"squawk box" begins now. ♪ live from new york where business never sleeps, this is "squawk box. good morning we're live from times square we've been watching the ekky fu. yesterday we saw a slight decrease for the dow, but new records for the s&p and the nasdaq this morning green arrows at this early hour with the dow futures indicated up by another 34 points. s&p futures indicated up about one. the nasdaq up close to nine

points overnight in asia, the nikkei hitting 26-year highs during the trading session. market ended up by over a half percentage point to 23,849 in europe this morning green arrows there the dax up is up by 0.2% in france, the cac is up the ftse up over 0.1%. yesterday the yield on the treasury closing at 2.48%. this morning the ten-year is yielding all the way up, almost 2.496% stocks to watch today. samsung is forecasting a 64% rise in fourth quarter profits on continued demand for memory chips but that guidance is below analyst estimates. the strong yuan and year-end bonuses hit results. samsung will report detailed

earnings at the end of the month. shares of altice are higher after the company announced plans to spin off u.s. operations the telecom provider will pay a $1.5 billion cash dividend prior to separation and launch a $2 billion buyback of u.s. shares after the spinoff. british american tobacco says the new u.s. tax rules will boost earnings by 6% in 2018 the changes will also result in a non-cash tax credit stemming from the re-evaluation of deferred tax balances from its acquisition of reynolds. last night's college football championship game was an all-s.e.c. battle president trump took the field for the national ann shem before tanthem before the kickoff. georgia came out with a strong start, taking a 13-0 lead at half time. in the second half, nick saban benched the starting quarterback in consideration for the backup quarterback, tua tagovailoa.

he threw for 166 yards, three touchdowns and sealed alabama's fifth national title in nine years under nick saban >> the last one he threw was to a freshman as well it was a freshman throwing to a freshman >> i feel a little bit -- >> that shows you what the program has ahead of it. >> alabama wins a lot. i feel like the guy at the end i'm just reading what happened but i guess he missed the field goal >> yes >> to win the game so he would have been, you know, he got bailed out in overtime. i guess georgia should have scored a touchdown i got up this morning, i said if i were to bet, i will bet i go to my phone and it says alabama won. even though i'm a georgia fan. but then the way it happened, damn overtime >> damn that you missed watching

it >> that's what i mean. i saw the -- my thrill with georgia/oklahoma was an unbelievable game. but -- >> the national championship what this means for nick saban is tremendous. this ties him with bear bryant >> six total >> six total >> the guy at georgia who seems like he's really inspiring these guys, he's from alabama, too >> it's like tiger cubs. >> exactly okay before attending the football game, president trump made a speech in tennessee highlighting the benefits of the new tax reform law kayla tausche joins us i know you were rooting for georgia, too that was a great game. >> i went to bed when it was 17-20, sad news to wake up to this morning but, you know, alabama played a good game. they pulled it out georgia has a freshman quarterback, too they have a good future ahead of

it let's talk about politics a bit. trump before that game addressed the american farm bureau convention in nashville, tennessee. the first presidential address to that group in a quarter century. he heralded tax bill for allowing farmers to deduct farm equipment but left the audience reading between the lines on one key issue, trade and the renegotiation of nafta >> think of it, when mexico is making all of that money, when canada is making all of that money, it's not the easiest negotiation. we'll make it fair for you people again >> members of congress have been lobbying the white house to preserve the deal. several traveled with the president yesterday. a gop working group on trade in the senate is set to meet this week ahead of nafta talks resuming january 3rd in nashville, trump signed an

executive order to increase broadband internet in rural areas. senior gop aides told me they doubted the deal would get formalized until the gop retreat at the greenbriar hotel. there's discussions between robert mueller and the president's legal team that began in december over a potential interview with trump himself. those talks are in the early stages but could result in a sit-down between the two in weeks. we'll see what format that would take and what guarantees mueller's team would be willing to give the president which his legal team is requesting becky? >> kayla tausche, thank you very much let's get you caught up on the markets. here with us for that is ed keon from qmu and paul hickey from spoke investment group keon, this is like i always say, this is not a stand-alone sort

of a movie on amazon this is ongoing. episodic last time you were on, you didn't know -- you weren't convinced we would get 30% last year you thought europe and international might be a better place to go. i think of you originally as a domestic guy but with your new job, you're all over the place you have to look internationally, right looking at last week, you were not that overly bullish about 2018 you still sort of meh about 2018 >> the way i would put it. there's three scenarios. so the most likely scenario is you get kind of a decent year. >> that's what people always say. >> i'm getting there i'll get there >> high single digits.

so hired tired of hearing that. >> i think there's a 30%, 40% chance that we get a year analogous to last year but another good well into double digit year. i think the key to that is what happens with productivity growth which has been trending up the last reading was 3%. i don't think we can sustain 3%. if you can get productivity growth of 2.5. we talked many times on the show, you can get 3% gdp growth? the key to getting 3% gdp growth is productivity growth up at a sustained basis. >> maybe technology can do that. >> nobody knows what causes that what about capital spending? >> that will help. if the new tax law incensed productivity, we're in good shape. >> population growth we need more babies.

people hunker down in the cold, might be a while >> takes a while for the labor force. >> all right so you wouldn't be -- you said double digit would be surprised if it was -- >> mike campbell this we could get 20%. >> talking to cramer yesterday, i said every day you see this. 577 points last week there's reversion to the mean coming there has to be, or else we'll be up like 800% or so. but then the earnings come out, and it almost, by the bootstraps, some of these companies do so well that it pulls the averages up when they shouldn't be going up. >> we'll get probably 15% earnings growth when you put in strong cyclical global recovery as well as the tax bill. >> ahead of expectations >> valuations are high

eventually we'll pay a price for that if you get 15% earnings growth, you maintain that level of valuation and maybe tick it up a bit. it's not impossible. >> it's like a ball hog. doesn't pass gets dribbled around, shoot. what do you think? >> i think just because calendar changes, the strategy shouldn't change going back to the strategist targets, single digits, a single digit year for the market is about half as likely as a 10% or plus year. to take a reined in attitude, it's a safe bet. we have new highs expanding five days into this year we've seen record highs 20% of the s&p hit record highs last friday. that would be the best rating of all of last year vix has not closed above ten as long as these trends remain in place, you can't fight it >> just to verify, you're saying

about half as likely we'll see 10% or less based on what? >> historical returns. actually, a 5% to 10% gain in the market is uncommon, even though it's what the average and what people tend to look for every year it's not the common return you see. in these bull markets, as ed was talking about valuations, they tend to get excessive. that's what happens in bull markets. bullmarkets die of -- when valuations are very stretched. i don't think we're extremely stretched now. >> as you point out, analysts are ratcheting up forecasts for u.s. corporate profits, the fastest pace in ten years. which means valuations will stay steady that's a better sign >> so we've seen a big uptick in analyst revisions, which you could consider a negative. it's more mechanical now, because the tax reforms come

through. the overall view is the market is going strong. today i was reading this article, this family office in asia, this bank, they're staying away from crypto and debt but focusing on private equities and real estate. >> so sentiment is important watching for years and years, you do see the wall of worry, you see the more skeptical people are, the further the bull has to go. last week the piece in the journal was that a lot of people missed out they didn't get in for whatever reason they weren't part of last year's rally. today it's investors drop shields against stock downturn so they're getting rid of what they had shorted, puts or hedges so that's the opposite of the -- is this starting to be embraced? >> i spent most of my day

yesterday trying to plot out how we would react to our portfolios if the market did turn down. as an investor you have to prepare for the worst, have a great plan as far as the fundamentals of the market now, valuations -- we'll pay a price for that some day, but i don't think it's in 2018 >> is joe right, this is a turn in sentiment where this has been an unloved market run, you could be looking at everybody kind of jumping in >> you can't say it's the most hated bull market ever now you've seen people embracing it short interest levels are not at record lows. margin debt is at record highs 25% of all margin debt readings have been at record highs. year over year increase in margin debt, 6%. in 2000 and 2007 the increase was over 60% doesn't tell you there's that much extreme optimism going on >> i think the key is productivity if we can get high productivity growth that will keep inflation down, let the fed normalize

policy, it will allow higher wages without crimping corporate profits. if you get 2.5% productivity growth that would do a lot of good things for the economy, wages and the market >> in terms of how you're getting your portfolio ready for the worst-case scenario, what does that entail >> creatal e aing options for mf either pulling back quickly on certain positions or constructing portions of the portfolio that are more defensive in nature. so the key is to have the tools available, so that when things do turn down, we have some big portfolios to manage, that we change them more quickly not that we will get it perfectly right, but you have to have the portfolio tools in place as part of the portfolio to get defensive quickly if you need to. >> paul, do you watch this show? >> yes >> so you know how i've been

treating people that say the high single digits he comes in, yeah. oh, yeah did you do that because you knew -- you're not just spoon feeding me what i want to hear >> you want to please me, okay only half as likely that it's only 10 or below than above. that's an out of -- you're sell side, aren't you >> no. >> okay. that's why you actually have to make money. you can't just try to keep your job by not saying anything that might not come out there's a big difference >> so it's just looking at history, and history says that, you know, things can go on for longer >> preaching to the choir, there's ran old saying after a real estate boom, please, god, let there be another real estate boom because i missed the last one. those three years in the mid '90s

35, 35, 35, that's a stock market that you want to be part of it doubles -- what's 35% give you? it doubled in 2 1/2 years. >> you look at valuations now, there's a three-year stretch in the '90s, that was an extreme, valuations of the s&p were this high in 1996 >> all right people now think 27,000 just sounds like absolutely stratospheric. what if it's -- i don't want to say the word last time somebody said 30,000, 40,000, glassman they got laughed at. >> i think we'll have another good year. >> don't try to join up with him now, keon. >> i'm spending a lot of time preparing for the worst, hoping for the best >> might go up, could go down. >> you have to be prepared >> all right paul and ed, thank you but you more when we come back, the

korean thaw. reports this morning of progress in the talks between the north and the south ahead of next month's olympic games. a live report from seoul after this who's the new guy? they call him the whisperer. the whisperer? why do they call him the whisperer? he talks to planes. he talks to planes. watch this. hey watson, what's avionics telling you? maintenance records and performance data suggest replacing capacitor c4. not bad. what's with the coffee maker? sorry. we are not on speaking terms. what's with the coffee maker? take a deeeep breath in... and... exhale... aflac!

