increase, but keep in mind shares of dialogue still down about 35% this year after saying it could lose business from apple another stock on the rise is ryanair, saying it will recognize cabin crew unions and hold meetings with them in due course, but the ceo warns that the airline would retain the right to move planes to different countries if unions made unreasonable demands, those the stock is up about 2%

meanwhile, south africa based steinhoff, which market value has plunged in the past month, says it is not able to give details of accounting irregularities in its books, as they prepare to meet with lenders in london. also appointing their chief operating officer as ceo and we finish with european perspective on bitcoin according to a survey of almost 50 academics from universities across europe, the majority are not too concerned by the risks posed by bitcoin, saying the relatively smaller size of the market makes it not as big of a concern. perhaps a sharp departure from what we've heard from european regulators carl >> thank you very much, seema mody watching europe's close this morning let's get a news update with sue herera good morning again, sue. >> good morning, carl. thanks so much here's what's happening at this hour, everyone iranian's president says president trump will not succeed in destroying the 2015 nuclear deal between iran and world

powers he told a conference in tehran that president trump had tried to kill the deal several times but hasn't been successful so far. a house committee has received additional information on sexual harassment settlements from 2008 to 2012. the total amount of the awards, including race and age discrimination, total to more than $350,000. audi is recalling more than 52,000 luxury cars in the u.s. and canada to fix fuel lines that can leak and increase the risk of fire that recall covers certain a6 and a7 cars from the 2012 to 2014 model years and disney's hall of presidents has been updated with an audio robot of president trump. the attraction has been closed since january. disney indicated the delay was because they were waiting for president trump to record his dialogue that's the news update this hour, back downtown to "squawk alley.

i'll send it back to you, carl kind of weird looking. >> thank you very much the house is preparing to vote on the sweeping tax overall, while most businesses would pay lower taxes, some tech companies might lose out joining us this morning to discuss the impact is gene muenster and senior writer at "fortune." good morning, good to see you both >> good morning. >> gene, the journal does this story, using microsoft as an example, where they argue the minimum tax on profits overseas might actually create a net increase in the rate is this well understood? >> it's confusing, so no, it's not well understood. i'm going to try to put some sensibility to it here these companies have been using these offshore vehicles, whether it's ireland or other countries, to create these absurdly low tax rates, but what they are really trying to do, the u.s. tech companies, is trying to find a way to keep as much cash offshore to bring it back in a

low taxed way. and so while this does mathematically create a higher tax rate, what's most important is that these tax holidays are a one-time tax benefit to bring the cash back to the u.s., which is, i think, a foregone conclusion at around a 10% or 11% rate i think this is -- that's a net positive, and i think the details of this you can kind of miss the bottom line, which is this is a positive for the companies. >> i get the sense a lot of big tech companies are kind of shrugging their shoulders. a lot of the reason why they are making investments overseas or hiring overseas is because that's where the growth is as they see it, not because, well, if the tax policy were different, they'd be doing more in the u.s what's your take >> i think it remains to be seen whether long term this is going to be advantageous to them

yes, there is a one-time discount which allows them to repatriate some of the profits they are hoarding overseas, but longer term it's going to increase the taxes that they have to pay, the minimum tax that they'll have to pay, on what they keep abroad. and it's not clear whether there are advantages to keeping that money abroad, like you said, for other purposes i think most of the reasons are, you know, just for tax reasons it's also not clear whether putting some of that money back into the united states is going to, you know, other than for shareholders, whether that's going to lead to increased investment here. so i think outcome longer term still remains to be seen >> but gene, it's also more than what's going on in terms of tax reform in the u.s., as well. it's the tax picture in europe and the possibility there could be a higher tax burden in europe, also potentially more regulatory scrutiny when you see headlines out of germany regarding facebook today

how much would that be pushing u.s. tech companies to bring more of their operations into the u.s. >> well, i think there's generally pressure to bring jobs back to the u.s. and tweaks to the tax policy and some of these tax shelters if and when they do go away, that will create some encouragement to bring these jobs back, but it's not as simple as it would seem, because there's going to be changes to the u.s. tax law and how some of these companies are going to be able to write off their r&d investment, so some of those benefits potentially could go away, too. i think the tech companies are probably just going to process this and make some decisions probably in the next six months about how that's going to play out. >> also -- >> good time to be a -- >> absolutely, but also how realistic is it to fill those jobs, thousands and thousands of jobs, here in the united states when we've got, you know, we've