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♪ welcome back dow jones is reporting that a highly classified u.s. government satellite appears to be totally lost. that satellite, which was code named zuma was launched on sunday by spacex the report says that lawmakers have been briefed about the destruction of the secretive pay load which is believed to have been burned up in the atmosphere but dow jones does note that the absence of official word on the incident means that there could be other explanations. satellite maker northrop grumman declined to grumman because the mission was classified said they can't say anything ever about classified missions spacex says reviews of the data indicate falcon 9 performed

nominally. >> that does sound bizarre, nominally. not good we're following a developing story opt crn the korean peninsa north and south korea sit down for talks. sherry cha chery kang has more. >> reporter: southen offici ekon officials and reporters are getting updates. the talks themselves are rare and the latest word is a rare development between the two koreas they have decided to reopen their military communication channels that have been cut off after 23 months. so a speedy turnaround on the mood in the korean peninsula in 2018 we're only nine days into the year also north korea's sports diplomacy fully in the works today saying that it will be

sending a team of athletes, a cheer squad, as well as high-ranking officials to the 2018 pyeongchang olympics, that's starting in a month from now. of course here is a sound that shows the warm and fuzzy mood at the border talks this morning. here is north korea's top point person >> translator: we came to this meeting today with a serious and sincere attitude and with the thought of giving our breather remember who have high hopes for this dialogue invaluable results as the first present of the year >> reporter: the real question is who is getting the big present here is it north korea that will eventually be asking for the price of the north korean participation at the games next month and how will the trump administration react to all of this this thaw in the korean tensions guys >> chery, thank you.

all right. coming up, geopolitical tensions aside, we will talk about the economics behind the olympic games, which are -- i can tell you, they're very good and how the host country is getting ready for the influx of fans as we head to break, here's yesterday's s&p 500 winners and losers most etfs only track a benchmark. flexshares etfs are built around the way investors think.

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good morning welcome back to "squawk box" on cnbc we've been watching the u.s. equity futures yesterday most of the major averages finished at highs once again. the dow was down slightly, down 13 points. this morning it's green arrows across the board, with the dow futures indicated up 36 points s&p futures indicated up by 1. nasdaq up by 10. stocks to watch this morning starting with urban outfitters same-store sales fell by 1% during the holidays. the retailer said tight controls

will leave it with clean inventories heading into the spring season. the stock is off 2.25% seagate is forecasting second quarter revenue that is above analyst estimates. shares of the hard disc drivemaker rose 7% yesterday on a post by value street research claiming the company invested in a cryptocurrency start up called ripple shares of gopro down again today. the stock fell as much as 33% yesterday after the company cut its fourth quarter outlook and announced layoffs. it paired those losses after cnbc first reported it had hired jpmorgan to explore a possible sale in a statement late yesterda gopro says it is not actively engaged in talks. as a result the stock is down. alibaba founder jack ma says the company will seriously considering listing in hong kong as they allow dual share

microsoft says specs on the new chips do not provide documentation provided by amd. and america says more rebates should be passed on to consumers. his comments came after he was asked about the possibility of amazon entering the drug delivery business. >> i don't know what amazon has in mind. that's in the distribution side of the business. we're focused on our business, bringing new, innovative, differentiated medicines to market for conditions like alzheimer's and other conditions like cancer. so, if that's a more efficient way of getting drugs to patients, we'd be in favor of it drugmakers have been criticized by president trump for raising drug prices. merck was singled out by the

president in a critical tweet after mr. frazier resigned from the president's manufacturing counci council. >> we continue to work with both the congress and the administration to try to do what's good for patients there are real issues out there for patients, there are real issues for the economy, jobs, innovation we continue to work effectively, i think, with the administration as well as with congress on those issues >> were you surprised or insulted when the president got personal with these tweets >> no, i can't say i was surprised. you know, i made my statement and the president made his statement in response. >> and we'll hear more throughout the day from the ceos of johnson & johnson, allergan,

and on the 28th, cnbc will host our first ever healthcare conference, healthy returns, investing in healthcare innovation we will be featuring top government officials, ceos, innovators, as well as investors. you can find more information at cnbc.com/healthyreturns. >> so the merck stuff, when they say that most of those -- they want to see more discounts and rebates go to consumers who are they going to now? are they going to insurance companies? they say it's a huge number. where do nothose rebates go who gets them? >> the pbos? >> pharmacy benefits managers, insurance companies? >> yeah. switching gears now. what network has the olympics this year? >> nbc >> that's right. that's true. winter olympics are one month away, south korea is putting the final touches on the venue

er eric chimi has more. i know andrew ross sorkin has some tickets will you be watching from afar >> i'll be watching with you in new york probably safer, warmer you should get the network right. nbc spends a billion just to show this winter olympics. probably spending more to send andrew there all 12 venues say they will be ready for the games. organizers built six new venues, but refurbished six others all sites are within a half hour of each other. all of this is a positive compared to past games when organize wrrs scrrs were scramb finish venues on time. pyeongchang hopes to get 5 million tourists to the region this year. that's up from the more typical

3 million. many hotels and resorts spent large amounts on money on renovations hope foging to attrt tourists ticket sales crossed 60% a few weeks ago, falling short of the pace set in sochi four years ago. there are still 18,000 hotel rooms available in the area. not helping ticket sales is the nhl decision not to allow current players to go. back to you guys >> yes how many different -- we have a lot of platforms, don't we >> i think every possible platform, even the little ones on the phone or snapchat, i think it's an experimental time. on cnbc, it will be nothing but curling in the afternoon >> that's -- curling, nothing but curling, cnbc.

wow, you are good. >> i'm ready this morning. >> we tried to do that one year in davos >> we did. we were bad. >> really bad. fell on my ass you're not on -- we were on normal shoes >> that may have been part of the problem. we didn't have curling equipment. >> are there curling shoes >> there should be >> and that thing is heavy >> the stone >> the stone >> we tried brushing it. >> all right i was going to invite you over to watch some of the olympics. >> let's do it >> nope. if you see essex county after you settled on bergen county, i don't want to do that to you you will be like, i moved to new jersey, i could have been in paris, instead i'm in some farmland somewhere >> brussels? >> i appreciate you looking out for me, joe. >> all right and the significant other. see you later. >> bye coming up, new data on small businesses we have the latest result of the

survey coming up. and then tom freedman will be here to talk about the protests in iran and the thaw between north and south korea. then at 8:00, michael wolff will join us on set his book about the trump white house kept washington buzzing for the last week. you're watching "squawk box" on cnbc no matter how the markets change... at t. rowe price... our disciplined approach remains.

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♪ welcome back let's look at the markets. check things out with what we've been seeing with the futures green arrows at this point except for 0.01 decline for the s&p. yesterday the down was down by almost 13 points the s&p up by 4.5. the nasdaq up by 20. both setting new record closes as you also saw with the russell 2000 and the dow transports.

they were up for the forgiifth straight session you are looking at the strongest session for both the s&p and the nasdaq right now the dow futures up by 27, nasdaq up by 4.5 in the energy markets, an increase in wti. sitting just below $62 a barrel. watching that closely because we broke through $60. just under $62 a barrel for wti. when it comes to the ten-year, it topped 2.5% hitting the highest level since march. just below that at 2.493%. when you check out the currency market, the dollar looks like it's up against the euro, trading at 119.27. down against the yen at 12.67. up against the pound let's look at gold prices. gold down to 1316 an ounce

we have this in the stack, we will check out bitcoin prices. we have a bitcoin desk that we're doing hits from. >> a crypto desk it's beyond bitcoin. >> eh. >> why >> i don't know. is this a sign of a bubble or a top? bitcoin futures trading at 14,850 on the cboe different price on the cme >> your boy, brian, the crypt keeper the krcrypto keeper? >> he does have a hedge fund specializing in cryptocurrencies he was there at beginning. >> really? >> 2011, 2012. >> i did not know this >> he wrote a book there 2013. >> how much was it trading then? >> i mean, it was nothing. then a crash, then -- that's the thing about bitcoin. it's crashed so many times it's had massive double digit declines, 70%, 60%, only to then

rally back so people are lamenting this decline since the highs in december this is like a cat with nine lives, though it's many more than nine at this point. >> tried to get me to tell him he was a gazillionare. he's not he's not like peter thiel. >> he collects peoples assets. >> i know. but he owns some himself >> for sure. >> he told me all about putting it physically in a safe, because it's like a bond even if the internet goes down, mic mic microwave crap -- >> there's baracks in the alps where people cold storage their coins. >> like a federal reserve. >> exactly like gold. >> i know. some gold and a glock and some rounds in a safe >> as opposed to a thumb drive with your bitcoin? >> right i don't know

two u.s. companies have shelved proposals to launch bitcoin etfs citing concern about regulators. the s.e.c. was worried about liquidity and valuation of futures contracts based on cryptocurrency rafferty asset management and exchange traded concepts each canceled plans to launch bitcoin funds that could be traded by retail investors as easily as stocks time for the executive edge. optimism on main street dips but from record levels kate rogers has the details of the latest nfib report >> good morning. the nfib's optimism index dipped in december to 1.049 the biggest drops in the index were in those who expect the economy to improve, down 11 points, and plans to increase invento

inventories. capital outlays increased by 1 point. this is actually the best year ever in the index's 45-year history with a yearly average of 1.048. the previous record was 1.046 set back in 2004 the historical average is 98 it's also notable that optimism held at record levels this year. last december the first reading after donald trump's election, the reading was 1.058, we're just about one point away from that level today the biggest issues for main street are taxes, quality of labor and government regulations and red tape small firms are raising pay for workers they currently have to keep them but skilled labor is a big challenge and it will continue into 2018 back over to you >> kate, thank you very much when we come back, the woman largely responsible for the unique corporate culture at netflix and writing a document that has been called the most important document to come out of silicon valley by none other

than sheryl sandberg patty mccord will talk about her new book "powerful" and the mick takes mistakes a lot of companies are making now before we go to break, a check of the markets green arrows stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and.

welcome back streaming giant netflix has a revolutionary culture, it's you a unique even to silicon valley. patty mccord has a book called "powerful" that shares her tips for building a culture of freedom and responsibility thank you very much for being here >> thank you >> i was thinking about this last night this morning, thinking through the things you talked about at netflix, things that worked there. like no vacation policies, treating people like adults, paying them well if you value them and having no problem saying good-bye if things don't work out it's great, it's interesting

not sure it would work everywhere tell us about the basic premises you tell companies to treat people like adults >> we have a big saying now in my field called empowering people it makes me crazy, that's why i named the book "powerful." the reason we have to empower everybody is because we took it all away you walk in the door with power, if you recognize that about the people we work with, we will quit doing a bunch of crazy stuff we do that doesn't matter. >> like what >> like annual performance reviews. everybody talks about how difficult it is to give hard feedback to people i say is there anything you do in your life wins a year that's you're good at if we give people regular feedback, we talk about how it's working out, we're honest about what work is for people, then i think we all have a better opportunity to get stuff done. >> and that is the type of approach that i would think would work well in a start-up company, maybe in silicon valley where, you know, they need

something brought in, but not a huge company i'm not sure it works in huge companies. >> i don't know that it doesn't work in huge companies huge companies don't try >> okay. >> when i talk to huge companies, i say, look, i'm okay if you go back and i say, look, you can operate the way you always have and do things because that's the way everybody else does it, but choose it. at this point we've got management practices that we all do, and because we all do it, we call it best practices even though we don't measure it i just think that we can apply an innovator's approach to the way we manage people too that's what i learned. >> it sounds good, although i don't necessarily -- managers have the opportunity they may or may not happen they're not acting as adults either i mean, there's two people in this party, right, on this transaction? how do you get -- >> there's a lot of people in

that party >> skbro how do you get managers to act like adults >> it's about discipline rather than process if you have a discipline that a manager makes with an employee on a regular basis, then you can make every third or fourth meeting about performance. it should go both ways that's the other part in the example you just gave is the manager is supposed to be the adult and the subordinant is supposed to be a child every single person that goes to work every day is an adult if we both act like that, then the power dine mechanic shifts >> a lot of times people are just so busy keeping up with the daily expectations that they don't have time to do these longer in depth processes. it's asking a lot when people are really producing a lot >> craw. i'm not talking about a longer in depth process at all. i'm talking about a 15 minute conversation on a regular basis

where you go how am i doing? or i say to you as my boss, you know, you could help me out here, right? it's a conversation that is regular and easy like breathing. it's not this big heavy process. >> can you do that when you are managing 50 or 80 people >> it's a pretty difficult task to do, and the other thng in my book i talk about is smaller teams tend to get better work done, and so part of it is the way you organize it's a whole system that i'm talking about, which is just this idea that we're going to come to work and do great stuff and be proud of what we do before we go home. i think that's a human drive >> the deck that you wrote, freedom of responsibility deck, carol sandberg says it's the most important document that's come out of silicon valley did you find clal ekz as netflix got bigger and bigger and find challenges with trying to stay true >> i didn't write it we wrote it collaboratively over

a period of ten years. that's another message which is -- >> frozen in time. >> it's not frozen in time, and you don't pick up my book and go let's do that and we're golden >> right >> it's that you pay attention to how you manage people as much as you pay attention to the work that they do >> is that something that hr departments are responsible for? is it something that has to come from the top down? >> it's both it's everybody >> right >> if it's everybody's responsibility to have a great workplace, then it will be a better workplace when it's just the job of management or it's just the job of h.r., then it doesn't get done >> what are -- go ahead. >> you were at net freflix for years. you were basically there when it started. if you are a company that's already in existence and you have a culture in place, how do you break that it's much easier to establish that culture -- >> for sure. for sure if you are in a company that's been around for a really long time and you are nervous about -- this is what happens when i talk to big corporations. they're nervous because the little companies are nipping at their heels, right

they realize they have to be more nimble, more in the moment, they have to be able to change faster these big heavy processes, it just slows you down. right? it's a way to -- so you don't have to change everything. i say just throw away one thing that doesn't matter. >> what would you throw out? >> probably the annual performance review i think everyone hates it, and i don't think it plishz what it sets out to do in my innovative silicon valley world, if i said, hey, let's create a system that gives people feedback, you would never come up with that. it's dumb. let's tell everybody once a year something that's vaguely reeld -- related to what they do. >> and tell everybody at the same time. >> and tie it to pay i believe the market based pay that system of looking backwards is really -- it just slows you

down >> you had situations at netflix where you paid somebody double because you didn't want to lose them doubled their salary >> it wasn't because we didn't want to lose them. it was because they had a particular skill that was really important to getting great stuff done for us at the time. right? hardly anybody gets double their salary over and over again it was a person that had been with us, what i thought, in my h.r. mind was a relatively short time, but had a very specific skill that was very rare i realized that it wasn't that i was paying him twice as much to keep him it was that, oh, my god, he is worth twice as much. to the five other companies that needed his particular skill. that's where those broad brush, you know, this is your job -- your pay grade, this is what everybody else makes i'm not sure if that's completely true anymore. >> sat down to read that yesterday to prepare for you coming on, and i started -- you know what, i turned on netflix, and it's your fault.

there's nobody else to blame for the dumbing down of society. i thought i'm not going to road this this is your fault >> you watch some very intellectually stimulating shows. >> what about my read? now i have no idea what when is in that book because i was watching "crashing" or something. you know >> i'll have to take the miniseries out of it >> coming up, pulitzer prize winning columnist thomas friedman joins us after the break to talk about the unrest in rafferty asset management he only had one song, basically. i don't remember it. >> south korea north korea. >> everybody else with john friedman not jerry rafferty nah. not gonna happen.

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we will speak to pulitzer prize winning author and foreign affairs column nus tom friedman about this story he is here on the set. wall street pointing to another record open with the nasdaq, s&p, and russell 2000 already at all-time highs. we will get you ready for what this trading day might bring and roll tide. more on alabama's big win over georgia last night as the second hour of "squawk box" begins right now. live from the beating heart of business, new york city

this is "squawk box." good morning welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square i'm melissa lee filling in for andrew ross sorkin joining joe kernan and becky quick. let's take a look at the futures at this hour for all you bleery-eyed people who stayed up to watch that national championship game. what a game that was we are looking at a higher open for the dow jones industrial average up by 39 at the open s&p and nasdaq looking to add. keep in mind, yesterday s&p and nasdaq closing at fresh record highs. check out shares of target this morning. the retailer raising fourth quarter guidance on stronger than expected holiday sales. among the other headlines at this hour, the nfib small business optimism index showing a slight drop to 104.9 from 107.5 in december. at 10:00 look for the job openings also known as jolt. the stock fell as much as 33% yesterday at the lows after the company cut its fourth quarter outlook and announced layoffs.

it appeared those losses after cnbc first reported that it hired jp morgan to explore a possible sale. go pro said it's not actively engaged in talks shares right now are down about 4% microsoft halting distribution of its meltdown inspector security updates for amd chips after reports of pc's not booting. it's microsoft support forms have been full of complaints from pc owners with amd processors, and the software giant has ak knowledged the issues today microsoft is blaming amd's documentation for the unexpected problems north korea and south korea holding high level talks today cnbc sherry king joins us from seoul, and, sherry, what can you tell us? >> well, the latest that we're getting over the last few minutes or so, becky, from the office of inter-korea dialogue is that from the two koreas have agreed on the three bullet pointed joint statement. a couple of points that i would like to highlight to you is, yes, and they put it in words

that north korea will be participating at pyeongchang winter olympics next month, and they also decided to resume their military dialogue which hasn't happened for some time now, so they'll be discussing north korea's missile test and, of course, a nuclear ambition. we're also hearing from the border village that north korean officials express discontent, their unhappiness with a south korea bringing up and taking an issue with north korea's nuclear ambitions. i think the centerpiece still remains very much the same north korea's nuclear ambitions. it's seeking to be recognized as a nuclear state. guys >> sherry, thank you very much again, sherry king joining us right now to talk about more about this and many other issues spanning the globe is "new york times" columnist, the author of "thank you for being late version 2.0," tom

friedman always great to have you here. >> great to be here. >> i was thinking about the situation with north and south korea. it occurs to me that the nuclear problem is a problem for us, but probably not for south korea i mean, they've had this problem on their border the entire time. is never going to launch nukes in south korea and be like new jersey launching nukes at new york you're basically bombing yourself we could be the odd man out in this like, things are going to get closer it may not be their top priority to worry about the nuclear ambition >> i think that's the big concern, becky i was in south korea last june, and one of the things you hear particularly from young people there is that they're more afraid of donald trump than they are of kim jong un that they're much more afraid of america doing something rash than north korea part of that comes from simply living next to a crazy neighbor for so long, and you get used to it young couples in seoul buy --

people start to play those kind of games with themselves when you are living for so many years in that kind of context. the danger with that and i think there's concern rightly in the trump administration over this, is that they get played by the north. that they want it more than the north does they're ready to make concessions that are unwise for them and unwise for us you know, we have seen these talks before with previous south korean prime ministers, they actually paid the north to come to these talks. i think that this is really a sensitive moment for us. we have to understand they want to obviously relieve this problem. particularly on the eve of the olympics at the same time we've got to stiffen their spine. >> is it just a show then? by south korean government, we're going to stage these olympics wrrks we're going to start make this a big step towards peace with north korea here we are on the world stage >> i think when you drill down, melissa, be what it is showing is the north is hurting. i mean, these sanctions are biting you know, we've seen these examples of we've had two north

korean defectors if you follow the story to the first one, i mean, the guy was full of tape worms these are their soldiers you think of anyone being well fed there, it would at least be border guards. you know they're probably hurting a lot more than we realize the question is can we leverage that into what we need, which is some kind of, you know, reversal of the nuclear program >> and, again, to that point, i mean, to me it feels like this is a move that may be great for the olympics, may be great for south korea. i don't know where it leaves us or what we should be asking for. >> you said in the intro that we could be the odd man out in this, and that's why i think -- >> what should we do at this point? >> we face these same three choices that we face with iran negotiate, bomb, or acquiesce? >> we don't want to bomb we don't want to acquiesce, so

we have to negotiate >> president trump said he is willing to talk at this point. >> i'm just for staying the course keep tightening the sanctions. keep encouraging the chinese to tighten from their end and i think you just got to wait these guys out i think, you know, if we start with what do we know what do we know for sure about north korea? we know that there are three generation dynasty how many three ggeneration dynas are there in the world >> how many four generation dynasties? >> what that does tell us is they're probably not suicidal. they are homicidal they're probably not suicidal. i don't think it's a regime that really does want to blow itself up for all their tough talk. i keep tightening the noose around them and being patient.