got a serious problem with talent so i think even though there is pressure, there's absolutely pressure to bring some of those jobs here to the states, you know, are they going to be able to do that >> right, right. we'll see. meanwhile, guys, shares of apple slipping on this downgrade, lowering its rating to neutral citing the company's current high valuations versus prior iphone cycles. last time the stock was downgraded was back in june. you have airpods, as well, out of stock until early 2018 online, same goes for best buy, target, and walmart. the call here, nothing to flout the trend of 30% to 40% intercycle down ticks. is apple still as cyclical a stock as it was in prior cycles? >> no. it's still cyclical, it's going to have some ebbs and flows, and i'm sure in six months when people think about this great next year we're going to have, people will look at 2019 and

that could be a negative maybe it they are looking out that further, but i think that the piece that has changed, obviously, service is now 15% of revenue growing at 20% plus, steady growth, that's different than it was in past cycles and this cycle is not done we think that the asps on the iphone for the next few quarters are going to be $740 i know the note today says that investors are already expecting a higher number. that's probably partially true, but not fully true so i think the simple answer is this, there's going to be fluctuations, but i still think the next move over the next few months is still higher >> michal, what's interesting about apple, ireally can agree with what gene said there about the strength in the iphone, they've had trouble around holiday launches pretty often over the past five years they can't keep airpods in stock, i don't know if they've ever been in stock over the last

year and the home pod is not launching in time for the holidays is that weird to you, too? they can do the iphone, but seems a lot of other stuff falls by the wayside >> yeah, i think some of the supply chain problems around the other products are pretty worrying, but it's not necessarily anything new airpods, honestly, they haven't said how many they've sold, so we don't know how many they expected to sell and really what the cause of the supply problems are, but i don't know if anyone really saw that coming, that airpods would be in really high demand but yeah, i absolutely think some of these issues are worrying and increasingly worrying >> they've been in short supply since they launched a year ago that's the thing for me. you had a year to catch up one wonders does some of the laser issues, why they invested, there are a lot of products -- >> investment fund >> yeah, the investment fund

maybe it's a component issue we just don't know meanwhile, facebook has a new problem in europe. germany's competition authority warned the social media giant is acting in an abusive fashion by collecting data on the way people use third party websites. gene, it takes us right back to this consistent narrative that big tech's biggest problem is going to be regulatory in nature and probably out of europe do you disagree? >> you took the words right out of my mouth. they seem to like to pick on the u.s. tech companies. i think at the end of the day, you know, there's new policy around a general data protection that europe is going to institute in may of next year. facebook has said they are going to be compliant with it, and as long as the tech companies, u.s. tech companies, are exerting force in their marketplaces around advertising or kind of how their businesses are being run, i think you're going to continue to see this kind of prickly elationship, and so as far as the substance of what's

been said today about germany and facebook, i don't think there's anything there that facebook needs to worry about. >> but, michal, i remember when what's app and facebook first linked up. there was this sort of idea that data was going to be segregated and what's app wasn't going to put advertising in the app and that was sort of a somewhat of a benefit to europeans, who use what's app a lot more than we do in the u.s sort of the sense that facebook snuck in this provision later saying, oh, well now we're sharing this data, but it's fine, without getting permission does this point to the kind of issue facebook and maybe others, google, can expect to have in 2018 and beyond? >> yeah, i think that the issue here is, at least at the moment, it's not necessarily advertising on what's app, but it's really the data sharing across the two. and it's not only between what's app and facebook and what's app, i think at the moment, is really sharing minimal data, so phone numbers

and things like that not the content of what's being said but, you know, it's also in germany, there's the problem, regulators have a problem with facebook culling data from third party websites, where if you press on a like button, that data is shared with facebook this really strikes at the core of facebook's business proposition, you know, this is how their ad network operates, it's based on really targeted advertisement that's built on the data that it receives, not just from facebook proper, but from everything, right, from this entire huge graph, and so i think, yes, we're only seeing pockets of these regulatory issues in europe, but it's indicative of a much larger existential problem for a lot of these companies, not just facebook and, yes, their business is booming, but this is a problem and just in these markets at the moment, but we'll see. >> gene, just to sort of piggyback off the point michal

just made, how much of a threat is this to revenue for companies like facebook, especially if there's even more ire in terms of what's going on with that data collection and data sharing for these companies moving forward, europe or here in the u.s. or other countries? >> well, just looking at the facebook piece, facebook has said they are going to be compliant with this general data protection, this european policy, so whatever they are doing out there in terms of what's going on with the like button, so i think that the simple takeaway is that if they make dramatic changes in terms of how facebook can go and interact with these third party sites, which i don't anticipate happening, but if they were going to do that, that could have a measurable impact on facebook's business. hard to determine what that piece was. i would point back to google has been under intense scrutiny, france has made some material changes in terms of how google ads have been displayed there, and google's business continues to grow at 20% quarter in,