>> ironically they're going through a parallel process i talked about this a little once before. 1979 was a pivotal year in the middle east and in the world what happened in 1979? first the iranian revolution happened in 1979 we had the emergence of this islam ek regime there. in 1979 you had the attempt take-over of the grand mosque in mecca. the saudi regime -- saudi royal family then reacted to that take-over by freaking out and basically banning fun entertainment and reinforcing the religious -- the control of religious police over their

society. 1979 you also had three mile island, which actually ended pretty much ended our nuclear program, and you had doneshell ping unleashing chinese capitalism and the soviet invasion of afghanistan. all those things together, what did it do? it gave us two competing islamic regimes. one in riyadh, one in tehran competing over who could spread fundamentalist islam farthest fastest. both at home and abroad. at the same time because of the instability, soviet invasion of afghanistan and other things, oil prices went up you had two islamic regimes with more money to spread islam around the world it actually changed the face of islam. it unleashed something really bad in islam that ended up in 9/11 and metal detectors everywhere what's going on today in iran and in saudi arabia are authentic movements of young people from the bottom up saying, you know what, we are fed up with 1979 all right? i want to live my life

i want religious clerics out of my face. i want to realize my full potential. >> i want a job. >> i want a job. particularly women, i want to be empowered. that in macro, that's what's going on the difference between the two is saudi arabia has an effective leader mohammed bin salamon, the crowned prince he is a millennial he is 32 years old the upside is he has been responding to that he has been both leading and following the youth by letting women drive, bringing cinema, bringing entertainment back to saudi arabia, focussing on employment that's the up side of him. he has a down side too mbs has issues he has an aught tarn streak and an impulsive streak. it ends up in jumping into the yemen war. it ends up in buying yachts, paintings, and mansions. the question is how does that balance? >> which side of him wins out? >> what's winning out -- the difference between iran and saudi arabia, is that saudi arabia is still a tribal

society. saudi youth right now, they're really into what's going on domestically they're used to their kings having lavish, you know, living habits for now i think, you know, he is okay he can play these things i think he should absolutely curb all of his excesses it's hard to run an anti-corruption campaign when you are seen buying yachts and mansions like this, and i think his legitimacy ultimately will depend on it, but the important thing is that he is not threatened by this rise of youth and their aspirations. he is encouraging it in iran it's just the opposite there you don't have a tribal society. you have a modern society where people want to be modern, and these young people, they have fed up with the clerical rule. the clerics there are being challenged by this this is going to be a long-term problem for them they can't answer those youth without undermining their own control. >> we have seen crackdowns in the past, violent crackdowns on these things is that what you think happens this time?

is it different? >> i think it absolutely happens. this regime in iran, they're already cracking down. the fact that this came from the bottom up from rural areas, not a bunch of college students in tehran, that tells you they have a serious long-term problem. >> is that something that you think there is a result -- something a 2018 issue we see some resolution? do you think this plays out much longer >> from an american point of view, iran is over-extended, okay iran now controls four arab capitals okay beirut, baghdad, damascus and yemen. the young people are saying when you are off in some islamic revolutionary ego trip controlling four failing arab states, where you are doing that, i'm unemployed, okay that's where you see all these signs. get out of damascus and pay attention to me. this is a real challenge for the regime >> what should america be doing in this situation in if the middle east? >> i think -- there has been a lot of debate about that i'm all for calling out the iranians and encouraging the young people

president trump has done that. they said obama didn't do that in 2009. i think at the end we're marginal either way. i'm all for encouraging what's going on this is a challenge to that regime i think the best thing we can do is bring down the price of oil, take away the money. the more you do that, the more the regime will have to respond. sn >> is that something that you think drill baby drill >> drill baby drill, but also clean energy, clean energy, efficiency, all things joe likes. i think you have to double down on those as well >> do you -- if you are doing both at the same time, you have no problem with what the trump administration is doing in terms of opening up places >> i always thought the right policy was the one obama suggested was let's do everything okay ultimately i am not for drilling on the continental shelf and all these things that threaten the environment, but the fact is through fracking and these other processes, we are becoming the world's biggest oil producer if we can bring down the price of oil -- i'm a big believer that the price of oil and space of freedom move in opposite

directs. the more the price of oil goes down, the more the pace of freedom goes up because the dictators, who, like in the middle east and in russia, basically when the price of oil is high, all they have to do is drill the ground they never have to drill their people to unlock their energy, creativity, aunt evenureship >> the reason it's not $300 a barrel is because of fracking, which you probably didn't like at the time. >> i never had a problem with fracking >> you know pope john paul ii visited poland in 1979, first time a pope ever visited a communist country. did you know that the president hasan al bacca resigned and saddam hussein, the vice president, took over in iraq >> so in 1979 -- >> in 1979 >> that's what you were doing over there >> he was dpoog dwling a lot >> did you know that of on the wall, michael jackson, 1979, first album ever to have four top ten singles on it now, and he launched his solo career and -- >> three mile island and off the ball >> off the wall. remember what the smashing

pumpkins what's the name of that song 1979 >> holy mackrel. >> you know what happens the next time friedman is on he likes to commit suicide, not homicide you use that all the time. you got a lot of really good -- he is going to be talking about off the wall he is going to forget that we gave him all that good stuff >> no, he won't. >> i forgot about that saddam hussein yeah that was -- that beauty -- >> gunshell ping unleashed chinese capitalism you put all those things together in one year, you have high oil prices and you have -- >> it's a really formative year. >> fueling a bunch of dictators in the middle east it changed the world, joe. it fundamentally tipped the world. >> my only pushback is russia, putin has gotten in desperate straits. that's why he is meddling in all these places >> i think long-term, you keep them low, ultimately he will have to -- i think that's how --

that's -- low oil prices help to bring down the soviet union. >> all right tom, it's always great having you here >> did it also usher in your favorite president in the next year sort of -- >> ronald reagan >> yeah. sort of paving the way for the transformative -- you got to go? >> coming up, new data shows the number of cars made in mexico and sold in the u.s. is climbing despite the president's warning. details after the break. later, it's day two of the j.p. morgan health care conference alread you always pay

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. despite president trump's vow to slow down the flow of vehicles and exported for sale here in the united states, the latest data shows is that auto

exports to the united states from south of the border have actually accelerated phil lebeau joins us right now he has that story. phil, good morning >> hi, becky a record high in terms of the number of vehicles that were built in mexico and then shipped up here to the u.s. and sold in the last year. the first year of the trump administration here are the numbers from the mexican automotive association 2.33 million vehicles were built in mexico and then shipped up here and sold in the u.s that's an increase of almost 10%. again, that is an all-team high. in terms of the big three, because they have been targeted in the past and while he was campaigning for president by donald trump, here are the numbers in terms of their exports from mexico. not just to the u.s., but overall. though a large portion to the u.s. fiat, chrysler up 35%. gm up 26%. ford actually saw a decrease in the number of vehicles exported out of many exco primarily because it was building cars down in mexico and the car market, not just in the u.s. but around the world, has slowed down substantially.

what's behind this increase in imports from south of the border as i mentioned, trucks and suvs, they are red hot they are in demand when you look at gm and fee at chrysler, look, down there is where they build the silverado, the seara, the ram 1500. a lot of those are built south of the border. that market has been up strong up 5% in the industry overall in the last year, and those popular trucks being built down there will continue to be built down there, although gm also builds them here in the u.s those plants are running at capacity remember, it's just a year ago that donald trump sent out this tweet. one of many tweets that he sent at specific automakers attacking them, and this is what he said on january 3rd of lats year. general motive is accepteding the mexican-made model of chevy cruz to u.s. -- well, there's no big border tax the question is will that change as you take a look at shares of gm and fiat chrysler in the last year, if that changes, you would see a real hit to truck and suv

sales. particularly for gm and fiat chrysler they don't have the capacity here in the u.s. people who would be in the market for those vehicles, they will be forced to pay a big border tax tariff. it will be interesting to see what happens as these nafta negotiations start to heat up over the next couple of weeks. >> all right phil, thanks phil lebeau in chicago target is out with guidance in just the last few minutes sending us shares of target up and raising fourth quarter guidance and also the new tax rate courtney reagan has more court, very optimistic >> target is the first big box retailer we've heard from when it comes to the holiday sales results. as you suggested, a strong number increasing 3.4% from the november and december period together that compared with the prior -- with flat to 2 percent growth. also raising that fourth quarter guidance to much closer to more

narrow range they are including 6 cents to le cents of a tax benefit as well as the strong holiday sales numbers. also giving us the initial 2019 guidance 515 to 545 that compares to analyst 436 much higher there than expected. target saying that the stores actually fulfilled 70% of the digital order so that's either with the buy on-line pick up in store or the ship from store option combined. that's pretty impressive it sort of shows the two platforms working together then all five core categories, including food and beverage, were positive for the quarter. target, of course, though, not the only one reporting american eagle also saying quarter to date. those holiday sales or the quarter to date sales plus a little bit of january up 8%. they are also upping their guidance excludeing one-time items and a tax benefit that they also expect to see there. that's something to watch for american eagle outfitters whose

shares have run up 34% in just the last three months. then urban outfitters is another one we watch holiday sales grow 2% that's actually below the rate suggested by the company on december 11th. sales of media and tech products at that urban outfitters brand dragged on the comp and shares are down as you can see premarket, but, again, up 4% in the last three months. >> i think important to underscore, courtney, is in the new guidance for fiscal year 2017 as well as fiscal year 18, you strip out the tax benefit, and it is still a much stronger guidance the bulk of that is really the strength in the holiday saz. the question now is does target become the underdog from last year that now starts to outperfect what had been the leader >> same thing about macy's >> that's right. many of the analysts are saying target may be in the position that wal-mart was in just a year, two years ago. watch them >> all right court, thanks. >> thanks. >> who did jimmy carter appoint in the 1979 -- >> to what >> chairman of the federal reserve. >> oh, it was -- >> paul volcker. >> volcker who brought up -- and

broke the -- >> revolutionized the whole -- ushered in -- jimmy carter >> jacked up rates >> you go, jimmy i found something you did. coming up, if you didn't stay up to watch the ncaa championship game, you missed an amazing ending highlights in just a few minutes. equities. they're not investing in commodities or fixed income. what people are really putting their money into is what they hope to get out of life. but helping them get there requires a real refusal to settle for average. because when you approach investing with a tireless desire to beat the status quo, something wonderful can happen. those people might just get what they wanted out of life. or maybe even more.

>> why stock picking is still alive and well e-spring investments on the rally in the u.s. and what you can expect abroad and in particular china stay tuned you're watching "squawk box. across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online.

>> get out of my hair. you're crazy good morning welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front and center, under armour downgraded that firm reversing its stance in just two months analyst says that the brand's risk are more like reebok than nike take a look. the stock down by 3.7% also, retailer express is lowering its fourth quarter guidance the company says that the key weeks leading up to the christmas time were disappointing. shares are down on that news

the company's market cap is around $700 million. zbleefrmt congratulations to the university of alabama after the criminalson tide beat georgia in dramatic fashion to win the national championship last night except ucf doesn't think so, do they they're undefeated the game went to overtime. that's when alabama's quarterback threw a 50-yard pass for the winning touchdown. the criminalson tide beat the bulldogs 26-23 alabama wins its 11th football title, and the fifth in the past decade i don't know what's in the water down there in alabama, but they're good >> formal bear bryant and nick saban, powerhouses >> one school. yeah, one school

florida has had some pretty good teemsz too i don't know it helps to be able to practice year-round, i guess, probably. dom chu has more dom. >> stock pickers did great last year, and if you take a look at the overall markets, they did beat the indexes we always talk about how warren buffett has a bet about ho passive investors will always beat the hedge funds, and then generally they're right. last year if you take a look at the numbers, it's pretty compelling this is christopher harvey he and his team take a look at large cap fundamental stock pickers, the big mutual funds, like the contra funds of the world, fidelity. they took a look at the biggest 50 out there, and they figured they outperformed their benchmark large cap sbeks by 2.3%.

small caps underperformed large caps, but small cap stock pickers, the manager who's get paid to outperform actually outperformed by almost 3%. pretty big move there as well. a couple of the things to watch as we approach 2018 in in the bulk of it, value versus growth. that was a big theme last year if you take a look at the russell 1,000 growth versus the russell 1,000 value indexes, you'll see a big amount of outperformance growth, 33%. value, 12%, 13%. that's massive we'll see if that continues. another thing to watch is whether or not some of the value sectors will re-emerge as leaders. energy in particular this is had a great run over the last two or three months whether that moment wrum continues, you can see on the right-hand side of your screen, off the lows in the spring xle, this is the big etf, the spider that tracks energy, and it's been up big along with oil prices value versus growth.

>> as a global economy continues expanding and monetary policies begin to normalize investors may need to rethink their market strategies joining us with her outlook for 2018, the chief investment officer at at the spring investments. great to have you with us. dom was talking about the underperformers now becoming the performers that's a trend we've seen over the past few months like energy. do you think that will be the theme for 2018,? >> i think 2018 is going to be continuing this goldie lock environment. you'll have definitely some catch-up as growth globally is synchronized monetary policy slowly normalizes and doesn't shock the system.

>> poush of the middle class growing between -- those are really big trends. what you want to do to win that asset allocation or stock picker game is really understand where people are underweight, wher you see a lot of value, and be positioned there for the long-term. generally the market comes to you. that sort of is the general idea >> when you say asia, what parts of asia are you talking about? i mean, says japan is close to a record high. i'm not sure if you see that as value at all >> and, again, being now based in singapore, i moved to singapore with e spring. what i see is a lot of changes

in china and indonesia and throughout the regions, particularly in tech and ai that are not really being picked up by a lot of people in global investors. i think, you know, if you look at the bond market in china, china is the second largest world bond market, and, of course, the access to that bontd market is not as easy as it is for other markets. you thn this is coming and this is happening i think it's more, again, that stock picking and understanding how 2018 and the long-term themes marry for opportunities, yeah >> you mentioned asian tech, asian a.i., and the rise of the consumer when you take a look at the outperforming sector here, which is technology in the past year, and you take a look at the basket of fang stocks, for instance, they were up each about roughly 50%. you take a look at a corresponding basket of asian tech stocks seeing a 10 cent -- albauba, baidu

is there value still >> i think, you know, it's not about those stocks in particular as the theme because as the economy of that stock and a.i. continues to expand, i have no doubt this is one of the ten, 20 year trends, you will find smaller companies around those who will thrive and do well, and i think the idea is it's not so much consent or not as opposed whoo are the companies in the ecosystem that are going to continue to benefit? i think that's really important. of course, that doesn't mean that that is all you have in a portfolio. if you look at global multi-asset portfolio, for example, i think one area that's really underestimated and at e spring we have looked at that very closely as infrastructure and private equity again in asia with a lot of potential there, says and a huge savings gap that needs to be filled up by the private sector >> as dom was talking about, energy, the materials trade has

really picked up steam in the past couple of months or so. there was an interesting upgrade of caterpillar yesterday by jp morgan, and within the upgrade they said one of the things they think is underpinning this upgrade is that caterpillar or the entire sector is in year two of a ten-year resource cycle, which would seem to be in the favor of emerging markets as well as china. is that a major theme of yours >> that is really interesting. i would look at it in different angle. the first one is long-term with renewable -- with the goal of china to make the sky blue again, and shell gas my view is there's a cap on oil prices think of where they would be if opec had not put all those cuts. that doesn't mean that on a short-term basis you don't have the potential for a rebound. all this said, infrastructure spending so, you know, the caterpillar machines sht only about energy infrastructure spending and cap x is coming back

after years of suspicion and unease about the crisis and the follow-up, and all this uncertainty, that is now coming back, and i think that's going to be a very -- >> so we should hand it for that analyst. he was 90. it's neutral he is 170. it would mean something that he sent it could mean something. >> he missed it. >> and to say buy it at a high, a lot of times stoksz that hit highs hit new highs. if you try to buy it on the low, they hit new lows. at least he has the guts to -- at least he has the guts to say, yep, buy it at 166 if it's a ten-year cycle, it's a ten-year cycle yesterday just reading it out loud and looking at it, you know, baydu in nuderal, looking at that chart -- >> yeah, it's like what do you -- he sees something he lik likes. >> when we come back, lots of buzz from the jp morgan health care conference. meg terrell will have a rundown

of the big news making stories in that sector right now, though, as we head to a break, take a look at european markets at this hour pretty narrow across the board the biggest gainer is the cac and dax.

>> meg terrell is at the center of it all. she's got very high profile interviews, and she joins us right now from san francisco meg, it's great to see you >> great to see you, becky yesterday the conference got off to a big start, but biotech stocks not responding super positively yesterday, ending the day down 1 .3% a lot of people said the reason for that was because this conference is a lot of deals the only real deal we saw was --

cell gene ceo says he is still looking, and we did see that reflected in some analyst notes coming out of the conference we also talked with merck ceo ken frazier about that company's pipeline and what's going on with drug pricing. we think we to get some of the rebates, which are the products of intense negotiations on to the supply chain, on to the people that need it at the pharmacy counter >> what frazier is talking about, there are rebates and discounts paid back to the pharmacy benefits mrgsz, and that's been a big topic of conversation in the industry are the rebates going trait straight to the companies or are they getting stuck in the supply chain? that will be a big topic of information with manufacture our guests news to point out this morning, late last night, illumina

that driving that stock up let's bring in doctor christiania barton at -- and mpm capital. doctor, you are an expert in a lot of cancers and blood cancers and i would like to tap into your expertise there in terms of, you know, what the landscape is -- what we have right now and in the future for drugs like that do you also comment on whether you should buy hospitals or managed care or home infusion or any of those other areas as well or plainly focus on new pharmaceuticals, new therapeutics >> thanks so much for having me. first of all, i want to say we are having an incredible innovation cycle here in biotech right now. last year we saw the approval of

a first -- for cancer. what's really incredible about the therapied is we're seeing incredible efficacy where patients are being cured from their kabs we're seeing response rates that are on the order of 60% to 80% complete responses from cancer that is absolutely incredible. the first approval out of spark pharmaceuticals for their start-up product, which is a gene therapy for the eye treating mashts who would otherwise have blindness and transforming their eyes and their ability to see these novel technologies are completely transforming the field. we are seeing a fabulous cycle of innovation right now. >> that begs a couple of different questions. number one, how much do you pay to cure blindness? 850,000 is to cure blindness you hear 850,000, it sounds like a lot, but to cure blindness is a whole other story.

you think about the strain on the health care system and cost pressures that we already have the other point i would like to bring up on the therapy, that's going to be expensive too. since it's individualized, obviously. is it ever going to be possible to have a t-cell that works on everyone that's modified for a specific kind of cancer? do you think you could -- is it immunilogic had immunilogically not possible to do that. >> pricing in the second, kind of the opportunity for improving that pricing model through new science. from the pricing perspective, the way i think about the biotechnology products are what is the value that it brings to the patient. they might have a dire augs of response on the order of months. you have just spent whatever amount of dollars for only 10% of people to benefit for only three months

now we have cart t therapies with 80% of patients respond the way they priced it is you would only pay if you respond. the duration of response is that the parent is potentially cured of their cancer. put that in perspective of what the previous standards of care were from that perspective, i think you have to price by value the value that you bring to the patients. i think there is a gene therapy where i can day donor t-cells, do what i need to do to them and give them back to the patient. that's more off the shelf type therapy. you can bring the cogs down from $400,000, potentially down to

$40,000. as science evolves and improves and that kind of idea certainly on the horizon, i think that drives down the cost and then drives down the ability of the entire marketplace to access this >> you run a fund, and if you were to advise someone on a basket of companies that are involved in all the things we're talking about right now, do you have some names for us >> yeah. i mean, i was just going to say so cart t has been an exciting field. the companies that are working in carti now are novardis. we have the gillead with the kite acquisition they'll be carting the tharpds for two types of cancer. one is called all for pediatric leukemia, as well as dlbcl, which is a form of nonhodgkins limp olympic for adults.

we just had our first approval for spark therapy pukts. it's for a very rare orphan blindness. that product looks great it transforms patients' lives. when you go to the ad coms and you hear about patients what weren't able to li and work whose lives are transformed, it's really incredible kushlg years ago boys had to receive factory replacement because they're missing a factor that causes them to bleed. they would need factor replacement daily. then we had kind of the long acting factors, which are now being lunched by novo and by -- these basicry are two to three

times a week, it's a little better, but -- not as combersome as before. potentially you could launch and have gene therapy for that factor, but you give the patient a gene yes. that's the whole point >> we're running out of time, but do you feel like we'll get a quantum -- it's a tv show. a quantum leap in all of the -- we've learned so much over the past 10, 15 years in basic science. some of it has made its way to the clinic or to the hospital bed, but i don't know. are you -- i'm frustrated by how much we know and how hard it is to design therapy mukts. there are so many things, testing and so many side effects and everything else. we know so much more yu i'm just looking for ration a.m. drug design lock and key type therapies. they're coming it seems slow. is there going to be two, three years from now where we're just amazed at how quickly things start moving >> i would say we're in the middle of that right now

hurry up we'll see you later. thanks coming up, stocks to watch ahead of the open on wall street at the top of the hour, michael wolff's latest book "fire and fury" raising questions about president trump and the administration he will join us in just a couple of minutes "squawk box" will be right back. running a small business is demanding. and that's why small business owners need more. like internet that's up to the challenge. the gig-speed network from comcast business gives you more. with speeds up to 20 times faster than the average. that means powering more devices, more video conferencing, and more downloads in seconds, not minutes. get fast internet and add phone and tv for only $34.90 more per month. comcast is building america's largest gig-speed network to give small businesses more. call 1-800-501-6000 today.