quarter out. and so i think to answer your question, the takeaway is, i don't think this is going to be a major, measurable impact on their businesses and i think they will ultimately be compliant. >> well, whether it's google eu or uber london, we have to stay well versed in european regulations. gene, michal, good to see you both when we come back, the u.s. officially naming north korea as the culprit behind the cyber attack that put lives at risk, cost billions of dollars earlier this year. we'll talk to the ceo of crowdstrike in a few moments meanwhile, rick santelli, what are you watching today >> first of all, i'm watching yields we're basically unchanged on the year i think that's pretty cool we're also going to talk about taxes, of course, what else? l tethbrk.iay.specll alafr e ea [vo] when it comes to investing,

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are going to go next year. we'll find out why and a nigerian family fight over nike top of the hour, morgan. >> thanks, scott now let's get over to the cme group, rick santelli with the santelli exchange, rick? >> well, thank you and good morning. listen, before we get to the meat of this, as i look at the board i see 245 and i'm telling you what, trading floors is still cool places, might not have as many people, but they have a lot of people and a lot of people are concerned how markets end up at the end of the year, and that change is huge. we could always argue about intraday volatility, but it's about closes and 245 is where we closed last year look at this chart, 240 area is key, as was the low 230s, but as you open it up to march, you should notice a couple of things march made the high for the

year, 263 high yield, but also notice to the right a bit, in october was a settlement actually about one basis point higher than what we closed last year you have that data in october, but everything else ended pretty much in march. january, february, march, spent some time with higher yields, lower prices after that, one session, until potentially today. this is still intraday but i guess the point is i think 244 and the high yield of the year, 263, are the two yields to pay attention to as we cruise into the end of 2017. i think the cards are played bund popped five basis points this morning, when we popped a bit. if i have a handicap power going into the end of the year, it's going to be sideways from here or yields higher, don't see much of a downside. now the heart of the matter, i had grover norquist on today, knows a lot about taxes. i listen to a lot of our programming, i think it's the

best programming on business there's a couple issues that need some talking to and the main issue is buybacks many investors, many people that are interviewed on our air, many of the people i rub shoulders with that don't pay a lot of attention to markets they think after the session ended in 2009, lots of buybacks and stock rallies, but i didn't feel i was involved in this parade. okay, here's a couple of things we should note first of all, central banks and our fed in particular, that was their plan, their plan was for stocks to go higher. the recession ended, had a really mediocre recovery because we're paying interest on reserves, why loan the money out, take the easier track, not sure what's going on, lots of regulations. taxes certainly weren't going down i understand buybacks got a bad rep, but i'm not sure it's deserved and even after the reagan tax cuts, which were, you know, they are the top of the mountain in terms of what we compare everything to, you go back and look at the polls back then, people weren't enamored with it. long and short of it is, sub 2%

growth isn't enough. is this the best tax plan we could get? no listen, if you're a teacher, fireman, you have a pension plan, buybacks aren't horrible for many other people they have 401(k)s, but at the end of the day, here's the key, small businesses do a lot of hiring. i don't see a lot of small businesses doing big stock buybacks morgan, back to you. >> rick santelli in chicago, thank you for that, as always. as we head to break, checking out shares of roku. they are higher after an fcc filing showed morgan stanley has a 5.1% stake in the company. stock up 1%. "squawk alley" back in a few

the white house announcing today that north korean leader kim jong-un ordered the of wannacry, the mal wear attack that cost billions of dollars and put lives at risk last may >> after careful investigation, the united states is publicly attributing the wannacry cyberer attack to north korea. do not make this allegation lightly and do so with evidence and with partners. >> other governments and private companies agree the united kingdom, australia, canada, new zealand and japan have seen our analysis and join us in denouncing north korea for wannacry. victims of wannacry included the british national health service which had to turn away patients during the attack government systems in russia, india, were also breached. even fedex was affected.