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snoo think if you shorted that 1 nous you would have to be pretty dumb the stock remains rated overweight the firm believes that the company has more internet shopping market share to gain than people think. you know, people can come back and stay i'm shorting at 1,400 no one checks what you have said in the past and no one knows if you manage any money anyway. elsewhere urban outfitters says the same store sales fell 1% during the holidays. even as on-line sales grew in the double digits. the retailer said tight controls will leave it with clean inventories heading into the spring season. wells fargo is upgraded to buy

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sfliencht north korea will send a team to the winter games just one month before the opening ceremony plus, retail bright spots. shares of target in the premarket. we'll tell you why as the final hour of "squawk box" begins right now. zplierchlt good morning.

wack back to "squawk box." i'm joe kernan along with becky quick and melissa lee. andrew is off today. the futures right now are somewhat positive. they have been for most of the morning. gotten more positive the nasdaq strong. up 1 1 the s&p up 149 the dow up 577 points last week. we got the pullback yesterday. 12 points. treasury yields over 2.5 then i moved on to currencies. i said, you know, i'm going to go back and look at the german bund because it's just so bizarre. below. like 44 basis points or something. our ten-year is 249. still on the continent yields that just are just glaringly low based on god knows what.

>> target raised its fourth quarter guidance on stronger than expected holiday sales. full year 2018 and 2019 earnings guidance also came in above what the street was expecting target says that it expects to see a benefit from lower structural tax rates in the fourth quarter, but really, a lot of the guidance that they raised this time around was on better than expected microsoft saying sh customers with devices using amd chips with getting an unbootable state after installing recent windows security updates it is temporarily pausing updates to devices that have the impacted amd processors. microsoft says that the specks on the chips don't match documentation that was provided by amd in other news north korea will send a delegation to the winter games in south korea. this comes after the country held the first formal taungs with the south in more than two years. seoul said it was prepared to lift some sanctions temporarily

so that visit could take place a new book sending shock waves through washington with some defending the content and others not so much joining us now on set in our if new studio, you have not been here, michael, and it's pretty cool, sent it? >> i think he was once >> oh, you were here >> uh-huh. >> oh, oifs out. >> david brooks, a huge never trumper, obviously even though he is the conservative writer presumably for the new york tiemds.

>> we have low browism too mostly on late night tv. the low browism berthed into your book. he doesn't adhere to normal journalistic standards he is tossing out rumors that are too good to check, and it's more about engagement than actual facts what's the matter? is that a fair credit stichl given that you your disclaimer -- >> it's preposterous criticism, and the "new york times", you know, listen -- i think -- i think the "new york times" has done a great job what they think or what they feel is i've stolen their story now. i mean, i came along i'm a complete outsider. that's why i got into the white house. i'm not a member of that -- of that club. i'm not in the press briefing room i'm not david brooks who is, you know, on all the morning shows actually, i just did it -- saw

him on sunday, and in the meet the press greenroom, this is a club i'm not a part of it. i went in. i got into the white house none of them did none of them have done i wrote this bok, which has, you know, i'm grateful and have become quite a phenomenon. it speaks to, i guess, somebody finally said what the "new york times" has not been able to say. the guy has no clothes on. >> the way that you have approach, it i've heard you say if it rings true, maybe it is true.

>> it's bob woodward that i guess is the prime expoenent of this >> gat changed the other one >> and the deal is you go in and you say i want to know what is going on here. >> you don't know actually because you don't know my sources, you don't really in the end know what's true here. if it rings true, in that -- i said that in, you know, in this moment of everyone -- every word i said is now scrutinized about this the truth is you have to go in this is a book you can kmooz to reject it entirely.

>> we're right back where we started. >> this is the nature of this kind of book if you want this view in the white house, which a lot of people clearly do, and it touches and a lot of people said, oh, my god yes, this is what i have -- this is what i have felt. this is what i have suspected. this suddenly makes sense to me. >> not one of us that were with the first family on the night of the election recall melania crying i have phoned everyone else that was there to confirm no one it simply didn't happen. she was not crying

>> it simply is not true what we have now is -- >> what do you mean? >> what cindy said >> so she was -- she was crying. >> absolutely. what we have now is donald trump flipping out -- literally bouncing off the walls saying his version of reality is true because that's what the trumpian thing is he is insisting that everyone confirm to that. i mean, you have to do that. >> we've had a lot of people who said they didn't say these things they just want their emails. what shocked me is that steve bannon took so long to come back and basically not say that wasn't what he said. >> this is -- i am -- i have -- i am confident in it everything that is in this book >> did steve bannon -- has he contacted you since the excerpts of the bok started coming out? >> let me not say that >> you know, this is -- it's no question steve didn't say, didn't

challenge anything this is -- i mean, this book is -- this book is really solid. but also, you have to just go back and say if you want to quite this kind of book and maybe you don't want to write this kind of book. maybe we don't want this kind of book to exist. but if you want this view into this institution like this, this is what you are going to have. >> it reminds me if over the last year this is the narrative that the true people -- the people that thought that trump was an illegitimate president. if rosie o'donnell will write a book, this would be her book think of the book that sean hannity would write. what's real? how do we decide what is real at this point it's so polarizing it just seems like more of the same it seems like -- >> i can't -- i can't solve this problem. i don't have a magic wand to say this is true >> right >> that's why i said if it rings

true -- that's a profound thing. does this comport with what you know, what you feel, what you suspect? >> is it based on things from people who are in the room this is not second hand information. i read through some of the excerpts and say, hey, it has to be -- it's a firsthand account it's all firsthand and appeals to those journalistic standards. >> a lot of this stuff eyewitness i chose to write this. i mean, there's a scene in the beginning of the book, which everybody says how could he have known this with roger ales and steve bannon everyone how could he are known this. there's long patches of dialogue here this must be ry said how did i know this? i was there. >> have you to take it it's a bok it's not -- it's not a holy grail. it's not anything. my goal was to say i'm sitting on this couch there. i wanted the reader to be there.

>> if it was read to me from the narrative that we've seen played out over the last year on cable or with all the trump haters, and that's how it's easily dismissed by people that don't feel that way. >> i want didn't say my book here is the -- there's a step when people start to say, oh, my go-ahead sf are and is this true? the fundamental -- the thing at the heart of this book is that everybody around the president thinks he is dysfunctional and i would say -- i would go you can hold the gun to my head

on that. literally everybody. >> did you see dersh oodershowi. his liberal friends ashtd talking to him anymore here it is let's just read it how dare liberals or peerm on the left try to undo democracy by accusing a president of being mentally ill without any basis the 25th amendment says everybody that knew donald trump. he hasn't changed, and i can tell i have known him 20 years he hasn't changed from what people knew that elected him to use this mental instability, that's what they do in russia or that's what they do in -- >> i certainly didn't say. i have not said that he is -- i don't know if he is mentally unstable this repetitive stuff is so disconcerting, and you sort of say what does -- what does this mean when i started to say the 25th amendment, i didn't -- i mean, that's what they said.

actually, when i sort of heard it, it's like, well, this is bad, but, you know, it's not the 25th amendment bad >> i don't know any of the other stuff. let me tell you this is a personal anecdote, and i don't have many. i have known trump for a long time it was -- he announced in june it was august. i was speaking to him on the phone, but as a -- not as the guy who was going to be the nominee, but as the trump that i knew i said what are you doing here is this something -- what -- are you the dog they finally catches the bus and says what -- why are you doing this is it for your brand maybe he is lying to me. he said, joe, i want to do this for the country. i'm an operator. i think i can make america great again. i think i can bring it back. i don't like it where it is right now. i really, really want to do this now, do you think he was blowing smoke up my nose or something. if he didn't want -- if he didn't want to be president, why

is he colluding with russia? can we second bob mueller home now since he didn't want to be president? why would he conclude? it or why would he -- you kn. >> i don't know if he colluded with russia. >> why would he collude with russia >> i report what i report from inside as people don't think in the white house don't think that he colluded with russia. at least not -- not in any -- strategic sense. they do think if the investigation goes near his finances, he is sunk everybody. again, to a man. >> michael, let's talk about what our viewers care about too. the business leaders they feel like they are -- you had an e-mail that came out reportedly from cohen that was pretty damning in the assessment of what's there. >> it was not reportedly from cohen. it was reportedly -- >> it was a pushback

>> it was -- it was from somebody who was reporting what they understood to be -- >> what they need to be his believes in this entire situation. what does this tell us for people who are business readers who have been talking to cohen, where does that leave them >> i think it's that weird thing. he is, you know, erratic, undpenu undependable we don't know what he is going to do. in a sense that that is good for the -- i mean, has been relatively good for the business community because there are forces -- he is not that interested in this stuff.

>> if we get bannon out. >> you know, america first no open trade. >> totally you know, and, you know, there is a lot of -- that's one of the funny things about this populist thing for him to go in as a populi populist to maybe thain an aleej ens to the business community, to leaders in the business community, to billionaires who -- >> billionaire chorus. >> only people he is really interested in. >> polls, public opinions, i remember the polls before the elections. i never know what's really true. people say, well, the stock market responds to different things just given what's happened in the stock market, since the election, i think the dow is up over 35% 7 trillion in value. the day that brian ross errantly reported up bh the contact with russia took place, the market sold off 400 points from the highs. it's the prospect that trump that is president might seem being in trouble are you surprise snd are you

surprised at business confidence, after after unemployment ll-time low there's so many positives happening. if this guy was so erratic and if you were so worried about being mentally unstable, do you really think -- doesn't the stock market know more than -- >> listen. you would say -- you would say that i mean, we have this -- >> i listen to the stock market more than rosie o'donnell or chelsea handler where. >> between those numbers and his approval numbers >> i don't know about those either he got elected >> he got 310 electoral votes. >> i don't know the answer to this i mean, this is this ongoing drama, and this is one of the reasons why we can't take our eyes off of it it is so anamolous in every way. maybe it turns out you want a president who is disruptive and who is detached from reality i don't know maybe that works

in the end of the day we say, oh, yeah, this is the kind of guy we want. >> in case we ever do that, or i know you told -- that the tapes are yours and you don't do what we do. >> i don't know. i have to -- you know, everybody is hammering me on this. >> have your lawyers asked for the tapes to review? >> yes this book has been lawyered every which way. but the. >> he alleges take the journalistic point of view, you are not supposed to do this. a lot of the tapes are of people who i said i absolutely promise. people who are now denying they spoke to me. i made a deal with them there. i guess we could create a whole thing. the bannon tapes maybe. maybe i should

i don't know >> did you really -- maybe some people at the white house, maybe they were gullible or not. the impressions of the president were somewhat negative, and you were going to correct that on record do they think -- >> did you think you corrected the record and -- >> i did i may not -- i did like trump, and i went in there. >> that's how -- was that a ploi to get the interview >> i didn't say i was going to write the following kind of book i said actually just let me write a book about the first 100 days just let me -- from the inside i said this. i wantton what the people here are thinking i want to do it through your eyes that is what i have done >> you said you liked trump when you went in. do you like trump now?

>> you know, i'm sure if we spent -- if we were together for two minutes, we would be -- he would be splat itering me, and i would be helplessly flattering him again. >> donald trump is a salesman. if he thought that he could sell me something else, he would do it the thing is the trump thing is this -- is this -- this is a man who wants to be loved. >> right >> and if -- >> all the publicity is good publicity. >> he think he is annoyed with this publicity, but when you get in a room with donald trump, he turns on this thing. it's actually sort of -- >> charming. >> sort of great >> do you think that the second 100 days or the third 100 days would be the same as the first in all fairness, could this

white house currently be very different from the white house you witnessed than the first 130 days >> i would think it was great if it were true i think donald trump is donald trump. again, maybe this turns out to be -- i argued in the beginning, this could be a success. i don't see it as a possibility now. maybe i'm wrong. >> it's going to have to turn around >> let me -- you are going to do very well with this book, obviously. now, yesterday the journal had a book review, and i don't know. >> this is how they ended. i don't know if you read it or not. he considered it his job to tell us what happened and not merely to offer up his own clever interpretation of what happened. he might not have felt emboldened to repeat every unseemly tidbit that he would -- that he could extract from -- then he wouldn't have gotten

rich they bring up the money -- you will do well >> you want to sell books, right? >> well, yeah. you want to -- >> of course >> the spicier, the better >> also, what you want to do is connect with readers >> yes >> you want to represent what the reader wants >> it's too good for put down. everyone says that >> what the "new york times" wants. i want people to -- i want to bring them right in. >> you don't want to be the national enquirer unless it was the john edwards story >> have you ever read a paragraph that i have written. >> no wrrks but ut don't want to make it -- you don't want to make it so gossipy and sensationalistic that people doubt the underlying facts. >> if you want to call my

tabloid, actually, that's probably good for me zoom what do you do next >> i'm sure another show in about -- >> another project after this or is it too hard to see past this? >> i have no -- i mean, this has been it for me a kind of, you know,ic approximated up as of last wednesday and i don't know if this is -- this is probably not life-changing. i have to go back and write another paragraph. >> trump would say you can embue huge ratings -- remember scare muchy. he goes on "the view." they get record ratings. you are probably as recognizable as anyone right now, would guess from this. that's one of the side he was effects. >> it's so -- it's extraordinary. this trump thing is -- >> are you getting stopped on the street now >> indeed. i mean, people follow me with cameras and they say you're the guy, that book >> well, we appreciate having you on, and we wanted to hear

some things and appreciate you answering all the questions. >> it sounded, though, like you're making out the mainstream media to perceive your book in an adversarial fashion like they're jealous because they've been reaching for the brass ring for the story for a long sometime you jumped on and grabbed it >> i think this is the biggest story of our time. everybody is trying to get a piece of it and get on top of it as it happens, you know, for this week at least, i'm the guy who stole the story. >> right >> it is i mean, the whole thing is amazing, and trump is -- i know that people make fun of the i'm an unstable genius, but really they go from whatever you want to call him, whether you don't want to call him a billionaire, but billionaire developer, golf courses to go from reality tv and become the biggest star for ten years and then become the president. something is happening here that's hard to put your finger on >> it is >> it's amazing. >> as of this week, i'm the one who has put his finger on it,

but next week somesomebody else. >> you put your somebody on to the people that already believed what you are writing >> skbro do you think you convinced anyone else of that? >> absolutely. i think that this moves over to people who didn't move over and you also -- hardened some other people that are now -- >> you have got to be getting tweets you have hardened other people that are even more angry at this point that are probably in his camp, right? >> probably. i don't know i'm not really here -- i don't know about that. >> can't wait until the movie comes out. are you going to have a movie? >> i don't know. maybe. >> oh, come on >> maybe who knows? >> someone just called me an unapologetic trump turd. i'm just watching the tweets come in, michael we'll be always be together on this in tefrmz of, i don't know -- it's interesting thanks

>> thank you, michael. zlo thank you. >> when we come back, we are counting down to the winter olympics we will talk to former olympic alpine skier tiger shaw. stay tuned you are watching "squawk box" right here on cnbc >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade. like you do sometimes, grandpa? and puffed... well, when you have copd, it can be hard to breathe. it can be hard to get air out, which can make it hard to get air in. so i talked to my doctor. she said... symbicort could help you breathe better,

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>> we are doing that with them, and helping them develop their

brands and their stories as we do ours. we stand 100% behind our athletes we have so many that are dominating it's absolutely astounding you say there's a greater depth of stars give me an idea of who the up and coombers are, who i should be watching. >> well, we have a number of them that have been winning or making the podium in a number of events jal jalen. we have lindsey -- lee anderson, and, of course, lindsey von, mikaela schiferin and tom liggety, tommy ford. there are just a number of athletes that are up and coming. kylie mcben in aerials i could go on and on, where.

>> we are hear about the olympics in every couple years what do do you in the off years to promote that pipeline >> exactly you know, the olympics are two and a half weeks off every four years, but during every season there is a season-long world cup and grand prix series. our teams travel the globe competing in 30, 40, 45 times a year at the world loefl. >> we are dominant in cross-country. the teammates are astounding again, in temz of being a worldwide brand, i mean, our notoriety in europe and asia and around the globe as well as here in the u.s. and the 16 domestic world cup grand prix level that is we host here in the united states really allows you to follow them and see them and nbc is a partner that way.

it's absolutely incredible all the events are on tv live, on nbc itself, nbc-sn, or the olympic channel. following our sports has never been easier and never been more exciting >> even on cnbc. >> that are probably tail somewhere north of 20 medals we're not really sure. again, you really have to earn them one by one. every athlete has to focus on their sport and win for themselves we hope the total is great enough to be that. if it isn't, we'll take a shot again four more years in beijing. >> north of 20 would be extraordinary. tiger, thanks so much. we'll be watching. tiger shaw >> thereon the >> cnbc's olympic coverage begins february 9th. also the day of the opening ceremonies andrew will be there for the second week of the games

let's get back to meg terrell. she is standing by at the jp morgan health care conference, and she joins us right now with the special guest. good morning again are. >> put up your fourth quarter results last night you made a forecast for 2018 of about 13% to 14% revenue growth coming in ahead of analyst expectations you guys are the biggest maker of gmc -- are more people getting their genome sequenced >> the numbers that we posted yesterday both for q4 and for 18 were bigger than anybody expected what we're seeing is a number of the markets for genomics are enflekting at this point we saw really huge growth in the consumer genomics market, and we saw really strong growth in the clinical market where in reproductive health and oncol y oncology, we're starting to see genomic testing being adopted as a standard of care after many years of great research discoveries where people were saying, look, when are we going to get to a place

where it's really being used, we're now at a place where it's really being used. that's showing up in the really strong numbers >> you also introduced a new sequencing machine yesterday who is it that going to serve? >> it makes the power of genomics, are auto the ability to read dna, available to a lot more labs have and have access to it before there are tens of thousands of labs that can get the accuracy of our squeensing capabilities but for under $20,000. i think that open you up a whole new set of markets where you see smaller labs doing applications like identifying hospital acquired infections or testing for food-borne pathogens this democratizes -- >> how does that kpir would your next post expensive sequencer? >> at the top end you can buy the most powerful sequencer available anywhere in a costs about $1 million.

we have $1 million instrument. we have an instrument about 250,000. we have the my seek at $100,000. we have the mini-seek at $50,000. now the i-seek for under $20,000. >> tell us about the growth in consumer genetics. you have companies like 23 and me, an sesry.mco almost all of them use illumina machines, technology how does that drive your business >> to 17 was definitely a break-out year for consumer genomic genomics if you look at the number of people that did genomic testing through one of those services, it really just more than doubled from the year before a number of things are coming into play. one is, you know, it's been many years that these vendors have been out in the market talking about consumer genomics and what it could do for you, and really geniology has taken off as one of those break-out applications where people are really connecting with identifying where they're coming from. another thing that's played out is through the technology advances that illumina has brought to the market. we've been able to lower the

price of doing sequencing. what we found in the market is, you know, as you lowered the price over the years from $250 a test to $1 00 a test and now in some cases to $50 a test that's expanded the market in a huge way >> two years ago here at y skbr p morgan, you made the announcement of a company called grail. it's working on blood tests for multiple cancers at the time jay flatly, who was the ceo at the time, made a goal of that test being available by 2019 is that still a realistic goal >> the idea behind grail is you can do a simple blood test, and in the blood you can identify if somebody has some form of cancer in the body. that cancer is shedding dna into the blood that can be picked up from the blood test. grail is making a huge amount of progress kbha knee done is kicked off dwo very foundational studies where theesh edge rolling both health healthy patients and patients that have cancer they are doing the big studies to see what you can find in the

blood. the question is not if you can find cancer. we know you can, where the question is what ipz too of cancer can you find? the other question is what stages can you see some that are stage zero, stage one as well as some in stage four? grail is making a lot of progress they're out there actually recruiting people for their clinical trials. then the test for broad consumer use will come out in a few years. >> in a few years. maybe not 2019 >> maybe not 2019. >> we look forward to talking more thank you for joining us >> thank you >> all right, becky. back over to you >> meg, thank you. meg terrell. when we come back, some stocks to watch as we continue the countdown to the opening bell. plus, we will talk market strategy with morgan stanley's ruchir sharma. he has some predictions. as we head to i abreak, take a look at the u.s. equity futures. continuing to gain ground. dow futures now up by 51 points above fair value s&p futures up by just over 2.5. the nasdaq up by 14.5. "squawk box" will be right back. jake!