joining us now for more is george kurtz, ceo and founder of cloudstrike, a cloud-based security company welcome to you so a lot of people, a lot of companies suspected that north korea was behind this to begin with how significant is this announcement now and this attribution as we head into 2018 and we're looking at the threats to expect in the coming year >> well, we believe it's significant because the u.s. government doesn't take these attribution cases lightly. we had been tracking this early on we certainly agree with the u.s. government, but i think it highlights the capabilities that north korea has in cyber, and what we've seen is the increase in capabilities just over the last three years, and it's something that, you know, a lot of companies should be concerned about, particularly those companies that have to -- that are dealing with bitcoin and crypto currencies. >> you mentioned bitcoin, and that's where i was going to go next

wannacry's ransom mechanism was set up that in order to get your files back you had to pay in bitcoin. should we expect or assume that north korea is holding some huge horde of bitcoin then that has gone up an extraordinary amount in the past year and now has more resources to do more of this >> absolutely. they are building a cache of bitcoin, an anonymous currency and can easily bypass any sanctions because there are none on bitcoin, and the value has increased dramatically so it's the perfect currency for north korea to be hoarding >> certainly there's a focus today on north korea and its link to this wannacry attack, but for our viewers who maybe don't know it, your company was the company that was tapped to investigate the dnc hack during the election last year which has been linked to russia. where do you see the biggest threats coming from right now? is still actors like north korea and russia, or is it cyber criminals that are looking to

collect data and sell it and -- and accumulate things like crypto currencies by holding information ransom. >> i think companies and consumers need to be concerned with both. from a nation state perspective we've obviously seen the capabilities of both russia and north korea. one in the u.s. election and second one in north korea and a lot of these ransomwear type attacks. the second areas are e-crime which we track very closely. if we look at some of the largest data breaches of 2017, e-crime has been front and center the ability to monetize this information, to be able to sell it on the black market and extract dollars from credit cards and other mechanisms is a huge concern for both businesses and consumers in 2017 going into 2018 >> george, an interesting stat you say the average attacker dwell time is 86 days. nearly three months from the first evidence that somebody has broken into a system, before somebody realizes, oh, wait,

there's an alarm tripped here. maybe somebody is in the building digitally speaking. is that time increase, and if so what are the implications for organizations, many of which have hackers in their system right now and won't figure it out for a couple of months >> well, we see this all the time, particularly when we respond to breaches where adversaries have been in the network for almost three months. the time is coming down a little bit, but the biggest issue is the companies don't have end point visibility they really don't understand that an adverse have i there, and they are essentially blind to what's happening, so any company may have an incident you want to make sure that that incident doesn't turn into a breach but not being able to detect it very quickly and what we've seen is companies who are using traditional security technologies miss this, and it's 90 days before the average detection time >> george, '18 has a lot of big events obviously the olympics in february and a mid-term election in the fall. i mean, in terms of cyber risks,

do you see one looming large above the others >> well, i think up. areas that we see more and more is this enterprise ransomwear which is rather than just ransomwear that sort of gets into people's computers and it's $300,000 to clean up a compute, enterprises are being targeted for a much bigger dollar amount, into the millions of dollars and we're seeing companies that are being blasted off the internet a host of those that happened this year, and i think ceos and board of directors really need to think about their security and understand the implications if there is an enterprise ransomwear that can take down their entire computer network. >> and just before we wrap this interview real quickly, how quickly is crowdstrike growing given all the attacks and all of the growing threats that are out there? >> well, we've just had a tremendous year and real since we started the company we've doubled every year we service a lot of the fortune 500 companies and all the way

down to small s & bs so given the landscape technology that we built powered by artificial e intelligence, we've seen an amazing run in our customer base, and we think it will continue in 2018 >> all right george, thanks enterprise ransomwear. sounds a lot like sony and that was just a test case and now they are going to go global with it. >> we'll hear more about this after the bell because fedex will be reporting earnings after the bell and they were impacted by it ransomwear that we just talked about, wannacry and also pettia, an issue that affected their earnings. >> the dow still stubbornly in the red after starting the bell in the green we're down 43. down for only the second time in nine days. "squawk alley" will be right back feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that,

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we continue to watch the market here as for signs about whether or not this is a true sell on news moment as the house is it awfully close to investigate on the tax bill, but we have gone in the red and pretty much stayed there hard to separate it though from things like the apple downgrade today. >> but not everything is down. twitter is up about 2% right now. the highest level since late last year. >> and we've seen certainly boeing trading higher again

today. the prototype for the drone tanker competition has been released which is getting all the news including on twitter for when they unveiled it. >> in addition to red hat will watch micron and see what the senate does maybe tomorrow morning. let's get over to the judge and "the half. welcome to "the halftime report." i'm scott wapner facebook face-off. with that stock surging 50% this year and one of tech's top performers, how much is really left in that rally one closely followed media firm openly asking the question today is it time to get out? with us for the hour is joe terranova, stephanie link, jon and pete najarian and courtney gibson is here, the president of loop capital and the head of u.s. equities strategy joins us as well from jpmorgan. somebody's p