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>> welcome back to zwauk box we have some stocks to wauch this morning let's start with under armour. it was down braided to sell. the firm reversing its stance of just two months. the analysts saying that the brand's risks are more like reebok than nike, and that there's no fundamental recovery in sight that stock is down by about 3.7% just this morning. albauba's founder jack ma says the company will seriously considering listing in hong

kong this comes as hong kong is preparing to allow dual class share. let's get a check on the broader markets. the futures have picked up steam through the morning. last check it looked like the dow is up by 50 points above fair value now up by 58 in europe markets have been higher there assist well as we've been watching through the morning. i think it was france that had the biggest performer of the major markets at least france up by .6%, but green arrows all the way across. if you want to check out the ten-year, we've been watching the yield which did touch above 2.5% earlier this morning. right now, yeah, back up above at 2.506%. joining us right now is rashir sharma, chief global analyst at morgan stanley we've been watching new records set by every one of the indexes almost every day some people think, great, this is the beginning of a new year we'll see a continuation of last year >> i think that the way it begins really tells us about how it's going to end, and my own feeling is that come this summer

and the economic environment globally could change quite materially from what we've seen now. >> starting where? in the united states starting in china? >> exactly i think that the two big sort of places to watch out for are the united states and china for different reasons. i this i that the united states what was seen as peak liquidity about to meet peak positioning what do i mean by this exactly. it's basically the fact that now we are beginning to see balance sheets across the world led by the united states will begin to contract by the end of this year, and that is a very major development given that it's one of the fundamental underpinnings of the bull market oerntd, we have peak positioning. we looked at the data here across etf's or mutual funds, institutional retail, and cash levels today are really about as low as they've been, say, for a very brief period in early 2000. you have the central bank

reversing course it's hard to imagine that global growth will accelerate further, and it's also that china is tightening i this i that this way that you've begun to see it could last for a few more months, but come spring-summer i think that we are likely to see a very different environment from what is currently on view >> i would have agreed with that maybe a little more likely if we hadn't just passed the tax plan here i think that will have implications or that it will change after this year or in several years down the road when some of the things sunset, some of the individual tax cuts sunset wouldn't that stimulus in itself kind of pick up the baton from what we've seen with central banks at that point and add some additional fuel at least to the united states economy? >> yeah. it could i think that's largely in the price in terms of what's happened this would be anticipated quite a bit. also, remember really that what is -- it's been the tech stocks. i think that that is where we begin to see some concerns really develop

there's a backlash building on the regulatory side which we have to be much more wary of there's an interesting backlash also building in terms of the dakds. you know, one of the trends i've been speaking about for this year is peak distraction in terms of the fact that a strength taken too far now become a weakness. it's about the fact that the over use of smartphones is like leading to a decline in productivity >> we heard a harder stance from some of the big tech giants. didn't really hurt the stocks. they finish up the year about 50% across the board when it came to fang stocks. that report yesterday that johna and -- were going after apple to get them to create more software tools for parents, that barely moved the stock as well. i mean, these are all things that they don't care about, it seems. >> until they don't. exactly. like the fact of the matter is that these things are slowly billed out you never get an end to these

things because of one event. this is slowly breaking the back of something before you end up seeing a return. as i said, it's a macroeconomic case which we're focused on. that's one of the things that i threw in there it's very unlikely that they'll have the revision. what you mentioned the global optimism about the tax plan people have revised up their earnings materially out here in terms of what the up side surprise would be i would say the odds are pretty low. >> that's the question how much of that is bakeed in and is reflected in the prices that we see right now. how much is not? >> as i said, when i see record low cash levels orlow record volt tilt, this is not just true of the u.s it's true everywhere even in ear merging markets. this is supposed to be a volatile asset class last year the maximum drawdown or correction in meerjing markets was barely 4%.

>> there is likely to erode as time goes by and central banks balance sheets begin to contract by the end of the year >> what would you tell people to do right now resist putting in any additional new money into the market or actually sell and build some dry powder for this drop that you expect to see? >> yeah. i think it's a one-two step. if you are tactical, maybe you could play this longer come summer, i would really say that we should be prepared for a pullback you know, that it could quite likely be that you're sort of in the process of being a major opt-out here for the next few months we should be much more concerned over what happens over the next couple of years. this is all about probabilities. i mean, even written off late in the "times" editorial last week that, you know, life is all about probabilities, not certainties. the probabilities today are like -- in terms of getting good

returns going forward. given what's happened over the last few years at its peak calm that we've seen in global markets that even the most volatile emerging markets have seen virtually no correction at all. this is really against the nature of the beast of financial markets. >> thank you very much for joining us we hope to see you again soon. >> sure. >> all right we'll be back. when we return, jim cramer will not join us from the new york stock exchange he is somewhere a bit warmer and sunnier. he will join us, but not from the new york stock exchange. i was, like -- >> what do you mean? >> wow what a great promo we don't have cramer so you can switch channels. no we do have him top story is next. here are the futures right now they like that michael wolff interview. we'll be right back.

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shares of target are higher this morning, the big box retailer raising fourth quarter guidance on stronger than expected holiday sales 2018 and 2019 earnings guidance

also above street estimates. >> dow jones is reporting that a highly classified u.s. government satellite appears to have been totally lost that satellite which was code name zuma was launched on sunday by spacex the lawmakers have been briefed about the apparent destruction, which is believed to have burned up in the atmosphere after failing to separate perfectly but dow jones does not say the absence of official word on incident means there couldn't be other explanations too satellite major north rop grunman failed to comment. spacex says review of the data indicate it performed nominally, definition, dictionary.com, saying it met the expectations >> performed how it was supposed to

if you think about it, the way nominally is used otherwise, the de facto state of things not the nuances and nominal inflation. >> it's an official aerospace term. >> right up next, as we said, jim cramer will join us live from orlando it might be a little better down there. it was balmy today i was out surfing because it was like 28 degrees. plus, gators braving the winter chill. we'll show you the video next. you always pay

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let's get to orlando i have a confusion to make, i just thought about earnings season and i was actually happy it was coming and not dreading it because we're going to have outlooks and we're going to hear what these companies are thinking about the future. and i think it should be really interesting and we should be able to make better determinations about the stock market afterwards. >> you know, i'm so glad you brought that up. the tone of how executives is speaking is to different from a year ago i mean, they are talking about opportunities and talking about

what can go right, not playing defense, they are playing offense. it's a light coming down here to this conference, we're hearing from people who are saying, this is a good time, we're going to profit from it. joe, i agree with you. i think the calls will be filled with optimism. >> is there anything that really needs help in terms of staying where it is, any sector you think that is out there where it better be good or we've got a problem? >> okay, i do fear that the bank guys who were trying to get as much deregulation as possible, will speak too boldly about what they see i'm always afraid there will be a pushback, we're back to the old ways and people will be suspicious of the numbers. other than that, i think things are good target announces a better number and now they buy it. the cynicism is strafrngely lack

being and you and i both like that. >> while you're down there, there's a storied legendary theme park right near where you are in orlando that has harry potter, it's got -- the universal studios theme park is absolutely magnificent, if you get a chance to check it out it's like the main attraction there, i think, at least -- >> harry potter the best ride ever the best ride ever i know there's another one a world something -- >> seaworld. >> disney world. >> not going there. >> no dis sea world, i'm not going there, no need. >> no, butter beer >> you're looking at alligators in north carolina, braving the winter chill the water park -- the water at this park in ocean isle beach is froesen but the gators keep their snouts above the ice to

breathe. that's crazy they enter a form of hibernation hopefully for this guy by lowering body temperature and metabolism they are so cool. >> did you see the iguanas. >> some aren't dead, be careful -- >> a guy put them in his car to try to save them and they regenerated while he was driving. >> i saw some down in -- they are beautiful and they are -- they let you come right up to them and stuff you don't even-- they look lik they are stuffed -- >> iguanas >> until they whip you with their tails. >> maybe they are not iguanas, about this big. >> with their tails, it hurts if they do. >> daughter was going to adopt one, he's so cute and sweet. >> my brother had one. >> last night's college football championship game was an all scc battle and president trump took the field for the national anthem before kickoff and joined by members of the rotc from both

colleges georgia came out to a strong start taking a 13-0 lead at halftime and then in the second half, alabama coach benched his starting quarterback in favor of hawaii an freshman who had just eight games of mop-up duty on his resume before that the gamble played off and true freshman beat the other true freshmen, threw for three touchdowns including the deep throw in overtime that sealed alabama's fifth national title in nine years under nick sabin. >> let's check on the futures, it's been a morning where we've seen positive green arrows and building through the morning too. this is the first time i've seen a six handle with the dow futures, the implied open would be up by 61 from here, s&p futures up by 4.5. the nasdaq up by 16.5. this comes after a day where the dow was down 12 yesterday and everybody else closed at record

levels for just about all of the other major averages also, the 10-year, this is something to watch and rick santelli can talk about this too. touching 2.5%. one we haven't seen in a while we'll continue to watch all of that as well melissa, thank you for being here today. >> see you tomorrow. >> see you tonight and tomorrow. right now it is time for "squawk on the street. ♪ >> congratulations to the alabama crimson tide on their fifth national championship in nine years good tuesday morning, welcome to "squawk on the street. cramer is at the icr conference in orlando a lot to come with jim this morning. futures solid as the s&p makes it five straight gains to start the year europe mostly green, german industrial production with an 8-year high and 10-year cracks